Peter Abramowitz • Jefferies

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Executive Chairman William Ackman acknowledged the complexity and stated the strategy is to embrace it by transforming into a diversified holding company, which he believes will attract a broader investor base than a pure-play developer. He highlighted Pershing Square's long-term view and investment acumen as key advantages. CEO David O'Reilly addressed the leasing question, expressing high confidence in leasing the newly acquired 7 Waterway building due to its prime location and the lack of other available space in the submarket.

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CEO Jordan Kaplan detailed a confluence of factors making the conversion attractive: upcoming large tenant vacancies, synergies with an adjacent residential project, a forced entrance relocation due to a new subway stop, and floor plates that are highly suitable for residential layouts. He noted these unique circumstances made it a cost-effective and logical decision.

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President and CEO Jordan Kaplan confirmed that leasing demand, signed volume, and the pace to stabilization at Studio Plaza have all surpassed expectations. Stuart McElhinney added that the building's remodel will complete later in the year. On entertainment demand, Kaplan noted their exposure is limited, primarily to industry vendors, and thus couldn't comment on broader trends.

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Executive Stuart McElhinney noted that leasing from the entertainment industry was at a 'typical pace' in Q3 and has normalized recently after a slower period. Regarding UCLA, he explained that their 120,000 sq. ft. is spread across many small leases and they act like multiple small tenants, not one large one. Therefore, there is no single chunky expiration and no prediction yet on how those individual leases will be handled.

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CEO Christian Ulbrich clarified that after 22% growth in Q2, the project management business is expected to see a 'normalizing' but still healthy growth rate, not a slowdown due to new headwinds. CFO Kelly Howe specified that larger U.S. gateway markets posted lower office leasing volumes in the quarter, which impacted JLL's results due to its heavier weighting in those markets.

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Christian Ulbrich, President & CEO, explained that while increased uncertainty reduces visibility, JLL must adapt, noting the business correlates with GDP growth. Regarding outsourcing, he stated that uncertainty can both drive demand for cost-cutting and cause short-term decision-making delays, creating a mixed but currently stable outlook.

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Global CEO Christian Ulbrich clarified that the pipeline growth figure is not a direct proxy for Q4 revenue but reflects a positive outlook. CFO Karen Brennan stated that while initial pent-up office demand has been met, leading indicators are steady. For industrial, she noted a slowdown from a high base, with activity now in line with pre-pandemic averages and a favorable long-term outlook.

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CEO Michelle MacKay confirmed the office recovery is broadening both geographically to non-gateway markets and by asset quality, moving from 'AAA class A space to what you might consider A-minus space.' CFO Neil Johnston acknowledged a tough Q3 comp but stated that current momentum and strong July results support the full-year guidance.

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CEO Michelle MacKay affirmed that underlying demand for industrial space remains strong despite trade discussions, with the company continuing to see positive trends. Regarding interest rates, she explained that the focus is on all-in borrowing costs, not a single benchmark, and noted that many clients can and do use all-cash for transactions, keeping the capital markets pipeline robust.

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CFO Neil Johnston stated the project management delays were not thematic but a function of a subdued market, particularly in office. CEO Michelle MacKay clarified that their 'waterfall' view aligns with a gradual, long-term recovery, with their base case assuming slow, steady interest rate cuts through 2025, fostering a more normalized environment over the next year.

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EVP of Operations Richard Hickson explained the Tampa occupancy dip was due to a routine 25,000 sq. ft. expiration. President and CEO Colin Connolly stated the current priority is expanding in existing markets like Dallas and Charlotte over entering new ones. Hickson noted that tech demand in Austin is showing tangible signs of improvement and re-emerging growth needs.

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EVP of Operations Richard Hickson expressed confidence in Charlotte's market fundamentals, highlighting a lack of new development. He stated that Cousins' redeveloped assets, including Fifth Third Center, are well-positioned to capture demand. While nothing specific was announced, he confirmed very good tour activity and interest in the Uptown properties.

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President and CEO Michael Connolly confirmed that build-to-suit conversations are increasing, though near-term investments are more likely to be acquisitions. He opined that public and private markets will eventually converge, but it will take time as private capital players must first work through legacy portfolio issues, giving public REITs like Cousins a current advantage.

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Chairman & CEO Gary Shiffman indicated that going-in cap rates for high-quality MH communities are in the 4-5% range, with a strong focus on subsequent growth potential. EVP & CFO Fernando Castro-Caratini described the share buyback as one of several capital allocation tools, considered alongside strategic reinvestment and acquisitions, without providing specific return hurdles or price targets.

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Executive Fernando Castro-Caratini described the financing market as 'very strong,' noting that Fannie Mae and Freddie Mac continue to actively finance the sector without any slowdown. Executive Gary Shiffman added that life insurance companies also remain active lenders, recognizing the stable cash flows and resilient fundamentals of the asset class.

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CFO Brendan Maiorana explained the FFO guidance was impacted by non-NOI headwinds like higher G&A and deferred interest income, which were more than offset by stronger underlying property performance. CEO Ted Klinck added that the acquisition market is improving, with the bid-ask spread narrowing and more high-quality assets becoming available as debt and equity capital markets reopen for office properties.

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CEO Theodore Klinck reported that the rent on the new Symphony Place lease was 'essentially flat' with the prior lease and detailed strong prospect activity for other core vacancies. Regarding capital markets, he expressed optimism, citing that debt markets are opening up for office and significant equity is becoming more constructive on the sector, which should drive higher transaction volume.

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COO Brian Leary and CFO Brendan Maiorana described the Vanderbilt renewal as a standard extension with normal escalators, not a major driver of spreads. Maiorana cautioned that while Q3 spreads were high, the long-term expectation remains flattish, as quarterly results are volatile. CEO Theodore Klinck added that it's too early to name specific markets for build-to-suit interest but that the inquiries themselves are an encouraging sign.

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Douglas Linde, President & Director, confirmed the SoMa market is improving with an AI-related resurgence. Rodney Diehl, EVP of West Coast Regions, elaborated that Embarcadero demand remains strong from traditional financial services firms, while SoMa assets like 680 Folsom are seeing significant interest from AI companies.

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President Douglas Linde confirmed 125 Broadway is a 'true lab building' with predominantly lab infrastructure. He anticipates some system upgrades will be necessary upon vacancy but expects it will remain a life science asset. Executive Bryan Koop added that while they assume Biogen is leaving, the tenant is still assessing its own needs, but BXP is highly confident in the building's value as a lab product due to its prime location.

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President Douglas Linde contextualized that a 'full return' never meant 100% daily utilization; pre-pandemic 'nirvana' was 80%, a level NYC is now approaching. Chairman & CEO Owen Thomas added that while CEOs have been reluctant to mandate returns for competitive reasons, actions by industry leaders like Amazon and Salesforce provide cover for others to follow suit, driving a slow but steady dissipation of the issue.

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President & CEO Stephen Budorick could not provide specifics on Space Command's needs but confirmed CDP is ready with immediate space and scalable development solutions up to and beyond 450,000 square feet. EVP & CFO Anthony Mifsud explained that quarterly expense savings were driven by lower utility costs and the timing of certain repair and maintenance projects, which will shift to Q3.

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EVP and COO Britt Snider stated a conservative 18-month to 2-year backfill timeline, though prospect activity is already strong. President and CEO Stephen E. Budorick added that the vacancy presents a strategic opportunity to add more defense tenants. Regarding the 'Other' portfolio, Snider noted a strong pipeline due to a flight-to-quality, while Budorick clarified that any asset sales are contingent on a more favorable interest rate environment for potential buyers, likely a year or two away.

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President and CEO Stephen E. Budorick confirmed that the strong leasing spreads in the Fort Meade/BW Corridor are indicative of future pricing power, given the extremely limited vacancy in that submarket. Regarding competitor acquisitions, he distinguished COPT's assets, stating that the mission and use are the highest priority in their investment decisions and that he did not consider the competitor's recently acquired assets to be comparable to COPT's portfolio.

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President, CEO, and Chairman Robert Sulentic cited factors like lower interest rates and a more stable European economy as potential drivers for a return to peak activity, but noted there is no single catalyst. He estimated that New York City contributes approximately 5% to 6% of the company's total earnings.

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CFO Emma Giamartino clarified that both rate stability and levels below 5% are key for capital markets, especially for loan originations, and confirmed that sales activity picked back up in April after a slight slowdown in March. CEO Robert Sulentic stated that CBRE does not have unique insight into political risk and has already factored significant uncertainty and a higher risk of recession into its current outlook.

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Chair and CEO Bob Sulentic noted that industrial leasing is trending up but at a slower pace than office, as large users absorb existing space. CFO Emma Giamartino addressed the rate question by stating that the Q4 guidance, which includes 30% growth in investment sales, already reflects high confidence based on a record number of rate locks in prior months, suggesting limited volatility through year-end.

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Marc Binda, CFO & Treasurer, explained that downtime for 2026 expirations is difficult to predict as it depends on capital needs and re-leasing strategy, particularly for a large project in Greater Stanford. Peter Moglia, CEO & CIO, stated the strong Torrey Pines yields were specific to that project's high quality but also demonstrated that tenants are willing to pay a premium for top-tier assets.

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CFO Marc Binda noted that Q1 had a disproportionately large amount of known move-outs, and re-leasing these large spaces will take time, likely into 2026. Executive Chairman Joel Marcus added a potential positive catalyst: increasing demand from non-lab tenants, such as AI companies, for some of their available spaces, which could accelerate absorption unexpectedly.

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Executive Peter M. Moglia confirmed that the sublease market has stabilized, with high-quality space being absorbed quickly. He also noted that leasing cycles have become significantly longer as tenant boards now require more extensive diligence and scrutiny before committing to new space.

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EVP Steven Durels noted that while hard to quantify, demand trends are positive across all industries, especially tech. Chairman & CEO Marc Holliday pointed to the company's supplemental data, which showed Q2 free rent and TI allowances were at their lowest levels in over a year, suggesting concessions are tightening within the SLG portfolio.

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Executive Harrison Sitomer stated that since it is an active negotiation, he preferred not to comment in detail. He expressed confidence in the team's ability to secure efficient financing, referencing their recent experience, and said an update would be provided on the next earnings call.

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Executive Steven Durels noted that the tech sector's presence is increasing, with active searches growing from 3 million to over 6 million sq. ft. in the past year, driven by AI initiatives, organic growth, and return-to-office mandates. Regarding 5 Times Square, Executive Harrison Sitomer confirmed it is an ASP (Alternative Strategy Portfolio) asset and stated that the company is working with its lenders and partners, promising to share more details at an appropriate time.

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EVP and Chief Leasing Officer Rob Paratte confirmed ongoing discussions with DirecTV. CEO Angela Aman added that renewal prospects have generally improved as return-to-office plans solidify. EVP and CIO Eliott Trencher explained that the disposition strategy is asset-specific, targeting properties where Kilroy's outlook differs from the market's and where strong pricing can be achieved, rather than exiting specific markets.

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EVP, Chief Leasing Officer Rob Paratte reported that leasing activity at Indeed Tower remains consistent, with some deals close to signing. He characterized the available space as the last manageable block of high-quality space in the CBD. He noted that overall demand in Austin, particularly in the CBD, has picked up, and the company hopes to announce new leases soon.

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CEO Darrell Crate confirmed the pipeline is approximately $1.5 billion and outlined a long-term goal for 15% of the portfolio to be state/local and 15% government-adjacent. CFO Allison Marino noted that recent debt market spreads have widened, validating their timely execution. She reaffirmed the 6.5x-7.5x leverage target, stating that despite an unfavorable cost of equity, the company can still fund accretive deals creatively.

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CFO Allison Marino stated that the overall cost of capital is in the low 7s, with new unsecured debt in the low 6s, and acquisitions are typically funded 50/50 with debt and equity. CEO Darrell Crate confirmed they are seeing acquisition opportunities in the high 7s and 8s. He also clarified that the $1.5 billion pipeline consists of smaller deals, not large portfolios, and that the company has assessed the risk related to the Buckley base and determined it is not an issue, while also exploring opportunities in Alabama.

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Paul Seavey, an executive, responded that while they monitor expenses closely and expect growth slightly above CPI, they do not currently see signs of acceleration. Marguerite Nader, an executive, acknowledged that development returns have compressed due to past cost pressures but stated they remain on track with development plans and do not anticipate significant changes.

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CFO Matthew Barnes indicated the 10-year private placement debt cost was recently around 6.5%, with a target closer to 6%. For 2025 growth, Barnes pointed to leasing at The Interlock and inorganic growth from Allied Apartments and Southern Post. President and COO Shawn Tibbetts added that while sentiment for office asset sales is improving, the market is still in its early stages, and the company's focus remains on transitioning to higher-quality unsecured debt.

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