Good morning and welcome to Boston Properties' Second Quarter 2019 Earnings Call. [Operator Instructions]. Our speakers will address your questions after the formal remarks during the question-and-answer session. At this time, I would 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 the Boston Properties Second Quarter 2019 Earnings 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 on the Investor Relations section of our website at bxp.com. An audio webcast of this call will be available for 12 months in the Investor Relations section of our website. At this time, I'd 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. Although, Boston Properties believes the expectations reflected in any forward-looking statements are based on reasonable assumptions that can give no assurances that the 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, Douglas 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 had another quarter of accomplishments and continue to execute successfully on our revenue and earnings growth strategy. Let me start with key financial highlights. In terms of FFO per share growth this year we continue to outperform every Company in our sector and a vast majority of REITs overall. This past quarter, we grew FFO per share of 13% over the second quarter of 2018, which was also $0.04 per share above the midpoint of our guidance for the quarter and $0.04 above the street. Our share of cash same property NOI growth was also very strong at 9% for the quarter. We also raised our full year 2019 FFO per share guidance by $0.06 at the midpoint, which would result in 12% FFO growth year-over-year, again, well ahead of peers. We increased occupancy for our in-service office and retail portfolio 50 basis points from last quarter to 93.4%. This also marks a 300 basis point increase from a year ago and our highest occupancy in over five years. Our growth is well balanced coming from both delivery of new developments and same-property performance. And in terms of operational highlights we had a busy and productive quarter. We completed over 2.4 million square feet of leasing, which is well above our long-term quarterly average for the period. We began construction of 225 Main Street in Cambridge for Google Hub on Causeway is starting to come online as Rapid7 moves in and the retail components activate in our podium first phase and we completed Boston Properties' second green bond offering raising $150 million at attractive terms in the unsecured debt market. So let me transition to business conditions. Our primary lens on the economy is leasing activity which remains vibrant throughout the vast…

Thanks, Owen, good morning everybody. Last quarter we described pretty healthy leasing activity across all of our markets, except the District of Columbia, and to the extent that there have been adjustments to these conditions over the past 90 days, the changes have been positive expressed in the form of more active requirements, more early renewals, and more tenant growth. While the slowdown in global economic growth and the trade dispute Owen referenced are impacting sectors of the economy, the tenants in our buildings and the tenants that are considering new space in our markets are showing great resiliency or have not been impacted to the extent that their behaviors when it comes to using space to attract, recruit, and retain employees remained constant. We are not seeing tenants put requirements on hold move to short-term decisions or list based on the sublet market. The demographics of the labor markets, the tight unemployment rate for the workforce with college or graduate degrees and the continued changes to how businesses workforce will be impacted from technological innovation are creating continued demand for our markets in our buildings. The demand is as Owen said is driven by growth from technology, life science media, but also some financial service tenants. In San Francisco, CBRE reported in 2013 that tech made up about 22% of the embedded occupied market or about 15 million square feet, As of the end of the second quarter of 2019 Tech made up 38% of the market and 31 million square feet. In Midtown Manhattan in 2010, CBRE reported at 5.5% of the market, were 70.6 million square feet was occupied by technology companies. At the end of the first quarter of '19 the texture had increased to 8.8 million, 8.8% or 32.5 million square feet and this excludes…

Great. Thanks, Doug. Good morning, everybody. As Owen described, we had another strong quarter. We increased our full-year FFO guidance again and we're now projecting 12% year-over-year FFO growth at the midpoint. Before I get into the financial results, I would like to touch a little on our capital raising, because we've been very active in the capital markets, raising capital through both debt issuances and property sales. We raised $150 million with the sales of 540, Madison Avenue and two smaller non-core suburban assets this quarter. We raised $850 million in the bond market in June with our second 10-year green bond at a very attractive 3.4% fixed interest rate. We also closed on $255 million of construction financing for the Marriott headquarters development where we have a 50% joint venture interest. And we are in the final stages of closing a $400 million construction financing to fund the development of our 50-50 joint venture 100 Causeway Street office development in Boston. We now have over $1 billion of cash on hand, plus our full $1.5 billion credit facility available. We are in a strong position to fund the remaining $1.5 billion of costs to complete our development pipeline which totaled $3.2 billion of total investment. We continue to have no need to issue public equity to complete our pipeline and we expect that our overall leverage currently at a reasonable 6.3 times net debt to EBITDA will improve as these projects deliver. We are pleased with our balance sheet and our ability to maintain modest leverage and strong liquidity while funding a growing development pipeline that will drive future growth and shareholder return. Now, let's get into the details for the quarter. Our second quarter results were strong and exceeded our expectations with revenue up 10% and FFO…

[Operator Instructions] Your first question comes from the line of Nick Yulico with Scotiabank.

Thanks. Owen, you talked about how the macro environment is slowing and get asset pricing is still very strong. So I guess I'm wondering how that changes your thinking on capital allocation. Does this mean we'll see more JV capital for new developments you start, you did mentioned San Jose is a candidate there or maybe and how are you thinking about sales of buildings or JV stakes in the core portfolio?

Yeah. So let me break that question down talk about sales and then talk about new investments. I think on sales I know on sales we're going to continue to sell non-core assets as we've done successfully, and I would say, fairly aggressively over the last few years and that's been always in the kind of a $100 to $300 million range. And then -- our core assets are not being sold but from time to time something opportunistic presents itself as it did with 540 Madison and we certainly want to take advantage of that. On the new investments. I'm not sure there's going to be a big change we are -- we will continue to not be purchasing stabilized assets in our marketplace which, I give these examples every quarter, and I can pick a deal or 2 out in almost every one of our cities that trades at a 4% cap rate and that's dilutive to what we're trying to do and those kinds of opportunities don't have the same growth that our development opportunity do so we're not focused on buying core assets. But relative to that interest rate environment and relative to that cap rate environment, we continue to add new developments through our pipeline that are approaching or at 7% cash yields, which we think are very accretive to shareholders, both from a NOI perspective and NAV perspective. And then lastly, on your question about JV partners, we are spending more time in the private capital markets, we are meeting new partners that we've entered into a number of joint ventures. Recently we -- I talked about platform 16. That decision is really more about our willing -- our ability to fund. As we mentioned, we don't want to issue our equity given our share price. We don't want to increase our leverage, given where we are with the economy. So if our investment pipeline exceeds our financial resources given those constraints that's when the financial private equity partners get introduced and that's been our logic on.

All right, that's helpful. I just -- one other question is, you've mentioned how 2020 is -- there are some items in 2020 that create some slowing in same store growth move-outs, GM, some other buildings that are known. But I guess, can you remind us about how you can what the benefit could be to next year, if you've got some of the vacancy leased this year at 399 Park and GM, how that could actually then be a benefit to 2020?

Sure. So, this is Doug. The reality of the situation, just to be perfectly blunt, is that the space at 399 is in a sale condition. And so, if we do at least today in all likelihood there won't be a build out for a significant period of time in 2020 but net -- the space that is available today and the space that is rolling over in the General Motors Building would have a positive contribution of about $27 million and we currently have $13 million from that pool of assets today. So you can divide by 12 months and figure out what -- how you want to think about that. And then the other major exposure we have is we have, I said this before, in excess of 0.5 million square feet of known expirations in our restaurant portfolio in the beginning of 2020 and the average rent is about $50 a square foot. So you can put a number of about $25 million on that. So there is a higher probability of us getting some of that back sooner, because we have tenants that are in some of that space that are expanding and we have some -- we have space that is currently build out and ready for occupancy and therefore we can recognize revenue earlier. So that's, those are the sort of the 2 big building block. One more thing, and the other thing which is important is that we have cash revenue at 1590 East 53rd Street and because that's when our leases they have to start, but they have been delayed in their planning and their construction documents for the 195,000 square feet and you'll notice in our, our supplemental, we pushed out the stabilization date because we just were a little unsure as to right now as to when they're going to complete their build out of that space, and so that will impact our 2020 numbers off.

Okay . I guess, just one follow-up here. There is just any commentary on how the leasing is going, discussions are going for that remaining space at 399 and GM that you're trying to get done?

John, do you want to cover that?

Yeah. We have a good action on trade 399. We've got some proposals and some people going back and forth. Some of it for 4.5 or a 4. So I think we'll make progress on that this year. GM we have a number of prospects for this space, some of them are looking hard at the market and this is a little more supply in the market on the high end then there has been in the past. Thanks everyone.

Your next question comes from the line of Manny Korchman with Citi.

Hey, good morning everyone. Maybe Owen or Doug on 3 Hudson remind us, given the amount of demand in a number of large tenants looking for space. What level of pre-leasing do you have to be at to get the project started or is that high level of demand giving you the confidence to go more spec on that better?

Manny we've answered this question in the past. Let me talk a little bit about the building and then I'll talk about the pre-leasing. So as Doug described, there is a lot of activity, a very positive activity in the marketplace both from new requirements from tech companies but also more traditional companies relocating. We've been very encouraged by the level of activity that we're seeing and we've been very encouraged by how the market has been receiving our offering. It's an exciting building and again it's being well received. We won't start the property without a very significant pre-lease. We are not going to state a specific number.

Okay. And then Mike, the expenses being delayed, are those the same expenses that was delayed last quarter and how do we think about how they're actually going to come in for the rest of the year?

I don't necessarily think it was the same expenses that were delayed last quarter, but it is typically this R&M item that our property management teams have I think they're just conservatively projected these things. And then I think the time of year, when most of the stuff gets done is kind of later in the year third quarter is a very, big period for that. So I would think that the third quarter expenses are seasonally higher anyway. And I think that much of this will be pushed into the third quarter. However, I think that some of it may drip also into the fourth quarter, but I do expect it all to get done in 2019. So I don't expect to see kind of savings associated with some of the stuff just dropping off.

Great. And one final one from me. The LA second generation cash rent spreads were negative I realize it's on a small amount of space. Is there something specific with that space or is there something broader going on in sort of your submarkets there?

There is nothing broader going on. The reason I didn't talk about LA this quarter mainly it was because we are --- all we're doing right now is the large renewal discussions and we have very little available space and interestingly I think the one thing about the Santa Monica Business Park, which by the way is we're all that space came from is that we're actually seeing lower transaction costs than we anticipated, because we're talking about basically five to seven year renewals, which probably is the right thing for us given the relative issues associated with the ground lease and the repositioning of the property.

Thanks everyone.

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

Thank you. Actually just sticking with Santa Monica, there was a discussion on another call about Snap downsizing their New York presence and I'm wondering if there's a similar situation in your portfolio.

Our interaction with Snap that the Santa Monica is our business park is that there, they're going to sequentially through all of their must take space and they're building it out and occupying it.

Okay. GM Building retail, I think the last official update you provided a couple of calls ago is that Apple moving in the first half of this year, has that delay impacted cash NOI at all and if you could just provide an update?

No, it hasn't impacted our cash NOI. Apple is at the very, late at latter stages of opening the store. And I think we're excited about what that's going to do not only for the retail, but for the environment on the corner of 59th Street and 5th Avenue, which has been a rather laborious construction site for the past couple of years and we're excited to have it all come to a conclusion.

Final question from me is that [indiscernible].

This is John. I would just say the store is spectacular when it opened you all have to come to see it. It's going to be amazing.

And just on that, when is Under Armour, when you expect Under Armour is open?

Right now we expect Under Armour to take possession of the space sometime in early 2020 and there we expect that there'll be working on their plans and opening hopefully before the end of the year. But we -- again that we're just -- we're not aware specifically what their timing is and how that vis-a-vis deals with their product launches and their store openings and their seasonal issues. So we just don't know.

And then final one and that shall make two, I think last quarter you were, you mentioned interest is picking up. It doesn't sound like you're as bullish on leasing prospects this quarter, I don't know if that's accurate, but can you provide an update? And also what is the impact to 2020 FFO would be at that asset?

So I'll start and I will let John comment. I would say that the reason that you're not hearing me be more bullish than I was last quarters because the tenants that we're talking to last quarter are the same times we're talking to this quarter there aren't any additional ones. And so things are just sort of being drawn out. Our assumptions for the revenue pickup for that building assume a pretty prolong lease up, which is why we extended out the stabilization last quarter to sometime in 2021.

And obviously the space has to be built out, so recognize revenue on those future tenants until they build out their space. So we work is building out their space now so we will get some incremental benefit in 2020 from that space, but other space would need to be leased and built out. So Doug says we've kind of elongated the revenue projections for some of that.

Understood. Thank you.

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

Hey, good morning guys. Maybe just going back to your commentary in the private equity partners for JVs. Could you just discuss kind of the appetite and you know of them four different stages of development, how you guys view kind of the right time to bring them in, to maximize the value creation and not give away too much of the upside?

I think, it's a good question. I think, look, there is, as I mentioned in my comments, I think there is very significant capital available for commercial real estate generally some of that is interested in office. And then even among that demand not all of it will go into development, some of it's more core, core plus, some of it is more value add and some of it wants development. So you have to kind of parse it but there's clearly interest in development. Our view is on a project like Dock 72 excuse me on Platform 16 that we're bringing in the joint venture partner, in that case we recently bought the site and we bought it entitled so we paid for entitled site. So that risk is not there. So the risk is in the leasing. So I think what you'll see in those kinds of deals is the joint venture partners are introduced more or less at our basis because they're taking the same risks along with us. If we had a development site that that we had owned for a long time and we had guided and entitled and we had done some of the pre-leasing and we decided to introduce a partner, we would expect to bring that partner at a higher basis, because a lot of the risks had been mitigated and we had created the value and we would expect to be paid for that upfront. I would say most of the JV partners that we're talking to in development they probably don't want to come in at the, I would call the venture capital stage, which is when both the project needs, both entitlement and tenants. I think they are more interested in coming in later stages of these projects.

And Craig, the other thing I would say about joint ventures, particularly with development is that we are creating significant value and we are not doing this on a Perry pass through pro rata basis. We are putting ourselves in a position where, to the extent that we're successful we're being paid for that success in one form or another. So the old -- old story or the old challenge is would you rather have 10% of an asset that's yielding 25% return or drive a 100% of an asset that's yielding 10%. Right. And if you could do the same amount of the 25% obviously rather do that, but you can't. And so we think long and hard about JVs and the ability to put ourselves in a position where we can enhance our return on equity for the shareholder. But if, in fact, we're going to use 3rd-party capital and we're going to be a great fiduciary for institutional investors.

Great, thanks for that. And then just second, Doug, you kind of touched on some expirations in Waltham, could we have some more opportunities for conversions. Could you give us just a sense of dollar amounts, and timing of when that could come your way?

Sure, so we're 200 West Street is likely to start in the 3rd -- 3rd or 4th quarter. And that is going to be about a 12 month project to complete the base building work and as well as the TI work and so that's a 2019-2020 project. We're also getting back on 195 West Street in August or September of this year. And that's another asset that is being looked at hard for lab usages and depending upon how quickly and how committed we are with the order West we will probably start that one as well and then we also have some space up at Bay Colony that is available and it potentially has the opportunity to be lab converted as well. Interestingly, we had a lab conversion that was done a number of years ago and that tenant was called Juno Therapeutics and they chose to sublet the space we actually recaptured it and released it and got a $20 premium from the existing tenant that was rolling over. So we clearly have a demand opportunity in the Waltham suburbs for these kinds of assets that will work very effectively and efficiently for both the lab and offices.

So it will total like $100, $120 million in total for those 3?

If we did all three of them, it would be somewhere in that area, yeah.

Okay, great. Thank you.

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

Thanks, good morning. Doug, you sounded much more positive on Manhattan, can you or John just more generally speak to the market rent growth you're expecting in Manhattan, over the next 12 months and whether that expectation has gotten higher recently with the activity you're seeing on the demand side or is the supply is still at a level that it's going to keep kind of that rent growth muted.

So my view is and I'll let John express his and it may be slightly different is that there is the demand growth is what is going to result in as a I quicker opportunity for there to be growth in the market, but there is not growth in the market today. So we are not asking or receiving any more or less than we were receiving six months ago at 399 Park Avenue, or the General Motors Building, it's still a competitive market and as the move-outs occur there will be more availability. But there is no question that the reduction of the new supply or the highly well -- well regarded renovated supply has diminished and so rent for new construction and for those types of assets are going up. John.

Yeah, leasing activity is very good in the market, but we still have excess supply coming on and as Doug said there is a preference in the market clearly for new product or a renovated product. So we have, we're having a little bit of a skewed situation in the market with the availability rate pretty constant, but different supply characteristics in different types of products. Net right now net, we haven't seen prices move up with that we are holding and there are limited opportunities in the market when tenants look for space. If a large law firm is looking for space now in Midtown let's say 400,000 square feet or so that maybe have one alternative or two alternatives. So still limited supply in certain areas and strong leasing velocity.

All right. That's very helpful. And then I wanted to touch real quick on acquisitions in LA in particular it seems like we've seen more deals coming to the market recently. Can you talk about your comfort with your current footprint, whether you guys have pursued or are pursuing anything out there at this point and whether there are any submarkets outside Santa Monica you guys would target in particular?

Yeah, no, we want to grow in LA. We're happy with the footprint that we have, but we definitely want to grow it and make LA more in line with our other regions in terms of size and market presence. So but it was as we've been saying, we're going to do it in a disciplined fashion where each deal has to make money for shareholders. We're not going to just grow for growth sake. John Lang and his team in LA are actively looking at most of the deals that are in the marketplace that fit our portfolio and fit our criteria, but to my point earlier about lower interest rates and flows of capital, it's hotly competitive and it's very difficult to find things that we think makes sense. We have expanded our footprint outside of Santa Monica. We are looking at things in Beverly Hills, in Culver City, and El Segundo in other West LA markets of that nature. We continue to hope to be able to, we kind of been describing it as we want to try to do a deal a year and you know it's a very informal goal, but it's a goal and we continue to hope to do that in 2019 and but whether we're able to accomplish that yet right now is a little bit undetermined.

All right, thanks guys.

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

So good morning. Good morning out there. Two questions, first, Doug, maybe just in San Francisco. If you could just give your comments on the Mission Rock and Pier 70 projects or potential could be projects on the Portland how that affects your thoughts on 4th in Harrison and if the amount of demand out there in the amount of RFPs is still so much that even with these 2 projects there still sort of a shortage of space for the tenants, you want to take new construction, maybe you can just talk about that.

Sure. I'll make a brief comment and then I'll let Bob Pester give you his view as well. So my view from the cheap seats in Boston is that there is a significant amount of demand from the technology tenants in San Francisco and manifested itself in 2 transactions. And I think we're a little bit surprising where it when Pinterest in salesforce.com both took space in significant blocks on buildings that weren't yet entitled and so there are, there are a number of requirements out in the market today and there are no blocks of space. And Mission Rock and Pier 70 are both good locations there, a little bit further SKU from the central core, but there also phase projects not big projects I sort of on a one-off basis. And I think many of these tenants are looking for larger blocks of space in bigger tickets, at one time. So we feel really comfortable with the relative de minimis amount of new construction that potentially could be put into play and with the sites in Central some of it has been approved. 4th, in Harrison, when it gets approved. And then the sites that the port control. Bob.

I would just add that there is several million square feet of tenants looking in downtown San Francisco and in the Mission Bay Area. And I would bet that both of those projects will be gone within the next 18 months or so from a leasing standpoint.

Okay. And then switching costs maybe if Ray is on the line. Just want to get a DC update we just had the budget passage which takes a debt ceiling off for 2 years and sort of both houses of Congress got their spending I guess spending needs fulfilled. So do you think there is a pick up in the demand from government leasing or has the sequester of almost a decade ago, really permanently changed that government demand in such that this 2-year sort of budget reprieve really well manifest in any more demand for leasing in the district?

Hey, Alex. But we are seeing is not so much incremental demand in the district. The district is still pretty much of a policy focused type of environment where we're really seeing the increased demand is from both the government space, consumer, but more importantly, the general contractors in that market that as Doug alluded to in our 25 years addressed. And we have never seen the level of both existing tenant expansion and new leasing in the Dallas Corridor and very limited supply the Tysons is a little more restricted in terms of access and in terms of the parking costs and -- County to the west is being totally absorbed with data centers, and as a result those of us, we have great assets in the Dallas Corridor between those two markets are really experiencing a revival in demand from our core tenants which is the corporate user and the defense contractor.

Okay. So basically…

Not too much downtown, but much more in the suburbs.

Okay. So basically, Ray. It's still private and contractor. The government is really not driving the leasing anymore and even wells budget reprieve?

Well, we are seeing -- we are seeing some incremental GSA leasing that we just renewed that large tenant, we're seeing continued growth, with new deals downtown, but that's really the private sector, driving the demand in Washington, DC, right now.

Thank you.

We have time for one final question and that question comes from John Guinee with Stifel.

Great. Ray, you did such a good job on that one. Let me just ask a couple more our defense contractors taking space anywhere else except the Dallas Corridor and are they still as price-sensitive as they have been and then second, I guess maybe Doug, 3 Hudson Yards, what do you think that new build will cost and did that influence your ability -- willingness to sell 540 Madison from $1100 of square foot?

So let me -- let me answer first about the demand in the Dallas Corridor. That's the primary focus because that's number one where the tech employees live and number 2, that's where major defense and cyber commands are located. And we're seeing a move John to a flight to quality, because all these defense contractors and cyber guys have to recruit the best possible talent. And going to a greenfield suburban office park is not going to be it. So the demand for monitise space like in Reston Town Center, again, as I said is probably the strongest I've seen in 25 years.

Great.

And John, so I'm not -- I'm not going to give you a specific number on our cost at 3 Hudson Boulevard, suffice to say that it's significantly more than $1100 of square foot, which is what the 540 Madison Avenue building sold for and I don't so, I don't really -- I don't think there's any correlation between the cost of one and this sell the other. I do think that the market demand for 3 Hudson Boulevard, on a relative basis is more than the market demand for what I would refer to as moderately price but well positioned Plaza District properties. So we think that the high-end is where the demand is going to be more fertile for us from a growth perspective. And so as we thought about what the by 540 profile would be from a growth perspective is own alluded to, we decided was muted relative to the other things that we have opportunities to continue to invest our capital in both existing assets and new product and greater Manhattan.

Just a follow-up question, five years ago, would you ever thought that statement possible that 3 Hudson Yards would have stronger demand than 540 Madison submarket?

I would say that anything is possible. I would say that we were, we were late to the game, which is something that we've admitted to in the past, we had the opportunity to be in one of the sites that for various reasons we chose not to do and retrospectively, it was the wrong decision.

All right, thank you.

And you do have an additional question from the line of Jamie Feldman with Bank of America Merrill Lynch.

Great, thank you. I'll be brief here. So I guess Mike, just can you talk about what your latest guidance it means in terms of AFFO and dividend covered for the year?

So, sure, absolutely. So obviously our AFFO improved this quarter and last quarter it was obviously the coverage was less because we had so much absorption of space. Last quarter, it was just a huge quarter. And it showed up in the leasing costs because of the pure kind of square footage of space that we had. Last year our AFFO was $443 a share. That was an increase over 2017. And we still expected to increase this year. We've got the cash same-store growth coming in, we've got incremental cash revenue from our developments. I think that the FAD should be somewhere in the 80% plus or minus kind of range. And if you think about kind of where the pieces are if you look at our leasing costs year-to-date it's $160 million that is probably more than half of what we will experience for the year, we can, because the first quarter was so high. I think that the rest of the year will be a little bit lower and maybe we're somewhere in the $250 to $270 million range for the year on leasing costs. We gave the non-cash rents in our guidance, which is $105 to $120 million and we think recurring capex is somewhere in the $90 to $100 million range. And then if you kind of look at the rest of the adjustments which are stock comp and then other non-cash items you get adjustments of to our AFFO of somewhere in the high 300 so you're talking about an AFFO of somewhere in the $460 to $480 type of range which is again higher than last year, which is $443.

Okay, great. Thank you. And then just one follow-up on the markets, I think you had talked about a pickup in large space users in Silicon Valley. Can you just talk more about that. And just kind of what that might look like for you guys over the next couple of years?

So look, we've -- we've made a debt on the Silicon Valley from a development perspective. We have the site at Platform 16, we have the site at in --which is another $1.5 million, we have a site in Peterson way, which is 650,000 square feet and we have our site at the station at a station in North first which is somewhere between $1 million and $3 million. And so we're very optimistic about the continued growth of these larger technology companies and when Verizon sells the Yahoo campus and leases and 650,000 square feet and the buyer is Google, which is more growth, I think it's just indicative of what is going on down there. And as I said, we saw the folks from Uber take 300,000 square feet and we are -- we are very aware of other active CBD headquartered companies looking in the valley for big blocks of space and then there are a number of large Valley headquartered companies that are continuing to grow. Apple is continuing to grow. Facebook is continuing to grow. There are a number of others. And so we're just, we're optimistic about the ability for the sites that we have which are relatively speaking very close to public transit and the on station site and the Caltrain has being the attractive places for those tenants to be looking for large cool campus environments. And so -- that we describe, when we talk about what we have coming forward. On the $3.2 billion plus the $400 million. They don't describe that that's going to be put in service at 2100 Pennsylvania Avenue. So where we have a lot of growth in front of us and a significant portion of it is in downtown in San Jose.

Okay. And with those deals pencil at today's rents or do you need the movement?

Yeah, no, I mean, looked at, we think that there -- that the pro formas that we bought the land at penciled and the rents are higher than the pro forma. So it's -- for us the question is how much pre-leasing do we want, do we want to build some of it on a speculative basis, what's the absorption is going to be? Those are the questions we're asking ourselves.

Okay, all right, thank you.

And I want to know --

I think -- sorry, Operator, go ahead.

Go ahead. I was turning the call back over to you.

Okay. I think that concludes our remarks and concludes all the questions. Thank you very much for your attention and interest in Boston Properties, have a good day.

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