Dylan Burzinski

Dylan Burzinski from Green Street inquired about COPT Defense Properties' thoughts on bringing 2100 L Street to market, considering improving debt capital markets and its stabilized status.

Answer

Stephen E. Budorick, President and CEO, indicated that the D.C. market is not yet showing pricing for assets that excites them, and he doesn't expect to bring 2100 L Street to market for another 12 months, waiting for capitalization rates to align with shareholder value.

Dylan Burzinski inquired about other markets for future data center development opportunities beyond the Iowa plan, and the company's thoughts on bringing 2100 L Street to market for disposition given improving debt capital markets.

Answer

President and CEO Stephen E. Budorick stated they are not currently seriously considering other data center opportunities but are constantly evaluating. Regarding 2100 L Street, he indicated the D.C. market is not yet showing exciting pricing, so a sale is not expected for 12 months, but the building is well-positioned for when capitalization rates make sense for shareholders.

Dylan Burzinski from Green Street Advisors, LLC asked about the company's appetite to begin marketing its non-core office assets for sale, given the portfolio's improved leasing status.

Answer

President & CEO Stephen Budorick responded that while they are anxious to sell the assets, they are waiting for the interest rate and financing environment to improve to ensure they can achieve strong value for shareholders.

Dylan Burzinski asked if the government's initiative to monetize some of its real estate under DOGE could create acquisition opportunities for COPT.

Answer

President and CEO Stephen E. Budorick stated that he does not expect acquisition opportunities from this initiative. He explained that most properties for sale are in downtown D.C. with non-defense tenants, a market COPT avoids, and that mission-critical facilities on military installations will not be sold.

Dylan Burzinski from Green Street asked if it was reasonable to expect development spending to increase meaningfully from 2026 onwards, given the strong demand environment and high occupancy.

Answer

CEO Stephen E. Budorick responded that he expects development spending to remain, on average, within the company's currently provided range. While acknowledging optimism for increased opportunities under the new administration, he indicated that the current guidance range for spending remains appropriate, allowing for some ebb and flow year to year.

Dylan Burzinski asked about the 130% mark-to-market on recent data center renewals and whether COPT is able to push for higher annual rent bumps. He also questioned if the company's 4% FFO CAGR target through 2026 is now too conservative given strong recent performance and a positive leasing outlook.

Answer

EVP and COO Britt Snider confirmed the recent data center renewals included higher annual rent bumps of 3%. Regarding the FFO target, EVP and CFO Anthony Mifsud noted that a key variable is the refinancing rate for a $400 million bond due in early 2026. President and CEO Stephen E. Budorick added that the company will continue to report against its 'at least 4%' growth benchmark until the forecast period concludes.

Dylan Burzinski noted the strong and accelerating demand backdrop, Cousins Properties' portfolio likely reaching 90% leased by year-end, new development being 4-5 years away, and replacement rents well above current market rates. He asked for an outlook on the growth of net effective rents over the next one, two, and three years.

Answer

Colin Connolly, President and CEO, described a very positive backdrop with accelerating demand, de minimis construction, and approximately 20 million square feet of inventory being taken out annually, leading to an anticipated shortage of premier space from 2028 onwards. He believes the market is nearing an inflection point where it will become a landlord's market, expecting rents to go higher and concessions to come down. He cited examples like Uptown Dallas, where Trophy Property rents have doubled in four years, and Hayden Ferry, where rents grew 10%-20% in the last 12-18 months, indicating a very favorable environment for Sunbelt Trophy Lifestyle Office owners.

Dylan Burzinski highlighted the strong demand backdrop, Cousins Properties' projected 90% leased portfolio by year-end, the lack of new development for the next four to five years, and replacement rents being well above current market rates. He then asked for Cousins Properties' outlook on the growth of net effective rents over the next one, two, and three years given these favorable market conditions.

Answer

Colin Connolly, President and CEO, described a very positive backdrop, anticipating an inflection point where it will become a landlord's market by 2028 due to accelerating demand and de minimis new construction. He expects rents to go higher and concessions to come down, citing examples like Uptown Dallas where Trophy Property rents have doubled in four years, and Hayden Ferry with 10-20% rent growth in the last 12-18 months. He emphasized a very favorable environment for Sunbelt Trophy Lifestyle Office owners.

Dylan Burzinski asked for the key drivers behind the continued strong leasing demand and the record-high late-stage pipeline that Cousins Properties is currently experiencing.

Answer

President and CEO Colin Connolly attributed the strong demand to a reversal of the subdued market of the past four years, with companies now playing catch-up on their office space needs. He stressed that this demand is heavily concentrated in the high-quality, lifestyle-oriented office segment where the company's portfolio is squarely positioned, leading to a disproportionate share of leasing activity.

Dylan Burzinski inquired about the potential for rent spikes and the ability to push net effective rents given market dynamics. He also asked about the near-term acquisition pipeline and seller appetite, considering the company's recent forward equity raise.

Answer

President and CEO Colin Connolly stated that improving demand and declining supply are creating a positive backdrop for leasing, with concessions leveling off and a long runway for rent growth. Regarding acquisitions, he noted that while more owners are exploring sales, recent market volatility has created a bid-ask spread, but Cousins remains optimistic about deploying capital creatively this year.

Dylan Burzinski asked for opinions on bidding tension and the emergence of new competitive buyers for high-quality office assets. He also inquired about the prospects for net effective rent growth and the future of leasing concessions.

Answer

President and CEO Michael Connolly acknowledged recent commentary from large investors like Blackstone as validating but noted that significant new competition has not yet materialized in Cousins' Sun Belt markets. Regarding rents, he stated that while the company has successfully grown net effective rents, it will remain situational and aggressive with concessions where needed to drive occupancy, especially as the trophy market is expected to tighten.

Dylan Burzinski from Green Street asked about Cousins' appetite to extend the Saint Ann Court loan at maturity and whether certain markets present a larger investable universe than others.

Answer

President and CEO Michael Connolly maintained confidentiality regarding potential outcomes for the Saint Ann Court loan but reiterated comfort with the collateral and basis. He stated that Cousins sees compelling investment opportunities across its entire Sun Belt footprint and will invest opportunistically where it can acquire high-quality lifestyle office assets on an attractive basis, rather than focusing on just one or two markets.

Dylan Burzinski asked for clarification on the $0.04 per share credit reserves included in the 2026 guidance, specifically whether these relate to looming bankruptcies or represent a conservative budgeting approach. He also inquired about the company's vision for the path back to 90%+ office occupancy, asking if it's a two-year goal or a longer-term objective.

Answer

Steve Center, EVP, explained that retail reserves were a generalized, conservative measure due to a manageable watch list (e.g., a theater, pet supply companies), with no broad-based deterioration. Office reserves were a hybrid of credit and speculative leasing conservatism, not tied to specific acute concerns but rather to model for potential fallouts. Regarding office occupancy, Mr. Center stated that a two-year timeframe to reach 90%+ is reasonable, citing investments in spec suites and a strong inventory of move-in-ready spaces as key drivers.

Dylan Burzinski of Green Street Advisors LLC questioned the nature of the $0.04 credit reserves baked into American Assets Trust's guidance, specifically whether they relate to looming bankruptcies or represent a general conservatism, split evenly between office and retail. Burzinski also inquired about the company's envisioned timeline to achieve 90%+ office occupancy, asking if this is a two-year goal or a longer-term objective.

Answer

Steve Center, EVP, clarified that for retail, the reserve is generalized due to a manageable watch list and no broad deterioration, while for office, it's a hybrid of credit and speculative leasing reserve, reflecting ambitious but measured expectations without specific acute tenant concerns. Regarding office occupancy, Mr. Center stated that achieving 90%+ within two years is "reasonable" and within the realm of possibility, citing the completed investment in spec suites and readily available inventory as key drivers for anticipated good results.

Dylan Burzinski asked for specifics on the re-leasing strategy for the two vacant Party City boxes, questioning if they would be split or backfilled by a single tenant. He also inquired about whether there were any 'green shoots' of activity from larger tenants in the office market.

Answer

Executive Christopher Sullivan clarified that the smaller 5,000 sq. ft. Party City in Hawaii would be leased as-is, while the company seeks a single 14,000 sq. ft. user for the other location. Executive Robert Barton responded to the office question by noting that while overall demand is for smaller spaces, larger tenants have appeared in Bellevue and tenant deal sizes are increasing in San Francisco. He added that tenants are committing to longer lease terms, averaging over 10 years for deals in negotiation.

Dylan Burzinski asked about the company's internal strategy for balancing deleveraging with share buybacks, seeking insight into specific leverage targets before initiating significant share repurchases. He also questioned if the University City, Philadelphia development projects (3025 JFK, 3151 Market) are considered potential disposition candidates after stabilization.

Answer

Gerard H. Sweeney, President and CEO, outlined the strategic goal of returning leverage metrics to investment-grade levels (Fixed Charge Coverage well north of two, Net Debt to EBITDA in low to mid-sevens) as a multi-year plan. He emphasized a current bias towards deleveraging but acknowledged the undervaluation of public securities, exploring ways to accelerate sales for additional liquidity to fund potential buybacks. Sweeney confirmed that 3025 JFK and 3151 Market are not off the sale list, with refinancing or joint ventures being evaluated, but the preference is to retain high-quality, growth-driving assets.

Dylan Burzinski asked about Brandywine Realty Trust's internal strategy for balancing deleveraging with share buybacks, inquiring about specific leverage targets before initiating significant share repurchases. He also questioned if the University City development projects (3025 and 3151) are potential disposition candidates after stabilization.

Answer

Gerard H. Sweeney, President and CEO, outlined a multi-year plan to achieve investment-grade metrics, targeting a Fixed Charge Coverage well north of two and Net Debt to EBITDA in the low to mid-sevens. He emphasized that the bias is to delever first, but they are exploring ways to accelerate sales to generate more liquidity for opportunistic share buybacks. Mr. Sweeney confirmed that 3025 and 3151 are not off the sale list, with potential refinancing or joint ventures for 3025's residential component and discussions with capital partners for 3151 after lease-up, while prioritizing holding high-quality assets.

Dylan Burzinski from Green Street questioned Brandywine Realty Trust's decision to issue unsecured notes to repay CMBS debt, seeking clarification on the rationale given the CMBS debt's rates. He also inquired about the company's long-term strategy to address the disconnect between share trading and NAV estimates, including future leverage targets.

Answer

Executive Vice President and CFO Tom Wirth explained that the unsecured note issuance aimed to unencumber assets for greater flexibility in leasing and capital markets, noting a minimal 25 basis point rate differential and the benefit of resetting rates. President and CEO Jerry Sweeney outlined strategies to improve market perception, focusing on leasing and recapitalizing development projects to remove earnings overhang and enhance cost of capital. He emphasized the strong operating portfolio, plans for strategic asset sales, and the objective of returning to investment grade by reducing leverage and refinancing high-coupon bonds.

Dylan Burzinski followed up on Brandywine Realty Trust's long-term strategy to close the disconnect between its share price and NAV estimates, considering its current cost of capital and long-term leverage targets.

Answer

President and CEO Jerry Sweeney outlined a strategy focused on leasing and recapitalizing development projects to prove their value and remove earnings overhang. He emphasized improving cost of capital outcomes, driving operating results, and strategically selling non-growth assets. The ultimate goal is to reduce overall leverage and achieve investment-grade metrics, which he believes will improve the public cost of capital.

Dylan Burzinski challenged the financial rationale for starting a new hotel development, given the company's share price, past development challenges, and capital scarcity, asking why proceeds weren't used for buybacks or deleveraging, and why they didn't just sell the land.

Answer

President & CEO Gerard Sweeney acknowledged the observation, reiterating that the decision balanced cost of capital against a strong real estate opportunity that serves existing tenants. He emphasized that the company believes it will have capital options to reduce its financial exposure as the project progresses, including bringing in partners or an early sale. He stated that selling the land was considered, but the current path provides a range of capital opportunities throughout the development cycle.

Dylan Burzinski asked about the impact of recent layoffs at Spark Therapeutics, Brandywine's second-largest tenant, and whether the tenant has any rights to terminate its lease or vacate the space.

Answer

Executive Vice President Jerry Sweeney confirmed that Spark, owned by the high-credit parent Roche, has no early termination rights. He noted the weighted average remaining lease term is 92 months and that Roche/Spark are proceeding with their adjacent development, indicating a continued commitment to the area. Some of their leases expire at the end of next year, which will be addressed in due course.

Dylan Burzinski from Green Street asked for clarification on what management means by "recapitalizing" the joint venture assets. He also inquired about the potential start of a new development project in 2025, questioning the rationale given the current cost of capital.

Answer

Executive Jerry Sweeney explained that the JVs are structured with preferred equity partners. Recapitalization involves Brandywine buying out these partners at a set price, allowing Brandywine to own 88-90% of the residual position and bring the asset onto its balance sheet or refinance. Regarding a new development, Sweeney clarified that while they are evaluating a few small ($40-50M) possibilities, any decision is contingent on progress with leasing up existing projects, which remains the top priority.

Dylan Burzinski asked how pricing on dispositions has compared to initial expectations and inquired about the strategy behind increasing ownership in the Commerce Square JV and whether there is a desire to do so for other development projects.

Answer

Executive Jerry Sweeney stated that disposition pricing has been in line with initial expectations. He explained the Commerce Square transaction was an attractive use of cash to buy back high-cost preferred equity. He affirmed that bringing other large development JVs, like those at Schuylkill Yards and in Austin, onto the balance sheet upon stabilization represents a significant future opportunity for the company.

Dylan Burzinski asked about the expected duration of the return-to-office movement driving leasing activity, questioning if it's a short-term phenomenon or a longer-term normalization.

Answer

President Douglas Linde believes there is still room for return-to-office improvement, citing Placer.ai data. He noted that leasing activity is strongly tied to earnings growth, which is projected to be higher in 2026. He clarified that current layoffs often do not impact premier workplace jobs, and BXP's financial services and legal clients are growing and needing more space due to hiring, independent of return-to-office mandates. Rodney Diehl, Company Representative, added that demand in Reston Town Center from defense and cybersecurity is driven by hiring, not return-to-office.

Dylan Burzinski asked about the expected duration of the return-to-office movement driving leasing activity, questioning if the current pent-up demand is a short-term phenomenon (12-18 months) or a longer-term trend.

Answer

Douglas Linde, President, believes there's still room for return-to-office improvement, citing Placer.ai data. He reiterated that BXP's leasing activity is tied to earnings growth, projected to be higher in 2026. He distinguished between general layoffs and their impact on premier workplaces, noting that financial services and legal firms are growing and hiring, not just returning to office. Rodney Diehl, Company Representative, added that demand in Reston Town Center is driven by corporate growth and talent location, not return-to-office mandates.

Dylan Burzinski from Green Street Advisors, LLC asked if it was fair to assume a clear path for the current in-service portfolio to reach 90%+ occupancy in the near term, given strong leasing and low expirations.

Answer

Douglas Linde, President & Director, affirmed that this expectation is 'entirely fair.' He stated that with signed leases yet to commence, a strong pipeline focused on vacant space, and very low expirations in 2026 and 2027, the company expects to see a meaningful increase in occupancy over that period.

Dylan Burzinski asked if BXP is successfully pushing base rents in its tightest markets, like Boston and New York, to achieve net effective rent growth, and what the outlook is for 2026-2027.

Answer

President Douglas Linde stated unequivocally that rents in Midtown Manhattan and Boston's Back Bay are rising, with double-digit increases on Park Avenue. He expects this trend to continue in 2025. However, he cautioned that this strength is concentrated in specific submarkets and not a portfolio-wide phenomenon. CFO Michael LaBelle added that a lack of new supply in 2026-2027 will further support pricing power in these areas.

Dylan Burzinski asked for a comparison of the pickup in tech tenant touring activity between New York and the West Coast markets, excluding AI tenants, to see if New York is leading.

Answer

EVP Hilary Spann noted that NYC tech demand increased after Labor Day, but decision-making is slow. Senior EVP Rodney Diehl countered that on the West Coast, beyond AI, there is a broader base of tech demand, particularly from the autonomous vehicle industry. The responses suggest both regions are seeing renewed, cautious activity from different tech segments rather than one clearly leading the other.

Dylan Burzinski asked about Vornado's expectations for cumulative net effective rent growth over the next four to five years, given the significant demand and tightening space. He also inquired about the redeployment plans for capital generated from non-core asset sales, considering options like acquisitions, deleveraging, internal development, or stock buybacks.

Answer

Michael Franco, President and CFO, Vornado Realty Trust, and Steven Roth, Chairman and CEO, Vornado Realty Trust, expressed expectations for 'quite a bit more' than 20-25% rent growth, citing favorable market dynamics and low vacancy. Michael Franco stated that capital from asset sales would be used to strengthen the balance sheet, pursue compelling external acquisitions, fund internal development (residential, 350 Park), or potentially for stock buybacks, given the perceived discount in Vornado's stock.

Dylan Burzinski of Green Street Advisors, LLC asked about Vornado's ability to push net effective rents in the current market and requested details on the 'A node and B node' investments mentioned.

Answer

President and CFO Michael Franco described the current environment as a 'landlord's market,' stating Vornado is actively pushing rents and expects significant rental rate growth. Regarding the investments, he explained it is a note on a high-quality Midtown site that could either provide a coupon return or become an opportunity to own the asset.

Dylan Burzinski of Green Street Advisors asked about the intended use of the $1.4 billion cash balance following recent transactions. He also inquired about the market appetite for further dispositions within the street retail joint venture, particularly from luxury retailers looking to own their real estate.

Answer

President and CFO Michael Franco explained the cash provides flexibility for new investments, paying down high-cost debt, and maintaining a strategic buffer. Chairman and CEO Steven Roth added that cash is earmarked for a future unsecured bond payoff and for development at 350 Park and the PENN District. Roth also noted that buyers for retail assets include large companies like Amazon, not just retailers, which is a positive trend for the New York market.

Dylan Burzinski from Green Street asked for clarification on plans to address the perceived undervaluation of its affiliate, Alexander's, Inc. (ALX), and questioned if a tracking stock for the New York office portfolio was being reconsidered.

Answer

Chairman and CEO Steven Roth explained that Alexander's value, based on a sum-of-the-parts analysis including its valuable land at Rego Park, is substantially higher than its stock price. Regarding a tracking stock, he stated that while he personally likes the idea, it is not currently on the table due to a lack of internal and external support.

Dylan Burzinski of Green Street inquired about Vornado's plans to monetize the remaining half of its retail JV preferred equity and asked for more details on the strategy behind the recent $50 million B-note acquisition on a Midtown site.

Answer

Chairman and CEO Steven Roth stated that Vornado is pleased to have monetized the first half of the preferred equity at par and is happy holding the other half for now, given its strong capital position. Regarding the B-note, Roth described it as a small but interesting investment with multiple potential outcomes, declining to provide further details due to the possibility of future litigation.

Dylan Burzinski of Green Street asked about the potential for the street retail portfolio's occupancy to return to pre-COVID levels, inquired about plans to repatriate preferred equity, and questioned the company's appetite for share repurchases.

Answer

President and CFO Michael Franco explained that the lower retail occupancy is primarily driven by the Manhattan Mall vacancy and that excluding it, occupancy would be around 87%, with an expectation to return to historical levels. Chairman and CEO Steven Roth confirmed Vornado is working on sales or refinancings to repatriate portions of the remaining $1.5B in preferred equity and stated that the share repurchase program is currently dormant.

Dylan Burzinski of Green Street inquired about the street retail portfolio's occupancy recovery, plans to repatriate preferred equity, and the company's appetite for share repurchases.

Answer

Michael Franco, President & CFO, clarified that retail occupancy is skewed by the Manhattan Mall vacancy and is otherwise healthy. Steven Roth, Chairman & CEO, confirmed they are actively working on sales and refinancings to repatriate portions of the remaining $1.5B in preferred equity. He also stated that the share repurchase program is currently dormant due to other capital allocation priorities.

Dylan Burzinski of Green Street questioned Vornado's acquisition strategy, asking if they would pursue a 'loan to own' approach and whether their focus was on office, retail, or both. He also asked about the balance between asset sales and acquisitions.

Answer

Chairman and CEO Steven Roth stated that acquiring assets through debt is the 'easiest way' and 'target #1.' He confirmed their acquisition interest spans both office and retail. Regarding capital allocation, he revealed that Vornado currently has four significant asset sale transactions in various stages of discussion, indicating a dual focus on dispositions and acquisitions.

Dylan Burzinski asked about how pricing expectations for sold assets have aligned with initial forecasts and the composition of bidding pools, specifically if institutional capital is returning. He also inquired if a certain percentage of the current portfolio is considered non-core for future disposition.

Answer

CEO Ted Klinck stated that disposition pricing is generally meeting or exceeding expectations, with deeper bidder pools and more familiar institutional capital returning, aided by increased liquidity in debt capital markets. He explained that the definition of 'non-core' is dynamic, as the company continuously evaluates its portfolio for improvement, meaning assets previously considered core might become non-core due to changing growth trends.

Dylan Burzinski of Green Street inquired about the improving capital markets environment, specifically asking how pricing expectations for sold assets have aligned with initial projections, the nature of bidding pools (institutional vs. high net worth), and what percentage of the current portfolio Highwoods would deem non-core for future dispositions.

Answer

CEO Ted Klinck noted that pricing on dispositions is generally meeting or exceeding expectations, with deeper bidder pools and more familiar capital, aided by improving debt capital markets. He observed more institutional capital making bids and increased constructive underwriting for office acquisitions. Regarding non-core assets, Ted Klinck explained that it's a continuous portfolio improvement process, with assets re-evaluated regularly based on growth trends, meaning what was core a few years ago might be non-core today.

Dylan Burzinski from Green Street Advisors asked about which markets are showing outsized demand and requested context on the gap between current market rents and the replacement rents needed to justify new development.

Answer

CEO Ted Klinck identified Charlotte, Dallas, and Nashville as the top-performing markets, with strong demand also seen in Tampa. He explained that while Dallas is approaching cost-justified rents in some submarkets, most other markets have a 20-40% gap, which has widened due to rising construction and financing costs. COO Brian Leary provided additional color on job growth and tenant requirements in key markets.

Dylan Burzinski inquired about recent changes in buyer appetite or pricing for dispositions and whether leasing economics, like free rent and TI packages, have shifted in recent weeks.

Answer

CEO Theodore Klinck stated there has been no change in buyer interest for assets on the market and that the company continues to field inbound calls. He noted that leasing concessions are leveling off and, in some submarkets, even subsiding. He believes both vacancy rates and concessions have likely peaked in Highwoods' markets, creating an encouraging outlook.

Dylan Burzinski asked about the potential occupancy recovery trajectory into 2026, questioning if a return to the high-80s or low-90s was feasible. He also inquired about the buyers of the recent Tampa disposition and whether that deal signaled a broader tightening in the transaction market.

Answer

Executive Brendan Maiorana expressed confidence in the setup for late 2025 through 2027, suggesting that with a stable economy, the company is well-positioned to steadily drive occupancy higher. CEO Theodore Klinck revealed the Tampa buyer was an adjacent user executing an expansion. He characterized the broader buyer pool as largely non-institutional but noted that institutional capital is starting to show interest in high-quality office assets, which could increase activity in 2025.

Dylan Burzinski inquired about the yield-on-cost hurdles required for new build-to-suit opportunities and the prospects for continued net effective rent growth as portfolio occupancy increases.

Answer

CEO Theodore Klinck stated that the bar for new development is very high due to elevated construction and financing costs, which translates to high required rental rates. He also noted that the leasing market remains competitive, with pressure from TIs and free rent. The company's goal is to maintain current net effective rent levels, cautioning that significant pricing power is not yet present in most markets.

Dylan Burzinski asked if the government shutdown was the only significant change this quarter and if demand is expected to pick up once the government reopens. He also inquired if demand has worsened since Q2, contrasting with peers reporting improving touring pipelines, and whether the company would consider selling partial interests in mega campuses to monetize its platform without tying up capital, similar to asset-light models in the office sector.

Answer

Joel Marcus, Executive Chairman and Founder, clarified that while the government shutdown is a prerequisite for industry function, it's not directly tied to demand. He emphasized the need for lower capital costs, a clear regulatory path, reduced drug development costs, and increased success probability for robust industry health. He stated that the industry's complexity makes quarter-to-quarter demand indicators unreliable, and while leasing has been reasonable, it doesn't reflect underlying health. Hallie Kuhn, SVP, added that despite good tour activity, decisions are taking longer due to uncertainty. Joel Marcus also stated that selling partial interests in mega campuses is not the game plan, as the goal is to own more of them, and the core strategy is to reduce non-income-producing and non-core assets. Peter Moglia, CEO and CIO, and Marc Binda, CFO and Treasurer, dismissed the asset-light model for this unique, highly regulated industry.

Dylan Burzinski asked if the government shutdown is the only significant change this quarter and if demand is expected to pick up once the government reopens. He also inquired if demand has worsened since Q2 2025, given prior commentary and peer reports of improving touring pipelines, and if the company would consider selling partial interests in mega campuses.

Answer

Joel Marcus, Executive Chairman and Founder, clarified that the shutdown is a prerequisite for industry function but not directly tied to demand, emphasizing the need for lower capital costs and streamlined regulatory paths. He stated that the industry's health is complex and not reflected by simple quarter-to-quarter indicators, despite two reasonable leasing quarters. Hallie Kuhn, IR Representative, added that decisions are taking longer due to uncertainty. Joel Marcus confirmed that selling partial interests in mega campuses is not the game plan, as the goal is to increase ownership and shed non-income-producing and non-core assets. Peter Moglia, CEO and CIO, added that an asset-light model is not currently viable as many projects won't be lab space.

Dylan Burzinski asked for the reasoning behind the increased cap rate guidance for dispositions, questioning if it was due to market-wide changes or the specific profile of the non-core assets being sold.

Answer

Peter Moglia, CEO & CIO, clarified that the higher cap rate reflects the transitional nature of the assets being sold. Many have near-term lease roll risk, which buyers are compensated for, and these sales are not representative of the cap rate for the company's core mega campus portfolio.

Dylan Burzinski of Green Street asked whether the negative sentiment and muted expansion demand in life science are driven more by broad macro issues or by industry-specific factors like NIH funding and FDA uncertainty.

Answer

Executive Chairman Joel Marcus responded that it's a combination of both. While investors are concerned about macro factors, they are also reacting to changes at federal agencies. However, he expressed confidence in the solid leadership now in place at the FDA and CMS. He noted the NIH has organizational issues to resolve but that the administration is focused on protecting the 'crown jewel' life science industry.

Dylan Burzinski asked if leasing economics, particularly tenant improvements and concessions, have stabilized at higher levels. He also inquired about the buyer profile for dispositions and whether institutional capital is returning to the sector.

Answer

Executive Peter M. Moglia stated that TIs for new biotech space are essentially "turnkey" and that concessions are stabilizing near a bottom. Regarding dispositions, he noted that while they haven't recently marketed a top-tier institutional asset, institutional partners consistently express a desire to invest with Alexandria, having learned lessons from funding less experienced sponsors.

Dylan Burzinski noted that most dispositions have been to users and asked about the current appetite from traditional real estate investors for life science assets.

Answer

Executive Peter M. Moglia acknowledged the recent success with user sales and explained that appetite from traditional investors is highly dependent on the financing markets. He expressed optimism that as lending conditions improve, transaction velocity with institutional investors will increase, which could also lead to better valuations.

Dylan Burzinski asked about the improving capital markets and transaction environment, specifically if more assets similar in risk profile to Maple Plaza or more stabilized core deals are coming to market. He also inquired if Kilroy is more focused on stabilized transactions or a project-level risk-reward analysis given existing market vacancy.

Answer

EVP, CIO Eliott Trencher stated that Kilroy is seeing all types of deals (core, core plus, value add, heavy repositioning) and focuses on a bottoms-up, project-level risk-reward analysis, ensuring new risks don't double down on existing portfolio vacancies. He cited Maple Plaza as an example where they entered a new submarket after thorough study. CEO Angela Aman added that with an improved but still discounted cost of capital, Kilroy seeks opportunities where its core competencies can drive value, as seen with Maple Plaza, rather than purely core, stabilized properties.

Dylan Burzinski asked if improving capital markets are bringing more Maple Plaza-like assets or stabilized core deals to market, and if Kilroy is focused on stabilized transactions given current vacancy levels.

Answer

Eliott Trencher (EVP, CIO) stated that Kilroy is seeing all types of deals (core, core plus, value add, repositioning) and takes a bottoms-up approach, evaluating asset and submarket dynamics relative to existing portfolio risks, emphasizing smart risk-taking. Angela Aman (CEO) added that with an improved but still discounted cost of capital, Kilroy is not the best buyer for truly core, stabilized properties and seeks opportunities where its platform can drive value, as with Maple Plaza.

Dylan Burzinski from Green Street Advisors, LLC asked whether the strong new leasing volume in Q2 represents a sustainable annualized run-rate or if it was driven by a few large, non-recurring deals.

Answer

CEO Angela Aman expressed encouragement about the sustainability of demand and the acceleration of leasing in the development portfolio. While hesitant to commit to a specific run-rate, she stated she is more encouraged by the leasing outlook now than at any point in the last 18 months.

Dylan Burzinski requested the total square footage of the leasing pipeline at KOP Phase 2, including the size of two larger interested users. He also asked if recent property sales at lower bases in San Francisco could pressure net effective rents downward.

Answer

CEO Angela Aman detailed that KOP 2 prospects include users for spec suites (15,000-25,000 sq. ft.) and larger tenants looking at one to three full floors (40,000-44,000 sq. ft. each). EVP and CIO Eliott Trencher commented that it is too early to determine if lower-basis sales will impact net effective rents, as it depends on the new owners' subsequent capital investment in the properties.

Dylan Burzinski from Green Street Advisors asked if the new leasing pipeline has been replenished after a strong Q4 and what factors are driving renewed activity. He also inquired if tenants are now more receptive to early renewal discussions and whether the trend of downsizing upon renewal is nearing its end.

Answer

Executive A. Paratte confirmed the leasing pipeline is stronger now than a year ago, with more LOIs in place, driven by return-to-office mandates, improved business confidence, and a flight to quality. He also noted that tenants are now materially more willing to engage in early renewal talks. While he feels give-backs have slowed, he acknowledged it is difficult to predict future trends.

Dylan Burzinski asked about Kilroy's appetite to sell assets in non-core submarkets as capital markets improve. He also questioned if the going-in yield on the Del Mar acquisition was close to the stated low double-digit stabilized yield.

Answer

CEO Angela Aman responded that while the company is always evaluating its portfolio positioning, the slow transaction market has limited actionable dispositions. EVP, CIO Eliott Trencher clarified that for the Del Mar acquisition, the in-place rents are below market and the deal was underwritten to a mid-teens IRR, indicating expected growth to reach the stabilized yield, not a high day-one yield.

Dylan Burzinski asked for an update on the disposition of non-core assets and whether the capital markets are showing signs of clearing up for the office sector's recovery.

Answer

CEO Brent Smith stated that the disposition environment remains challenging, with buyers seeking significant deals for non-trophy assets. He mentioned an asset in Washington D.C. currently on the market, reflecting a continued focus on pruning non-core assets in challenging markets like D.C. and those with limited portfolio depth (e.g., Houston). He also noted that the New York City asset would likely be monetized upon a long-term lease, with improving debt capital markets potentially aiding execution for larger dispositions in 2026. Increased leasing activity in Piedmont's markets is expected to provide better underwriting conviction for investors, potentially improving the disposition environment in 2026.

Dylan Burzinski inquired about the current status of Piedmont's efforts to take non-core assets to market and whether there are signs of the capital markets for office asset sales clearing up.

Answer

Brent Smith, CEO, stated that dispositions remain challenging due to market expectations for significant deals on older assets. He mentioned an asset in Washington D.C. and others in Houston are being targeted for sale in 2026, with the New York City asset's monetization contingent on a long-term lease. He noted that improving debt capital markets could aid execution, particularly for the New York City asset, and that increased leasing in their markets should provide better underwriting conviction for investors.

Dylan Burzinski asked for more detail on the commencement timing for the $71 million in future annual rent. He also inquired about the primary drivers behind the recent reinvigoration of leasing activity, especially among large tenants, and whether this reflects net new demand or tenants relocating within the market.

Answer

President, CEO & Director Brent Smith described the rent commencement timing as a "smile," with significant portions starting in Q4 2025/Q1 2026 and again in late 2026. EVP & COO George Wells attributed the leasing momentum to tenants upgrading their office experience, return-to-office mandates, office demolitions, and tenants avoiding properties with distressed capital structures. Management clarified that most activity is tenants moving to higher-quality buildings within the same market, with Dallas being the main exception showing net inbound migration.

Dylan Burzinski inquired about the decision to maintain leasing guidance despite strong year-to-date activity and a robust pipeline, asking if conservatism was due to macro uncertainty. He also asked for a timeline on when the historically wide gap between leased and economic lease percentages would normalize.

Answer

President and CEO Christopher Smith acknowledged the strong leasing momentum, noting that if it continues, guidance could be revised upward on the Q2 call. However, he cited the long lead time from lease execution to cash rent and general economic uncertainty as reasons for current caution. Regarding the dividend, Smith explained the suspension provides about $60 million in annual retained cash flow, which will be prioritized for funding internal growth. He stated a dividend reevaluation would likely occur in the latter part of 2026 at the earliest, as the company focuses on leasing momentum and improving the balance sheet.

Dylan Burzinski questioned if Piedmont can maintain its upward trajectory on lease percentage into 2026 given known large move-outs, and asked about the prospects for achieving net effective rent growth across the portfolio.

Answer

President and CEO Brent Smith expressed confidence in achieving the 89-90% lease percentage target for 2025 and noted strong backfill activity for known 2026 vacancies, which should allow for continued positive absorption. He stated that net effective rent growth is already occurring, particularly in Sunbelt markets where the portfolio is over 90% leased. He characterized rent growth as flat-to-slightly positive in suburban Boston and Minneapolis, but flat-to-negative in the challenging Washington D.C. district, which represents a small portion of the portfolio.

Dylan Burzinski asked about current trends in the leasing concession environment, specifically tenant improvements and free rent, and whether relief is emerging. He also inquired if Piedmont is considering alternative acquisition paths, such as purchasing debt or notes on target assets.

Answer

President and CEO Brent Smith explained that while base rents are rising, tenant improvement allowances have leveled off after a period of increases. He noted the company is successfully reining in free rent, particularly through its spec suite program. On acquisitions, Smith confirmed Piedmont is comfortable operating across the capital stack and would consider acquiring a note to gain control of a strategic asset, but the immediate focus is on deleveraging through non-core sales to prepare for offensive opportunities in 2025.

Dylan Burzinski of Green Street Advisors, LLC asked if there were any other large potential move-outs to be aware of for 2026 and how the Washington 1000 project would impact earnings as it comes off capitalization.

Answer

Chairman & CEO Victor Coleman reiterated that there are no other large move-outs expected. President Mark Lammas confirmed Washington 1000 will no longer have interest capitalized at year-end and that the company anticipates stabilization in 2027, providing a ramp for modeling its contribution to earnings.

Dylan Burzinski of Green Street asked management to reconcile the seemingly static 2 million square foot leasing pipeline with their optimistic commentary about a tech-led recovery. He also asked for their view on whether Seattle's Proposition 1A would further separate the recovery of the Bellevue and downtown Seattle office markets.

Answer

CEO Victor Coleman and EVP of Leasing Arthur Suazo clarified that while the pipeline's total size is stable, the company is transacting at a high volume and the average deal size within the pipeline is growing. Regarding Seattle, Coleman argued that despite Prop 1A, downtown Seattle's significant rent discount compared to Bellevue provides a powerful economic incentive for tenants, noting that two large tenants recently shifted their focus from Bellevue to Seattle's Pioneer Square.

Dylan Burzinski asked why the company no longer expects to achieve flat year-over-year office occupancy and what has changed in recent months. He also questioned why the return-to-office momentum on the West Coast isn't translating into a swift leasing recovery as it did in New York.

Answer

President Mark Lammas attributed the revised occupancy outlook to two specific events: Amazon's early lease termination and the designation of Foothill Research Center as held-for-sale. CEO and Chairman Victor Coleman addressed the RTO question, explaining that West Coast tech companies are just beginning to implement mandates and that the significant reduction in high-quality sublease space is a leading indicator of future direct leasing demand.

Dylan Burzinski from Green Street Advisors, LLC inquired about the composition of tenant demand in the New York office market, asking if there has been a shift in demand from tech tenants or if it remains primarily driven by financial and legal services.

Answer

EVP of Real Estate Thomas Durels explained that tenant demand is broad-based, attracting a wide variety of industries. He noted current activity includes tenants in consumer goods, finance, legal, professional services, and engineering. While ESRT has a good amount of tech tenants in its portfolio, he stated that recent activity has been more heavily weighted towards the FIRE sector and professional services.

Dylan Burzinski asked for an update on the marketing of ESRT's final suburban asset and whether they are seeing any hesitation from tenants that would prevent them from pushing net effective rents higher.

Answer

Chairman and CEO Anthony Malkin confirmed the final suburban asset is being broadly marketed and the process is proceeding as expected. EVP of Real Estate, Thomas Durels, addressed rents by stating that shrinking availability of high-quality space gives them pricing power. He noted they have recently increased asking rents, reduced free rent concessions, and are seeing less resistance on price and terms across the portfolio.

Dylan Burzinski of Green Street asked about ESRT's ability to continue pushing net effective rent growth in a strong demand environment. He also inquired about demand trends across tenant sizes and whether larger tenants are becoming more active in the market.

Answer

EVP of Real Estate Thomas Durels confirmed plans to continue raising rents and reducing concessions in 2025, following a 13% year-over-year increase in net effective rents in 2024. President Christina Chiu added that demand is strong across tenant sizes and is migrating toward high-quality assets like ESRT's, creating a supply shortage in that category which supports pricing power.

Dylan Burzinski asked about the timing for the compression of the spread between leased and occupied percentages, which is currently wider than historical averages. He also sought clarity on how stabilized occupancy and market rent growth potential factor into the Williamsburg retail acquisitions.

Answer

Executive Vice President Thomas Durels explained that occupancy will increase into 2025 as over 315,000 square feet of signed-not-commenced leases will more than offset known vacates. President and CFO Christina Chiu clarified that the Williamsburg yield growth to 6% is driven by contractual free rent burn-off and leasing up known vacancy, not speculative rent growth. She added that significant mark-to-market potential exists as many current tenants have below-market rents, creating future upside opportunities.

Dylan Burzinski asked for an update on the acquisition pipeline and whether there is an acceleration in sellers' willingness to transact on properties.

Answer

CIO Kevin Crummy characterized prime Westside assets as 'family jewels' that owners are reluctant to sell, limiting distressed opportunities. He suggested that some core funds facing portfolio-wide pressure might become sellers. President and CEO Jordan Kaplan added that the transaction market is 'certainly not a flood.'

Dylan Burzinski of Green Street asked for more detail on the scale of the residential densification opportunity within the existing portfolio. He also inquired about the key drivers behind the renewed optimism and leasing activity from tenants seeking over 10,000 square feet.

Answer

President and CEO Jordan Kaplan reiterated that the residential development opportunity within their existing land is for 'thousands of units' and noted the company now has three such projects underway. He attributed the large-tenant demand rebound to two factors: a shift in tenant mindset away from expecting a dramatic recession, and the increased effectiveness and focus of DEI's own leasing and development platform.

Dylan Burzinski of Green Street asked if the recent strength in leasing activity was concentrated in specific submarkets or was broad-based. He also inquired if there was any appetite from the company's JV partners to sell their interests back to the company.

Answer

Executive Stuart McElhinney confirmed that the strong leasing activity was broad-based across all three of the company's regions, with a good mix of tenants and geographies. CFO Peter Seymour responded succinctly that the company's JV partners are 'full on buyers,' indicating no interest in selling their stakes.

Dylan Burzinski of Green Street asked about the nature of improving leasing volume, specifically if larger tenants are returning to the market in New York and San Francisco. He also questioned whether the demand in San Francisco represents net new tenants or a 'musical chairs' flight to quality.

Answer

Peter Brindley, EVP, Head of Real Estate, responded that in New York, competition for premier space among large tenants is a primary driver. For San Francisco, he noted the market is recovering, with the strongest Q1 since 2019. He clarified that while law firms represent a flight to quality, the significant increase in AI-based tenants, over half of which were new to the market in Q1, constitutes net new demand.

Dylan Burzinski asked about the difference in the bid-ask spread for assets in New York versus San Francisco and inquired about the state of large-tenant leasing activity, particularly in San Francisco.

Answer

Albert Behler, Chairman, CEO, and President, explained that the bid-ask spread is narrowing in both markets but noted New York is currently less risky, while San Francisco offers deep value potential but is about a year behind in its recovery. Peter Brindley, EVP, Head of Real Estate, addressed leasing activity, stating that while current demand is strong from smaller, early-stage tech companies, they are beginning to see inquiries from larger tech firms that have been dormant, driven by the return-to-office movement.

Dylan Burzinski followed up on the AI theme, asking how Paramount underwrites the credit risk of new AI tenants given market uncertainty. He also asked if JV partners' unlevered IRR expectations have changed from the previously mentioned 7-10% range and if there is a return premium for San Francisco versus New York.

Answer

EVP, Head of Real Estate Peter Brindley explained that Paramount applies a serious and consistent credit review process to all tenants, mitigating risk with newer companies by limiting capital outlay and securing leases with letters of credit. He also clarified that investor return expectations differ significantly by market. San Francisco acquisitions require higher, double-digit returns and are often all-cash deals. New York return requirements have also risen, with investor appetite leaning more towards opportunistic assets rather than core properties.

Inquired about the street retail portfolio's occupancy recovery, plans to repatriate preferred equity, and the company's appetite for share repurchases.

Answer

The low retail occupancy is primarily due to a large vacancy at Manhattan Mall; excluding that, occupancy is much higher and expected to recover. The company is exploring both sales and refinancings to repatriate portions of its preferred equity. The share repurchase program is currently dormant due to other capital allocation priorities.

Asked about Vornado's acquisition strategy, including interest in loan-to-own opportunities, target asset types, and the company's broader capital allocation plan between acquisitions and dispositions.

Answer

The company's primary acquisition strategy is to buy buildings through their debt, which they see as the easiest entry point. They are focused on both office and retail opportunities. Asset sales remain a key part of their strategy, with four significant sale transactions currently in various stages of discussion.