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    BXP
    Earnings call· Mar 2026(Q1 FY26)

    BXP Q1 FY26 earnings call BXP

    Apr 29, 2026 Source

    Executive summary

    BXP Q1 FY26 — Strong Leasing Activity and Occupancy Gains Drive FFO Beat

    BXP delivered a strong first quarter, surpassing FFO estimates and making significant strides in leasing, with in-service occupancy rising to 87.4%. The company continues to execute its business plan by monetizing non-core assets and progressing its development pipeline, notably 343 Madison Avenue. Despite increased interest expense, BXP raised its full-year FFO guidance, driven by robust leasing and occupancy recovery, reinforcing confidence in its premier workplace strategy.

    Highlights

    5

    • FFO per share of $1.59 exceeded estimates by $0.02.

    • In-service portfolio occupancy rose 70 basis points to 87.4%.

    • Completed over 1.1 million square feet of leasing in Q1 FY26.

    • Raised $360 million in net asset sale proceeds year-to-date, contributing to $1.2 billion since investor conference.

    • Increased full-year 2026 FFO guidance by $0.01 per share at the midpoint.

    Concerns

    3

    • Net interest expense for Q1 FY26 was higher by $0.01 per share due to lower interest income and higher commercial paper rates.

    • Increased 2026 assumption for net interest expense by approximately $10 million due to early project delivery and flat SOFR rates.

    • Leasing CapEx for Q1 FY26 was $178 million, significantly higher than normal due to lease commencements.

    Guidance & targets

    12
    CategoryTargetConfidence
    FFO per share guidance
    $6.90 to $7.04 per share
    high materiality
    High
    Asset sales net aggregate proceeds
    approximately $1.9 billion
    high materiality
    High
    Future net proceeds from dispositions
    up to an additional $400 million
    medium materiality
    Medium
    Total occupancy improvement
    4 percentage points
    high materiality
    High
    Full-year leasing volume
    minimum of 4 million square feet
    medium materiality
    High
    Occupancy at year-end
    89%
    high materiality
    High
    Occupancy at year-end
    91%
    high materiality
    High
    Same-property NOI growth (BXP share)
    between 1.4% and 2.4%
    high materiality
    High
    Average occupancy outlook
    88.25%
    high materiality
    High
    SOFR rates assumption
    flat
    medium materiality
    Medium
    Net interest expense assumption
    increased by approximately $10 million
    high materiality
    High
    Termination income assumption
    increased by $8 million
    medium materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Back Bay (Boston)
    Tightest supply and most landlord-favorable market conditions. Activity focused on small pockets of availability and future expirations (2028-2032) due to lack of premier blocks.
    Leased percentage: 98.8%
    		————
    Midtown Manhattan
    Significant difference in leased versus occupied space due to recent leasing activity, contributing meaningfully to potential rent growth.
    Average rent on unoccupied vacant space: $100-$105 per square foot
    		————
    Midtown South (New York)
    Significant acceleration in activity. 360 Park Avenue South reached 90% leased with an additional 138,000 sq ft, and an AI client expansion brought it to 95%. AI demand is accelerating year-over-year.
    360 Park Avenue South leased percentage: 95%200 Fifth Avenue availability: 33,000 square feet (from 350,000 sq ft in 2025)
    		————
    San Francisco
    Most significant change in portfolio activity. AI and tech leasing is driving demand, with a steady increase in its share of total leasing demand. Spec suites strategy at 680 Folsom was very successful.
    680 Folsom and 50 Hawthorne Q1 leasing: 103,000 square feet680 Folsom and 50 Hawthorne early April leasing: 63,000 square feetAI and tech leasing as % of total demand: 80% (Q1 FY26, up from 50%)
    		————
    Reston Town Center (Northern Virginia)
    Activity concentrated here, with tight supply and landlord-favorable conditions. Successful with prebuilt suites for smaller tenants (4,000-6,000 sq ft) seeking proximity to corporate HQs.
    Leased percentage: 97.3%Small leases completed: 7Leases in negotiation: over 150,000 square feet
    		————
    Urban Edge (Boston)
    Seeing turnkey activity with new emerging companies, including life science. Activity has ticked up, and clients are doing their best to project growth.
    Lease with national restaurant operator: 100,000 square feetLease with life science company: 43,000 square feet (15,000 sq ft lab, 28,000 sq ft office)
    		————

    Operational metrics

    45
    FFO per share
    $1.59
    Q1 FY26

    Exceeded midpoint of guidance range by $0.02 and consensus estimates by $0.01.

    FFO outperformance vs. estimate
    $0.02
    Q1 FY26

    Outperformance against company's own estimate.

    FFO outperformance vs. consensus
    $0.01
    Q1 FY26

    Outperformance against consensus estimates.

    Portfolio outperformance contribution to FFO
    $0.03
    Q1 FY26

    Comprised of $0.02 from better rental revenues and $0.01 from higher termination income.

    Higher net interest expense impact on FFO
    $0.01
    Q1 FY26

    Partially offset portfolio outperformance.

    Rental revenue beat contribution to FFO
    $0.02
    Q1 FY26

    From commencing leases more quickly and increased client utilization.

    Termination income contribution to FFO
    $0.01
    Q1 FY26

    Higher than expected.

    Termination income total
    $12.8 million
    Q1 FY26

    Primarily related to two clients.

    Termination payment received
    $6.25 million
    Q1 FY26

    Covers prior write-off and nearly 12 months of potential downtime/rent for a defaulted client.

    Commercial paper rates widening
    25 to 30
    Q1 FY26

    Contributed to higher net interest expense.

    FFO guidance change from same-property NOI growth
    $0.02
    FY26

    Increase in FFO guidance.

    FFO guidance change from termination income
    $0.04
    FY26

    Increase in FFO guidance.

    FFO guidance change from development activity
    $0.01
    FY26

    Increase in FFO guidance.

    FFO guidance change from higher interest expense
    $0.06
    FY26

    Offsetting decrease in FFO guidance.

    Leasing volume
    1.1 million
    Q1 FY26

    Total leasing completed.

    In-service portfolio occupancy
    87.4up 70 basis points
    Q1 FY26

    Increased from previous period.

    Leased vs. occupied square footage spread
    3.5widened 80 basis points
    Q1 FY26

    Precursor to more occupancy gains.

    Net sale proceeds
    $360 million
    YTD FY26

    Total net sale proceeds so far this year.

    Net sale proceeds since investor conference
    $1.2 billion
    since investor conference

    Includes land, apartment, and office/lab/retail sales.

    Land sales proceeds
    $250 million
    since investor conference

    Part of total net sale proceeds.

    Apartment sales proceeds
    $460 million
    since investor conference

    Part of total net sale proceeds.

    Office/lab/retail sales proceeds
    $500 million
    since investor conference

    Part of total net sale proceeds.

    Marriott HQ sale price
    $430 million
    Q1 FY26

    Sale of 50% interest to partner; 743,000 sq ft building, fully leased to Marriott.

    Marriott HQ gain on investment
    $35 million
    Q1 FY26

    Development was very profitable for shareholders.

    Office transaction volume (significant sales)
    $14.1 billionup 72% from Q1 FY25
    Q1 FY26

    Private markets activity, down from seasonally elevated Q4.

    575 Fifth Avenue sale price
    $383 million
    Q1 FY26

    Market transaction, 525,000 sq ft, 90% leased.

    TransAmerica Pyramid sale price
    $600 million
    Q1 FY26

    Market transaction, 525,000 sq ft, only 60% leased.

    343 Madison stabilized unleveraged cash return
    7.5% to 8%
    upon delivery

    Projections remain on track.

    Executed leases on vacant space
    700,000
    Q1 FY26

    Part of total leasing volume.

    Renewed or backfilled expirations
    235,000
    Q1 FY26

    Part of total leasing volume.

    Leases in negotiation pipeline
    1.7 million
    post March 31

    Current pipeline of leases.

    Executed leases on vacant space (expected commencement)
    1.44 million
    Q2-Q4 FY26

    Expected to commence in the next 3 quarters of 2026.

    Remaining 2026 expirations
    770,000
    calendar year 2026

    Down to this amount.

    In-service occupancy
    86.7
    end of 2025

    Baseline occupancy at the end of the prior year.

    Total discussion pipeline
    3.1 millionhigher than last quarter
    current

    Combined pipeline of leases.

    Leases executed post March 31
    300,000
    post March 31

    Additional leases signed after the quarter end.

    Total leases for the year
    1.5 million
    YTD FY26

    As of the call date.

    Leasing cost per square foot per lease year
    $10
    Q1 FY26

    Considered reasonable and within expected range.

    Leasing CapEx
    $178 million
    Q1 FY26

    Higher than normal due to significant lease commencements.

    Full-year leasing costs projection
    in excess of $400 million
    FY26

    Anticipated due to occupancy growth and early renewals.

    San Francisco market requirements over 100,000 sq ft
    20up from 12 a year ago
    current

    Indicates increased demand in the market.

    Average rent on unoccupied vacant space
    $75
    current

    Average rent for currently vacant space.

    Unoccupied vacant space
    800,000
    current

    Significant portion of company-wide vacant space.

    Average rent on unoccupied vacant space
    $100 to $105
    current

    High rents for vacant space in Midtown Manhattan.

    Net Debt to EBITDA
    8x
    current

    Company goal is to lower this over time.

    Industry KPIs

    8
    MetricValueDetails
    Occupancy rate87.4%%
    Development starts1project
    Disposition volume$360 millionUSD
    Same store noi growth1.4% to 2.4%%
    Net debt adjusted EBITDA8xx
    Leasing bookings volume signed1.14 millionsquare feet
    Ffo core ffo normalized ffo per share$1.59USD per share
    Development pipeline under construction3.4 millionsquare feet

    Orderbook & backlog

    3
    Development pipeline underway$3.6 billionQ1 FY26

    Represents BXP investment for 6 office, life science, and residential projects totaling 3.4 million square feet.

    Assets under contract for sale$40 millionQ1 FY26

    Total net proceeds from 3 assets.

    Signed-not-commenced leasing backlog1.6 million square feetQ1 FY26

    grown

    Signed leases that have yet to take occupancy for currently vacant space.

    Deals & partnerships

    2
    Partner (unnamed)Sale of 50% interest in Marriott headquarters building$430 million

    743,000 square-foot building, fully leased to Marriott. Sold for $589 per square foot at a 6.8% initial cap rate. Bethesda market is not strategic for BXP.

    Institutional partner (unnamed)Development of residential townhomes and apartments at Worldgate

    Purchased 300,000 square feet of office buildings and re-entitled as residential. Venture closing and construction commencement anticipated during Q2 FY26.

    Capital programs

    2
    343 Madison Avenue Developmentunderway
    Spent to date: 83% of construction costs procured
    Funding: Equity partners (30-50% leverage interest) and construction financing from banks

    Benefit: Premier workplace tower in New York City; 29% leased, 27% in negotiation (total 56% committed); stabilized unleveraged cash return of 7.5% to 8%

    Largest development underway. Recapitalization with partners and construction financing expected to be completed in 2026. Realized anticipated savings from original budget.

    290 Binney Street Developmentnearing completion
    Spent to date: just about complete with tenant improvements

    Benefit: Tenant AstraZeneca commenced cash rent payments as of April 1

    Expected to deliver more than a month early. Early delivery requires cessation of capitalized interest early.

    Risks & headwinds

    4
    Market anxiety regarding AI impact on job creation and leasing demandNear and medium-term

    Not quantified directly, but acknowledged as a market sentiment.

    Mitigation: BXP is experiencing direct and indirect benefits from AI, leasing to AI companies and those displaced by or serving the AI industry. Premier workplaces are less affected by job disruptions.

    Significant concession packages required for West Coast leasingCurrent

    Not quantified, but described as 'pretty significant concession package'.

    Mitigation: Acknowledged as a market condition due to significant space availability, despite accelerating demand.

    Credit issues leading to lease terminations and lower rental incomeFY26

    Impacts about 200,000 square feet of space, resulting in approximately $5 million of lower rental income in 2026.

    Mitigation: Company expects to receive $8 million in termination income, offsetting the rental income loss. Spaces are readily leasable and expected to be backfilled quickly.

    Higher net interest expenseFY26

    Increased by $0.01 per share in Q1 FY26, and full-year 2026 assumption increased by approximately $10 million.

    Mitigation: Caused by lower-than-anticipated interest income, higher commercial paper rates (widened 25-30 bps), and the assumption of flat SOFR rates for the remainder of 2026. Early delivery of 290 Binney Street also ceased capitalized interest early.

    What to watch in Q2 FY26

    5

    343 Madison Avenue Recapitalization

    2026
    CurrentIn discussions with potential equity partners and banks
    TargetCompletion of recapitalization

    Why it matters

    Successful recapitalization will de-risk the asset, free up capital for other investments, and contribute to deleveraging.

    We intend to complete the recapitalization in 2026.

    Q&A highlights

    5

    Are discussions to signed leases shortening, and will CapEx decrease given improved leasing environment?

    Lease duration depends on legal counsel, not market conditions. Concessions (free rent, TIs) are stiffening in tight markets (Boston, Midtown, Reston), but still significant on the West Coast.

    “I would say our ability to say yes to request from our tenants in terms of what their counsels are saying is clearly stiffened. And so maybe that's why it's taking longer to get leases done in some cases, I don't know.”

    asked by Steve Sakwa · answered by Douglas Linde

    2 min read6 chapters

    Detailed Narrative

    01

    AI's Impact on Leasing

    BXP is directly benefiting from leasing space to AI companies in San Francisco, New York, and Seattle, and indirectly from companies displaced by growing AI firms and those serving the AI industry. Premier workplaces, representing 14% of space and 8% of buildings in BXP's 4 CBD markets, show 8.5% direct vacancy compared to 13.8% for the broader market, with asking rents commanding a 60% premium. Net absorption for Premier Workplaces over the last 3 years was positive 11.9 million square feet, versus only 420,000 square feet for the balance of the market.

    02

    Portfolio Optimization and Asset Sales

    BXP has raised $360 million in net sale proceeds year-to-date, contributing to $1.2 billion since its investor conference. This includes land sales ($250 million), apartment sales ($460 million), and office/lab/retail sales ($500 million). The company has received or is pursuing entitlements for over 3,500 residential units on former office land, creating significant value. Three high-quality stabilized apartment buildings were sold at a mid-4% cap rate.

    03

    Development Pipeline Progress

    BXP's largest development, 343 Madison Avenue in New York City, has a lease commitment for 29% of the building, with negotiations for another 27%, potentially bringing it to 56% committed. The project is on track for a stabilized unleveraged cash return of 7.5% to 8% upon delivery in 2029. The company is in discussions with potential equity partners for a 30% to 50% leverage interest and aims to complete recapitalization in 2026.

    04

    Market Conditions and Leasing Trends

    The U.S. economy's technology cycles continue to drive office demand, particularly from new AI organizations in San Francisco and New York City. CBRE reports 3 million square feet of positive office absorption in San Francisco over the last 7 quarters, with 1.4 million square feet in Q1 2026 alone. BXP's total leasing volume was 1.14 million square feet in Q1, with 700,000 square feet of vacant space leased and 235,000 square feet of 2026/2027 expirations renewed or backfilled.

    05

    Leasing Concessions and Capital Expenditures

    Concessions for leasing are stiffening in landlord-favorable markets like Boston's Back Bay, Midtown Manhattan, and Reston, Virginia, with lower free rent and tenant improvement (TI) offerings. However, the West Coast still requires significant concession packages due to available space. Q1 leasing CapEx was $178 million, driven by a high volume of lease commencements, including several early renewals. The company anticipates full-year leasing costs to exceed $400 million.

    06

    Market Transaction Activity

    Office transaction volume in private markets remains healthy, with $14.1 billion in significant office sales in Q1 2026, up 72% from Q1 2025. Notable transactions include the sale of BXP's 50% interest in the Marriott headquarters in Bethesda for $430 million (6.8% initial cap rate) and market sales like 575 Fifth Avenue in NYC for $383 million (5.1% cap rate for office portion) and the TransAmerica Pyramid in San Francisco for $600 million (2.9% in-place cap rate, expected high 7% stabilized).

    AI-generated summary of the company’s earnings call. Not investment advice.