Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmett’s quarterly 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 will now turn the conference 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; Kevin Crummy, our CIO; 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.

Good morning, everyone. Thank you for joining us. We had another good quarter, thanks to the continued expansion of the Los Angeles economy and the lack of office construction. Office rents in our core LA markets are growing by double-digit rates year-over-year. Looking back over the last two business cycles, our core markets have achieved meaningful, long-term, non-cyclical rent growth, in contrast to other core markets like New York, Boston and San Francisco. In each of the previous two cycle's rents in our markets have grown more than 55% during the expansion, but declined by an average of only 16% during the subsequent contraction. Office rents are now approaching the prior 2008 peak and we continue to be extremely supply constraint. Most other gateway office markets are facing significant new supply. Construction as a percentage of existing office stock is 7.7% in San Francisco, 2.5% in Boston and 1.2% in Midtown Manhattan believe but less than one-tenth of 1% in our core market. In short we do not see new supply as of direct joined doing rental growth during the remainder of this cycle. In fact, in the last two expansions we saw rental rates grow exponentially as the cycle progressed. The leased rates in our core LA markets are approaching all-time high, so our primary focus this year has been on rental rates. Comparing new leases to the expiring leases for the same space starting cash rent this quarter were 6.1% higher than the ending cash rent and straight line rent were up 21.1%. Our residential platform continues to be a star. Our portfolio remains fully leased at our highest rent ever. During the last year we increased our same-store multifamily asking rents by 4.8% to a level 18% above the 2008 peak rental rates. Our capital markets team continues to work on acquisitions, we’ve also been spending significant time on our loan program, as Kevin will discuss. Kevin?

Thanks Jordan and good morning everyone. The underlying fundamentals in our core markets are feeling strong increases in asset prices. In some cases pricing has already exceeded prior peaks. For example 2,700 Colorado and approximately 307,000 square foot Class A office building in East Santa Monica was recapitalized last quarter for $915 per square foot and 2007 it traded for $720 per square foot which was the high water mark for Santa Monica in the previous cycle. And Beverly Hills, 100 North Crescent, 116,000 square foot boutique office building traded for $1,100 per square foot and several other smaller office properties are under contract for over a $1,000 per square foot. For a variety of reasons, these deals were not appealing to us. However, we do share that underlying vision of sustained rent growth fueled by strong tenant demand and a lack of new supply. As a result, we continue to work on assets in our markets that fit our profile and where we see value. As Jordan mentioned, we’ve been active on the financing front. In April, we closed a non-recourse $340 million interest only loan, which matures in April 2022 with interest effectively 2.77% per year for the next five years. We used the portion of the proceeds to pay down $140 million of our $400 million loan during 2017. And then on July 1st paid of the remaining balance of $260 million using cash on hand and funds from our credit lines. On July 27th, we closed a non-recourse $180 million interest only loans, with interest effectively fixed at 3.062% per year for the next five years. The loan effectively matures in July of 2022. We are also considering increase in our credit line capacity by $100 million to a total of $400 million. We prefer secured property level debt over a corporate level debt, even though it requires more time and effort to arrange. Secured debt enables us to avoid the financial covenants and rating conditions that forced many of the REITs to sell equity at low prices during the recession. In addition, our secure debt provides flexibility, since we typically negotiate in 18 to 24 months cost free refinancing window. In the last year we have already refinance the lion’s share of our 2015, 2016 and 2017 debt maturities. In the next few quarters we expect to complete refinancing our remaining 2017 maturities and we’ll consider refinancing some of our 2018 maturities. With that, I’ll turn the call over to Ted.

Thanks Kevin. Good morning everyone. I’ll begin with our results, address our office’s multifamily fundamentals and finish with an update on guidance. Compared to a year ago, in the second quarter of 2015, our revenues increased by 6%, our FFO increased by 0.3% to $71 million or $0.40 per share and our AFFO increased 4.8% to $59.6 million or $0.34 per share. Comparing our same property cash results in the second quarter of 2015 to the second quarter of 2014, revenue increased by 1.5%, on the office side we saw higher base revenue and parking income and multifamily rent again moved up nicely. Expenses increased by only 0.6%, well below the 2% to 3% might be expected in the current environment and as a result same-store cash NOI increased by 2%. When we eliminate the impact of prior year CAM reconciliations and leased termination fees, our core same-store cash NOI rose by 3.3%. As reflected in our guidance, we expected our same-store cash NOI growth will continue to improve in the second half of the year. In fact, we are now assuming that core same-store cash NOI for 2015 will grow between 3% and 4%, an increase of 0.5% from our assumption last quarter. This is being driven primarily by improving revenues and lower expected growth and operating expenses. In addition, because of somewhat better revenue from non-core items, our assumption range for same-store cash NOI growth is now between 2.5% and 3.5%, increasing the midpoint of that range by a percentage point from our prior assumption. Our G&A for the second quarter was $7.5 million or 4.7% of revenue. By keeping our G&A percentage well below that of our benchmark group, we convert more of our NOI to cash flow. Now, turning to office fundamentals. In the second quarter,…

Thank you. [Operator Instructions] Our next question comes from Craig Mailman at KeyBanc Capital Markets.

I was hoping you could maybe talk a little bit about the decline of lease rate at Warner Center, if that was driven by one big lease or is this is a trend that we should expect to continue?

I don't think it's a trend you'd expect to continue and quarter-to-quarter I think it's tough to see what's going on there. I still feel very good about where Warner Center is going and I feel like it is in recovery and our future is bright, but of course I would have liked to see better performance out of this last quarter.

And then I guess as a follow up to that, as we look at most of your markets outside Honolulu and Warner Center. You guys are pretty well stabilized there and you had nice acceleration and same-store NOI growth and rental rates are improving. But as you look out into '16 -- do you guys feel good about being able to keep that trajectory up without a significant improvement in Warner Center or does it start to plateau or potentially roll over?

I guess the lot of that depends on which metric you're talking about, the occupancy metric for sure depend -- I mean leased occupied depends on Warner Center because there's not many amount of places where we have vacancy that we could fill. In terms of growth and NOI, our same-store NOI or rental rates I still feel very good about those numbers and I think we're just starting to kick-in. So, I don't feel like we're hampered there. Is it that answered? Was that your question?

I'm going to -- certainly as you look at -- what the problems are that you guys are getting leases. Those are traditionally between 3% and 4%?

Some are starting to go to 5%, but yes, I mean as it moves closer to -- I think, as it goes some more closer to 4, which I think this quarter we actually do have higher percent that closer to 4 than closer to 3, it's certainly kind of puts you in a position for a strong improvement going forward.

The next question is from Manny Cordesman at Citi.

Going back to your earlier comment about assets shutting at peak levels, I think your comment was that you continue to work on assets in your markets, that’s set your profile, what are you looking at to sort of differentiate yourself as either better or what types of assets are you looking at that you're not going to just go and pay the highest price for these assets or is that, what might happen?

You want me to take that? I mean we gave two examples of recent properties that traded were they didn’t quite fit our profile and so other people came in. So like 2700 Colorado was an example of local manager who is looking to recapitalize with a passive capital partner, that’s not our profile, we love the assets. But that’s something that we’re not going to bid on, but as I mentioned last call for assets that have some vacancy or where we can add some value or we see value in an asset. Those are the assets that we’re most interested in and I think that we’ll be competitive in a bid process.

Where usually the best bidder on multitenant with some upside vacancy whatever you want to call it, in the markets that we’re focused on, where we got to get a lot of both expense synergies and synergies from our leasing platform being and like sort of full swing.

Next question is from Nick Yulico at UBS.

Lot of talk about how I guess West LA office rent growth looks like it's accelerating and yet when you look at the overall cash same-store NOI growth your office pull at 1.2% doesn’t seem to fully reflect that. So I was hoping you can maybe breakout little bit how the West LA portfolio is performing versus the San Fernando Valley and Honolulu?

So one of the things that probably helps in that number is if you remember there is a significant differential between core same-store and same-store and that’s all been concentrated in the first-half of this year. So as we told you from the start of the year, we expected those numbers to be challenged during the first part of the year. I think that if you look -- I don’t think we breakout those numbers specifically ever, but -- we actually divided between core LA markets which we include San Fernando, we include Sherman Oaks/Encino, as well as West LA and Warner Center. It is very clear that Warner Center while a step out the bottom in terms of rent, it's not moving up significantly and it contribution to NOI, as Jordan said earlier will largely come if we have occupancy growth there. But on the West side, we’ve got double and Sherman Oaks/Encino -- we’ve got double-digit rent increases and we have in place very nice bumps. So in prior years we had bumps being offset by the -- by the rent roll down and now we have both of them acting in the same direction.

So it sounds like when you're talking about your core LA sub markets rising at above 10% on rents that’s most of your LA portfolio?

That’s correct.

And so you're just dealing with I guess more of an occupancy bouncing around and I guess in the valley versus more of the traditional versus your West LA or non-valley portfolio, that the way to think about it?

Sherman Oaks/Encino which is in the valley is actually -- we treat that as part of core LA because that one again is eventually full and you're seeing as you said bouncing around from quarter-to-quarter one will go up, one will go down, but it's pretty much full. Warner Center on the other and remains a market where occupancy is our --.

We’re under occupied, so we think we have a lot of room there to move that one down.

But as we look at your overall guidance this year for the office cash same-store NOI growth and I know you guys don’t specifically break it out by market is sort of -- West LA is it performing above the average and there is some of your other markets that are performing below that?

So again, going back core LA including Sherman Oaks/Encino which is performing about the same as the West side that we have very good rent growth in that. Warner Center we have very modest uptick, we just off the bottom in terms of rent growth and we are looking to add occupancy there. Honolulu we added some occupancy or some leased rate this quarter and rents are moving up, but not the way they are moving up here in the core LA market.

The next question is from Gabriel Hilmoe at Evercore ISI.

Jordan just going back to your comments on asking rents approaching kind of the 2008 peak, I guess given what you're seeing in the market today and what you're seeing in your portfolio, do you see a fundamental picture that supports rental growth that I guess would be a meaningfully surpass the prior peak as we kind of get into '16 and '17?

Yes, I mean, I'd keep talking, but the answer is yes.

Okay, fair enough. And then just going back to Warner Center -- I think you've got about 75,000 square feet rolling there for the remainder of the year which seems pretty manageable, but can you maybe just handicap the level of retention, you think you'll be getting on the [indiscernible]?

I don't have any reason to believe the retention level on what we have left is rolling which as you said is pretty natural, is any different than the way it's been going forward. I know you can see from our stats or when we post our stats, our average retention always revolves around 70%.

The next question is from John Guinee with Stifel.

Couple of comments on -- maybe about a year and a half ago, the big Century City deal by J.P. Morgan was on the market, it was a couple of billion dollars TIME, [indiscernible], Cornerstone, DXPU, [indiscernible] were sort of the finalist. Almost everybody had sovereign wealth dollars -- to the extent big deals come on the market in your backyard, is it the same group of characters very well regarded, big name players with the same sovereign wealth funds be in at the end of the day?

I think that's reasonable to assume. I mean each deal appeals in different ways to different groups. You certainly are naming all the groups that I wish did bid on the stuff we’re interested in. So, I mean -- you are right when you talk about the interested parties on that deal.

And then, talk about the mass transit expansions that’s going on West LA, I think it's reaching all the way close to the beach and what's going to happen at the stops, are they going to up-zone those for high density office or what's the plan there?

They are definitely not up-zoning them for a high density office, there was a location just at the East end of Santa Monica right at a stop where I think it was Heinz [ph] assumed they would be able to talk them in to some sort of up-zoning and then after a year and when I say year, I think it looks like seven years of battling it out with -- the City Council. The City Council approved it and almost instantly the community started issuing -- that was putting on collection of signatures to our proposition to reverse the City Council's position or recall some of those, some of the moment -- whole and as soon as those sinkers [ph] came in the City Council literally unwound their approval and said we have changed our mind, you are now not approved. And they pretty much at that point threw in the towel and said well there's never going to be any up-zoning that's going to be available and they saw the site. So, we actually had a separate question just on that issue as to whether the city and we've asked this, whether city intends to improve, sort of, from those hubs the transportation to the office quarters. Because we would think that it would dramatically change the way that buses would router right, you could come in and then if you needed to go kind of goes in line [indiscernible] as you know we almost [indiscernible]. So, which must be office space for [indiscernible] and then we thought how were the people -- that would be a very long walk probably not an appealing walk, so how did people making that last leg, I mean it's not just going to like zillion uber cars. So, we're trying to find out what they’re doing something about that, we're looking at ourselves, at what we can do about that. So, I hope it's going to be good for us, I think it’s going to be good for us, but to makes it the best that could be for us. We have to use the fact that people come in here without party traffic and go to work in the buildings and we have to make that last leg available too and that’s still has to be figured out.

So, you're telling me that we've the best weather in country and nobody walks?

Yes, there's some truth to that. I mean I think they get their exercise like kind of weekend walking or something, but they don’t walk to work, you are correct.

The next question comes from Alex Goldfarb with Sandler O'Neill.

Just continuing on the theme of impossible to build, can you just give us an update on the two apartment projects including the cost increase of segments, they both were pushed back, right word is now [indiscernible] pushed that little more surprised on Hawaii, but the cost increases were up, so can you just give us some color?

I don't know if it's push back or whatever Brentwood [ph] is just and we've always said, this is a long term, long attempt to do something that I think in every way its right, its right for the location, its right for the community, its right for traffic. But there's just a kind of cultural rejection in development that's so deep rooted in the way the city operates that even something that's great for them, it takes a long time to work it through the system. And so, we are hopeful, optimistic but it's just going to be a long process. So any type of -- being or not being on schedule -- any schedule is fictional, I mean you just work through as they drive us through the lane.

And is the budget, what about that I assume that that sort of set -- that’s quantified right or is that also a moving target?

As time -- we only can have rough budgets because we only have kind of rough parameters and we put together what we need to put together, I mean obviously I haven’t done a full set of plan that would be an enormous amount of money, we put other way, you need to put together to have fully -- to have a complete environmental impact for submitted and has that we go, we would go and do plan consistent with all of the design and stuff that the manual has for you. You can’t great numbers without really getting biddable plants. So that’s -- I mean the budgets is based on extremely preliminary stuff of everything you need for any IR and you can do stuff on sort of per square foot will cost us to build this and we don’t think we’re going to -- we obviously don’t need to build a parking structure and we have structure engineers going there, we got, what are these connections going to cost as we penetrate through to the -- the whole site is under laid by four levels of parking, so we don’t have to build parking. I mean until we have real plan that can go out to bid, we’re not going to be able to do very much refinement. You can move numbers a little bit only because you say well at this time construction costs have increased because obviously we’re not in recession anymore and therefore you can take a look at those numbers and increase your numbers little bit just to reflect that, but it’s still not really a bid number, it's still got a lot of guess factor in that.

And then the second question Jordan is that on Page 6 from the presentation which highlights the rental assets being talked about as far as the market and the limited downside. Can you just a little bit about what your views are at on this cycle, how much longer it has to go? And also if you guys talk about -- as Kevin talked about some of the valuations recently, is your sense of people are pricing in sort of a 50% to 60% peak -- drop to peak rent increases that they applied are two cycles of underwritten or people pricing on something less than or more than?

Well let me just show, I know lot of people may -- because there are no lot of people on the call look at our earnings package and we also did release this other thing and maybe they haven’t examined it that well. You're referring to a literally 20 years history on asking rents for our market which is extremely interesting graph and I encourage everybody to go look at it, it's got a couple of interesting points to it, one of which is that as -- and people know the LA story, know there was PropU [ph] and then there was limited product to be build and then the supply was build and we’ve sort of dried up. And as that process now progress and we aren’t able to bring to plan anymore and believe me rents are moving pretty fast right now. So you could build today again, you would definitely build. And so we’ve seen that cycle play through now actually two kind -- one smaller recession at the end of the 90s and then obviously an early 2000s that what we call dotcomLondon [ph] and then the one that we all just suffered through. And interestingly these cycles now the floor, the recession floor is still higher than the prior peak and so over 20 years it's a pretty good looking curve and if you actually start looking at the curve over shorter period back really when no real -- all new supply of down after that last dotcom won, the kind of visual direction of the curve is relatively steep for your own purposes, project out. So the questions being just that kind of directional intuition that you get from looking at this chart are people pricing in a similar, even if there is another recession having to floor that next recession and be still above the peak of let's call now the above the 2007, ’08 peak. And it's hard to tell exactly what is in people’s rents, but I think it's real reasonable to assume that people are using the next two, three, four years of pretty aggressive rent growth and we’re seeing pretty aggressive rent growth. We also aren’t seeing anything that’s peculiar to our market that we get in the lay of that. So I suspect what most people are doing is looking at the industries, look at peso [ph] rent growth and saying what can happen most likely from the outside would there be a shift in the capital market, a shift in the national economy that would throw the monkey wrench into where your eye would kind of lead this curve off. So that alone will cause you to go, I feel like I can see out two, three maybe four years and I think that’s where people are being very aggressive in terms of the rental growth in their rents.

But are you comfortable underwriting a drop ’08 or you would and your underwriting you would give yourself more question there?

I’m sorry, can you say that again.

If you're saying that people are looking at just in underwriting that rents don’t grow below the prior peak, are you comfortable, as you guys looking acquisitions with that mentality or you underwrite further downside potential?

Again, when someone does a 10 year run -- I've never seen 10 year run that actually underwrote a different rents, so all they have to do is they change the growth assumptions of rents and what will happen is you take the first three years which you feel like yes on visibility and then you stabilize. And then if you look at -- we are today and 10 years out and you go, well somewhere by some pattern at the end of 10 years, do I think is reasonable, I would have gotten from the rents we're we are at today to those rents start performing in 10 years. So, I doubt there's a drop in people's assumption, there's never a drop in people's assumptions, but I don't think it would be unreasonable if there was such a thing as that for people to say, yes we don't --we are like rents are at a very stable and increasing place and we don't see a lot of room for rents to back up so dramatically -- so, sort of a huge national hit where they would dip dramatically below I mean slightly below, the peak what you’re calling ’07 only a peak. I’m not being unreasonable to think that.

And next question is from Jamie Feldman, Bank of America/Merrill Lynch.

Can you talk a little bit more about the leasing demand pipeline in Warner Center and Honolulu or those are open for occupancy?

There I mean demand is it was like net demand I'd go we would have had absorption, there's a lot of demand, there's a lot of activity and we feel like with all the activity that’s there we are be able to hold and attract and trap more of them into our projects and that's why we're optimistic about where things are going, it's a very active area, there's lot going on, residential and new small business and entrepreneurial people and Westfield spending a lot of money out here, I mean there's just a lot going on out there, so when you're there and it's a great place, I have friends including my sister who moved out there for lifestyle, scores in and she grew up on the West side like I did, so you sort of look at it and you know wow that is a very vibrant market, how does the office not slingshot back and catch up to all whatever else is going on and I think that's going to happen, it's not like there's no office being constructed and by the way every other type of product is being constructed around there, whether it be lifestyle stuff, retail, shopping centers, residential so, I continue to feel like it’s a good bet going forward.

But is there a decent pipeline of big block users, I think that's where we take the move to needle on your occupancy, by comparing today maybe the year ago or couple of quarters?

Big block users can move the needle if we have big blocks I mean one of the problems is we purposefully are trying to move to let's say the less risky, higher net value leases which tend to be smaller leases, those big block deals when you really focus on cash are very hard on cash so, if you can suck up the pain and suffering, leasing out floors or multi floors as either a single floor or parts of the floor, I opposed to going to someone and say I’m looking for that five floor user and I’m going to clear big block space, that is -- does assume like a lenient way to move occupancy but long term I'm not sure it gives us the best cash flow and performance out of the asset. And so, yes big block users are always helpful just in general to absorbing space in the market, but it isn’t -- the end of all answer is just retain our people and keep moving the system and moving occupancy up through these other leases.

And then I know you walked through your cash balance in your credit line capacity but can you just let us like talk us through how much capital you think you have before you need to raise more, assuming your investment activity ramps up there?

Well, that has a lot to -- I'm not a big fan of issuing equity, there's no secret about that, I don't like delusion and I feel we have a top class portfolio that at the moment, I feel it’s pretty dramatically undervalued vis-à-vis if you just add up to debt and the equity and say with that mean I'm buying these buildings for. So, I would more say that instead of issuing equity I would look for alternatives such as joint venture capital which you heard us talk about on the Century City deal before I would say -- I need equity at my backend so also on the issued stock. Question for me has more to do with where would I think this stock is fairly valued where I don't mind issuing some equity, I mean in a substantial way -- instead of saying hey we've put money into the deal as much of it as we can and now we're going to JV Partner, the larger deals into order to continue the control, what I think is great real estate is a great market.

And then along as how do you think about the required returns to you, like for the real estate self to real estate to you with a fee?

Well we don’t tend to look at the -- say hey, this works for us with a fee, but it wouldn’t work for us without a fee, I mean I am getting joint venture partners because I need the money to buy some big and I am not willing to risk that much equity of the company’s balance sheet. If you look at some things that very large and you say would I put is probably not smart to put 20, 30 plus percent of the company in anything, no matter what it is, but sure thing that’s just -- there is nothing as a sure thing. So more of what we are doing is saying, let's look at this, looks like a deal, let's look at how many buildings it this, where they are, whatever, look at the size and what are we comfortable having -- what’s the most we’re comfortable of the company’s balance sheet being exposed to that and whatever, because you have to deviate those deals if something goes wrong. So that’s more how we look at it and beyond that it's good deal is a good deal, I mean good for the goose, good for the gander. We made substantial investments, you're not going to sit there and go, I am doing this because if he gets me over the line and otherwise I wouldn’t do it because we put a lot of money, we want to put a lot of money into the deals. We just don’t want to put so much money into the deal, that it puts our balance sheet at risk.

And then I guess along that line, what about the organization, I mean how many more assets could your firm handle before you like to stress running your portfolio?

I think we’re extremely well positioned to take on additional assets. As a matter of fact, to say it even stronger, I doubt this is another platform or system in Los Angeles that is anywhere near us in terms of being position to take on additional assets smoothly and take advantage of where the market is now and hit the ground running hard.

Our next question is from Jed Reagan at Green Street Advisors.

I wonder if there any talk about time about the 12 to 24 month’s time period for getting up to 90% occupancy just curious if you expectations have changed at all.

Other than the fact that I had hoped we’d do better this quarter, I still feel like that’s reasonable set of expectations, I mean anyone would say okay, let's say [indiscernible] this quarter so maybe I should change them a little bit, but it’s far enough out and I like what’s going on out there, I still feel good about that.

And you guys talked about some of the aggressive price levels we’re seeing on some trading on markets [indiscernible], I guess just given the backdrop of sort of the recent uptick and treasury yields and borrowing costs, how would you characterize, how cap rates are trending your markets. Any noticeable change as one way or the other?

Well, funny because obviously cap rates are good and part by kind of alternatives choices that capital have. So when you [indiscernible], maybe treasuries at a higher interest rate or something and then part by people’s expectations for the investment in growth and rental rates. I think right now in LA I think first of all I see a lot of people buying stuff without a lot of debt. So just in terms of direct impact on the run, I don’t think it change in -- the slight changes in the cost of debt at least impact things. And I think in LA, I think people are lot more focused on the second thing which is how fast rents are moving up, than they are on the first thing, which is, well if I hold on to my capital for another year maybe interest rates will be 50 basis points higher and that will be an alternative that I’ll have that I can go and do because the going in cap rate I believe is much more reflective of where people are now kind of the trajectory people are using for rental rates and occupancy rates than it is kind of -- this isn’t a great return, but I am getting a worse return if I go by treasury.

And then I know you guys -- you don’t own malls or hotels in Hawaii, so you may not be super close to this, but just curious if you're hearing about or maybe anticipating the slowdown in international tourism down there just given the stronger U.S. dollar and some of the China stock market challenges and whether you have some concerned that could affect you’re -- the value of your portfolio down there overtime?

Well, I would say in terms of the value of the portfolio if anything the dislocations that happens in Asia makes people want to move more capital into the United States and if anything accelerates their interest in placing money into real estate assets. So I don’t think it reduce the capital, I think actually increase the capital. In terms of use and then you know this is obviously no secret, we just made that deal with China, we’re now -- these are for 10 years and much gigantic. and by the way we go there, Kevin, Stuart and I travelled there and looking for equity and they travelled here obviously to West and -- their ability to move around, right when that change was made, it was made both ways. So now our visas are 10 years and their visas are 10 years and I think you're seeing it reflected both in California and Hawaii in terms of in migration of tourism and investment.

Just there wants to know obvious change that you guys are hearing, the ground maybe even a positive change?

Yes.

And just last one, you talked briefly about land marker earlier. Can you just remind us what the plan B for that asset is -- it's the access or site is if the process doesn't go your way?

We frankly have kind of stalled week, we didn't go back and just lease it as the market. I mean it's in a great location with great parking and it's a great structure, red granite, it's a beautiful market and at great location. We think this is an opportunity for us to do better and for the community to better, the traffic driven by the market obviously if we go back to a classic market, super market is really substantially more than the traffic that would had been driven by the apartment tower that we're hoping to put there. So, I think all of parties end up better off, there's nothing we could literally just today say, okay that wasn’t a lot of fun and we would go out and we would re-lease it again as a market, no problem. We're making us that this investment of -- we've got this opportunity got created by them now renewing -- they as opposed to five year renewals and I guess they missed the last ones, so we have this opportunity again and we're trying to take advantage of it to get something better for everybody.

Our next question is from Vance Edelson at Morgan Stanley.

Maybe just sticking with development but now on more on a little that anticipated completion last quarter I think was '16, '17 is now late '17, anything we should know about delays there separate from the types of factories, you've mentioned on rent Brentwood. And then on the same project, I think a little blurb in the supplemental, you used to mention the upgrade of the existing apartment building, it looks like that reference was removed so is there any change in the strategy there?

I would say that primary change in the strategy that we have there is, we want to get in a group, get this thing moving and so the things that we see as creating noise around just giving these first 500 units up and until we're trying to move away from those things and moved us along at a quicker pace and that's all as we're going on there now.

And then just shifting gears from my follow-up, you mentioned 2% to 3% G&A growth might be expected in the current environment and you're extremely well positioned to take on more assets as you pointed out, so do you see any additional economies in scale as you leverage your current team, are there opportunities for the 5% of revenues, percentage to even decline some more as occupancy in rental rates climb and as you potentially take on more assets?

Well, for sure as we take on more assets and then more gross revenue that number will decline, because I do not see any significant big expense adds to take on even millions of additional square feet. So, that will cause it to decline and obviously the household will decline, specifically what happens is rental rates go up -- so, those are things putting pressure on it, definitely as they are pointing out they put pressure on the downward direction or they are helpful to us in terms of that metric.

The next question is from Brendan Maiorana at Wells Fargo.

I thought your G&A was going to on up because your lease cost went up so much, so it's good to see that you can keep it under control. Your new lease or your corporate building. Ted, question, so NOI you guys same-store core basis, you did I think 09 in the first quarter, 33 this quarter, so your guidance implies it's probably like around 5% in the back half of the year, it looks like occupancy probably helps you out a little bit based on your guidance. You've got in place bumps, but is there major expense savings because it seems like it's a little bit of a lead to get from the 33 that you put up this quarter, that kind of get to 5% just based on the basic parameters you have in your guidance?

There are certainly are some expense savings we're seeing in the second half of the year, we'll focus more in the second half of the year and in addition to that what we have is we have the continuing kicking in of ramp rollup from the first couple of quarters and as said some occupancy, some good occupancy things which in prior years as I said earlier sort of was masking the impact of rental roll up from continuing leases because the two were offsetting and now those should start to kick-in and help that in the back half of the year.

And I think maybe it was sometime last year might have been sort of middle part of the year when you guys try to put in higher annual bumps, but it takes time for that’s about to come through. So Jordan you sort of referenced it in your prepared remarks. But are you seeing a notable change in kind of where in place bumps are that are in the portfolio, in the rental roll today versus maybe where they were 6 to 12 months ago?

Yes, I think it goes back probably a couple of years now to a while before since we started putting them in and so now we’ve had -- we now are having the number of lead that’s coming up on their first anniversary which have imbedded rent growth which is higher than the 3% that we used to have, we have 3.5 and 3/4 [ph]. And as Jordan said although not many of these have yet come up to their anniversary or actually getting five in some places as well.

And then just last, Ted did you -- you may have provide this, I apologize if I missed it, but mark-to-market across the portfolio I think you said it was about 9.5% last quarter is that about same?

It's about 10% this quarter, so I think it was plus 40 basis points last quarter.

Our next question is from Rich Anderson at Mizuho Securities.

So I just want one, just starting to feel little bit like 2007 again and I guess if I had any worry that you kind of go out and make a big deal or make a big acquisition of some sort and people think you overpaid and money is kind of the perception of what’s going on. So is there any though in your mind about letting things marinate for a little while and maybe taking the foot off the paddle if it's there on acquisitions. I know you're talking a lot about deal making, but maybe this not the time to be doing that?

Well, I mean I don’t want to make any deals where we’re going to lose, I would only make deals where we would make money and I mean there is just so much in that question. I will start out with this, I believe in this markets long-term like 30-year long-term, I also realize as you do that we’re not at the bottom of a cycle, right because we’ve had so much move up and value and whatnot we’ve been mentioning that. At the same time, beyond the way we build this portfolio and the way anyone builds a Class A portfolio is buying Class A buildings when they become available. Now if you buy Class A buildings when they become available, you need to A, not overpay for them or you lose money; although the question of winning and losing, you have to judge that in real estate, not over the next four quarters or eight quarters, but over a longer period of time, which I am confident in this market over a longer period of time. But you also have to do it in a way that doesn’t put you in jeopardy or fundamental earnings of your company at risk. I think we’re able to do all that, but each deal as it comes up we have to make that decision and then we go ahead and either buy it or we don’t. We don’t like to wait to come out. Kevin described two deals where we like -- yeah, these guys are probably right rents are going up, so those are not exactly right for us and the risk associated but putting in that really is a single tenant building and whatever. So we didn’t do these deals now there could be some deals coming up or we will go. Those are right for us and may work long-term in terms of controlling them, but we don’t want to put the company at risk or we structure at this way and we’re going to do that and then we’ll probably do those deals. But you got to look at the stuff that has come up.

Do you have any evidence of sort of an in migration move, companies or people from Northern California, San Francisco to Los Angeles, do you keep track of that or are you seeing any evidence on that?

Yes, I can’t -- I mean obviously and you guys know this there has been a very big tech move down here because they have shifted their focus to kind of entertainment style content and this is the hard of the entertainment industry and I get it, I mean if your question is other industries that have made the shift down here, no I am not -- I can’t speak of any -- I mean the areas we are in here and have invested in have a very good population growth. I’ve actually especially out in that wood and hills areas, I’ve been surprised at how aggressive the absorption’s been in terms of population growth taking on all those new apartments that were build down there or occupancy levels. But I don’t know that a side from tech moving down here that it's just a general trend the people just kind of heading south from Northern California.

Our next comes from Bill Crow of Raymond James.

Can you give us an update on the relative success or lack there off maybe of the downtown market and its transition to the 24 hour city and I guess more to the point, are you seeing tenants get attracted down there from your core markets and may not be your tenants because you deal with smaller sizes, but any movement them from the Westside to downtown?

I think that there is -- and we're probably not the perfect people to ask about downtown I mean there're lot of people for lot of capital invested in Downtown that would be better to ask. But obviously, they've done -- spend a tremendous amount of capital and made a lot of changes there, there's a lot of residential going in there, have they made it to a 24 hour Downtown? No, I don't think that's happened. In terms of moves I think Westside tenants generally move driven more by kind of community patterns and where their employees and where the senior people live. There may be some cases of people moving downtown, just because they've gotten very large and they're looking for a -- an alternative, Downtown is obviously much cheaper than some of the other alternatives that can handle larger tenants. I thought for a while that the Westside -- the larger Westside tenants were generally -- I mean the once that are willing to pay pretty good amounts, we're generally go and apply at this side, but it happens so quickly with what Google did that, this is generally full, soaked up. So, now you see them again looking for alternatives and there's some new construction in Hollywood, so some will go there, they want to be near the studios. And to other places sort of along 101 corridor out there including [indiscernible]. But every time that comes up and people stay downtown I don't see the -- it would be very natural for some of these big guys to say, yes, I'm going to go Downtown where there is -- I can get huge amount of space force together, the whole nine yards and it's not even very expensive to be there. But that does trend that what I see, I don't see that trend to be there choice. Lot of times more of what I see is, the tenants that are Downtown are sort of trading positions around but every once you’ll hear of a larger tenant moving down there.

At this time, I'm showing no further question. Would you like to make any closing remarks?

Well, I'd just like to thank everybody for joining us, and we look forward to speaking with you again next quarter.

This conference is now concluded. Thank you for attending today's presentation. You may disconnect.