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Boston Properties Inc (NYSE:BXP)
Q1 2020 Earnings Call
Apr 29, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Boston Properties First Quarter Earnings Call. [Operator Instructions]

At this time, I'd like to turn the conference over to Ms. Sara Buda, VP of Investor Relations for Boston Properties. Please go ahead.

Sara Buda -- Vice President, Investor Relations

Hi. Thank you. Welcome, everybody, to the Boston Properties First Quarter 2020 Earnings Conference Call. The press release and supplemental package were distributed last night and furnished on Form 8-K. In the supplemental package, the company 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 Investor Relations 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. These statements involve known and unknown risks and uncertainties. And although Boston Properties believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, we cannot assure you that the expectations will be attained.

Risks and uncertainties 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 the company's filings with the SEC. In particular, there are significant risks and uncertainties related to the scope, severity and duration of the COVID-19 pandemic, the actions taken to contain the pandemic and will mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures on Boston Properties and on our tenants. Boston Properties does not undertake a duty to update any forward-looking statements. I would like to welcome Owen Thomas, Chief Executive Officer; Doug Linde, President; and Mike LaBelle, Chief Financial Officer. During the Q&A portion of our call, Ray Ritchey, Senior Executive Vice President and our regional management teams will be available to address any questions.

I would like to turn the call now over to Owen Thomas for his formal remarks.

Owen D. Thomas -- Chief Executive Officer and Director

Great. Thank you, Sara, and good morning, everyone. I'm dialed in from Westchester County, New York. I would normally point out at the start of our earnings call that we once again beat our estimates and explain to you how well we performed in the first quarter as well as our growth expectations for 2020. However, we recognized all our worlds changed in March. And our focus this morning will be on the state of the COVID-19 pandemic, its impact on markets and Boston Properties' business, what we are doing in response and how we see the future unfolding. Despite the near-term challenges of the crisis, which I'm about to describe, I'm optimistic about the future and remain confident of Boston Properties' ability to both weather current and coming market uncertainty as well as to pursue over time new opportunities that will undoubtedly present themselves as a result of the crisis. The COVID-19 pandemic took the world, the U.S., the business community and the real estate industry by surprise.

It's a good lesson on the difficulty in predicting downturns and the importance of always being prepared for them. The COVID-19 recession is different from past downturns in that it was sparked and is driven by science, not economics, making its future course more difficult to predict. The precipitous drop in economic activity globally has had significant negative impact on many industries, such as energy, retail and travel. And 26 million U.S. jobs have been lost, at least in the short term. So how does this economic downturn progress from here? The answer is science-based and entirely driven by the fight against the virus. Our economy cannot fully return to normal until individuals feel safe, which can only come with the development of a vaccine, therapies, testing and/or a better understanding of the dangers of the virus. With these solutions likely months down the road, our elected officials at the federal and state levels are faced with very difficult decisions as they analyze imperfect data and balance the need to either extend the lockdown for health safety or reopen the economy, risking further outbreaks.

Though the strategy to shut the economy through remote work has been successful so far in reducing infection rates, the process is slow and economically challenging for many industries. If proper balance is achieved, the economy will likely be opened up slowly over the next few months. But new normalcy cannot be achieved until a medical resolution is discovered and distributed, probably in 2021. A downside case would be the economy is opened too swiftly and we have another spike in infection causing further shutdown later in 2020. The upside case is the more rapid achievement of a medical solution sometime this year. And lastly, the new normal economy will likely be reset below pre-pandemic levels given elevated unemployment and restructuring and many factors. These science-driven scenarios, which are difficult to predict, create a wide range of macroeconomic outcomes and resultant operating environment for Boston Properties in 2020. And lastly, on the economy, rapid intervention by the Fed and Treasury with aggressive monetary and fiscal stimulus have been impressive, important and very helpful in mitigating the impact of the crisis as has the relative health of the U.S. banking system.

The Fed quickly reduced the federal funds rate to 0 and has provided significant liquidity through a number of measures to ensure functioning markets across the capital market spectrum. Fiscal stimulus, including the Treasury-led CARES Act has brought so far over $2 trillion of needed financial support to small businesses, individual and industries most affected by the crisis. So now moving to the impacts on the market. Let me start at the property level with leasing. As in past recessions, an economic slowdown creates uncertainty, which reduces some users' need for space. Business leaders can become more cautious and reluctant to invest capital in new offices. Incremental growth slows, putting pressure on market rents, though renewal probabilities for expiring tenants will likely rise. It is currently very difficult to determine where market rents are today or where they will settle as a result of the crisis as leasing volumes have slowed and very few new leases, those priced after the onset of the pandemic, have been completed. The good news is that the majority of our core markets were healthy entering the pandemic.

Further, not all markets will be impacted equally, and regions with industries less affected by the crisis, such as life science, government and technology should outperform. In terms of private capital markets for real estate, there were a number of sales of Class A office buildings completed in the first quarter in our core markets and pricing consistent with 2019 levels. But these transactions are not particularly relevant for thinking about current valuations. As of late March, building sales have essentially stopped. Offerings have been withdrawn, and most buyers for deals agreed before late March have either walked on contract deposits, sought price reductions or delayed closings to seek financing. With the prospect of lower rent, expectations of future property cash flows will be reduced. And coupled with decreased access to secured financing and nervous buyers, private market values for assets with leasing risk have likely fallen. We are still very early in the correction. Sellers are probably still in the denial phase, and there are limited post-pandemic transactions to provide new pricing guidance. Low interest rate and historically wide cap rate spread will undoubtedly cushion the blow.

Public office REIT trading values could provide a market, though the magnitude of the price reduction due to the pandemic being severe relative to potential reforecast cash flows. Now turning to impact on Boston Properties business. Let me start with operations. The most notable change for the majority of us is working remotely for the last 6.5 weeks. Though the arrangement is clearly less efficient and all of us are anxious to return to the comradery of our offices, we have been able to effectively operate our business and accomplish important goals. Our buildings have remained staffed and open throughout the crisis for customers who need access. I want to thank Boston Properties essential workforce and our heroes of the COVID-19 crisis, our property management organization for their can-do attitude and vigilance under stressful conditions. Our most important activity at this time is planning for the safety and health security of our customers and employees as they return to work in our buildings, likely in the next two months. We have formed an internal cross-regional health security task force that is ensuring best practices, which Doug will cover.

On leasing, as of late March, new requirements and tour activity largely disappeared, but we continue to close many of the deals we had negotiated before the crisis. There are significant pending leases under way, particularly for our Reston portfolio. The other significant leasing activity has been restructuring short-term cash payment requirements for our customers experiencing financial difficulties, largely in our retail portfolio. These deals generally entail deferring several months of 2020 rent into 2021 and later or abating rent and return for lease extension. Nonessential construction activity has been halted by government order in all our markets except Washington, D.C. Assuming the orders are lifted in the next couple of months, this delay will offset some of the achieved construction schedule cushion on our base building projects outside of the Washington, D.C. region. But we still have sufficient contingency in our project schedule to meet customer delivery date. The greater impact from the construction halt is on tenant work for customers planning to occupy or vacate our portfolio in the coming months.

This will cause delays in revenue recognition for several new tenants and holdover rent opportunities for tenants who are delayed leaving. Moving to financial impact. Boston Properties has the scale, market diversity, revenue stability, credit and access to liquidity to navigate the turbulence of the current market storm. First, we have a very high-quality portfolio of buildings in the most vibrant cities in the U.S. filled with industry-leading tenants. This is demonstrated by the fact that we have collected 95% of April rents due in our office portfolio as of yesterday, and office tenants represent 86% of our total revenue. Further, only 5% of our portfolio rolls between now and year-end. The balance of our revenue comes from retail and residential tenants, parking, service fees and the hotel, which are more economically sensitive. Doug and Mike will be providing more detailed building blocks for our revenue stream. Our access to liquidity is also very strong at over $2 billion, with $661 million of cash in our balance sheet, $151 million in the 1031 escrow account and $1.25 billion of funding available on our credit facility. In terms of needs, we have $1.2 billion remaining to fund on our development pipeline over the next three years, and our next unsecured debt maturity of $850 million is not until May of 2021.

The unsecured debt market is also available to us to issue in size at low coupon rates. In terms of Boston Properties investment activity, we raised $254 million from the sale of New Dominion Technology Park in February. We intend to complete a lifetime exchange with this asset for 880 and 890 Winter Street, which we purchased last year and the site underlying the Fourth and Harrison development in San Francisco deferring a substantial tax gain. We are also negotiating the sale of a small number of additional assets, which, if completed, would raise over $250 million in net sale proceeds. Further disposition activity is essentially suspended given market conditions. In terms of new investments, our focus at this time is preserving resources and managing our buildings to ensure health security. We have limited new investments under consideration, so I would expect that will change later in 2020 as the crisis will likely create interesting acquisition opportunities that reset pricing levels.

We continue to formalize relationships with private equity partners to help capitalize new investments down the road. Our existing development pipeline, which currently stands at 11 projects, 5.2 million square feet, $2.9 billion in total investments and 73% pre-leased will continue to be a strong growth driver for Boston Properties. We just delivered into service last quarter 17Fifty Presidents, a 276,000 square foot office building located in Reston and 100% leased to Leidos at more than a 7% initial cash yield. Due to the pandemic, we are suspending investment in new vertical development for projects with material lease-up risk. As you know, we have two significant projects we are planning to launch in 2020, subject to market conditions. The first is our 835,000 square foot Fourth and Harrison project in Central SoMa, where we have completed entitlement and plan for the first phase and expect to purchase the site later this year. We have responded to RFPs from potential anchor tenants but will not commence vertical development without a significant pre-lease commitment. The second is Platform 16, a 1.1 million square foot 3-phase office development in San Jose, where we have entitlements planned and own a 55% interest in site.

Though we have completed site preparation work in consultation with our partner, we have paused construction activities and we'll revisit our plans once we get through the current phase of the crisis. As a final point, much is being written and speculated about the future use and needs for office space as a result of the pandemic. Several business leaders have commented on their success in operating remotely and claim to be reevaluating their future office space needs. Further, urbanization as well as office densification has been questioned given the imperative of spacing during a viral pandemic. Though no one, including myself, knows the answers to these longer term questions, it is instructive to focus on what we know today. The biggest impact to the office market near term is recession, which, as I discussed previously, will adjust rent and capital value. Low interest rates definitely help. Second, our customers with dense layouts, including Boston Properties, are removing workstations and will return to work in a less dense environment.

Some of these users will have a portion of their workforce continue to work remotely, and some will require more space. Third, modern, healthy and well-managed building with state-of-the-art health security will be at a premium like never before. Lastly, and anecdotally, though this crisis has improved our skills at using remote work tools and procedures, it has also made apparent that collaboration, productivity and cultural benefits of working with others in an office environment. So in summary, the widely speculated market correction has arrived, though in a form few predicted. As we have communicated to you over the years, predicting downturns is difficult, and you must always be prepared. As a result, Boston Properties is ready for the COVID-19 recession, given our high-quality tenant base, long-term leases, modest leverage, access to liquidity and pre-lease development pipeline.

Let me turn it over to Doug in Westin, Mass.

Douglas T. Linde -- President and Director

Thanks, Owen. Good morning, everybody. I'm in suburban Boston. If you hear a noise behind me, it's the robin that keeps snapping against the window in my study. I want to make a few comments on what we're doing to enhance our health security activities as our buildings begin to refill as well as our current leasing activity. But I'm going to focus my remarks this morning on the context behind our decision to withdraw our guidance for 2020. The health and safety of our employees, tenants, service providers and visitors is first and foremost on our minds. Over a month ago, we formed an internal health safety task force comprised of Boston Properties employees from around the company as well as outside experts in industrial hygiene, cleaning and security. We designed standard operating procedures that will include, but are not limited to, air filtration, water quality, janitorial products and procedures, social separation during building access and use of a vertical transportation, the use of PPE, signage, and management of construction activities in our in-service buildings.

All of these activities are currently being validated by outside experts. It's possible that some of our procedures may get relaxed over time as we are being guided by the health and medical experts and acting with an abundance of caution. We will be releasing our plan over the next week to our entire community. Leasing activity for the first quarter was anticipated to be light pre-COVID-19. We ended the year just under 93% occupancy. And from a seasonal perspective, the first quarter is typically our quietest period. Recognizing our occupancy levels, leasing in Boston was concentrated on renewals at our Waltham assets. In San Francisco, we also had a number of renewals and one modest recapture and release, where the rent increased by 50% on a net basis. This was negotiated in late 2019. In New York, we completed our forward lease at 399 Park Avenue on an October 2021 expiration, with an 8% increase on a gross basis, again, negotiated in late 2019. In Washington, D.C., more than 50% of our leases were from GSA renewals. I think a little bit more interesting perspective is really what's going on right now.

As Owen made clear, what we know is that the economy is in a recession, and many organizations have either laid off or furloughed their staff. There are no in-person tours of space, and the implications of social distancing on space planning and utilizations are uncertain. In spite of this, during the month of April, we signed another floor lease at 399 Park Avenue with a hedge fund. The office space at 399 is now 100% leased. We also signed a full floor new tenant lease at Times Square Tower with a law firm. We completed a 20,000 square foot extension and expansion with an investment banking firm at Embarcadero Center. We completed 135,000 square foot relocation and 11-year extension in the Reston Town Center with a defense contractor, and we recaptured 120,000 square feet of space in suburban Boston with a late 2022 expiration and did a new 12-year lease with a technology company starting in June 2020. We are actively working defined as leases that are in progress so the paper is moving back and forth. On 50,000 square feet of leases in New York City, 40,000 square feet in San Francisco, 235,000 square feet in Boston, 200,000 square feet in Los Angeles and almost 900,000 square feet in Northern Virginia, including backfills for significant portions of our Leidos exploration in Reston Town Center and an additional occupant at our Reston next development. Separately, about 300,000 square feet of signed LOIs are currently on what we refer to as COVID-19 pause across our regions.

So let's discuss our 2020 revenue. We have a very strong base of revenue. But the economic uncertainty that Owen described, coupled with the variability it has created in certain areas of our revenues, is simply too unknown for us to provide tight forecast at this time. And as you know, quarterly and annual guidance is all on the margin. I believe that if we provide you with the data for 2019, you will be able to make individual judgments about the COVID-19 impact on 2020 and, more importantly, have visibility on 2021. If you start with our supplemental disclosure, we break out revenues into four categories: lease, parking, hotel and development and management services. I'm going to comment on those first three. In 2019, the lease category made up the majority of our revenues at 93% of the total. And if you break down that a little bit further, 92% of that 93% is office, 7% is retail and 1% is our apartments. So bottom line, office revenues make up 83% of our total revenue base, including our unconsolidated assets, JVs. So let's focus for a few minutes on that office portfolio. The composition of that office portfolio, our share, I'm going to use data from our April 2020 cash billings to give you a perspective of the segmentation. Again, this is a cash perspective based upon this last month of collections and billings.

So financial services make up about 25%; technology and life science companies make up about 24%; the legal profession makes up 22.5%; other professional services, which are accounting firms and native consulting firms and other engineering kind of firms, make up about 8.5%; manufacturing and retail, companies that make things, make up about 4.6%; real estate and insurance, 4.2%; media and telecommunications, 4%; flexible office space providers, 2.5%; government, 2.5%; and education, 2.3%. So that's a good sense of where our money is coming from, from a revenue perspective. 2019 revenues from office leases, including our share of unconsolidated JVs, totaled more than $2.657 billion. The office portfolio ended the first quarter 2020 at 92.9% occupied, essentially flat to the end of 2019. Owen gave you our baseline April collections for the company. We collected rents in 95% to 100% of all of those office buildings that I just described, those categories with the exceptions of our flexible space operators and manufacturing/retail. The manufacturing/retail category includes retail and consumer product tenants with office leases. So those are companies like Aramis, Ann Taylor, Macys.com, Saucony, Clarks shoes, JUUL and JAKKS Pacific, which is a toy company.

Those are sort of the larger ones in that category as well as industries as diverse as the defense sector and electric battery manufacturing. So it's a pretty broad base. Our share of the accrued rent balance of those manufacturing/retail tenants that did not pay April rent, and they're all in the retail-oriented businesses, stood at $7.6 million at the end of the quarter. And our share of unpaid flexible state operator-accrued rent stood at $4.5 million. 29 days into the quarter, it's not clear if those tenants are simply not paying but will catch up, have a short-term liquidity issue or more significant business challenge. We've reviewed our accrued rent balances in our accounts receivable, but the full impact of the COVID-19 shutdown on many businesses is still not yet evident. And while we've increased our reserve this quarter and written off some AR, we have additional reserves we expect will take over the next quarter that we really can't identify today. And those decisions impact our net income and our funds from operations. But bottom line is we have a really strong set of tenants where we collected the vast majority of our cash rent in 2020 April.

I want to repeat that the foundation of Boston Properties ongoing revenues and cash flow is our contractual office lease book with an average lease length of approximately eight years. One challenge with forecasting short-term revenue of our office leases is knowing the revenue recognition dates on many of the new leased singed. At the moment, we have over 500,000 square feet of signed leases with annualized revenues of $37 million on spaces that we have delivered in shell condition and are being constructed by tenants. We are receiving cash rent for some of this space, but not booking any GAAP revenue. So it's not "occupied" yet. As Owen mentioned, construction has been shut down in New York and Boston and San Francisco, and we don't have clarity on when local authorities will allow a restart, how long it might be before contractors can fully mobilize on in-service asset tenant improvement job. And most importantly, when those tenants will complete their work and we could commence revenue recognition.

So again, on an annualized basis, about $37 million of uncertainty there. Our current baseline office revenue for 2020 assumes virtually no additional leasing other than the volumes I described earlier, the deals we're working on, and no contribution from this 500,000 square feet of space that have been delivered in shell condition. Occupancy at year-end is assumed to be modestly lower than our current level. The revenue pictures include an annualized contribution from properties that were brought into service in 2019 as well as eight months of contribution from 17Fifty investments. The baseline consolidated office rental revenue contribution, including our share of unconsolidated JVs, is approximately $2.683 billion. So 2020 is about 1% higher than 2019. That's sort of our base line building block for the company's revenues, OK? So that's the office side. After breaking out financial institutions, telecom and technology tenants with the retail operations, our remaining retail exposure is about $144 million annually and $108 million for the remainder of 2020. This is made up of 275 tenants with more than 40% of the revenue in the fast casual and sit-down restaurant sectors.

Logically, we have a lot of urban buildings with street-level retail, and the majority of that is in the food services. In April, we collected 23% of rents from this retail group. Again, this is after having broken out all of the banks and the telecom and the technology companies aka the Apples and the Microsofts, the Verizons, the AT&Ts. So that group of tenants, where we collected the 23% of rents, we have an accrued rent balance of about $30 million with those retail spaces. Now if you add back all the other retail categories, our collections jumps to somewhere between 35% and 40%, depending upon the day we collected some more money yesterday. We are working proactively with many of these tenants on lease modifications to ensure their continued operation when we get back to the new normal. We also earn percentage rent in some of the clauses the leases that we have with high-performing tenants. We don't expect to receive any percentage of rent in 2020. Okay. So I've talked about office revenue, and I've talked about retail revenue. Next is parking. Total parking revenue in 2019 was $113.5 million. We have two primary components of parking, monthly passes and transient or hourly/daily parking revenue.

Consolidated transient parking in 2019 totaled $40 million. In April and May, with stay-at-home orders and business closures, we expect our transient income to be nonexistent. Some of our monthly parking revenues are contractual agreements embedded in leases and some are at-will individual agreements. In the short term, we have seen some monthly agreements canceled as well. We don't know if the gradual buildup of office occupants will coincide with a slow ramp-up in transient parking and monthly parking or potentially a much more rapid increase as our customers choose to drive to work as opposed to take public transportation. Apartments. Our apartment portfolio only contributed $35 million in consolidated revenue in 2019, again, 1% of total lease revenue. Virtual leasing is occurring across the portfolio but not at the pace of in person leasing that we experienced in the early 2020 or 2019, and we are in the initial lease of Hub House and had hoped to commence leasing at Skyline in Oakland in May. Construction stoppage of those new developments will impact leasing and delay it and the additional contribution from this portfolio that we had expected in 2020. Finally, we have one wholly owned hotel that contributed $14 million of net operating income in 2019.

The hotel closed in early March and is running at a monthly deficit. It's unclear when it will reopen and what the ramp-up in business travel, leisure travel and tourism will be in 2020. Mike will discuss our liquidity and capital commitments in a few minutes. But suffice it to say, our development capital spend has slowed in New York, Boston and San Francisco. Construction activities have continued, as Owen said, in Greater Washington, D.C., albeit with significant health, safety precautions and intermittent work stoppages necessary to clean sites due to COVID-19 impacted workers. So again, I think I've given you the building blocks where you can pretty quickly come up with your own views on what you think the economic impacts will be of COVID-19 and provide yourselves with estimates for our earnings in 2020 should you choose to do so as well as give you a sense of the baseline for 2021.

I'm going to stop here and hand the call over to Mike, who is in Medfield, Massachusetts, home of that infamous Disney movie, the computer that wore tennis shoes, put in 1969 starting Kurt Russell as a student at Medfield College. Mike, take it away.

Michael E. LaBelle -- Executive Vice President, Chief Financial Officer and Treasurer

Thanks, Doug. I really thought you would go with The Shaggy Dog, but I'm just happy to see that you're spending your time well at home, catching up on your Disney classics. Good morning, everybody. First, we truly hope that all of you and your families are safe and healthy as we experienced this really tough time. This morning, I'm going to go through three topics: our first quarter performance, more details on changes from our prior guidance and our balance sheet and access to liquidity. We had a strong first quarter reporting FFO of $1.83 per share, which is $0.02 greater than the midpoint of our guidance or about $3 million. The office portfolio exceeded our assumptions by approximately $6 million or $0.03 per share. About $0.02 of this was from lower expenses, primarily utility due to the milder winter and lower R&M expense. And $0.01 per share was from higher rental revenues. This was offset by $3 million of lost income related to the shelter-in-place orders from COVID-19, which impacted parking income by $2 million and caused us to close our Cambridge Hotel, costing us $1 million compared to our budget for the quarter.

Doug did a great job describing our revenue profile. Our current exposure areas during this crisis are primarily retail, parking and our hotel, which as of the first quarter, comprised 11% of our consolidated revenue for the first quarter. To assist you with your models, I want to summarize what we expect the impact on our quarterly run rate will be from these exposure areas so you can get a sense of the change from our guidance last quarter. What is not clear is how long the shutdown of businesses will last, but this information will help you calculate the impact on us based on your own views. Retail is about 7% of revenue. As Doug described, there are segments of our retail portfolio with tenants that have justifiable financial needs, where we're actively working on lease amendments. There are a number of alternative structures, but in most cases, there will be a pause in cash rent followed by a future increase in rent, term or both. The result will be the loss of near-term cash income but a more modest impact on GAAP income as we streamline the rent for those tenants we believe will resume operations. We estimate the impact on our quarterly GAAP revenue related to our retail exposure will be $3 million to $5 million per quarter.

Parking is typically about 4% of our revenue or $28 million per quarter. Approximately $17 million of this is a mix of longer-term corporate tenant leases and month-to-month leases where today, we've seen only modest impact. The remaining parking revenue is daily transient, which is more heavily impacted and totals about $10 million per quarter. Our hotel is currently closed. The negative quarterly impact to our FFO is approximately $7 million versus our prior assumption. With regard to office leasing, Doug also described the impact of the current environment on tour activity that is affecting the pace of new leases for vacant and expiring space. In addition, he described the construction delays are likely to impact our revenue recognition related to tenants who are currently building out space. We expect a reduction of $25 million to $35 million of revenue for the full year 2020 from a slowdown in the pace of new leasing and TI construction delays combined. This is compared to our prior assumptions for 2020. On the positive side, lower interest rates should result in reduced interest expense on our floating rate debt.

The vast majority of our debt is fixed rate, but we have $750 million of floating rate corporate debt and approximately $200 million in our share of floating rate joint venture debt, where interest is not being capitalized. The drop in 1-month LIBOR to approximately 50 basis points is expected to reduce our interest expense assumption by $7 million to $10 million from our prior assumptions for the year. These numbers do not include the risk of reserves we may take associated with the accrued rent for tenants, where we may see a dramatic change in their business prospects or actual defaults we may encounter due to the economic impact of the environment our tenants face. Hopefully, the information we provided on tenant collection, leasing and development provides perspective on the current impact of COVID-19 on our business. Overall, I would say we are fortunate. BXP was built to withstand such situations. We've always maintained a conservative balance sheet, a base of strong, creditworthy tenants and an appropriate level of pre-leasing to mitigate development risk. Given the uncertainty associated with the timing and pace of returning to work and the unknown depth of the economic recession, we believe there are too many variables to provide prudent guidance for 2020 at this time.

As a result, we are withdrawing our 2020 guidance, and we will revisit this decision in future quarters as we develop more clarity on the economic trajectory of the pandemic. I also want to remind you of the trend in our same-property performance. In the first quarter, our same-property NOI growth was up 4.8% over 2019, which was slightly better than our expectations. As we described last quarter, we had known move-outs in the second quarter, including 250,000 square feet in Reston Town Center and 85,000 square feet at the GM building. This, combined with losses related to COVID-19, is expected to turn our same-property NOI growth negative in the second quarter. The last thing I want to cover is the strength of our balance sheet and our liquidity. As a core philosophy, we prepare our balance sheet to fund new investment in good times but also to be ready for an economic disruption so that we are not in a position to be forced to raise capital in a bad market. As evidenced, we raised $2.2 billion of debt capital in 2019 to refinance our 2020 unsecured debt maturities and put cash on our balance sheet to fund our future development investments. We currently have $661 million of cash and $1.25 billion available under our line of credit.

We also have $151 million from the sale of our New Dominion properties sitting in a 1031 escrow account. So in aggregate, our current liquidity exceeds $2 billion. We're also working on the dispositions that Owen described. It can raise another $250 million. And our external funding needs for the rest of 2020 include approximately $500 million for developments that we currently have in our pipeline and $130 million for the land acquisition of Fourth and Harrison in San Francisco that we expect to fund with the 1031 escrow account. Our 2020 debt maturities are modest, with only $200 million, representing our share of five joint venture mortgages that we expect to extend or refinance. Our next sizable debt maturity is not until May of 2021 when we have $850 million of unsecured bonds expiring that have a GAAP interest rate of 4.3%. The investment-grade unsecured bond market has been one of the most resilient capital markets during this crisis. The market has remained open throughout providing liquidity to corporates. And while 10-year credit spreads for us widened from the low 100s pre-crisis to a wide point about 400 basis points, they have now settled down into the high 200s.

Based upon where treasuries are today, we could price a 10-year bond at under 3.5%, still near historic lows and lower than the yield on a 10-year bond we issued in mid-2019. We will continue to monitor the market with the potential to layer in additional liquidity in 2020. In conclusion, I want to reiterate that while we are certainly not immune to the economic impacts of COVID-19, office rents comprise 86% of our total revenues and come from an array of mature, primarily credit companies with long-term leases and diverse industry groups. April collections from these clients exceeded 95%. And our balance sheet, liquidity and access to capital remain a strength of the company, providing us with comfort and our ability to ride out a challenging time period and to be ready for opportunistic investment when the cloud is clear.

Thank you. That completes our formal remarks. Operator, can you open the line for Q&A?

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Jamie Feldman with Bank of America.

Jamie Feldman -- Bank of America -- Analyst

Great. Thank you. And we appreciate all the details and thoughts. I guess just to start out, as you think about the fact you don't you could see more reserves going forward. You could see tenant bankruptcies going forward. You pulled your guidance. Just how do you think about how long your tenants that kind of are on that list, that watch list can make it before you really do start to see the wave of or I shouldn't say wave but maybe just a pickup in bankruptcy volumes and greater reserves on your end?

Douglas T. Linde -- President and Director

So Jamie, this is Doug. I think that we're not saying when about what's likely to happen. We do expect there to be some amount of restructuring going on with some of the tenants that I described. But we also think that the office space that they have in our locations may be critical to their ongoing restructuring to the extent that they're able to do that. And so we think we're going to see some of this over the next couple of months or quarters as people understand the severity of the situation. But it's hard for us to tell you one way or another whether particular tenants restructuring is going to involve a major disruption in their use of office space at this point because they are using it. Although everyone is effectively done the shelter in space shelter-in-place workflows. And so they're not currently using that space today, but we expect they'll go back to it.

Jamie Feldman -- Bank of America -- Analyst

And then what about the retail side?

Douglas T. Linde -- President and Director

So our retail is, I would say, in terms of where we've collected and where we haven't collected, again, we have an awful lot of service and/or restaurants that are sit down and work fast casual. And we recognize that, that's going to be a slow comeback. And so we are really trying to work thoughtfully and constructively with those organizations to make sure that we are not the problem that puts them into a more difficult financial situation. And I think that our locations from a business perspective are good ones for those businesses where they were doing very well. And I think it's a question of how long it's going to be before people get comfortable going back and being in more crowded areas with regards to eating and getting takeout. And so I think it's going to be a longer road for those companies to figure out whether or not their businesses are going to be "sustainable" and/or they're going to just sort of decide it's not prudent for them to move forward. But we're again, we're having very constructive conversations with those operators, and we're we know that they, in almost every case, they want to come back.

Jamie Feldman -- Bank of America -- Analyst

Okay. That's helpful. And then I guess just second for me. Owen, you had commented on initially, you think tenants come back with much less dense layouts. Can you just provide more color on the conversations you're having in terms of the amount of space that they do feel like they will need per employee? And just it seems like the pendulum has gone too far here in density. Just what the initial discussions are on that and even from work from home on the longer term?

Owen D. Thomas -- Chief Executive Officer and Director

Yes. So Jamie, I think there's speculation in some of that question. And the way I tried to focus my remarks is acknowledge the questions out there and then focus on what we know today. And I do think there's some short-term and long-term answers. So first, on the densification, there is going to social distancing is going to continue in our core markets even after we go back to work. So employees are going to have to work plus/minus 6-feet apart. So even in our own workspaces, we're looking at that and trying to figure out how we're going to configure space or how we're going to have our workers come to the office such that, that distancing can be accomplished. And again, I think it's a little bit early days. I think both landlords and customers are figuring this out right now because the return to work is happening. But we've seen some customers literally just going to take out chairs. They're not going to rebuild their space, they're going to take out chairs. Or in some cases, they may take more space or figure out temporary solutions. So that's what we know today. Longer term, assuming that the virus goes away, we get a vaccine, and we're in a real post-pandemic period. My guess is the 6-foot distancing won't be as important. There'll always be sensitivity to the virus and to health. I think everyone's focused on health security will be greater, but I doubt that 6-foot social distancing requirement will remain.

And but I don't think that, in general, companies are going to be seeking to densify further from where they were in February 2020. And frankly, as we've said on these calls before, we thought that trend was subsiding anyway. And I think your last question was on the work from home and how what impact that's going to have. Again, we don't know. There's lots of speculation about it. I think there's no doubt that we all are better at it. We have the tools. We understand its value. But I also don't think there's any doubt that every anecdotally, all of whom I speak with want to go back to their office. They miss the efficiency of it, the comradery of it. So I don't certainly don't think the need for office space is going to go away. But I do think the work from home is going to accelerate a trend. Maybe you won't travel to that next meeting if you can do it on Zoom. If someone needs to work from home for a personal reason or otherwise, one day a week, that's now going to be easier to accomplish. So I think there'll be some trends like that as opposed to wholesale changes in office demand.

Jamie Feldman -- Bank of America -- Analyst

Okay. But I guess you're not really having those initial discussions yet with tenants in terms of how they're thinking about the world? Is it just too early is my guess?

Owen D. Thomas -- Chief Executive Officer and Director

Well, the short-term ones, we're having that now. That's why I broke it into CT. And we absolutely know of customers that are taking out C Boston Properties is taking out C. And we also are having not a tremendous number at this point, but we are having conversations with customers that want more space to deal with distancing. So we know that.

Douglas T. Linde -- President and Director

And Jamie, we've had conversations with some of our technology tenants, and there is no question that the technology tenants are looking to increase the amount of space per employee. And they are clearly thinking about reducing the "areas of collaboration" and increasing what you would refer to as personal space. My own personal view is there's the short-term issue and then there's a much longer term issue. I think the longer term issue is less of a concern because I do believe that once we get through this particular virus, people will get back to being comfortable not wearing masks in their offices and being able to be in close proximity to each other. But I think that what this crisis has created is a realization that you have to be prepared for something like this happening in the future. And so I think that will impact densities in a more meaningful way because I think people are going to look and say, OK, I know that we don't have any problems now, but what if we get another one of these types of problems? We want to be positioned to be able to recover much more quickly from that.

Jamie Feldman -- Bank of America -- Analyst

Okay, great. Thank you. Appreciate it Douglas.

Operator

And your next question from the line of Vikram Malhotra with Morgan Stanley.

Vikram Malhotra -- Morgan Stanley -- Analyst

Thanks for taking the questions. And again, thanks for all the details, and coordination. Maybe just going back to one of your original comments, which talked about certain markets and sectors will probably do better than others. I think tech and government were mentioned. I know, while it's hard to comment on kind of rent growth, how that will trend, maybe give us some relative thought relative color, just thoughts on how you view your markets on a relative basis today from a rent growth and a value perspective?

Owen D. Thomas -- Chief Executive Officer and Director

Yes. I think Vikram, it's Owen. It's hard to rank them up based on a future state that's dependent on a lot of different factors that I outlined in my remarks. But I do think, as you suggest, that I think it is instructive to look at each region and understand what the industry drivers are for demand in those regions. And as I suggested in my remarks, I do think there are industries like life science, like technology, like government that will likely outperform because they've either been enhanced or not nearly as heavily impacted by the crisis. And the converse is also true. There are industries like energy, like travel, like retail that I think are more heavily impacted. And I think those cities that have higher and lower percentages of those industries, I think that's going to be instructive to think about how the office markets are going to perform over time. Doug, I don't know if there's more you'd like to add.

Douglas T. Linde -- President and Director

Yes. I would just add that you do have to look at the current condition of those markets from a supply perspective as well. And so markets like San Francisco and Boston and Cambridge, which are obviously very tight today, will have less of there will be less of an impact relative to the recession than a market like CBD, Washington, D.C. from a real estate perspective. On the other hand, people typically look at Washington, D.C. as a better market from a demand perspective during a recession. And it will be interesting to see whether or not the government reaction to what has been going on will be to invest in an infrastructure that will be helpful to the United States and the world going forward, and that would mean office space and job growth. And the question is, where might that be if it's in the Washington, D.C. area. But I will tell you that we continue to get inquiries from both technology and life science companies, and interestingly, in Reston and in Boston and in to some degrees, in the Silicon Valley, about additional space requirements. None of them is moving quickly, but there are tenants that are thinking about growth. At the same time, there are also tenants that are in the "new age economy" like in the travel industry or in the food industry that are that were "technology-oriented" companies that are obviously going in the other direction based upon their industry sectors.

Vikram Malhotra -- Morgan Stanley -- Analyst

That's really helpful. And then just maybe building on that, on the inquiries. Can you maybe give us a bit more granular color on the kind of development pipeline, the lease-up trajectory from here? And given the inquiries, can you maybe give us some color on how you were thinking about sort of new starts just prior to this? And what we should be kind of viewing as we think about 2021 and '22 as well?

Douglas T. Linde -- President and Director

Sure. Let me answer the first question. And then Owen, you can pick into the second, I'll just give the specifics. So in our existing development platform, the only place where we have "available" space today of any significance is the Dock 72, which is in the Brooklyn Navy Yard. And if you notice our supplemental, our occupancy went down in Reston because Fannie Mae gave back gave us back a couple of floors. Interestingly, we are in lease negotiations for a tenant who would take that space plus virtually all of the remaining portions of Reston Next. So aside from that, the only other exposure we have is in our CityPoint property, where we have two floors or 60,000 square feet of space. So our existing development pipeline is basically full or close to committed other than Dock 72.

Owen D. Thomas -- Chief Executive Officer and Director

Yes. And then, Vikram, just to add to that to think going forward, there are three projects that I would mention. And I would just say, as I mentioned in my remarks, there's an overlay. Understandably, given the crisis, we're much more reluctant to take speculative development risk. And so when you look at our pipeline, on the last quarter call, we mentioned two projects, Fourth and Harrison and our Platform 16 project in San Jose that we were considering launching. At least in the case of Platform 16 first phase without tenants. And we've put that on pause because we want to see how this marketplace unfolds before advancing either one of those projects further. We're going to buy the site under Fourth and Harrison. We have all the plans and the entitlement for the first phase. We own the land under Platform 16. We're ready to go, but we're going to wait for in this market environment, a significant pre lease. The other project that I'm sure someone's going to ask about is three Hudson Boulevard in New York City. And that, I would say, hasn't changed as much because we've been saying on that project, we needed a significant pre-lease to go forward, and that continues to be the case.

Vikram Malhotra -- Morgan Stanley -- Analyst

Great, thank you for the color.

Operator

Our next question comes from the line of Steve Sakwa with Evercore ISI.

Steve Sakwa -- Evercore ISI -- Analyst

Thanks. Good morning. I guess, first, as it relates to co-working. I realize it's not a big it's not necessarily a big part of the portfolio. But could you just maybe speak to co-working in general and how you guys are sort of thinking about that in the marketplace? The space that could come back into the market, the impact that could have in some of your key gateway markets?

Douglas T. Linde -- President and Director

Owen, do you want to go first?

Owen D. Thomas -- Chief Executive Officer and Director

Yes. Yes. Sure. I think, Steve, sorry, we're in different locations, so I didn't know whether Doug or I were going to address this. So look, I think there's no doubt that this environment is challenging for coworking. And because there was always a debate before the crisis about how well coworking would withstand an economic recession. But what none of us really thought about was how would coworking perform in not only an economic recession but a recession that required social distancing, which is certainly counter to the approach of coworking. So I don't think there's any doubt that a it's going to be a challenged industry during the term of this recession. That being said, I do think long term, there is a role and a place for shared work space in the real estate market. They're individual, small companies that like the flexibility and the speed to market of that product, and I don't think that's going to go away. And I think there are enterprise customers, larger companies that will continue to want to procure a small percentage of their space on a short-term basis. So I don't think those demand drivers are going to go away. So I think that the industry over the long term will still be around. But in the short term, it's challenged. And clearly, there's limited growth, probably contraction among the coworking operators, and yes, there may be some consolidation in the sector. And it's not going to be a source of net absorption for the office markets for the foreseeable future.

Douglas T. Linde -- President and Director

And Steve, relative to supply, I think it's a fair question. There's no question that some of the operators are probably going to reduce the number of locations that they currently have leases to. And as you know, they have the ability to do that relative to "leading their LLCs" out there and continuing to operate their "overall mother ship." And that space, in many cases, is probably not as it's currently configured, very amenable to a new installation. Now that doesn't mean that it can't be retrofitted with reasonable amounts of capital put into it to make it very functional. But the landlords are going to have to make those decisions as to whether or not they want to spend the money to redo those types of spaces, because obviously, they were constructed for a different kind of a utility. And so I do think that they will there will be some of that space in the major markets that will come back and that we will have to deal with that from a supply perspective. The good news is that, as I think we've talked about in the past, in markets like Boston and San Francisco, the relative amount of that stuff compared to the total overall market wasn't that great because the markets were so tight. I think New York City, obviously, is going to have more of an issue with the number of installations that are there. And then clearly, some of the other markets where the coworking flexible case operators had a larger proportion of the absorption are going to have some impact.

Steve Sakwa -- Evercore ISI -- Analyst

Okay. And just maybe as a follow-up on that. To the extent that you did get back in the coworking space, is it would it be your, I guess, intention to sort of reconfigure it into sort of the FLEX by BXP product? Or do you think you'd have to sort of reconvert it to just traditional office space and release it in the market?

Douglas T. Linde -- President and Director

I think it will depend on what it is and where it is. And we'll if, in fact, we're in a position where we get some of those spaces back, I mean, we are again, we have relatively little exposure, and the spaces that we do have are relatively small. There's sort of a floor here and a floor there. So we're we feel like we'll be able to adjust appropriately. I would tell you that today I'm not entirely sure what the right configuration is for a new floor of space, and we're going to have to figure that out as time goes on based upon the way the customers are looking at what they want and what they need. And so we would be probably somewhat reluctant to take one of these spaces back and just and got it and put it into a "FLEX by BXP" configuration in the short term.

Steve Sakwa -- Evercore ISI -- Analyst

Okay. And then just one question for Mike. I guess on the thanks for laying out some of the retail that you talked about and some of the troubled operators that you've got. I'm just curious. To the extent that you're restructuring leases, I mean, how are you thinking about sort of thinking about what the right sales levels are for these restaurants or other retailers? I mean, are you structuring these more as percentage rent deals so that you benefit as sales improve for them? Or are you trying to just recut sales at a much lower level and reset base rents? I'm just curious how you guys are sort of thinking about the impact of the retailers and what sort of flexibility they have on new lease terms going forward.

Douglas T. Linde -- President and Director

Yes. So Steve, this is Doug. So the only companies that we're having those types of conversations with are the food service operations. We're not having a conversation with Sephora or with a Bonobos or any of that sort of whatever service, soft-good retailers. With regards to our restaurant retailers, we think that making sure that they are not overpaying when they start to operate makes a lot of sense. And so we are orienting our deals into percentage rent types of clauses for periods of time with an expectation that should sales at the certain levels will start to get paid back.

Steve Sakwa -- Evercore ISI -- Analyst

Got it. Okay, thanks.

Operator

Your next question comes from the line of Craig Mailman with KeyBanc Capital Markets.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Hi guys. Just circling back to density. I'm just curious, kind of thoughts here as it relates to maybe development, demand and pricing here. The ability to pack more people into less space clearly brought down occupancy costs and allowed new supply some of these higher rents. So just curious what you think early thoughts on just the impact of that could be as you guys look to start either Ford & Harrison or Platform 16, how you go about designing kind of coming to a potential yield on that?

Owen D. Thomas -- Chief Executive Officer and Director

I think it's too early to address that question. I would I think there are as I mentioned, there are a handful of places where we're talking to customers and responding to RFPs for major requirement. Ford & Harrison, three Hudson Boulevard are two examples. But I'm not aware that we have had those kinds of impacts in those discussions. So I think it's just too early to suggest that rents are less affordable because of less density. I we certainly haven't seen that impact yet.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Okay. And then I don't know if you guys have these figures handy, but I'm just curious in terms of your portfolio, specifically, kind of where average tenant densities have gone this cycle maybe knowing that you guys have more law firms in your portfolio and that just getting rid of law libraries would naturally brought down density anyway. Just curious as what you think may be the impact could ultimately be on your portfolio knowing kind of where tenants are today?

Douglas T. Linde -- President and Director

So we actually did a study for our Board in the middle of last year. And it was I think it was surprisingly interesting to see that while density has come down over time, it has not come down to nearly the extent that people thought it would come down, that there are very different density levels for very different types of industries. And the most interesting, I guess, realization that we came to was that density is a definition that is hard to get your arms around because there are two different kinds of workers. There are people who you would refer to as traditional workers who are people that are expected to "come to their space" every day and work on in the same space. And then there are what you would refer to as dynamic workers who are people who may not very frequently be in the office or when they are in the office, they're using different kinds of spaces for different kinds of needs. And so the real issue is going to be how and Owen talked about it earlier as well as some of the other questions that were raised, which is how is working from home and/or working remotely impact overall density? Because our expectation is there will actually be a lot more people who are assigned to a particular space. But the way the space is built out may be much more wide open, not in terms of open office, but in terms of giving people elbow room. And that space will have a higher density of people who are using it in a different manner, not necessarily on a day to day to day basis. And so it's very hard to sort of understand how those relationships are going to work in the future. But we can tell you that prior to COVID-19, we were seeing significant numbers of people that were assigned to spaces and that were not using those spaces on a frequent basis, but that view themselves as having an "office at a particular location."

Owen D. Thomas -- Chief Executive Officer and Director

I would summarize that by saying that and we were saying this before COVID-19, physical densification is was likely over before COVID-19. Densification was coming from increases in occupancy, so I think that will accelerate. I think the physical densification can actually go in the other direction and get more spread out. And I do think there'll continue to be a focus on occupancy, which will be partially facilitated by all the work-from-home tools that we're all using.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

That's helpful. And then just one quick one for Mike. As we think about bad debt, you didn't really put a number out there. Just thoughts on where that could ratchet up this cycle, maybe look at what happened in the financial crisis. And just any significant tenants going on nonaccruals that we have to worry about with cash accounting versus GAAP.

Michael E. LaBelle -- Executive Vice President, Chief Financial Officer and Treasurer

We do it on a tenant-by-tenant basis. And Doug's remarks, he really tried to provide some guide posts for those industry that we thought would potentially see more distress. I think Doug came up with accrued rent balances of somewhere in the low $40 million for kind of those areas that we've focused on. So that's kind of the number that we're thinking about. I mean, at this point, it's kind of early to determine. Overall, we feel very, very good about the creditworthiness of the overall portfolio. And Doug tried to go through that. And if you look at the top tenants that we have, they're all very, very strong, again, mature long-term companies for the most part. That doesn't mean that something is not going to happen, right? I mean if you look at the last cycle, the last downturn, which was a different kind of downturn, certainly, it was a financial downturn. And I think the financial community is in much better shape this time, but we did get credit losses from places that you wouldn't have necessarily expected like Lehman Brothers, for example. But overall, I think we are well positioned. And there's just a few areas where we're monitoring closely, and we wanted to give you that insight. That was the whole purpose of providing you some of those numbers, to give you some insight.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Great, thanks.

Operator

Your next question comes from the line of Rich Anderson with SMBC.

Rich Anderson -- SMBC -- Analyst

Thanks. Good morning. Just on further on that one, Mike. The $40 million accrued rent balance that Doug kind of went through in the office space, and then you had this $25 million to $35 million is a range for the office sector that you went through. Is that incremental to the starting point? I'm just trying to reconcile those two observations.

Michael E. LaBelle -- Executive Vice President, Chief Financial Officer and Treasurer

Sure. The I mean, they are separate. So the $25 million to $35 million that I described is basically a reduction of revenue from last quarter's guidance that we gave you that we think we are likely to have because the pace of leasing is slower. So we expected to have tenants coming into either vacant space or expiring space where we know tenants are leaving. We may have expected those spaces to be filled and starting revenue in 2020. And with what's going on and the lack of ability to kind of do tours and our expectation is a lot of that stuff is going to be pushed off. I think it will still be leased, but it may not occur until 2021. And then from a TI perspective, if we have a 30- to 90-day disruption of construction on tenants that we have to wait until they complete their spaces until we can start revenue, we've got to push those dates out. So many of those tenants were expected to complete their work at the end of the year, and now they're getting pushed down into 2021. So that was really the $25 million to $35 million, whereas, the accrued rent is basically a separate item. But at this point, we are comfortable with where our accrued balance is on our balance sheet. But as I said, we're monitoring certain industry sectors that we think are a little bit more exposed.

Rich Anderson -- SMBC -- Analyst

Okay. Got it. When you think about the development pipeline, Dock 72 was mentioned earlier. But are there any in your in the pipeline that you look at that maybe not right now, but perhaps down the road, if this thing drags out for any length of time, that just fundamentally won't work and that you could be looking at like a stoppage and an exit from a project down the road? Or do you feel like everything you got in the docket right now, eventually, in some way, shape or form will restart depending on how long this thing lasts?

Douglas T. Linde -- President and Director

We are highly confident that the developments that we have under way in the Northern Virginia and Maryland marketplaces and in the greater Boston marketplaces, with the credits that we have in place, are going to be finished, and those tenants are going to continue to pay rent. Obviously, they haven't started their build-out of their tenant improvement construction yet. So it may very well be the way they approach their installation of their own spaces is going to change. So the [use] doesn't work. I'm not sure how you're referring to. From a financial perspective, they're going to work. From how they're building out space, I would expect that there will be lessons learned, and there will be a pause and a review of those types of improvements so that they can make sure that they're prepared for today as well as tomorrow. But we're we have no concerns relative to the financial feasibility of the tenants that we have entered into leases with for any of those developments.

Owen D. Thomas -- Chief Executive Officer and Director

And also just I think part of your question was about the prospective pipeline. And as I described, we're suspending significant investments in the future pipeline unless we get a material pre-lease, such that the project would have the same characteristics that Doug described. So they would have been "derisked". Now we do have a very significant land bank of over 10 million feet. And as we've described before, we control a lot of that land, not through not in all cases, but we try to minimize our cash investment in that portfolio and try to control it more through options or covered land plays. So I don't think we can, at this stage, piece through every one of those projects and tell you, yes, this is viable. This is not. But my again, I remain optimistic about the long term. This recession, we will work through it. And my guess is these projects will be viable in the future. Again, they're subject to entitlement, planning and pre-leasing.

Rich Anderson -- SMBC -- Analyst

Okay. Last question for me, the world-famous NOI bridge over the past several years. And I'm wondering, did you feel like you kind of just got under the wire there in terms of completing that? Or will there be some lingering issues perhaps at 399 Park where that might get kicked down a little bit longer? Or do you feel like you kind of got that pretty much buttoned up, the nine assets?

Douglas T. Linde -- President and Director

Every single space and every single one of those leases is done. And the only question we have in front of us is when the tenants on some of the spaces will actually be occupying their space or having completed their TIs, so that from a revenue recognition perspective, we will have be able to start booking a rent. Interestingly, we will in many cases, we'll start to see we may actually start to see cash rent like we are now in certain cases prior to when that space is done. So from an economic perspective, we're two years away two years past that those issues.

Rich Anderson -- SMBC -- Analyst

Okay, great. Thanks very much.

Operator

Your next question comes from the line of Alexander Goldfarb with Piper Sandler.

Alexander Goldfarb -- Piper Sandler -- Analyst

Hi, Good morning. So a few questions. First, Doug, in response to your development question, you specifically said Maryland. So I assume that you're comfortable with Marriott and taking their development headquarters in Bethesda. But maybe you could talk a little bit about Under Armour. I don't know if that's part of the $40 million of rent accrual. But is that lease at the GM? Is that one of the leases that should be in discussions for restructuring or as far as you guys are aware, they are current on their expectations to start paying cash rent at the end of the year?

Douglas T. Linde -- President and Director

So we have not had any additional conversations with Under Armour since their last quarterly call. And our expectation is that, obviously, they're there's no cash rent right now, so there is no "collection issue." And we fully expect that they will continue to be a thriving retailer, and we'll be in a position to live up to all their commitments.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. The second question is for Mike LaBelle. Mike, you guys you walked through guidance and you walked through all the variables and why you guys chose to rescind it. At the same time, if we look at your development spending and the fact that you only drew a little bit on your line of credit, it seems like you have a lot more confidence in your ability to fund development and the credit market versus the variability in the income statement. So maybe you could just sort of juxtapose that because a lot of companies are seeming very cautious on their balance sheet in light of COVID, whereas you guys seem to have a lot more confidence in your balance sheet and your funding and not needing to draw down heavily on the line of credit versus the variables that you outlined on rent collections.

Michael E. LaBelle -- Executive Vice President, Chief Financial Officer and Treasurer

Alex, I think, as I said, we feel like we entered this period of time in great shape from a balance sheet perspective because we raised a lot of capital last year. That doesn't mean that we're not going to continue to think about ways to raise capital, because in periods like this, I don't think you can have too much cash per se. So we're going to be evaluating all of those things to make sure that we have as much liquidity as possible to get through this event and then be ready for what happens on the other side. I mean, there was talk a minute ago about development starts and whether we would start developments during a recession or after a recession. And if you look at our history, our history is that we don't really start a lot of developments in a recessionary environment that we hold those land parcels we think until things improve. But there's other opportunities for the company to invest capital in because there's certain situations where we can be opportunistic. So I think we want to make sure that we have the capital available for that. We feel really good about where we are, and we feel really good about our access. So we're quite pleased with our partners that work with us on those things.

Douglas T. Linde -- President and Director

Alex, this is Doug. You shouldn't construe our decision not to provide guidance with any discomfort with our income and our receipt of cash and our abilities to forecast. You should look at it as the following. In a traditional non-COVID-19 environment, we would be giving guidance that has a pretty tight range. And the things that we would be thinking about on the margin are, are we going to be able to lease a little bit more space this quarter or this year? When are the seven or eight projects that we have under construction going to be completed? And when can we start recognizing the revenue? How many of the renewal conversations that were that are currently in place are going to happen in this month versus next month so we can start recognizing the kind of accrued rent balance increase or things like that. Those are the kind of things that we sort of deal with when we're coming up with our numbers. We're not dealing with we had $40 million of transient parking revenue, and in the months of April and May, they went to negligible numbers because people were totally weren't allowed to go to work, or we had a hotel that was operating instead of at $14 million, $13 million or $12 million and suddenly, you closed the hotel, right? So the economic uncertainties associated with what's going on are what is giving us pause to provide "a guidance level." And I don't think you should consider that as any reflection on our comfort level with our income on a relative basis relative to our balance sheet. So we're those are sort of two disparate issues.

Owen D. Thomas -- Chief Executive Officer and Director

Okay. And I would add to Doug's point. The other thing I was trying to make a point in my remarks, the future is also science-driven. There's rumors about a new therapy or drug for COVID-19, and markets rally, and everyone gets excited. And then there's new news that it didn't work. They're just they're factors that are going to drive the economic outcome that are not economically driven. They're science-driven. They're harder for us to estimate the timing and the impact. So that was certainly a driver of the decision.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay, thank you. Thank you, Owen, Douglas. Mike. Thank you.

Operator

Your next question comes from the line of Derek Johnston with Deutsche Bank.

Derek Johnston -- Deutsche Bank -- Analyst

Hi, everyone. Thank you. So what are some of the increased expenses, including new technology systems, that you expect to incur from, let's say, new processes or procedures that you're putting in place to fully reopen? Can you share any details on these expenses and systems and any options to reduce G&A and potentially offset?

Douglas T. Linde -- President and Director

So this is Doug. Let me just give you follow-ons on our comment. So much of what we are going to be doing are going to be standard operating procedures and uses of different materials and different processes in accessing and cleaning our buildings and moving air around our buildings, the vast majority of that will be showing up in changes to operating expenses. And so there's not a lot of "new technology" associated with that. The one area that we are considering, and we haven't made final decisions on, are temperature checks and effectively thermal screening. And again, those are that is not a high-tech instrument at the moment. We're not looking at doing thermal screenings relative to having the types of screens that you're seeing in airports in China and things like that. It's quite frankly not available, and the technology is not at a point where we're comfortable laying it out. So I think in the short term, the cost increases will go will be seen in our operating expense side of our income statement, not on the capex side of it. And we have to be thoughtful about making sure we're doing the right amount of health safety work and not be so concerned about dollar costs until we're really satisfied that we are giving people the best possible environment to work in.

Owen D. Thomas -- Chief Executive Officer and Director

There also have been, as you suggested in your question, operating expense savings during the crisis, because obviously, the buildings are less occupied so power usage is down. Certain tenants wanted to have less janitorial, so that expense is down. So there have been some savings that have occurred on the opex related to the lower occupancy.

Derek Johnston -- Deutsche Bank -- Analyst

Okay. Great. And could you comment on your pipeline, how it looks today versus how it looks pre-COVID? Do you believe demand will return to previous levels, maybe late in 2020? Or couldn't this be pushed out to 2021? Or is there still may be a disconnect?

Owen D. Thomas -- Chief Executive Officer and Director

I think the as I've discussed in my remarks, the when I assume when you say demand, you're talking about leasing. The since the crisis started, as I mentioned, new requirements, other than a handful of developments that we're working on, are few and far between. Very limited tour activity. We are having success completing leases that were under way before the pandemic. So I think for leasing volumes to return, you have to decide what economic scenario is going to unfold over the next year. So I've described three in my remarks, the base case being we have a slow return to work over the next couple of months. And then there's some kind of medical solution or some kind of solution where people feel safe by 2021. And I think if the safety occurred, yes, I think we can go back to a prepandemic level of leasing sometime next year. But there are other outcomes that could slow that down or speed it up.

Douglas T. Linde -- President and Director

And then the financial projections that I went over, what was the assumption that we made was that we were not going to be doing any additional incremental leasing in 2020. So that can sort of give you a baseline on that number relative to 2019. And then obviously, to the extent that we're increasing occupancy in 2021, I mean, you can make an assumption for what that means from a revenue perspective. But look, the fact of the matter is, as Owen said, physical tour activity is nonexistent today. There's a little bit of virtual leasing that's going on. And that just means everything is going to get postponed, right? And there but there are lease expirations in the marketplace that happen every single year. And those lease expirations are going to require leasing activity, be they renewals or be they move to different locations. Again, as Owen described, it may be very possible that if we're in a recession, many companies will say, "I'd rather not spend the money on the new installation. I'm not entirely sure what that new installation should look like, and I'm just going to renew for a year or two years or three years or something short term." So it's hard to say how that new that leasing activity will manifest itself, but it will happen. Thanks everyone.

Operator

Your next question comes from the line of Manny Korchman with Citi.

Michael Bilerman -- Citi -- Analyst

Hi. It's Michael Bilerman here with Manny. I had a few topics I wanted to go over. The first, Owen, in your comments, you talked about looking at potential acquisitions and maybe setting planting some seeds today to look at something maybe down the road. And you also commented about reset pricing referring to deals that happened pre-COVID and when sellers need to reset their expectations. So you clearly were active post the GSC. Think about the GM Building, Macklowe portfolio that you purchased. What do you need to see to become aggressive, right? So what are the goalposts from a pricing perspective? What do you need to see in the market to actually go out and try to transact? And how active are you doing that today?

Owen D. Thomas -- Chief Executive Officer and Director

Yes. So I would say that in general, we are going into a recession. And that usually creates, as I mentioned in my remarks, reductions in rents and reductions in values for certain types of buildings. We do have a lot lower interest rates, which is very helpful. So I do think that it's likely that, as a result of this crisis, we will identify some interesting acquisition opportunities as a result. So your question on timing. Today is too early. This just started six weeks ago. There is a period of time where the market needs to settle and new pricing needs to be established. So we are simply staying in the market, making sure we understand what's going on, trying to understand any new leases that get done, where is the rental rates, those types of things. But I think our desire to pursue something months away, I think, the drivers of it, Michael, will be, first, which of those economic scenarios that I described in my opening remarks, when do we know which one of those were on? Because that's going to have a big impact on how this recovery goes. So we're going to want some more clarity on that. And then second, I think it would be helpful to have some new leasing activity and maybe some other transaction activity so we understand valuation. But we think there are going to be interesting opportunities, and we want to be well prepared for them.

Michael Bilerman -- Citi -- Analyst

You talked a little about the different sectors that are getting impacted by this energy, and oil being one of them. A number of your partners that you have in from a joint venture perspective, highly tied to the oil market in terms of their wealth and their denominator effect, obviously, has taken a pretty big hit. How do you sort of see those sovereigns acting in this? Does that provide you opportunities to buy back stakes in your existing ventures at attractive pricing if they need liquidity? Will there be other sort of distressed sellers coming out of this, where you may not have all the answers to how everything is going to transpire, but you do have capital and history where you may want to act before you have everything in place? Because, by the way, once everything is known, the market's already corrected.

Owen D. Thomas -- Chief Executive Officer and Director

Yes. Yes. No, look, I agree with what you your last statement is you can't wait for it to be perfect because it's too late. Look, I think your question on different investors and what their behavior will be during this crisis, it's very case-specific. As you said, there are certain sovereign investors that are driven by oil revenues. And my guess is that will have some bearing on their appetite to do new business or maybe even to change the composition of their portfolios. We don't know the answer to that. I think another factor is how is the what is the performance? What did that sovereign invest in? What did their portfolio look like? How has it performed? And how does that affect the appetite of that investor for further investment? I think that's part of it. We are as I mentioned in my remarks, we are staying active in the private equity market, talking to major investors and understanding their interest level. And I would say, for the most part, there is still enthusiasm for investing in real in U.S. real estate and an appreciation for the dynamics of the market and the opportunities that are going to result. So obviously, not a lot of deals are getting done right now, so these investors haven't been able to demonstrate from in terms of writing checks, their desire to do this. But there's certainly a lot of enthusiasm and interest in pursuing the opportunities as they arise.

Michael Bilerman -- Citi -- Analyst

And the second topic is just going back to the whole office utilization. And I appreciate the fact that you splitted it into both the near term, which is clearly impacted by a recessionary environment as well as the social distancing aspects and more the longer term. And so I wanted to focus in on the longer term where I think you've talked about that you don't anticipate a wholesale change in the way office demand is going to be used. And I understand that from a Boston Properties perspective, your portfolio is very high quality. And on a relative basis, you should share better given the investments that you're making in all the air quality and space and management of your buildings. But putting that part aside, really just trying to understand the dynamics from an office utilization perspective. You have 100% of corporate America that is going through this trial and experiment of having people work from home.

And I would think that, that coming out of it, that we're not going to go back to 100% of office normalcy, that there could be some levels of more willingness to have people in remote locations, so incremental net hiring will not translate into the same level of square footage per employee. Again, post-COVID, right, where we're not having social distancing, just a level of willingness. And then maybe there's more satellite offices because you realize you can get good employees that can be productive, not have the commute time, not have the cost of commute or the time of commute, maybe will take care of and have more child care and things like that. I just I don't see why there wouldn't be a wholesale change in the way office is being used in the future.

Owen D. Thomas -- Chief Executive Officer and Director

Yes. So I would Michael, I would address your question in the following manner in terms of thinking about the future. First question is, are we in markets where there are industries that are growing? Because that's the most important thing, that the customers are growing their businesses and they need they're going to hire new people and they need more space. So I think that's the key driver, number one. Number two, what's the densification of the buildout? And I firmly believe that the densification, frankly, we thought it was over before the crisis. We thought occupancies were going up, but physical densification was stopped. I think there's no doubt that densification is going to go in the other direction as a result of this crisis and as a result of some frustration some of our customers were having with their dense environment even before the crisis. So I think that's a change. And then the third is what you're talking about, which is work from home and the ability for companies or groups within companies to work together in remote locations.

And look, I agree with you. I think that we've all gotten better at it. We understand the power of the tool. And I think we also understand what's not great about it in terms of being with colleagues, can you really manage and lead an organization or a group remotely over the long term? Can a company build a culture by not being in person over the long term? Is it really more efficient for everyone to be working remotely? I think these are the questions that business leaders are going to have to answer for themselves as they work through the question that you postulate. So I'm not saying things aren't going to change. Things always change in real estate and in the use of office buildings. But again, I think the viability of the office is not questioned by what we're experiencing.

Michael Bilerman -- Citi -- Analyst

Okay. And then just on a short-term basis, if you looked at the square foot per employee for your footprint today, when you impose the social distancing in that environment, what percentage of the workforces could come back, right? So do you believe in the current construct that with a 6-foot social distance and use of the assets that your current tenants can only bring back, let's say, 50% of the employees and amount to it? Or is it 75? Or is it only 25? Where I guess, in your planning, what percentage of employees could come back and still be safe?

Owen D. Thomas -- Chief Executive Officer and Director

I think that is hard to answer, Michael, because it is highly dependent on the physical work space that a customer is in. I mean, we've got some customers that are primarily in individual offices, and they don't have to adjust at all. And there are others that are in bench seating and packed in at 100 square feet per person or less. So I can't give you a finite number answer to that question. Doug, I don't know if you can...

Douglas T. Linde -- President and Director

Yes. Okay. No, I can't give a finite answer. I can tell you that the issues with people's installations, our customers' installations are not necessarily contained just in what where their physical sitting their seat is, right? It's how is the space set up? And are there how do you provide services? How do you deal with bathrooms, all the other sort of ancillary areas, which are the things that we're thinking about? And so I think it's going to be a little bit of a test case, and people are going to sort of figure out as they go. And I would expect people will have be operating with an abundance of caution. And so they will make sure that they don't put themselves in situations where lots of people are congregating in closed small areas. And so to the extent that there are concerns about that, that will limit the number of people who are coming back at any one particular time. Not necessarily during a day, but you may see people elongating the work hour and the work day and/or asking people to come in at different hours, not necessarily moving from floor to floor, if at all possible. I mean, there are all kinds of operating procedures that I expect people and businesses will create to allow people to come back, be feel comfortable, most importantly and safe where they are and get accustomed to the situation we're in until, again, there's a medical treatment and/or a vaccine that puts people in a much better health safety perspective.

Michael Bilerman -- Citi -- Analyst

Right. That's helpful. If I can just sneak one quickly for LaBelle just in terms of the financing side of it. From a nonguidance perspective, are you should we expect an unsecured a large unsecured debt offering to take out the 2021 bonds and also build up additional cash liquidity? And would you have a sense of timing? You talked a bit about sort of where rates are. So I didn't know if you're sort of tipping your hand a little bit to doing an unsecured debt issuance for that.

Michael E. LaBelle -- Executive Vice President, Chief Financial Officer and Treasurer

Michael, we're always as you know, almost every year, we're looking ahead to deal with our debt maturities before they happen. So this is this year is no different than that. We do think about what the volatility in the markets might be depending on different outcomes with respect to the economic environment and the COVID-19 virus. If you get bad news, what's it going to do to the bond market? What does that mean? So we're always thinking about those things. I can't say whether we're going to do any kind of capital raise or not. But it's not out of character for us in the back half of the year if we have a debt maturity in the first half of the following year to be starting to think about that and thinking about what windows of time in the market might makes sense.

Michael Bilerman -- Citi -- Analyst

All right, thank you.

Operator

Your next question comes from the line of Blaine Heck with Wells Fargo.

Blaine Heck -- Wells Fargo -- Analyst

Great, thanks. Morning. Clearly, there's a more cautious stance emerging on the development side of things. I mean, land values are typically the first to decline in these situations. Do you guys have any sort of thoughts on the magnitude of that decrease in land values? And do you think there will be any opportunity throughout this crisis to find land sites that significant discounts that maybe you didn't want to reach for in the last few years to kind of lengthen that potential development runway as we come out of this? Or is your focus mainly going to be on more of the existing buildings, whether they be stabilized or value add?

Owen D. Thomas -- Chief Executive Officer and Director

I think you're right. I think the land values in a downturn get impacted more negatively than buildings. Understandably, they don't generate cash flow. And it is a possibility that there may be a site that we identify at an attractive price during this downturn. So I think most of the remarks I made about chasing new opportunities at cycle were more directed at existing buildings, which is something that, as you know, we've been more reluctant to do in the upmarket. So that could be a switch. But yes, we will be looking at sites as well.

Blaine Heck -- Wells Fargo -- Analyst

And any specific markets that you guys might be targeting?

Owen D. Thomas -- Chief Executive Officer and Director

Well, we I think the opportunities for new investment, whether they be sites or buildings are what I'd call bottom-up. They're very opportunity-specific. What is the building? What is the opportunity? What is the insight that we have? What is the relationship we have with the seller? Those tend to drive the decisions as much as anything. But as you know, from our development pipeline and the deals that we've done prepandemic, we have been focusing on California. We have been focusing on Boston and less so on New York and Washington, D.C. And pursuant to my remarks earlier, where we think the industries that are going to perform better are primarily government, and maybe more importantly, life sciences and technology, I think the we would have more confidence in them after the cycle that would probably dictate what areas would be of more interest to us on the margin.

Blaine Heck -- Wells Fargo -- Analyst

All right. Great. That's helpful. And then maybe for Doug. Can you just talk about the Fannie Mae situation? How were they able to decrease their commitment to the Reston Gateway development? Was that something you guys agreed on mutually, just given some of the other activity you mentioned on that project? Or was there some sort of construction milestone maybe that wasn't met that opened up that optionality? Just any color on that situation would be helpful.

Douglas T. Linde -- President and Director

Sure. So the project is way ahead of schedule. And Fannie Mae, when they negotiated their lease, negotiated for the right to give back 85,000 square feet of space, I think. I think that's the right number. And so they had a contractual right as part of their original lease discussion. Interestingly, we're in conversations with another tenant who wants all that space plus the remaining space in the building. And we're actually trying to figure out whether or not we'll have enough space to accommodate both Fannie Mae's growth in the future if they needed as well as the other tenant. And we're working actually on those types of issues as opposed to worrying about Fannie Mae not needing their space or having any outs in their lease. So there's actually a lot of positive things going on with Reston right now.

Owen D. Thomas -- Chief Executive Officer and Director

The other thing I would just say is when you do a deal that size, that was one of the largest nongovernment leases ever in the state of Virginia, but if you do a deal that size, it's not uncommon for the customer to have the right at some point during the development to give back or to take more space. It's usually, obviously, a small percentage of the total commitment, but it's not uncommon to provide that to a customer as they determine what their space needs are during the term of the development. So I just wanted to add that to Doug's remarks.

Blaine Heck -- Wells Fargo -- Analyst

Yes. No, that makes sense. Are there any other situations where you have a tenant that's committed to space in your either your development pipeline or maybe even signed leases that haven't commenced and they have the optionality to either decrease or increase their requirements?

Douglas T. Linde -- President and Director

In our development pipeline, there are no such requirements like that. In our portfolio of 45 million square feet or in-service properties, lots of tenants have contraction rights in their leases based upon notice and time frames. And those are just an ordinary course of business, lease discussion that gets negotiated on a deal-by-deal basis.

Blaine Heck -- Wells Fargo -- Analyst

Yeah. All right. Thanks, guys.

Operator

Your next question comes from the line of John Kim with BMO Capital Markets.

John Kim -- BMO Capital Markets -- Analyst

Good morning. A number of companies in the media tech industries have already announced that employees are not coming back to work until at least September. I'm wondering if you're seeing this in your portfolio at all. And whether or not it's September or earlier, do you anticipate more office tenants will be requesting either abatement or deferrals?

Douglas T. Linde -- President and Director

So that's a very broad question. I'll try and give a broad answer. In some of our markets, some of our tenants have made those types of, I guess, releases. And in other markets, we actually have tenants who are telling us that they're going to be coming back earlier than we would have expected. And we're actually making accommodations for them filling the buildings up before we're in a position where we can really roll out all the things that we would like to roll out. So it is very much a market-by-market determinant. The concept of abatement or deferment really isn't one that we're talking about with regards to office tenants other than in a very unique situation where a particular customer has significant financial challenges at the moment and where we think it's constructive for us to be helpful.

John Kim -- BMO Capital Markets -- Analyst

Yes. I'm just wondering if that becomes industry norm and a lot of companies not going back to the workplace in a 5- or 6-month time frame, how many of them can actually stay current on their rent?

Douglas T. Linde -- President and Director

Well, if they're not going back to the office and they're actually working, presumably they're working because they have revenues and/or business operations that would allow them to continue to work on a remote basis. So I'm not sure it necessarily impacts their financial viability. Obviously, if it's a retail organization or a consumer product organization that would have a brick-and-mortar selling channels, that's a substantial amount of what they're doing, it's at a different situation. But I'm not aware, for example, of a media company that's telling the people that they can't go back to work they shouldn't go back to their office that is not in a very strong revenue situation.

John Kim -- BMO Capital Markets -- Analyst

Okay. And the leases that you signed in April, were there any changes to the lease terms related to COVID-19 a clause, any pandemic-related clauses for instance?

Douglas T. Linde -- President and Director

So to date, we have not seen any COVID-19 clauses. We do expect that going forward, there will be a realization that this not unlike terrorism risk insurance and the issues associated with those types of problems will have to get addressed in leases. And we'll have to figure out what the right industry mechanism for dealing with those will be. And to date, it has not occurred.

John Kim -- BMO Capital Markets -- Analyst

Thank you.

Operator

Your next question comes from the line of Tayo Okusanya with Mizuho.

Tayo Okusanya -- Mizuho -- Analyst

Hi, Yes, Good morning. Just a couple of quick ones, realizing the call is running long. This may not be on people's minds anymore given everything that's happened with the pandemic. But any thoughts about the Prop 13 split roll now that we're getting closer and closer to the national elections?

Owen D. Thomas -- Chief Executive Officer and Director

Rob Pester? Are you on the line?

Robert E. Pester -- Executive Vice President, San Francisco Region

Yes. I'm here.

Owen D. Thomas -- Chief Executive Officer and Director

Prop 13?

Robert E. Pester -- Executive Vice President, San Francisco Region

Yes. It will be on the ballot. The polling that we're seeing right now shows that it will not pass. I think California per se, people are tired of increased taxes. So we don't see it passing.

Tayo Okusanya -- Mizuho -- Analyst

Got you. That's helpful. And then the other question I wanted to ask is just on the accounting for the JV with Alexandria, could you just walk us through with their 50% ownership? Are you going to consolidate that? Is Alexandria going to consolidate that? Or how is that going to work?

Michael E. LaBelle -- Executive Vice President, Chief Financial Officer and Treasurer

This is Mike. I don't want to speak for what Alexandria's accounting is, but our accounting is that we will treat it as an unconsolidated joint venture. And so that's how we'll treat it. We treated it as kind of a contribution of 50% of our properties into that. And as you might have noticed, there was pretty significant gain on that contribution for our gateway assets, which is really a noncash gain because it went right into acquiring their share their 50% share of their assets. That's kind of how the transaction is accounted for.

Tayo Okusanya -- Mizuho -- Analyst

Great. Thank you.

Operator

Your next question comes from the line of Peter Abramowitz with Jefferies.

Peter Abramowitz -- Jefferies -- Analyst

Thank you. I just want to ask a small question on your parking and other income. What's the breakdown for the parking income? How much is month to month? And how much is kind of built into the leases?

Douglas T. Linde -- President and Director

So I think I gave a number for 2019, and I said that I think we had we had $113 million of total, and $40 million of it was transient or for hourly parking. That's about as much breakdown as we can give you.

Peter Abramowitz -- Jefferies -- Analyst

Okay, got it. Thanks.

Operator

Your next question comes from the line of Daniel Ismail with Green Street Advisors.

Daniel Ismail -- Green Street Advisors -- Analyst

Great, thank you. There have been a few media reports lately on the MTA sites. And I was hoping to see if you can provide any update on the status of that transaction.

Owen D. Thomas -- Chief Executive Officer and Director

John? John Powers? You still on?

John F. Powers -- Executive Vice President, New York Region

I'm still on. Yes. It seems that our governor and our mayor in the midst of this decided that they would move forward and made a deal on how the tax revenue would be distributed. And that is that's what's been holding us up for the last couple of years. So we're going forward, but we have to go through a whole year of process there. So this is a multiyear project.

Daniel Ismail -- Green Street Advisors -- Analyst

Okay. So still not closed but advanced a little further.

John F. Powers -- Executive Vice President, New York Region

Advanced further. Yes. It will take some it will take more time, multi years.

Daniel Ismail -- Green Street Advisors -- Analyst

Great. And then just a follow-on to that. State and local budgets are clearly under pressure in this environment, which might be a driver of repermitting or rezoning. Are there any short or long-term opportunities here for Boston Properties, say, at the Santa Monica Business Park for instance?

Owen D. Thomas -- Chief Executive Officer and Director

Danny, I think it's an interesting question, and I think you're right. It could potentially create some opportunities in a lot of different areas. I think the situation at the MTA that John just went through, perhaps, is one of them. In other words, the project that all of a sudden we've made a lot of headway on. I think it's too early to conjecture what those might be, but I don't disagree with the concept.

Daniel Ismail -- Green Street Advisors -- Analyst

Great, thanks a lot.

Operator

Next question comes from the line of Nick Yulico with Scotiabank.

Nick Yulico -- Scotiabank -- Analyst

Thanks. Just wanted to ask about sublease space in your portfolio. And in your markets where you are, maybe on a real-time basis, if you're seeing any pickup in sublease space.

Douglas T. Linde -- President and Director

So Nick, this is Doug. The only place that we have immediately seen some pickup has been in San Francisco, where there were actually some organizations that we're planning on subletting space and it's come to the market, I think, more quickly based upon COVID-19 and their employment headcounts. But we have not seen any significant blocks of space come on the market in our other locations to date. I mean, again, the fact that there's no "physical tour activity," I'm guessing, has probably created a situation where there's not a impending need to quickly put some space on the market and the company is thinking about that because there's just nothing it's not actionable at the moment.

Nick Yulico -- Scotiabank -- Analyst

Okay. Just one follow-up on that is if you had any update on Macy's at 680 Folsom. I think they were planning to sublease that space. Any latest thoughts there?

Douglas T. Linde -- President and Director

Yes. So we actually we checked in, and there's no "lease" yet that we're aware of on the macys.com space at 680 Folsom St. I think that, that again, that space was put on the market pre-COVID-19 as they made a decision to move those people to a different location from a regional perspective. But so we anticipate that, that space will still be on the sublet market. And it's a great space, and that it will lease whether the economics hold for what Macy's thought they were going to get relative to where they will ultimately do a deal. That's hard to determine.

Nick Yulico -- Scotiabank -- Analyst

Okay, thanks Doug.

Operator

And there are no further questions at this time. Would you like to continue with closing remarks?

Owen D. Thomas -- Chief Executive Officer and Director

Thank you very much, operator. Our call is pushing two hours, so I'm going to minimize my closing remarks to simply thanking everyone for staying with us for all these minutes and your interest in Boston Properties. Thank you, everyone.

Operator

[Operator Closing Remarks]

Duration: 117 minutes

Call participants:

Sara Buda -- Vice President, Investor Relations

Owen D. Thomas -- Chief Executive Officer and Director

Douglas T. Linde -- President and Director

Michael E. LaBelle -- Executive Vice President, Chief Financial Officer and Treasurer

Robert E. Pester -- Executive Vice President, San Francisco Region

John F. Powers -- Executive Vice President, New York Region

Jamie Feldman -- Bank of America -- Analyst

Vikram Malhotra -- Morgan Stanley -- Analyst

Steve Sakwa -- Evercore ISI -- Analyst

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Rich Anderson -- SMBC -- Analyst

Alexander Goldfarb -- Piper Sandler -- Analyst

Derek Johnston -- Deutsche Bank -- Analyst

Michael Bilerman -- Citi -- Analyst

Blaine Heck -- Wells Fargo -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Tayo Okusanya -- Mizuho -- Analyst

Peter Abramowitz -- Jefferies -- Analyst

Daniel Ismail -- Green Street Advisors -- Analyst

Nick Yulico -- Scotiabank -- Analyst

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