Financial Data and Key Metrics Changes - Core FFO per diluted share for Q4 2025 was $0.35, down from $0.37 in Q4 2024, attributed to the sale of two projects and higher net interest expense [26] - AFFO generated in Q4 2025 was approximately $18.7 million [26] - 2026 annual Core FFO guidance is projected to be between $1.47 and $1.53 per diluted share, reflecting an increase of $0.08 at the midpoint over 2025 results [28][30] Business Line Data and Key Metrics Changes - Total leasing volume for 2025 reached 2.5 million sq ft, representing approximately 16% of the portfolio, the highest in over a decade [8] - In Q4 2025, approximately 679,000 sq ft of leasing was completed, with nearly 70% related to new tenants, resulting in a year-end lease percentage of 89.6%, an increase of 120 basis points over 2025 [10] - Rental rates for leases executed in Q4 increased approximately 12% on a cash basis and 21% on an accrual basis [11] Market Data and Key Metrics Changes - The number of Fortune 100 companies requiring a five-day workweek in the office rose to about 55%, compared to 5% two years ago [6] - Positive absorption was reported in 50 markets in 2025, up from 33 in 2024, marking the highest number since 2019 [6] - Sublet availability has declined, with only 4 million sq ft of new office space delivered in Q4 2025, the lowest since 2012 [7] Company Strategy and Development Direction - The company is focused on leveraging its portfolio of recently renovated, well-located, and amenity-rich properties to drive sustainable earnings growth [9] - The strategy includes a hospitality-infused service model to enhance tenant experience and retention [9] - The company aims to achieve mid-single-digit organic FFO growth in 2026 and 2027, supported by increased occupancy and rental rates [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the occupancy trough occurred in Q4 2025, with expectations for a rebound in leasing and occupancy rates [12] - The company is optimistic about the demand environment, driven by a shift in workplace strategies among large users [50] - Management believes that the unique positioning of their portfolio will continue to attract tenants, even in challenging markets [51] Other Important Information - The company completed significant refinancing activities, issuing $400 million in new bonds and repurchasing $245 million of higher coupon bonds, resulting in annual savings of approximately $0.04 [27] - The out-of-service portfolio is expected to stabilize and rejoin the normal operating portfolio by the end of 2026 or early 2027 [10] Q&A Session Summary Question: What is the breakdown of renewal versus new leasing in the 1.7-2 million sq ft target? - Management indicated that it is roughly 50/50 between new activity and renewal activity [34] Question: What is the potential cap on lease percentage given structural vacancies in some markets? - Management believes they can push lease percentages upwards of 91%-92% across the portfolio, despite some challenges in specific markets [40] Question: What types of products is the company targeting for disposition in 2026? - Management noted that they are looking to monetize non-core assets, particularly in Houston, and are progressing with land parcels under contract [44]