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DATE

Wednesday, April 29, 2026 at 10 a.m. ET

CALL PARTICIPANTS

  • Chairman and Chief Executive Officer — Owen Thomas
  • President — Douglas T. Linde
  • Chief Financial Officer — Michael E. LaBelle
  • Executive Vice President, New York Region — Hilary J. Spann
  • Executive Vice President, Boston Region — Bryan S. Koop
  • Executive Vice President, Washington, DC Region — Jake Stroman
  • Executive Vice President, San Francisco Region — Rodney C. Diehl

TAKEAWAYS

  • FFO Per Share -- $1.59, $0.02 above company guidance midpoint, driven by $0.02 higher rental revenues and $0.01 higher termination income, partially offset by $0.01 in additional net interest expense.
  • Full-Year 2026 FFO Guidance -- Midpoint increased by $0.01 to a new range of $6.90 to $7.04 per share, reflecting increased termination income and higher same-property NOI expectations, with $0.06 per share in added interest expense.
  • Total Leasing Activity -- 1.14 million square feet executed, with 700,000 square feet leased on vacant space and 235,000 square feet for upcoming expirations; post quarter-end, total leasing for the year reached 1.5 million square feet.
  • In-Service Portfolio Occupancy -- Increased 70 basis points sequentially to 87.4%, with the leased-versus-occupied spread widening by 80 basis points to 3.5%.
  • Asset Sale Proceeds -- $360 million in net proceeds this year; $1.2 billion since the investor conference, including $250 million from land, $460 million from apartments, and $500 million from office/lab/retail, with future dispositions potentially aggregating up to $400 million.
  • Major Disposition -- Retained sale of 50% interest in Marriott Headquarters in Bethesda for $430 million ($589 per square foot) and a 6.8% cap rate, resulting in a $35 million gain on a $47 million investment.
  • Same-Property NOI Growth Outlook -- Raised by 15 basis points to a range of 1.4%-2.4%, excluding termination income; expectation for occupancy to average 88.25% in 2026, up 25 basis points.
  • Leasing Pipeline -- Standing at 1.7 million square feet under negotiation post quarter-end, with another 1.4 million square feet in active discussions and a 2026 leasing minimum guidance of 4 million square feet.
  • Development Pipeline -- Six projects totaling 3.4 million square feet and $3.6 billion of investment underway; largest being 343 Madison Avenue, New York, with 29% leased, leases for another 27% in negotiation, and cash yield projection of 7.5%-8% upon delivery in 2029.
  • Leasing Demand Segmentation -- AI and tech tenants comprised up to 80% of San Francisco demand in the quarter; new tenant expansions in both AI and traditional sectors noted across gateway markets.
  • Leasing and Occupancy Guidance -- Guided for year-end 2026 occupancy at 89% if signed leases for vacant space commence as expected; anticipated 2027 occupancy at 91% with full run-rate of current leasing gains.
  • Leasing CapEx -- $178 million recognized in the quarter, mostly from several early renewals totaling over 1 million square feet; full-year CapEx projected above $400 million based on anticipated occupancy growth and scheduled future renewals.
  • Market Metrics for Premier Workplaces -- Premier workplaces command asking rents with a more than 60% premium over non-premier buildings and sustain direct vacancy of just 8.5% compared to 13.8% for the general office market.
  • Land Repositioning -- Over 3,500 residential units entitled or in entitlement pursued on land initially designated for office use, driving future land sales and apartment development strategy.
  • Spec Suite and Turnkey Build Strategy -- Increased use of turnkey and speculative suites has shortened time to occupancy for growth tenants, especially in Northern Virginia and San Francisco; suite sizes and build features adapted to evolving tech demand with rapid lease-up rates.

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RISKS

  • Michael E. LaBelle stated, "We have increased our assumption for termination income in 2026 by $8 million. It relates to several credit issues we are working through impacting about 200,000 square feet of space that we expect we will get back in 2026."
  • LaBelle reported, "Our net interest expense for the quarter came in higher by a penny per share from lower-than-anticipated interest income and higher commercial paper rates related to the market volatility in the fixed-income markets."
  • Doug T. Linde noted, "the West Coast still has a pretty significant concession package, largely because there is still a significant amount of space available, even though the demand has accelerated materially."
  • Higher leasing CapEx anticipated above $400 million for the year, following a Q1 spike to $178 million driven by early renewals, with additional renewals expected to further elevate costs in the next quarters.

SUMMARY

BXP (BXP 3.37%) delivered results above internal estimates, raising full-year FFO guidance and achieving significant lease-up of vacant space across its major markets. Management detailed further success in monetizing non-core assets, securing over $1.2 billion in net sales since the investor conference, and repositioning office land for higher-value residential uses. The company outlined a robust, diversified development pipeline and highlighted accelerated leasing demands from AI-driven tenants, contributing to positive absorption in core submarkets. Cost pressures remain evident, particularly in leasing CapEx and certain legacy vacancy markets; however, premium asset performance and reduced office supply underpin confidence in sustainable occupancy and NOI growth targets. Strategic capital allocation continues to prioritize development yielding above 8%, with deleveraging set as a stated objective.

  • The disclosed signed-not-open lease pipeline now totals 1.6 million square feet, providing potential for further sequential occupancy gains as those tenants occupy space.
  • Capital market activity in the office sector appears to be increasing, as noted by management, referencing a 72% year-over-year rise in significant private office sales volume this quarter to $14.1 billion.
  • BXP continues to avoid share repurchases, citing its capital allocation focus on deleveraging and accretive project development rather than equity buybacks, despite viewing its shares as attractively valued on a cap-rate basis.
  • Management stated that fee income from residential development partnerships should expand as more minority-interest deals ramp, enhancing non-rental revenue streams.

INDUSTRY GLOSSARY

  • Premier Workplaces: Top-tier office properties representing the highest-quality segment in each gateway market, typically with superior amenities, higher occupancy, and significant rent premiums over broader market averages.
  • Cap Rate: The quotient of projected net operating income to acquisition or disposition price, expressed as a percentage, used to compare relative value in real estate asset transactions.
  • Spec Suite: Pre-built, move-in-ready office space constructed without a prior tenant commitment, designed to accelerate lease-up and tenant occupancy by minimizing build-out timelines.
  • Termination Income: Lump-sum compensation received from tenants upon early lease termination or default, calculated to offset lost rental revenue and potential downtime during re-leasing.
  • Leased vs. Occupied Spread: The difference, measured in basis points or percent, between total square footage under signed leases and the portion of that space currently occupied and paying rent.
  • Same-Property NOI: Net operating income derived from assets held and operated consistently across comparative periods, used to assess organic growth excluding impacts from acquisitions, dispositions, and developments.

Full Conference Call Transcript

Helen Han: Good morning, and welcome to BXP, Inc.'s First Quarter 2026 Earnings Conference Call. The press release and supplemental package were distributed last night and furnished on 8-Ks. In the supplemental package, BXP, Inc. has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G. If you did not receive a copy, these documents are available in the Investors section of our website at investors.bxp.com. A webcast of this call will be available for twelve months. At this time, we would like to inform you that certain statements made during this conference call, which are not historical, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

Although BXP, Inc. believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks that could cause actual results to differ materially from those expressed or implied by forward-looking statements were detailed in yesterday's press release and from time to time in BXP, Inc.'s filings with the SEC. BXP, Inc. does not undertake a duty to update any forward-looking statements. I would like to welcome Owen Thomas, Chairman and Chief Executive Officer, Douglas Linde, President, and Michael LaBelle, Chief Financial Officer. During the Q&A portion of our call, our regional management teams will be available to address any questions.

We ask that those of you participating in the Q&A portion of the call please limit yourself to one and only one question. If you have an additional query or follow-up, please feel free to rejoin the queue. I would now like to turn the call over to Owen Thomas for his formal remarks.

Owen Thomas: Thank you, Helen, and good morning to all of you. BXP, Inc. had a successful first quarter. Our FFO per share result exceeded our own estimate by $0.02. Our FFO per share guidance for 2026 was raised by $0.01. We made continued strong progress on our business plan articulated at last year's investor conference by completing significant leasing, closing additional asset sales, and progressing our development pipeline. Last week, we also released our annual sustainability and impact report outlining the positive outcomes achieved for shareholders and other important constituents from our industry-leading sustainability efforts. Our first business plan priority is to lease space and improve portfolio occupancy.

There is no question that AI has been and continues to be enormously beneficial to BXP, Inc.'s leasing activity, despite the market anxiety regarding the impact of AI on job creation and resultant leasing demand. We are experiencing direct benefits by leasing space to AI companies in San Francisco, New York, and Seattle, as well as indirect benefits from both leasing space to companies displaced by growing AI firms and to our core financial, legal, and business services clients serving the rapidly growing AI industry. The near- and medium-term negative impacts of AI on jobs are more likely in support functions, which are less present in premier workplaces and in gateway markets.

We had a strong first quarter, completing over 1.1 million square feet of leasing. Our in-service portfolio occupancy rose 70 basis points to 87.4%, and the spread between our leased and occupied square footage widened 80 basis points to 3.5%, a precursor to more occupancy gains ahead. The environment for leasing premier workplaces remains healthy and very active. Our current and prospective clients are generally experiencing increasing earnings due to the growing U.S. economy. We are seeing more client growth than contraction in our leasing activity. In many cases, our clients are also upgrading their space and/or location to more readily effectuate their tightening in-person work policies.

All of these client factors—growth, more use of space, and upgrading—have led to the consistent strength and outperformance of the premier workplace segment of the office market, where BXP, Inc. is a clear market leader. Premier workplaces represent roughly the top 14% of space and 8% of buildings in the four CBD markets where BXP, Inc. has a major presence. Direct vacancy for premier workplaces in these four markets is 8.5% versus 13.8% for the broader office market, while asking rents for premier workplaces continue to command a premium of more than 60% over the non-premier buildings.

Over the last three years, net absorption for premier workplaces has been a positive 11.9 million square feet versus only 420,000 square feet for the balance of the market. For the non-premier workplace segment, all markets had negative absorption except New York City. Given these positive market and client trends and BXP, Inc.'s strong leasing over the last year, we have started to realize our forecasted occupancy gains the last two quarters, reinforcing our confidence that our target of four percentage points of total occupancy improvement over 2026 and 2027 remains achievable. Our second business plan goal is to raise capital and optimize our portfolio through asset sales.

During our investor conference, we communicated an objective to sell land, residential, and non-strategic office assets for approximately $1.9 billion in net aggregate sale proceeds by 2028. We continue to make great progress. In the first quarter, we have raised $360 million in total net sale proceeds so far this year and $1.2 billion since our investor conference, including land sales for $250 million, apartment sales for $460 million, and office/lab/retail sales for $500 million. Further, we have under contract the sale of three assets with total net proceeds of approximately $40 million and are in various stages of marketing several additional assets.

As of now, future net proceeds from dispositions projected in 2026 could aggregate up to an additional $400 million, and we are consistently exploring more asset sales. We have been able to achieve attractively valued land sales by creatively positioning our office land for more valuable uses, particularly residential. Across multiple jurisdictions, we have received or are pursuing entitlements for over 3,500 residential units on land intended for office use, which is creating significant value for shareholders and will be the backbone of both our apartment development and land sales activity going forward. We have now sold three high-quality stabilized apartment buildings, which we built, all at a mid-4% cap rate.

A notable office transaction we completed in the first quarter was the sale to our partner of our 50% interest in the Marriott headquarters building in Bethesda, Maryland, which we developed in 2021. The 743,000 square foot building is fully leased to Marriott and sold for a gross price of $430 million, or $589 per square foot, and a 6.8% initial cap rate. The Bethesda market is not strategic for BXP, Inc. We were able to achieve attractive exit pricing, and the development was very profitable for shareholders, generating a $35 million gain on a $47 million investment.

Supporting our disposition efforts, office transaction volume in the private markets remains healthy, with financing available at scale, particularly in the CMBS market. In the first quarter, significant office sales were $14.1 billion, down from the seasonally elevated fourth quarter but notably up 72% from 2025. In addition to the Marriott headquarters sale, there were a couple of other transactions with relevance to BXP, Inc.'s portfolio. In New York City, 575 Fifth Avenue sold for $383 million, $734 per square foot, and a 5.1% cap rate for the office portion of the building. The asset comprises 525,000 square feet and is 90% leased.

In San Francisco, the Transamerica Pyramid sold for an allocated price of $600 million, or $1,113 per square foot. The 539,000 square foot building is only 60% leased. The in-place cap rate was 2.9%, but expected to be in the high-7% range in several years once the asset is leased and stabilized. The third business plan goal is to grow FFO through new development—selectively with office given market conditions and more actively for multifamily with an equity partner.

For office, we have and expect to allocate more capital to developments and acquisitions because we continue to find premier workplace development opportunities with preleasing that we believe will generate cash yield upon delivery roughly 150 to 250 basis points higher than cap rates for lower-quality asset acquisitions with ongoing CapEx requirements. The trade-off is timing, as developments obviously take several years to deliver. For multifamily, we have three projects with over 1,400 units under construction, or in various stages of entitlement and/or design for nearly 5,000 units, and have one project in Herndon, Virginia, which we plan to commence in 2026. We expect to continue to capitalize new development starts with financial partners owning the majority of the equity.

BXP, Inc.'s largest development underway is 343 Madison Avenue, our market-leading premier workplace tower in New York City with direct access to Grand Central Terminal. As previously reported, we have a lease commitment for 29% of the building located in the mid-rise. We are also negotiating leases with tenants for another 27% of the building, which will bring us to 56% committed, with available space at both the podium and high-rise of the tower. Given strong market conditions and the lack of available competitive product, we are making multiple client presentations every week for the remaining space.

We have procured 83% of the construction costs, have realized anticipated savings from our original budget, and our projections remain on track for a stabilized unleveraged cash return of 7.5% to 8% upon delivery in 2029. We are in discussions with several potential equity partners for a 30% to 50% leveraged interest in the property and also have an agreed letter of intent with a consortium of banks for construction financing at attractive terms. We intend to complete the recapitalization in 2026. BXP, Inc.'s current development pipeline, comprising six office, life science, and residential projects underway totaling 3.4 million square feet and $3.6 billion of BXP, Inc. investment, will deliver external growth over the longer term.

In conclusion, we continue to successfully lease space and improve occupancy, creatively reposition and monetize non-core assets, and de-risk our development pipeline through leasing, construction, and capital-raising successes. New construction for office has virtually halted, leading to higher occupancy and rent growth in many submarkets where BXP, Inc. operates. Debt and equity capital is available for premier workplaces. BXP, Inc. is building market share given our stability and consistent service to our clients and, in many markets, less competition.

BXP, Inc. remains comfortably on track with our business plan, which, if successful, will lead to increasing portfolio occupancy and FFO per share, deleveraging, external growth from development, and a more highly concentrated CBD and premier workplace in-service portfolio in the years ahead. I will now turn the call over to Douglas Linde.

Douglas T. Linde: Good morning, everybody. I am going to speak to demand for the bulk of my comments. We can debate whether technology companies today are overstaffed, whether remote work strategies have had a demonstrable impact on premier property demand, whether the massive capital investment from data center infrastructure has led to a different perspective on human capital from the large tech companies, and whether new AI models and AI agents will lead to changes in the makeup of the workforce. There are no answers, just conjectures.

What we do know is that the U.S. economy has gone through many technology cycles since the invention of the personal computer 45 years ago, and in this cycle today, there is dramatic incremental office demand growth from new organizations that are developing AI. This new technology demand is focused in San Francisco and more recently in New York City. OpenAI and Anthropic are clearly the most recognizable expansions, but there are many meaningful space occupiers expanding across our markets—Databricks, Perplexity, Decagon, Harvey AI, Sierra AI, Snowflake, to name a few—with Decagon and Snowflake being new tenants in the BXP, Inc. roster.

It is clear that the clients that are growing are not the tech types that expanded during the last decade, but there is meaningful office-using growth in our markets. CBRE reports that there has been 3 million square feet of positive office absorption in San Francisco over the last seven quarters, including an extraordinary 1.4 million square feet in 2026. This backdrop is important because it is increasingly translating into tangible leasing activity. In the first quarter, BXP, Inc.'s total leasing volume was 1.14 million square feet. As I discussed during our investor day, in-service vacant space leasing and covering near-term lease expirations will drive our occupancy improvements and same-store revenue growth.

During the first quarter, we executed leases on 700,000 square feet of vacant space and renewed or backfilled 235,000 square feet of 2026 and 2027 expirations. Post March 31, our current pipeline of leases in negotiation consists of 1.7 million square feet and covers 500,000 square feet of existing vacancies and 500,000 square feet of 2026 and 2027 expirations. We start the second quarter with 1.44 million square feet of executed leases on vacant space that we expect to commence in the next three quarters of 2026. The remaining calendar year 2026 expirations are down to 770,000 square feet.

So if nothing else were to change, we should pick up 670,000 square feet, or 150 basis points of occupancy, and end the year at 89%. The majority of our remaining 2026 expirations are known, so near-term upside will stem from leasing currently vacant space with immediate revenue commencement. We ended 2025 with in-service occupancy of 86.7%.

Our occupancy at the end of the first quarter is 87.4%, an increase of 70 basis points, with about 57% of that gain stemming from improvements in the portfolio leasing and the balance due to changes in the portfolio, including the sales described in the press release and the suburban office buildings I highlighted last quarter that we removed from service and expect to demolish and then redevelop to higher-value residential uses, consistent with our portfolio optimization strategy. Conversions are progressing quickly in Santa Monica and Waltham.

Separately, we are finalizing documentation with an institutional partner to commence development at Worldgate in Herndon, Virginia, where we purchased 300,000 square feet of office buildings and re-entitled this as residential townhomes and apartments. We anticipate closing the venture during the second quarter and immediately commencing construction. We are in active conversations with new and renewing clients across all of our markets. Our total discussion pipeline, in addition to the 1.7 million square feet in negotiation, includes another 1.4 million square feet, and we continue to anticipate a minimum of 4 million square feet of leasing in 2026, consistent with what we put forth in our 2026 guidance.

Post March 31, we have executed 300,000 square feet of leases, so the total for the year stands at 1.5 million square feet as of today. We made a change to the way we are reporting our second-generation leasing statistics this quarter. Instead of providing statistics on leases based on the economic impact data at the lease commencement—which is backward-looking—we are showing the change in the rents for all the leases executed in the current quarter where the comparative lease expired during the prior 24 months from the date of the new lease. Since all that data is in our supplemental, I am not going to repeat it.

I do have a few comments on the transactions behind the aggregate numbers. In Boston, the data includes a 100,000 square foot lease in the Urban Edge, space that was previously leased to Biogen. In New York, the bulk of the executed leases this quarter were at Times Square Tower, where we backfilled a law firm that was coming off a 20-year term with large blocks. In San Francisco, the largest portion of the leasing was at 680 Folsom. In D.C., we extended a law firm for almost six years through 2038 in exchange for minimal TIs and a current rent reset.

This quarter, we executed several large leases—17 leases over 20,000 square feet—with the largest just over 100,000 square feet and a second with an expanding client that took 92,000 square feet. Thirty-four percent of our square footage involved renewals, extensions, or expansions, and 66% was with new clients. Existing client expansions encompassed 150,000 square feet of activity, and we had about 50,000 square feet of contractions. A few comments on our individual markets speak both to the sources of demand and the success we are having leasing vacancy across the portfolio. In the BXP, Inc. portfolio, Midtown Manhattan, the Back Bay of Boston, and Reston, Virginia, continue to have the tightest supply and therefore the most landlord-favorable market conditions.

This quarter, the most significant acceleration in activity was in the South of Market in San Francisco, Santa Monica, and the CBD of Washington, D.C. In the Back Bay portfolio, where we are 98.8% leased, much of our current activity is filling in small pockets of availability, but we have begun discussions with larger tenants that have expirations between 2028 and 2032 since there are no premier blocks of availability in the market.

In our Urban Edge portfolio, we completed a 100,000 square foot lease with a national restaurant operator at The Core & Weston and a 43,000 square foot lease with a life science company relocating into 15,000 square feet of lab space and 28,000 square feet of office space at 180 CityPoint. Our current Urban Edge activity includes expanding hard tech companies, and additional life science companies are looking exclusively for office space. In New York, the most significant change in our activity has been in Midtown South. At 360 Park Avenue South, we completed another six floors, or 138,000 square feet, of leasing, which brings the building to 90% leased.

Last week, we came to an agreement with an existing AI client to expand to an additional floor, which will bring the building to 95% leased. Across Madison Park, we leased an additional 32,000 square feet at 2 05th Avenue, leaving us with only 33,000 square feet of availability, where we had 350,000 square feet vacant in 2025. At Times Square Tower, we executed over 100,000 square feet this quarter, including 85,000 square feet of currently vacant space. In San Francisco, the most significant change in our portfolio continues to be at 680 Folsom and 50 Hawthorne. During the quarter, we executed leases for 103,000 square feet and, in early April, executed another 63,000 square foot lease.

Since the beginning of 2024, AI and tech leasing has steadily increased from 50% of the total leasing demand in the market to 57% to almost 80% in the first quarter of this year. As I stated earlier, there has been over 3 million square feet of positive absorption over the last seven quarters. In Santa Monica, we have seen a pickup in interest from clients with near-term lease expirations and the need for new and expanding space. This is a meaningful change from the last few years. The activity in D.C. this quarter was concentrated in two transactions.

We did an early 153,000 square foot extension with the anchor tenant at 601–630 Connecticut, and we gave up our regional headquarters at 2200 Penn as part of a 58,000 square foot lease with the Washington Commanders. Currently, activity in the region is still concentrated at Reston Town Center, where we are 97.3% leased. This quarter, we completed seven small leases with defense contractors and professional service firms, and we are in negotiation on over 150,000 square feet of transactions, including 100,000 square feet of 2027 expiring leases where, in aggregate, the tenants will renew and expand.

We continue to field inbound requests from law firms that want us to identify sites and develop new projects similar to what we have achieved at 725, 1212, and 2100 M. We have some visibility on the third of these projects today. That wraps up my comments. I will turn it over to Mike.

Michael E. LaBelle: Great. Thanks, Doug. Good morning, everybody. Today, I am going to cover our results for first quarter earnings and update our full-year 2026 earnings guidance. For the first quarter, we reported FFO of $1.59 per share, which is $0.02 above the midpoint of our guidance range and $0.01 ahead of consensus estimates. The performance of our portfolio exceeded our expectations by $0.03 per share and was partially offset by a penny of higher net interest expense. Outperformance in our portfolio was comprised of $0.02 better rental revenues and $0.01 of higher termination income.

The rental revenue beat was from commencing leases more quickly in both 535 Mission and 680 Folsom, as well as from some leases in the Urban Edge properties in Boston. We also generated more service revenue from our clients, particularly in New York City and in San Francisco, reflecting increased utilization. Termination income for the quarter totaled $12.8 million and primarily related to two clients. In the first case, we proactively took back 25,000 square feet from a client in Washington, D.C., which allowed us to lease 58,000 square feet to the Commanders at 2200 Penn. This is a great trade for us, creating incremental occupancy and extending lease maturity.

The second case relates to a client that defaulted on its lease in the fourth quarter last year, when we took a charge totaling $3.6 million to write off their accrued rent balance. This quarter, we received a termination payment totaling $6.25 million, which covers both the write-off from last quarter as well as nearly twelve months of potential downtime in rent. Our net interest expense for the quarter came in higher by a penny per share from lower-than-anticipated interest income and higher commercial paper rates related to the market volatility in the fixed-income markets. CP rates widened by 25 to 30 basis points during the first quarter.

The rates have improved in the past few weeks, but they are still not quite back to where they were in the fourth quarter. Now I would like to turn to our updated guidance for full-year 2026. Big picture, we have increased the midpoint of our FFO guidance by a penny per share by bringing up the bottom end to $6.90 per share and maintaining the top end at $7.04 per share. We have increased our assumption for termination income in 2026 by $8 million. It relates to several credit issues we are working through impacting about 200,000 square feet of space that we expect we will get back in 2026.

More than half of this space is held in a joint venture, so the financial impact to us is less. The termination income we expect to receive is in lieu of approximately $5 million of lower rental income in 2026 from these clients. These spaces are readily leasable in the current market, and we expect we will be successful in backfilling them quickly. Strong leasing performance across our same-property portfolio is giving us increased confidence in our growth outlook. In our same-property portfolio, we are increasing our assumption for our share of NOI growth over 2025 by 15 basis points to between 1.4% and 2.4%.

Keep in mind, we exclude termination income from our same-property NOI assumption, so if not for the lease terminations, we would have increased our assumption for our share same-property NOI growth by an additional 25 basis points. The increase is driven by the robust leasing activity that Doug outlined, which continues to exceed our expectations and supports a stronger occupancy recovery. Reflecting this momentum, we have increased our occupancy outlook for 2026 by 25 basis points to an average for the year of 88.25%.

On a cash basis, we have reduced our assumption for year-over-year growth in our share of same-property NOI by 25 basis points, and that accounts for the lease termination activity as well as a couple of early renewals with free rent periods in 2026. In our development portfolio, we expect to deliver 290 Binney Street more than a month early, as we are just about complete with the tenant improvements. AstraZeneca already commenced cash rent payments as of April 1, and we expect to deliver the project by June 1 at the latest. We have two factors impacting our interest expense assumption for the year. First, the early delivery of 290 Binney requires that we cease capitalized interest early.

Second, the likelihood for Fed rate cuts later this year has diminished, and we are now assuming that SOFR rates are flat for the remainder of 2026. Including our first quarter result, we have increased our 2026 assumption for net interest expense by approximately $10 million. Overall, we are raising our guidance for 2026 FFO by a penny per share at the midpoint, and our new range is $6.90 to $7.04 per share. The changes come from increases in our assumption for growth in our share of same-property NOI of $0.02, increases in termination income of $0.04, and an increase of a penny from our development activity. These are partially offset by higher interest expense of $0.06.

As Owen described, we continue to execute on our plan. We have closed on asset sales generating $1.2 billion in net proceeds, including $360 million so far in 2026, in line with our guidance. We are making great progress at 343 Madison with additional leases under negotiation and active discussions for both private equity capital and construction financing. Importantly, our leasing activity has been consistent and above expectations. Signed leases that have yet to take occupancy for currently vacant space have grown to 1.6 million square feet. Our current pipeline of 3 million square feet of leases either under negotiation or in active discussions is higher than where it stood last quarter.

We remain highly confident in our ability to grow our occupancy meaningfully, driving higher portfolio performance and value. That completes our formal remarks. Operator, can you open up the lines for questions?

Operator: Thank you, sir. As a reminder, to ask a question, you will need to press 11 on your telephone. To withdraw your question, please press 11 again. We ask that you please limit your question to no more than one, but feel free to go back into the queue. If time permits, we will be happy to take your follow-up questions at that time. Please stand by while we compile the Q&A roster. I show our first question comes from the line of Stephen Thomas Sakwa from Evercore ISI. Please go ahead.

Stephen Thomas Sakwa: Yes. Thanks. Good morning. It sounds like all of you have had very positive comments around the leasing environment. Things have certainly gotten better, and the tide seems to be turning in a number of markets like New York, certainly San Francisco and parts of Boston. I guess the question is, to what extent are you able to shorten the time from when you start the discussions to getting leases signed, and then the implications that might have for the TI and CapEx that you might need to be spending on these deals? Can you get tenants in the space faster, and might we see CapEx start to come down?

Douglas T. Linde: Steve, this is Doug. The duration of the lease is really dependent upon the aggressiveness of the legal counsel for our tenant. In some cases, we have counsel that are very thoughtful from our perspective, and we can get leases completed in a couple of days. In other cases, it can take six months. I do not think market conditions have really impacted that. I would say our ability to say yes to requests from our tenants in terms of what their counsels are saying is clearly stiffened, so maybe that is why it is taking longer to get leases done in some cases.

From a capital expense perspective, there is no question that in the Back Bay of Boston, in Midtown Manhattan, and in Northern Virginia in Reston, we are being more conservative relative to the kinds of concessions that we are offering, meaning they are lower. They are lower in the form of the amount of free rent and the amount of TIs that we are offering. I would say the West Coast still has a pretty significant concession package, largely because there is still a significant amount of space available, even though the demand has accelerated materially.

So there are places where it is better, and there are places where it is still, relatively speaking, consistent with what it has been over the last three or four quarters.

Operator: Thank you. I show our next question comes from the line of Anthony Paolone from JPMorgan. Please go ahead.

Anthony Paolone: Thanks. Good morning. Wanted to follow up on your comment about 80% of demand in San Francisco coming from AI tenants. How should we think about whether that is really incremental demand above and beyond what would be normal, or if it means only 20% of the demand is coming from outside of AI? What does that tell us about the rest of the tenants in the market?

Douglas T. Linde: I will start, and I will let Rod comment. My inference is that there is a clear acceleration of technology—defined as these new AI-oriented companies—that are absorbing the majority of the incremental space absorption in the market. What has changed, and it has changed dramatically, is if you went back to 2010 to 2019, virtually all of the absorption was coming from the tech titans—Google, LinkedIn, Microsoft, Meta—the larger companies. That has clearly shut down. None of those companies are expanding in any material way in the city of San Francisco. In fact, some of them have given back space. I would say that the amount of space that is being absorbed has accelerated.

I cannot tell you if that is going to hold on a consistent basis for the next three to five quarters, but these companies are aggressively hiring people, relatively speaking, and they have made a decision that in-place work is critically important to their business strategies. Those are all great indicators from our perspective. The professional services and business services firms have not expanded the way they are expanding in Midtown Manhattan. We are hopeful that as these companies become public and they change their capital flows and that improves the overall wealth creation on the West Coast, there may be more material improvements in financial services and professional services and mid-business and administration services.

Rodney C. Diehl: I think you covered most of it, Doug, but I would just add that on the topic of the non-tech companies—the traditional tenants—and we have many of them, particularly at Embarcadero Center, what we are not seeing is downsizing. They have gone through that already, and we have executed a handful of different renewals with those types of tenants and some new tenants coming in. I would say they are stable. Then, when you look to the flip side and think about where the demand is growing and where it is coming from, it is what you would expect from the Bay Area, which is a tech-driven market, and these are tech companies that are driving the market right now.

There are 20 requirements that are over 100,000 square feet—that is about 3.3 million square feet in San Francisco specifically—and a year ago, that number was about 12 requirements. It has definitely increased, and it is great. As Doug said, these are with companies that we had not heard of before. It is new, emerging, growing companies. So it is very positive. Thank you.

Operator: I show our next question comes from the line of John P. Kim from BMO Capital Markets. Please go ahead. Mr. Kim, your line is open. Do you have your phone on mute?

John P. Kim: Sorry about that. At 343, you talked about lease negotiations for another 27% of space. There has been some media speculation of who that is. Can you discuss whether that space represents consolidation of space, expansion, or musical chairs?

Douglas T. Linde: This is Doug. It is tenants—it is not a single tenant. It is some consolidation and some growth.

John P. Kim: Thank you.

Operator: I show our next question comes from the line of Nicholas Philip Yulico from Scotiabank. Please go ahead.

Nicholas Philip Yulico: Thanks. Mike, I wanted to ask about lease CapEx. It was higher this quarter—$178 million hit the FAD calculation. I think last call, you said for the year it could be $2.20 to $2.50. Can you talk about what drove that and how to think about leasing CapEx for the rest of the year?

Michael E. LaBelle: It was driven by several early renewals that we did a couple of years ago that hit this quarter—over 1 million square feet of that. If you looked at leasing cost per square foot, they were about $10 per square foot per lease year, which is pretty reasonable and well within the range we would expect. It was just these early renewals that hit that caused FAD to be higher. I would not expect that to continue at those levels for the next few quarters. But I do expect that, for the year, our lease transaction costs will be higher given the start that we have at $175 million for the quarter.

I would anticipate that our leasing costs will be in excess of $400 million based upon occupancy growth that we anticipate, and there are a couple of other early renewals that are going to be coming in the second and fourth quarter.

Operator: Thank you. I show our next question comes from the line of Blaine Heck from Wells Fargo. Please go ahead.

Blaine Heck: Great. Thanks. Good morning. I was hoping you could talk about the trends you are seeing in the life science segment of the portfolio. You have disposed of your West Coast exposure, and you have had some success in leasing up the Greater Boston portfolio. Is that potentially a source of funds if the transaction market is supportive, or do you still see the overall Boston life science portfolio as a longer-term hold for BXP, Inc.?

Douglas T. Linde: The BXP, Inc. life science portfolio is in two submarkets. It is in Kendall Square in Cambridge—we are building our new building for AstraZeneca, and we have buildings with the Broad—and then our life science buildings in Waltham, Massachusetts at 180 CityPoint, 880 and 200 Winter Street, and then at 101/103 when we get that building leased. I do not think that we are looking at exiting any of those markets or any of those buildings. We are clearly seeing a change relative to the demand that is currently in the market toward more office and less lab intensity, and quite frankly, we are taking advantage of that in our traditional office buildings with life science companies.

As part of the 1.7 million square feet of leases under negotiation, we signed a letter of intent last night for a life science company that is going to take 49,000 square feet of office space at one of our buildings. I think we will see a continuation of that. There is no question that the life science market has already bottomed out, and things on the margin are getting better in the greater Boston ecosystem. You will find, if you look at incubator-like companies, there is more activity and more interest in those incubators, and hopefully that will, over time, roll into larger companies.

There is clearly consolidation in terms of big pharma purchasing life science companies that were born and bred in the Boston ecosystem, which is a good thing. On the margin, things are better. We are strategically going to continue to maintain our portfolio, and we believe in the long-term viability of a life science business in Greater Boston.

Operator: Thank you. I show our next question comes from the line of Jana Galan from Bank of America Securities. Please go ahead.

Jana Galan: Thank you. Good morning, and congrats on the great leasing. Given the focus on occupancy and speed to occupancy, can you talk about any initiatives like spec suites to attract tech and AI tenants quicker? Do AI tenants have different power or architectural requirements than more traditional tenant groups?

Douglas T. Linde: I will let our regional management team answer that question. I would like Brian to talk about turnkey builds, where we are doing a significant amount of what I would refer to as design-and-build for medium-sized companies. Then Jake can talk about our prebuilt suite program in Northern Virginia. Rod, you can talk about what we did and how we were successful at leasing 680 Folsom. Brian, why do you get going?

Bryan Koop: Urban Edge is the area we are seeing this type of activity because our portfolio is effectively leased in Boston and Cambridge. On the Urban Edge, we are seeing this turnkey ability with these new emerging companies, several of them in life science. Like Doug said, we are encouraged and feel it has bottomed out. The activity has definitely ticked up. One interesting thing relates to Steve’s earlier question about time to put a lease together. These clients are doing their best to gauge what their growth will be. We will be working on a 30,000 foot deal, and they will say, we have good news, it could be 40,000. That is new. The turnkeys are working out really well.

We have only done very small spec builds in that area, but turnkey is fast with quick occupancy.

Jake Stroman: In Reston Town Center, we have delivered over 50 spec suites. There are two buildings in Reston that we have coined our incubator buildings. These are buildings for groups that are 4,000 to 6,000 square feet who want to be adjacent to the many corporate headquarters that exist in Reston Town Center. We have been very successful with those prebuilt suites. Often, when we have gone forward to build five to six of them, prior to having drawings and permits in hand, we have already leased those suites. There has been insatiable demand for that space. In terms of power requirements or anything different, nothing really different relative to those spec suites.

Often we are doing those on a short-form lease, we are seeing term greater than five years, and very competitive rental rates.

Rodney C. Diehl: At 680 Folsom, spec suites were a key part of our strategy. We did a full-floor spec suite—34,000 square feet—last year. It was extremely well received. We were able to show prospective clients what it would look like, and our activity increased quickly. The activity we reported is largely based on that strategy. This is nothing new for us. We have been doing this for many years, and we continue to do it across our properties in the Bay Area. Most tech companies need the space quickly, and when it is built and ready to go, we can deliver it quickly. On the power question, we are not seeing additional power needs in San Francisco offices.

We are seeing that in some of our R&D portfolio properties in Mountain View for robotics or different technology companies. Power is definitely something they will seek out.

Operator: Thank you. I show our next question comes from the line of Alexander David Goldfarb from Piper Sandler. Please go ahead.

Alexander David Goldfarb: Question on the development program. You talked about a new pipeline of deals. Two parts. One, the split between residential—where you are monetizing land or buildings to ultimately sell—versus office. And then as you contemplate office, given where the stock is trading and implied 8% yields, how you weigh starting a potential future office deal versus where the stock is trading right now?

Owen Thomas: Good morning, Alex. On the pipeline, as I mentioned, it is about $3.5 billion or so. It is about to shrink because we are going to deliver 290 Binney Street. We do have a portfolio of new development coming. We have talked about a couple that we are doing in Washington, D.C., so I think that will build back up. On residential, you may have a situation where we have more projects, but it will be lower capital. That is the Seventeen Hartwell deal we did—20% of the equity—and SkyMark—20% of the equity. Those are the models you will see going forward. In the future, the amount of capital invested will be greater in office than in residential.

On the development yield versus capital allocation decision of starting a new office development at an 8% yield versus repurchasing shares, we think an 8% yield is higher than the underlying yield in the stock. The look-through cap rates are probably somewhere in the 7s for the stock. At 8%, we think development is an accretive activity for shareholders, and it is more attractive than some of the acquisitions I described. The only other thing I would add on residential is we are going to generate more fee income, because we will only own a minority interest and will generate development and other fees. As those start to ramp up, we should see it in our fee income.

The company over a long period of time has generally had somewhere between $3 billion to $4 billion of development underway. In the future, that could continue, but there will be fewer projects because costs are much higher, so it will be concentrated in fewer individual projects.

Operator: Thank you. I show our next question comes from the line of Seth Bergey from Citi. Please go ahead.

Seth Bergey: Hi, good morning. You mentioned $400 million of dispositions. What is the target mix between non-strategic office, residential, JV interest, land? Given some of the interest rate movements that drove the change in that guidance piece, how have pricing and conversations with potential buyers changed around that pool of assets?

Owen Thomas: I am not sure that pricing has really changed all that much. I do think slowly more and more capital is coming back into the office sector. I provided the sales data earlier. In the first quarter of this year, office sales were up 72% seasonally over the first quarter of last year. That is a marker that more and bigger deals and more capital are coming into the market. On your question about mix for the rest of the year, the residential is not fully complete but largely complete. I think you are going to see more non-strategic office and some land.

Operator: Thank you. I show our next question comes from the line of Caitlin Burrows from Goldman Sachs. Please go ahead.

Caitlin Burrows: I was wondering—back to 343 Madison JV—if you could give any incremental color on the conversations you have been having recently, timing, expectations for an announcement, and if you are pursuing just one partner with you in the project?

Owen Thomas: As I said in my remarks, timing is this year. Our goal is to complete this recapitalization in 2026. In terms of how the partnership will be structured, that is to be determined, but our forecast at this point is that we will probably have multiple partners instead of one.

Operator: Thank you. I show our next question comes from the line of Brendan James Lynch from Barclays. Please go ahead.

Brendan James Lynch: Good morning. Thanks for taking my question. Doug, I wanted to follow up on your commentary about the U.S. economy growing through a lot of tech cycles. The pushback would be that historically office has not necessarily grown in conjunction with tech or even with broader economic growth. There have been lumps over the past couple of decades—the GFC, excess supply in the teens, then COVID. How can we get confidence that this cycle and the next five to ten years are going to be better than the last twenty or so?

Douglas T. Linde: I cannot give you that the next five years will be better than the last twenty. What I can tell you is that much of the discourse and pontificating about the impacts of the rapid utilization of artificial intelligence tools is not equivalent to what is actually going on in our markets. In our markets, we are seeing additional absorption of office space, growth from our clients in premier buildings, and—in particular in markets like San Francisco and Midtown South—significant growth of new organizations, many of whose names and ideas did not exist five years ago, that are likely to be the next vehicles of growth from technology compared to the tech titan explosion between 2010 and 2019.

We did, in fact, see significant office demand growth during that period. Then COVID happened, which dramatically changed the economics of our business because of the amount of supply suddenly brought back to the market through subleases and tenant defaults. This time is not that different than other cycles we have been through, but the source of the demand is different. As Owen started his remarks by saying, there may be and likely will be some kinds of job disruptions from these technologies, but it certainly does not feel like—nor have we seen any evidence—that it is occurring in premier office assets in our markets across the United States.

Hilary J. Spann: If I could add a data point to that, Doug, this is Hilary from New York. In Midtown South, 2026 captured as much AI demand in leasing as 2025 did. The demand from AI users in Midtown South is actually accelerating in New York year over year.

Operator: Thank you. I show our next question comes from the line of Upal Dhananjay Rana from KeyBanc Capital Markets. Please go ahead.

Upal Dhananjay Rana: Thank you. In terms of capital allocation, the stock has come down a bit this year. Are share buybacks potentially on the table, or is that something you are considering?

Owen Thomas: We think our stock is a very attractive investment, given that the look-through cap rate is in the 7s and all the comparable sales that I provide every quarter are in the 5s and 6s. We think the stock is a very attractive investment. That said, as we have described, we are allocating capital to new developments generating 8%+ yields to the company, which are accretive. Also, one of our goals—our leverage is about eight times net debt to EBITDA—is to lower that over time, and that is why we are not repurchasing shares.

Operator: Thank you. I show our next question comes from the line of Analyst from Ladenburg Thalmann. Please go ahead.

Analyst: Hey. Morning, guys. You talked a little bit about the CapEx requirements. I do not think you quantify your signed-not-open pipeline. You have 350 basis points of delta between your leased and occupied space, and not all space is created equal. Your Urban Edge portfolio has much lower rents. The occupancy there is much less valuable than in your urban portfolio. Maybe you could quantify what your incremental rents would be and the impact on your NOI and FFO potentially.

Michael E. LaBelle: I will go back to what I said during our investor day. I cannot answer your question explicitly without having a whole bunch of computer screens open. Big picture, our average rent is about $75 per square foot on our unoccupied vacant space. If you take $75 per square foot, most of it drops to the bottom line other than a little bit of cleaning expense. Multiply that by the roughly 3.5% leased-versus-occupied spread applied to our in-service base to get the contribution if that all flowed through at one time. One thing I can say is there is about 800,000 square feet in Midtown Manhattan.

Our leased versus occupied spread is significant in Midtown based upon all the leasing that we have done there over the last six to twelve months. That is a meaningful component at very high rents—somewhere around $100 to $105 per square foot.

Operator: Thank you. I show our next question comes from the line of Dylan Robert Burzinski from Green Street. Please go ahead.

Dylan Robert Burzinski: I wanted to touch on 343 Madison. Leasing continues to be very strong in New York. You talked about having leases in negotiation that would bring that project to the high-50% pre-let. Dispositions are trending very well, and you continue to monetize that. Why the desire to re-cap the equity in 2026 when it seems like you could wait, get that project closer to stabilization, and get stronger pricing?

Owen Thomas: We did delay raising this capital and doing this recapitalization for a year to accomplish all of the things that we have accomplished and to de-risk the asset—in all the ways that you described. We are about to lease more than 50% of it. We bought most of the materials at savings. We are close to completing a construction loan, etc. We think the terms under which we will bring in capital into this transaction will be attractive to shareholders. It will be accretive to BXP, Inc., and it will allow us to free up capital to make additional investments and also to deleverage, which is one of the goals I described earlier.

Operator: Thank you. I show our last question in the queue comes from the line of Analyst from Morgan Stanley. Please go ahead.

Analyst: Hey. Just a quick one on same-store NOI. As you go through this year and into next year, clearly this year you talked about sort of flat, and there are some buildings taken out of service. As you roll into next year, how should we think about the occupancy ramp, any other buildings that could potentially come out of service, or is it a pretty clear acceleration into 2027 and beyond?

Michael E. LaBelle: At the moment, the only thing we can say definitively is that we are going to sell assets, and as we sell assets, they are going to impact our portfolio size—but on the margin. We are highly confident that we will end 2026 at 89%, hopefully a little bit higher, and that we will end 2027 at 91%, hopefully a little bit higher. The majority, if not all, of the occupancy that we are working on today will be in place on 12/31/2026, so you will have a 100% run-rate on all the improvement in occupancy that we are achieving right now.

My guess is that we will get some more early in 2027 as we continue to do leasing in this environment on both renewals and vacant space that will likely start during that year. We are still pretty comfortable about the ramp-up in our same-store portfolio on a going-forward basis.

Operator: Thank you. That concludes our Q&A session. At this time, I would like to turn the call back over to Owen Thomas, Chairman and Chief Executive Officer, for closing remarks.

Owen Thomas: We have no further comments. Thank you all for your attention and interest in BXP, Inc.

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