Financial Data and Key Metrics Changes - FFO for the quarter was $1.08 per diluted share, including approximately $0.03 per share of one-time items [22] - Cash same property NOI growth for the third quarter was 60 basis points, with real estate tax appeals contributing to 150 basis points of growth [22] - Occupancy improved modestly, ending at 81%, up from 80.8% at the end of the second quarter [22] Business Line Data and Key Metrics Changes - Over 550,000 square feet of new and renewal leases were signed during the quarter, marking the highest third quarter of leasing activity in six years [5] - SOMA assets executed over 95,000 square feet of new and renewal leases this quarter, with tour activity up 170% year over year [6][8] - In life sciences, 84,000 square feet of leases were signed to date with established biotech companies, indicating strong demand [9][10] Market Data and Key Metrics Changes - Office demand in San Francisco reached a post-pandemic high of nearly 9 million square feet, up from approximately 7 million square feet last quarter [5] - The XBI index is up more than 20% year to date, reflecting strong performance from biotech companies [9] - Over 2 million square feet of sublease space has been taken off the market in San Francisco, indicating a sustained recovery [39] Company Strategy and Development Direction - The company is focusing on capturing growing demand across markets and ensuring assets are well-positioned to outperform [8] - Capital allocation strategy includes recycling capital with a focus on long-term cash flow and value creation [13] - The company is actively engaged in the Flower Mart project, exploring various development scenarios to maximize value [15] Management's Comments on Operating Environment and Future Outlook - Management noted improving workplace norms and a resurgence in leasing activity, particularly in the West Coast office and life science markets [4] - The company anticipates modest improvement in occupancy in the fourth quarter due to accelerated rent commencement activity [23] - Management expressed confidence in the leasing momentum continuing into 2026, driven by strong demand from various sectors [44] Other Important Information - The company completed the sale of a four-building campus in Silicon Valley for gross proceeds of $365 million and acquired Maple Plaza for $205 million [13] - The company raised its 2025 FFO outlook to a range of $4.18 to $4.24 per share, reflecting updated expectations [25] Q&A Session Summary Question: Thoughts on retention for expirations and occupancy commencement - Management indicated a remaining expiration pool in 2026 of about 970,000 square feet, with limited opportunities for additional renewals [31][32] Question: Competitive positioning in San Francisco - Management noted a shift in tenant preferences towards impactful space and highlighted strong demand from AI companies [36][38] Question: Update on KOP2 leasing activity - Management confirmed strong demand across various sectors, with a focus on biotech and life sciences [42][45] Question: Insights on Noy House lease and rent contribution - Management clarified that the Noy House lease would impact occupancy and emphasized efforts to minimize downtime [51][52] Question: KOP lease economics and tenant improvements - Management stated that rental rates are in line with original underwriting, though tenant improvement costs have increased [56][64] Question: Considerations for fourth quarter guidance - Management highlighted a difficult comp from the previous year due to recognized restoration fee income [67]

Financial Data and Key Metrics Changes - FFO for the quarter was $1.08 per diluted share, including approximately $0.03 per share of one-time items [21] - Cash same property NOI growth for the third quarter was 60 basis points, with real estate tax appeals contributing to 150 basis points of growth [21] - Occupancy improved modestly, ending at 81%, up from 80.8% at the end of the second quarter [21] Business Line Data and Key Metrics Changes - Over 550,000 sq ft of new and renewal leases were signed during the quarter, marking the highest third quarter of leasing activity in six years [5] - In San Francisco, office demand reached a post-pandemic high of nearly 9 million sq ft, up from approximately 7 million sq ft last quarter [5] - Life science demand rose over 20% from 1.8 million sq ft to 2 million sq ft in Q3 [40] Market Data and Key Metrics Changes - San Francisco led all U.S. metros in office leasing growth over the last 12 months [5] - Tour activity in SoMa assets increased by 170% year-over-year [6] - The XBI index is up more than 20% year to date, indicating strong performance in the biotech sector [9] Company Strategy and Development Direction - The company is focusing on capturing growing demand across its markets and ensuring assets are well-positioned to outperform [8] - The acquisition of Maple Plaza in Beverly Hills marks the company's first investment in a highly sought-after area with low vacancy rates [12] - The Flower Mart Project is being redesigned with multiple development scenarios submitted to the city's planning department [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the return to office is improving, driven by evolving workplace norms and recognition of the office's role in culture and collaboration [4] - The company anticipates modest improvement in occupancy in the fourth quarter due to accelerated rent commencement activity [22] - Management raised the 2025 FFO outlook to a range of $4.18-$4.24 per share, reflecting positive updates to expectations [23] Other Important Information - The company completed the sale of a four-building campus in Silicon Valley for gross proceeds of $365 million [12] - The company is actively engaged with potential tenants for KOP 2, with discussions reflecting an overall improvement in the life science market [11] - The company is focused on optimizing portfolio returns and maintaining a strong capital structure [13] Q&A Session Summary Question: Thoughts on retention for expirations and occupancy commencement - Management indicated that the remaining expiration pool for 2026 is about 970,000 sq ft, with limited opportunities for additional renewals [30][31] Question: Competitive positioning in San Francisco - Management noted a shift in tenant preferences towards landlords who can deliver space quickly, with significant demand from AI companies [34][36] Question: Update on KOP leasing activity and demand - Management reported strong demand across various sectors, including biotech, AI, and robotics, with a focus on creating a dynamic life science ecosystem [40][42] Question: Insights on NeueHouse lease and rent contribution - Management clarified that the departure of NeueHouse will impact occupancy but the space's high-quality build-out is generating strong interest from prospective users [48][49] Question: Lease economics at KOP - Management stated that lease economics vary, but rental rates are holding steady relative to original underwriting, with higher tenant improvement costs [52][53] Question: Capital allocation strategy and priorities - Management emphasized a disciplined approach to capital allocation, evaluating opportunities for investment and maintaining a strong balance sheet [78][80]