Douglas Linde: John, this is Doug. I’ll just give another perspective. So we have a lot of what I would refer to as highly financeable assets with long-term credit leases and where we would likely go and finance, for example, a 15-year Google lease for fivce years or a 12-year Microsoft lease for 5 years, right? And we’re not doing these 75% LTVs. We’re looking for a modest amount of leverage. So those types of assets, we believe are highly marketable to the various counterparties in the lending community, be they insurance companies, be they domestic or foreign banks, be they the CMBS market. So that’s sort of where we’re looking for additional capital. And then as Mike suggested, we have a maturity in a relatively small-sized asset, a $100 million asset in Washington, D.C., and we had a number of term sheets from secured lenders on that. And so we are seeing evidence that our portfolio is as being receptive to additional secured initial.
Operator: And I show our next question comes from the line of Camille Bonnel from Bank of America.
Camille Bonnel: Following up on the leasing pipeline, can you please comment on how you classified deals in the active proposal pipeline? And how this pipeline compared to last quarter or even a year ago?
Douglas Linde: So the way I characterize things is if we are negotiating a lease document, it’s part of that 900,000 square feet. If we have an active conversation and are exchanging letters of intent, but we have not yet confirmed a letter of intent, AKA, meeting of the minds, and we haven’t started a lease negotiation, that’s sort of in that other pipeline. And I would say we have slightly more stuck in the active proposals or active negotiation stage than we had last quarter, largely because some of the stuff that I thought was going to get done in the first quarter reached into the second quarter. There are 2 meaningfully larger deals, meaning over 100,000 square feet that we had — we thought we had a chance of signing in the first quarter that just didn’t get signed yet. And our active proposal pipeline is, I would say, modestly growing sort of quarter-to-quarter, but pretty consistent with what it’s been the last 2 or 3.
Operator: And I show our next question comes from the line of Anthony Paolone from JPMorgan.
Anthony Paolone: Yes. So I appreciate all the color on capital markets and how you’re trying to triangulate where pricing might be. But just for BXP for you to put capital out the door right now, what would you all want in terms of an IRR, how would you underwrite rents and cash flow growth? Like what would a deal that would prompt you to pull the trigger on look like?
Owen Thomas: It’s Owen. A couple of things I would say. One — first thing would be, what is it? So we’re not going to go out and buy a cheap office building in the hopes that we can make it less cheap over time. We’re going to focus on premier workplaces in the office segment. We’re going to continue to focus on our life science portfolio, and we’re also going to focus on residential development, probably more as a merchant builder as opposed to a long-term owner. So I think perimeter is very important. Look, in terms of overall — yes, in terms of overall cost and what we’re going to be looking for. One, it’s certainly gone up. Number two, it would depend a lot on the risk profile of the asset. But then number three, what’s always on our mind is our stock is currently trading at a look through cap rate of 9%. And that’s got to be a guidance post as we think about putting out new capital.
Operator: And I show our next question comes from the line of Alexander Goldfarb from Piper Sandler.
Alexander Goldfarb: So Owen, along those lines, in prior cycles, you guys have bought some buildings 399, 510 Fed, you bought those in prior opportunistic times. But given the capital markets today, given Mike’s comments about assessing the dividend if the disposition market doesn’t open up. Are you guys more keen and confident to buy assets, let’s say, around Park Avenue, Grand Central or other transit hubs? Or is the company’s focus more on capital preservation and therefore only stick to the current pipeline and really limit incremental opportunistic existing asset purchases.
Owen Thomas: Alex, we have access to capital, as Mike and I pointed out and the key is pricing. We’re interested. We’re open for business. We’re interested in growing our company. We think we will. But that’s at a 9% look through cap rate is a guidepost for us.
Operator: And I show our next question comes from the line of Nick Yulico from Scotiabank.
Nick Yulico: I appreciate all the commentary on the secured lending market. I guess a question I have is — and again, I realize this doesn’t really apply to your near-term maturity schedule. But now if we think about, let’s say, New York City, this is a market that historically relied on very large loans that were put into the securitization CMBS market and it’s not a single tenant, long-term credit building often. It’s multi-tenant, the vintage of the asset will vary, but we’re talking about $1 billion loans that got done for New York City, which seems like cannot get done right now because of what’s going on with the securitization market. So I’m just trying to figure out what your thoughts are about the ability for this let’s say, New York City as a market to function from a property sales standpoint, from a lending standpoint, if it is historically a market that has very large loans that can’t get done in the securitization market right now.
Douglas Linde: So this is Doug. I don’t want to get into a conversation about other people’s assets. So from our perspective, obviously, we don’t have anything maturing anytime soon in our Manhattan portfolio. And we do have two large CMBS transactions that were done. There were SAS deals but they’ve got long duration associated with them. I would expect that the markets will heal and that there will be capital available at a different kind, as Mike described, a different kind of a leverage point and are a different kind of a pricing parameter. So there is going to be equity that’s required in these assets to appropriately refinance them with a capital structure that makes sense for the large loan marketplace. And there’s going to be, obviously, some degree of time before we get there.
I mean there are obviously a lot of, I guess, sort of kick the cans or workouts or other conversations going on right now. But I believe with enough equity, you will be able to raise $1 billion financing in the market, but they’re going to be done at different kind of leverage points.
Operator: And I show our next question comes from the line of Blaine Heck from Wells Fargo.
