Good morning, and welcome to BXP's First Quarter 2025 Earnings Conference Call. The press release and supplemental package were distributed last night and furnished on Form 8-K. In the supplemental package, BXP has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G. If you did not receive a copy, these documents are available in the Investors section of our website at investors.bxp.com. A webcast of this call will be available for 12 months. At this time, we would like to inform you that certain statements made during this conference call, which are not historical, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Although BXP believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks that could cause actual results to differ materially from those expressed or implied by forward-looking statements were detailed in yesterday's press release, and from time to time in BXP's filings with the SEC. BXP does not undertake a duty to update any forward-looking statements. I'd like to welcome Owen Thomas, Chairman and Chief Executive Officer; Doug Linde, President; and Mike LaBelle, Chief Financial Officer. During the Q&A portion of our call, our regional management teams will be available to address any questions. We ask that those of you participating in the Q&A portion of the call to please limit yourself to 1 and only 1 question. If you have an additional query or follow-up, please feel free to rejoin the queue. I'd now like to turn the call over to Owen Thomas for his formal remarks.

Thank you, Helen, and good morning to all of you. Our results in the first quarter demonstrated BXP's continued strong performance given our execution and a sustained property and capital market recovery. Our FFO per share for the quarter was in line with our forecast. We completed over 1.1 million square feet of leasing in the quarter, which was 25% above the leasing volume we achieved in the first quarter of '24. Further, over the last four quarters, our leasing volume of 5.9 million square feet was 33% higher than the prior four quarters. Importantly, we made progress leasing up our development pipeline assets and completed several significant leases with important clients such as Goodwin Procter, Cooley, and a defense technology company. We completed over $4.2 billion of financing activity, demonstrating improving market conditions and BXP's strong access to capital. We released our 2024 sustainability and impact report highlighting BXP's leadership and accomplishments in sustainable business practices, important to the capital providers, clients, and communities we serve. Now starting with the operating environment. The obvious question is what impacts will tariff and other federal policies have on BXP's business? So far, the tariff program has increased volatility in the capital markets, created concerns over the potential for higher prices, inflation and interest rates, and reduced consumer confidence, leading to more economists forecasting a recession or slower U.S. GDP growth. For BXP, the primary drivers of leasing activity are corporate confidence and in-person work behavior. Our primary concern has been that our clients may delay or terminate space requirements due to the more uncertain operating environment. This has not happened. Specifically for the 1 million square feet of deals where we have a signed LOI and are negotiating a lease, to date, only a single 8,000 square foot prospective user declined to move forward due to market conditions. Doug will describe our current pipeline of leasing activity, which remains robust. Federal funding cuts to the NIH and other research organizations, as well as uncertainties over FDA approvals, are causing significant concerns for the life science community, creating additional headwinds for Life Science leasing. If the U.S. were to enter a recession, leasing demand would undoubtedly slow, but interest rates would likely be lower and remote work would likely decrease due to a weaker labor market. Tariffs will drive up material prices, increasing construction costs. Given non-U.S. material procurement is a modest component of our construction budgets and contractors are eager for new business, we don't see tariffs having a major impact on our construction estimates, and Doug will provide a real-time example of this. As mentioned last quarter, we think DOAS has had a positive impact on BXP's Washington, D.C. business as federal workers and their contractors, who are our clients, return to the office. We are already seeing increased foot traffic, retail activity, and parking revenue at Reston Town Center as a result of this policy. Moving to office market conditions. I will continue to emphasize that the Premier Workplace segment where BXP primarily competes continues to materially outperform the broader office market. Premier workplaces as defined in CBRE's research continue to be the highest quality 7% of buildings, representing 13% of total space in our five CBD markets. Direct vacancy for Premier Workplaces is just over 13% versus 19% for the broader market. Likewise, net absorption for Premier Workplaces has been a positive 18 million square feet over the last three years versus a negative 30 million square feet for the broader market. Asking rents for Premier workplaces continue to be more than 50% higher than the broader market. Regarding the real estate private equity capital markets, office sales volume in the first quarter was $7.6 billion, down approximately 14% from the first quarter of last year. Though financing remains available and transactions continue to close, the current market volatility has widened credit spreads in both the CMBS and REIT investment-grade unsecured markets, which should have some impact on pricing. Though several premier workplace transactions are underway in the U.S., there were a few new commitments of note. Moving to BXP's capital allocation activities and new investments, we commenced the development of 290 Kohl's, a 670 unit, 100% market rate multifamily development project in the Soho West submarket of Downtown Jersey City. Jersey City's multifamily market is highly attractive due to its easy access to Manhattan and a less expensive housing option, resulting in robust population growth, strong demand for apartments, and resulting in rent growth despite new development activity. Our partners in the project are Albany's organization as co-developer and Cross Harbor Capital Partners as financial partner. A key attraction of the investment for us is the capital structure, where BXP will be providing $20 million in common equity for a 19.5% interest in the project and $65 million of preferred equity with a 13% preferred return. At project stabilization, the $225 million senior loan and BXP accrued preferred equity investment will represent under 65% of the total $456 million cost of the project, and the unleveraged cash development yield on cost is projected to be more than 6%. Including development fees and carried interest earned, we project the common and preferred equity investments together will deliver total returns in the mid-teens. Construction has commenced; delivery of the initial units is scheduled for the first half of 2028, and asset stabilization is forecast for the second half of 2029. Continuing with new development, I have described our 930,000 square foot 343 Madison project in Midtown, with direct lobby access to the Grand Central Madison concourse, and located two blocks south of JPMorgan's new headquarters building. The Midtown office market is strong and experiencing rent growth with a vacancy rate under 7% for the higher-quality buildings. 2022, 2023, and 2024 were all record years in New York City for leases signed in excess of about $100 a square foot and $200 a square foot. 343 Madison is the only immediately actionable office development site in close proximity to Grand Central Terminal. We have made lease proposals to seven anchor clients, primarily financial service firms with an average requirement of 350,000 square feet. There are another 10 clients with requirements aggregating over 3.2 million square feet who have received presentations and are considering the building. We expect to launch this $2 billion project in 2025, where, as a reminder, BXP owns a 55% interest. We are in various stages of negotiation for the sale of eight land sites that will generate, if successful, net proceeds of approximately $250 million over the next 24 months. Several of these sales require re-entitlement, creating a more extended closing period. We continue to evaluate additional asset monetization opportunities. So in conclusion, BXP is a domestic business with long-term leases and a stable dividend that will not be as heavily impacted as other industries by volatility and global trade. Further, new construction for office has dropped precipitously, and users are gravitating to higher-quality assets, the combination creating rent growth in several of our submarkets. BXP is maintaining momentum in both leasing and new investment activity despite this more challenging market environment. With our current leasing momentum and only 3.9% portfolio lease rollover in 2026 and 5.1% in 2027, we expect to gain occupancy revenue and FFO in the years ahead. Development deliveries and potentially acquisitions will add additional growth.

Good morning, everybody. It's a beautiful spring day here in Boston, and we have a pretty optimistic report that we're going to give you. Owen described our views of the business environment and the current challenges that are associated with the constant dynamic changes in trade relationships and government efficiency. My comments this morning will address what we're seeing in our results and our client interactions. Our client purchase cycle may be a lagging indicator, but based on the first quarter leasing results, both in our current pipeline of transactions under negotiation and our funnel of possible additional activity, we've seen very little impact on our 2025 plan, which calls for about 4 million square feet of leasing, but more importantly, including about 3 million square feet of leasing on vacant space and known 2025 expirations, which is where our focus is our leased square footage. During the first quarter, we executed just over 1.1 million square feet, which is almost 35% more than our seasonal Q1 average over the last five years. More importantly, the activity included 467,000 square feet of leases on vacant space, and 561,000 square feet of 2025 known expirations. This 1 million square feet of leasing activity on our near-term exposure, vacant space, and 2025 expirations will drive improvements to our occupancy over the next 12 to 18 months. Post 4 125, our current pool of leases in negotiation is 1.1 million square feet. It covers an additional 435,000 square feet of currently vacant space, 230,000 square feet of 2025 expirations, and 190,000 square feet of 2026 and 2027 expirations, which will lower our future exposure as well as our second lease at 725 Indigo Road. We have another 1.7 million square feet of active pipeline transactions which could cover an additional 1 million square feet of vacant space or 2025 expirations. This would put us on our target for our full year '25 vacant and 2025 expiring lease guidance of about 3 million square feet. One of the inferences from Owen's comments would seem to be enhanced caution from clients as they navigate uncertainty. And we would be naïve to think we won't see some impact, but speaking to you today, it has yet to be material. Let me give you a few examples of current client behavior. An existing Boston client with a recent return-to-work mandate believes it needs additional seats, but it's being measured in its approach and waiting until there is clarity of use before they commit to more space. In our Reston, Virginia portfolio, where we have an embedded base of defense and security clients, we would think these clients have the most impact. We are seeing renewals and incremental additional space needs, not downsizing and canceled requirements. There is a government contractor in the market that wants to relocate a 50,000 to 60,000 square feet block of space to the town center and at the moment, we're unable to accommodate them. In Manhattan, we have one existing 11,000 square foot client that put its expansion plans on hold saying, we want to watch how the financial markets evolve; in the same building, another 11,000 square foot client in the same industry is negotiating for an 11,000 square foot expansion. In the aggregate, these conversations are consistent with what we were hearing in January 90 days ago. As we discussed in January, an expiration of 350,000 square feet at 200 Fifth Avenue coupled with about 150,000 square feet of expirations in San Francisco CBD this quarter reduced occupancy to 86.9%, a 60 basis point decrease from last quarter. However, we executed a lease for 244,000 square feet of that now vacant space at 200 Fifth and expect occupancy to return in late 2025. Our pipeline of deal discussions covers more than 125,000 square feet of our San Francisco CBD vacancy. So we're staying pretty level. The least in-service portfolio remained flat quarter-to-quarter at 89.4%. Our lease but not yet commenced square footage has grown to 250 basis points or over 1.2 million square feet over our occupied square footage. We expect about 800,000 square feet to commence in 2025, with almost all the rest in 2026. We have a large pickup in our development leasing this quarter, noted on page 15 of our supplemental, where we signed up another floor at 360 Park Avenue South, our second lease at 725 Indigo signed during the second quarter, and we completed a 162,000 square foot lease at 1050 Winter Street, resulting in a jump from 50% to 62% pre-leased in our development pipeline. 1050 Winter Street was previously out of service, and we had previously terminated all leases to reposition it as a life science building. Long story short, a defense technology company that is currently occupying 40,000 square feet in the market approached us to lease the entire building for 15 years, and we made the decision to pivot back to office. The building is 100% pre-leased and will be brought into service in Q3 '25. Office market conditions are consistent with our remarks last quarter, with a possible exception that conditions are even tighter in our Midtown New York City portfolio, the Back Bay of Boston, and Reston, Virginia. What this means is that availability is sparse, rents are increasing, and concessions remain constant. We completed 91,000 individual transactions this quarter, $300,000 in Boston, 420,000 in New York, 350,000 on the West Coast, and 80,000 square feet in Reston. The overall mark-to-market on cash basis was up about 5% with an increase in Boston, flat in New York, and decreases on the West Coast and in Reston. Other than the new lease at 200 Fifth Avenue and at 1050 Winter, no other transaction exceeded 40,000 square feet. Our highlights in Boston this quarter were in the Urban Edge, where we did a 15-year lease at 1050 Winter and a 39,000 square foot lease at 180 CityPoint. Last quarter, I remarked that we were touring life science clients who had no lab infrastructure needs, while the first of these transactions was executed in the first quarter at 180 City Point. In addition, we are in lease negotiations with a second client for another 40,000 square feet at 180 CityPoint. These life science companies are looking exclusively for office space as they focus their capital on acquiring de-risked products that are in trials rather than pure drug discovery and therefore, do not need lab infrastructure. The economics of doing an office transaction on raw space, even though the building was purpose-built with lab infrastructure in it, are far superior to a lab transaction given the elevated tenant improvements necessary to compete in the markets. The availability of space is in short supply, but spacing the lower sections of buildings is available and competitive. Our new amenity center, the Mosaic, is a strong draw for new clients considering Embarcadero Center. 2024 was a terrific absorption year for the AI companies with more than 1 million square feet of positive absorption. We need to see this trend continue. AI is getting a disproportionate share of all venture investing, and more than 65% of it is going to San Francisco-based companies, so the future bodes well. Before I conclude my remarks, I want to discuss tariffs as they relate to construction activities. We are currently bidding a multifamily project in Jersey City, 290 Kohl's. To date, about 60% of the job has been bid and awarded, and we are inside of our hard cost estimates by a few percentage points. We've had one trade-winning award bid necessitated a tariff upcharge. The contract, including the tariff cost, was still below our budgeted estimate for the subcontract, but it's going to add somewhere between 1.5% and 4% to that particular trade. Given the overall slowdown in new construction, there seems to be enough subcontractor interest to offset potential tariff increases. Remember that construction is a composition of labor, materials, and profit. While there's certainly a positive outcome for our business, it's too early to predict how U.S. tariff policy will impact our future development activity. And with that, I'll turn the call over to Mike.

Great. Thanks, Doug. Appreciate it. Good morning, everybody. Today, I plan to cover our activity in the debt capital markets, which Owen described briefly as very significant, which it was. Our first quarter earnings results and an update to our full year 2025 Earnings guidance. As you know, the debt markets have experienced significant volatility over the past month. Credit spreads have widened in the unsecured and secured bond markets, especially for lower-rated credits. Spreads for stronger companies like us are now tightening again but are still wider than earlier in the year. Our 10-year bond spreads have increased by about 30 basis points, and we could issue in the 10-year unsecured bond market at about 180 basis points spread today or a fixed rate right around 6%. The treasury market has also experienced large swings ranging almost 100 basis points this year. Issuers need to pick their spots in this market, but also can take advantage of the volatility when the market dislocates. We were opportunistic a few weeks ago in the middle of the day with dramatic swings in Fed rate cut expectations. We swapped $300 million of floating rate debt for a year at a fixed rate of 3.68% and locked in some savings. We continue to have open access to all the markets, and we're busy in the bank market, CMBS, and the commercial paper market this quarter. In the bank market, we increased and extended our corporate facilities, including increasing the borrowing capacity in our revolving line of credit by $250 million to $2.25 billion and extending it for 5 years. We also extended our $700 million term loan for 4 years plus one year of extension options. And we closed a $225 million construction loan for our new 290 Kohl’s joint venture residential development in Jersey City. In the CMBS market, we closed a $252 million, 10-year fixed-rate refinancing of our loan on the Marriott headquarters building that we developed. It priced at a fixed rate of 5.5%, representing a credit spread of 124 basis points over the 4.26% 10-year treasury rate at the time of closing. We closed this loan prior to the recent disruption in the markets, and the spread would likely be wider today. We remain an active commercial paper issuer and have increased our outstandings to $750 million. The CP market is our cheapest source of debt capital. Spreads have been moving around a little in the last 30 days, though in a relatively reasonable 10 to 15 basis point range for us. Our portfolio is currently priced at a weighted average yield of 4.27%. Turning to our first quarter results. Our earnings came right in line with the midpoint of our guidance range, and we reported FFO of $1.64 per share. As we look at the rest of 2025, there are a few items to consider. First, and as we discussed last quarter, we have two larger expirations in the second quarter, aggregating 465,000 square feet in our urban edge portfolio in Boston. We expect our occupancy to decline slightly in Q2 before starting to increase in the back half of 2025 as our signed leases and our 2025 leasing plans start to take occupancy. Second, in our strongest markets of Midtown Manhattan and the Back Bay of Boston, we're creating transactions to increase future revenue where we currently don't have available space. As a result, we're taking back space early to complete long-term leases with expanding or incoming clients. This quarter, we terminated two floors at 599 Lexington for this purpose, and we're working on a floor at both the Prudential Tower and at 200 Clarendon Street. These deals pulled forward downtime into 2025 in favor of starting new leases with higher rents in 2026. The new leases will be reflected in our leased percentage, but not in occupancy in 2025. We have taken a 360,000 square foot building in the Urban Edge of Boston out of service this quarter. We are relocating several clients into the other buildings in our portfolio. The building is extremely well located, and we're evaluating multiple feasible future redevelopment plans. The impact is a shift in the NOI of this asset from our same property pool to our out-of-service portfolio. Also, as Doug mentioned, we signed a 160,000 square foot lease at 1050 Winter Street. We're completing a repositioning of the building and adding it to our development pipeline with full occupancy projected in the third quarter of 2025. This deal combined with leases signed at 180 CityPoint and 360 Park Avenue South, as well as faster-than-expected lease-up at our Skymark residential development in Reston, has resulted in our increasing our assumption for the contribution from our developments placed in service. So overall, we are narrowing our 2025 FFO guidance range, and maintaining our midpoint with a new range of $6.80 to $6.92 per share. The changes in our guidance assumptions include an increase in the contribution of our same-property portfolio of $0.02, an increase in the contribution from developments placed in service of $0.01 offset by a reduction of $0.02 in NOI from our buildings out of service and minor changes to our net interest expense of $0.01. Leasing remains our biggest focus, and we're delighted by another strong quarter of more than 1.1 million square feet of leasing in the portfolio. Our pipeline continues to build with 2.8 million square feet of signed letters of intent and active proposals, which represents an increase of 15% since our last call last quarter. These 2.8 million square feet, along with over 1.2 million square feet of signed leases that have not yet hit our revenue and occupancy totals to 4 million square feet, and it compares favorably to the 3.8 million square feet of lease expirations we have through the end of 2026. This is what gives us confidence that we can grow our occupancy as we look ahead into 2026 and 2027. That completes our formal remarks. Operator, can you open the lines up for questions?

And I will now turn it over to our first question from Steve Sakwa at Evercore ISI.

I would like to ask about 343 Madison. The comments regarding demand are quite positive. I understand that the building may not be suitable for pre-leasing due to the size of potential tenants, but how are you assessing the decision to start construction with or without pre-leasing? Is this a building where you need to commit to moving forward with construction before you can really begin leasing? What yield are you aiming for on this building if you decide to proceed?

Our goal was to achieve occupancy of 950,000 for biopharmaceutical. Pre-leasing will not be likely at the property; it will be in the 50 to 250 range we might get. So that's our first priority. We do have a decision point at the end of July with respect to going forward with the project. And given that demand profile that I described in my remarks, we have a lot of confidence in this property. We don't have to make that decision until July, but that's when we'll have to make it. And then our forecast yield or what we're trying to get on the property is 8%, which we think is appropriate given our interest rate environment that we're operating in.

And Hillary, you just might want to comment. So you've been part of every one of these presentations we've done. I think there is a significant amount of interest for organizations of up to 300,000 square feet that actually would consider and are considering doing a precommitment to this building.

Yes, that's right. We've had numerous conversations and multiple rounds of those conversations with some tenants about committing to the building, which at 150,000 square feet is a little bit unusual. Usually, those tenants are not looking four years out for their space. But it remains the case that very high-quality space at scale in the Park Avenue and Plaza District submarkets is vanishingly rare. And so those companies are willing to sort of look ahead of time and stretch in terms of figuring out how to get into 343. So there has been a lot of interest from folks who are willing to commit on a pre-lease basis.

And I show our next question comes from the line of John Kim from BMO Capital Markets.

Doug, you mentioned in your prepared remarks the plan this year is for 4 million square feet of leasing, including 3 million square feet on vacant space and 2025 expirations. I just wanted to ask how confident you were on this plan. And when you look at the expirations this year, you have about 1.9 million square feet expiring. So can we deduct that you're planning to grow occupancy by about 1 million square feet this year? I'm not sure how developments and first quarter activity factors into this.

Yes, sure. Thanks for the question, John. So, as of today, we've done about 1 million square feet of leasing on vacant space and 2025 expirations. And in my sort of pipeline of what's under negotiation today, like leases that are being actually documented, there’s another 400,000 square feet of vacant space and 250,000 square feet of 2025 expirations. So net-net, we're actually more than halfway there. And again, my pipeline of other activity has another 1 million square feet of that type of space. So I feel really good about our leased square footage percentage. I say this with all due respect; it's really hard for us to correlate leasing with occupancy on a quarter-by-quarter basis because we just don't know when that revenue is going to commence. And so if you're looking at our leased square footage, which is what I'm trying to point people to, and that number is continuing to expand, that is going to be where the revenue comes from. And as I said, the vast majority of what we're doing today is going to be in ’25 or ’26. So I am very confident of our occupancy build as we move into 2026 because all the things we're doing now will be in-sourced by that. It's very hard for me to say on December 31, 2025, our occupancy is going to be xx percent because I just don't know what the revenue recognition is going to require for us.

And I show our next question comes from the line of Nick Yulico from Scotiabank.

Could you elaborate on how to consider the effects of occupancy and earnings throughout the year? Specifically, Mike, you've mentioned the known expiration in the second quarter. With the ongoing activities either completed or expected, how will this influence the NOI, occupancy, and FFO for 2025? What should we understand regarding the earnings guidance range and what remains to be done to achieve specific targets for occupancy and FFO?

Look, we narrowed the range primarily because of the success that we had in our leasing and the timing of some of those occupancy starts that we now know about. So the bottom end of the range was lower. We've got a lot of leasing done, so we have a lot more confidence that the bottom end is better, and we brought up the bottom end of our same-store guidance as well correlates to that. From the top end of the range, it was related to the starts that we might have or leases that will be on that managed start now in 2025, but we're doing deals on deals where we get the revenue recognition, and those deals will probably be in 2026. So we are going back a little bit on the top end of our range primarily for that reason. We feel highly confident in the range that we have in the press we provided. That's upon the activity that we have. I'll give you one example of the relief that is meaningful. We’ve done this at 4,000 square feet, which is fabulous and great and will start in 2026, right? So it's not going to impact occupancy in 2025. On the other hand, we have another 10,000 square feet of availability in that building. We're talking to two tenants right now. One of those tenants may take this space immediately. The other tenant will probably not take the space until 2026.

So if on average the rent there is $100 a square foot on 100,000 square feet, right? That's a meaningful amount of dollars that is going to shift one way or the other, and therefore, is why we have the range where we have it. And unfortunately, we just don't know until these leases are signed and we actually see what the condition requirements are of how we're delivering the space, which way we're going to go. And that sort of subtlety is why I'm so fixated on our lease square footage and not necessarily our quarter-to-quarter occupancy.

The other transaction I mentioned in my notes involves the four floors we have in 599 and the Back Bay, where we currently have leases that will expire either at the end of 2025 or early in 2026. We are aware that those tenants will be leaving, so we are actively marketing that space. We have potential clients who are looking to expand or move into the building, and they are aiming for a 2026 occupancy. To facilitate this for 2026, we need to negotiate with the existing tenant planning to vacate in 2025. This situation will positively impact our occupancy rates and revenue in the future, but it requires some adjustments throughout 2025.

And I show our next question comes from the line of Ronald Kamdem from Morgan Stanley.

Just a quick one. We've been having a little bit of trouble hearing. Maybe it's just us. But I guess I'd love to focus on, one, just trends on the ground in the life science market. I think you talked a little bit in your opening comments about that space, but you guys always have a pretty good perspective. Just what are you seeing? And what do you think it will take for that to turn around? And then if I could ask a little bit of a follow-up just on the Boston market overall. We've seen job growth start to slow there. Just what are your thoughts there?

So let me answer the question on Life Science first. I would say that we have seen very little in the way of new requirements for raw life science space in either South San Francisco or in the greater Boston Waltham, Lexington market, which is where we have our space. We are seeing, as I described earlier, life science organizations that want office space, looking at our portfolio in Greater Waltham, in a meaningful amount. And so I would not be surprised if we have leased well over 100,000 square feet of life science client demand, but not lab space in our Waltham marketplace in 2025. I think things are actually slightly more extensive and more robust, and I use that term slightly because it means a pickup in demand is way greater in the Boston market than it is in the San Francisco marketplace. The issues associated with regulatory environments and how that's impacting potentially new therapeutics are going to be regulated by the FDA, I think is creating a lot of uncertainty and stalling in the market.

Ladies and gentlemen, please continue to hold; your conference call will resume momentarily. Please continue to hold your conference call will resume momentarily.

Okay. We're back. I think can you hear us?

Yes. Loud and clear.

And then your question on Boston is relative to just overall demand growth and job growth. I'll let Bryan handle that one.

Yes. I believe the key to closing deals right now, particularly in our Urban Edge portfolio momentum that Doug and I both mentioned, is noteworthy. Although I wouldn't say it's a widespread trend yet, we are observing a couple of deals we successfully closed in the first quarter. These transactions were initially headed elsewhere but required capital that the properties could not provide. We are noticing an increase in such scenarios due to capital stack challenges and the existing inventory. Additionally, as Doug pointed out regarding the one defense contractor transaction, we successfully transitioned from a life science development to a building configured for office and specialized use for this contractor. Flexibility and capital are increasingly capturing the attention of the tenant rep community. We will see how significant this trend becomes, but it is definitely aiding us in closing deals.

And I show our next question comes from the line of Anthony Paolone from JPMorgan.

Can you talk about your West Coast leasing activity and what you're seeing there as it relates to strengths and weaknesses by either tenant type or submarket and anything that's changed in the last couple of months?

Yes. So I'll make a brief comment, and then I'll turn it over to Rod. My view is that, as I said earlier, the large users have all sort of landed and there's a significant amount of embedded tenants in the market, but they're all of a smaller nature. And for the most part, the financial services, legal, and professional services are incrementally either staying in place or seeing a modest amount of space reduction still. But there are quite a few, what I would refer to as early-stage and smaller AI and other technology companies that are in the market looking for space. Rod?

Yes, I agree, Doug. Right now, we are focused on leasing at Embarcadero Center, particularly with many law and financial firms. These are mostly relocations, which have been quite active. This activity is contributing to the volume from the West Coast. Regarding AI, it remains significant, with AI companies in San Francisco now occupying over 5 million square feet. Many companies are actively searching for space, including some new names that are emerging. This is encouraging, and I expect this trend to continue. However, there seems to be somewhat less activity in Silicon Valley. It's a bit slower there, but we've seen a few larger requirements come to our attention in the past month, which is positive.

And I show our next question comes from the line of Blaine Heck from Wells Fargo.

Can you talk about leverage and funding? A little bit of debt to EBITDA ticked up to 8.3x on your numbers this quarter, which is higher than you've run it historically. I guess how are you thinking about your comfort there given the additional projects you're taking on, any thoughts on near-term moves to bring that down? Or should we just expect you to kind of wait in anticipation of natural downward movement in that metric as developments come online and with potential occupancy upside?

In the first quarter, our leverage increased slightly, partly due to the seasonal nature of this period, as our general and administrative expenses are significantly higher compared to the rest of the year. This seasonal impact contributed to a lower EBITDA for the first quarter, and when annualized, it creates a notable difference. If we adjust for this, it would be closer to 7.9 times. Despite the increase from $7.65 billion to $7.9 billion, I anticipate that this will continue to rise over the next few quarters as we fund our development pipeline. When 290 Kohl's comes on line in the middle of next year, we expect significant income. Additionally, leasing activities from other parts of our development pipeline will generate income as well, leading to a moderation afterwards. From a funding perspective, we are still utilizing incremental debt, which is reflected in the slight increase in leverage. We believe that once our pipeline starts delivering, our leverage will decrease. Furthermore, we are exploring options to monetize non-income-producing real estate, including potential land transactions worth $250 million, which we aim to execute in the coming years. We are also considering private equity options as needed, and our approach to potential equity sources will depend on our stock price, along with any additional debt required to support our investments.

Yes. I just would make one last comment, which is that 290 Kohl’s from a cash perspective is going to be online in less than a year. So we may not be recognizing revenue, but the cash is going to be there. So effectively, on a true basis, our EBITDA is going to start coming down in a meaningful way when that happens. And I believe that's late April of 2026. So even though occupancy may not occur from a revenue recognition perspective, the cash is going to be up.

And I show our next question comes from the line of Jana Galan from Bank of America Merrill Lynch.

Thank you. Just wanted to congratulate you on the refinancings and financings completed in 1Q and the market timing. I guess given the capital markets volatility in the last month, can you comment on where you think BXP can issue unsecured debt, secured, and what CMBS pricing would look like today?

Look, as I mentioned in my call that the bond market for us has widened, and now it's coming back. So things are kind of settling down a little bit in the bond market over the last week or two, I would say. So our bond spreads kind of in early April, they moved out 50 basis points, and now they're down 30 basis points. So they're settling in. And I think for stronger credits the spread widening is less. And when you get out into high yield, the spread widening is significantly wider. So that's in the unsecured bond market. And I think the same thing is in the CMBS market. High-quality, lower leverage deals can get done, and higher leverage stuff is going to be tough. And AAAs on CMBS widened pretty dramatically. So they had gotten to 100 basis points or less; they went out to 250 basis points, and now they're back below 200. There's just been a lot of volatility. So again, I think people have to think about timing and be prepared in advance to strike when that market is good. And again, I mentioned the commercial paper market, which is also a live market that we're in every day. And there's been a little bit of widening there. But again, it's kind of settled down. So I would say things are improving right now. We can issue 10-year unsecured debt at a fixed rate of 6%, which is favorable given the current market conditions.

And I show our next question comes from the line of Seth Berge from Citi.

I just wanted to ask a quick question about your in-service portfolio occupancy guidance that looks like Reservoir Place and Reston Center were kind of taken out in 651 Gateway wasn't added this quarter. Kind of what are the puts and takes there? And are there any changes that we should be thinking about there as it relates to kind of the NOI run rate kind of going forward?

So we talked about Reston Corporate Center last quarter. So that's a building that was 100% leased at the end of the year. The tenant vacated; we knew they were going to vacate. And it's the location for us to build the next phase of Reston Town Center, which is 3 million square feet of density. So that's been in the works for years. And we actually have the density approved, and we'll be working over the next few years trying to make some of that development a reality. Reservoir Place was the asset I mentioned in my remarks, which was a building in the Urban Edge of Boston. It's an older office building incredibly well located, great visibility, and we think there is likely a better utilization for that real estate potentially. So we elected to start to move some of the clients that were in there into other buildings in our portfolio. Some went to CBD, similar to other Urban Edge assets, and we just elected to take it out of service, and that was a 350,000 square foot building, and it had, I think, 220,000 square feet of vacancy at the end of the quarter. As I said, we're relocating tenants out of it. There's a couple of other buildings that we are considering pulling out of service, also suburban buildings that total somewhere between 250,000 and 300,000 square feet that are vacant today and we could take out of service. And then the development pipeline, which is coming into service, includes 651 Gateway, 360 Park Avenue South, and Reston next block. And so all of those will get added; we believe, sometime in 2025, although at 651 Gateway, we're kind of taking the lead from our partner on when they deliver that. But if all of those deliver and there's no additional occupancy, that would add somewhere between 50 and 70 basis points to the vacancy on the headline.

And I show our next question comes from the line of Alexander Goldfarb from Piper Sandler.

Mike, or Doug, could you revisit the topic of uncertainty regarding when tenants will occupy the space? Back in January or early February, we discussed expecting a significant increase in FFO in the latter half of this year based on the occupancy trends. Do you still believe we will see this increase in the second half of the year, or could the uncertainty regarding when tenants might occupy space mean that this increase is pushed to 2026 instead?

I believe it will be both. Looking at the midpoint of our guidance and considering what the FFO needs to be in the third and remaining quarters, the second quarter will have a slight negative impact, although it's up a little primarily due to lower G&A. The third and fourth quarters are expected to see a significant increase, largely driven by occupancy from leases we've either signed or are in the process of signing. This will primarily contribute to the same-store metrics. If we consider the figures, we had $1.66 in the second quarter and $1.64 in the first quarter, and we need to average around $1.78 over the next two quarters. This increase is part of the anticipated ramp-up.

And I show our next question comes from the line of Omotayo Okusanya from Deutsche Bank.

Thank you for your time. I believe there has been significant attention on certain areas and what they might mean for your numbers, especially with expectations for a ramp-up in the latter half of the year. Can you discuss potential opportunities to exceed guidance and what factors could contribute to that?

Certainly. Increasing our leasing activities on vacant spaces will enable us to recognize revenue more rapidly, which is key to driving growth. We see significant opportunities in our Manhattan portfolio, particularly at 360 Park Avenue South, as well as at our Embarcadero Center portfolio in San Francisco, where we can make substantial gains in occupancy. If we see exceptional leasing performance in 2025, these locations will likely be the main contributors. So far, we have not observed any signs of distress or hesitation in these markets, although there are broader economic concerns being raised by many macro economists regarding potential negative GDP growth and a recession. However, our interactions with clients have not reflected these worries yet.

Thank you. And I show our next question comes from the line of Dylan Bazinsky from Green Street.

Just sort of wanted to go back to some of the comments on a lot of your West Coast markets and particularly you're still seeing tenants rationalized or downsized space, particularly amongst the legacy larger big tech companies. However, meanwhile, in certain markets like New York, right, you're seeing Google renew a lot of their leases. You're seeing Amazon take down new expansionary space. So clearly, there's some appetite for space across their current markets outside the West Coast. So I guess just as you think about it and speak with these tenants and Steve brokers and whatnot, at what point of the downsizing cycle for a lot of these tenants on the West Coast do you think we're in? Do you think like they still have another 20%, 30% of the space to get back? Or do you think it's going to be more incremental from this point on?

I'll begin by addressing the situation, and then Rod can share his perspective on the West Coast, followed by Hilary’s comments. It's important to distinguish the developments in the CBD of San Francisco from potential changes in Silicon Valley or the Peninsula. They are quite different. Currently, there are hardly any significant increases in subleasing or lease terminations in the greater CBD of San Francisco. In contrast, there are substantial amounts of space from tech companies that are still available in the greater Silicon Valley. If you were to ask some of the larger companies, they would likely say they could justify more space. That provides a broader perspective. In Manhattan, the situation is somewhat more nuanced. We see some organizations experiencing significant growth, while others are maintaining their current status without necessarily downsizing. Rod, please go ahead, and then I'll ask Hilary for her insights.

Yes. I mean I think there are some examples of that in San Francisco, but it's mostly down in the Valley and with the largest firms that are down there. And again, each one of them kind of has their own story, but there's probably more of that space down in the Valley, and I'm talking excess capacity sublease space than there is in San Francisco.

And then Hilary, your view on what's sort of going on with tech in Manhattan?

With large tech in Manhattan, specifically on tech, I would say that the large tech is stable at this point. We've heard that Meta has taken some space that they were planning to sublease off the market, and we'll be occupying that themselves in Hudson Yards. You referenced the Amazon transaction. That's obviously positive for that building and absorption in the market. We're also starting to see more activity in the smaller tech space in and around Midtown South. And so that has been a net positive because most of the big leasing that's been done in that submarket has actually been done by more traditional type tenants coming out of Midtown proper. So as it pertains to tech, I'd say New York feels stable. And we are starting to see some green shoots on the leasing front. And more broadly speaking, in terms of downsizing versus folks expanding. If I could just give one statistic of all the leasing activity that the New York region did in the first quarter, which was just over 390,000 square feet, only 11,000 square feet was a straight renewal. Everything else was either a new tenant or an expansion. So if that gives you a sense of the pressure of demand in New York, I thought that was a pretty interesting statistic.

One additional thing for Boston, both tech and conventional clients, whether it's law or finance is that we are seeing a trend where there's an adjustment being made as people understand their workforce needs greater. There was an undershoot, in other words, not enough space allocated for focus work, and there was maybe extra collaboration space that's all getting used, but we're hearing from several clients in both of those sectors, tech included, that, hey, we undershot the focused work areas, and they're needing to add on that. So we'll see how that formula turns out and whether that's a big absorption issue for us. But it is definitely happening where they start to get a greater handle on the percentages of workspace they need.

And I show our next question comes from the line of Brendan Lynch from Barclays.

I wanted to follow up on your comments around pulling forward some expirations to redevelop assets. It sounds like the specifics of those redevelopment projects are still under consideration. So can you just talk about when that might be finalized and when the actual development process might be able to begin?

There is a complex and evolving situation regarding entitlements and user requirements that needs to be addressed. For instance, Bryan and his team in Boston are currently discussing an existing office space that they believe could potentially be rezoned for a significant number of multifamily units. As this conversation progresses, various factors such as jurisdiction, state regulations, and transportation issues need to be resolved. These processes take time, making it difficult to provide a specific timeline for development; it is unlikely that any projects will be actively developed in 2025. However, there is potential for some of these initiatives to begin in 2026 and 2027.

And I show our last question in the queue comes from the line of Peter Abramowitz from Jefferies.

Yes. I just wanted to ask about 125 Broadway. I believe Biogen announced they're going to be moving to a new development elsewhere in Cambridge. I know you have until '28 to address that. But just curious about kind of the asset, whether you think it needs any repositioning or whether it's something that you think you can just lease kind of as is? And how much of that space is traditional lab space versus office and thinking about positioning that for potentially a new tenant?

Yes, so I'll just describe what the building is, and I'll let Bryan describe the market. So 125 Broadway is a true lab building, which is predominantly lab infrastructure, and it's been the home of Biogen for 30-plus years. The building has been reinvested by Biogen, but I am sure when Biogen moves out, if, in fact, they're moving out, they haven't told us they're moving out, but there's a presumption that they're moving out; there will be some amount of work that needs to get done to rethink the systems in the building. In all likelihood, it's going to continue to be a life science space, and I'll let Bryan go ahead.

Yes. We're going with the assumption, as Doug said, that they would be moving out. However, they have told us that they're still assessing their needs, and several of those needs are for specialized uses within that particular building. We are determining whether or not it can go to the next phase. But in terms of that being in the cluster that we've got there, we’d be highly confident in that as a product. We're talking to Biogen about their portfolio needs there, which we've had there for 40 years, so there's a lot of fluidity to it.

Thank you. I'm showing no further questions in the queue at this time. That concludes our Q&A session. At this time, I would like to turn the call back to Owen Thomas for closing remarks.

No further remarks. Thank all of you for your attention and interest in BXP.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Good day.