BXP, Inc. Q4 FY2025 earnings call

Leasing: Strong fourth quarter and full year leasing, with over 1.8M sq ft in Q4 and over 5.5M sq ft in full year 2025. Client earnings growth, return to office mandates, and accelerating demand from AI companies, especially in Bay Area and NYC, support leasing. Premier workplace segment has lower vacancy and higher rents. ### Asset Sales: Off to strong start with 12 assets closed for over $1B net proceeds, 8 assets under contract/agreed terms for 2026. Land sales for residential use creating value, apartment sales at profitable cap rates, and office sales with strategic focus. ### Development: Allocate more capital to office developments with pre-leasing generating over 8% cash yield. Multifamily has 3 projects over 1,400 units under construction. 290 Binney Street life science project 100% leased. ### 343 Madison Avenue: Finalized lease commitment with Starr, negotiating for another 16% of space, aiming to recapitalize in 2026 with stabilized unleveraged cash return of 7.5%-8% upon delivery in 2029.

In 2025, BXP had strong leasing performance with over 5.5 million square feet leased for the full year, exceeding goals. Asset sales: 12 assets closed for over $1 billion in net proceeds, with 8 assets under contract/agreed terms for 2026. Development: 3 new properties delivered in 2025, with 3 projects over 1,400 multifamily units under construction and 8 projects totaling 3.5 million square feet underway. Premier workplaces segment showed strong demand with lower vacancy and higher rents compared to broader market.

2026 FFO guidance range: $6.88 to $7.04 per share. Same-property NOI growth expected 1.25%-2.25% from 2025. Development contribution to add $44M-$52M in 2026 NOI. Asset sales expected to reduce portfolio NOI by $70M-$74M. Net interest expense expected $38M-$48M lower in 2026. G&A expense projected $176M-$183M in 2026. Development and management services fee income $30M-$34M in 2026.

Concerns about AI impact on jobs, though not affecting premier workplace segment where BXP operates. ### Market uncertainties in different regions, such as West Coast life science market with high vacancy rates. ### Potential dilutive impacts from asset sales and development timing affecting FFO.

Q: Steve Sakwa asked about disposition pace and balancing portfolio sharpening with FFO growth.

A: Owen Thomas said sticking to $1.9B sale forecast, land sales accretive, and paying attention to dilutive impacts. Michael LaBelle added pace of first $1.1B sales ahead of expectation. Doug Linde mentioned residential activity value.

Q: Michael Goldsmith asked about leasing conversion rate.

A: Douglas Linde said 1.1M sq ft in negotiation with 95% conversion rate, pipeline conversion rate around 0.5M sq ft.

Q: Anthony Paolone asked about AI cannibalizing space needs.

A: Owen Thomas said clients growing, leasing activity accelerating, AI so far net plus for BXP. Rodney Diehl and Hilary Spann discussed AI demand in SF, NY.

Q: John Kim asked about FFO cadence for 2027.

A: Michael LaBelle said first quarter 2026 likely lowest, occupancy to build after, expecting consistent growth into 2027.

Q: Alexander Goldfarb asked about reimagining leasing to shorten downtime.

A: Douglas Linde and Michael LaBelle discussed turnkey builds, reducing free rent, focusing on reducing downtime but not eliminating it.

Q: Nicholas Yulico asked about G&A efficiencies and development partner management.

A: Douglas Linde said G&A not expecting significant AI impact, Owen Thomas discussed residential partners and office development partner strategy.

Q: Blaine Heck asked about FAD/AFFO cadence and concessions.

A: Michael LaBelle said AFFO expected slightly up, leasing costs in line, free rent guidance higher but turning into cash rent in 2027.

Q: Jana Galan asked about 343 Madison demand and rents.

A: Hilary Spann said strong demand from financial services tenants, rents trending up, meeting market terms.

Q: Seth Bergey asked about rent regional variation and mark-to-market.

A: Douglas Linde said mark-to-market in high 4s to low 5% range, regional variations in cash mark-to-market.

Q: Richard Anderson asked about 2027 NOI growth.

A: Douglas Linde and Michael LaBelle said 2027 expected to have cleaner story with improving leasing trends and low rollover exposure.

Q: Caitlin Burrows asked about 290 Binney GAAP NOI recognition.

A: Michael LaBelle said revenue recognition starts in June 2026 after tenant improvements complete, capitalizing interest stops then.

Q: Floris Van Dijkum asked about tenant improvement packages.

A: Douglas Linde said concession packages vary by region, with Midtown pulling back, West Coast still elevated.

Q: Brendan Lynch asked about layoffs impacting portfolio.

A: Owen Thomas said not seeing impact in leasing activity, clients growing.

Q: Vikram Malhotra asked about structural peak occupancies.

A: Douglas Linde said above 93% attainable but hard to surpass, San Francisco has most upward opportunity.

Q: Dylan Burzinski asked about return to office driving leasing.

A: Owen Thomas said room to go, but layoffs not affecting premier workplace leasing. Douglas Linde and Jake Stroman discussed demand from financial, legal firms not tied to return to work.

Q: Ronald Kamdem asked about LA/Seattle markets.

A: Rodney Diehl said Seattle starting to see demand, LA still recovering but activity picking up. Douglas Linde mentioned taking Santa Monica assets out of service for residential.

Q: Michael Lewis asked about leasing capital.

A: Michael LaBelle said leasing capital amount not specified, transaction costs ranged $85-$100 per sq ft, not trending significantly higher.