Boston Properties(US:BXP)2025-10-29 15:02Financial Data and Key Metrics Changes - Funds from operations (FFO) per share for Q3 2025 was $1.74, which is $0.04 above the forecast and $0.02 above market consensus [5][38] - The midpoint of the earnings guidance for the full year 2025 was raised by $0.03, now projected at $6.89-$6.92 per share [5][40] - Occupancy in the same property pool increased by 20 basis points from the previous quarter, reaching 86.6% [21][38] Business Line Data and Key Metrics Changes - Over 1.5 million sq ft of leasing was completed in Q3 2025, a 39% increase compared to Q3 2024 and 130% of the last five-year average for the same quarter [6][5] - Year-to-date leasing activity reached 3.8 million sq ft, which is 14% greater than the first three quarters of 2024 [6] - The total portfolio percentage leased for the quarter was 88.8%, a decline of 30 basis points, but an increase of 10 basis points from June 30 [22] Market Data and Key Metrics Changes - S&P 500 earnings have been growing for nine consecutive quarters, with a projected growth of around 11%-12% for 2025 [6] - Office transaction volume in private markets improved, with significant office sales reaching $12.9 billion in Q3 2025, up 6% from Q2 and 55% from Q3 2024 [8] - Direct vacancy for premier workplaces in key markets is 11.7%, which is 22% lower than the broader market [10] Company Strategy and Development Direction - The company aims to lease space and grow occupancy, with a focus on premier workplace assets in core gateway markets [5][10] - A strategic goal includes selling 27 non-strategic assets for approximately $1.9 billion by the end of 2027, with $1.25 billion in transactions already closed or underway [7][8] - The company is reallocating capital to premier workplace assets and has launched new developments in New York and Washington, DC [12][14] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are growing and utilizing their space more intensively, leading to positive leasing market conditions [16] - The company expects to see a 200 basis point increase in occupancy by the end of 2026, driven by active leasing and market conditions [52][70] - The overall market for office space is improving, with more availability of capital at better pricing [16][37] Other Important Information - The company recorded $212 million in impairments related to assets part of its strategic sales program [39] - The debt markets have improved, allowing the company to access financing at favorable terms, including a $1 billion unsecured exchangeable notes offering [35][37] Q&A Session Summary Question: How is the company approaching smaller markets like Seattle and LA? - Management indicated that there are no current development opportunities in LA or Seattle due to weaker leasing conditions, but they would consider acquisition opportunities if they arise [46][47] Question: What is the confidence level regarding occupancy increases in 2026? - Management expressed confidence in achieving a 200+ basis point increase in occupancy by the end of 2026, supported by ongoing leasing activity [51][52] Question: How is the company addressing the recovery in San Francisco? - Management noted that AI demand is primarily in low-rise buildings south of Mission Street, and they are seeing growth in leasing activity from technology companies [54][56]