Good afternoon, ladies and gentlemen, and welcome to the AvalonBay Communities Second Quarter 2013 Earnings Conference Call. [Operator Instructions] I would now like to introduce your host for today's conference call, Mr. Jason Reilley, Director of Investor Relations. Mr. Reilley, you may begin your conference.

Well, thank you, Alan, and welcome to AvalonBay Communities Second Quarter 2013 Earnings Conference Call. Before we begin, please note that forward-looking statements may be made during this discussion. There are a variety of risks and uncertainties associated with forward-looking statements, and actual results may differ materially. There is a discussion of these risks and uncertainties in yesterday afternoon's press release, as well as in the company's Form 10-K and Form 10-Q filed with the SEC. As usual, this press release does include an attachment with definitions and reconciliations of non-GAAP financial measures and other terms, which may be used in today's discussion. The attachment is available on our website at www.avalonbay.com/earnings, and we encourage you to refer to this information during the review of our operating results and financial performance. And with that, I'll turn the call over to Tim Naughton, Chairman and CEO of AvalonBay Communities for his remarks. Tim?

Thanks, Jason, and welcome to our second quarter call. Joining me today are Sean Breslin, EVP of Investments and Asset Management; and Tom Sargeant, our Chief Financial Officer. Sean, Tom and I each have some prepared remarks, and then the 3 of us will be available for questions. I'll begin by summarizing our results for the quarter, including our updated outlook, and then share some comments on the broader U.S. economy and apartment market fundamentals. Sean will then provide color on our second quarter operating performance, current trends in the portfolio and discuss our disposition activity. Finally, Tom will conclude our prepared remarks with an update on our development activity and capital plan for the balance of the year. Starting with our results for the quarter, last night we reported EPS of $0.28 and FFO per share of $1.55, a 15.7% increase over the prior year. Adjusting for nonroutine items, which primarily include transaction and other costs related to the Archstone acquisition, FFO per share increased nearly 21%. This marked the eighth consecutive quarter of adjusted FFO growth of greater than 15%. Overall, operating performance through the first half of 2013 was ahead of budget, driven by better-than-expected results from our operating and lease-up portfolios. Operating trends remained favorable as year-over-year same-store revenue growth in Q2 was higher than that experienced in Q1 and sequential same-store revenue growth was higher than in the second quarter of last year. The continued strength in portfolio performance supported by apartment fundamentals. Stronger job growth, favorable demographics and reduced housing inventory are all contributing to apartment market performance. We believe that we are still in the early portion of this apartment and housing cycle, and the underlying economy continues to improve in important areas that will support a sustainable expansion. Based on our performance…

Thanks, Tim. As Tim mentioned, I will comment on operating performance during the second quarter, current portfolio trends and our disposition activity. Starting with same-store results, year-over-year total rental revenue increased 5.2% driven by a 4.3% increase in rate and a 90 basis point increase in occupancy. Year-to-date, total rental revenue is up 5%, it reflects a 4.5% increase in rate and a 50 basis point increase in occupancy. Sequentially, total rental revenue increased 1.8%, 30 basis points more than the second quarter last year. Same-store expenses for the second quarter increased 2% and are up 2.7% year-to-date. Expense growth is being driven primarily by property taxes, including significant increases in rate and/or assessments in the New England, Metro New York, New Jersey and Pacific Northwest regions, along with insurance. Collectively, all other operating expenses are down year-to-date. Same-store NOI growth was 6.6% for the second quarter and 6.1% year-to-date. In terms of the Archstone portfolio, overall performance continues to track modestly ahead of our original expectations, as we indicated during the first quarter call. Revenue is slightly ahead of our original underwriting and expenses are generally in line. In terms of regional performance, the Mid-Atlantic continues to underperform the remainder of the same-store portfolio, producing year-over-year rental revenue growth of just under 2% and sequential rental revenue growth of 1.1%. In terms of submarket differences, our suburban Maryland assets are currently underperforming the Northern Virginia portfolio. And in Washington D.C., our same-store portfolio of 2 assets is too small to draw any definitive conclusions about submarket performance, particularly since 1 of the 2 assets is student-oriented. The recently acquired Archstone Communities is in D.C., however, are performing relatively well and producing rent change in the mid-2% range currently. It's no secret that D.C. Metro area is facing challenging headwinds…

Thanks, Sean. As Tim mentioned, I'll share a few comments on our revised outlook, the development pipeline and our capital needs. With regards to the outlook, Tim noted the overall strength of apartment fundamentals and this certainly contributed to our revised higher earnings outlook, particularly related to the NOI growth assumptions. Our overall operating FFO outlook improved by $0.01 from the interim outlook provided in April and improved $0.15 from the initial outlook. As compared to the interim outlook, the table included on our press release notes that $0.06 contributed by higher projected NOI growth was partially offset by higher overhead of $0.02 and then $0.03 related to changes in our financial plan, including reduced acquisitions, interest will increase line use, an adjustments to the mark-to-market on Archstone debt. From our original outlook, the $0.15 increase is primarily due to improved NOI from operating assets of about $0.10, and this was driven by the 60 basis points increase in our same-store NOI growth outlook, as well as the related improvement from our stabilized assets and lease up communities. Lower overhead provide another $0.04. And finally, reduced interest expense from refinancing less assumed debt and changes in acquisition or disposition activity contributed another $0.01. It's important to note that of the NOI improvement, 70% is from higher than expected revenue with the balance coming from expense savings. Just a quick comment on our third quarter outlook. The third quarter now reflects loss settlement cost of $53 million that was previously expected to be expensed in the fourth quarter. This, and other small nonroutine items pertaining to Archstone combined, says that third quarter adjusted FFO is expected within the range of $1.60 to $1.66 per share. Turning to development. It was once again an active quarter. We delivered 3 new communities for…

Well, thanks, Tom. So in summary, our portfolio performance continues to be strong, and based upon occupancies in the 96% plus range and healthy demand expectations, it's well-positioned to absorb new supply at this point in the cycle. Our development pipeline is just beginning to add meaningful FFO and NAV growth, and our balance sheet is well-positioned to fund this external growth over the next few years. As we discussed on Investor Day, we believe that our capital allocation track record and organization capability sets us apart. Our ability to raise, deploy, grow and manage capital in a value-added manner has led to a significant outperformance over the last couple of cycles across every important metric, including total shareholder return, as well as per share FFO, NAV and dividend growth. While all companies have benefited to some extent from improving fundamentals over the last 2 to 3 years, we are now in the stage of a cycle where companies that are able to add value in various ways of their business models will separate themselves from the pack in terms of performance. We are excited about the prospects for the industry over the next few years. But equally as important, we're excited about our competitive position and our ability to leverage key capabilities to continue to deliver long-term outperformance. And with that, operator, Alan, we are ready to open the call for questions.

[Operator Instructions] Your first question in queue comes from the line of Jana Galan.

You had very impressive occupancy gains across all your markets, and I was just curious if this was the result of the stronger job growth and demand? Or is it part of your strategy to keep occupancy high, as we see these first waves of new supply hit the market?

Jana, this is Sean. Really, 2 things. One is we typically run at a higher occupancy platform. Certainly, that is fueled by healthy demand. The job numbers have a been a little bit better than expectation, which has supported that. But also there's a little bit of a seasonal component to it, first off, so that we're typically building occupancy through the first quarter, end of the second quarter, as we start to push rate harder, which is something that you saw on the second quarter. And then as we get into the back half of the year, we will also try to be building a little bit higher occupancy platform as we go into the slower season through the winter. And as you're talking about supply, that is something that we consider more from a tactical point of view within specific submarkets based on anticipated lease up activity and when those deliveries start to occur. It's not necessarily a global strategy if you want to call it that, it's much more tactical in nature based on local conditions.

And then just on the development pipeline and on big focus of the first quarter call with rising construction costs. Just curious in terms of kind of the new rates that you're buying in land parcels, how are you thinking about future construction costs and yields?

Jana, this is Tim. In terms of construction costs, they're basically back to the prior peak. So while they've gone down between 20%, 25%, depending upon the product type, they're basically are back to peak. It depends on whether you're talking about concrete or wood frame construction. They -- it varies a little bit. But in terms of underwriting, we continue to underwrite the way that we always have. It's a little difficult to project construction costs on something that may take 3 or 4 years to get through the entitlement process. And so we do look at it as really on a current yield basis as if we were building it today and delivering it to the market today and leasing it up. And to the extent we have a view about construction costs and the direction of the market, whether it's rents or construction cost. So that impacts, maybe at the margin, the kind of yields we might look for, but it's more at an intuitive level, I would say, than analytical level. It's really -- it probably helped shape more how we think about how aggressive we want to be as opposed to any particular deal.

Your next question in queue comes from the line of David Toti. David Toti - Cantor Fitzgerald & Co., Research Division: I just have a sort of a high-level question, you covered a lot of detail in the call. But when you think about the acceleration in the development pipeline sort of higher volumes, a bigger overall investment, maybe it's not supply or absorption or job creation that causes you to pause, maybe it's the disruption in the capital markets, potentially higher cost of capital down the road. How do you weigh those 2 sort of macro factors relative to deciding to move forward with an even higher volume of product deliveries?

Well, David, maybe I'll start and, Tom, feel free to jump in. I guess where I'd start, higher capital cost could impact not just -- that just doesn't impact development, your development strategy, it impacts your stabilized portfolio, right. And as Tom mentioned in his comments, we're delivering new product for 280-a-door versus -- our 17-year-old stabilized portfolio is worth 330 340 a door. So if can only own one of those portfolios, I think you prefer the one that's $280,000 a door and brand-new. So while it factors in at some level, David. It's I would say probably replacement cost is a bigger driver in terms of how we're thinking relative to current phase, how we think about overall level of development. But certainly, it factors how we finance a development as we're starting. And Tom, maybe just touch on that a little bit in terms of some of the things we're doing from a matching standpoint.

Sure. Well, David, as you probably heard me speak to in the past, we have something that we've dubbed integrated capital management, which generally requires or generally a guideline is that we've matched fund our starts as they happen through either equity and debt or dispositions or some mix of capital. If there were a disruption in the Capital Markets, unless it's a protracted disruption, it would really impact future starts. We think that this risk is substantially mitigated by this integrated capital management program or the concurrent funding of our development activity with new capital. So I guess it is a concern. It's one that we always raise, and I think we presented at our Investor Day, our long-term look at liquidity, as well as our short-term look. But we think the way we run the balance sheet and the way we have this structured program in place really substantially mitigates the risk that could come from a disrupted Capital Market. David Toti - Cantor Fitzgerald & Co., Research Division: Just touching on -- the yield appear to have compressed a bit in the most recent -- in the recent quarter, and I guess, is this or as they say a sort of a spot compression? Is this something we can kind of expect to continue into the end of the year as you sort of push more of this product and more of this development starts through? Or can we start to expect to see that begin to widen out a bit towards year end?

Yes, David, there's interplay of a few things happening there. First of all, I think as Tom mentioned in his remarks, more of the pipeline is West Coast-oriented over the last 2 or 3 years, which generally is lower yielding -- lower cap rate, lower yielding developments. Roughly East Coast deals, you underwrite the current yields of, call it, high 6% or 7%, West Coast closer to 6%. So you're getting a little bit of that waiting, a little bit of a mix issue that's driving the average projected yield. And then, we just don't have that many deals in lease-up right now. I think out of the 27 that are listed on there, there's maybe 7, 8, 10 that are in lease up. And so as deals start to come to market in terms of lease-up, just given the momentum and strength we've seen in the market, we actually would expect to see some of those yields come up. I think we actually have 6 or 7 starting lease-up in the third quarter alone. So the combination of maybe a bit more West Coast coming in that generally have lower yields and in starting to ramp-up the leasing activity in Q3 and Q4, I think you're going to see a little bit of interplay between those 2 factors that are may be working in a little bit opposite direction. David Toti - Cantor Fitzgerald & Co., Research Division: Okay. And then my last question, are you guys seeing any change in the appetite at the municipal level when you go through the zoning, permitting, staging, you're obviously trying to increase density and change some land parcel zones. Are you seeing any resistance at this point at that level to new supply for apartment product given a pretty big jump in construction levels sort of more broadly?

Well, I guess a few comments. A lot of the increase in production has been in urban submarkets. And generally, the installment process is not as intense. You don't have the same kind of level of an NIMBYism in the urban submarkets as you do in the suburban markets. Then the other thing I'd say, a lot of the stuff that's been produced or started to date were deals that were already entitled or had partial entitlements in place before the downturn. So they just weren't as politically charged. Having said that, I mean, there are some -- I think we've mentioned the last couple of quarters, we're kind of refocusing back in the suburbs, in many cases sort of business back to usual, creating value through the entitlement process. And there are some projects that we're involved with as well as I'm sure some of our peers that kind of back -- slugging through the entitlement process and working through that over a 2, 3, 4 year period. So is it more charged than it was at the end of the last cycle? These things tend to be a little cyclical in nature, and there's still a dearth of activity generally as it relates to construction in the Northeast where it tends to be more political, they aren't -- most municipalities aren't search rateable, and so they've been a little bit more accommodating, I would say, generally, in terms to a multifamily proposal.

Our next question comes from the line of Rich Anderson.

Many comments on the call today about how you're doing better versus last year's pace, whether it's renewals or lease-up pace or development yields. And I'm curious, what do you think, are there macro events driving that? Are you as a company more confident to push rents more significantly? What should we read into an improvement versus what were very good conditions last year to this current year?

Rich, there's a lot of things. I mentioned in my remarks about sort of a growing housing shortage. I think we continue to see that sort of that excess inventory burn off over last year. Obviously, there's more new rental supply coming into the market this year than there was last year, but on the other hand, there's just less overall housing start demand. I think household formation is estimated to be about 1.4 million this year versus total delivery, total housing delivery, single-family and multifamily, less than a million. And so I think you're seeing a little of supply demand dynamic play out a little bit and benefit the rental sector. But importantly, one of the things we try to really press upon analysts and investors is we don't really see this cycle looking like the 2000 cycle, where it was just -- it went up and then it went down. And as we've talked about, we think this is more similar to the '90s where you had a -- what we think is a likelihood of a more sustainable economic expansion mixed by more stable supply growth. And as a result, we would expect sort of rental rate dynamics to sort of move up and down through the course of the cycle as opposed to one direction up and one direction down, which we experienced in the 2000. So I think what we're seeing is just a little bit more of the -- similar to how the '90s played out, frankly.

So if you were, to say, what inning you would have thought you were in this time last year, let's just say fourth inning of this cycle, is that -- are you saying you can actually have reversed an inning this time around and gone to the third inning? I mean, maybe a funny way of thinking about it, but is that kind of what you're saying, it kind of goes up and down that way?

Yes. I mean some folks might feel that way, I don't think that's how we felt. I think we just view that the expansion is likely to be a longer expansion just given frankly the depth of the correction. And there are quite a few similarities with coming out of the late '80s or early '90s in terms of the depth of what we've gone through. And just given the condition of corporate and consumer balance sheets and the deleveraging that we've seen. In many ways I think we felt, we sort of view this as being more lock and loaded for our longer expansion than frankly the 2000s, which was driven as much, I think, by a fairly accommodative monetary policy as true underlying fundamentals.

Okay. One of your comments was made about supply, and you said that you're not worried about it because there's a lack of condo component to those supply numbers. I'm wondering why that's a good thing, assuming that condo development will start to happen, why would we be happy to hear that 250,000 units is all multifamily. Wouldn't it be worse if -- wouldn't it be better if some of that was condo right now?

I guess the point I was trying to make, if you look over the 2000 cycle, I was comparing apartment starts with prior apartment starts, okay. So they both are on 2 50 -- 2 25, 2 50 range. But we have -- what we have last cycle is we have 75 to 100,000 condos. It's about 75,000 condos a year. I think we're under 10,000 right now as a start rate on new condos. And so, total multifamily supply is actually less than what we've seen -- we saw last cycle, that was the point I was trying to make, Rich.

Okay, got it. Last question is, if you can have a broad comment on the fledgling business of single-family rentals. We have some companies now out there. To what degree do you find yourself concerned about that business as a competitive pressure for AvalonBay in the industry?

Rich, this is Sean. Just based on the data that we track, we don't see many of our residents moving out to buy -- to rent single-family homes. Typically, it's just a different household type. And I think a lot of studies have concluded that a lot of the people that were homeowners, that were foreclosed out, et cetera, they became single-family renter or occupants as opposed to people in multifamily moving to single-family for rental purposes. There's certainly some percentage of that, but it's pretty negligible in terms of the data that we track, so we're not overly concerned about it right at this moment.

Do you think it's a good business?

Hard to opine on that, we don't have any experience with it. So probably it wouldn't be wise to share an opinion.

Rich, it's Tim. I think it's good for the consumer. I think what Sean is alluding to, it's not -- it's unproven, I guess, from an operator standpoint. I guess it's kind of in the question out there as to whether somebody can really scale this thing and be able to operate in a really profitable and efficient manner. But I think it's a good thing from a consumer standpoint, right, in terms of having a more professional operator than your uncle who may be their landlord. So my guess is, a couple will figure it out and be able to make a business out of it.

And your next question in queue comes from the line of Karin Ford.

Just following up on that condo question. I think, Sean, we had talked a little bit at NAREIT about potentially seeing some -- the beginnings of some condo conversion activity of rentals. Are you still seeing that and do you think that will be a growing trend here as the housing market continues to recover?

Yes, Karin, this is Sean. What I think I indicated at NAREIT is there was some chatter about that and there had been 1 project that we were aware of in the mid-Atlantic where that had occurred, a small project. There continues to be a chatter about the potential conversion of multifamily, particularly communities that are under construction where a condo developer doesn't have to design something and then go through the process to construct it over 2 years and sort of have readily available inventory. So the major urban centers is likely where you're going to see that happen first. That has not happened yet to our knowledge, other than the 1 community I mentioned, but there continues to be increasing chatter about that. So I wouldn't be surprised to start to see some of that activity occur over the next 12 months. We just don't have actual transactions occurring just yet.

And Karin just to add, I mean, the one area -- the couple of markets we're seeing a little -- some purpose built condos are starting to see a little bit in San Francisco and New York, and that may be an indication of where -- intuitively, it matches kind of what we're seeing just in terms of home prices versus rents where condo conversions might make sense sooner rather than later.

And Tim, I think you had talked in your -- in beginning of the year about considering a possible reacceleration of growth in 2014 as you said as new supply sort of reaches its peak and, hopefully, job growth is getting better. As the economy gets better and, as you said, as the second quarter revenue growth was higher than the first quarter already, this quarter, are you still thinking about that? Do you think it could happen potentially sooner than you had previously thought?

Perhaps. I guess it was really a broader comment, again, kind of going back to my response to Rich's question. You going to go back to the 1990s, you had years there, growth rates moved up 100 or 200 basis points and then moved down 100 or 200 basis points the following year. My comments the beginning of the year were really geared towards, we saw supply starting to level off. We think that the peak is likely to be in '14 rather than '13, which I think I said in our market, 2013, we have seen some supply get delayed and get deferred into 2014. So we actually think the peak is going to be in the first half of 2014, at least in our markets, and a little bit later than that nationally. But at a time when we had expected, as the private sector started to get on a more sustainable expansion path, that we expect the job growth to pick up, and that actually has happened sooner than we'd anticipated, 200,000 jobs per month versus, I think, the consensus was 135,000 to maybe 150,000 for the first half year. So in that respect, I guess it could happen a bit sooner, but again, it was really as much about we see this thing as being a more sustained level of performance than sort of a prototypical, cyclical up and then down.

Got it. My last question is just on the Archstone portfolio. I heard you say that it's still doing better than you had expected on the top line. Can you just give us some statistics on where occupancy stands and where renewal and new lease increases have been in that portfolio?

Sure, Karin. This is Sean. In terms of occupancy, as you may know, Archstone's rental community is a little bit lower occupancy platform than what we typically run. So they've been running in the low 95s, which is consistent with the way Archstone has been running at. As I think I may have mentioned in the first quarter call, their revenue management strategy was a little bit different, and we are looking at what they've been doing in 2 particular markets just to get a sense of their strategy in those markets relative to ours and some comparisons in terms of how we manage the revenue management system. So those communities continue to run in the low 95s consistent with that experience as compared to ours in the 96 range. In terms of rent change, what I can tell you right now is that out of the 6 major regions that we operate in, as we have started to track rent change, and keep in mind, this is 1 quarter of data at this point, about half the regions, the Archstone communities are outperforming, including the Mid-Atlantic by the way, and the other half, the AvalonBay Communities, are outperforming. That's just 1 quarter of data in terms of what's happened. What we're going to be trying to look for over the next 3 or 4 quarters is sort of what's behind that and is it mainly submarket differences or is it really a difference in strategy that's driving that. So the rent change differences aren't material in most cases, but that gives you some perspective for sort of the half and half at this point. But we probably need 3 or 4 more quarters of trend to be able to give you more precise information.

Next in queue we have the line of Nick Joseph.

Did you see any differences in terms of same-store growth in the second quarter between your different brands?

Nick, this is Sean. At this point, we're not providing a lot of information on the performance of the specific brands. It's a little too early given that some of the communities have just now been rebranded over the last 6 months or so to be able to provide information in that regard. So our anticipation is that at some point, further down the road, we'll be able to provide that. What we can say right now is based on the communities that have been rebranded, for example the AVA communities, we are seeing more of the target audience at those communities. For example, like renovation communities, where we rebranded from Avalon to AVA, there typically has been a shift in the profile to be more AVA customers, which is something that is a good outcome. And our expectation is that if we're delivering the product and services that, that particular customer would desire, then there would be financial benefits associated with that over time and lead to outperformance. But the sample size is a little too small at this point and it's probably a little too early for the communities that had been rebranded to give you any conclusive data.

Tim, it's Michael Bilerman speaking, I'm not sure who would take this, but just thinking about development for a second and the significant ramp and growth in your own pipeline, but also your commentary about you're sort of seeing it peaking out by mid next year, I'm just curious, who you see is as others that have also been ramping their pipelines and sort of why you think they may also slow down or not start as much, why you sort of don't see if improving capital markets and the demand is there, why you don't see that others with access to be able to develop won't continue it even if you're being more disciplined?

Yes, Mike, I think it's a good question and maybe it's important to differentiate here between our markets in more national and some of the more less supply-constrained markets. I think there are a few things that work. One, we talked about rising construction cost. And so I do think, particularly, somebody does have kind of platform that we've got just from terms of managing costs, I think the economic's going to probably look a little bit more strained. But I think importantly, in our markets, as I mentioned earlier, a lot of the deals that were gotten done were deals that were either entitled or partially entitled or had infrastructure in place. And it's between 2 million and 4 million of pursuit cost just to get it in ground and to an average deal in our markets, and that's back to the kind of deals that we're looking at today and putting into the pipeline as opposed to something that's relatively close to being already to go. So I think that is still keeping some folks away from some of our markets, or at least they're taking a more balanced view in terms of their own footprint, where capital, their capital sources, if they're private guy, maybe pushing them more towards the Coast, with the resurgence of some of the Southeast and South Western markets and ability to leverage that, their own capital, that sponsor capital, across a bigger development pipeline in some of those markets. I think to the extent that you get more supply, it's likely to be in those markets for those reasons. But in terms of others that are ramping up, I mean, we have seen it probably more among the -- either the publics or those private guys that had really well-established platforms, before had good track records and been able to get the capital come along side them. I think those are the guys that hopefully or maybe paying a little bit closer attention to the transparency and the metrics that are out there in the public arena that are being provided by guys like you in terms of informing some of their business decisions at the margin.

That's helpful color. Just one lastly, on Lehman, so they're open to sell again, it's 60 days past the last offering, is that correct?

Yes, Michael, this is Tom. That's correct.

And would you ever use, I guess now that the stake's has been cut down to just over 5%, would you ever -- would be selling more assets and recognizing that you have significant development on the com [ph] , would you ever use liquidity to maybe take out the rest of that stake on a buyback perspective? Is that something that you would entertain at this point, now that the first slug is done?

It really is a capital allocation question, and as we sit here today, we think our development pipeline is the most attractive asset class to allocate capital to. We think our stock -- we think there's obviously opportunity in the stock today, but there's probably more return to be had from allocating that capital to development. So as we sit here today, we would not be interested in buying back those shares only because we like the opportunities from development that are in front of us.

Your next question in queue comes from the line of Rob Stevenson.

Can you talk about what you were seeing in terms of the spread between where you send out renewals and what you wind up netting and how that sort of trended over the last year?

Rob, this is Sean. It does trend throughout the year a little bit differently, but right now, what we're seeing is somewhere in the neighborhood of 80 to 100 basis points in terms of the initial offers relative to what's actually signed, and that's been pretty consistent the last couple of months. And so I mentioned, for example, in July that renewals are actually trending to about 6%. They went out right around 7% and then August and September are going out in the low 7s. Typically, when we're in late in the second quarter and third quarter, when we're pushing pretty hard, those trends tend to widen a little bit and then narrow as we go through the winter and we're slightly more conservative. So on average it's usually somewhere in the 60, 65 basis point range, but it does move around given the season.

Okay. And then I guess, Tom, how many of the Fund I assets are left when you get fund selling the 26 million that you have under contract and the 150 that you guys expect the market?

Yes, this is Sean again. That is about $350 million in total volume that needs to go out represented by about 11 assets that are left, and our expectation is that we'd be selling somewhere in the neighborhood of 40% to 50% of that, the remainder of this year, and then the balance in 2014, Rob.

Okay. And then how much of the Fund II assets are still left?

Pretty much the whole portfolio. We only sold 1 asset out of that particular fund. So originally, we had a total of 13 assets, and we have 12 now. It's about $800 million or so cost basis.

Next in queue we have the line of Alexander Goldfarb. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Just 2 quick questions. Just in thinking about you guys as you ramp up the dispositions. If we look back over the past sort of 8 years or so, Fairfield County, New Haven has never really been a leader revenue. In fact, it's lagged towards the back. So apart from sort of providing divorcee housing or home remodeling housing, just sort of curious why that market should continue to be in the portfolio or receive further capital investment given that you guys get better growth in other parts of the portfolio?

Alex, this is Sean. Probably a couple of things to keep in mind. One is if you look back over the long period of time, we have still some assets in that market in Stamford, in particular, I know of 2 or 3 assets we sold, going back 6, 7 years ago. So we've sold down some. But the other thing to keep in mind in terms of just Fairfield overall is the development has been highly accretive. So it's not just the growth rate that we're looking at, but we're looking at the total returns. As we talked about in Investor Day in terms of how we're allocating capital, so if we can continue to put yields on the book that are 6.5%, 7.5% range in that market, even if the growth is not quite the same as San Jose, as an example, total return still makes sense, particularly when trading cap rates in that region are probably in the low 5s. So you got to still look at both sides of it in terms of that initial investment and growth rate in terms of what the return looks like. But to the extent that we see opportunistic dispositions in the Fairfield County, we definitely would be executing. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Okay. And then second question is for Tom. You guys have about $44 million of year-to-date Archstone expenses in your guidance, it's $0.75 for the full year or roughly, what, about $95 million. So what's the split for the third and fourth quarter or some of these expenses been housed elsewhere other than that Archstone expense line?

Yes. Alex, we didn't parse out -- we've given you guidance for the entire amount of the acquisition cost of capitalized and expensed. It really hasn't changed that much since our original outlook or, I'm sorry, since the first quarter update and we didn't parse that out between the third and fourth quarter other than what I mentioned on the call today in terms of the swap online and some other minor acquisition-related costs. So we did give the full year outlook at 6 30 and we've provided reconciling information so that you can understand the difference between FFO and AFFO and substantially, all of that difference is the Archstone transaction and relating cost.

[Operator Instructions] Next in queue we have the line of Nicholas Yulico.

Sort of bigger picture question, I mean, I'm wondering how you guys are thinking about the size of your development pipeline, how it might change in the face of what we're now seeing to be a more likely shifting interest rate environment, especially since it's taking at least, say, 2 years to build stabilized assets?

Nick, this is Tim. I think we talked about that at Investor Day. And I think there's plenty of time we've gotten together with analysts and investors, we kind of think of the development pipeline at least from a guardrail standpoint, kind of being in that 10% to 15% of total enterprise value range. We're trending towards the top end of the range, but as we said, we think we see that flattening out over the next year. But maybe more directly, to your question, I think it impacts how you think about optioning land versus buying land. And the more that you can -- I think it puts more pressure to think about optioning versus being willing to take land on your balance sheet. If rates continue to move up, you do have the opportunity some times to renegotiate land if it's optioned as opposed to it's being owned, so the economics makes sense. Having said all that, our total land inventory today is, if you look at land owned and land optioned, it only represents about 19% of total projected capital investment for the development right portfolio. So it really -- I think it really comes down to more kind of how you manage risk in terms of that land inventory, make sure you're not buying it at hopefully peak values if you're taking it on your balance sheet and make sure you're being smart about how you option as you go through the entitlement process as well.

Okay. And then just one other question on Brooklyn, I was wondering how much of the kind of accelerating rent growth you're seeing in New York City is being driven by the Brooklyn asset and what's the latest on when you might be able to start Willoughby Square?

Nick, this is Sean. I can talk a little bit about, Fort Greene, I think you're referring to, and then Tim could comment on Willoughby. But Fort Greene is one of our assets in the city, and it has been -- my recollection is the average rent growth there on a year-over-year basis is in the 6% range, I can double check that and get back to you, but that's my recollection, sort of slightly above the market average, and the property that's been outperforming the most is Morningside Park, which is up near Columbia. That property has done exceptionally well in the first 2 quarters, is leading the New York City portfolio overall.

Nick, this is Tim. In terms of the start of Willoughby, we actually do anticipate starting it this quarter and we've actually finalized our budgets and actually anticipate mobilizing fairly quickly on that deal.

Is there anything you could say about -- kind of think about the cost of that project at this point?

No. We'll be disclosing it on the -- when it starts, we'll be disclosing the economics of -- in terms of cost and projected rents at that time. I just don't have it in front of me.

Next in queue, we have a question from the line of Jeremy Mith [ph].

Earlier you guys talked about buyers using different debt structures given the move in the 10 year. Anecdotally, we've heard that well cap rates haven't moved yet, necessarily, the pool of potential buyers. Your core product has started to shrink a bit, which theoretically could create more opportunities given your capital advantages. Just wonder if you've seen this as well. And secondly, has the treasury move caused any increase in product come into markets as buyers come off to sideline ahead of potential further rate increases?

Jeremy, this is Sean. As it relates to your first question about core buyers, we've sold core assets this year both of those were executed prior to the recent rise in the treasury. But we also have assets that are on contract right now. And based on what we've seen, the pool of core buyers hasn't changed dramatically. It's come down maybe a little bit off of last year, but we're talking nominal percentages, not material. And when you're selling a core asset and a lot of these are bigger assets for us, everything we've sold that's core is $100 million plus. And typically the pool of buyers is 5 to 8 players. That hasn't changed dramatically, maybe it was 10 last year as an example. When it comes down to a typical, there's a top 5 or so that are really competing for deals of that size. And then as it relates to your second question about product, yes, over the last month, as I mentioned in my prepared remarks, we have seen listing volume increase. Can you put your finger on it to say it's as a result of the movement in the treasury? It's possible. But it's hard to explain every individual seller's motivation, but the trend is that there has been a recent spike in activity, yes.

Okay. Appreciate the color. And then just one final one. You talked about adding development rights and construction cost back to peak, can you just give a little bit of color on land pricing trends and whether yourself or developers, more generally, are taking on entitlement in zoning risk?

Jeremy, Tim. You're not seeing land, for the most part, trade before it's entitled, unless it's rates at a steep discount that's usual because there's some level of distress or somebody had a liquidity need. So for the most part, people are, including us, are able to option land still and get some time, whether it's 18, 24 months, sometimes longer, to get the major entitlement, so that the larger entitlement risk is behind. You may have to take down a property 6 months, 9 months before you're ready to pull a building permit, but it's not -- you don't have any entitlement risk in front of you at that point. So I'm not seeing any huge appetite and most of our markets is to just buy land and put on the balance sheet and then pursue entitlements or need to do that.

Next in queue, we have the line of Paula Poskon. Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division: Just a quick question about what you're seeing in the field. Just given all of the new supply that is coming, are you seeing any pressure on wages or challenges in terms of retention and recruiting at the property level?

Paula, this is Sean. To answer your question, there are specific submarkets where if there is concentrated amounts of supply, there can be pressured particularly on the community consultants, the leasing consultants, that would put pressure on that in terms of, particularly, from the private operators more of the merchant builders where their model is really to get it least-up, highest rents and get it sold. It's more of a -- you think of it almost as just a capital cost or transaction cost as opposed to a steady-state operators. Most of the steady-state operators don't feed into that, they get a permit, business model, organization. They look at their compensation philosophies and stay pretty constant. So you see slight uptick and turnover at the community consultant level, that's typically where that would show up, but it's not material by any sense. It would be very submarket-driven and I could think of it in 2 submarkets for us right at the moment, but it's not material in any way.

And there are no further questions in queue at this time. I will turn the call back over to Mr. Tim Naughton for closing remarks.

Well, thanks, Alan, and I thank all of you for being on the call today. We hope you enjoy the rest of your summer, and we look forward to seeing many of you in the fall at various investor events and conferences. Thanks again.

And this concludes today's conference call. You may now disconnect.