Occupancy Guidance and 2025 Outlook
Q: How will occupancy and leasing activity trend into 2025?
A: Occupancy is expected to increase over time, but it's hard to project exactly when it will materially improve. The trajectory is upward, and if we end the year in the mid-87% range, we could reach 88% occupancy in 2025.

Leverage and Refinancing Concerns
Q: What's the trajectory for leverage over the next 6–12 months?
A: Our leverage ratio is temporarily higher due to funding our development pipeline. As these developments deliver and start generating EBITDA, leverage will moderate by a full turn, bringing it back down to 6.5x to 7.5x, our typical target range. We expect to stay higher than that for the next several quarters but anticipate moderation as projects stabilize.

Office Market Activity and Acquisitions
Q: Is transaction activity in the office market picking up, potentially involving foreclosures?
A: There's been very limited foreclosure activity for premier assets. However, we're seeing increased testing of the market with certain buildings being offered. It's interesting to see if the bid-ask spread will be bridged; so far, owners haven't accepted current bids.

Tech and Life Science Leasing Recovery
Q: When will tech and life science leasing return to normal?
A: On the tech side, it's about companies investing in real estate relative to their human capital. The pipeline of funding is being raised, but it takes time to translate into growth. We anticipate more job creation in life science and technology sectors, but the timing is uncertain.

Capital Expenditure Plans
Q: What's the update on CapEx plans given higher lease commencements?
A: Maintenance CapEx will run between $80 million and $100 million this year, in line with historical averages. Repositioning CapEx is more meaningful this year, primarily at 200 Clarendon Street.

Development Project Delays
Q: How do you view lease-up periods for delayed development projects?
A: Stabilization dates assume 85% occupancy. We expect leasing to occur 12 to 18 months prior to stabilization, with tenants moving in as space is built out. We stop capitalizing interest 12 months after the base building is completed.

Terminations and Impact
Q: Can you provide details on recent lease terminations?
A: One termination impacts 20,000 square feet of occupancy in the near term. Another tenant is downsizing and relocating within our portfolio. We've secured new tenants for these spaces, offsetting the impact.

Net Effective Rent Growth
Q: When will net effective rents for premier assets pick up?
A: In the Park Avenue submarket, net effective rents are higher today than six months ago and higher than a year ago. Vacancy is less than 8%, leading to increased face rates and stable concessions, which boosts net effectives.

Premium Product Leasing and Renewals
Q: Is the leasing pickup focused on premium products, and how much is renewal?
A: The pickup is clearly in premier buildings. About 40% of our leasing is added occupancy, with the rest being renewals. We have visibility into renewals for 2025 and 2026.

Operating Expense Growth
Q: Why were operating expenses elevated in the same-store portfolio?
A: Operating expenses were less than expected but increased slightly due to utilities and repair and maintenance in the second quarter. We anticipate higher expenses seasonally in the third quarter due to weather conditions.

New Apartment Developments
Q: What yields are expected on new apartment developments, and how will they be funded?
A: We're targeting mid-6% yields and higher on projects mostly on land we control. We'll likely bring in joint venture partners, keeping a percentage similar to our 20% ownership in the Skymark project.

Amenity Upgrades in Buildings
Q: Is it time to re-engage in amenity upgrades given leasing pickup?
A: We've effectively upgraded almost every building, with projects either underway or nearly complete. These upgrades are demanded by tenants and are essential for retention and attracting new leases.

Election Impact on Business
Q: Are there regulatory changes from the election that could impact the business?
A: We don't foresee significant differences at the federal level. State and local elections have a larger impact, particularly regarding real estate taxes, entitlements, transit, and public safety.

Same-Store NOI Outlook
Q: How will commencements and expirations affect same-store NOI next year?
A: Same-store NOI is modestly down this year due to lower occupancy. We expect some occupancy growth next year, which should help improve same-store NOI.

Forward Earnings Growth and Leasing
Q: How does corporate earnings growth translate to leasing activity?
A: There's a clear correlation between S&P 500 earnings growth and our leasing activity. As companies grow and become healthier, they're more likely to hire and lease space. This holds true even with tech companies being cautious.