Good day, and thank you for standing by. Welcome to Q2 2023 BXP Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference call is being recorded. I'd now like to hand the conference over to Helen Han, Vice President, Investor Relations. Please go ahead.

Good morning, and welcome to BXP Second Quarter 2023 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 measure 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 that 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. [Operator Instructions]. 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'll cover BXP's above-expected operating performance in the second quarter, key economic and market trends impacting BXP, BXP's capital allocation activities and a personnel and organizational announcement. BXP continued to perform in the second quarter, once again demonstrating sentiment in the office industry is worse than what we are experiencing. Our FFO per share was above both market consensus and the midpoint of our own forecast. And once again, this quarter, we increased our FFO per share guidance for all of 2023. We completed 938,000 square feet of leasing in the second quarter with a weighted average lease term of 8 years despite continued challenging leasing market conditions. We completed multiple company and asset-specific financings, both elevating our liquidity position and demonstrating BXP's sustained access to the capital markets. U.S. economic growth is challenging to forecast as there are currently 2 competing and viable theories predicting very different trajectories. The first theory is that inflation is increasingly under control due to pandemic economic anomalies wearing off and Federal Reserve interest rate hikes. And the economy has and will remain healthy with a strong labor market and continued GDP growth driven by consumption. The second theory is that inflation is already well under control, and the Federal Reserve has been overly aggressive in the magnitude and timing of its interest rate increases, which will create dislocation in sectors of the economy as has already started to occur with regional banks and commercial real estate and will result in a recession possibly as soon as later this year. We are obviously hoping for the first outcome but have prepared BXP for the second by increasing liquidity currently at $3.1 billion, pursuing additional capital raising opportunities and being measured in discretionary capital expenditures and new…

Thanks, Owen. So during our June NAREIT meetings, the most frequent topic of conversation was our leasing activity since it obviously drives occupancy, top line revenue on our net operating income. So I'm going to focus my remarks here this morning. Owen highlighted the volume of signed leases during the second quarter. Just to remind everybody, during the last 9 months, we've been providing the leasing expectations embedded into our 2023 earnings guidance between 0.5 million and 1 million square feet per quarter which translates to 750,000 square feet on average or 3 million square feet for year 2023. So during the first quarter, we signed 660. As of the end of the first half of '23, we've completed 1.56 million square feet, pretty much on target. This quarter, the 930,000 square feet of time leases included 63 transactions, 37 renewals, 26 new tenants. There were 7 contractions and 5 expansions. Three of the expansions were law firms, although we also had two law firm contractions along with the nonprofit and a government agency. Breaking the volume down by market, 320,000 square feet in Boston, 280,000 square feet in New York, 235,000 square feet in D.C. and a 100,000 square feet in San Francisco. We ended the second quarter with an in-service occupancy of 88.3% compared to 88.6% last quarter. But as Owen said, we added 2100 Pennsylvania Avenue to the in-service portfolio. The building is 91% leased but only 61% occupied for purposes of revenue recognition, which is how we calculate our occupancy statistics. So if you exclude the additional property, our occupancy actually remains flat for that quarter. As we sit here today, we have signed leases that have yet to commence on our in-service vacancy, totaling approximately 1 million square feet with 800,000 square feet anticipated to…

Great. Thanks, Doug. Good morning, everybody. I'm going to start with a few comments on our balance sheet and then I plan to cover the details of our second quarter performance and the changes to our 2023 earnings guidance. We had a busy quarter in the debt markets, and we continue to bolster our liquidity and opportunistically manage our interest rate risk. In the bond market, we issued $750 million of 6.5% 10-year unsecured green bonds. We had strong support from our fixed income investors and our deal was well oversubscribed, allowing us to upsize the transaction and reduce the pricing from initial guidance. When we issued the notes in May, the underlying treasury was 3.34% and our credit spread was 320 basis points. Our credit spreads have rallied significantly to under 250 basis points today, while the 10-year has increased to over 4%. So despite all the volatility, if we issued another 10-year today, it would be at a similar coupon. In the mortgage market, we refinanced our $105 million expiring mortgage on 500 North Capitol Street in Washington, D.C. We also exercised 1-year extensions for our mortgage loans on the Marriott headquarters in Bethesda and the Hub on Causeway office tower in Boston. Our remaining 2023 loan maturities are limited to a $500 million bond maturity that we expect to repay with cash as well as a mortgage loan on our mixed-use Hub on Causeway podium building. The Hub on Causeway is held in a joint venture and our share of the loan is only $87 million. We're finalizing terms and expect to refinance the loan in the third quarter for two additional years plus a 1-year extension option. This quarter, we also entered into interest rate swaps to fix the rate on our $1.2 billion unsecured term…

[Operator Instructions]. So our first question comes from the line of John Kim from BMO Capital Markets.

I think I'll try to ask a multipart question on 343 Madison. Any additional commentary you could provide on the total costs of both the site access and the building itself, development yields that you expect, who the partner is or at least what regions they're in? And what level of pre-leasing you need to move forward for the project?

So let me answer the first three parts of your question, and then we'll let Hilary answer the fourth. So we're designing the building. The building hasn't been designed yet. We are not in a position to discuss the economics of the development or the returns. Clearly, the capital markets are different than they were, so the return thresholds necessary to rationalize putting capital into building are going to be higher than they would have been in 2019 or 2020. I will let Hilary talk about the demand side.

Thanks, Doug. The demand side for this building has been interesting in the sense that, as Doug pointed out, the building is still being designed and yet we're receiving inbound calls from clients who are interested in anchoring the development even in spite of the fact that it would take several years to build the building. This has to do, as Owen mentioned, with the tightness in the Park Avenue district and the Plaza submarket more generally in the sense that there's very little Class A premier workplace available for folks to occupy and as businesses are expanding in that district, they're finding themselves boxed out of larger space options. And so I would say, particularly given the fact that we have not had a very active marketing program in place for 343, the interest in the building has been very, very robust with multiple clients ranging from call it, 200,000 to 300,000 square feet seeking information on the building.

And John, it's Owen. And lastly, we are honoring our partner's request for confidentiality.

And I show our next question comes from the line of Michael Griffin from Citi.

Owen, I appreciate your comments kind of about the transaction activity and potential acquisition opportunities out there. I was wondering if you could give some color on kind of what the IRRs on those potential opportunities could be and kind of how you weigh that relative to maybe potential share buybacks.

Well, Michael, I think on IRRs, as I mentioned in my remarks, there's just not very many deals out there that are happening. I mean, on this call, every quarter, I try to give a spectrum of the deals that got completed. And frankly, it's really hard to find things right now. So look, I think in the premier workplace segment, overall, the IRRs where transactions were occurring before interest rates went up was probably in the 6s and today, even though there's not many data points given the capital is more expensive. They've clearly gone up 100 basis points or more, I would say. But again, that's conjecture. As it relates to buybacks, as we have been saying, we think our stock represents a tremendous value opportunity. But we also have uses for the capital, our development pipeline and opportunities that may present themselves. And so we have elected not to pursue a buyback program at this time.

And our next question comes from the line of Blaine Heck from Wells Fargo.

Owen, I think you mentioned considering capital raising through dispositions and joint ventures. Can you just expand on whether the dispositions would be concentrated in noncore assets or higher quality properties. Then on the JV side, can you give some color on what potential investors are looking for in an ideal investment? And what sort of returns they're targeting in this environment given those high capital costs that you just referenced?

Well, I mentioned in my remarks that we're looking at dispositions and joint ventures with our residential assets and also our leased development properties. And I think those two asset categories would probably represent the least impacted in our portfolio in terms of increasing cost of capital and cap rates. So I think the residential asset segment today is more liquid than office. There are no premier workplaces selling, but it's certainly more liquid in office. So we're going to evaluate those opportunities. And we're also evaluating opportunities in our leased development pipeline.

And Blaine, I would just make the following sort of analytic comment. And the IRR is dependent upon, obviously, what the cash flow looks like, but they're still very dependent upon what your expectations are for the future. And so we are not smart enough to be able to read the minds of our potential partners and how they're thinking about what they view as the capitalization rates in 10 years, 8 years, 15 years and how much growth they're viewing is going to be in the underlying rents of the buildings that we might be offering to them. So it's really hard to sort of get into their minds. As Owen said, it's a lot higher than it was in 2019. But we don't know if it's higher because they've lowered their expectations for those residual cap rates, they've lowered their growth rates on their rents or some combination. But it's not an easy question to answer.

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

I wanted to just maybe circle up on Platform 16. And Owen, I realize you've kind of gone through this before with 250 West 55th in the past. But does the building have maybe other uses if office for that building just doesn't come back in the near term? Can you switch to residential? Or I guess, how long are you prepared to hold this?

So Steve, this is Doug. So the answer at the moment is we haven't focused on not building the project that we currently have. And the project we currently have is three commercial premier workplace buildings. Clearly, we have a platform in a parking structure that is going to be able to hold three large suburban office buildings on it. So the platform would allow for something other than that. But at this point, we believe in the location, we believe in the rationalization of transportation through the Caltrain, which is why we easily picked this location in the first place. We believe in what eventually the user who owns most of the land around there will build. And so we're not pushing towards doing something different at this moment. But fundamentally, we looked at the market and said, 2024 is pretty quickly coming and owning a building that's going to deliver in that marketplace probably given the availability of other buildings around there is not going to be the best use of our capital today. So we're just going to hold off and let the market recover some more and deliver at the appropriate time. And that's the fundamentally the decision that we made today. Rod or Bob, I don't know if you'd like to add into that.

Yes, I don't have anything to add at this point.

And I show our next question comes from the line of Michael Goldsmith from UBS.

We recognize one of the key tenets of the BXP investment case is this long development pipeline. And so now you're pausing this one building. Like how should we think about or what is your confidence level in the expected yields of some of your future projects? Are they at risk of also being delayed? And just your overall thoughts about when your development pipeline can be monetized and whether that is in the near term or kind of on the shelf for now.

Yes. So -- it's Owen. Most of the balance of what we have is leased. So the big projects are the ones that we have in East Cambridge and one is fully leased faster. The other is fully leased by road. 360 Park Avenue South and other one, we're actually having some very constructive dialogues on that property and have a letter of intent with a client for part of the building. So I think the Platform 16 was rather unique circumstances given the amount of sublease space that's been put on the market in the Silicon Valley/San Jose area made us feel that -- and it was a completely speculative project with no pre-leasing. That brought us to the decision that Doug described.

And again, everything that we currently have on that development pipeline that is not yet leased is almost finished. So there is no such thing as a delay of these projects. Relative to our future development, I mean, again, 343 Madison is future development. And as I said, where our return expectations is higher than it would have been in 2019 or 2020. So if we -- if and when we start those buildings, we would hope that we're going to have an economic opportunity to achieve the kind of returns that are necessary to rationalize an incremental amount of capital going into those new assets.

And I show our next question comes from the line of Caitlin Burrows from Goldman Sachs.

I think you mentioned earlier about how the top question at NAREIT was on leasing because that's so relevant to your company. So following up on that, in leasing velocity was up significantly in the quarter, but down year-over-year. I guess it can be volatile. So what are your conversations like now? And do you expect that pace of signings from 2Q can be maintained or like the pickup that you saw in the second quarter? Was there something in particular that drove that? Or could it be continued? .

Yes. So welcome back, Caitlin. So the -- when we had our call during the first quarter, we had about 900,000 square feet of what I referred to as our leases in negotiation. And so as we enter the third quarter, that number was over 1.1 million square feet. So I'd say, as I said, a modest acceleration in that. And we are comfortable with our embedded expectations of somewhere just over 3 million square feet for the year. So I would say quarter to quarter to quarter, it's going to be really what we anticipated. And I'm guessing the third quarter will be slightly better than the second quarter and the fourth quarter will depend upon how many early renewal conversations occur for 2024, 2025 lease expirations because again, as we get closer and closer to the end of the year, the leasing activity is generated from those types of conversations with our clients. So we're constructive. I mean, as Owen said, the tech demand particularly on the West Coast, has not really started to materialize. And so -- and that was a big volume generator for all of the companies that are in our product mix. We don't anticipate that changing in 2023, probably not in 2024. So our comparisons to the prior years, we think, will be muted because as Owen said, we are -- we believe we are in an office recession relative to our clients. And so there's not likely to be a massive acceleration in leasing activity. Again, we're going to capture market share because of our asset quality and our teams and their propensity to be creative about figuring out how to solve client problems, which will add to our occupancy, but the general market is not going to be what it was in 2022.

Doug, one additional comment on the activity is that we are seeing a tremendous increase in the amount of not only access but time that we're spending directly with clients. And most of them are focusing on what is the workplace strategy for them going forward. And we're even seeing title changes where you have Director of Workplace strategy versus facilities people. And these conversations are increasing weekly, and it has to do with the whole strategy and specifically on what premier workspace is going to be needed versus the other bifurcation in the space that they had that you mentioned earlier. So I think there's going to be an activity jump here in the future that's coming because it's been pent up because people have been kicking the can.

And I show our next question comes from the line of Alexander Goldfarb from Piper Sandler.

First, Bob, congrats on your retirement or I don't know if we're allowed to use word retirement, maybe going to part time, but congrats there. So question for you, just continuing on the West Coast theme. What do you guys need to see to happen? Like what's going on with the tech companies? If we think back to the credit crisis like here in New York, Wall Street was down and out for quite a long time. It took many, many years before it came back. For the tech companies, is it they overhired. They're not sure what's going on with work from home. I mean they certainly seem to be profitable. they always come up with new innovations that they seem to need to hire and need space for. So what is -- what are the things that you need to see for the tech industry on the West Coast to sort of reengage proactively on the office front.

I think Alex, I'll take a shot at that. I'd say, first of all, the tech companies trajectory of income growth has flattened out. So I think there's more focus on cost, which has an impact on space demand. And as new technologies are created and the advertising cycle changes and the growth continues, then I think there'll be more space demand. I think that's part of it. I think there definitely could have been an overinvestment period where there were lots of employees hired and also space that was taken in anticipation of growth that hasn't materialized. So I think there's a digestion aspect of this. And lastly, I think the technology companies as well as the Federal government, by the way, have been behind the rest of corporate America in return to office. And I think as those policies are rolled out with the tech companies. And we're seeing it happen. Amazon came back to the office on May 1. There are other technology companies that have come back to the office. Others are suggesting things like I said in my remarks, about evaluating performance and paying people based on their office attendance. These policies are rolling out now, and I think that will also increase the demand for space. And it's going to take some time. Doug, Rod, anybody else have other views on this?

This is Rod. I'll just comment real quickly. Alex, I just would add, and I think both Owen and Doug addressed this point, which is one of the positive tech drivers now that we're seeing is the AI demand. It's real. We've seen those deals in the market, a few of them have gotten signed, and it's not still by any stretch the majority of deals in the market, but it's happening. So it's that opportunity of a new technology that has pulled us out of other downturns. And so this is getting a lot of attention, and I think rightfully so.

And I show our next question comes from the line of Nick Yulico from Scotiabank.

I just want to follow up on all the commentary, Doug, you gave on leasing and the pipeline and activity. Just wanted to make sure we're clear on this. So if we look at your lease rate, it was down year-to-date about 100 basis points. Are you suggesting that in the back half of the year based on the visibility you have right now is actually going to be improvement in the lease rate? And then second part of that is you also mentioned in numerous times occupancy gains for the portfolio. And so I just want to be clear that are you saying that occupancy this year is going to be at a bottom. And at this point, you think next year is actually a growing occupancy year for the portfolio?

So I'll answer the second question first. Yes, it's going to be modest, but it's yes. I'm not sure what you mean by lease rate. If you're talking about the amount of leasing that we are doing on a quarter-by-quarter basis compared to the previous years, it's going to be down for every quarter in 2023 relative to 2022. And that's why we -- I mean, again, we did build-to-suits in 2022 that we're not doing in 2023, including almost 1 million square feet just in Cambridge with AstraZeneca and the . So again, the -- we're doing a lot more leases in terms of numerical number of transactions, but the check size is obviously smaller because of the nature of what the demand is coming from and which is small professional services and law firms and the financial services firms that I described before. So I -- we feel good about our pipeline of activity on a relative basis, first quarter, second quarter to third quarter to fourth quarter of 2023. And again, it's going to be within the construct of the embedded earnings projections that we provided, which is somewhere in the neighborhood of 3-plus million square feet space.

And I show our next question comes from the line of Vikram Malhotra from Mizuho.

So just maybe building on uses of capital, you talked about the balance sheet. Your ability to fund what you have so far. But I'm just wondering, stepping back given what we know about the transaction market or [indiscernible]. Today, how do you view sort of your implied value given the run-up in office or the little run-up in office, we've seen relative to perceived NAV. And related to that, just uses of capital is the premier workspace trend is sustainable over, say, a 5, 7, 10 year period, is this a unique opportunity for you to do something more strategic in the premier space.

So Vikram, I'll answer it this way. NAVs are hard -- they're based on a lot of judgments that Doug talked about earlier, which are what is your assumption on rent growth and residual cap rate and all these things. So I think the simplest way to think about it is what is the -- what does BXP's look through cap rates. And today, that is around 8.25%. I did highlight one premier workplace that sold in the Silicon Valley and its cap rate was 6.1%. I can't tell you what the proper look-through cap rate is for BXP's assets, but I don't think it's 8.25%. And so I think that it does represent significant value. Look, I think we are always going to be interested in looking at expanding in the premier workplace segment in the Life Science segment and in the residential development segment. And that's one of the reasons why we have the liquidity that we have, and we're so focused on our balance sheet because we want to have capital available during this time -- available to make these kinds of investments. And we're going to stay actively involved in our markets, looking for them.

And I show our next question comes from the line of Camille Bonnel from Bank of America.

You've had a lot of leasing activity over the past year in your Boston CBD portfolio, which is well leased. So could you speak to how tenant demand is trending for your suburban markets? And more generally, any comments on how your leasing pipeline breaks down between life sciences and more traditional office users would be great.

So with regards to the Boston suburban market, depending upon how you define things, we have Cambridge, which is where the bulk of our value is and we have no available space there either, including the new developments that we're doing, which are 100 facilities. And then we have this group of assets that were once the sort of the perfect solution for a growing technology company on 128, which was called Technologies Highway that were created in the '80s, '90s, 2000. And those locations are fabulous locations still and what we have been doing over time as we've been converting some of those buildings from office locations to life science locations. And so if you look at our development pipeline, the bulk of our available opportunity set is in Waltham, Massachusetts. It's in life science. And that is, I'd say, our focus for growth because we see more likely growth over time with life science demand in the greater Boston market than we necessarily do with traditional technology office demand. It doesn't mean there isn't demand out there because we are actually doing leases, both renewals and new deals in the Greater Waltham, Lexington market on the office side. But I will tell you that in general, the suburban Boston office demand market is slower than the CBD market by a material amount right now. And so we are well positioned to capture incremental demand as the life science market recovers. And as we've said, time and time again. We're not going to simply build for the sake of building. We're going to wait for the demand to come to us and for the market to tighten to the point where it makes economic sense to do this, and we have such a low basis in these buildings because we have effectively free land or buildings that were purchased for $150 or $250 a square foot, where we can rationalize incremental investment and get a strong return when the market is a "stable" market from a life science perspective. So I would say that the demand in general for traditional office space in the greater Boston suburban market is light. But it's -- there is some there, and we are capturing it because we happen to have the best -- absolutely the best properties in the best locations in what Bryan has sort of turned our urban edge locations. It's no longer viewed as suburban. And Bryan, I don't know if you want to make any additional comments?

Yes. Two early things that I could point to this may lead to a trend is we have already completed one transaction with a downtown tenant, who has put a spoke into the urban age in one of our assets. We're talking to two more about that strategy, which gets back to this workplace strategy in the future for these companies that are really focused on their knowledge workers. And then we're seeing, let's say, early trend, Doug, in what some people are calling Top Tech, which is some portion of the space needs bigger clear heights for work benches, et cetera, maybe it's displays for sales, but that use has picked up over the last 6 months for certain.

And I show our next question comes from the line of Ronald Kamdem from Morgan Stanley.

Just staying on the life science theme, we've sort of heard about sort of funding a lot of these smaller companies having to come back for funding and could impact what you think. So we just -- would love to hear just both on the demand side, what your expectations are in terms of activity over the next 12 to 24? How you guys are thinking about it? And then also hear your thoughts on the supply side. I mean I think a lot of the brokers have a lot of supply in the pipeline. Maybe if you could talk about what you're seeing and which is competitive to your portfolio.

So I'm going to try and truncate the -- my answer to this. I'm not going to talk about all the things that and [indiscernible] talk about on their calls relative to sort of overall large-scale demand in life science and particularly biotech relative to gene therapy and all sorts of new discoveries that are going on. If you simply look at where the money is going and where it was, the amount of capital that was put into the life science market from a VC perspective had an enormous spike in 2019, '20 and '21, and it was way outsized. And if you look at what's going on in 2023, it's pretty normalized and slightly higher than where it was in, call it, 2014 to 2019. And so I would say that there is lots of available capital, but the capital is being very thoughtful, and it's taking advantage, quite frankly, of dramatic drops in valuations for companies that were funded by people who probably shouldn't have given them capital and gave it to the valuations that were not appropriate for whatever the discovery was in the stage of those businesses. So we believe -- and we believe we will see this, what I refer to as sort of small life science demand continue in the marketplace, the issue is that there are not a lot of big demand drivers other than some 1 or 2 consolidations that are occurring with some pharma companies that have acquired some medicinal biotech companies over the last few years and are starting to put those requirements together in both South Francisco and in the greater Boston marketplace. But you hit on the sort of the issue, which is there's more supply. And when that money was going into the sector, lots and…

And I show our next question comes from the line of Dylan Burzinski from Green Street.

I guess just looking at BXP's portfolio in terms of office concentration, are there certain markets where you see you guys sell adding incremental capital to or possibly even reducing your concentration to over time?

Our -- the way we operate is strategically, we set a perimeter, which are the 6 markets that we're in and the way the capital gets allocated is bottoms up. So what deals arise in those locations that make the most sense for our shareholders and we execute on them. So we pay attention to the top line, what's the contributions from the different markets, but we think it's very important to be nimble and opportunistic as we think about allocating capital across those regions. There have been shifts over time. If you look at the last 5 years, there's clearly been a shift of capital and allocation out of the CBD of Washington, and that would be a change that I would point out. So that's the way we operate the business from a capital allocation standpoint.

And I show our last question in the queue comes from Anthony Powell from Barclays.

I think you mentioned that variable revenues, including parking was a source of upside in the quarter. Could you remind us where you are in parking revenues on a same property basis versus pre-COVID level? How rate and utilization trended? And could you push parking rates as more people come back to the office going forward?

I mean I think we're doing pretty well on parking. We are -- overall, I would say, on parking, if you kind of exclude the fact that we removed a parking garage in Cambridge from service earlier this year, we're actually where we were before. I do think there's still opportunity to grow that because we're better than where we were before because we have increased rents. We have had occupancy come back into these buildings and into these cities. So I do think there's still room there. But for parking, we're already there. The increase that we had in this quarter for parking was modest. As I said, the kind of the revenue beat was a little bit across the board. It was a little bit in a bunch of different places. On the retail side, I'd say every place, but San Francisco, we're back. The San Francisco retail contribution before the pandemic was a few million dollars. So hopefully, that will come back at some point. But at this point, I'd say it's still difficult, and we're helping our retailers along. We do have some retail still returning, for example, in Boston, where we close down the Lord & Taylor and we're putting in a fixed sporting goods that's going to open next year. I mean that's going to be additive to us from a retail perspective. And then the hotel still a couple of million dollars below where it was. So I don't know where that's going to stabilize that. I mean it's doing pretty well. But hopefully, it will continue to improve over time and get back to where it was and above where it was.

I'm showing no further questions in the queue. At this time, I'd like to turn the conference back to Owen Thomas, Chairman and CEO, for closing remarks.

That concludes our remarks. Thank you all for your interest and attention for BXP. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.