Strategic Performance and Market Dynamics

• Strong leasing volume across in-service and development portfolios drove a 50-basis-point increase in the in-service leased rate, establishing a foundation for multi-year NOI and FFO growth.

• Management attributes pricing power to a 'flight-to-quality' dynamic where high-quality space in Best Business Districts (BBDs) is becoming scarce due to historic lows in new office construction.

• The portfolio is benefiting from a 'sprint to quality' as customers proactively seek early lease extensions to secure prime locations before market inventory further diminishes.

• Strategic capital recycling continues with $108 million invested in Dallas and Raleigh joint ventures, funded by non-core dispositions aimed at improving long-term cash flow resilience.

• Management views AI as a potential long-term demand variable but notes that current customer appetite for physical space remains undiminished, with some net positive leasing from AI-related firms.

• A significant 470-basis-point spread between leased and occupied rates serves as a leading indicator for substantial occupancy gains as signed leases commence through 2026.

Outlook and Strategic Priorities

• Full-year FFO guidance of $3.40 to $3.68 per share is maintained, with a projected earnings ramp in the second half of 2026 as occupancy steadily increases.

• The company expects to complete approximately $200 million in additional non-core asset sales by mid-2026 to fund growth initiatives or share repurchases on a leverage-neutral basis.

• Development properties placed in service this quarter, combined with the remaining pipeline, are projected to deliver over $20 million of annual NOI growth compared to the Q1 2026 run rate.

• Management is increasingly constructive on new development, reporting rising interest from build-to-suit and large anchor prospects due to limited existing inventory for large blocks of space.

• Year-end occupancy is targeted between 86.5% and 88.5%, requiring approximately 100,000 square feet of new leasing per month through mid-summer to reach the midpoint.

Financial Adjustments and Risk Factors

• A new $250 million share repurchase authorization provides additional capital allocation optionality alongside acquisitions and development.

• Capitalized interest will decrease for the foreseeable future as major projects like 23 Springs and Midtown East transition out of the development phase.

• First-quarter results included a $2.2 million term fee and a $1.4 million gain from the sale of a brokerage firm interest, both of which were anticipated in the original outlook.

• Q1 FFO was impacted by $0.03 in one-time gains that were offset by seasonally higher G&A expenses, with management expecting a meaningful ramp in the back half of the year to reach the midpoint of guidance.