Financial Data and Key Metrics Changes - The company reported FFO per share diluted as adjusted of $2.33 for Q2 2025, up 1.3% compared to the prior quarter [33] - Occupancy at the end of the quarter was 90.8%, down 90 basis points from the prior quarter [33] - Same property NOI was down 5.4% and up 2% on a cash basis for the quarter [34] Business Line Data and Key Metrics Changes - The company leased approximately 770,000 square feet in Q2, with leasing spreads of 5.5% to 6.1% on a cash basis [26] - Tenant improvements and leasing commissions on renewals were down 40% compared to the previous two quarters [26] - The company completed the largest lease in its history, a 466,000 square foot lease with a top 20 pharma [25] Market Data and Key Metrics Changes - Private biotechnology companies represented 30% of overall leasing for the quarter, with nearly $22 billion deployed in venture funding in the first half of the year [14] - Publicly traded biotechnology companies represented just under one-fourth of leasing, with over 95% consisting of new leases [15] - Large pharma represented 5% of leasing for the quarter, buffered from short-term volatility due to significant cash flows [18] Company Strategy and Development Direction - The company is focused on its mega campus platform, which is strategically important for capturing opportunities and supporting talent recruitment [22][25] - The company is making progress on its asset recycling program, with approximately $785.4 million in dispositions to date [30] - The company expects to see a pickup in occupancy as non-stabilized assets are sold [61] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for the Fed to lower interest rates, which is needed for capital markets [7] - There are concerns about the FDA's efficiency, but no major issues have been reported from tenants regarding delays [8][9] - Management noted that fears of spending cuts at HHS may be overblown, and onshoring of R&D could provide a tailwind for the life sciences sector [13] Other Important Information - The company is reiterating guidance for year-end 2025 occupancy at 90.9% to 92.5% [34] - The company has a $3 billion investment in future pipeline projects requiring capitalized interest [38] - The Board maintained the dividend at $1.32 per quarter, yielding 7.3% as of quarter-end [42] Q&A Session Summary Question: Trends or catalysts leading to the Campus Point lease - Management indicated that the lease was driven by a notable big pharma's effort to consolidate its R&D hub rather than onshoring issues [45] Question: Insights on free rent trends - Management noted that free rent did increase slightly this quarter, but it is hard to predict future trends [46][47] Question: Tenant perspective on build-to-suit versus vacant space - Management explained that large tenants prefer build-to-suit options for their robust R&D needs, which cannot be met by existing buildings [51][55] Question: Concerns from tenants regarding FDA leadership changes - Management stated that concerns vary by tenant type, with private biotech focused on cash conservation and public biotech on market health [72] Question: NIH funding concerns - Management acknowledged worries about NIH not issuing grants, which could disrupt capital supply to institutions [76]

Financial Data and Key Metrics Changes - FFO per share diluted as adjusted was $2.33 for Q2 2025, up 1.3% compared to the prior quarter [34] - Occupancy at the end of the quarter was at 90.8%, down 90 basis points from the prior quarter [35] - Same property NOI was down 5.4% and up 2% on a cash basis for the quarter [36] Business Line Data and Key Metrics Changes - Approximately 770,000 square feet were leased in Q2 2025 with leasing spreads of 5.5% to 6.1% on a cash basis [25] - Tenant improvements and leasing commissions on renewals were down 40% compared to the previous two quarters [25] - The company leased 131,768 square feet during the quarter, including the first lease signed at 701 Dexter in Seattle [26] Market Data and Key Metrics Changes - Private biotechnology companies represented 30% of overall leasing for the quarter, with nearly $22 billion deployed in the first half of the year [14] - Publicly traded biotechnology companies represented just under one-fourth of leasing for the quarter, with over 95% consisting of new leases [15] - Large pharma represented 5% of leasing for the quarter, buffered from short-term volatility due to significant cash flows [18] Company Strategy and Development Direction - The company is focused on its mega campus platform, which is strategically important for capturing opportunities and supporting talent recruitment [22][24] - The company has a $3 billion investment in various future pipeline projects, with a focus on preconstruction activities [40] - The asset recycling program is expected to be heavily weighted towards the fourth quarter, with significant dispositions planned [30][31] Management's Comments on Operating Environment and Future Outlook - Management expects the Fed to lower interest rates, which is crucial for the capital markets in the industry [7] - There are reasons to be optimistic about the life science sector, with M&A activity and biopharma licensing deals providing positive dynamics [20] - Management noted that fears regarding spending cuts and changes at HHS may be overblown, and onshoring of R&D could provide a tailwind for the life science sector [13] Other Important Information - The company completed the largest lease in its history, a 466,000 square foot lease, demonstrating brand trust and product quality [6][24] - The company has identified 768,000 square feet of lease rolls with a weighted average expiration date of January 21, 2025, with 20% already leased [27] - The company reiterated its guidance for year-end 2025 occupancy at 90.9% to 92.5% [36] Q&A Session Summary Question: Trends or catalysts leading to the Campus Point lease - Management indicated that the lease was driven by a notable big pharma's effort to consolidate its R&D hub rather than onshoring issues [48] Question: Insights on free rent trends - Management noted that free rent did increase slightly this quarter, but it is hard to predict future trends [50] Question: Tenant perspective on build-to-suit versus vacant space - Management explained that large tenants prefer build-to-suit options for their specific needs and the quality of the location [54][56] Question: Occupancy expectations for the remaining portfolio - Management expects a pickup in occupancy as non-stabilized assets are sold and new leases are executed [64] Question: Impact of FDA leadership change on tenant decisions - Management stated that concerns vary by tenant type, with private biotech focused on cash conservation and public biotechs concerned about market health [74][76] Question: Potential for larger capital transactions - Management expressed a preference for owning more of their mega campus assets and is focused on strategic transactions to monetize non-core assets [84][86]

Investment Rating - The report maintains a "Buy" rating for Hongkong Land (HKL) with a revised target price of USD6.00, up from USD5.23, indicating an upside potential of approximately 18.6% from the current share price of USD5.06 as of May 13, 2025 [5][8][78]. Core Insights - The report highlights that the share price of Hongkong Land has increased by 50% since May 2024, outperforming the Hang Seng Index by 27 percentage points, and suggests that the market has not fully accounted for the potential of the company's new corporate strategy announced in October 2024 [2][23]. - The new strategy focuses on simplifying the business by developing premium integrated commercial properties in key Asian cities and targeting long-term recurring income growth [3][37]. - The report identifies four key factors that support a positive outlook for HKL: successful office divestments showcasing capital recycling capabilities, the beginning of a 10-year transformation plan, sustainable dividend growth supported by rental income, and a shift away from being solely a proxy for prime Central office space [3][4][51]. Financial Performance and Projections - The report revises earnings estimates for 2025-2027, with a slight increase of 1.6% for 2025, a decrease of 2.2% for 2026, and a decrease of 0.8% for 2027, reflecting earnings accretion from recent office sales [5][76]. - The estimated NAV per share has been increased to USD10.00 from USD9.18, reflecting an 8.9% increase, while the NAV discount has been narrowed to 40% from 43% [5][77][78]. - The projected dividend per share (DPS) is expected to grow from USD0.23 in 2024 to USD0.44 by 2035, with a payout ratio of 60-80% of recurring income [43][45]. Strategic Initiatives - The report emphasizes the importance of capital recycling, with a target to recycle up to USD10 billion by 2035 and at least USD4 billion by 2027, of which USD1.2 billion has already been recycled as of April 2025 [4][58]. - A share buyback program of USD200 million was initiated in April 2025, with potential for expansion if divestment targets are met [4][59]. - The company aims to double its recurring underlying profit before interest and tax (PBIT) by 2035 and grow its assets under management (AUM) to USD100 billion [45][36]. Market Positioning - The report notes that HKL is transitioning away from being perceived solely as a Central office landlord, with its Central commercial portfolio now accounting for 47% of its valuation, down from two-thirds a decade ago [3][52]. - The company is focusing on high-end commercial properties and has ceased investments in the build-to-sell segment, reallocating capital to integrated commercial property opportunities [37][38].