Welcome to the Alexandria Real Estate Equities Incorporated Second Quarter 2014 Earnings Conference Call. My name is Jessica and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note today's conference is being recorded. And I will now turn the conference over to Rhonda Chiger. Ms. Chiger, you may begin.

Thank you and good afternoon. This conference call contains forward-looking statements within the meaning of the federal securities laws. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the Company's Form 10-K, Annual Report and other periodic reports filed with the Securities and Exchange Commission. And now, I would like to turn the call over to Mr. Joel Marcus. Please go ahead.

Thanks, Rhonda, and welcome everybody this second quarter call. With me today are Peter Moglia, Steve Richardson, and Dean Shigenaga. As all of you have seen from the press release we are pleased to have reported our second quarter FFO at 1.19 a share an increased in the mid point of our narrow 2014 guidance range $4.74 to $4.80. In the second quarter we have witnessed the very positive conversions of really more a key cyclical as well as structural factors which have resulted in exceptionally strong environment for our unique collaborative science and technology campuses in our great urban innovation clusters. And point we actually see exceptional opportunities, very strong tenant demand, increasing rents and occupancy and Alexandria is able to drive earnings and NAV growth therefore. We will at Investor Day in December set expectations for growth and 2015, as well as how our value added growth pipeline should evolve over the next two to three years. We will also detail our funding approach to our capital allocation in 2015 as the company continues to have the full range of capital sources available to it and if you look at -- take a glimpse of 2015 can be seen on page 50 of the supplement. Other macro comments let me share with you. We see continuing strong improvement in the life science industry’s ecosystem participants to be urban core clusters, Peter will talk about this in a minute, presences, really tertiary cluster locations outside of the key core urban clusters are really declining even if you have got a second tier academic or university nearby and Pfizer sale of three facilities and they are moved to the heart of Cambridge which again Peter will comment on in detail in a moment, really are the prime example we have…

Thanks Joel. Good afternoon. This quarter I would like to highlight one notable life science trade that provides some clarity on cap rates in Torrey Pines, San Diego, one of Alexandria's largest sub markets. Trades of office property in San Francisco and Manhattan that illustrate continuing cap rate compression in the core urban markets that Alexandria invests and operates in and then highlight the sale of life science portfolio by Pfizer in West Cambridge, not so much for its financial metrics but because it offers further support that the transition of large pharma and biotech companies from siloed research campuses to centers of innovation anchored by academic institutions is continuing. First, I would like to discuss the sale of 11099 North Torrey Pines Road by Angelo Gordon to HCP. The asset is 93% occupied, 92,479 square foot multi tenant laboratory office building on the northern age of the Torrey Pines sub market. There are about a dozen tenants in the facility that are mix of large company or institutional credit with some early stage private biotech. The sale price was $43,750,000 which would indicate a low 5% cap rate on in place income. But after allocating value to excess land, it was reported to be at 5.67%. So this is a solid building but we believe our portfolio in the submarket is of higher quality and therefore this comparable should support low 5% cap rates for our higher-end Torrey Pines properties such as our Nautilus and Spectrum projects. There were no other life science trades to report this quarter, but we would like to note that last week an article in the registry noted that 405 Howard Street in San Francisco is being acquired by Norges Bank Investment Management and TIAA-CREF for $350 million, which is estimated to be $750…

Good afternoon, everyone. At the outside, I'd like to first commend our best in class regional teams for truly exceptional operational performance year-to-date as we are hitting on all cylinders. The level of expertise and commitments excellence in all facet of the business is truly unique and unparalleled in the industry. Today I will touch on two key aspects of our operations in my remarks. One the ongoing and sustainable solid performance of our core. And two as we forecasted earlier this year the increasing actual and immanent deliveries from our significant $1.1 billion current value creation development pipeline. First the core is performing very well as we reported cash and GAAP increases of 6.3% and 13.6% year-to-date and 3% and 9.9% respectively this past quarter for renewals and re-leasing of space. We were seeing now more broadly as a trend the clear and compelling sense of urgency towards Alexandria’s Class A facilities and operational teams and its irreplaceable cluster locations as tenants with 2015 and even in some cases with 2016 rollovers engaging our regional leadership teams to renew leases and lock down space. This is a very noteworthy and powerful market dynamic that we really haven’t seen in decade or more. The stability provided by our Class A facilities and AAA, urban science and tech campuses populated by investment grade tenants with a high bar 96.9% occupancy rate for North American properties is also impressive as this is the second consecutive quarter we have been greater than 96.5% occupied. Probably no better metric for the return to stability seeing we outlined at our December 2013 investor meeting. The rollovers remaining to resolve in ‘14 are very manageable 150,958 square feet or just 1% of our operating base. We'll take a closer look at each of Alexandria's urban science…

Thanks Steve, Dean Shigenaga here. Good afternoon, everyone. I have four important topics to cover. First, I want to provide an update on our balance sheet including our recently highly successful issuance of unsecured notes; second, I’ll provide a key update on land sales for the second half of this year; third, briefly touch on interest expense for the second quarter; and fourth, provide a summary of key drivers of growth and our guidance for 2014 FFO per share and confidence in our ability to deliver solid growth and cash flows, net asset value and FFO per share in 2014 and beyond from our Class A buildings and land parcels in AAA locations in urban innovation clusters. Starting with our bond offering, mid-July, we completed our third highly successful unsecured bond offering and increased the strength and flexibility of our balance sheet and capital structure. Our $700 million dual tranche offering focused on three primary goals, first transitioning variable rate bank debt to longer-term fixed rate unsecured bonds; second, prudent laddering of debt maturities; considering our outstanding bonds with maturity dates in 2022 and 2023; and greatly increasing flexibility as we focus on several high value build-to-suite development projects. Our bond offering consisted of $400 million of 2.75% 5.5 year unsecured notes due in 2020; $300 million of 4.5%, 15 year unsecured notes due in 2029; blending to a weighted average rate of 3.5% and a maturity of 9.6 years; and to put this pricing into context, a 10 year deal would probably have priced within interest rate around 4%. This highly successful transaction also extended our average maturity of outstanding debt to 6.3 years, up from 5.1 years; increased our liquidity to 1.8 billion; and reduced our unhedged variable rate debt to 7% of total debt. Briefly on a…

Operator, we are open for Q&A.

Thank you. (Operator Instructions) And we'll go first to Emmanuel Korchman with Citi.

Hey thanks guys. Dean, if we just look at your income statement there was no other income in the quarter typically you’ve had some amount in there attributable at least to marketable security sales, could you just tell us what's going on there?

Yes, I’d say we had a onetime decline in other income, typically you see other income in the $3 million to $4 million range and that's our outlook for the remainder of the year. In the quarter, we did have a lower amount of investment income. In fact there was a small loss in aggregate during the quarter. So that was the driver there.

And then given the strength you spoke about in terms of assets sort of next you're already selling it good cap rates have you thought about selling more core assets into that type of market rather than just the non-income producing ones?

We did go through recycling of assets that we wanted to lighten up the uncertain sub market in latter '12 and part of '13 and I think that was completed at the moment. We're reviewing things constantly and you may see us do some of that but at the moment we don’t have anything particularly to target.

And then in terms of the non-core sales the 50, 60, 100 JV do you still plan to have them this year?

We’re certainly on target to do that, yes.

Great. Thanks guys.

Yes. Thank you.

Our next question comes from Jamie Feldman with Bank of America Merrill Lynch.

Great, thank you and good afternoon. So I guess sticking with the acquisition or the disposition market, can you talk a little bit more about the types of buyers you guys are seeing for your asset class?

Hey Jamie, it’s Peter Moglia. We’ve seen a lot of domestic and foreign capital private equity, we’ve had a lot of pension funds interested in both buying our product and in joint venturing with us. So I would say that pretty much every class of investor has looked or purchased life science product now, maybe that wasn’t the case seven years ago but it is now.

Yes and I think that’s a good thing because it’s become more mainstream and certainly cap rates have reflected that.

And then in terms of operating, I mean a little bit of a differentiated asset class today operated in-house or there is just specialized third-parties or do you guys maybe more retain more today?

I think most of the things that that have traded to those types of buyers have been long-term leases that they’ll likely probably be distil maybe within 3 years or 4 years of those leases bring up. We haven’t got to that point where someone needed to operate something yet.

Okay, all right. And then shifting to the development pipeline. Can you talk a little bit more about your leasing prospects at 3013 Science Park Road and then New York?

Yes, I’ll speak to New York, you want to talk about 3013.

3013, we’ve got the existing building that we’re saving the steel frame where we’ve got that 25% lease to a top tier life science company in that market and then for the other project we actually have a letter of intent for the entire 65,000 or so square feet for a long-term lease there. So all we have left would be about three floors on building that development.

And then in New York we have four floors left and we have some reasonable activity on some of those floors, we don't have anything that’s moved to the stage or LOI, but we're very active and we think that over the coming couple of months we'll have some news ahead of our internal projection. So I'd say stay tuned for that.

Yes and Jamie, let me just add from a modeling perspective or guidance only assumes we deliver about 60% of the project by the end of this year for the West Tower.

Okay. So I guess just thinking about leasing and just kind of interest in New York. I mean is there anything that’s changed or is it just a bit, is just lower than expected. I guess that’s an expected could you stay your environmental guidance but just how tenants are reacting to the market into those assets?

Yes. I think we're ahead of our own internal expectations, so I think that's reflected I the model that Dean just referred to. But I think you have to look at New York, again always in New York we are building a cluster there and so there is not, if not like Cambridge or San Francisco. But I'm very comfortable, we've got a number of tenants book big pharma and one very interesting entity that a non-profit that are looking that good blocks of space and we'll see. But a great market and I say rental rates are exceeding what we hope to get. So we are I think feeling pretty good about that.

Okay. And then finally can you talk about your largest expirations in the bank half of the year and then in 2015?

Jamie its Steve. The expirations in ‘14 are really marginal as I was saying it’s a 150,000 feet total just 1% of the asset base. I think the largest block is potentially in Maryland and it’s probably about a third of that, otherwise it’s pretty well distributed in either Cambridge, San Francisco really.

And then for 2015, it’s really split among quite a number of regions, it’s about 1.1 million square feet which generally takes us about two quarters lease or sometimes in even one quarter, the largest is a suburban property in out in Route 128 and we are well on our way to working on a retenanting plan, we have got one or two tenants already until. So we feel pretty good about that there is a some phase that could be significantly up in tech square and kind of varied by region. I don’t know Steve any other color.

Yes, no. I think that’s right, I mean as you look at these rolls that were in the core markets, tech square, San Francisco piece and UTC in town center, so the larger blocks in ‘15 are all in good core locations.

Okay. And do have a sense to the mark to market on your expirations?

Yes certainly in ‘14 as we touched on as we closed the year out those are all on a GAAP basis in the mid-teens so I think that will continue to support the guidance we had at the beginning of the year.

Yes. And I would expect directionally on the rental rate steps on our leasing activity for ‘15. I think generally speaking we're going to be in the general ranges of both GAAP and cash steps. So I think the performance we have this year or at least our expectation for 14 should continue in the ‘15.

You are saying the leasing spread should be about the same [you read box]?

Yes.

Yes, the leasing spreads.

Leasing spread. Okay.

So, the rental rate increases.

Alright, great. I appreciate it.

Our next question comes from Gabriel Hilmoe with ISI Group.

Thanks. Just maybe following up on the last question little bit, but just on the expansion on the leasing spread guidance. Steve you talked a little bit about the current mark to market in a portfolio. But can you talk a little bit about where things are may tracking ahead of where you thought they would be maybe three or six months ago by market I guess?

Yes Gabe, it's probably certainly Cambridge, San Francisco and San Diego. I think overall we just see demand has not only continued, but it's strengthened in those areas. People are locking down space, so that's enabling us to drive rents in those kind of key core market more so. So, it's probably those three markets that are driving it primarily.

Okay. And then I realize this is still strong number, but it looks like the occupancy dipped a little bit in San Fran, anything in terms of the progress and back selling some of those smaller move ups in the quarter?

Yes, we did have one legacy tenant at one of our mid Peninsula properties that ultimately rolled out, we're actually working with the Group right now. So, temporary dip from 99.9% occupancy there.

Okay. And then maybe lastly for Joel, I may have missed this, but any update on the plans or progress for the North parcel in New York or is the West Tower still kind of the priority for the time being?

Well both, the West Tower is still the priority with four floors left and some under active discussions but no paper trading yet and then we are in discussions with the city on North parcel also.

Any idea of any type of timing around that North parcel?

Too early to say at the moment.

Okay, thank you.

Yes, thank you.

We’ll go next to Dave Rodgers with Robert W. Baird.

Yes, hey Joel. You’re 97% leased, I think in the operating portfolio 77% leased or negotiated in the development portfolio. What should we expect to see coming out of the ground in terms of new development? I mean obviously you want to get more product out there. So may be give us a sense on starts may be over the next 6 months to 12 months and then also where those starts might be located, where do you feel the best about kind of getting new projects coming out of the ground?

Yes. I think in my prepared remarks I mentioned, if you go to page 27 of the supplement, this is kind of the best way to visualize it. And if you go to the second half, the bottom half of that spread sheet, if you will, we find a LOI with alumina working on finalizing the lease that will kick off here pretty quickly and that will be delivered next year. We're in active discussions with two significant tenants in 6 Davis Drive. And my guess is that will probably kick off here in the second half of the year. Townsend, Steve can give you a quick update on that.

Yes, we’re making a real good progress. The team on the ground with advancing the entitlements there and perfecting the entitlements we’re engaging tenants in the market in a series of serious conversation, so we’re encouraged there as well.

On Campus Point, we have a letter of intent with an existing tenant to take most of the new buildings and we expect that will move forward here over the next few months. Lake Union, we’ve got two parcels in play with multiple users, don’t know how that’s going to go but we think we have a shot, so I’ll reserve judgment on kind of the starts there. And then on 50, 60 and 100 Binney we’ve got a lot of activity on those parcels.

Would you feel comfortable going just back on any of those or pre-leasing continues to be the focus?

When you say any of those meaning any of these on the whole list or any…

Yes, the bottom assets that don’t have that pre-leasing component or the negotiating component already underway.

It’s possible. I think the strength of the Cambridge market might move us to go forward, we’re already -- we're doing site work right now. So I’d say stay tuned there.

Okay. And I guess with 50, 60, and 100 Binney, maybe -- I don’t know how much you can talk about this under your negotiations but talk about maybe the cost and return terms to you as you think about maybe what you might be giving up. And I guess the only reason I ask that is your cost of capital has come way down with the both of bond offering and where the stock is. And I think that returns continue to improve given where rents are going in those markets. So, you said you’re still on track with that and certainly understand the capital component of it, but maybe can you talk about the cost and return terms to ARE?

Yes, I don’t think we’re ready to talk about anything. But I would say in general that we feel that we’ve got as I used the term exceptional prospects. I don’t know that I’ve ever used that before in all the conference calls I’ve done. So I think that with that clearly we want to keep our balance sheet in great shape. I think Dean’s report on the balance sheet is very comforting. So for us to be able to look at exceptional prospects and have another major source of capital to do things that we want to do and are greater than clusters gives us I think a big advantage. And so I think that just stay tuned. But we don't we're -- I wouldn't characterize that as giving up anything, I think we're gaining something very valuable. And we can move a number of projects ahead much more quickly than maybe we could on our own. And we are focused on again keeping both the NAV growth moving and very importantly our earnings growth moving, not only this year but well into next year in ‘16.

Great. Thank you.

Yes.

We'll go next to Michael Knott with Green Street Advisors.

Hi guys, good afternoon. Question for you, and this has been asked a little bit, but I just want to take a slightly different tack. Your ‘15 releasing spread sounds like will be similar to ‘14, but just curious given the strength of the tenant demand you're seeing, if you think that you might see at some point the cycle re-leasing spreads exceed what look to be the peak from last cycle about 8% on a cash basis, on an annual basis just curious. Yes, sorry go ahead.

Michael, Dean Shigenaga here. Yes, I gave you some baseline assumptions to think about for ‘15, but no doubt the strength of our core markets and demand in the marketplace for quality space that exist in our asset base or space like the quality of our asset base I think is going to provide opportunities, both in capturing new requirements but also as we work through early renewals, I think we have an opportunity on both sides. But I guess I want to give you some baseline assumptions as we think well ahead of Investor Day six months from now or five months from now.

Okay, that’s helpful. And do you guys think about where your overall portfolio is on a mark to market basis today, sounded like the ‘15 expiries are in pretty good markets and is sort of inline with spreads you are seeing this year but just curious if the overall portfolio is maybe a little better than that or sort of similar to that sort of up 5% on a cash basis.

Yes, I think on a cash basis, we are probably in that 2% to 3% and an 8% on a GAAP basis on a mark to market overall operating portfolio. Keep in mind, you have got long-term leases, you have annual cumulatively compounding increases with some pretty great tenants. So I think it’s important to really look at the GAAP metric as well.

And we are trying to be conservative so that it makes sense.

Got you. And then Joel or Dean, just curious how much development you are comfortable at carrying at any one time as a percent of total assets, just curious how you think about that? And obviously the list of projects you have going is pretty appealing at this but just curious how you think about it from an aggregate standpoint?

Yes I can ask Dean to comment from an aggregate. I think though the most important thing is that we try to cover the vast majority of our capital spend with both free cash flow and the generation of EBITDA from projects. And so to the extent that we can do that, Dean laid out I think a pretty nice slide on that.

Page 44 has a really nice depiction of…

So I think that’s how we think about that. At the same time, we are bringing down non-income producing assets as a percentage of total gross assets, funding our construction spend, really our spend on growth is really and this is just our own credit capital plan nothing is definitive yet till we give for sure guidance in December, but this is I think a handy way to think about it.

Okay. Thanks for pointing that out. And last one from me on that, debt to EBITDA target of 6.5 times. First, thanks for providing that, none other companies are thoughtful enough to do that, so thanks for that. But my question is, just curious is that your long-term target or is that more or just sort of where are you going to end up in the near term? And then also just curious how you arrived at that target as opposed to something else?

Well, I think 6.5 times has been a bogie for ours for some time. So it is near term by the end of ‘15. And I think we'll always look for opportunities as we grow our EBITDA to possibly improve that. But for now that's our bogie. And really most of our EBITDA growth is providing the opportunity to manage the growth of our business without moving leverage in the wrong direction.

Okay. Thank you.

We'll go next to Sheila McGrath with Evercore

Yes, good afternoon. Joel, I noticed that Longwood had a little bit of pickup in leasing in the quarter. I just wondered if the level of tenant interest is continuing there? And how the velocity of leasing you expect?

Yes, as I said. Thanks Sheila for the question. As I said last time and we've made comments on and maybe other places, of all the markets and the all the segments, this is the one that I think is most disappointing in a sense when we – they had the current vacancy rate in Longwood it's about 1%. But I think there has been this weird overhang of NIH not increasing the budget it was kind of little bit under the Budget Act from congress and then it got restore and it's kind of current run rate is about 30 plus billion dollars although I note that I think Tom Parkins I think Iowa just introduced the bill in Congress to raise it over, I think a five year period to 46 billion I don't know where that's going to go but that would be good. But I think the institution has got a little bit frightened, they're also a little bit nervous about where Obama Care is headed, because nobody really has been through that process. So I think their operating spend has been more conservatively managed while their capital spend certainly is going forward. So we've had a lot of interest in buying floors for condominiums. We've kind of put that off for the moment. We may return to that at some point if we decide to. But we do have some -- we do have current demand for two floors which we hope to resolve over the coming may be quarter or so. And then beyond that we got active discussions with the bunch of people but nothing to show up on the scoreboard yet. There is some pharma interest in Longwood although -- although the main pharma interest does tend to be as Peter pointed out Kendall Square. So we'll see what happens. But as they say that's the one area with such a low vacancy rate our view, back a couple of years ago when we proceeded on this process. We thought this would be much more efficiently leased than it is, but we're still comfortable. We don't deliver till the end of the year. And I think we'll be well over 50% at that point which will meet our internal projections. And we hope our rates stay at what they are pro forma wise which today have been the case. So we'll see where that goes keep in mind remind we have a 27.5% interest in that joint venture.

Then just on 50, 60, and 100 Binney it sounds like you’re seeing a lot of interest and given where you have the NOI coming online in 2016. Is the interest that you’re seeing more life science or is a mix of tax as well?

It tends to be very heavy life science at the moment.

Okay. And then last question Steve, you mentioned in your remarks that the Amgen submarkets base might come off the market. Could you just give a little more detail and how much space there is and maybe the impact on vacancy potentially?

Sure Sheila. The vacancy overall is probably right around 10% in the market although if you segment that and take smaller blocks of space you’re probably at just 3% to 4% so that’s why we’ve been able to be very successful with our projects there. In the smaller blocks over the past several quarters, these couple of blocks you’ve got probably roughly 0.25 million square feet and it looks like they may take back one if not both of those blocks of space there. So that’s been something they’ve talked about much more intently. I think as they look at 1000 Oaks recruiting versus South San Francisco. So we’re hopeful that conversation is becoming more serious than we occupying that space. That would drop the overall vacancy rate, you probably down total that would cut it in half really be at 3%, 4%, 5%.

Yes, I’d make one footnote comment to that Amgen who I used to deal with pretty regularly and we have pretty close relationships with, approached us recently and we did a bit of a strategic planning session with them on innovation and it was pretty interesting because I think Amgen similar one or two of the big pharma is probably hasn't been historically as innovative as Genentech was. Genentech ended up spending out 75 to 100 companies over its lifespan, before it finally got acquire by Roche, Amgen is just starting to do that, but historically hasn't. So I think what Steve says make on the provision they really thinking about becoming a much more innovative company, they've been highly, highly successful. But it hasn't generate a lot of spin-off companies and out licensing of technology, which I think they are now under new leadership really beginning to examine pretty carefully.

Okay. Thank you.

Yes. Thank you.

We'll go next to Michael Carroll with RBC Capital Markets.

If you guys give us some color on monthly for 124 Terry Avenue and 9950 Medical Center Drive. It looks like you moved those two projects out of the near-term by accretion pipeline and moved them into the future one. Can you kind of explain what changed there?

Sure. Maryland I think the simple fact is we don't see the demand that would really push us to do development there. We think there is adequate available space there through we have some space obviously and others have a bunch space both local and national folks. So I think that was put down and then although we have been approached a number of times by the NIH, but we'll see where that goes up for some new space. And then 124 Terry, we think that's probably likely to go resi and so that's probably something we wouldn't do ourselves. So stay tuned we might years sell the parcel or joint venture the parcel something like that.

Okay. How is I guess, how long does it take for 50 and 60, 100 Binney Street to do development how improved are those land sites and if you start the construction let’s say beginning of ‘15 were to get done by ‘16?

Yes there is several ready and there is something in the range of about…

30 months construction timeframes.

Yes.

Alright and then do you expect to start 50 and 60 before 100 or 100 just takes longer because it’s a bigger project?

At the moment although we have it in the disclosure but it looks like 100 would be started later it really depends on the demand the demand in Cambridge is as I said is pretty large and so it’s hard to say at the moment.

Okay, great thanks.

Yes.

(Operator Instructions). And we will go back to Emmanuel Korchman with Citi.

Hey it’s Michael Bilerman. Good afternoon. I echo Michael (inaudible) thank you for the target debt disclosure as well as level of the commentary that you had in the release. And if I may I just had just a question sort of surrounding it. When you think about getting to 6.5 by the end of ‘15 from 7.2 today what else is sort of in that forecast in terms of capital spend and any asset sale. So we know what’s sort of happening in the back half of the year which I think you have about $380 million left to spend, you have about $16 million of free cash flow that’s coming in and then you have the asset sales you have targeted, but I am curious I didn’t know what was factored in to 2015 in order to get to that target?

Michael it’s Dean here. I think the best way to think about 2015 is that we have a number of items that bring clarity to what can unfold i.e. the retained cash flows after dividends and EBITDA growth. So we have tremendous capacity to fund growth for ‘15. Hopefully, everybody can appreciate it, it's a little difficult to predict the exact dollar amount of construction spending related to a number of projects that we've identified. And this goes back to page 27 on the pipeline of opportunities in the near term. We have a number of negotiations ongoing, the exact starts will likely depend on the pace of those negotiations and leased executions on many of them. So, I would say give us some time to come back to you, probably closer to Investor Day to give you better clarity on the exact mix of what will unfold for ‘15, because there is a lot of moving pieces at the moment.

Maybe we talk it from a different level, there are some known factors that actually more embedded. One is you talked about that other income being very low, this quarter and you had a lot sales, investment sales, you had a loss. Just moving that back towards the average is about 0.2 times on debt to EBITDA. So, 7.2 goes to 7. You have same store EBITDA growth. I assume next year. And so that's going to add some level, I don't know what are you going to forecast for next year, whether it'd be 3% or 4%, but probably somewhere within that range. That's going to add to it. And then you have this large redevelopment development platform that has delivered some assets that are not yet stabilized and that are going to be delivering over the course of the back half of this year and next year. Do you sort of have the buckets of that EBITDA from those activities. So at least we can get the EBITDA numbers that underly the forecast and then we can figure out what spend will be?

We'll provide that clarity in December Michael, at our Investor Day.

How much of development, re-development pipeline is -- where is that number for what you want to be delivered in 4Q of next year, how of much that's been leased. So you do very highly leased development platform what is that number in terms of the projects that will be earning income 4Q ‘15?

Yes, I think if you look at page 28 of our supplemental which highlights the current development pipeline, it’s probably as simple as just to go top down on page 75/125 Binney Street, which is 99% released to ARIAD, will be delivered contractually here in late March and rent will commence in late March. 499 Illinois will be delivered over multiple quarters but I think we get to stabilization close to year-end, probably in 90% range with a little bit being delivered in the first quarter. And again, that’s 100% leased. 269 East Grand will be probably in October 1 delivery, 100 leased. Science Park, Peter ran through, 60% leased negotiating today; pretty good shape there. We talked about New York being about 60% delivered by the end of this year with upside on delivery through ‘15. On the redevelopment front on page 30, 225 Second Avenue looks like 100% leased with an occupancy in the second quarter of ’15; Barnes Canyon 100% leased, delivery later this year in the third quarter. And then Rozelle, it's mix, 75% leased, 24,000 square feet has been delivered; we have another 17,000 to be delivered probably in second quarter of ‘15 with a little bit to resolve. So big picture of your answer of your question Michael, the pipeline of active projects that will be delivered substantially through the first quarter is driving the tremendous amount of the EBITDA growth that’s been forecasted. And big picture I think same property performance on the cash side I think will be solid, given the occupancy growth in the portfolio over ‘14 which will contribute to ‘15 as well as nice steps on leasing activity and contractual rent steps embedded in the leases. So, core should deliver strength into ‘15 and you’ve got tremendous value-add that’s highly pre-leased but driving a significant EBITDA growth. So, we’ve got a pretty good ability for internal funding which is what we’ve been trying to highlight and again I think we’ll provide more clarity to some of your questions on Investor Day Michael.

And then just going back to Binney 50, 60, and 100, so you have about $300 million in the effective land today on your schedule pace 32, my understanding is that’s going to be where you’re going to raise some capital as part of this joint venture capital forecast you have of $110 million to $210 million, part of that’s going to be putting some of this land into a joint venture. How much of the project are you going to be putting into joint venture?

It will be a minority interest.

So, 25%, to 30%?

Yes. I am not sure I am ready to announce any percentage but it will be a minority percent; it will be less than 50%.

And as you think Joel, as you think about putting in land and obviously getting some mark-to-market on that piece of the value that’s been created in the value in Cambridge, how do you sort of evaluate that versus settling in 25% or 30% interest in a core stabilized asset versus putting a lot of money into Cambridge at arguably a very attractive yield relative to your plan basis. How have you sort of wrestled with being of current cash flow at attractive valuation given how where cap rates are versus developing to a higher yield and earning the NAV spreads on that?

Yes, I mean that's always the historical challenge, but I think that, because Cambridge is so large and may move all together that having a capital makes a lot of sense and we look forward to having a more programmatic sense of other things that we have in more the medium term pipeline that aren’t necessarily reflected here as far as our thoughts and things that we're going to do we'd like to have that source of capital available to us to do things that we might otherwise can’t do. I think if we go down the road of we are looking hard at a variety of assets that we haven't made any decision about, we have recycled assets as you know. But I think in recycling assets, we've got strong cash flows, we've got long-term tenants, we probably would not want to give up what we would consider to be really irreplaceable locations that are already cash flowing at very strong yields out there. But there are a host of assets that we might consider, so I think stay tuned on that score.

Okay. Thanks for the color. Look forward to Investor Day.

Yes. Great questions as usual.

And we'll go to Jim Sullivan with Cowen and Company.

Thank you. I just have one quick question. Digital houses a category has been attracting a lot of start-up funding as you were (inaudible) recent report from mid-year indicator a very, very significant uptick year-over-year in that category and I know that you've mentioned once or twice in connection with some of the land acquisitions and I wonder if you could talk to us a little bit about how you assess the potential for growth in digital health demand number one, number two whether or not there is any regional concentration in demand so far or anticipated? And I guess number three whether there is any specific physical demands in terms of space let’s say need i.e. can they take conventional office space or not and I guess finally is there any need for them to be and what you would think about is innovative cluster markets or approximate or adjacent to the innovative cluster markets?

Yes all good questions, I think it’s really an emerging sector broadly under the IT sector and under the life science sector my sense is over the next five to ten years it will be a very big sector and it will come into maybe some prominence that would be identified as a some category under/either both of those the growth is really pretty staggering, the opportunity is huge. But I think it’s too early to tell I think the main cluster where we are seeing activity is San Francisco at the moment there is some in New York and in the Boston Cambridge area, but I would say primarily in San Francisco and that’s due to the extremely heavy concentration of tech-oriented venture capital on San Hill Road et cetera. Most of those requirements can be accomplished with office kind of a creative tech office some might require some enhanced features, but we view that those people generally will want to be at least the ones that we identify now will want to be in kind of the urban innovation cluster markets primarily for recruitment and retention. So we're tracking that sector, emerging sector very closely. And I'd say we hope to see it growing in pretty substantial fashion over the coming years.

Thank you.

Yes. Thank you.

And this does conclude our question-and-answer session. Mr. Marcus, I will turn the conference back to you for closing remarks.

Okay. Well, everybody thank you very much for busy time on one of the earnings day. Thank you for questions and attention and we look forward to talking to you on the third quarter call. Thanks.

This does conclude today's conference. Thank you for your participation.