Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmett's Fourth Quarter 2012 Earnings Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. After management’s prepared remarks, you will receive instructions for participating in the question-and-answer session. I would now like to turn the call over to Stuart McElhinney, Vice President of Investor Relations for Douglas Emmett.

Thank you. Joining us today on the call are Jordan Kaplan, our President and CEO and Ted Guth, our CFO. This call is being webcast live from our website and will be available for replay during the next 90 days. You can also find our Earnings Package at the Investor Relations section of our website. During the course of this call, we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although, we believe that our assumptions are reasonable, they are not guarantees of future performance and some will prove to be incorrect. Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material. For a more detailed description of some potential risks, please refer to our SEC filings which can be found in the Investor Relations section of our website. When we reach the question-and-answer portion in consideration of others please limit yourself to one question and one follow-up. I will now turn the call over to Jordan Kaplan, President and CEO of Douglas Emmett. Jordan?

Thanks Stuart. Good morning everyone and thank you for joining us. We are very pleased with our strong fourth quarter gains in both occupancy and leasing. We got our best quarterly occupancy gains ever and we exceeded our annual guidance of 150 basis points of positive absorption pushing our fall 2012 increase to 210 basis points. We also grew the lease percentage of our total office portfolio by 70 basis points. The 102,000 square feet of net absorption was our second best quarter ever. We are particularly pleased with the robust leasing activity in Warner Center where we increased our lease percentage by over 200 basis points during the quarter. In addition, after the end of the fourth quarter, we entered into a new 10-year lease with AIG, our largest tenant in Warner Center which will commence when its current lease expires in August. As we expected, their new lease covers approximately 138,000 square feet down from their current 182,000 square feet. This renewal removes a potential impediment to the ongoing recovery in our Warner Center portfolio. Our multifamily portfolio continues to perform exceptionally well with our average asking rent 5.7% higher than in the fourth quarter of 2011. Our performance benefited from both our integrated operating platform and improving fundamentals in our portfolio and in the Los Angeles economy. Los Angeles County added an estimated 74,000 private sector jobs in 2012. Entertainment, tourism and foreign trade all set records during 2012, while healthcare and technology continue to drive strong demand drivers. These industries not only directly benefit us, but they also support the success of our legal, accounting and financial service tenants. Honolulu had a record year for tourism and we are seeing significant growth in military and construction sectors. Unemployment is now approaching 4% and the workforce size is already at pre-recession levels. Our same property cash NOI grew by 1.9% in the fourth quarter and almost 2.5% for the full-year, fueled by higher revenue from our office and multifamily portfolios as well as good expense control. Acquisitions have remained slow in our markets as Ted will describe later. Earlier this week, we used approximately $8 million of our cash on hand to purchase additional interest in our funds. I will now turn the call over to Ted.

Thanks, Jordan. Good morning everybody. I would like to begin our results after which I will address our office and multifamily fundamentals and then finish with some color on 2013 guidance. Compared to 2011, our 2012 FFO increased 6.4% to $235.4 million or $1.36 per diluted share treating debt interest rate swaps as fully terminated in the quarter of termination. Our AFFO increased 13.5% to $181.8 million or $1.05 per diluted share. Our fourth quarter 2012 office rental revenues decreased 2% compared to the same period in 2011 because of lower straight-line rent. This primarily reflects a single tenant with a large straight-line balance that went bankrupt in the face of regulatory investigations and other legal challenges. Our 2012 G&A totaled approximately $27.9 million or 4.8% of total revenues. For the fourth quarter of 2012, our G&A totaled $7.9 million or 5.5% of total revenues reflecting our typical seasonality. We continue to run one of our efficient operating platforms in our peer group with our G&A and CapEx among the lowest as a percentage of revenue. Comparing the results of our combined office and multifamily same properties in the fourth quarter of 2012 to the fourth quarter of 2011, revenues decreased 0.1% on a GAAP basis, but increased 2.2% on a cash basis. Expenses increased by 2.9% both on a GAAP basis and on a cash basis and net operating income decreased 1.5% on a GAAP basis and increased 1.9% on a cash basis against the tough 2011 comparison. Now turning to office fundamentals. As Jordan mentioned, during the fourth quarter we increased the lease percentage for our total office portfolio by 70 basis points to 91.1%. Our occupancy rate increased to 89.6%. While we told you last quarter that we expected to increase occupancy in the fourth quarter alone…

(Operator Instructions) And your first question comes from the line of Brendan Maiorana [Wells Fargo].

So, Ted, I wanted to follow-up on the same-store guidance. I think you said plus 0.5 cash for the year and I think we had talked earlier last year that as you guys sort of looked at rent spreads, they would be offset by in place bumps and then you get occupancy gains which would sort of drive the remainder or drive the increase overall and if I look at, I guess, where your average occupancy was in 2012, I think it was around 88.3% or 88.4% even if you back off 60 basis points of tenants moving out, beginning of the year, sort of puts you at 89 and then it looks like you are going to move up 100 basis points from there, I think that same-store would be a little higher or is there something else going on?

Well, we did have an awful lot of move-ins in the fourth quarter and so we got some concessions that kick in during 2013. So we don’t get the full impact of those, of that rental growth until towards the end of the year.

Brendan, I got to tell you, we looked at the number ourselves and said, we're not in love with that number. Let me just say. I don’t know if you remember from last year we started out saying our same-store NOI was 1% and end up being 2.5%. I am not giving any comment on the batches on us for predicting our same-store NOI and I am kind of waiting to just watch that number play out a little more. I hope that it's an extremely conservative number.

Yeah, I mean, did you sort of arrive at that same guidance level, the same way you arrived at the plus one initially for ‘12?

Yeah, it's kind of ground up modeling and I guess when you started to ground yourself tired by the time you get to the top you don’t exactly hit it perfectly. So we need to play through a little bit and watch the numbers roll out and I think we will have a better directional feel on that.

Okay thanks and then just the follow-up for Ted on the interest expense; is it fair to assume that you are going to swaps burn off you are going to let that float and there is no pay down of the debt with the cash that sits on your balance sheet today?

I think that it’s fair to say that we will let the swap stay off as we typically do while we think about when and how to refinance it. I think that we are looking at, I think that our modeling assumes that we use a $100 million of our cash for something whether its debt pay down or acquisitions and so I think that there is some change there.

And your next question comes from the line of Alex Goldfarb [Sandler O’Neill]. Alex Goldfarb - Sandler O’Neill: I will ask my follow-up question first and then I will ask my first question. Just following up on….

Okay I am going to consider your follow-up question to be your first question, go ahead. Alex Goldfarb - Sandler O’Neill: Okay while I am just following up on Brendan’s question. So I will tag on to that, as far as modeling goes what should we be expecting for the down time of you guys having the swaps out there is that like a first quarter, second quarter that we should have expect lower interest expense and then have it go higher to back half of the year? How should we be thinking about that?

I don’t think that we have made final, they will float until we decide to refinance that debt. I think it will be, at the earliest it will be much later in the year.

The only flexible debt we have left is that debt, so we are not anxious to lock it up because it gives us the place to do pay downs if we want to do that because we are seeing a lot of cash, it gives the place to be flexible for cash out. I mean, if we start executing swaps than that makes that debt a lot more rigid and we want to have some plan in the system, we don't want to have three point whatever $3 billion of totally rigid debt, so that's why we were letting that portion flow. Alex Goldfarb - Sandler O’Neill: Okay, and then as my follow-up question to the first follow-up. You guys are obviously, news article and on the building out there. If you guys given that there is doesn't seem to be that many deals out there at least once that we read about. What are your thoughts on taking the mass approach like [Slug] does here in New York where you get involved in doing financing on buildings that love to own but you are not necessarily to winning bidder?

I have never been a big fan of that, I’ve always felt like mez lenders had the worst of both where they don't really control the building and they are upside of cap, you know with that said, I don't know if there is turn on opportunity out there to put mez loans on the buildings that we want to own, I mean I don't think they are out looking necessarily for that kind of debt. More common lenders of debt structure that can be used some times in order to get through to get control of the building because they guy had some loan or taxes or who know what are the timing issues and we do that.

Yeah, I think you can think with Jordan’s anxiety over the last few years are trying up the number of acquisitions, we considered most everything that we can do but I go but I agree with Jordan that unfortunately the mez thing is not likely to be one that's going to work on our markets very much.

And your next question comes from the line of Michael Knott [Green Street Advisors].

Can you just maybe talk about the Brentwood sub market, it looked like that was one area of a little bit of weakness and I know there's the construction going on there, can you just talk about that sub market in particular.

Yeah, I mean Brentwood has traditionally and we think will be again a really great sub market, it’s actually one of the best of the sub markets. Right now there's something below a sub market, or sub sub-market. The San [Vicente] properties are actually doing as well or better than the average properties on the west side, and as you said with the 405 widening project there's been a lot of traffic problems down on Wilshire and that's compared with probably just quarterly fluctuations has made that markets fall off a little bit, hopefully they will finally finish that this year and we believe that long term it remains one of the better markets.

Yeah, its kind of packed in as you know in those areas its packed in between a bunch of good markets, there's no reason why it shouldn't be performing as well as it has historically. There's nothing special going on other than that traffic issue with the 405.

And Westwood also was down a little, again that could just be quarterly fluctuations as it happens but that's also, that's the market right on the other side of 405 from Brentwood. So you've got a little bit of weakness in there.

And then my follow-up would be on Warner Center, the market seems to have sold off a little bit since the call started, but the Warner Center news seemed like a positive both with respect to AIG and sequential leasing gains. Can you just talk about whether some of those gains were expected and maybe how AIG played out relative to what you feared might have happened.

Well, I mean it kind of played out how we thought it would. I mean from the beginning they didn't need all the space and from the beginning we had the idea that they wanted to renew and it was tough, you know its awfully tough negotiated deal but that's the way it was just with the large tenant never super fund to negotiate those deals but we are glad we got it done and move on to the next thing.

Has Warner Center bottomed now with that 200 basis points leasing gain sequentially.

I hope so, I mean we feel and we've been saying this on the last few calls we feel like there's some good, we are going to get absorption out there, we are getting good activity out there but for things to really feel good we just need to get the absorption all the way up to 90%. Then we will start having positive feelings that we've been having about the west side and these other markets that we've been telling you guys.

As we said along we really still like all of the long term demographics trends that Warner Center you know the investment in new housing out there, the investment by Westfield in the sort of expanding and integrating that large mall out there. We think all of those trends are really good. We certainly hope that we are now moving into the phase where we are going to be adding occupancy, but this is the first quarter where we've seen a pick up off of that and we are hoping that continues.

And your next question comes from the line of Rob Stevenson [Macquarie].

When you take a look at where your escalated rents are for the ‘13 and ‘14 lease explorations versus market rent, what does it start looking on a cash rent spread to get back closer to positive versus down 10% to 15% that you’ve been running over the last few quarters?

Well, it's just, it's a real hard thing to do that because the 10% or 15% only marginally relates to the leases that expired in that quarter, say of leases. If it's measured on a different statistic, which is part of what makes it very difficult that these people renewed later and then space that goes vacant actually relates to a lease that expired before hand. So if you just look at the exploration which I think we give you looking out towards the number, those numbers go down in better half of 2014 and 2015, but they don’t relate all that well to the numbers that we report in terms of roll out.

Okay, and then where was the renewal of the AIG lease versus expiring?

It was off. The new lease on a net effective basis was off like in the high 13% from the first lease.

Okay, and what's the term on that?

10 years.

And your next question comes from the line of Jamie Feldman [Bank of America/Merrill Lynch] Jamie Feldman - Bank of America/Merrill Lynch: Sticking with AIG, what about the TI package or concession?

Well, overall, the whole net effect is off about 13%, including TIs. Jamie Feldman - Bank of America/Merrill Lynch: Okay, and then back to the same store question, can you break out for next year in your guidance, your office versus multi-family and then if you were to back out of AIG what would your growth rate look like?

Okay its two questions; number one I think we can look at doing that, so we will talk about that, and then number two what would our growth rate and what look like without AIG. Jamie Feldman - Bank of America/Merrill Lynch: Well I guess I am just trying to figure out, I think if you look at how the stocks acted since the call started I think since your same store outlook for 0.45%. Is the biggest drag the leasing spread or is it big AIG lease renewal and so if we….

I got to tell you and I am going to say again, I don’t have a lot of confidence in the 0.45% that’s the reality but that’s what the model gave and so that’s what we are giving. As it tightens up we will try and get better about predicting it. I don’t think AIG is playing much of a role in that.

Remember it will only impact the back half of the year after.

Last four months or something. Jamie Feldman - Bank of America/Merrill Lynch: Okay so then I will ask another question which is what’s your leasing spread assumption for 2013 any guidance?

I don’t think we have a leasing spread.

Again a part of the problem with that question, I don’t know what the average is. It’s literally done on every space in the portfolio, and there is an assumption made on each one based on where we are in the process of negotiation or where we are in that building. So I don’t know what the average is because we don’t think of it that way, which is part of the problem why when the model spits out it’s number, we all looked at it and it doesn’t feel right to us. But it’s what the model says.

And your next question comes from the line of Joshua Attie [Citigroup].

Michael Bilerman for Josh. I had one question. I mean, as you think about what you put in the model versus where you took out, you went lease by lease. Do you put in different assumptions than you have done in the past, maybe more downtime, maybe more TIs. The inputs in developing them space by space basis, were you more conservative in that and hence when you roll it all up, you got a conservative number?

Yeah, I mean, obviously there is some conservatism in doing the model. I got to say, I know now everyone is focused on the same store NOI because they think that someone selling because they didn’t like the 50 basis points. I mean that is, as I said, we publish and even reported the number and we have been ask to report it, so we’ve been reporting it, we are not in love with that number. As you remember last year, we said 1% we ended up at 2.5% right. When we saw this numbers, I was like I don't like that number and it doesn't feel at all right compared to what we see going on in leasing, but it takes a while from when they build up all these leases for us to kind of start fixing that whole ground up thing, giving it a proper direction and making adjustments so our predictions are better. I don't have enough information now other than gut instinct to tinker with then I wasn’t comfortable coming up with a number that I was more comfortable – coming up with a more comfortable number without a basis that I can like see what my adjusts in the model were. So we decided to go with that.

Hey, this is Joshua. Can you talk about little bit more about Warner Center, embedded in your occupancy growth assumption, is there a significant lease up in that market and do you think the occupancy gains you saw in the fourth quarter are sustainable?

I don't, I mean I kind of see say in the fourth quarter for quarterly gain is it was pretty stunning, so I think that it would be very hard to sustain that over on a quarterly basis. I think we think that Warner Center will continue to do well, but I think as we said in the past its going to take Warner Center a few years probably to get to a point where its really in the raising rent category like the other markets are.

In the 100 basis points of occupancy guidance you have is there discontinued lease up for that market incorporated?

Yes, I believe its right.

And your next question comes from the line of David Harris [Imperial Capital].

Yes, the taxes weighed on anybody’s decision on space, should we call it the Michelson effect, did it suppress any tenant demand do you think?

What was it….?

Did you tax the taxes way on space demand at all or are you experiencing reservation on behalf of any tenants?

I don't think so.

I haven't heard that.

Right, I don't think that I have, first of all it would be early for that to be happening but I don't think even anecdotally that we are hearing a lot of things that people moving out.

Okay. Related to the tax question, a lot of other companies that have cover for no exposure have expressed a view around Prop 13; have you got any additional thoughts on that and I know that the subject was discussed frequently in the past?

I think that our expectations, the Prop 13, the split role which would be to take commercial move off there has not really gotten a lot of political traction in prior years. I think that we actually think that Prop 13 by effectively at least according to the politicians fixing all of the issues with the economics will take the pressure off of that.

Okay. And then a question on the acquisition of the interest in the funds, I don't know if you are willing to discuss this, but could you discuss the pricing, is it NAV, is it a discount to cost or how would you characterize the pricing around those acquisition of those interests?

Its just, its fair pricing, that's the way they want to be treated, I mean when you want me to characterize the pricing, I mean it’s a price that the two of us agreed to, but it was a fair pricing, its not that I think we got any extraordinary deal; I mean their investor that had to sell for unfortunate reasons because of the way regulations are impacting and not a lot of whole investments like that anymore and I think they are happy with it and we are happy with it.

Well, the reason it seconds your market so the fair market reference would be in respect to NAV?

I think its fair with respect to NAV.

I don't think…

Its fair with respect to the value of the interest.

Yeah, I don't think…

Because that meant to us.

I don't think Jordon said fair market, I think he said fair, I don't know that there is a market, but I can tell you there isn't a market for these things, so its really an agreed upon pricing.

It’s a limited partnership interest.

Right. Yeah, there are no effects of whether its limited secondary market activity and these things, we know that, okay. And there is nothing in the guidance for us to assume that you are going to acquire any more interest as we go forward. These are all going to be opportunistic if they occur at all?

Yes, probably right.

Yeah, that’s right. We will only expect that people will sell if they have a reason, the two acquisitions we made are both driven by external events that we have no control over and indeed no knowledge so we get a call from somebody saying, I got to sell for whatever reason it is.

Okay. And without wishing to drag this out, there is nothing in the agreements with the other investors that necessitate you to make the same bid at the same level to (inaudible) parties?

No.

And your next question comes from the line of Jordan Sadler [KeyBanc Capital Markets].

Just wanted to circle back to rents; I think last quarter we talked about having the ability to push rents in your markets 5% to 10%. I am curious where you fell you are overall in those markets where you are having greater success versus less and how receptive especially the market has been to the rent bumps?

Well, when we say to you, we feel like rents are up 5% to 10%, we're talking about deals we've already done; not that our plan is to just try and push them up 5% to 10%. It’s said, it's happen.

That’s a comparison of net effective and it's very a complex and very noisy comparison between net effective rents on the leases we have executed.

Right; comparing to kind of the low point from coming out of the recession, we're saying things have turned up depending on the market looking at between 5% and 10%. And we spent a lot of time with rents kind of where rents went down and they remain being down and flat for a while and as we're now looking at it, we can see that we're really well off of that floor and that’s what we're saying to you.

And while markets across all the submarkets other than Warner Center and Honolulu, if you are asking sort of clearly the places where the lease statistics are the highest for the submarkets like Downtown Santa Monica and Downtown Beverly Hills, those are going to lead the way in terms of rent growth.

Okay I am trying to bridge the gap between I hear you are not comfortable with the 0.5%. So I am off of that, I am trying to bridge the gap between what you told us last quarter in terms of your confidence and the ability to push rents, you were sounded like you had some enthusiasm relative to what you are seeing today or what you saw late in the fourth quarter until today that’s making you feel so uncomfortable with the 0.5%?

Well part of it is that enthusiasm about the rent, when I see what’s going on with rents and I see what’s going on with the leasing pipeline, I look at it and I don’t believe that 0.5% because what we are experiencing seems better than that, but you gave the number.

And that would you say if you sort of had to handicap is it more a function of continuing to see more net absorption, there is more people for the door more towards you are going to have better net absorption or you just bet 5% to 10% number is a non-issue you can continue to press it?

I think we are going to be able to continue to press on rents. I also think that they got caught up in this sort of transfer over between last year and this year and leases have rolled over and how they rolled over and what their expectations for them were and so we ended up with what seems like a number but we are not going to solve it here on the phone, we have already been looking at it trying to figure out why are things coming out wrong and we got to the point that (inaudible) roll over report the number that the model gave us.

Is that cash by the way or GAAP?

Cash.

Those are cash plus (inaudible) okay. Ted, you have the $100 million of cash and the model being put to use a $100 million of your cash being put to use, what's the convention that is sort of a mid-year assumption or the 5% unlevered yield or what you sort of…

Well, I don't know that I mean, we actually have a number of different, we ran a number of different scenarios because it could be acquisitions, it could be pay down it, could be different dates, it doesn't actually have a huge impact on the model one way or the other.

And your next question comes from the line of John Guinee [Stifel, Nicolaus & Company, Inc.] John Guinee - Stifel, Nicolaus & Company, Inc.: Quick question, one other things we’ve always liked about you I think I always like to ask you as for the small kind of local focus and therefore your [TIs] and leasing commissions, you are not creating higher rated court orders and moving around demising walls and all that sort of thing, 65% of your office income from tenants less than 20,000 square feet. Having said that, you are sort of stuck in the $4 plus or minus square foot for lease year for TIs leasing commissions which seems sort of high relative to the small nature of your tenancy which makes the mostly paint and carpet type renovations, what I am getting wrong there, why is the TIs and leasing commissions continue to be in the $4 per square foot for lease year?

Well, first of all leasing commissions don't really change if it’s a small tenant. So we unfortunately we can't squeeze that down very much and you have an average between as you said everything you say about the small tenants is right, its why we feel really good about it. But we also have larger tenants and larger tenants have much more than the $4 square foot to build that out. So it winds up being before we actually feel pretty good about that number. We think it’s a really nice number. John Guinee - Stifel, Nicolaus & Company, Inc.: And how much is the breakdown of those TIs and how much is leasing combination roughly?

Well, let's see, it depends on the size of the lease, but overall probably, well I don't have that number right here. John Guinee - Stifel, Nicolaus & Company, Inc.: Don't worry about it.

So anyway alright, thank you.

And your next question will come from the line of Rich Anderson [BMO Capital Markets].

So this model if it told you to jump off a bridge, would you jump off a bridge too. I mean why would you listen to the model if its not doing its job and if you look at what it predicted last year and it underestimated it then why isn't there lessons learned from last year that you can actually produce a same sort of guidance number that you are comfortable with?

Yeah well the lesson learned last year was we weren't kind of to predicting it which is why I'm willing to say this year I'm not in love with the number. If it was last year I would be saying hey I expect this to be the number. I don't know why we are questioning it. After living through last year I'm questioning it and I did question it.

Okay, that's fair. But do you think you need a better model?

Well, we need to get better as people focus so much on that number. We need to get better at predicting that number. You are correct and last year as we went through the year, we were obviously we were off by over 100%. So that would not be in any plus here right. I hope we were going to be off by that much this year. When the number came out I said that doesn't look right but I can't recreate a model with thousands of leases and redo every all that in time to call and say okay now I like this new number. There's a lot that goes into it. So we are going to play through the quarter and we are going to see how it goes and then you will get another prediction at the beginning you know on the next call.

So is there anything in your experience in these markets over you know how many years I mean the date you've been doing, within the business, is there anything unique and I know the answer is yes but I mean significantly unique that could alter the way things would normally progress in South Carolina and that's why you can't quite get a handle on it in the last year or two?

No, I'm going to say it, the way things are progressing or how I thought they progress in terms of the fundamentals, in terms of the growth of our income and AFFO and the way cash flow is working for the company, its progressing exactly what I thought. We've gotten great absorption now over the last year or so, our cash flow has gone way up. We got through all of our refinancings, we are leasing now at higher rates than we were 12 to 18 months ago. So rental rates are moving the way you think they would be moving as the occupancy goes up and there is some other accounting going on, on that NOI number, I don't know what to tell you, the rest of the numbers are looking good.

Those are very small movements in that, very sensitive to very small assumptions in the model because it's not a lot of dollars.

Okay. So, my next question won't be on the model. You mentioned you got through AIG, it was about what you would have hoped for in terms of lesser space and getting that issue resolved. But then you also said, at some point on this call, you will move on to the next thing. What is the next thing in terms of tenants? Is there one or two out there that you can identify, that are we going to require that kind of high level of activity for single tenant that hasn’t been resolved yet?

No. As a matter of fact when we say we will move on the next thing, we had to get through this AIG thing in order to really get on a good path towards positive absorption in that market, because that would back us up a lot if we had lost them. So, now that we have that done, we're in good shape just do our normal thing, knock out little leases and bail occupancy and get ourselves to the point where we can start pushing rents. The AIG lease while for a long time, it seems like we were going to make a deal with them. Things can go wrong and we wanted to get it done and signed and it did get done and signed. So we're glad to have that behind us.

And your next question comes from the line of George (inaudible).

Jordan, you mentioned that rents in your market were up 5.7% year-on-year. If you had to make a guess on what market rents do in 2013, do you think it's sort of along those lines, better or worse?

You are on the apartments on the resident?

No, I am sorry, was that residential rent?

Yeah.

Okay, sorry about that. And then just going back to the NOI just briefly, on the rent spreads for 2013 I know you have one number in front of you, but it was down 15% last year. Will the trend be about the same or will be a bit more positive?

Well that’s a cash number that you are talking about and it’s hard to tell as we do this. A lease like AIG whatever quarter falls in that in tax numbers even if a bunch of leases, when we look at the list of leases, lets say there’s 200 leases that go into calculating that for a particular quarter that we have signed right, there is a huge amount of them where there is a positive spread and maybe there is 80 of them where you are like up, up, up and then there is 120 down, and then depending on the size of (inaudible) and other characteristics it tells you where the net number is going to be up and down which is why we keep (inaudible). We can’t predict which leases are going to land in the quarters. So I looked at the list yesterday trying to think what’s next quarter going to look like because I see the pipeline and I see the deals where they are headed. And I am reading down and I am like that could be a real good quarter, could be positive then I get down near bottom like well looks like there is more that are rolling down than rolling up so maybe it’s going to be negative. But until they are signed, like you could have a guy move out and he could have moved out in second quarter of 2012 and we sign that lease in second quarter of 2013. So all of a sudden that comparison just got accelerated to happening in this quarter not the quarter may be that you guys are thinking that it should have been four quarters ago. So when we do new deals, you are dragging something from the past forward to create that comparison, and at the same time when we renew, we could be renewing a lease that’s still not set to expire for nine months, okay. So all of a sudden the some quarter that when we just looked at the numbers, we thought it was going to come in, it now shows up three quarters earlier. So the number can really just bounce up and down and all of a sudden just we can have a quarter when it turns, and we can have a quarter when it turns back.

Okay, and Ted I missed it. How many units on the multi family have not yet turned?

You are talking about the pre 1999.

Yes.

257

And you have a follow up question from the line of Jamie Sullivan [Cowen & Company] Jamie Sullivan - Cowen & Company: So if you look at your year-over-year same store NOI expenses, looks like you are up about 2.9%, what’s your expectation for 2013, is there anything on the expense line that create some of the drag?

I think that we actually for the year we were up, I thought it was 1.1 for the year in terms of the expenses. Jamie Sullivan - Cowen & Company: I was looking at the fourth quarter.

The fourth quarter is a bad comparison. I think that the expenses, I think that is an other area where we are going to be looking into it, because I think that we did a really good job of controlling the expenses last year, and we have not projected that were going to control it nearly as well this year, but I have more faith in our operating group in that, so the answer is yes.

Expenses and revenue are both places and expenses is one of the places that we were questioning when we saw the increase that you just kind of focused on. Jamie Sullivan - Cowen & Company: So you are saying right now you could have the modeled them flat, are you actually have them rising.

No we have them rising.

We have them rising yeah.

The model shows them rising more than they rose last year and…

We are requesting that.

Yeah. Jamie Sullivan - Cowen & Company: And where are the key areas you could cut, is it

That may not even require cutting and maybe that this is in the budgeting process people just got…

It’s not a question of cutting, it’s a question of making sure that the increases don't, that more additional increases don't go through and I think that there was a lot of that's just projecting what's going to happen in the outside world and I think that we can do better projecting there, that's my guess. Jamie Sullivan - Cowen & Company: And then you briefly touched on Honolulu, the unemployment rate is looking pretty good but its one of the markets you are not really seeing rent growth, what do you think its going to take that the fundamentals really tighten up there.

I think we are very close actually to I mean the fundamentals are looking like they are getting tighter, and I actually would have thought even although it didn't show I would have thought near the end of last year we would have been able to say rents are going up, but it didn't come out in the numbers so we didn't say and then I'm hopeful that will be stated this year. Jamie Sullivan - Cowen & Company: And then acquisition opportunities there, anything interesting.

We are working on a couple of things there and we are working on a couple of things here in LA.

And you also have a follow-up from the line of David Harris [Imperial Capital].

Could you may be give any update as to the status of these two multi-family developments that you referenced on the last call.

No, I mean we are going through a process with them to go through and get the sort of city approvals in both cities, and so that's the update effectively, its not a lot of real activity or report. I don't think you will see us breaking ground for maybe a year in Honolulu and maybe even more than that year plus in LA.

Okay. Any timeframe on getting the approvals in place.

Well, as soon as they get in place we will be going forward (inaudible)

Okay, it’s really going to take that long to get it through the municipalities there.

Yeah.

And I'm showing no further questions in the queue at this time.

Alright. Well thank you everybody for joining us and we look forward to speaking with you again next quarter.

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