Good morning and welcome to Boston Properties Fourth Quarter 2018 Earnings Call. This call is being recorded. All audience lines are currently in a listen-only mode. Our speakers will address your questions at the end of the presentation during the question-and-answer session. At this time, I’d like to turn the conference over to Ms. Sara Buda, VP Investor Relations for Boston Properties. Please go ahead.

Thank you. Good morning everybody and welcome to Boston Properties fourth quarter 2018 conference call. The press release and supplemental package were distributed last night as well as furnished on Form 8-K. In the supplemental package, the Company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. If you did not receive a copy, these documents are available in the Investor Relations section of our website at bostonproperties.com. An audio webcast of this call will be available for 12 months in the Investor Relations section of our website. At this time, we would like to inform you that certain statements made during this conference call, which are not historical, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Boston Properties believes that its expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks that could cause actual results to differ materially from those expressed or implied by forward-looking statements were detailed in yesterday's press release and from time-to-time in the Company’s filings with the SEC. The Company does not undertake a duty to update any forward-looking statements. I’d like to welcome Owen Thomas, Chief Executive Officer; Doug Linde, President; and Mike LaBelle, Chief Financial Officer. During the question-and-answer portion of our call, Ray Ritchey, Senior Executive Vice President and our regional management teams will be available to address any questions. And now I'd like to turn the call over to Owen Thomas for his formal remarks.

Thank you, Sara, and good morning everyone. We just completed another strong quarter capping off one of the most productive and successful years in Boston Properties' history. Specifically, in 2018, we completed 7.2 million square feet of leasing, our second highest level of annual leasing ever. We delivered and placed in service 2.3 million square feet of new developments, the commercial component of which is a 100% lease. We commenced 2 million square feet of new developments, which are 80% preleased in the aggregate with strong customers such as Verizon, Fannie Mae and Leidos as anchor tenants. We completed important new acquisition joint venture including Santa Monica Business Park, doubling our Los Angeles presence, and a site at 3 Hudson Boulevard in New York that can accommodate 2 million square feet of new development. We completed approximately 720 million of non-core asset sales. We increased in-service portfolio occupancy, 70 basis points over the years to 91.4%. And lastly, we increased our regular quarterly dividend 19%. In fact Boston Properties has increased its regular quarterly dividend by more than 46% over the past three years. And more recently in the fourth quarter of 2018, we generated FFO per share in line with prior guidance, and up 7% year-over-year. We leased 1.8 million square feet including of 300,000 square-foot leased with Millennium Management at 399 Park, bringing this focus asset to 93% leased. We raised $1 billion as the green bond in the unsecured debt market on favorable terms, and we increased the midpoint of our FFO per share guidance for 2019 by $0.11, raising our projected 2019 growth to over 10% at the midpoint. Our performance in 2018 highlights the key characteristics that make Boston Properties unique and its ability to generate growth and shareholder returns in the office sector. Our…

Thanks, Owen. Good morning everybody. Go back, we had great leasing success in 2018 including the four leases from major new developments that Owen described and our development delivery income continues to accelerate, and it is certainly true there is a barometer of real time economic activity, looking at our revenue from the office leasing business, really a lagging indicator, given the lead times inherent in our transaction cycle. It is also true that the decisions made by our customers a year ago or two years ago or even five years ago are just starting to be seen in our top line revenue and they are contractual and growing for years to come. So, let’s have a case in point at Salesforce Tower. We signed our first lease in April of 2014 and the building won't achieve its all occupied rent revenue run rate until October of this year. Starting at that point, the contractual cash rent increases on average 2 plus percent per year. The first lease exploration in the building and it's only about 70,000 square feet is 2027, and based on the last few deals and inferior buildings in the market in '18, the rent on that particular lease is somewhere between 35% and 40% below markets today. As Owen despite the macroeconomic volatility leasing activity feels a lot like 2018. Our primary customer large real-estate users either public or private start ups are established continue to make decision the upgrade and consolidators space and in some cases it's been. While we continue to see the bulk of office demands growth from the technology and the life science businesses, and flexible space operators there is also robust demand for new space do not necessarily growth space from traditional industries, as evidenced by the incredible activity in Manhattan…

Great, thank you, Doug. Good morning. As I always said, we end at -- we had another strong quarter in the fourth quarter. Once again, our portfolio of revenues increased sequentially just over to 4% over last quarter and 7% year-over-year. We also grew our share of same property NOI by 3.4% on a GAAP basis and 7.9% on a cash basis over the same quarter last year. And net rents on our second generation leases that commenced this quarter were up over 11% over the expiring lease, all of these are positive trends. Our occupancy climbed to 92.1%, which is a 100 basis point higher than last quarter, if you exclude the delivery of Salesforce Tower. We brought Salesforce Tower into the in-service portfolio this quarter at 70% occupancy which dampened our overall occupancy to 91.4%. Salesforce Tower is a 100% leased, and we expect all of the office tenants will be in occupancy by the end of the third quarter of 2019. We issued a $1 billion green bond with a 4.5% coupon in the quarter and use the portion of the proceeds to redeem $700 million of high coupon 5.78% bond that were due to expire in late 2019. We booked the loss on debt extinguishment of $16.5 million or $0.10 per share, which was primarily the yield maintenance penalty for paying off the bonds early. This charge was included in our adjusted guidance issued in December. We are now taking care of all of our material debt, maturities through late 2020. We reported fourth quarter funds from operations of the $1.59 per share and full year funds from operations at $6.30 per share, which was in line with our guidance. Portfolio revenues and management service fee income were both slightly ahead of our plans but they…

[Operator instructions] Your first question comes from Manny Korchman with Citi.

Just focusing on New York for a second, if you think about Brookfields announcements that goes back at 2 Hudson Yards. Just wondering if that curtails anything about your 3 Hudson developments whether it'd be your desire to go spec or wait for tenants to come in or if there is any shift in timing for that development?

So, I'll make a brief comment and join in John Powers, I'm assuming you're on and you can you can add on. So at the moment with the two developments at the Hudson Yards, there is -- in one building, there’s just over 1.5 million square feet and the other building just over 1.2 million square feet of available place. And if the announcement that you saw yesterday, it's actually true that the Brookfields tends to start on spec that's another 2 million square feet. So, that's 4 million square feet right there. And then obviously, you have other buildings in Midtown Manhattan that are under construction. I think that we would certainly be looking to have a significant amount of preleasing before we started. John?

Well, Doug's giving you the facts there. On our situation, we've been working hard since we closed the deal with Joe to redesign the building and we've done that. We're in a 100% BDs now. The construction is ongoing on the foundations and we're talking to some tenants in the market, but clearly we need a significant interest from tenants to move forward with the project. We're very excited with the redesign by the way and it's been very well received by the tenants that we showed it to.

The other question I was just looking at sort of new markets and new submarkets you're looking at. Is there anything else out there that you're actively tracking that you could share with us right now.

Manny, it's Owen, good morning. Nothing outside the perimeter that we've described.

Your next question comes from the line of John Kim with BMO Capital Market.

I wanted to ask on some of the components of your guidance change this quarter from last quarter which includes the higher occupancy assumption. What was that primarily due to? And also if you could talk about the termination fee where this was coming from and how likely it is you are going to release the space?

So, the guidance change is obviously we increased our guidance last quarter and we also announced I guess earlier this month that we signed a bunch of leases that Doug spoke of in New York City which is over 550000 square feet. We were working on some of those leases last quarter, but they clearly weren't complete. So, we were certainly handicapping the likelihood of those things. And I would say, the execution of those leases some of which are starting you know revenue although not cash revenue in the first and second quarter brought up the drive up the bottom line of our guidance because we got those things. I would say that with a continued velocity of activity that we're seeing in our markets is driving up the high end in the overall guidance range. So those are really the two pieces that are on that are hitting occupancy the increase in the occupancy and the increase in guidance range. Obviously a little bit also came from interest expense as I mentioned. On the terminations, Doug really spoke about the recaptures both in Boston, suburban Boston, he mentioned one and in New York. So we're recapturing space that is expiring, a year from now or even five years from now, and we are getting termination payments that will that are driving our termination income guidance in 2019, which is higher than 2018, but were doing that because we have leases that are signed. So, there may be some interruption in cash rent while that tenant builds out their space, but ultimately what we're doing is we're signing leases now and based and very strong market at strong rental rates that are much higher than the expiring rental rate because we think that we want to take advantage of the market condition we're in.

And then if I can ask on the sale of the TSA developments and the impairment that you took as part of that sale. Is your view that the market value of this asset will not exceed the cost? And if that's the case, what's really changed since you out of growth of development?

So, there's a, I would say a lot of financial counting minutiae that's involved in how we recorded the sale of the TSA development. I would just point out two things. One is that we are guaranteeing completion and we are also entitled to any savings under the contingency line item in the budget, as well as we are getting significant development fees when you include those things along with clinical with our land cost was. This was a profitable development for us from a valuation creation perspective. And that counting just let us to having to report as the way it was reported.

Your next question comes from the line of Craig Mailman with KeyBanc Capital Markets.

Owen, just going back to your commentary about being a little bit more cautious on how you guys are looking at developments other than kind of higher preleasing targets potentially on some of these. Are you guys changing at all your yield requirements or any other underwriting kind of items?

Yes, I wouldn't say that we changed our yield requirements I had pointed to you in fact, the reference rate the 10 year U.S. treasury drop 50 basis points in the last few months. So by keeping our yields flat in essence we increased profit. But I think the answer to your question has a couple of things. One, as you suggest, you know what kinds of preleasing are we going to require for new developments, and I know everyone wants us to give a precise number on that question and that's not really feasible or possible given that all circumstances are different depending on the scale of the building and the economics, and the velocity in the market, and all that type of thing. But yes, I do think we will today seek to have even more preleasing before we launch new developments, and also I think it's being disciplined and looking at new acquisitions of both buildings and sites I mean for example, recently we were chasing a site that we were interested in here in the Boston region and we topped out, at a particular value and at least based on the knowledge that we have today, we are not going to win that. So that would be an example of the increase disciplined that I described.

Yes, Craig, I think in big picture our underwriting criteria have just gotten a little bit more stringent or you thought you might lease up space quickly by elongated where you think you are going to be able to have to provide an improvement allowances or get rental rate increases you might temper those expectations. And so it just all adds into the formula and so it just makes it a little bit more difficult to go after something that we otherwise might have been more aggressive on a year ago.

And then on Platform 16 just some clarifying points. On the purchase option of 125 bucks a foot, is that on the buildable 1.1 million? Or is that kind of land that they are…

Yes, that’s on the buildable.

So you guys are looking for all like 137 million potentially on that. And then are you guys the way the co-development is going with a partner are they kind of doing the non-office and you guys are doing all the spend on the office? Or could you just give us a little more color on how that works?

So this is pure office development, and the group that put it together is staying involved in the development component, and we are the principal capital partner and we will ultimately own 100% of the asset. All being said as Owen described, we are in serious discussions with a capital partner to participate in our interest on a long-term basis.

Have you guys had discussions with tenants? Or your discussions about higher preleasing with this project given the adjacency to Google and everything going on in San Jose kind of require less in your view to go forward or how are you guys thinking about it?

So let me just answer the question in the following way and then I'll let Bob talk about leasing conversations. So, the property is an assemblage site and we are literally as we speak I believe, doing surveying work and within expectation that we are going to demolish all the existing structures, do all the relocation of utilities and what we refer to is the enabling work that’s all going to go on over the next six plus or minus months. Then this is a structure of a series of buildings and they all sit on top of a subterranean parking structure. And we will then make a decision as to when we want to start that subterranean parking structure and how we would phase. And this is a feasible project. And so, you know no different than when we started our conversations about Salesforce Tower back in 2013. We are moving forward. We are excited about the project and we are hopeful that leasing markets will provide us with a tenant or tenants well in anticipation of our commencing instructions but you never know. So Bob do you want to just comment on the leasing activity?

Yes, we had discussions with tenants and we plan to talk to other tenants. I think the important thing to point on the site is it's the only transit oriented site between San Francisco and San Jose that will have both Caltrain and BART access. BART has actually just started construction this past week where you can provide up to 1 million square feet at a location.

Hey, Doug, it's Jordan Sadler. One other quick one for you, if I could. Your cadence on the New York City in the prepared remarks seemed pretty positive particularly given the asking rents on new development. Do you expect New York to see an improvement and net effectives in '19?

We certainly think that net effective rents are not going down and that there will be modest increases in the rental rates and the concession packages will have half blackout.

Your next question comes from the line of Blaine Heck with Wells Fargo.

As you guys mentioned, these are some turbulent times with respect to what’s going in DC, given that the government is your second largest tenant, I was just hoping you guys could touch on any specific areas within your portfolio? Do you think could see some disruption because of the shut down and also if you could touch on any possible effect on Fannie Mae as you guys move ahead with their 850,000 square foot build to suit in Reston?

Ray or Peter do you want to take that.

Well, I’ll start and Peter can jump on. First of all as relates to GSA, one of the great things about leases there, they are long and strong and not related to annual appropriations. So, we have seen actually no change in the current GSA structure as relates to our existing leases. We have a major lease expiring here in a few months and we feel very, very confident about the renewal there. As it relates to Fannie Mae, it remains one of the most profitable entities in the Unites States government. So, we are very much positive about the outcome of the development. They’re still keeping all those space. They have the option to take more. They’ll be in our conference room today just to talk about the status of the construction, and we’ll force them ahead, doing very good about the NMA.

Yes, I’d also jump in. The deal that was referenced earlier in the call at New Dominion is actually what the government agencies that's already exercised their independent leasing authority, and it happens to also be a mission critical location for the government and the buildings are at the highest level of security that’s provided would be almost impossible to replicate in any kind of reasonable timeframe. So in that regard, we feel very good about the near term exposure.

And we have also mitigated our exposure with the sale of 580 and the presale of GSA. So, our exposure to the government is much less than it was even three or four months ago.

And then maybe, Mike, can you just touch on the Salesforce buyout? How was the 187 million calculated? Or maybe how is that allocated between the buyout of the 5% interest in the property? And any promotes that were paid? And how does that bio affect the yield on your total investment in the property?

So, Blaine, this is going to be really unsatisfying answer, but we’re in discussions with the City Assessor right now and it's just not appropriate to discuss how the valuation was done and what it was, how all of those sort of elements were figured out, we just can’t talk about.

Lastly, noticeably, the estimated total investment on 159 East 53rd increased quite a bit from 106 million last quarter to 150 million this quarter. Can you just touch on what change there and is that going to have any effect on the pro forma yield that you guys are looking at?

So, the reason that the cost were driven up were almost entirely due to the lease that we have with NYU which is a 30 year lease versus what we originally underwrote which would have been a shorter term lease, effectively kind of 15 years would have been what we would have underwrote. So the leasing commission associated with that and the tenant improvement associated with that are the majority of that increase and that lease officially came out of escrow within the last quarter. So we determine to put that into our budget this quarter because there was uncertainty. The only other thing that really changed on this, we’re making some enhancements to the retail aspect of the job and improving the design and what the retail environment and atmosphere is going to be that takes the most significant advantage of the opportunity that we have to upgrade the place taking there, so that's a design is driving a little bit more cost into that part of the job, as well. And but we still expect the project to meet the return criteria that we typically sellout for this type of development.

But just to be perfectly honest about this, this is a place making exercise as we said there is a great incremental investment on the works that we did at $159 to the 185,000 square feet that we release to the tenants that taking for 30 years. The incremental return on the capital for the food hall and the other "place making experiences is de minimis", and it’s really going to be reflected in the ability to rent space at 601 Lexington Avenue, 399 Park Avenue, and 599 Lexington Avenue, so it's not really -- the yield was not with that result.

Your next question comes from the line of James Feldman with Bank of America.

I'm hoping to get related thoughts on co-working and what you think that tenant base is going to mean for the office sector going forward? I mean we've seem, rework has had a little bit of trouble raising its flash around the capital and we've seen kind of proliferation of different types of approaches to that business. So, as we -- just kind of an update on what your latest thoughts are and what you think it's going to mean for you guys?

It's Owen. Look, we continue to believe co-working I'll call it shared workspace business to be an important sector of the office business it's been, it's been an important net absorber of space, I think in the markets where we operate, the total square footage of this lease by these operators today is somewhere between 2.5% and 5% depending on the city and it has been growing. We work as clearly the leader by scale, but there are other operators and in fact as discussed on our prior call where we've been doing it some of it ourselves on a small scale basis in a couple of our buildings. So I think the business has created important new options for customers for individual and retail customers it's a way to get into a community and a high quality space and in many cases, high-quality buildings and from landlords it's aggregated demand that would be otherwise very difficult to leases too. So I think that's been very positive. And I think for a larger companies it's given them flexibility, we don't see companies -- large companies taking all of their space requirements and putting it into shared workspace, but we certainly see some of them procuring single-digit percentages of their space on a flexible basis to try to manage that -- the space procurement process which can be difficult, when human resource requirements are a lot more volatile than their ability to procure space. So, there has been a lot of press lately about we work ability to raise additional equity capital that may have some impact on the business. We don't know yet, but in general, I would say this sector is an important part of the office business, and as we think it's been a very positive and many of the shared workspace companies like we work are important customers of Boston properties.

And Jaime just to add a couple more thoughts, so if we think about our portfolio and how the flexible office operators have impacted our portfolio and the margin we think it's been a positive trends for the kinds of spaces that we have listed them in the places where we have lease that space and at the same time and I don’t think its coincidence we have done more large, long term leasing with corporate customers, call it the last 2.5 to 3 years than we have ever done in our history. And our average lease rent has actually gone up slightly as opposed to down slightly. So it has not impacted our business at all in terms of our portfolio other than again in those instances where we have done a transaction with one of these operators we think it's incrementally help us in some way shape or form. In Washington DC its aggregating demand and Embarcadero center it changed the image of a particular space which we use as a showcase to demonstrate to nontraditional tenants how they could use Embarcadero centers infrastructure to change the image of their space at 200 Clarendon St. we were struggling with convincing people that this was not a attired state financial services building and we did a transaction and then we got a whole host of customers who actually use the flexible officer provider space on a short-term basis while we were building out their space in the building so it was a great shock absorber. So there are lots of different reasons why this company works. And it is here to stay there are clearly places where all kinds of companies think about how this might be helpful to their portfolios, but as Owen said it is not going to displace the business that we are in. And we are very comfortable that we can work cooperatively with these types of users in a symbiotic way.

Do you have any thoughts on how much larger the sector can become? I know you have mentioned that kind of less than 5% to most markets.

Well, so I think its market dependent right. I used an example of San Francisco and in San Francisco there just over call it 3 million square feet of space. There is no availability there are no blocks of space. If they wanted to double in size they would have to take every single block of space that is coming available in the next year two years three years in order to get there and that’s just not going to happen. Similarly, in Boston it’s a very competitive market and so it's just going to be really, really hard for them to grow in a meaningful way relative to the percentage of the market. So I think it's going to be different market by market. Bryan, do you any thoughts on that?

Yes, I think part of it is also identification of product bifurcations. So for example the traditional co-working is different than enterprise leasing in the smaller spaces without the community aspects to it. So it's almost a totally different product and what's taken place out there is everybody is lumping everything together and it creates some illusions that you probably are not necessary in terms of the size and scope. So a lot of this has to do by defining what the product is. So as an example with our flex product we don't have the community managers, we are not looking to provide additional services. It's just highly flexible space that’s a shorter-term lease and that's quite different than other products. So a lot of it has to do with their business lumping everything together.

And then, we have seen a lot of large leases from tech and media companies in the last couple of years. What gives you comfort that the space that they will use and we are not seeing excessive expansion here?

So Jaime, in comparison to 1999 to 2001 year in the dotcom era, the companies that are taking down the space are what we refer to in our small circle is tech tightened and these companies which have multifaceted businesses, multifaceted growth aspirations, and they are hiring people at enormous rates. And so, they are filling their space as quickly as they can get it. And interestingly what is going on is that they are looking to find those locations that are closest where the talent is and where they can attract the talent. And just as again sort of to talk about Downtown San Jose, the reason that side is so interesting to us today and remember that we do have another site in Downtown San Jose that we have owned for 20 years and we haven’t gotten going yet. So, this was the double down in Downtown San Jose, is that the idea that companies are going to put their employees that are living in the city of San Francisco, put them on coach boxes and have them travel down to 280 or the 101 for up to three hours a day of the commute it's just becoming really tired. And so having the ability to have a transit oriented location, where they can get on the Caltrain Bullet stop in San Francisco and be down in Downtown San Jose in about an hour is a very, very attractive preposition, and Google has also made a commitment to build housing and retail and also some other things. So, it was going to become a really interesting Downtown. And our view is that the market has really changed down there. And so what was once going to be an 800 plus thousand square foot either office or residential site at the Plaza at Almaden, we are now permitting for a minimum of 1.3 million square feet and could be larger than that. The parking ratios have changed. The use of trifurcation has changed and we just think these are the types of locations where companies are going to go. And you’ve obviously seen Amazon and Google and Facebook make tremendous piece of the base acquisitions across their marketplaces, not just in Silicon Valley, but in Los Angeles and in Austin and in Boston and in Washington DC. And we just -- we’re comfortable with these companies are long-term growth organizations that are going to be very aggressive about hiring talent to feed their businesses.

Your next question comes from the line of Garrick Johnston from Deutsche Bank.

How was the entitlement process for new CBD development currently shaping out by market? And I was wondering if you had experience any deltas notable we're sharing?

So, do you have half hour 45 minutes, that’s how long will take to answer that question. Why don't I let Bob Pester talk about what’s going on in San Francisco. Obviously, with our site at Fort Harrison and at the CBD site, and then I'll let Bryan talk about, what’s going on at Back Bay in Boston, Boston because those are sort of the two entitlement opportunities that are in front of us right now.

In San Francisco, the Central SoMa plan was proved and immediately there were four lawsuits filed which all are CEQA land suits, which pretty much will put everything on hold unless they are settled or someone could elect to go ahead and be subject to whatever happens in the lawsuits. San Francisco continues to be probably one of the most difficult markets in the United States to get entitled in, and other than the 6 Central SoMa sites that are called super sites. The Giants Mission Rock in Pier 70, there is not a lot on the horizon as far as feature development in San Francisco of any significance.

So in Boston, our project in the Back Bay is probably most significant on the commercial side. We do have some residential components to it and we see that to be at least the couple more years of permitting. But not having to do with anything other than that’s the process and it’s a complicated site over a transportation hub. So the Back Bay has limited amount of foreseeable, will say product line coming on in the commercial side. And that goes for Cambridge as well. We are seeing as it was noted earlier a real discipline amongst the developers who have states that are permitted and all seem to be conditioned on preleasing as well.

And just last one for me. It was interesting to see the land acquisition at Carnegie Center in Princeton. I was wondering, if you just share some further thoughts on the suburban addition? And I'm assuming this would be a preleased type of development perhaps life sciences, anymore inflow there would be interesting?

When Boston Properties bought Carnegie Center 20 years ago, we bought the buildings and we got plus option to purchase the site. And over the years, we have purchased a handful of the sites and done build the suites for customers. That option expired last year. So we were faced with the decision on whether to let the option expire or to exercise and purchase all the land part. So we access -- we obviously elected the latter. So we do have all this land, we acknowledge Princeton is not our fastest growing market. That all being said we do have some uses for the land. So for example, right now we have a customer parking need that we're going to satisfy with the -- with one of the lots that repurchase, we anticipate our ability to sell some of these individual paths which we will do, but perhaps most importantly, our perspective is our investment in Carnegie center is more valuable with the buildings and the development opportunity, unified rather than as they are being separated and that was a key driver of the division.

Your next question comes from the line of Alexander Goldfarb with Sandler O'Neill.

So two questions, first, just sort of continuing on the Princeton theme. Mike, you spoke about getting exciting, fully exciting Annapolis Junction. Princeton, it sounds like you may exit as well or you may keep. But as you outline your guidance for this year, is there a certain amount of dispositions that's in their meaning if you fully exited Annapolis Junction or anything else, does that impact your guys ability to deliver on your growth this year? Or is there some potential that dispositions could disrupt what you guys have laid out?

Alex, I am going to answer the former and I'll let Mike jump in on the latter. So, we have no current plans to exit our Princeton investment. We do think purchasing this land for the reasons I just outline on the last question, we think our investment in the whole project is more valuable by owning the land, but we have no near term plans at exit it. That all being said a week intend in 2019 to continue with our non-core asset disposition plan and again we haven't finalized our exact list this year, but I would anticipate that it will revert back to levels of '16 and '17, which would be and accounted to $250 million maybe $300 million sales in 2019.

And Alex, as reflected in guidance as I mentioned in my call notes. We haven't included anything additional other than what's in our release for asset sales within our guidance. So some of what were selling as Owen said is non-core some of it is land parcel that we don’t think we're going to develop, so we really don’t have a meaningful impact. Than a lot of the other non-core stuff you're talking about is kind of suburban stuff that is not that big. So, yes, some of it does have NOI that would come out so we're going to get cash and we would deploy that cash so that would help and it would reduce our line of credit usage. So there is kind of both sides of it and without knowing exactly which assets there are we think it was inappropriate thing to do that kind of put up ex amount in the guidance. We would rather just say there is nothing in the guidance and give us time to think kind of things we are thinking about. But I don't think it would have a meaningful its not going to be huge, its not going to have a meaningful impact.

And then the second question is sort of continuing the co-working theme. Dock 72 initially takes occupancy in the second quarter of this year, still only 33% leased. It's one sort of outlier in your New York portfolio. Presumably, you want to lease it up before assessing what your options are with it. But as you stand today, what are your thoughts on keeping that versus selling it as I say, it stands out versus the rest your portfolio in New York?

So Alex, we have no plans to sell Dock 72. Our current focus as you suggest is certainly leasing the asset and that’s what we are focused on now.

Your next question comes from Tom Catherwood with BTIG.

A quick question on New York and then Reston; In New York, Mike or I think Doug, I appreciate your commentary as far as leases over $100 a square foot. You mentioned though obviously the slower demand when it goes over $120 a square foot. What are you seeing as far as interest in and options for your vacant space at 767 Fifth?

So, John, do you want to take that.

Yes, well, we think the market last year was really hot 32.4 million. We haven’t had a year like that in New York since 2000. So, this is really a lot of momentum. And notwithstanding the equity market jitters at the end of December, having talk now to a number of brokers and looking at the market, things still do you rolling along. So, we are optimistic about what's happening at GM, but we do have competition coming on place during the year. 425 Park is going to be a great building and 550 Madison the top floors are going to be good. But we think the product is still outstanding the best in the market and we are starting to work on those blocks that are coming up in '19, '20 now.

And then, John, maybe one more on the GM building, anymore clarity as far as the timing of the ins and outs for the retail portion?

Yes, we are working very hard with Apple on the Apple Store, and we don't have a date, but certainly that date will be sometime in the first half of this year. And we are working also with Under Armour because Apple is the temp store now and wants to stay there and we work things with Under Armour. So that will work for them although the Under Armour still will be delayed, resulting as the result of the Apple staying in the temp store. And we do have some Cartier left of course and we do have some interest in that space, and we think just something there in the first half of this year.

And then just quick one on Reston. Doug, I think you mentioned a place making project down in the town center and making some improvements there. What were you referencing to? And do you have a sense of what that cost impact could be?

Peter, do you want to take that?

Sure, so, this has been going on for probably in terms of design and rebranding of the lower year. And in the next quarter or so, we’re going to start the actual physical improvements. We have done a few minor ones. To a lot of the public around, through the Town Center there’s a few been there, there is a number of larger public open venues, the pavilion area around the fountain et cetera. And I would say over the course of probably the next 24 months, we’re looking at investment that’s probably plus or minus in the $3 million. We’re also in the Fountain Square buildings which the original office building already underway with redoing those lobbies which were ready for the refresh that is 25 plus years old. So, I hope that answers your question.

Your next question comes from the line of Daniel Ismail with Green Street Advisors.

Just a bigger picture question on the utilization space by your tenants. One of your peers in some recent years articles have suggested that the justification trends of the last few years may have over short the mark. Curious what are you seeing in your end portfolio with respect a new or renewal leases? And how you guys are planning for new developments in terms of space per employee?

So, why don't start with Bryan and then if any of the other guys want to chime in, they should do that.

Yes, one of the things that ties with the question about how clients are using their space earlier, was that the sophistication with these clients are working with the great examples of Verizon, is incredible versus let’s say the year 2000 when you had growth from tech companies that were gabling down space and really didn’t have an idea of their utilization, their growth rates et cetera. What we’re finding across the board is the sophistication of the users is very knowledgeable of how they are use that, how much space they’re going to use it, and its far more accurate in terms of their needs. So because of that we can shift that also been a great discipline that’s been added to the market and then you add that with the shock absorbers that Doug mentioned in terms of how they are using some of the these shorter term space. I think it's really healthy.

Bob, you might want to describe how everyone has been building out Salesforce Tower, right. Because it’s the newest sort of CBD building that we have and how their "program" has worked.

The build out varies the tenant on the type of the tenant that I can say in the case, Salesforce it's all been seeding for the most part and they're about a 160 square feet per employee. I know that they have relaxed their requirement as far as trying to get tighter than that. Initially, I think they were targeting a 120 when Ford Fish was there renting the real estate department.

Okay, that’s helpful. And maybe just staying in San Francisco, have you guys noticed with I know it's only about a month in 2018, but any impacts on proposition fee either on the tenant side or near and if your ability to push through that increase on new leasing?

Yes, I would respond that. We haven’t seen any pushback from tenants on that and we haven’t seen any tenants that leave the market based on -.

We have time for one final question and that question is a follow-up question from the line of Manny Korchman with Citi.

Thanks for taking follow-up guys. Just Doug or John, could you just run through your rent growth expectations throughout the different submarkets of New York?

John, you want to start?

Rent growth in submarkets of New York. So, first, when we say, we don't have a lot of space to lease. So, if you are talking about our buildings, there is only a few building -- few pieces of space that we have to look at. I think will do well at GM and will have some rent close there clearly the block we have left at 399 there will be wrinkles there and that's probably states that over a $100 a foot. 159 is all leased and I guess when we look at the base of 510, I would say will definitely have rent growth there over the deal we've had in place.

Okay, I think that completes all of our questions. Thank you everyone for your interest in Boston Properties.

This concludes today's Boston Properties conference call. Thank you again for attending and have good day.