Dinner Nuggets: Translating Artificial Intelligence into Real Cash Earnings

Research evidence excerpt

Dinner Nuggets: Translating Artificial Intelligence into Real Cash Earnings

C O M PA N Y N O T E

M a y 1 4 , 2 0 2 6

BXP (BXP) Overweight

CONCLUSION PRICE: US$58.96

Reiterate OW on BXP given accelerating demand from AI and finance in New York TARGET: US$75.00

and San Francisco (42% of NOI), as availability rates decline boosting pricing power. ~11x our 2026E of FFO.

Earlier this week, we hosted BXP for an institutional investor dinner with the conversation

heavy on AI disruption for office (all evidence positive so far), willingness of tenants to pay Alexander Goldfarb

Managing Director, Piper Sandler & Co.up for premium buildings, and management's focus on driving earnings growth. Taken in 212 466-7937, alexander.goldfarb@psc.com

reverse order, BXP understands all eyes are on the ability for office REITs to convert the

robust leasing environment into FFO growth and need to limit unnecessary earnings offsets. Changes Previous Current

Tenants in the Back Bay of Boston, Midtown, DC, and San Francisco have become less Rating — Overweight

price sensitive as the rush for well located, heavily amenitized office trumps rent. Ultimately, Price Tgt — US$75.00

FY26E FFO — US$6.95the AI transformation over the past year is a complete game changer, echoing the dot.com

FY27E FFO — US$7.29

era but more real estate disciplined. FY26E AFFO — US$3.66

FY27E AFFO — US$4.23

• AI surge mirrors increased demand for office. So far, BXP has not seen any tenant Market Cap. (mil) US$9,368.7

cite AI as a reason to shrink. The growing tech companies today either didn't exist or NAV $98.00

weren't on anyone's radar a few years ago. AI tenants went from short-term, cheap, Implied Cap Rate 7.5%

and move-in ready in 2025 to long-term, premium, and customized in 2026.