Good day and thank you for standing by. Welcome to the BXP’s Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there’ll be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I’d now like to hand the conference over to your first speaker today, to Helen Han, Vice President of Investor Relations. Please go ahead.

Good morning and welcome to BXP’s fourth quarter and full year 2022 earnings conference call. The press release and supplemental package were distributed last night and furnished on Form 8-K. In the supplemental package, BXP has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G. If you did not receive a copy, these documents are available in the Investors section of our website at investors.bxp.com. A webcast of this call will be available for 12 months. 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. Although BXP believes the 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 BXP’s filings with the SEC. BXP does not undertake a duty to update any forward-looking statements. I’d like to welcome Owen Thomas, Chairman and Chief Executive Officer; Doug Linde, President; and Mike LaBelle, Chief Financial Officer. During the Q&A portion of our call, Ray Ritchey, Senior Executive Vice President and our Regional Management teams will be available to address any questions. We ask that those of you participating in the Q&A portion of the call to please limit yourself to one question. If you have any additional query or follow-up, please feel free to rejoin the queue. I would now like to turn the call over to Owen Thomas for his formal remarks.

Thank you Helen and good morning everyone. Today I will cover BXP’s continued strong operating performance as demonstrated in our fourth quarter and full year 2022 results. I’ll discuss key economic and market trends impacting BXP and finish with BXP's capital allocation decisions and activities. Despite increasing economic headwinds, BXP continued to perform in the fourth quarter and had strong overall operating results throughout 2022. Our FFO per share this quarter was above both market consensus and the midpoint of our guidance. Our FFO per share grew 15% in 2022 due to development deliveries and strong leasing activity. We completed 1.1 million square feet of leasing in the fourth quarter and 5.7 million square feet of leasing for all of 2022 which is 95% of our average annual leasing over the last 10 years. The weighted average term for leases signed in 2022 was 9.2 years. This success can again be attributed to not only BXP's strong client relationships and our team's execution, but also the increased share of tenant demand captured by premier workplaces, which are the hallmark of BXP's strategy and portfolio. BXP raised $1.2 billion in additional liquidity through a $750 million unsecured green bond offering and the extension and upsizing of a bank term loan ensuring funding for our sizable and substantially leased development pipeline in a challenging capital markets environment. And lastly on 2022, BXP continues to be a decorated industry leader in sustainability having most recently won Nareit’s Leader in the Light Award named the highest ranking real estate company and 29th overall on Newsweek's list of Most Responsible Companies and one of only eight property companies named to the Dow Jones Sustainability Index. Notwithstanding the running debate on whether the U.S. economy will experience a hard or soft landing, commercial real estate markets…

Thanks Owen. Good morning everybody. So Owen really spent some time describing the totality of what's going on at BXP. I'm going to be a little bit more concentrated today and talk about demand. Every day seems to bring another announcement of staff reduction from some large or medium sized employer. And while the cons -- these announcements have been concentrated in the technology industries, as Owen described, primarily big tech, we're also seeing them in the finance industry, the legal industry, and broader corporate America. Now I can point to examples of companies in our portfolio that are growing, but we are the first to acknowledge that the pool of clients overall demand that we serve is unlikely to be growing their overall footprint in 2023, aka hard to see much in the way of positive absorption. If there's a silver lining in the job reductions that are being announced, it's an improvement in the labor availability is manifesting itself in encouraging ways. Fewer job listings being offered for remote work. Forms of hybrid work seem to be sticky, but the power dynamic between employers and employees is shifting. Companies are stepping up the days that workers are asked, required, cajoled to come into the office. In our portfolio, we're seeing a steady increase in the number of unique occupants that are in the office each week. We measure the unique number of card swipes on a daily basis where we have turnstiles. These numbers vary day-to-day and if I compare the best day in March of 2022, which is after the last sort of COVID omicron surge versus the best day in January, so a week ago, across the BXP portfolio volume is up almost 40%. I don't know how others measure their usage. BXP measures against the…

The mark to market on the leases we signed this quarter were up 7% in Boston, 9% in San Francisco, flat in New York City and down 11% in DC. It should come as no surprise that we think BXP's premier workspace portfolio is highly differentiated, but on top of that, our operating teams are the best in the business. I want to describe three transactions we accomplished in the fourth quarter that illustrate our team's creativity. In Boston we were getting a 100,000 square feet block of space back in one of our assets. The team identified a client that typically does not do direct deals with landlords, but generally looks at sublet space. We engaged the principles in a tour of the space. The space was in great condition and we were able to secure a lease that met the tenant's desire to have an attractive annual rent as possible in a premier building with limited capital outlay and make a long-term commitment. The lease was executed in late December. In San Francisco a client with a fast approaching termination option in its existing non-DXP building wanted to move to View space. They toured the market in early in December and then identified two spaces in the 34% available market that met their needs. On December 26th, we signed a binding letter of intent. The client understood they were not taking any counterparty risk with BXP and we signed the lease for 50,000 square feet or two and a half floors that were vacant on January 16th. In October, our New York team identified a client that had a lease expiration and no ability to renew in place in mid-2023, which is a very tight timeline. We sent an unsolicited proposal for two vacant floors in our 53rd…

Great, thanks Doug. Good morning everybody. I plan to cover the details of our fourth quarter performance and the changes to our 2023 earnings guidance. However, I would like to start with a summary of our recent capital raising activities. We've been very busy in the capital markets and have substantially bolstered our liquidity heading into 2023. In the last 120 days, we've executed on three transactions in three different markets. We sold one of our residential buildings in Reston Town Center for $141 million and a 4.3% cap rate. We issued $750 million of five-year unsecured green bonds, and in January we extended and upsized our corporate unsecured term loan to $1.2 billion, an increase of $470 million. In aggregate, the net proceeds raised from these deals is $1.35 billion and we now have liquidity of $2.6 billion, which puts us in an extremely strong position to complete our development pipeline, including our recently commenced 570,000 square foot fully pre-leased, 290 Binney Street Life science project, as well as provide additional capital for other opportunities that may arise. We've also reduced our 2023 loan maturity exposure to $930 million, which is comprised of $500 million of senior unsecured notes that expired in September and five expiring mortgages totaling $430 million at our share. The majority of these mortgages have embedded extension options and we anticipate renewing or refinancing all of these facilities. Given the challenging state of the current debt markets, particularly with respect to the mortgage markets, we are very well positioned. Now I'd like to turn to our fourth quarter earnings results. We reported fourth quarter FFO of $1.86 per diluted share and full year 2022 FFO of $7.53 per diluted share. This is a penny ahead of the midpoint of our guidance and $0.02 cents ahead…

Thank you, sir. [Operator Instructions] I show our first question comes from the line of Camille Bonnel from Bank of America. Please go ahead.

Hi, good morning. Your guidance mentioned higher contributions from acquisitions and development activities, but it looks like a few initial occupancy dates for offices and life science projects got pushed back a quarter into next year. Can you just provide a bit of color on what's contributing to this outlook and any comments specifically on how the leasing pipeline is going for your construction properties would be very helpful? Thank you.

So we did a significant amount of leasing at 2100 Penn and a portion of that will contribute in 2023. We did push out by one quarter 360 Park Avenue South based upon where the leasing activity and the development activities are on that asset. And then the other place that we had a little bit of an increase was at 205th Avenue, which is an acquisition we made and we finalized the kind of accounting of straight line rents and fair value rents for that asset. So that's flowing through into our straight line rents next year, which our guidance is up for straight line rents. Doug, I don't know if you want to talk anything more about the development leasing. I mean, you talked about it a little bit on notes.

Yes, I think in my comments I described sort of where we are, which is big picture we're about 50% leased on our, the totality of our development assets one. And by the way we'll be including next quarter 300 Binney and 290 Binney on our CIP schedule. The leasing is slow at 360 Park Avenue South. The leasing picked up as Mike said at 2100 Pennsylvania Avenue. We're very well leased at the other assets that that got brought on this quarter. So relative to 2023, I don’t think you’re going to see much in the way of changes.

Thank you. And I show our next question comes from the line of John Kim from BMO Capital Markets. Please go ahead.

Thanks. Good morning. You spent a lot of time at your Investor Day talking about the occupancy upside potential given your near-term expirations. And I know a lot has changed since then, but you have leased 1.1 million square feet in the fourth quarter. And my question is, how does that compare versus your expectations at the time? And as you sit here today, is 1.1 million square feet, is that a good run rate for the rest of the year?

Well, you’re asking if I described how we were thinking about the world in September versus the way we’re thinking about the world today, I would tell you that there’s been a material change in the overall economy relative to the risk of recession and I think there is less demand in the overall environment than there was then. We still feel really good about the overall quality of our assets and the ability to capture incremental demand in the marketplace due to the nature of the tenants that are looking for space. And so again, we actually exceeded our own internal projections at the end of the year because we thought we would be slightly below where we were in the third quarter. And again, if you sort of adjust for bringing these new assets into service and simply put them in at their actual leased occupancy or remove them, we actually increased our overall occupancy during the year. And so I would tell you, if you look at our exploration schedules for 2023 and you look at the 1.5 million square feet we’ve already leased, and we will, again, hopefully be leasing somewhere in the neighborhood of 750,000 to 1 million square feet per quarter, we should again be increasing our occupancy as we move through 2023.

Yes, John, and just to add, I mean, we’ve maintained our guidance for our same property portfolio and for our occupancy. So our kind of outlook is similar to what it was when we gave guidance last quarter. I think that our occupancy in the first quarter, so three months from now will likely be lower or flat than what it is today. But we’ve got a lot of leases that are already signed that Doug described, the 1.5 million square feet that are coming into play. And I think that’s starting in the second quarter we're going to see our occupancy grow from there through the rest of the year. And a lot of this occupancy is in coming in some of the major markets like New York City, we've got a number of leases that are signed that we’ll be starting in the second quarter. Doug described a deal in Boston that we did just in December, and that deal is going to start in the second quarter. And we also have some deals in Reston starting. So I think that we feel we’ve been conservative in our approach to our guidance based upon what we see future leasing activity as, but we feel good about the guidance that we provided.

Thank you.

And I show our next question comes from the line of Steve Sakwa from Evercore ISI. Please go ahead.

Yes, thanks, good morning. I didn’t know if you could talk a little bit about maybe Platform 16 and 360 Park Avenue South. And I know both of those buildings were sort of geared towards tech tenants and Doug given your comments about slowing tech demand and even some of these tenants subleasing, I’m just curious how you’re maybe altering the marketing program there or do you just need the macro environment to really get better to see traction on both of those buildings?

So let me ask Hilary Spann to talk about 360 Park Avenue South, and I’ll ask Bob Pester to comment on Platform 16.

Thanks, Doug. Hi, Steve, how are you doing? So at 360 Park Avenue South, the redevelopment is underway. We are very far along in discussions with a retail tenant that is going to be very exciting when we’re able to announce it. I think it’s fair to say that the demand for 360 Park Avenue South is diversified, but tilted toward tech and media firms because of its location in the Midtown South submarket. And to the point that everyone has been making on this call, that leasing velocity has slowed dramatically starting probably in the end of the second quarter of last year, maybe early third quarter of last year. And so we’re proceeding at pace with the development, and we expect to deliver it as per our original estimates. And some of the demand that we have seen for that building is actually in a more traditional industry groups, finance, the industries that support finance, et cetera, but no question that the leasing has slowed there. And so we’re thinking that rather than looking at 150,000s, we may be looking more at 50,000 to 75,000 square foot tenants to fill the demand for that building.

Bob, thank you.

Yes. Hi, Steve. So on Platform 16, the project doesn’t deliver until 2025. And as we’ve told them many times before that San Jose Silicon Valley market is a build and they will come market that typically tenants don’t look at the buildings until they can walk the building or get a feel that this deal is going up. We still see it as a tech building. It’s the only building that’s going to deliver in that 2025 timeframe in the Silicon Valley it’s new. So we’re still optimistic that over the course of the next 24 months that tech user will materialize for the building.

Thank you. And I show our next question comes from the line of Blaine Heck from Wells Fargo. Please go ahead.

Great, thanks. Good morning. The fourth quarter seemed to be a slow leasing quarter in the overall market. U.S. BXP did relatively well compared to the market. But can you talk about whether you think you’ve seen a change in the level of demand or leasing activity thus far this year? And maybe more importantly, what do you think needs to change to get some of the tenants that have been reluctant to sign longer leases to meet those longer-term commitments.

So Blaine, I am -- and I’ll let Owen make a comment as well. I hope that my comments were both honest and thoughtful regarding what I think we think the demand picture is, which is there is less overall demand in the market today due to the nature of the business economies changes. And we don’t think there’s going to be much of any positive absorption occurring. We think we will lease more space than our peers because we have premier work places that are geared towards the tenants that are in the market and then that are making decisions. And I don’t actually believe that the tenants that are looking for space are concerned about making long-term decisions. They are, in fact for the most part, making long-term decisions, and we are still doing longer-term leases in all of the leasing that we’ve been doing in the last couple of quarters, some of it hasn’t hit the lines yet in terms of our occupancy numbers. But so, I can’t tell you how long the economy is going to be where it is, but as the economy recovers, traditionally jobs and/occupancy are second derivative events associated with that, and so it will be a period of time before tenants are "growing" again. But Owen, maybe you have some other ideas?

No, you covered it well.

Thank you. And I show our next question. Our next question comes from the line of Alexander Goldfarb from Piper Sandler. Please go ahead.

Hey, good morning. Good morning. First as a comment, maybe Dock 72 would be good for resi conversion, if you’re taking suggestions from the cheap seats. A question for Ray, is in D.C., it’s good to see the politicians and including in Congress addressing the work from home endemic that’s with the federal employees. My question for you though is, how much does work from home for government workers really affect like Reston Town Center and the private office market? I would guess that one, GSA doesn’t really sign high-priced deals; two, just given what’s been going on I’m guessing more of the private investment market is focused on private companies or DoD or other security tenants who have to be in office. So just sort of curious your take on what’s going on in D.C. and how much we need government workers to come back for the market to flourish?

Well, first of all, Happy New Year, Alex. Thanks for the question. It’s living here in the district, it’s really kind of frustrating to see the federal workforce not fully engaged in the return to work. The real estate roundtable has been very effective in reaching out to Mayor Bowser and really stressing to her the importance for the federal workforce return not only just in terms of consumption of office space, but the social fabric of the city is completely deteriorating with the workers not coming and we’re also very concerned about the impact upon metro. Before the pandemic, there was almost 800,000 riders a day on the metro. Now there’s less than $300,000. And that will have an impact on the public transportation system here. As it relates to Reston, specifically, we have a very large portion of our tenants who are engaged in government contracting support to the federal government. And the policy of the federal government not to return to work also is impacting occupancy in Reston. And while many of them have the requirement to be in the office because of the security nature of their work, it still impacts the more traditional office support tenants for the federal government contractors. So it’s impacting Reston from presidents of the retail, it impacts things like the fitness center and other support activities we have in the building. So even though we’re a diverse tenant base there, the lack of the federal government coming to work is still impactful. We're really assisting to the leadership in the district, the importance for the federal government to return to their offices.

Thank you. And I show our next question comes from the line of Michael Griffin from Citi. Please go ahead.

Great, thanks. It seems like relative to your East Coast peers as West Coast markets continue to lag, I guess what sort of concern do you have for the long-term viability of a market like San Francisco? And if there were a bid, would you look to maybe allocate capital out of there? And then, Doug, one thing I wanted to clarify real quickly on your leasing comment. I think you said 39% of the leases this quarter came from renewals, some of which took the same amount of space versus some amount that downsized? What percentage of the same space versus downsized? Thank you.

So Michael, I don’t have all the data in front of me. When I actually looked at it the other day, in terms of the number of tenants, there were two or three tenants that downsized, but they were larger. I mean, the biggest example being, we had Zillow/Trulia, which renewed on two out of six floors at 535 Market Street, but there were one or two tenants like that. The majority in terms of the number of tenants that signed leases that did renewals actually were staying in basically the same number of square feet.

And then it's Owen, to answer your question about West Coast and capital allocation, you are right. The West Coast is lagging from a return to office perspective and also from a leasing perspective, is driven by the fact that there’s a much higher percentage of technology users in those markets and those users are not using their office to the same extent that their industries are. And so far, they’ve led other industries in terms of layoffs, which impacts space use as we’ve described. Look, we’re going through a cycle and word cycle means it goes down and it comes back up. This has happened before. Every cycle is different, but they all look somewhat the same. And I’m convinced this is a cycle as well and we will have a recovery. And I think the technology industries, the institutions that exist in California are not going to go away, but we are going to have to work ourselves through the recovery that we see ahead.

Michael, one thing I’d like to add is on the kind of tenants expanding versus contracting, we have done an analysis of the rent leases that commenced in 2022 for renewals. And we had about 4 million square feet of leases that commenced and we had actually those tenants expanded by 6% or almost 300,000 square feet. In the fourth quarter, it was a reduction of about 100,000 square feet, but overall, some expand, so contracting. Again, this is only tenants that renewed in our portfolio or they took on additional space before their lease came up. It doesn’t have doesn’t count tenants that either left our portfolio, and I don’t know what they did before that or they came into our portfolio and we don’t know what their size was before that. But that’s a signal that not every tenant is contracting. There are many tenants out there that are continuing to take more space.

Thank you. And I show our next question comes from the line of Rich Anderson from SMBC. Please go ahead.

Thanks. Good morning. If I could just play a little devil's advocate on the premier office, excuse me, Premier Workspace Motif that you’re talking about here. In a deep recession type of environment, is it potentially an outcome where you could see a reversal of the trends that you’re seeing relative to conventional more cookie-cutter office, where people are looking for cheaper alternatives and maybe your premier office product becomes more vulnerable in a deep recession type of scenario. Is that something that has happened clearly, it’s happened in the past, but I mean what gives you comfort that won’t be an outcome for you this time around?

Yes. No, I certainly understand the logic of your question. I’d answer it simply that history has not shown that to be the case. Higher quality buildings have outperformed in recessions in the past. And I think this recession is different because of the work from home and the flexibility that technology is providing for workers. And therefore, I think this flight to quality and change of how we describe our business from office to premier workplace is more important. I think the market share that the premier workplaces are getting in this downturn is actually much higher than it has been in previous downturns. And it’s important when you look at our business to not look at the overall market statistics but to focus on the premier workplaces because that’s actually the market that we’re competing in.

And I would just add, Rich, that two things. One is most, I think, of the economists pundits would say if we hit a recession, we’re not going to go into a clinical deep recession. But if you had a deep recession, and we’ve had deep recessions in the past, typically, what has happened is there has been a compression in the pricing between Class A and Class B, meaning Class A has come down to a level that makes it so attractive that it squashes Class B demand. And people look at the relative opportunity set and jump at taking additional space in great buildings because there has been a dramatic reduction. We don’t believe we’re any going to see "deep recession" but that is what has historically happened.

Thank you. And I show our next question comes from the line of Anthony Paolone from JPMorgan. Please go ahead.

Yes, thank you. I was wondering if you could comment on dispositions. And in terms of anything you might have in the market right now or expectations for this year and whether or not you think that could be additive or dilutive to where you put guidance at this point?

Yes, we have assets that we would like to dispose of non-core assets. But as I mentioned in my remarks, the capital markets are very liquid just generally, but also, I’d say, for office assets. And therefore, we didn’t put out a guidance on what we thought dispositions were for this year because we don’t -- the market is not cooperating at the moment. Hopefully, that will change, but we can’t forecast that right now.

And Tony, if something -- if we were to be in a position to sell something, unlikely that we’re going to put anything on the market in the beginning of 2023, which means any transactions that are likely to be weighted towards the far back end of the year.

Thank you. And I show our next question comes from the line of Ronald Kamdem from Morgan Stanley. Please go ahead.

Hey, just looking at the 1Q guidance of $167 million, when I compare that to the 4Q number of $186 million, any sort of -- that’s a $0.19 delta, any sort of high level, how much of that is sort of the G&A seasonality versus this sort of onetime charge you talked about versus interest cost would be helpful? And if I could sneak another one in, just on the View Boston opening up in April, just sort of curious sort of how the marketing, how the interest and an update there would be helpful. Thanks.

So while Mike looks at his numbers, I’ll let Bryan Koop just describe sort of where we are with our plans from a marketing perspective on the Observatory in Boston. And we haven’t officially announced the date yet. So...

Yes. The great news is, given what we worked during the last two years in construction, we’re actually ahead of schedule and turned out beautiful. We’re doing marketing tours with people that would like to look at events in the future. I’d say we’re oversubscribed on that, and we’re determining how we want to execute that because as each of these observatory locations are fairly highly bespoke and different. And we have a good deal of space that we can do the events. Pre-marketing is going really well. The City of Boston is gearing up for tourism and we’ve seen a big response from that sector in call-ins to our team. And in general, we’re just focused on hiring people and getting staffed up for F&B and the overall staff, but we feel really great about it. We feel awesome about how it’s turned out. It’s just spectacular.

So Ronald, on the first quarter, you’re right, it’s obviously down because it’s seasonal. We have a hotel that is seasonal that because it’s located in Massachusetts it has very few people that come to it during the winter. So it actually loses money in the first quarter and that it has profit to the other three quarters of the year. And then our G&A expense is front-loaded because of vesting and payroll tax issues. And then obviously, we borrowed more money in the fourth quarter. So we expect our interest expense to be higher in the first quarter than it was in the fourth quarter. The portfolio itself is actually -- we expect it to be up slightly. And then going out for the following quarters because if we started $1.67, right and our guidance is much higher than that for the full year. Obviously we see pretty significant increases in the following quarters. And as I mentioned, we expect our occupancy to start to move up in the second quarter. Bryan just talked about View Boston, we expect that to open up in the second quarter. So there are several things that are occurring in the second and third quarters that are going to push the FFO up later in the year.

Thank you. And I show our next question comes from the line of Dylan Burzinski from Green Street. Please go ahead.

Hey guys. Thanks for taking the question. Just curious, I think the story thus far has been that office landlords have been able to hold base rents and they’re giving up more on the concession side of things. But just curious, Doug, given your comments about not expecting positive absorption in 2023, is this the year that we start to see landlords sort of deal up on the face rent side of things?

I guess, I don’t think landlords, at least this landlord is never going to give up on anything. And we -- look, we have situations in our portfolio where we have very little space in a particular building. And we’re very comfortable and able to handle both relatively modest concession packages and strong face rates. We have other pieces of our portfolio where we have vacancy or availability where we are trying to be aggressive about increasing our occupancy. And so in those cases, we are thinking about all the arrows in the quiver and figuring out what the right approach is for a particular client that we’re trying to serve. Some of those clients would prefer to have free rent. Some of those clients would prefer to have more CapEx in terms of transaction costs. We might even agree to do turnkey builds in certain cases, and some of them may be looking for a lower "annual run rate" and sort of use the concessions in a different way. So I think it’s very hard to sort of try and articulate a particular component of an economic deal that is being done with a client of ours and sort of say, we’re going to gear towards one thing or another because we try and meet the needs of those clients. In general, transaction costs are higher. Why? Because there is more available space and it’s still very expensive for a company to move or relocate or grow, and the landlord is contributing capital for that, and it’s coming in the form of either additional free rent or additional TI, it’s generally not in the form of the "face rent" on the deal. And I don’t think that’s going to change much as we approach 2023.

Thank you. And I show our next question comes from the line of Peter Abramowitz from Jefferies. Please go ahead.

Hi, yes. Thank you. Just do you have any comments or commentary you can give around the restructuring announcement from Salesforce from about a month ago. I think they said they’re both looking to divest their own real estate holdings, but also reducing their footprint, where they lease space. Any conversations you’ve had with them and any impacts to your portfolio?

Yes. So I’ll just make a comment, and then I’ll turn it over to Bob. So we have one building, which has a long-term lease with Salesforce.com, which is Salesforce Tower, which is to some degree, their preeminent building and is the preeminent building in San Francisco. And Bob, why don’t you comment on any conversations we’ve had with Salesforce regarding their utilization of space?

Yes. They’ve got multiple buildings on the market. They’ve got 53 miner across the street that they own with 400,000 feet. They had several 100,000 square feet per lease in 350 Mission; they got space available, the space that was occupied by Slack. All the indications we’ve had so far is, they’ve indicated no interest in subleasing any of the space in the tower. But if they do, we’ve got 9-plus years existing weighted average lease term on their lease in that building. So we’re really not too concerned about it. We do get calls constantly about major tenants. We just had one this past week for 100,000 feet, that would like to be in the tower, but we don’t have any space available.

Thank you. And I show our next question comes from the line of Anthony Powell from Barclays. Please go ahead.

Hi, good morning. Just a question on acquisitions, what you target in terms of [indiscernible] space changed in the past few months given the environment, would you be less willing to do deals like 360 Park Avenue, given the leasing there and more targeted sort stabilize or financial tenants. Maybe just comment on what you’re looking for would be great.

So as I mentioned at the outset, we have the capital in the balance sheet to make additional acquisitions but we are in -- the market is repricing. And so, yes we are going to be very focused on valuation for any acquisitions that we would look at in the coming year.

Yes, I would also say I would add to that. We are, as I mentioned in my remarks, our focus is going to be on premier workplaces, life science and residential development.

Yes. And I would just add the following, which is if we’re looking at an existing asset, they’re obviously, if we can’t make it a premier workplace, we’re not going to spend time on it. If we think we could, then it’s going to be a question of what our views are on how long it will take us to lease up the space. And I would say that we’re constructive about our markets, but we are realistic as I think all of our comments this morning were about the overall absorption of space in the marketplace. And so, I’m not sure our underwriting is necessarily going to match with the seller’s expectations for what they think their buildings are. We will look at stuff. We will be thoughtful about it. We will make offers. But whether there’s inability ability for there to be a meeting of the minds, I would say we’re skeptical that will happen in 2023.

Thank you. And I show our last question comes from Nick Yulico from Scotiabank. Please go ahead.

Thanks. A question for, I guess Owen or Doug, I was hoping to get a feel for -- as you’re having conversations with your JV partners, pension funds or other potential institutional partners, what is their attitude right now towards office space, particularly in relation to investing incremental capital into buildings? What types buildings are still possible, what aren’t? And ultimately, how you think this is all going to affect office building values?

Yes, I think generally, institutional investors in real estate, not just the office are cautious at the moment given higher interest rates, slower leasing volumes that Doug just described and what the repricing is. And so, I think investment volumes generally from institutional investors have gone up – have down materially. So as it relates to office, I think it’s going -- I think there is capital available from institutional investors for premier workplaces that are underwritten with the new cost of capital as well as the leasing dynamics that Doug described in the last question, which is we have a slower leasing environment and the assumptions when you’re underwriting a deal need to reflect that. But assuming you have all those pieces, I think there’s capital available for premier workplaces.

I also think the other thing to think about here too is the -- we talked about the institutional investment world as its some homogenous group of investors. Well, it’s not. They all come from different geographic locations. They all have different funding sources. They all have different funding obligations, and so they don’t operate in a unified fashion. So my comments are not targeted to any one group, but I would just point that out.

Thank you. That concludes the Q&A session. At this time, I’d like to turn the call back over to Owen Thomas, Chairman and CEO for closing remarks.

Yes, thank you all for your time, attention and interest in BXP. Have a good day. Thank you.

Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect. Good day.