Good morning, and thank you for joining us for our second roundtable session at our Global Real Estate Conference. My name is Camille Bonnel, and I'm the Office REIT Analyst here at Bank of America. Speaking with us today is BXP's President, Doug Linde, and CFO and Treasurer, Mike LaBelle. We'll pass it over to Doug in a second for just some opening remarks and then go into Q&A. We'd love to have it as an interactive session, so please feel free to ask any questions. Thank you, Camille. So I thought I would just sort of start with a sort of, I guess, our thematic discussion points that we're, I guess, dealing with at each one of our sessions to date. And we've had some dinners and some outside of B of A meetings as well. And those are that, how's our leasing doing? And how are you thinking about your cost of capital? And so I'll talk about leasing, and I'll let Mike talk about cost of capital and the impacts on our earnings of those two things. So on the leasing side, I think we had a pretty constructive message when we had our call on 31st July. And we announced how much leasing we did in the second quarter, which was 1.3 million square feet. I said at that time that our pipeline for the Q3, so starting on 1st July, at that time was about 1.4 million square feet of active conversations, meaning leases that were in negotiation. That number today is about 1.8 million sq f t. Acceleration over the last month or 40 days. Of that, we have completed, so executed leases of just over 900,000 sq ft of space. In January of 2024, when we announced our guidance for the year, we had told the street that we were in the 3.5 million sq ft plus or minus range. That was after a 3 million sq ft 2023. We've done 2.2 to date. If we complete the 1.8 that's currently in negotiation, we'll be at 4 million sq ft. I would expect that we'll do some more than that. So net net 2024 will have been a pretty meaningful acceleration from 2023. Everybody is fixated on our occupancy. We have a hard time being able to predict exactly when our revenue is going to commence, and therefore our space will be "occupied" for earnings purposes. Of the 1.8 to 1.9 million sq ft that's currently in active negotiation, about 700,000 sq ft of that is on currently vacant or known expirations, which is going to call it 40% to 45%. So that's sort of where the occupancy build will come from. The other leasing is obviously from renewals. The thematic areas of the country, it's still predominantly a good story on the East Coast and a challenging or more challenging story on the West Coast. Our portfolio in the greater Boston market and most clearly the Back Bay and our Waltham submarkets are seeing an acceleration of demand where we're doing most of our leasing. Obviously, everyone knows the Park Avenue submarket of Manhattan is highly, highly competitive. We have some available space in that marketplace, and we feel really good about our leasing prospects there, and then Northern Virginia, which is our Reston portfolio of almost five million sq ft of space, we are seeing a lot of activity, most of it from cybersecurity and from defense contracting firms, not from large tech. And that has been, again, another tailwind for us in terms of our leasing velocity. Jumping to the West Coast, the San Francisco market clearly is doing better than it was doing in 2023. There are more tenants in the marketplace. The preponderance of those active requirements are still traditional professional services, asset management, consulting, law, those types of tenants, not "tech tenancy." There is incremental AI demand, but there is also still reductions of utilization and space that's going back to the market from "the large tech companies." Obviously, everyone knows that Google made a major announcement just at the end of the second quarter about what they're doing in San Francisco. Those are pretty big requirements. The Seattle market, which is where we have a modest amount of assets, we are seeing a higher preponderance of leasing activity. It's much smaller in scale than San Francisco. So it's seven to 20 to 25,000 sq ft kinds of requirements. Most of it's looking at Madison Centre, which is our newest building of the two buildings that we have in that marketplace. Amazon's still getting smaller in Seattle. And so they will be giving back more space in 2025 and 2026. So that's going to be, again, another pretty big headwind. And there is not a lot of incremental absorption of space going on from much of the tech world. There was one large announcement of an Apple transaction that occurred in South Lake Union, which was a nice sign, but it's not leaked into the CBD. And then our weakest market from a demand perspective is the West LA market. Everyone is probably aware that there's a challenging consolidation, profitability, discussion, analysis going on with all the large major media companies. That is clearly creating just a constipation relative to any kinds of real estate decisions. It's likely that there will be fewer people working in those industries at the end of the day than are working in it now, and certainly that we're working at it in 2020. The gaming businesses have also been sort of, I would say, on a downsizing journey as opposed to an increasing journey. The West Coast still has some issues. The one bright spot that we have seen is that in our Silicon Valley portfolio, which is predominantly R&D space, not office space. We don't have multi-story buildings that are leased to technology companies that are doing software. We have maker space. The Silicon Valley Bank disaster in March of 2023 literally froze everybody. It's taken about a year for those tenants to start to stick their heads out of their shells. There's actually a reasonable amount of maker space activity that we are seeing down in our R&D property. So I would say we feel much better as we sit here in September than we did in January, February, March, April, May about our ability to actually lease some of that space. And those are 20 to 30,000 sq ft single-story buildings with loading docks for people who are working on cars or doing photo electronic devices or other sort of interesting hard tech, not people who are creating software. So I'll stop there. And And Mike, you may want to sort of talk about our cost of capital. Sure, so as Doug described, there's really two things that are really helping us right now, right? The corporate health that Doug talked about and the fact that our portfolio is primarily oriented towards these traditional financial services and FIRE type of tenants, so we're seeing our leasing activity up by 35% year- over- year, which is pretty significant. So that's one side of our business that's doing better, and we expect, we see it continuing to do better. The other side is interest rates, so interest rates are starting to come down. It feels like they're poised, short-term rates are poised to come down. Long-term rates have come down a little bit. We're not so sure the long-term rates will come down a lot, but on the short-term rate side, we have 10% to 15% of our debt portfolio's floating rate. That's $1.8 billion. So if rates go down by 50 basis points or 100 basis points or 150 basis points over the next 12 months, we're going to see some real benefit to moderating interest cost. And then on the long-term rate side, we just did a deal, a 10-year deal at 5.8% to refinance a loan that's coming due next year. So we don't have any other long-term financing to do in the next 12 months. So we've kind of taken care of all that. Our stock price has gone up over the last three months pretty meaningfully. Part of that is the activity that we're seeing on the leasing side. Part of that, I think, is the view of interest rates coming down and the benefit that we'll have on valuation and interest costs going forward. So that's obviously a positive thing and is also reducing our overall cost of capital. So the other two sort of tangential questions that we've been getting are what's going on with the life science market. And we have a relatively modest exposure to life science. It's under 7% of our NOI. But we have exposure in terms of new developments in two markets, one in South San Francisco and then two smaller buildings in the Waltham submarket. And my sort of comment is, while the venture capital funding has started to recommence and money was both raised and is being deployed, it's being deployed differently. So the number of companies that are actually getting funding is dramatically lower than it was during sort of the "heyday," probably 20% to 25% in terms of where those numbers were. But the check sizes are much, much bigger. And so those companies that are getting money are getting money, and they're being told by their boards that they should be taking as much as they need to get them to the next major milestone. So there's no such thing as going back for another round after six months or nine months or twelve months. You should think about your next trial stage, phase one to phase two to phase three to commercialization and have enough capital to do that. And that's how they're raising those dollars. Those companies are not necessarily brand new that are starting to look for space. They are more established privately funded companies, and they're being also told by their boards, FF&E and real estate leases are not a good use of capital unless absolutely necessary. And so that is restricting the overall amount of demand that we're seeing. There's just not a lot of significant activity out there. There is also a capital challenge that is still being dealt with, which is many companies raised a lot of money and spent it on space. Those companies have not had the same success that they probably thought they would have from a science perspective. There's a lot of sublet space on the marketplace. That sublet space and the lack of demand, in addition to a whole host of landlords saying, "Aha, the thing that we can do to 'improve our chances of leasing space' is to do pre-builds." There's a lot of pre-build space available too. Completely, it's got the benches with the casters, it's got hoods, it's got all the chemicals, storage facilities, it's got all the gases piped in, it's got office furniture. It's beautiful brand new space, and it exists. And so all of that is just impacting the overall challenging life science market. And so while in South San Francisco, it's concentrated in San Mateo County and sort of South San Francisco slightly to the north of Brisbane and slightly to the south, the market is a little bit different in the greater Boston area because there are more tangential locations. And so in East Cambridge, which is the heart of it, there's an availability rate probably of 5%. In Somerville, which is, as a crow flies, two or three miles away, there's probably a 40% availability rate. And so the difference in Boston, in the greater Boston market, is there will probably be more challenged properties that will not be able to recover in any short order timeframe, and there will be other properties that are doing relatively well. But the same demand challenges exist in the greater Boston market that exist in South San Francisco. And we are not thinking about starting new things. We are not really looking actively at the distressed life science opportunities, of which there are many, largely because we just are not able to underwrite the demand side. We just don't know if it's going to be a year or two years or five years before a particular building is going to be able to lease space. And if you can't do that, you can't be competitive even on a distressed situation. So that's going on. And then the last question we've been getting is, so what about 343 Madison? Everyone's talking about the Park Avenue submarket as the strongest, one of the strongest, if not the strongest market in the country. I would tell you that Century City is probably pretty strong too, interestingly, even though it's in the greater Los Angeles region. And that building is ready to go. So we are drawn. We're moving forward with our construction documents. We've started the construction of the base where we're doing the East Side Access as we connect into the Grand Central Terminal. And we'll be in a position where we could start construction in late 2025. So we are actively talking to tenants. We have a partner there who is responsible for 45% of the capital. And we're hopeful that that will pencil. Interest rates coming down and reducing the cost of our financing on the construction loan side will also be additive to that project. And so we're looking forward to being in a position where a tenant gets serious about needing occupancy in late 2028 or 2029, and we can deliver a building for somebody who would be a great kickoff on a pre-leasing basis. So I'll stop there. A lot of exciting things to cover there. I want to come back to this opportunity you have at Madison in a second. But just starting big picture, because I saw some people walking in, it's refreshing to hear you have such a strong leasing update after so many years of muted demand. And I recall off the bat, you had already signed 500,000 sq ft coming out of the quarter, and now you're saying you've signed another 400,000 from here. So can you just talk about that activity? How much of that is large tenants, industries? Is this vacant leasing or? Yeah, so the leasing that we have done is predominantly being done in Boston and New York and in Northern Virginia. I looked last night because I figured I get the question about how much of the space that you're actively under lease with is available space, and about 700,000+ sq ft is currently vacant. And of that, about 300,000 sq ft is in the greater Boston market, 100,000 sq ft in New York, 150,000 sq ft in DC, and 175,000 sq ft in the West Coast region. So that's all really good in terms of improving our occupancy and our leased square footage. I can't comment on the timing of all that stuff, and Mike and I have these conversations and these debates about revenue recognition and when something is or isn't going to be in service. But the bottom line is we just can't control that. The vast majority of the leases that we have signed this quarter to date have been in Boston, and they have most sort of been dominated by private equity and by legal. And those are sort of the two areas of, again, consistent with my general comments on where the active demand is. The interesting thing is we're also seeing a reasonable amount of that same kind of demand in San Francisco with one major differentiation. When we're doing a lease in greater Boston and New York, nine out of 10 times the tenant is staying the same or growing. When we're doing a lease in San Francisco, seven out of 10 times the tenant's getting marginally smaller. So there's still a reduction of use of space for the California professional services firms. And that includes asset managers as well as law firms and consultants and accounts, etc. So there's a different mentality out there relative to how they're looking at that marketplace in terms of how they're servicing their clients on a regional basis. And the shift in the leasing activity you've seen across your tenants has been more willingness to discuss early renewals or come to the table earlier. As you look forward, and maybe you can tie in 343 Madison here, what's changed in terms of them being willing? And have rents actually started to pencil out at a place where it does make sense for the returns? Yeah. So I've been trying to sort of explain to anybody who will listen that the macro statistics that you will read about the office market in 2024, 2025, 2026, 2027 are going to be lousy. There is so much available space in these marketplaces, and there's just not significant enough absorption to really change that. However, that doesn't matter. And so we sort of have been talking about premier and the differentiation between premier and other kinds of property for quite some time. The other subtlety which I have been trying to espouse is the submarkets matter a heck of a lot. And so if you look at Manhattan as the simple example, there's probably an availability in Manhattan of somewhere between 20% and 25%. If you look at the submarket of Park Avenue, narrowly defined as 42nd Street to 59th Street and maybe Madison to a couple of buildings on Lex, that availability is under 8%, which is at a historically low number. That is a landlord-favorable marketplace. Or you go to Boston and you look at what's going on in the Back Bay, where the availability rate in our portfolio is under 1%. We're basically 99% leased. We do not have space. And yet you look at the availability over the "CBD of Boston," and it's 23%. We are in a situation where we are raising rents aggressively in the Back Bay because we can and because we have the demand. And yet South Station, which is a brand new building, is struggling to find its first tenant and its brand new construction that's going to deliver sometime in 2025 or 2026. And so these submarkets matter a heck of a lot. And we are going to be able to have what I believe will be strong economic opportunities to improve our bottom line in these submarkets sooner than what you will see from a macro perspective. And so 343 Madison is exactly that, which is there is probably one or two blocks of space above 100,000 sq ft available in that Park Avenue submarket. And everyone's talking about, so what will JPMorgan do? How much space will they give back? From what we hear, it's very little, and it's going to be a while. And if there's going to be a new building that's built in Midtown, it's going to be our building, we believe. And so we think that we can achieve rents that are probably higher than the market today at the base of the building, but certainly not higher than the market today at the top of the building. And the question will be, how much will rates rise over the next few years? Remembering that we are leasing for 2028 or 2029. We're not spot leasing for 2025. And so if the average Park Avenue rent in the low rise of a building is $110 a sq ft in 2025, what kind of growth is there likely to be? And what kind of growth can we assume we can get from a tenant that needs space in that building? And we believe that will pro forma into an acceptable return for us. And we are trying to achieve a return close to 8% on a cash-on-cash basis. That's our goal. Whether we'll get there or not, we'll be seeing. And deliver that building starting with a meaningful amount of pre-leasing. And again, it's going to be well in excess of $2,000 a sq ft. And just given we've started to see more transaction data coming out, particularly around the West Coast, seems to be testing new lows on the price per sq ft. How are you assessing the opportunities, and would these deals be of interest to you? I want to sort of just sort of back up. All of the transactions that are "occurring" are on what we would define as distressed assets. These are assets that are buildings that have a significant amount of vacancy. We're probably undercapitalized from an improvement perspective for a meaningful amount of time, which is one of the reasons why they are so vacant. They are, in general, smaller buildings that you would define as B or better, not premier buildings. The reason that they are being bought is because you can rationalize raising $100 to 150 million of capital to buy one of those buildings. That is a very different conversation than a $1 billion asset that's well leased in Midtown Manhattan or a $700 million asset that's well leased in downtown Bellevue or the Spring District or a building in Austin, Texas, that's leased to Google. So the reason I bring those up are there are three examples of what I would refer to as high-quality, long WALT, weighted average lease length, brand new buildings that have been on the market in major cities in the last, call it, nine months. The first was a building that's leased to Google in downtown Austin. The second is a building that's leased to Meta, which they have sublet to Snowflake, which is in the Spring District of Bellevue. And the third is a building in the Seaport of Boston that is a multi-tenanted building. All three of those buildings were put on the market. In all cases, bids were made. Those bids, from our understanding, were generally above a 7% going in cash-on-cash return. NOI, because there's no real leasing, is sort of the same thing. In all cases, the owners of the building said, "We're not selling." So that's just a very different phenomenon than the building in downtown San Francisco on California Street that has been vacant for four years and is being sold on a sort of short sale basis or a building in Washington, D.C. that's being sold on a short sale basis at a zero cap rate, effectively, at a price per square foot that's $150 or $200 a sq ft. The one other thing I would say about those buildings that are being sold at those valuations is figure out how to build up to where you get to stabilization. How much base building capital is necessary? How much TI and brokerage commission is necessary? And then the million-dollar question is, how long is it going to take and what's your cost of carry? If you're buying a vacant building and you think you're going to lease the building up in 12 months, you're just deceiving yourself. So if it takes you three or four years to lease that building up and you're buying a building with an expected IRR of 15% to 20% and you can't really put a lot of leverage on it and you build up what your basis is going to be in that building, at the end of the day, you're going to need a pretty high rent in order to lease that building up. It's probably a rent that's consistent with the rent that an existing premier building might be getting today. And so I don't know how successful some of those sales will be unless we have a very dramatic quick recovery. Because if they can beat you on timing, if you can lease it up quickly, you win. If you can't lease it up quickly, you're going to lose. And so that phenomenon is still there. And we were hopeful in the beginning of 2024 that we were going to see because we were getting inbound calls from a bunch of institutional capital managers, generally pension funds, but some sovereign wealth funds, about assets that they were considering selling. And then when they started to hear where our pricing was and other pricing was, they basically sort of said, "Yeah, we're going to hold on. We're going to hold on. We're going to hold on." So I think that we haven't yet really seen active, high-quality, long-term, weighted average lease length assets sell. If the folks from Eastdil Secured were here today, I'll do a commercial for them because they seem to have the biggest market share. They would say, "Well, let's look at first at what's going on in the residential world, and then let's look at what's going on in the industrial world. And we're starting to see more transaction activity in those two marketplaces." And generally, everyone would tell you the cap rates are probably somewhere in the low fives. That's sort of where things are. So that's our baseline. The issue is that other than these huge portfolios being bought by the large private equity firms, the transaction sizes are pretty small. The question will be the ticket size and how much equity will be required in order to actually physically purchase a large office building, knowing that debt capital is going to be a challenge for a while. I think we're still in this very, very early era of the transaction volume in office really coming back. [audio distortion] Can I just ask, do you comment on where you think we are with the pricing cost? Relative to what? [audio distortion] To what you're seeing in the marketplace. I mean, so to build a new building in Boston or in New York with no land basis is, in the case of New York, over $2,000 sq ft and Boston over $1,500 sq ft. Buildings will sell for probably somewhere between 60% to 70% of that. My guess is, at the end of the day, depending on where they're leased, at the height, and there will be sales much below that. What the cash flow characteristics of those buildings are really matters. A building on Park Avenue is going to be a lot closer to replacement cost than a building on Third Avenue. But I think just going to all the core points that you've raised this morning and the fact that we clearly see there's this divergence between the haves and have-nots, which you clearly have a lot, which you're seeing in the operating platform, your cost of capital. So when you think about those investment opportunities out there, why not leverage that more? And given that you do have the balance sheet. So why are we not being more opportunistic? We are trying to be opportunistic. So Mike, for example, surfaced a transaction where we found a development where rescue money is needed. It's not office, so we're not taking leasing risk. And we're going to probably put some preferred capital in at a double-digit return. That's going to be what we think is a very successful investment. Now, the owner operator is saying, "Well, we need to get this thing going, and we believe the cap rates are going to be really, really low, so this thing is going to work for us too." Great, but it'll work for us as well. We've spent some time looking at some, what I would say are not trophy buildings, but sort of that next tier down buildings that we know are both capital-starved relative to new fresh capital to reposition or re-lease them and debt capital structure. It's slow to get anybody to say yes on these things, but we're spending time looking at it. We're still going to be conservative relative to our balance sheet. I would say that until our developments are closer to coming online where we get even some more dry powder, and that will happen in 2025 and then in 2026 with the two buildings that we're doing in Cambridge, Mike's putting a pretty strong "We got to think about this and think about our overall leverage." What we're saying is that means we have to go get third-party capital to do it. And we have third-party capital partners who will do deals with us, unquestionable. But their challenge and our challenge is we're still looking for a higher return than we are seeing a seller prepared to give us. And the question is how long it will be before those sellers ultimately say, "It's time to move on, and we're going to do some things. Do you regret your entry into LA and life science? I don't regret either thing. The winds change, but I hearken back to 2020 when we were told, "Your East Side Manhattan portfolio is in the wrong part of the city. And the city has clearly tilted in a big way to the West Side, and you guys are going to have a really bad, tough time," and suddenly, the best market in the country from an investment and from a return perspective is Park Avenue, so over a long term, we are very comfortable with what we did in LA. We're comfortable with what we did in Seattle. Our timing sucked. I mean, we didn't anticipate COVID, not only anybody did, and we just got in at the wrong time, particularly in Seattle. But we believe in the land that we ultimately control in West LA, and we believe in the reasons why people want to live and work in that region. And on the life science side, we've tiptoed in. I mean, we have a total of three assets that are under development, and it's in total 450,000 sq ft of space. So it's not like it's a really big problem for us. And we're believers in the science and the opportunity for improving the longevity and the health of human beings. And so we're comfortable with those locations. But again, the world took off, and unfortunately, everyone sort of got caught. So I don't think we would have not done any of those things were we back in those situations at those times. Clearly, if we had known what was going to happen, we probably would have acted slightly differently in terms of the volume of things we did. And I think on the life science, look, we did the two projects in Cambridge that are 900,000 sq ft. That's the biggest part of our development pipeline, 100% leased, 100% pre-leased before we started. And as Doug said, we did a small suburban Waltham life science project, and we did one building at a time in South San Francisco where we built a building and we leased it, and then we built a building, and now that building is 25% leased, where we won't do anything else until it's leased and the market recovers. Mike, just shifting over to the balance sheet now that we seem to be past this higher rate environment, what other tools do you have to manage your debt costs from here? Does your view on the floating rate exposure change in this rate-cutting cycle? I think we're going to keep our floating rate exposure where it is. I don't anticipate us increasing it significantly because I think overall, a portfolio that's got long-term assets, long-term leases should be financed predominantly with long-term debt. So I think we will still continue to have long-term 10-year fixed rate unsecured bonds as the primary piece. Obviously, we went into the commercial paper market this year. I think we could increase a little bit our exposure to the commercial paper market. It's been very successful for us. So we have $500 million outstanding. It's been outstanding for over six months now. And so we are now a more mature and certainly an active issuer that has an investor base that is continuing to invest in us. So I think that's an opportunity for us. We talked a little bit about the convert market before, and we looked real hard at convertible debt and instead of doing the unsecured bond we did three weeks ago, because we can do a convertible debt with a coupon of 3.5%, it's got more fees associated with it, so when we kind of looked at the all-in cost of that financing versus the 5.8% deal that we did on the unsecured side, the convert market all-in would have been 50 to 70 basis points cheaper, but the question is, what's the value of the option you're giving somebody? Because you're giving them an option on your stock that with a call spread is up 35 or 40%. Is that worth 50 to 70 basis points? We concluded to ourselves that it wasn't, so we did the unsecured debt anyway. And then we have private equity that is a clear benefit to us and a strong source of capital that we have, both for example, at 343 Madison, where we already have a partner for 45% of that. And then we have a number of multi-family projects, both in urban locations and in suburban locations, that we can start over in the next several years. Two projects potentially next year, where we would also use third-party capital for a large component of that. And that's very similar to what we've done in Reston Town Center, where we're building a 450-unit project right now, and we've got an 80% institutional capital partner for that. And the reason we would use institutional capital for that is residential buildings, they have lower returns than the commercial buildings that we would do. So we want to goose our return through the fees that we get to help clear our cost of capital. And it's monetizing land that we already have on our balance sheet. The other thing we're looking at is we have a lot of land on our balance sheet. It's at a low-cost basis. There's the opportunity to monetize some of that. So there's four land parcels that we're talking about executing on sales right now, where we could raise up to around $200 million if we're successful in doing that as an additional source of capital. This land obviously has zero income associated with it. It actually has expenses, taxes, and insurance. So it's not part of our valuation at all, if you think about a multiple perspective. So it's a really efficient form for us. We're looking at monetizing some of our land parcels that we just think it's going to be a long time before we could actually execute on building anything there. Is that monetization something near-term, or are you looking at potentially repurposing or getting the planning permissions before going to the market? I think we're doing both. But the $200 million that I talk about is stuff that we've either re-entitled to residential and we could sell to a townhome type of developer, or other land that we just think is longer-term for us and we have a user that is interested in developing it. One, it's next door to a large corporate that would like to secure expansion over the long term. And so they're interested in buying the land. There's another one that's a data center. It's located in a data center type of an area. So there's a lot of demand for that, things like that. We're coming up to time. I have some rapid-fire questions, but just want to check if anyone from the audience has any questions. All right. Well, three questions for you. Do you expect the real estate transactions to increase once the Fed starts to cut? Yes or no? And if yes, when do you expect it to pick up? I'll give you the options. Yes. I would say probably the second quarter of 2025. Perfect, and how would you characterize demand for space today? Improving, steady, or weakening? Improving. Lastly, the majority of companies stated that they were expecting to ramp up AI spend this year. What do you characterize as your plans for 2025? Is it higher, flat, or lower? It's higher, but it is very, very slow. We are going to be very methodical about making incremental investments because you've got to really understand that there's a value proposition associated with whatever you're trying to do. I mean, we're going to do it because it's important to be testing things, but we have never been the first mover when it comes to technology, and we think it has put us in good stead because we have not made a lot of mistakes that we've seen other people make with technology that's just basically been worthless. Thank you for your time. Thank you.