BXP (NYSE:BXP) executives used the company’s fourth-quarter earnings call to emphasize progress against a multi-part business plan focused on leasing-driven occupancy gains, portfolio optimization through asset sales, selective development-led external growth, and recapitalization of its flagship 343 Madison Avenue project in New York City. Management characterized 2025 as a “very strong year” operationally, while acknowledging a fourth-quarter funds from operations (FFO) result that came in below the midpoint of guidance.
Leasing momentum and occupancy outlook
Chairman and CEO Owen Thomas said BXP completed more than 1.8 million square feet of leasing in the fourth quarter and over 5.5 million square feet for full-year 2025, which he said was “well above” the company’s goals. President Doug Linde added that fourth-quarter occupancy increased about 70 basis points, with roughly 35% of that gain attributed to portfolio leasing and the remainder to a smaller in-service portfolio following asset sales.
Management reiterated an expectation to complete 4 million square feet of leasing in 2026. Linde said the company had 1.1 million square feet in negotiations during the call (later updated to 1.2 million square feet), and a discussion pipeline of about 1.3 million square feet, about 10% larger than the prior quarter. In response to a question, Linde said BXP’s conversion rate for deals “in the lease negotiation” stage is about 95%, while conversion from the broader pipeline varies.
BXP ended 2025 with in-service occupancy of 86.7%. Linde and CFO Mike Labelle both said the company expects occupancy to rise to about 89% by year-end 2026, with Labelle projecting average same-property occupancy of 87.5% to 88.5% during 2026 after a relatively flat first quarter. Linde said BXP expects roughly 200 basis points of occupancy improvement by the end of 2026, consistent with targets laid out at the company’s September investor conference.
Market commentary and AI demand
Thomas pointed to return-to-office trends and office utilization data, citing Placer.ai data indicating December 2025 was the busiest in-office December since the pandemic and showed a 10% increase in office visits nationwide versus December 2024. He also pushed back on concerns that AI will materially reduce leasing demand in BXP’s segment, saying client actions do not reflect that thesis and noting “accelerating demand from AI companies, particularly in the Bay Area and New York City.”
Regional executives reinforced that view during Q&A. In San Francisco, regional leader Rod said overall tenant demand is around 8 million square feet, with 36% attributed to AI or AI-related technology companies. In New York, regional leader Hilary said demand remains strong in financial services and pointed to improving activity in Midtown South; she also noted that many tenants leasing at 360 Park Avenue South have an AI component.
Linde described mixed cash mark-to-market outcomes for fourth-quarter leases: cash mark-to-market was flat overall, with Boston up about 10%, New York and Washington, D.C. essentially flat, and the West Coast down about 10%. He said lease structure and concessions influenced outcomes, particularly in San Francisco.
Asset sales and residential repositioning
Thomas said BXP remains focused on raising capital and optimizing its portfolio through dispositions. At Investor Day, the company outlined a plan to sell 27 land, residential, and non-strategic office assets for about $1.9 billion in net proceeds by 2028. Thomas said BXP has closed 12 asset sales for over $1 billion in net proceeds ($850 million in 2025 and $180 million in January), and has eight additional assets under contract or with terms agreed for an estimated $230 million of net proceeds in 2026. He said 21 transactions are closed or “well underway,” with roughly $1.25 billion of estimated net proceeds in total.
Management highlighted that several sales involved land and residential assets, and Thomas said land sales can be “completely accretive” because the assets generate no income while proceeds can be used to reduce debt. He also discussed residential entitlements pursued across multiple markets, stating BXP has received or is pursuing entitlements for more than 3,500 residential units across locations including Massachusetts, Maryland, Virginia, California, and New Jersey.
Linde said BXP removed a 275,000-square-foot suburban office building (1000 Winter Street in Waltham) from the in-service portfolio during the quarter as part of redevelopment planning. He said two additional Santa Monica Business Park buildings totaling 261,000 square feet are expected to be removed from the in-service portfolio as leases expire, and the company has submitted an application for a 385-unit residential project at one of the sites.
During Q&A, Thomas said the company is sticking with the $1.9 billion disposition forecast but may sell more if pricing is attractive, while paying attention to near-term earnings dilution. Labelle added that the pace of sales has been slightly ahead of expectations, with dilution still within the range previously discussed.
Development pipeline and 343 Madison recapitalization
On external growth, Thomas said BXP is prioritizing development over acquisitions for office given targeted returns. He highlighted a new Washington, D.C. CBD development plan at 2100 M Street, which includes a 15-year lease for 75% of a planned 320,000-square-foot building; BXP purchased the site for $55 million, with a total development budget estimated at about $380 million and a forecast unleveraged cash yield “in excess of 8%.” Construction is not expected to begin until 2028, with delivery projected for 2031.
Thomas also outlined multifamily plans, stating BXP has three projects with over 1,400 units under construction and is in entitlement and/or design stages for 11 projects totaling over 5,000 units, with one expected to commence in 2026. He said the company expects to use financial partners that own the majority of the equity for new residential starts.
A key priority remains bringing a financial partner into 343 Madison Avenue in New York City. Thomas said BXP finalized a lease commitment with Starr for 29% of the building and is negotiating a letter of intent for another 16%. He said BXP has committed to nearly 50% of construction costs and remains on track for a stabilized unleveraged cash return of 7.5% to 8% upon delivery in 2029. Labelle said the company is in discussions with potential equity partners for 30% to 50% of the project and is also pursuing construction financing, with an expected closing late in 2026 and a modest earnings impact for the year.
Financial results and 2026 guidance
Labelle reported 2025 consolidated revenues of $3.5 billion and full-year FFO of $1.2 billion, or $6.85 per share. Fourth-quarter FFO was $1.76 per share, which he said was $0.05 below the midpoint of guidance due primarily to higher-than-anticipated general and administrative (G&A) expenses and non-cash reserves for accrued rental income. He said G&A ran $3.5 million, or $0.02 per share, above projections, driven by higher compensation and legal expenses related to elevated leasing activity. The company also recorded about $6 million, or $0.03 per share, of credit reserves for accrued rent balances tied to two clients, while noting both remain in occupancy.
BXP introduced 2026 FFO guidance of $6.88 to $7.04 per share (midpoint $6.96), representing a $0.11 increase from 2025. Labelle said the outlook reflects higher same-property net operating income (NOI) from occupancy gains, incremental NOI from development deliveries, and lower interest expense from debt reduction using sales proceeds, partially offset by NOI lost from asset sales, buildings removed from service for residential redevelopment, higher G&A (including non-cash expense tied to an outperformance compensation plan), and lower fee income.
- Same-property NOI growth: 1.25% to 2.25% in 2026; cash same-property NOI growth of 0% to 0.5% given free rent and other factors.
- Developments: incremental 2026 NOI contribution projected at $44 million to $52 million, with 290 Binney Street—100% leased to AstraZeneca—expected to deliver into occupancy in late June.
- Sales impact: guidance assumes $360 million of additional sales in 2026 (net proceeds about $230 million), with sales dilution of 6 to 8 cents per share.
- Interest expense: net interest expense projected $38 million to $48 million lower in 2026 versus 2025; consolidated net interest expense guidance of $581 million to $593 million.
Management said it expects quarterly FFO to improve through 2026 as occupancy ramps, with a larger contribution in the back half of the year, and expressed optimism about positioning for 2027 given expected occupancy gains and low rollover exposure.
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.
