BXP, Inc.

Good day and thank you for standing by. Welcome to BXP Q2 2026 Earnings Conference Call. At this time, all participants are on the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To re-draw your question, please press star one one again. We ask that you please limit your questions to no more than one But feel free to go back into the queue, and if time permits, we'll be happy to take your follow-up questions at that time. Please be advised that today's conference has been recorded. I would now like to hand the conference over to your first speaker, Helen Han, Vice President, Investor Relations. Please go ahead.

Good morning, and welcome to BXP's second quarter 2026 earnings conference call. The press release and supplemental package were distributed last night and furnished on Form 8K. In a supplemental package, BXP has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg. G. If you do not receive a copy, these documents are available in the Investors section of our website at investors.bxp.com. A webcast of this call will be available for 12 months. At this time, we would like to inform you that certain statements made during this conference call, which are not historical, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Although BXP believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks that could cause actual results to differ materially from those expressed or implied by forward-looking statements were detailed in yesterday's press release and from time to time in BXP's filings with the SEC. BXP does not undertake a duty to update any forward-looking statements. I'd like to welcome Owen Thomas, Chairman and Chief Executive Officer, Doug Linde, President, and Mike LaBelle, Chief Financial Officer. During the Q&A portion of our call, our regional management teams will be available to address any questions. We ask that those of you participating in the Q&A portion of the call to please limit yourself to 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.

Thank you, Helen, and good morning to all of you. BXP delivered a very strong second quarter, both operationally and financially. FFO per share exceeded both our guidance and consensus estimates by $0.08, and we raised the midpoint of our 2026 FFO per share guidance by $0.05. We also made meaningful progress against the business plan we articulated at last year's investor conference. Leasing results were strong, in-service portfolio occupancy increased significantly, additional asset sales progressed, and our development pipeline was active with project deliveries, launches, leasing, and capital raising. Our first business plan priority is to lease space and improve portfolio occupancy. We had a great quarter, completing nearly 1.8 million square feet of leasing 29% above our 10-year historical average for the second quarter. Year-to-date, we've leased over 3 million square feet and our in-service portfolio occupancy also rose materially and for the third quarter in a row. This outcome reflects strong execution by our leasing teams as well as a very healthy environment for leasing premier workplaces. AI continues to be enormously beneficial to BXP's leasing activity. Our current and prospective clients are generally experiencing increasing earnings in an AI-powered US economy, are more often expanding than contracting their space requirements, and in many cases are also upgrading their space. We are leasing space to AI companies in San Francisco, New York, Boston, and Seattle. to companies displaced by growing AI firms and to our core financial, legal, and business services clients that support the AI industry. While AI's long-term impacts remain difficult to predict, research shows that technology advances historically increase the share of office-based jobs. Additionally, AI will likely exert a greater impact on less adaptive back office workers and these roles make up a smaller share of employment in knowledge center gateway markets and in premier workplaces. Further, it is reasonable to believe non-office using remote jobs which generally have more process and analytical content than interpersonal requirements will be more disrupted by AI. Lastly, companies winning in an AI-enabled economy will be more profitable and face more intense competition for talent. leading to less price sensitive demand for easily commutable and desirable workplaces for their employees. For all these reasons, we believe premier workplaces located in gateway market knowledge centers are positioned at best to benefit from and at worst to be the most immune from AI impacts on the labor force. As proof, the premier workplace segment of the office market where BXP is a clear leader continues to materially outperform the broader office market. Premier Workplaces represent roughly the top 14% of space and 8% of buildings in the four CBD markets where BXP has a major presence. Direct vacancy for Premier Workplaces in these four markets is 8% versus 13.5% 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. With an 8% vacancy rate, positive net absorption, and limited new construction on the horizon, premier workplaces in BXP's core markets are set up for material rent increases, which has already commenced in many submarkets. Given these positive market forces, we are well on our way to accomplishing our two percentage point occupancy gain goal in 2026, reinforcing our confidence that our target of four percentage points of total occupancy improvement over 26 and 27 remains very much on track. Our second business plan goal is to raise capital and optimize our portfolio through asset sales. At our investor conference, we communicated an objective to generate in aggregate $1.9 billion in net sale proceeds by 2028 from the sale of land, residential, and non-strategic office assets. We continue to make progress in the second quarter and are well ahead of schedule. We have raised $370 million in total net sale proceeds so far this year and more than $1.2 billion since our investor conference. In addition, we have six assets under contract for sale with total net proceeds of approximately $240 million, $180 million of which is scheduled to close in 2026. Two of the assets currently under contract for sale are office buildings in Washington, D.C., which are scheduled to close this quarter. We're also in various stages of marketing several additional assets, including 7 Times Square in New York City. As of now, future net proceeds from dispositions possible in 2026 could aggregate up to an additional $500 million, bringing our total net proceeds from asset sales to $1.7 billion by year end, and we continue to explore additional capital-raising opportunities. Supporting our disposition efforts, office transaction volume in the private markets remains reasonably healthy with financing available at scale, particularly in the CMBS market. In the second quarter, significant office sales were $12.6 billion, down 13% from the first quarter and essentially flat from the second quarter of 2025. Though there continue to be very few premier workplace assets trading, there were a couple of transactions in the quarter with relevance to BXP's portfolio. One Marina Park Drive located in the Seaport District of Boston is under agreement to sell for approximately $435 million, which represents pricing of nearly $900 a foot and an initial cap rate in the low 7% range. The asset comprises 495,000 square feet, is 99% leased with above-market rents, and is being sold by an advisor to the operating arm of a non-U.S. pension plan. Further, Tower 1 at West Main, located in downtown Bellevue, Washington, is under agreement to sell for approximately $340 million, representing pricing of around $930 a square foot and a 6.75 initial cap rate. The 365,000 square foot building is fully leased to Amazon on a long-term basis and was sold by a local developer to an advisor. BXP's third business plan goal is to grow FFO through new developments, 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 than acquisitions due to the materially higher yields available. This quarter we delivered into service 290 Binney Street, a 570,000 square foot lab building fully leased to AstraZeneca located in the life science nexus of East Cambridge. The project is a great example of BXP's development skills, creating value for shareholders, where we establish development rights through executing a complex infrastructure enhancement. We fully leased the asset before commencement We sold a 45% stake in the property at a profit to a financial partner, and we delivered the project $20 million below budget and two months ahead of schedule. BXP's $488 million investment for its share of the project is yielding an 8.9% unleveraged cash return and a 10.3% gap return. BXP's largest development underway is 343 Madison Avenue, our premier workplace tower in New York City with direct access to Grand Central Terminal. This past quarter, we signed 148,000 square foot lease with McDermott, Will, and Schulte at the bottom of the high-rise bank of the building and Star expanded by two floors in the mid-rise, bringing us to 50% lease. Further, we are in lease negotiations with a 2-4 client in the podium, which, if completed, would bring us to 56% lease. Lastly, we are exchanging proposals with another client requiring five floors at the base of the podium, which would bring the project to nearly 70% lease. Though we have received single floor inquiries for the seven floors remaining at the top of the building, We expect continued rent appreciation and will likely lease these floors closer to delivery given their ability to command market leading rents. We have procured 94% of the construction costs on budget. Leasing economics have been at or above forecast and our projections remain on track for a stabilized, unleveraged cash return of 7.5% to 8% upon delivery in 2029. Yesterday we closed a 60% loan to cost $1.2 billion construction loan for the project on attractive terms and have a letter of intent with an equity partner for an $80 million investment representing a 10% interest in the project with a basis above our costs. We expect the equity investment to close this quarter and our marketing efforts continue with the goal of ultimately monetizing a total of 30 to 50% of the project over time. The value of the development continues to rise as we lease space and get closer to delivery. This past quarter we launched the development of our World Gate multifamily project comprising 359 wood frame residential units located in Herndon, Virginia. The project's budgeted cost is $132 million and we have secured a financial partner to supply 80% of the equity as well as the construction financing. BXP originally bought into the WorldGate property, which comprised an empty office building and parking garage on 10 acres in 2023. The project was rezoned for residential. The for sale component is under contract for sale to a home builder, and the apartment development will entail demolishing the office building and utilizing the structured parking. BXP will earn a profit from the total monetization of our investment in WorldGate. and has reinvested our share of the proceeds from the contribution of the apartment land back into the development joint venture for a 20% interest. We have additional residential projects in Weston, Massachusetts and Santa Monica, California that we are intending to launch next year. This past quarter, we also signed a 320,000 square foot long term lease with Boston Dynamics, which will create a state of the art robotics and and AI Center at Reservoir Place, a 360,000 square foot office building BXP had taken out of service in Waltham. We will invest $87 million to retrofit the building and expect to earn an initial cash return of over 10%, including an inferred value for the existing improvements. The project is expected to be delivered into service in the second quarter next year. BXP's current development pipeline, comprising seven office and residential projects underway, totaling 3.5 million square feet and $3.2 billion of BXP investment, will continue to deliver external growth over the longer term. So in conclusion, BXP is set up well for success. New construction for office has virtually halted, already leading to higher occupancy and rent growth in most submarkets where BXP operates. Debt capital is readily available for premier workplaces at attractive credit spreads. BXP continues to capture market share, driven by our stability, reliable client service, and lighter competitive landscape across many markets. BXP 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 AI-enabled gateway CBD premier workplace concentrated portfolio in the years ahead. Over to Doug.