BXP Q2 Earnings Call Highlights

Key Points

• BXP exceeded expectations in Q2, reporting FFO of $1.78 per share and raising its 2026 FFO guidance midpoint by $0.05 to $6.99–$7.05 per share, driven primarily by stronger portfolio NOI.
• Leasing momentum lifted portfolio occupancy to 88.4% from 87.4% in Q1, prompting BXP to raise its average 2026 occupancy forecast to 88.9% and reaffirm a target of 91% occupancy by year-end 2027.
• BXP is advancing its capital strategy, with potential 2026 asset-sale proceeds of up to $870 million, plans to reduce refinancing needs for a $1 billion bond maturity, and a $1.2 billion construction loan for 343 Madison Avenue.

BXP NYSE: BXP reported second-quarter results that exceeded its guidance and consensus expectations, citing stronger leasing, rising occupancy and better-than-expected portfolio net operating income. The office landlord raised the midpoint of its full-year 2026 funds from operations guidance by $0.05 per share to a range of $6.99 to $7.05 per share.

Chairman and Chief Executive Officer Owen Thomas said FFO totaled $1.78 per share for the quarter, exceeding both the midpoint of guidance and consensus estimates by $0.08 per share. Chief Financial Officer Mike LaBelle said nearly all of the outperformance reflected stronger portfolio NOI, including higher rental and service revenue as well as lower operating expenses.

Leasing Drives Occupancy Gains

BXP completed nearly 1.8 million square feet of leasing during the second quarter, 29% above its 10-year historical second-quarter average, Thomas said. The company has leased more than 3 million square feet year to date.

Portfolio occupancy rose to 88.4% as of June 30, from 87.4% at the end of the first quarter and 86.7% at the end of 2025. President Doug Linde said the company has achieved 170 basis points of the 200-basis-point occupancy increase it had originally expected for 2026.

BXP raised its forecast for average 2026 occupancy by 65 basis points to 88.9% and now expects to finish the year closer to 90% occupied. The company began the third quarter with approximately 1.3 million square feet of signed-but-not-occupied space, including 1.1 million square feet expected to commence during 2026.

Linde said BXP continues to target 91% occupancy by year-end 2027. He added that the company could ultimately reach occupancy in the 94% to 95% range, though he said BXP was not yet changing its 2027 target.

The company said demand has strengthened across technology, artificial intelligence, defense and cybersecurity, financial services and professional services. Thomas said AI has supported leasing both directly from AI companies and indirectly from businesses displaced by AI tenants or serving the AI sector.

• BXP signed a 320,000-square-foot long-term lease with Boston Dynamics at Reservoir Place in Waltham, Massachusetts, for an advanced robotics and AI center.
• At 343 Madison Avenue in New York, BXP signed a 148,000-square-foot lease with McDermott Will & Emery, while Starr expanded by two floors. The project was 50% leased at quarter-end.
• At 360 Park Avenue South in New York, BXP said it was in lease negotiations for the final available floor, which would bring the building to full occupancy.
• In San Francisco, the company reported leasing activity at 680 Folsom, 50 Hawthorne, 535 Mission and Embarcadero Center, with AI-related demand contributing to market momentum.

Guidance Increase Reflects Higher NOI Expectations

LaBelle said the company’s second-quarter revenue exceeded expectations by $0.04 per share, including $0.03 per share of higher rental revenue and $0.01 per share of higher service income. The earlier-than-anticipated occupancy contributed to the revenue increase, though LaBelle said he did not expect that lift to compound into future projections.

BXP also generated $0.04 per share of outperformance from lower portfolio operating expenses. About half resulted from lower repairs and maintenance costs that are expected to be deferred into the second half of the year, while other benefits came from lower utility costs and real estate tax abatements.

The revised full-year FFO guidance incorporates a $0.06-per-share increase from expected portfolio NOI growth, $0.03 per share from lower net interest expense and $0.01 per share from higher fee income. Those gains are partly offset by a $0.05-per-share reduction from NOI lost through asset sales.

BXP increased its expected share of same-property NOI growth for 2026 by 30 basis points to a range of 1.8% to 2.6%. Cash same-property NOI guidance was unchanged because recently commenced leases typically include free-rent periods, LaBelle said. He said the cash benefits from this leasing activity should become more visible in 2027.

Asset Sales and Financing Progress

BXP has raised $370 million in net sale proceeds so far in 2026 and more than $1.2 billion since its investor day, according to Thomas. The company has six assets under contract for sale that are expected to generate approximately $240 million in net proceeds, with $180 million scheduled to close in 2026.

Thomas said BXP could generate up to an additional $500 million of sale proceeds this year, potentially bringing total net proceeds to $1.7 billion by year-end. The company’s stated objective is to generate $1.9 billion in aggregate net sale proceeds through 2028 from land, residential and non-strategic office assets.

LaBelle said the company may use available cash to reduce by as much as $300 million the refinancing need for a $1 billion unsecured bond due in October. The maturing bond has a 3.5% GAAP interest rate; a new 10-year bond issued at current market rates would likely price near 6%, he said.

The company also closed a $1.2 billion, five-year construction loan for 343 Madison Avenue. The loan funds approximately 60% of development costs and is priced at SOFR plus 250 basis points, declining to SOFR plus 225 basis points upon achievement of project milestones. Interest will be capitalized into the project until its anticipated completion in 2029.

Development Pipeline Remains Active

During the quarter, BXP delivered 290 Binney Street, a 570,000-square-foot lab building in East Cambridge that is fully leased to AstraZeneca. Thomas said the project was delivered $20 million below budget and two months ahead of schedule. BXP’s $488 million investment is expected to generate an 8.9% unleveraged cash return and a 10.3% GAAP return.

The company also launched the World Gate multifamily project in Herndon, Virginia, consisting of 359 residential units. BXP said the $132 million project has a financial partner providing 80% of the equity and construction financing.

BXP’s active development pipeline comprises seven office and residential projects totaling 3.5 million square feet and $3.2 billion of BXP investment. Thomas said the company expects development to provide longer-term external growth, with office development pursued selectively and multifamily development pursued more actively with equity partners.

About BXP (NYSE:BXP)

Boston Properties, Inc NYSE: BXP is a publicly traded real estate investment trust (REIT) specializing in the ownership, management, and development of Class A office properties across major U.S. markets. Headquartered in Boston, Massachusetts, the company's portfolio comprises high-quality office buildings, mixed-use developments and select retail assets designed to serve leading corporations in key metropolitan areas.

Established in 1970 by Mortimer B. Zuckerman, Boston Properties has grown through disciplined acquisitions and strategic ground-up developments.

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