Good day, everyone and welcome to the Alexandria Real Estate Equities fourth quarter and year-end 2009 conference call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Paula Schwartz. Please go ahead.

Thank you and good afternoon. This conference call includes forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933 as amended and Section 21-E of the Securities Exchange Act 1934 as amended. Such forward-looking statements include without limitation statements regarding our 2010 earnings per share diluted attributable to Alexandria Real Estate Equity, Inc. common stockholders, 2010 FFO per share diluted attributed to ARE's common stockholders, the business plans of certain tenants and the expected impact of the conversion of our unsecured convertible notes. 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 developments 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 develop, our failure to successfully operate or lease acquired properties, decreased rental rates or increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, general and local economic conditions and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission. Forward-looking statements are made as of the date of this call and we assume no obligation to update this information. For more discussion related to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements and risks to our business model in general, please refer to our SEC filing including most recent Annual Report on Form 10K and any subsequent quarterly reports on Form 10Q. Now, I would like to turn the call over to Joel Marcus. Go ahead, Joel.

Okay. Thank you very much. Welcome everybody to the fourth quarter and year end 2009 call. With me today are Dean Shigenaga, Peter Moglia, Peter Nelson and Krupal Raval. As I always do, I want to start out with some macro comments for both 2009 and then looking forward in to 2010. The fourth quarter was a solid blocking and tackling quarter as the final quarter of obviously a uniquely historic year where the financial and credit systems were really on the precipitous of collapse and as the Fed Chairman has said just over the last day or two, the recovery is likely to be painfully slow. Success under extraordinary stress is really all about the best people and successful execution and that I think was our report card for 2009 and really a great credit to the women and men of Alexandria. A couple of critical highlights for the fourth quarter and 2009 as a whole. I think the theme is really consistency, 11 years straight of positive year-to-year lease rolls. Pretty – we maybe unique in most of the REIT universe, 46 consecutive quarters of positive same property growth, 11 years of high occupancy approximating about 95%, historically steady high margins, reductions significantly the principle balances of secured notes this year, Dean will talk about extended of about 267 million extension or maturities and refinancing of other secured notes payable about 159 million and then we repurchased about 75 million par value of 37 converts. Let me talk about the industry and some crucial data points and trends. Pharma is going through, as you all know, a necessary phase to become more globally competitive. This is actually a good thing. Reselling of pipelines through M&A is one of the critical strategies and obviously the Pfizer-Wyeth acquisition is a…

Thank you, Joel. It's clear that in 2009 the real estate industry along with almost every industry experienced an unprecedented financial, economic and banking environment. Fortunately, the core of our operations delivered solid operating statistics similar to those accomplished each and every year since our IPO. The real estate industry has shown tremendous capacity to attract important capital since the depth of the crisis. Alexandria has also executed on various important capitals and deleveraging initiatives in 2008 and 2009. Over the next few minutes I will provide an overview of certain key financial and operating metrics and provide an overview of our guidance for 2010. Our supplemental package provided a new summary of historical occupancy percentages, rental rate increases on annual leasing activity and quarterly same-store performance. Our average occupancy percentage at 12/31 from 1998 through 2009 was over 95%. Our average occupancy percentage was over 89% for the same time period, assuming we include all vacant space undergoing a change in use through redevelopment. We completed our 11th year of positive increases in rental rates on leasing activity and our 46th consecutive quarter of positive same property results. Additionally, operating margins remain relatively steady at approximately 74%. Our operations have been steady through the various environments including the past one to two years, highlighting the strength of our asset base to deliver solid operating statistics during very tough cycles. Let me briefly comment on capped interested for the fourth quarter. The aggregate amount of capitalization was up this quarter due to increase in our weighted average interest rate and due to timing of delivery of a couple of spaces from redevelopment. These spaces were delivered, ultimately occupied and are now generating revenue. As for the interest rate, it is impacted by the mix of our outstanding debt and the…

Thank you, Dean. Operator, if we could go to Q&A, please?

Absolutely. (Operator instructions) Our next question will come from the sight of John Stewart from Green Street. Your line is now open. John Stewart – Green Street: Thank you. Joel, can you touch on East Jamie Court and specifically I think, you referenced redesigning that for multi-tenant how much would you expect to spend to build that out?

Well. We are not – I think I said redesigning it, I didn't say building it out. John Stewart – Green Street: Sorry. How much would you spend on the redesign?

It's not significant dollars. John Stewart – Green Street: Okay. And how about –?

These are not millions, these are in low hundreds of thousands of dollars my guess would be. John Stewart – Green Street: Got it. Okay. And the stabilized yield.

On? John Stewart – Green Street: On that project.

I couldn't tell you we don't know what the rental rate will be. John Stewart – Green Street: Okay. Can you speak to the UCSF campus? I have read that there may be potentially some funding shortfall, can you speak to that?

I'm not aware of anything that is in process now that would be subject to the shortfall. The hospital is one where people were wondering about but the hospital has been fully funded to my knowledge based on what was represented to me by the folks at UCSF. I think it's been, I don't have Steve Richardson here but it has been fully bond approved and I believe, I can't remember what the budget is, it is well over $1 billion, 1.5 million square feet children's, women's and cancer hospital and its sight work is going on as we speak. I don't think the California budget situation is going to negatively certainly not impact the hospital development and to my knowledge, existing construction on the R&D campus that's underway certainly isn't going to be impaired and by the way what has happened there to some extent is they often times came up large donors with bond financing so it's not strictly state funded. John Stewart – Green Street: Right. Okay. That's helpful. Could you just broad brush touch on absorption in San Francisco?

When you say absorption meaning when I talked before about trends and what we have seen, are you talking about future or? John Stewart – Green Street: We've heard that there is pent up demand that you expect to see big leases hit in the relatively near term, is that jive with what you are saying?

Well. I think we have a number of requirements that we are certainly dealing with that are more than just trivial and so I think the answer is that's a good sign, the West Bay has been as you know, more protected but still has suffered in the downturn. But we expect to see I think some occupancy pickups during 2010 for our asset base in the South San Francisco market for sure. John Stewart – Green Street: Okay and then just lastly real quick, if you could touch on China particularly given the Google announcement and then Rio Tinto as well, just kind of your thoughts on that market.

Yeah. I think that market is – it's a unbelievably great market to me in the sense of opportunities but it is in a realistic sense a challenging market because the U.S. government and China have a number of critical issues between them or . Yeah, that goes from obviously trade currency valuation, information freedom and so forth. So we are not blindsided by the challenge in that market. I guess I would use the Chinese proverb to say that a journey of a thousand miles begins with the first step. We just put our first step in to south China and our first step in to north China, so we don't view this as an immediate situation that we hope to have some large amount of space in a very short period of time. Our partner is the government and we see this as a very, very careful step by step process. I just was in China, very aware of the tensions that also spill out in to the real world of commercial enterprise. John Stewart – Green Street: Great. Thanks a lot.

Thank you.

And it looks like our next question will come from the site of Anthony Paolone of JP Morgan. Your line is now open. Anthony Paolone – JP Morgan: Thanks. Good afternoon. The first question is on capital spending for 2010, I think you mentioned mid to high 200 million and I think if I look at your cost to complete development and redevelopment it comes out to about 200, so just wondering where the rest is, where that comes from.

Well. We always have other protects that are occurring from time to time, some of it could, is attributed to additional redevelopments. Joel hinted also and we have for the last quarter or so anticipated another project related to a university that we are working with and that's included in our estimates of spending, so our spending includes a forecast for incremental projects. Anthony Paolone – JP Morgan: Okay. Then second question really then would relate to that. Can you just give us a little bit more color on the university deal and also you mentioned maybe a foreign tenant. I just want to understand I guess I'm not clear as to what those things mean like a foreign tenant outside of the U.S. or just a foreign tenant on one of your U.S. land parcels? And on the university side, I guess I'm still a little unclear as to who is party to what in that situation?

Yes. I'll try to help you as much as I can, given existing agreements. On the foreign side, one of our locations overseas in Asia, we are working actually with two, one existing client and one non-client for significant space on a build to suit basis from our shell and what we view that as, as a – I think like I said to John as a first step in validating that we can build first class high quality space in a market that's never seen it before with the kinds of challenges you have and also attract both current tenants and non-tenants to that market because the market is obviously one that has huge future potential. So hopefully that's helpful. On the university side I think what I emphasized is we view this also as a first step we view partnering with a number of universities across the country and maybe throughout the world is an important part of the future growth of this Company and certainly the industry and given endowment challenges that they've had, even more reason to think about using their land for something other than just traditional academic buildings or just traditional kind of the way they did business before. So partnering up can be awfully enticing to both parties. We will; we are not prepared to announce anything but we are well along in an effort. We got design done, we got agreements that are moving through process and we are moving through an approval process where we would announce a signature building on a major university campus that would be credit tenant leased in a majority to that university but with an exciting set of tenants in the building, so all I can say at this point is stay tuned but that's kind of the first step of this program. Anthony Paolone – JP Morgan: So doesn't sound though like you would be doing something, say on campus where you would start it without some sort of pre-leasing?

No. No, no, that's not anything, I think in this credit and financial environment we would never do that without a majority being pre-leased on a long-term basis. Anthony Paolone – JP Morgan: Okay. And then just a last question, if my notes are right I think historically you talked about rent spreads looking like I thought it was in the 5% to 10% range, you talked about 0 to 5 for 2010. I'm just wondering if there has been any change in the market there.

I think if you take out the two leases we talked about, one was the San Francisco lease of an industrial building that had an existing high rental rate with, actually it was a big company that we moved to a Cleantech company and we took a step down on that and you exclude a lease we re-did in Maryland where the tenant had signed at a high point in the market, if you take those out and then you kind of project forward I think both Dean and I said we feel relatively comfortable in the 0% to 5% range going forward for this year.

No. I agree with that. Anthony Paolone – JP Morgan: Okay. Thanks.

Yeah.

And we’ll move next to the site of Jamie Feldman from Bank of America. Your line is now open. Jamie Feldman – Bank of America: Thank you. Good afternoon. Dean I want to make sure I heard you right. The same store outlook, for next year plus 2%?

Yes. That's correct. Jamie Feldman – Bank of America: Is that a cash basis or GAAP?

I'm trying to think. I think they are both relatively in that range. So both on a GAAP and cash basis to be in that range. Jamie Feldman – Bank of America: Okay. So you're basically saying occupancy is flat to up and leasing spreads are slightly positive, then you have annual bumps to get there?

Correct.

That's a good way to characterize it. Jamie Feldman – Bank of America: Okay. So you mentioned the East River Science Park, building 100% leased. What does this mean for the second building? Should we start thinking about that soon?

I wouldn't say it's all leased but it's relatively fully committed. I think by the end of the year that building will be virtually all stabilized and I think you will see the significant benefit of those leases and the high quality nature and the long-term nature of those leases flow in to NOI certainly big time in 2011. I think we would love to try to think about the West Tower but I think again, we still are in an environment that is awfully, awfully tough and I think too many people forget that it is, we got very high structural unemployment out there that doesn't seem to be abating, treasury is obviously signaling maybe a move to move on interest rates later in the year. There is certainly no, to my knowledge, no great ability to get construction financing today given the credit markets. So I think it's going to take some time but we have sufficient demand today that we could make, I don't know what the percentage would be but that building if we build it today would not be empty. But I think stay tuned because I don't think that's going to be imminent but I think we will reevaluate that as we go forward but it certainly is a high class problem. Jamie Feldman – Bank of America: Okay and thank you.

Yeah. Thanks. Jamie.

And now looks like our next question will come from Michael Bilerman of Citigroup. Your line is now open. Michael Bilerman – Citigroup: Hi. Thank you. Dean, just on the capitalized interest, you look at the rate that using to capitalize went from 516 to 542 up 26 basis points, page 12 of your sup but your average rate on your debt only went up 10 basis points from 4 85 to 495 that's on page 19. What is driving the difference between the weighted average rate change in the quarter and the rate that you are using in capitalization?

That's a really good question, Michael. The real impact is almost, I think the easiest way to help present this on the call is think of higher rate either fixed rate, secured debt or swapped out facility debt as one bucket assume 50% of the debt is in that bucket for the sake of just this analysis and assume the other half of the debt is sitting in a variable LIBOR based bucket, which we all know LIBOR is extremely cheap right now. And if that bucket was 50-50 as far as the amount of debt in each category, you would get a simple average of the effective interest rate. But as we completed two transactions, one the equity offering in the third quarter and then the secured debt in the fourth quarter, the proceeds of which went to pay down our credit facility balance, which first goes to payoff unhedged available rate debt, which effectively and proportion to the buckets of 50-50 that I was describing to you earlier. You would have less debt weighted to roughly 1.5% LIBOR based debt versus an average of almost 6% other debt. So when you change the mix, you effectively weighed up the interest rate used for capitalization. Michael Bilerman – Citigroup: You are not using average debt balance in some way you are using a different bucket for the capitalization rate versus the average debt rate?

Well, the… Michael Bilerman – Citigroup: Directionally, I would have thought if one would go up the other would should go up proportionately unless you are using different.

Yeah. It's – I've never looked at it that way, Michael, but they are two separate calculations. Michael Bilerman – Citigroup: Okay. In terms of G&A I think you mentioned G&A for 2010 was 31 million, which is about 7.75 million a quarter. You averaged about 9 million in '09 and $31 million number would take you back to '06, late '06 levels. What is happening in 2010?

A little bit is being driven by I think a lower amount of aggregate stock compensation anticipated running through G&A in 2010 versus 2009 and keep in mind we had significant amount of compensation running through '09 at a fairly high stock price. That's – from a pure accounting perspective that runs through, based on the value of the award at the date of grant which, for the most part we know that most of it was in the $100 range and the more recent grants through since late '08 have been done at much lower stock price. Michael Bilerman – Citigroup: So that $5 million is the difference is all stock comp? There is nothing else capitalization or anything else going on?

No. It's not being driven by a change in capitalization. The capitalization really hasn't moved much as you look at the amount of development and redevelopment of construction activities we broadly have. Whether it's '07, '08 or '09 it's pretty significant. So nothing is changing there. And I guess to some degree although we didn't have – we didn't have any reason to cut staff because of the crisis. I think we did have some performance reductions that have had occurred in late '08 and little bit of '09 that helps out a little bit. But I think the majority of the change is really driven by stock comp. Michael Bilerman – Citigroup: So you would expect the 14 million of stock comp adjustment, that's page 16 in your AFFO, that 14 million would go down to 9 million for 2010?

Yeah. Probably close to that would be my guess, yes. Michael Bilerman – Citigroup: You talked a little bit about development and obviously to coming on line later in the year. Do you have a sense of – you give us a capitalized interest reduction heading into 2010. But how much development NOI is effectively going to start hitting the numbers in 2010? And then what would that be on annualized basis by the time we get to the end of the year?

Yeah. And keep in mind guys, although I think I tried to give you some perspective of what we anticipate completing in deliveries at 80% of our development pipeline, a lot is back end weighted. As an example, I think we also footnoted in our supplemental that the Gilead building in Seattle was delivering in early February but if you think about it, New York, which is the bulk of the square footage and cash flows that will be all back end delivered. But the good news is given the pace of activity that we got on the project. We feel very comfortable getting the majority of that delivered this year. Michael Bilerman – Citigroup: And what's the – in terms of East River, when does that actually start to come in?

I think we will start to see some of that start in the third quarter.

Yeah.

And the majority of it will be late third quarter and starting the fourth quarter. Michael Bilerman – Citigroup: Okay. Joel, you mentioned little bit about the 2011 lease role obviously being a big percentage of your total leases and you talked about Cambridge and one of the buildings and office building in Tech Square, take out and redevelop. I guess it's about 140,000 square feet, the remains about I think 600,000 square feet in eastern mass, I don't know how much of that is in the suburbs verse news Cambridge, that's rolling in 2011. Can you give any color that's one of the biggest markets where the roll is concentrated?

Yeah. Let me just take a look at the schedule for a moment. Yeah, the techs core building is the largest – can you run that down, they will run that down and maybe I can come back to that in a moment. Michael Bilerman – Citigroup: Okay. I was up in Toronto recently and passed by the development that you have underway there or at least the construction site is fully up. How much capital are you spending there I know it's not listed as active development project, but it look I mean your signage was everywhere and looked like an active protect. Can you give us an update on what's happening?

I actually can't. I will tell you the following because we are under discussion with Mars there, but there is an active lender that is interested in financing the transaction and it looks like there may be very large requirement that we might be able to get but we are working with Mars to try to address that again given the where we are in the credit markets and that's an active negotiation as we speak. But we certainly put tens of millions of dollars in building the underground parking and foundation before the project was suspended due to the financial collapse. So I would say stay tuned, that discussion is going on literally as we speak today. Let me see if I can give you a couple of highlights on the – yes, Tech Square the building 400, which is occupied by an office tenants right now is about 145,000 square feet, MIT comes up and they are almost 100,000 square feet. So that's a good majority of that and we have every reason to believe based on discussions with MIT they are going to renew. And then there is one other that comes up kind of midyear that's about 100,000. So there are really three big leases with – it's a suburban location with a pretty large credit tenants and I think we have every indication that they are likely to renew on that. So and also we are expecting based on what we can see in that market in 2011 potentially to have double-digit rent increases which is amazing to say today. Michael Bilerman – Citigroup: And then just go to quick ones, in terms of disk ops how much is held for sale on the balance sheet today?

Hang on, guys. I think most of that was in our 10Q footnotes but let me pull the schedule here, it's about low $30 million – yes. Michael Bilerman – Citigroup: Still run, still held for sale?

Yeah. And we sold one small asset in the fourth quarter. Michael Bilerman – Citigroup: Okay. And then you talked a lot about the leasing spreads in the quarter being influenced by the San Francisco building and the Maryland building. Obviously, cash rents being down 8 was a great mark. What would the rent spreads have been without those two leases?

I think it would have been about breakeven. Michael Bilerman – Citigroup: Right. And what's the size of those two leases?

Well that’s… Michael Bilerman – Citigroup: I think one was San Francisco is maybe what about –

Out of the 374. Michael Bilerman – Citigroup: One was San Francisco maybe about, so large, it's a large – together I think they are probably north of 100,000 would be a guess. Michael Bilerman – Citigroup: Great. Thank you for the time.

Yeah. Thanks, Mike.

(Operator instructions) Our next question will come from Will Marks of JMP Securities. Your line is now open. Will Marks – JMP Securities: Thank you. Hello, Dean and Joel.

Good. Will Marks – JMP Securities: A quick question on the lease roll over, on 26, page 26 you have in 2010 annualized base rent 2431. Where was that at the beginning of, where was 2009 at the beginning of the year?

I don't have that.

I don't either.

But I can tell you the challenge with that analysis it's dependant on the mix of leases that you have rolling in the schedule. Will Marks – JMP Securities: It does look like 2010 is low certainly compared to future years.

Yeah. I think that's a fair statement, yeah. Will Marks – JMP Securities: Can you offer any color on if you are doing anything in terms of free grant or other concessions these days?

Yeah. I think it's very dependent obviously market. To give you example research triangle park if the process of renewing a lease right now and the tenant is throwing out market statistics. But those are not first class lab space, they tend to be kind of third or fourth generation or they tend to be other space but somebody would have to invest a lot of dollars. But we are looking in some of the softer locations at trying to encourage people through a bit of free rent and I'm talking about a month or two or three at the most on a five or seven year lease to make sure they feel like they are getting some benefit and obviously looking overall at the net effective rent on that transaction. But I would say buy in large it hasn't been hugely significant, but it's at the very least end market dependent. Will Marks – JMP Securities: That makes sense. Okay. I though…

For example, in Massachusetts in other locations in Mission Bay it just hasn't been really part of the equation in an important sense.

And looks like our last question will be a follow-up from the site of Michael Bilerman of Citigroup. Your line is now open. Michael Bilerman – Citigroup: I said I had one more, sorry.

It’s okay. Michael Bilerman – Citigroup: The straight line rents I think, Dean, you said something about in the fourth quarter one lease that drove that 7 million.

I said I have a one more question.

Hello. We can hear whoever is talking there on the site. Michael Bilerman – Citigroup: Yeah.

So Michael, the straight line rent was up primarily for two reasons. One, we have been delivering some leases, long-term leases under our redevelopment and development projects lately that's contributed to it. But we also had a fairly meaningful one-time prepaid rent that was contractually due under lease that was received in the third quarter – excuse, the fourth quarter GAAP number. So I think we reported about 7 million of straight line rents, it's a drop back down more in line with about a 4 million run rate per quarter in 2010. Michael Bilerman – Citigroup: Has anything happened to the GAAP rents in that case?

No. No. No. Those are under a lease, GAAP straight line rent so there is no impact to GAAP rents. Michael Bilerman – Citigroup: Okay. Thank you.

Yeah. Michael also, or maybe this is Will that asked, if there is any free rent that we offer and we are pretty careful in most locations hopefully not to do much of it, we always just extend the term. Michael Bilerman – Citigroup: Right.

Operator, any other questions?

We have no further questions at this time.

Okay. So thanks, everybody very much and we look forward to talking to you for the first quarter in May.

And this does conclude today's teleconference. Thank you for your participation. You may disconnect at any time.