Good day and welcome, everyone, to the Alexandria Real Estate Equities fourth quarter and year end 2008 conference call. (Operator Instructions) At this time for opening remarks and introductions I would like to turn the call over to Rhonda Chiger. Please go ahead, ma'am.

Thank you. Good afternoon and thank you for joining us today. This conference call includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding our 2009 earnings per share diluted, 2009 FFO per share diluted, and our redevelopment and development pipeline. Our actual results may differ materially from those projected in such forward-looking statements. Factors that might cause such a difference include, without limitation, our failure to obtain capital, debt construction financing and/or equity, or refinance debt maturities, increased interest rates and operating costs, adverse economic or real estate development in our markets, our failure to successfully complete and lease our existing space held for redevelopment and new properties acquired for that purpose and any properties undergoing development, our failure to successfully operate or lease acquired properties to increase rental rates or increase vacancy rates or failure to renew or replace expiring leases, defaults on or nonrenewal of leases by tenants, general and local economic conditions, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission. All forward-looking statements are made as of today and we assume no obligation to update this information. For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements and [inaudible] business in general, please refer to our SEC filings, including our most annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q. At this point I would like to turn the call over to Joel Marcus. Please go ahead.

Thank you very much and welcome, everybody. With me today are Jim Richardson, Dean Shigenaga, Pete Nelson and Peter Moglia. As we discussed on our third quarter call on October 30th, the world has fundamentally and structurally changed and we commented in that call on the depth of the economic perfect storm and the swift and immediate actions necessitated thereby. I think it's fair to say this is an historic unprecedented fundamental and permanent structural change in the financial, banking and credits systems and future implications now are only somewhat becoming better understood. We're all witnessing real time the progressive, rapid, unrelenting and continuing deterioration of the consumer-driven economy and massive job losses. As I said, on October 30th we reported to you eight major actions we were compelled to take and are continuing at present. I want to update you on those. First, substantial, meaningful and positive progress on our balance sheet, liquidity, leverage and access to capital is ongoing. Substantial and continuing progress on major reduction of CapEx and also substantial and continuing progress and major reduction in operating costs, including the review by the CEO and CFO of every expenditure exceeding $250 - kind of unprecedented. Successful extension of our 2008 debt maturities, continuing focus on our tenant monitoring and collectibility of now which are historically low tenant receivables. Number six, continued laser focus on the solidity and durability of our unique business model as fine-tuned for this new reality and new environment. Number seven, continued laser focus on maintaining strong cash flow from our operating assets, maintaining high operating margins and a high return on invested capital. And then finally, an ever-increasing focus on the enhancement and improvement of tenant quality. And as I have said really continuously since our IPO, we have the best assets…

Thanks, Joel. Consistent with the required actions we described in our third quarter earnings call, we have been appropriate, thoughtful, deliberate and careful. I will provide an overview of our capital plan, liquidity, balance sheet matters, key operating statistics, and our guidance. Our capital plan includes management of our balance sheet capacity and liquidity over the next two, three and four years, reduction of our outstanding balance on our unsecured line of credit and unsecured term loan over the next two to three years, and from time to time, equity capital, broadly speaking, including joint venture capital. Our two primary uses of capital over the next two years include debt maturities and the wind down of construction spending. Consistent with the strategy we communicated during our last call, we have made significant reductions in our overall capital plan. From the second quarter of '09 through the fourth quarter, we expect to reduce our construction spending to an average of approximately $60 million for the quarter, representing an approximate 40% reduction from our average construction spending in 2008. Our current forecast reflects less $40 million in construction spending in the fourth quarter of 2009 with a further insignificant decline going into 2010. Moving on to debt matters, we have two secured loans maturing in 2009. One loan has an outstanding balance of approximately $51 million and our share of this balance is approximately $28 million. This loan has extension options, so it should take the ultimate maturity of this loan to mid-2010. In 2010 we have a total of seven secured loans maturing with an aggregate balance of approximately $258 million, including the recent loan extension we completed in December related to a $175 million secured loan. Our primary goal for our upcoming secured debt maturities is to extend the maturity…

Operator, we can go to Q&A please.

Thank you. (Operator Instructions) Your first question comes from Jamie Feldman - UBS.

So, Joel, you'd mentioned the 80 basis point occupancy decline in the fourth quarter. Could you talk a little bit about what's in there and what's included - how you're thinking about it going forward, the assumption in guidance for occupancy? And then also what are you guys assuming for Cell Genesys, that space, as '09 progresses?

Okay. I think when you look at occupancy in this world, it is hard to predict virtually anything. I think some of the weakness in San Diego and Maryland is not surprising. Those have historically been markets that have been softer historically over the last few years compared to the other markets that we are in, and so we saw the same thing. We did have one space that came back to us in Maryland which contributed to some of that softness in the occupancy. But I would say that's probably, of all the factors going forward, the one that probably we have the least best crystal ball. It just is very difficult. I think you can tell by the amount of space we leased this quarter - 513,000 square feet - it's pretty remarkable and unbelievable, in a sense, given, again, the worst quarter in the financial history of certainly our reporting quarters. So I would say we are working very hard to maintain occupancy in each of the markets, but it's hard to give any absolute numbers. I think if you go back to '98 and 2001, maybe, as some kind of a proxy. If you look at how Alexandria compared to office companies during those two years and you look at overall same-store obviously made up of both rate and occupancy components, we did decline in those time periods, but far less than generic office. And fortunately, we stayed positive; we've stayed positive every quarter, so we hope that will continue. So that's kind of the view on occupancy. On Cell Genesys, we are working hard. As I think we said, I don't want to make any comments publicly at this point, but we are working hard to re-lease that building as we speak. And, again, we hope to have very positive news on that.

Your next question comes from Mark Biffert - Oppenheimer.

Joel, the first question, you guys had mentioned that you're expecting a 5% rate increase. Is that a net effective rent or are you including concessions that you may be offering and, if you are offering concessions in your leases, what are they? And then what, in terms of length of terms, are you seeing or are you signing with renewals or new leases?

Yes. That's net effective and I think one of the reasons we're pretty comfortable, if we look at our annualized base rent in some of the big markets that turn in D.C., our current annualized base rent is in the $20 range, and so that makes us feel pretty good. In the San Diego market it's about $30, which is probably kind of closer to market. The Bay Area is probably more or less market, in the Southeast we're somewhat under market, in Massachusetts, we seem to be pretty well under market, and in Seattle way under market. So I think, again, it varies by market and we feel pretty good and those are net effective rents. You had asked a question about - I'm sorry, just a second - beyond the concessions, you asked a next question.

It was the length of lease terms that you're signing on renewals. Have you see that shrink?

We've typically - and I think we've said this for many years in both up cycles and down cycles, this is a structural change cycle, but typically shorter-duration leases are for smaller spaces. Medium-duration leases tend to be for medium spaces, and larger spaces tend to have longer-term leases. That's just the way it works in this industry. So if you look at the quarter, there was no surprise there. We had renewed or released space almost five years. That can run anywhere between three and seven years. And then on developed and redeveloped we had about six years and that, again, runs between three, four, five, six, seven. Sometimes it varies. I think where you get the longer-term leases are in the larger spaces, either developments or just big blocks of spaces. So those are very much in line with what we've seen historically.

And then when you look at the mergers that you've been hearing being announced in the large pharma and the biotech space, in terms of addressing some of the layoffs you're seeing in some of R&D space, what are you seeing from your tenants or from other assets that they own in those markets in terms of sublease space coming back? Have the discussed that with you and what's the potential threat for new supply?

Yes, that's a really good question. And as I said in the prepared remarks, we've been very, very fortunate because of the really phenomenonal location of virtually all of our assets and, I think, the very high quality of those assets. And our leases to big pharma by and large are critical research components of big pharma. They're not SG&A outposts, they tend not to be manufacturing, and they tend not to be kind of main campus operations where, in case of an acquisition or a major restructuring those things get closed down. I mean, if you just look at a couple of the ones I mentioned to give you a little bit of color on that bear with me one second; let me just go back to the couple that I mention - if you look at the four that I mentioned, Pfizer, well, Pfizer, as you know, with the Wyeth acquisition, which we think is probably a pretty smart acquisition, has closures in a number of different locations. We don't think those are typically going to hurt us in the triple A core life science markets if you're in the right location; if you aren't, then you can get killed. But the Pfizer locations, they opened an operation at Tech Square which was a critical operation of their Capsugel division. And also signing up for Mission Bay, which is a new bio innovation and bio therapeutic focus. That's the very thing that they're trying to do, is to move outside of the traditional campuses. Same thing with Merck. We were benefited by their acquisition of Sirna in Mission Bay and that’s a mission critical research location. We don't see any space affecting us at Mission Bay particularly. Glaxo, they're our second-largest tenant and, through a number of acquisitions, there again in a number of locations, but including Cambridge, which has now been enhanced to one of their primary research focal points. It was mentioned specifically by Andrew Witty. And they cut another kind of comparable - not on the same science comparability, but another group; I think it may have even been England or another location that didn't impact us. And same thing with Novartis. So by and large, we've been substantially benefited. And I don't think in any of the markets we're going to see - again, in great core markets we're going to see a lot of sublease space come onto the market. That's just the nature of these assets and these unique locations.

And for Dean, a couple accounting questions. I did not see the property related CapEx for the quarter in leasing costs in the release. Do have that, by chance?

I don't, but it will be dropped into our 10-K for the disclosure that we include on a five-year average basis.

And then related to your guidance, was the expectation for the APB 141 cost, is that going to be equivalent to the '08 amount of roughly $0.23 a share? Is that your expectation? Is it in that guidance of $6.26?

Correct. Yes, that is right, $6.26 if forward-looking for '09 as to what we expect, including the impact of APB 14 for our convertible debt. And we gave you a footnote on the prior period impact. It's in that range of $0.20 - $0.23.

Your next question comes from Anthony Paolone - J.P. Morgan.

In terms of the land for future development, I think it's somewhere around $700 - $800 million, how much money do you have to spend on that in 2009, whether it's related to development staff, property taxes, engineering, etc., just those sorts of costs?

Yeah, that's a good question, Tony. It really depends project by project and the nature of the preconstruction activities because each project's going through a different set of activities to move it along. One example is our large land effort in Cambridge, which is going through with the city as we speak. We've incurred a small amount, but meaningful number preconstructionrelated dollars related to moving along our basic design and architect work, and then all the consultants that are involved in that process to move the project through the entitlements with the city. Two other projects that may be smaller in scale and less involved. So Tony, I actually don't have a number in total for our spending across our pre-construction projects. It's not extremely significant, but at the same time it's definitely north of a few million dollars.

And is it something, do you think, in the tens of millions?

No. No. No.

And then Mission Bay North, were you signed, I believe, previously 100,000 square foot lease with Pfizer, I didn't see that on the active construction schedule.

It's not in vertical construction yet, but it will appear in the first quarter.

Okay, so there hasn't been any changes to that?

Correct.

And then in terms of your 2010 expirations you laid out this quarter, the markets where they're in on your leases, it seemed like Cambridge, San Francisco, San Diego had the bulk of them. Any comment as to particular leases that are coming up in 2010 to watch for?

Yes, in 2010, I guess, we've got broken down about 140,000 in the Maryland market, about almost 200,000 in San Diego. The Bay Area's got about 200,000, Eastern Mass almost 300,000, and Seattle about 100,000. So it's a pretty good amount. It's about 10%. In normal times we would relish the lease rolls. I think in these times we're obviously more cautious, but we still see upside from our net effective current rents there. No particular color I can give you at this point on those specific lease roles but, if you go back to the comments that I made, we're clearly addressing them in a fairly focused fashion. And, as I said, we have about 10% leased or committed and almost 50% negotiating or anticipated, so that's 55% to 60% at this point, almost over a year out, so we feel pretty good about that, and almost less than a third that we believe is too early. So we feel pretty good about that, I think, and with 5% kind of internal projection on rental rate increases. So I think we feel pretty good.

And then just a last question for Dean on your swaps. You've got some that go out to like 2014 and that's beyond where your line and term debt is in place until. Is there other variable rate debt that goes out to that point or is that just the anticipation that you'll have some level of floating rate at that point?

Correct, Tony, it is in anticipation that we have some floating rate that goes out. But beyond the maturity of 2012, there's only about a couple hundred million that goes out that far. So we wanted to have a safe assumption going out that far. We obviously don't want to carry $1 billion of swaps beyond our extended maturity date.

Your next question comes from Irwin Guzman - Citigroup.

Dean, you mentioned the percentage of your secured debt that CMBS. Can you break that down for us in terms of 2009 and 2010 expiration?

Let me see if I've got - how close I have that schedule to me. Hang on, Irwin. Do you have another question that we can go to and we can come back to you on that while I -

Sure. On the South San Francisco developments, the two that come in this year, what's the timing that those enter service?

Well, our current forecast is the 2009 South San Francisco assets in development, our current forecast in late '09.

And has there been any change to, as you're negotiating these leases, what your overall yield expectations are relative to the low double-digit returns that you've spoken about in the past?

No change.

And just one more question on the redevelopment pipeline. Can you tell us what the lease rate is on specifically those projects that deliver this year for the redevelopment piece? Or maybe another way of asking that question would be -

You'd have to go to every single lease at every single property, so that'd be very difficult to tell you. But we still are targeting, by and large, right now at Tech Square, I think we have it about 87% leased, and I would say that we're on track to beat our projected assumptions back when we bought that property in '06, so we feel pretty good about the rental rates we've achieved, even during the fourth quarter as we've signed leases there.

Can you give us a sense as to how much leasing, even just on a sort of total volume basis, for those redevelopments? Because that's a big piect.

Oh, on the redevelopments?

Right, on the redevelopment portion how much leasing is left to sort of hit your guidance number?

Oh, to hit guidance? You know, unfortunately, Irwin, I don't actually have that with me. Most of our redevelopments take a conservative view from what we present and our model, and we've been doing that historically where - and I know sometimes this causes some challenges with the models you guys run, but we give the in service dates and then we tend to give a conservative view in our model beyond that to give us some cushion on our guidance. So I think you can use that as a general guideline. As it relates to your prior question, Irwin, on CMBS maturities for 2009, we only have really two loans maturing - one's a life loan and one's a bank loan. And beyond that they're just principal normal debt service payments in '09.

Joel, it's Michael speaking. Can you just talk a little bit about - you went out international and started to try to plant the seeds in Scotland and a little bit in India and obviously China, which you reverted back a little bit last quarter. Can you talk about how much G&A you're having in building out an international pipeline and whether there's additional capitalization from some of these other things that you're pursuing outside the U.S.?

Yes, I think it's very minimal.

Is that any bit of a focus at all or has that just been completed ramped out?

Well, actually, one way to think about it, Michael, is our basis in our international efforts beyond North America, I mean our cost basis, it's fairly nominal, meaning we don't have any significant U.S. dollars invested in China quite yet and we don't have any significant dollars invested in Scotland or anywhere else beyond North America. So there's really, from a capitalization perspective, not a lot there.

I just didn't know if there was anything on the G&A front, as you sort of build up those platforms, or whether all of it was sort of running through the P&L already.

There's a little bit, but not much being capitalized related to the international effort. It's small relative to our U.S. operation.

And do you expect to start any of these things internationally this year or there won't be any capital deployed?

Yes, I think the answer is, as you just suggested, that given the structural change in the capital markets, it's very difficult to imagine now.

I may have missed this. There was on your future development square footage, there was a ramp with about 400,000 square feet in the other category - sequentially went up from 516,000 to 905,000. What does that represent?

That's the second tower for our project in New York.

Oh, so move another tower from current to future?

Right, the West Tower of ERSP.

Your next question comes from Philip Martin - Cantor Fitzgerald & Co. Philip Martin - Cantor Fitzgerald & Co.: Just in terms - and maybe, Joel, you could speak to this - but just a little more insight into the mood of your underlying tenant base. How much have the tenants slowed their plans, and maybe in terms of how it would relate to or impact their real estate needs? Could you just go into some of the conversations you're having with the tenants and what their mood is?

Yes, that's a good question and a tough question to answer because it's so variable. About three weeks ago - I'll give you one end; you wouldn't imagine this - I participated in a lunch meeting with Gavin Newsom, who's the mayor of San Francisco, Jeff Kindler, the CEO of Pfizer, and a number of senior people at UCSF together with our senior team up at Mission Bay. And it was kind of a roundtable luncheon discussion regarding - and this was before Wyeth was announced but Jeff had taken the time to come out to Mission Bay to look at the site where this building will be built and also meet up with Corey Goodman, who is president of this effort and who Pfizer's staking of political capital on, and he was basically talking about Pfizer's overall restructuring efforts, but that this particular matter represented a critical function of what I said before and that is the restructuring of big pharma really to get out of the main campuses and to go to much more innovative and to almost a biotech-like model. Corey was a professor at UCSF. He also ran a couple of biotech companies and so he's ideal. He actually, I think, had turned down overall Head of Research at Pfizer, I had heard. So that's one kind of anecdotal kind of commentary. A bunch of us met with some of the Glaxo team up in Cambridge and they're very focused on creating a new set of pipeline opportunities for Glaxo there and doing some expansion. So I think when we look at big pharma, we're in the sweet spot of where they want to be at the heart of the clusters adjacent to the great institutions. If you're out in the suburbs or you're in a…

Right. I think the answer's most definitely yes, heavily due to triple-A locations and, obviously, high quality facilities. But also we've had a number of strategic meetings with a number of major companies who've asked us to come in and actually consult with us, much like a McKenzie would do, although we're not charging like McKenzie, but to come in and help them rationalize what they're doing on the innovation side. So we think those are interesting opportunities, but the real problem at the moment is, again, the credit market seizure. And when you have triple-A institutions telling you they've got buildings ready to go that they need for their own use and they can't get bond financing, you know we're in a climate that no one's ever really experienced before. Philip Martin - Cantor Fitzgerald & Co.: That kind of goes to my next question, which actually it just answered, but the last question, just more of in terms of the leasing front, obviously, leasing has continued to go pretty well here, but how are those discussions - and I know you've bought up some of this, but again, with many of the tenants that you're discussing on '09 and '10 maturities, it sounds like from your opening remarks that those conversations are going pretty well with the majority of your tenant base.

Yes, I think the answer is they're going pretty well. I think the one area that we're very mindful of is, again, some of the public biotech companies that are caught in this - I've used the term kind of the Valley of Death - where they can't get to product revenues yet. They can't get to the FDA soon enough because the FDA is somewhat overwhelmed at the moment, much like maybe the SEC is overwhelmed, and the markets are not open for either debt or equity financing. So there they've got to rationalize what they're doing, they've got to potentially slim down their lease commitments, and they've got to refocus on what they're doing and how their company is organized and positioned. And those are the ones that I think we're most focused on the downside, so those are ones that clearly anybody in this business has to pay attention to. I think that's the area that we would pay most attention to and be most sensitive to.

Your next question comes from David Aubuchon - Robert W. Baird & Co. David Aubuchon - Robert W. Baird & Co.: Dean, when you outlined your sources of cash you had $100 million in asset sales and then you had another bucket of equity, JV and refinancing. Was that correct?

Correct. David Aubuchon - Robert W. Baird & Co.: What sort of secured debt are you thinking about right now to help kind of fill that funding gap or just the funding usage that you need?

Well, I think, like we have done over the last year, we're extremely focused right now on extending our maturities to the extent possible and then possibly refinancing certain maturities with our existing lenders. As it relates to new secured debt, we're as cautious as everybody else is in this marketplace. The larger your needs are, the more complicated they are. But we are working through opportunities and we're really going to take advantage of any movement in liquidity on the debt side. So I really don't have a target for you. All I can tell you is that we're trying to do our best, like everybody else, to extend, refinance and capture some portion of new loans over the coming years. David Aubuchon - Robert W. Baird & Co.: And you did say 65% of your NOI was unencumbered as of Q4?

Correct, as of year end. David Aubuchon - Robert W. Baird & Co.: Any thought to selling some land? I think that you guys mentioned that as a possibility. Is that within the asset sale $100 million bucket or just in addition to that?

Yes, I think there is one; the one we highlighted in the last call is included in there. But as far as timing goes and exact amount, we don't have a good estimate yet. David Aubuchon - Robert W. Baird & Co.: And then the construction spending, you mentioned from Q2 '09 through Q4 '09, I believe, that construction spending would fall $60 million per quarter. Was that correct?

Yes, it would average $60 million per quarter. David Aubuchon - Robert W. Baird & Co.: And where is it at Q4 '08?

I think it's $40 in the fourth - oh, I'm sorry, what was it in - David Aubuchon - Robert W. Baird & Co.: Correct. So if it's going to average $60 million in '09, kind of where was it?

Yes. Well, I think on average for the year of '08 we probably spent right about $100 million a quarter.

Your last question comes from George Auerbach - Bank of America.

Joel, you mentioned the potential $10 billion of additional funding for the NIH in the stimulus package.

Yes.

In your opinion, how soon would this funding become available for research grants and, I guess more importantly for your business, how quickly would those grants translate into increased leasing demand?

That's a hard question to answer because probably the Senators and Representatives don't even know. As best we know, there's an allocation. It's kind of like a lot of buckets. If you've ever seen, I don't know, the New York Times did a chart of all the kind of buckets that the stimulus is going to go into and we just know that there is a - I think the Senate added $6.5 billion onto what was already $3.5 billion from the House, but we think probably there's a high likelihood that that is going to be passed. My guess, it wouldn't be all in one year; it might be over a period of two years. And where most of that money goes, I think you'll see the big benefit going into the institutions, the universities, and the research institutions. NIH money doesn't typically go directly into companies. They generally go into scientific research organizations. So we'll see, I think, that stimulate that part of the sector. And it's hard to say exactly how that will translate into space, but it's clear it will because it always has and I think that's good. And what that does also then is create new opportunities for the public sector - I should say the commercial sector - to access new technologies being developed. And I think a lot of that might go into the stem cell area, too. So we think it's a real big plus.

And as you mentioned, the House bill was for $3.5 billion, of which I think $2 billion was for infrastructure and redevelopment of current research facilities?

Yes.

Do you have any interest or, I guess, would you come in as a third party to help do some of that redevelopment?

Yes. I mean, we were asked recently to be a fee developer - because we obviously don't want to necessarily do a joint venture with debt on our balance sheet - but as a fee developer to do some construction for a site that was maybe governmentally controlled and that would be built for kind of a quasi-governmental agency and that we might be a fee developer for that, so we would book the income as other income as opposed to have it on our books as a real project where we were at risk for it. So I think there'll be some of those opportunities. In normal times we would not have looked to do those, but I think in the extraordinary times that we're in those are a good use of our time and expertise.

This concludes today's question-and-answer session. Gentlemen, I'll turn it back over to you for any additional or closing remarks.

No, we just thank you for your time and we'll look forward to talking to you at the end of the first quarter.