Welcome to the Washington Real Estate Investment Trust Third Quarter 2010 earnings conference call. As a reminder, today's call is being recorded. Before turning over the call to the company's President and Chief Executive Officer, Skip McKenzie; Jordan Willis, Senior Finance Analyst, will provide some introductory information. Ms. Willis, please go ahead.

Thank you and good morning, everyone. After the market closed yesterday, we issued our earnings press release. If there is anyone on the call who would like a copy of the release, please contact me at 301-984-9400 or you may access the document from our website at www.writ.com. Our first-quarter supplemental financial information is also available on our website. Our conference call today will contain financial measures such as FFO and NOI that are non-GAAP measures and in accordance with Reg G, we have provided a reconciliation to those measures in our supplementals. The per-share information being discussed on today's call is reported on a fully diluted share basis. Please bear in mind that certain statements during this call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties, and other factors include, but are not limited to, the effect of the recent credit and financial market conditions, the availability and cost of capital, fluctuations in interest rates, tenant financial conditions, the timing and pricing of lease transactions, levels of competition, the effect of government regulation, the impact of newly adopted accounting principles, changes in general and local economic and real estate market conditions and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2009 Form 10-K and second quarter 2010 10-Q. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Participating in today's call with me will be Skip McKenzie, President and Chief Executive Officer; Bill Camp, Executive Vice President and Chief Financial Officer; Laura Franklin, Executive Vice President and Chief Accounting and Administrative Officer; and Mike Paukstitus, Senior Vice President, Real Estate. Now, I'd like to turn the call over to Skip.

Good morning and thank you for joining the Washington REIT earnings conference call this morning. The economic recovery is moving along in the Washington region albeit slower than we would like. It feels like the market is moving slowly off the bottom with choppy improvements in operating metrics and increased leasing activity. As I mentioned last quarter investments sales activity continues to improve in the Washington region with cap rates for quality assets stabilizing as more product is brought to market. In particular beginning September we have seen a dramatic increase in property offerings region wide. We are diligently mining investment opportunities both on and off market an across several property sectors, and I am optimistic we will be reporting some good news in the near future although nothing is firm at this time. In addition, we continue to evaluate our existing portfolio for accretive ways to recycle assets and to better long-term growth opportunities. And we expect to report progress in this front as well in the fourth quarter. Operationally in the third quarter, same store results were generally flat compared to last quarter as we saw a diversified portfolio service purpose of offsetting losses in some property sectors with better results than others. Multifamily operations in particular are reporting strong activity. The big news this quarter is on capital side where we made significant progress in strategically refinancing the 2011 maturities with the execution of our first ever index eligible bond deal and the resulting tenders of some of our outstanding debt which still will explain in detail later in the call. Now I'd like to turn the call over to Bill Camp, who will discuss our financial results in capital market activities and then Mike Paukstitus, who will discuss our real estate operations. Bill?

Thanks Skip, good morning everyone. We reported FFO of $0.49 in the third quarter generally in line with last quarter and still pushing our expected results for the year towards the upper end of the guidance range before the effects of the premiums and charges related to the refinancing of our 2011 debt. In terms of a core portfolio, our multifamily occupancy increased nearly 200 basis points sequentially. We lost occupancy in our office sector primarily due to the previously announced move out of Lafarge at Monument II. We call that our new tenant taking over half of that space as expected to partially show up in our fourth quarter numbers with the December moving. Our medical office, retail and industrial sector occupancy were generally stable from second quarter to third. This quarter the combination of bad debt vacancy loss and rents abatements was 12.6% of minimum rank on a GAAP basis. A slight improvement over the last quarter and consistent with our original projections for 2010. On the capital side, since we last reported to you we raised an additional 49 million to our ATM program with BNY Mellon, bringing the total issuance for the year to $120 million. The proceeds from the latest issuance were used to pay down a portion of our line in far general corporate purposes. Insurance of our $262 million line of credit, we officially extended the line through November 1, 2011 at the same terms of 42.5 basis points over LIBOR. At the end of the quarter, we had a line balance of $100. As we have noted on prior calls, the balance is swapped to a fixed interest rate of 2.52% through the extended maturity date of the line. We will likely work to refinance this balance in 2011. As announced in…

Thanks Bill and good morning. This quarter our real estate portfolio occupancy generally held steady compared to the second quarter. But the multifamily’s leading the way and offsetting some lags in the office sector. Sequentially, same store NOI decreased 1.8% and rental rate growth was 1%. Our multifamily sector posted strong occupancy gains growth of the second quarter almost 200 basis points as we came out of the successful spring in summer leasing season. Cash and GAAP NOI was up about 11% from the third quarter one year ago, reflecting improvements in rental rates, occupancy and less concessions needed to lease space. At 95.6% occupied we have a great opportunity going forward to be aggressive on rental rates and increased revenues throughout the portfolio. In the commercial portfolio this quarter we had executed 330,000 square feet of lease transactions at an average rental rate increase of 6.8% of responding leases on a GAAP basis with an average lease term of 4.4 years. In the office sector, overall economic occupancy declined by 120 basis points compared to the second quarter. This decline serve the effect of the fourth quarter of the Quantico acquisition in Stafford, Virginia all said by our previously announced expiration of Lafarge at Monument II in the Dulles quarter on July, 31. As we mentioned last quarter, we signed a lease for more than half of that space and then good prospects for the remainder. Despite the decline in occupancy this quarter our office portfolio occupancy continues to outperform the sub markets in which we do business. In the medical office sector, same-store occupancy was down slightly from the second quarter due to two move-outs at our Shady Grove Medical. Same store rental rate growth was 1.1%. At Lansdowne, we have signed leases for 20% of the building at rental rates at or above pro forma and have another potential 20% in the pipeline. A retail sector occupancy was basically steady from second to third quarter with a few solid strategic 10-year renewals with Rite Aid and the U.S. Postal Service at the Bradlee Shopping Center. Retail NOI was up 2.7% in the second quarter. And the industrial sector of this quarter, we entered into leases for a total of 104,00 square feet with an average lease term of 3.4 years. Overall occupancy will slightly improve from the second quarter by 20 basis points. Bad debt expense in the industrial sector is trending better and we are confident the worst of our credit issues are behind us. Now I’ll turn the conference call back over to Skip.

Thanks Mike. Finally, yesterday the Board of Trustees announced an increase in our dividend to $1.735 commencing with the fourth quarter dividend. While overall this increase maybe small it is an indication of our long-term commitment to a prudent but steadily increasing dividend to our shareholders and that confidence in our beliefs that the worst economic news is behind us and the opportunities to acquire a grown up portfolio are increasing. With that we’ll now like to open the call for your questions.

(Operator Instructions). Our first question is coming from Mitch Germain with JMP Securities. Please proceed with your question.

Can I get some details on the discussions you have had with the lenders regarding the line? I know you talked about resetting it next year.

Sure, yes the discussions are fairly lively. I'm not sure how much detail I can give you at this point. We are in discussions with several banks. Obviously our lead bank on that line as Wells so we're obviously talking with Wells closely, we are also talking to other people. There are quite a few banks that are not in the line, they want to be on the line but we at least have expressed the interest in the line. And there are some others that are on the line that may or may not participate. I think their overall strategy is to potentially have a larger size line so we are at 262 right now on that line to have it bigger than that, to have additional capacity and then do it with, right now with the 10 banks I’m hopeful that we won't do it with as many banks but you never know. Its way too early in the process to be able to tell, in terms of where the world stands right now our 42.5 basis points would probably go up. I'm sure that’s an obvious statement by now but I think we're probably at that between two, around 2.25, plus 2.25 right now. And the facility fee right now we pay 15 basis points facility fee in that probably that kind of current market is 40. So it’s going to be more expensive. I don’t think there would be any major changes at the covenant structure.

That is really helpful. And Skip, I apologize, I missed the first couple of comments you made. I know you talked about your acquisition pipeline. Can I get some more clarity as to which sector? I mean is it more office or medical office or --?

I’ll give you as much as I can at this point. We don’t have anything from it now or we are very active right now as I indicated the market has really heated up there is many more offerings on the market listed by brokers as well as its used to be a little more active even off markets. We have the vast majority of the offerings in just, which is always typical to watching the market our office buildings. But we've also seen a number of offerings in some of the other sectors that are quite encouraging, in particular we've seen more retail assets recently than I had seen in a long time. The residential market is extremely torrid, the cap rates have really compressed rapidly there and there is not a lot of medical office buildings out there but we have seen a few. So where we would anticipate coming out, where we've got offers at pretty much in all those different areas. I would anticipate hopefully putting points on the board in the fourth quarter and we are optimistic that we’ll be successful. That’s much as I can say right now without anything permanent in our pocket.

That is really helpful. And with regard to asset sales, I mean I know that there is a ton of capital that is targeting the DC region. I mean is that something that you might consider increasing your expectations for sales?

Yes we are committed to an asset recycling program, we actually currently have two part properties listed on the market today. I would say we are testing the market to be quite honest with you. If we don’t get the number we like then we won't pull the trigger on it. But one of the assets is a flex part we own in Prince Georgia County called the Ammendale I and II which we've owned for a number of years. So that’s on the market. And I'm very optimistic that that we’ll be successful in that and then the other property we have in the market is Dulles station development. We have recently put that on the market and I'm not sure that would close by year end if we're successful but we're putting feelers out to see where that will go.

Great. And last question, guys, I think probably more from Mike. Can you just characterize the activity you are seeing with regard to demand from tenants? I mean is your pipeline where it stands today relative to three months or maybe six months ago?

Yes, I would say that there is probably more decision process. We were seeing a lot of deals just floating around. Globally, we are seeing in the DC Metro area, we are seeing vacancies going in the more positive direction. We are seeing absorptions getting better and what we are experiencing both of those globally in the DC Metro region rents are down 6% this year and as you can see from our numbers we are not down that well, we are doing better against that market. But yes I would say that we are seeing things improving.

Our next question comes from Michael Knott with Green Street Advisors. Please proceed with your question.

Just a couple of questions for you. First, I was curious if you could just give us an update on your Lansdowne MOB?

Sure we're about 20% leased right now. The asset somewhere it was the activity was not good in terms of just number of people touring the property. It’s really picked up since September, we've got about another almost 20% of the building in the pipeline, they are not firm dealers yet but they are really good prospects. But I think I mentioned even in the last conference call. While we were getting the rates we wanted on that property, even in medical office buildings lease up has been slow and what we are hearing from some of our tenants is there is a lot of concern about the health build et cetera. And even in that world people are still playing defense and they are less inclined to take additional space. They are not necessarily downsizing, they are not necessarily going bankrupt, but they are less inclined to take additional space and that has resulted in really a slower lease up and quite frankly we had anticipated last year.

I would just add one point, the key feature for us is our retenant is down the building. So then we have an 8000 foot user in there, there is a pediatric practice, it turns to be a good draw, so we are getting in those lights on the buildings. So we are seeing more traffic with respect to that.

Okay. And then Bill, do you expect to continue using the ATM equity arrangement in 2011? It seems like it has been a great source of capital this year.

Well I agree with you, we've spent a great choice of capital. Do I anticipate using it? We've kind of said Michael a lot on that. We will pay any kind of acquisition dollars that are net part of dispositions will be generally paid with equity and whether that’s going to market and dealing some kind of ordinary transaction or if its smaller amount that I can take care of using the ATM that is probably the path of that we would use if it’s a smaller amount. But that’s yet to be determined. And obviously it depends on share price and various other things.

Okay. And then, Skip, I was just curious, or Mike or Bill, your thoughts on where cap rates might be for your apartment portfolio. It seems like cap rates have gone down quite a bit for that particular product. I'm just curious how you think the market would potentially value your new developments and then also maybe just talk about your Kenmore acquisition in hindsight a couple of years ago.

Its crazy out there, EQR is paying 5-cap for everything. Did you consider the fact that all of our portfolio with one exception, our Walker House one, every one of them is inside the Beltway. And all but one of them is a high rise and that’s Bethesda Hill Apartments which is virtually right across the street will now age. And if you consider that sort of math is not really achievable. I would think that on the aggregate basis it is sub 5-cap, I couldn’t tell you what it is because those things aren’t trading but individual assets are trading at 5-caps regularly and you can’t amass what we have, in the locations we have in bulk. So it’s hard to say Michael but I would offer and be less than five.

Thanks for that. And then I guess my last question, what prompted putting Dulles Station on the for-sale market? I know generally the strategy has been to recycle the lower quality assets. I'm just curious if it was the fact that [Abers] sold for a pretty nice price out there on the toll road or just the thought process there?

Sure I'm just going to give you a sort of generic comment. I really don’t like to articulate prior to a property being sold at the motivations et cetera especially when we've got buyers looking at the problems. I don’t want to get too much into the leads on that. But I would say in general. We've created the value there. We leased the property out there. It’s a great market. The property across the street from us stole for a great price. So I’ll leave the fracture on the table at that. I really don’t want to articulate as to our motivations behind the scene while we were in potentially in the middle of the marketing process.

Okay. And then just one quick follow-up on that if you don't mind. Would the development land be part of that?

That’s part of the package. And off course, just being prudent we evaluate the offers that come in over the transom, and we’d evaluate it in many different ways. It could be sell the whole caboodle there or we could break it off and sell one or the other depending on what interest we have. So it’s hard for me to say but we are going to consider all interest and do what we think is in the best interest of the shareholders.

Our next question is coming from John Guinee with Stifel Nicolaus.

Nice job, guys. Just a quick clarification. Is the dividend up $0.05 a year or $0.005 a year?

$0.05.

$0.05.

So 1/8 of a $0.01 a quarter?

Correct.

Got it. Okay. Second, Bill, you did a great job articulating the $9 million of cost to tender on your debt. How much of that is cash premium, and how much of that is non-cash write-offs?

Its 5.5 million of premium.

Okay so that’s a cash charge?

That’s a cash, that’s what we paid over and above par for the bonds.

Our next question is coming from Dave Rodgers with RBC Capital Markets. Please proceed with your question.

This is Mike Carroll here with Dave. We noticed some leasing activity on M Street. Can you give us some color on the availability and traffic in that area?

Where?

M street.

Okay. 2000 that Mike you want to cover that I mean.

Yes I mean the M street, the CVD marketplace is essentially a market has been slower and I would say in the city, we are starting to see a lo more activity now. We look at some different marketing efforts that we put in place in that market. Generally in DC rents or sort of move the opposite way compared to last year. But we've got a pretty healthy pipeline in retaining some larger users in that marketplace right now.

We just signed the lease with that third quarter.

Yes that was the (Inaudible) that renewal. But I would say we've got a lot of flexibility down there. We could accommodate a pretty broad range of tenant mix down there. So we are looking at a lot of different options.

Thanks.

I'd say thanks. Generally speaking, the early traffic in downtown was private government that went to kind of the newer areas where they had big four plates that you could soak up, and the other stuff was just kind of, if you had vacancy, it’s just kind of sad.

And that’s true a vast majority of the absorption that we see in the district has just been these huge deals that have signed over by the ballparks and over in NoMa. And to be honest with you, the sort of the more meat potatoes type activities has been, it certainly was disappointing in the first half of the year. I would say once again in September it seems like activity has picked up a little bit but it has legs to take us to the end of the year.

(Operator Instructions) Our next question comes from Brendan Maiorana with Wells Fargo Securities. Please proceed with your questions.

This is Young Ku here with Brendan. I just had a question. Skip, maybe you can comment on this. We have been hearing that small tenants are not recovering as well as they did in prior cycles compared to big tenants. Could you comment on what kind of activity you are seeing in your markets in terms of big to small tenants?

I absolutely agree with that assessment. Certainly, we've seen that the retail level with a smaller tenants in the retail product leads really where we've experienced it mostly in that area, it’s been a bad debt expense, we've seen similar effects in our industrial portfolio where we mostly lease the smaller industrial tenants, small-based tenants. And, as you know, we have struggled a little bit there as the whole market has and we've seen increased credit loss there as well. And even in the office buildings the smaller tenants have not eagerly been expanding over this time. So the one area that held pretty solid medical office buildings but even as I made at my prior comments, they are not aggressively expanding right now, they are just holding on. But without question the uncertainty of the economy climate has for the little fear of god in the small guys and they are less inclined to sign long leases, they are less inclined to take additional space and they are basically still somewhat up in the defensive posture.

Okay. Thanks for that. So with that as a backdrop, then maybe are you guys changing your strategy a little bit, going and chasing after bigger tenants than small tenants as you have done?

I wouldn’t necessarily say that. We are looking at good quality buildings and good locations. We’d love to diversify tenant roster with a number of tenants. And we are confident that we've seen the worst parts of the economic crisis behind us. I do believe it’s going to be a little choppy going the next 12 months but I do believe we're on upward trajectory here and we’d love buildings with a diversified tenant roster. So we are not really backing off that. We are more focused on the quality of the location and an infill type properties that are located near Metros.

Okay, I appreciate the color. And the last question I had, maybe Bill can answer this, and maybe you mentioned it earlier. But CapEx spending I know you guys have about by our calculation about $8 million in committed but unspent CapEx that still needs to be spent. Could we get a timing on that flowing through to your FAB?

I would love to be able to give you exact timing on when the tenants are going to spend the money that we give them but unfortunately that doesn’t happen quite the way I like it and I like you would love to know the answers to that question. Generally speaking, if we don’t see it come through in the first couple of quarters we generally spread it out over a four or five quarter period. And then when we signed a lease and we get these numbers in and we see obviously you are talking about the differences between kind of the leading stat page in the supplemental and those differences as you add them up over four quarters or five quarters, you get to the numbers that you are talking about. And we're kind of just waiting and seeing when they come in. We know which tenants are building out space, we know what tenants aren’t. But that have big dollar amounts so we have a little bit of better information than you guys do but generally speaking these tenants sometimes build out their space and they will bill us until the last day that they can capture the money from us. So it’s all with the board and it’s pretty hard to predict. But you are right, there is some backlog there.

Our next question is coming from Michael Knott with Green Street Advisors, please proceed with your question.

I was just wondering if you can comment on comparing and contrasting overall office leasing conditions in the three regions there and what your expectations are as you look into 2011 for overall market trends and leasing activity?

I would say that the three sub-state sectors, Maryland is still the softest of the three. However, I would comment that we in particular have seen better activity in our Maryland buildings with some of the healthcare related tenants but certainly the activity in Maryland is the slowest of the three. In Virginia, it depends largely on the sub sector of the state. If you are inside the Beltway in Virginia, it might be the best market in the whole area particularly the Balston/Rosslyn corridor. We have a building in Rosslyn that’s just phenomenal. When you get out the Tysons Corner its being impacted significantly by the Metro construction there. And it’s really tough till we space inside in this corner today. And when you out to the Reston, Herndon, Chantilly out in that neighborhood, it is still very soft because there is a lot of supply but there is much better activity so I think we are going to chip away out of in those outer markets but its going to take time because we are now seeing activity. In DC, as we mentioned earlier most of the activity has been the large tenants in NoMa and by the ballpark. But the smaller tenant has been slower than we would have liked. And there is probably a little bit of rental rate decline in the district right now but we are starting to see little bit better progress with the small tenants in our buildings. But when your district and vacancy rates still in the CBD and East End, it is sub 10%. So even though the activity has been a little bit less than we’d like. Its still pretty healthy market but I guess we're just spoilt.

Okay. And then is there any concern among tenants about the possibility of defense spending cuts? That was in the press a couple of months ago or maybe the possibility of austerity measures if the election results go a certain way next week coming out of that?

I think everybody has taken a wait and see approach on that, we've never really seen that in any significant way so the people within the business and the market a long time here are skeptics as to whether that can actually be achieved. But certainly there has been some rumbling about that, we've seen really no significant evidence of it. The government sold the couple of properties. They sold a building in Bethesda, and we’d looked to disposing of a couple of assets. But we haven’t seen any really significant evidence of reduction at this point. But it’s certainly something that we will all keep an eye on.

Okay. And then last question, any discussion among your tenants and any of your commercial property types about the lease accounting changes and how that may or may not impact their desire to lease space?

That’s an interesting point. I haven’t seen any evidence of it yet. And certainly we’ve heard people talking about the trend that maybe the leases will start getting shorter. We haven’t actually run into a tenant who has not signed the lease because they’re bad or not signed a longer-term lease and then shorten up the term because of that yet. But it’s certainly another subject area. We have rumblings up, we just haven’t seen specific evidence of it yet.

I was at a conference by our auditors on this topic. And one of the participants in the audience said they signed a 10-year lease with some credit public company tenant and in that lease there was a right to terminate the lease if the new lease accounting standards went through. And that was the first evidence that any one in the audience ha heard that somebody was actually reacting to that thing.

Wasn't Northrop decision to purchase there in Virginia partially driven by that?

That’s quoted in the press that way. But there was a lot of strategic decisions made in there in terms of wanting ownership. The other thing I would just note that, because we have a significant amount of smaller tenants, clearly how many of those will really be concerned about GAAP anyway. So certainly the bigger guys are going to think about it. But what we are seeing in it is a tremendous amount of seminars. In the DC Metro area there is a lot on the topic.

Our next question is coming from Suzanne Kim with Credit Suisse. Please proceed with your question.

I just want to get some more color on your ATM usage with the acquisitions that you potentially are thinking about in the next couple of quarters and just how we should think about that dilution?

It’s hard to say because there are no future acquisitions until we have one. As we have said in the past and we’ll continue to think this way at least as we go through some modest probably modestly leveraging over an extended period of time and the way we would delever is by as we add acquisition to obviously we're going to fund the portions of the acquisitions with dispositions cause we are recycling some assets. The net number would generally be funded with equity so if we do $50 million and we sell a $20 million deal, we’ll probably fund that extra 30 with some form of equity, and not necessarily fund it with just straight debt that released as the plan. Now it is all subject to the cost of capital at the point in time when you pull the trigger on the acquisition. Is it best to sit and put it on your line for a little while and then try and see where the markets go and is it better to just collectively get a bigger tranche of acquisitions altogether and then finance it out part equity part. There is a lot of options. So we’re tired of answering that question but certainly the general being is just that we will continue to delever a little bit over time. And that’s kind of the mode of operation at this point in time.

And I did not catch this at the beginning of the call. I had a little bit of technical difficulty. But you talked about the $9 million in treasuries from all the debt transactions. I'm wondering is that impacting your guidance, or is that net it washes out because of your operating fundamentals?

What was that?

I did not catch, what you said the impact of guidance would be on the fourth quarter?

The impact is basically $0.14 on current share count. And it will be ahead in the fourth quarter so if we had the same quarter as third quarter $0.49 will report something in the $0.35 range.

And impacted on.

That’s where we haven’t changed guidance cause they mean a lot of people on the call, a lot of investors just look kind of past that look at the operational number and as we said the operational number will be towards the higher end of the range. But when you take that $0.14 off, we are kind of at the lower end of the range.

Okay. So you are still maintaining your guidance range?

Yes.

There are no further questions at this time. I would now like to turn the floor back over to management for closing comments.

Okay. Thank you, everyone for listening to our call this afternoon. And we look forward to following back up with you at the end of the fourth quarter. Have a good weekend.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.