Welcome to the Washington Real Estate Investment Trust third quarter 2011 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, Kelly Shiflett, Director of Finance will provide some introductory information. Ms. Shiflett, 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 third quarter supplemental financial information is also available on our website. Our conference call today will contain financial measures such as Core FFO and NOI that are non-GAAP measures and in accordance with Reg G; we have provided a reconciliation to those measures in the supplemental. 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. We provide a detailed discussion of these risks from time to time in our filings with the SEC, please refer to pages 7 to 14 of our Form 10-K for our complete risk factor disclosure. 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 of Real Estate. Now, I would like to turn the call over to Skip.

Thanks Kelly. Good morning and thank you for joining the Washington Real Estate Investment Trust third quarter earnings conference call this morning. This quarter and subsequent to quarter-end, we took huge strides in accomplishing a significant piece of our long-term strategic plan with the sale of the vast majority of our highly volatile industrial portfolio and redeployed majority of the proceeds at the strategically located office and retail assets. All these transactions were previously announced and I want to walk through the individual importance of each transaction. We acquired a 345,000 square foot Braddock Metro Center office asset, adjacent to the Metro in Old Town, Alexandria for $101 million. This building fits our stated strategy of being in a great inside the Beltway submarket with great employment driver sitting next to the Braddock Metro stop. While we underwrote vacancy, we believe the location will drive leasing velocity. Next, we acquired the 223,000 square feet John Marshal II building at Tysons Corner. In the near term throughout the entire period of the massive construction going on in Tysons, we will have a fully leased building to Booz Allen Hamilton as its corporate headquarters. Once the construction of the metro is complete, we will own a A-Class office asset with the future potential to increase density significantly within privately guard to the entrance to one of the four metro stops in Tysons and was expected to be a very vibrant market in the metropolitan area. And lastly, we acquired the Olney Village Center, a 199,000 square foot grocery-anchored shopping center in Olney, Maryland, in the heart of Montgomery County. Consistent with our strategy, we continue to like to grocery-anchored centers in the areas with great demographics and this is one of them. Overall, by the end of the year we project that…

Thanks, Skip, good morning everyone. Today I'd like to focus on the third quarter results as well as discuss guidance for the rest of the year. Last night we reported third quarter FFO per share of $0.48, which was impacted by the timing differences related to our strategic sale in the industrial portfolio versus our acquisitions. In terms of Core FAD, we reported $0.38 per share, which included the anticipated higher expenses related to tenant improvements and leasing commissions. As we stated last quarter, we expect higher tenant improvements and leasing commission cost in the third and fourth quarter, due to leases negotiated in prior quarters. The repositioning of the portfolio that Skip discussed is a major focus of ours. The activity, we are in the process of completing and shifted the complexion of the NOI coming from our asset inside and outside the Beltway, adding stability to our cash flow. This quarter's transaction activity increased the amount of NOI coming from inside the Beltway by 400 basis points to 52.1%. We believe the next shift in the portfolio will begin to minimize our exposure to Suburban Maryland office, as we continue to requiring areas that better fit our stated strategy. Operationally, we continue to experience positive same-store growth, NOI growth on a year-over-year basis. Year-to-date and third quarter same-store NOI growth is 0.6% on a GAAP basis. These results are driven largely by rental rate increases and expense reduction, partially offset by loss of occupancy. In terms of capital raising activity, we announced last quarter, we replaced and expanded our Wells Fargo credit facility, improving our liquidity position by increasing our total line capacity to $475 million. With the ability to expand an another $200 million within accordion option. At the end of the quarter, we carried a balance…

Thanks Bill and good morning everyone. At quarter end, same-store occupancy finished above the 9% level for the first time in a quite a while. This is primarily due to the sales in the industrial portfolio and redeploying the capital into better acquired assets. Our leasing activity was steady compared to past quarters and we expect a modest uptick in leasing activity going forward, particularly in the office sector. Translating this activity into our same-store NOI performance as Bill mentioned, same-store NOI growth continues on a positive trajectory on an annual basis. However, compared to last quarter same-store NOI was down 2.6% driven by higher utility expenses and lower occupancy offset by higher rent levels. I will reiterate what Skip mentioned earlier. The stock that's out there in the markets is through leasing agent. Market data absorption numbers in absolute rental levels continue to point to a very challenging environment. Overall rents increased 2.6% over in-place rents on a cash basis and 11.7% on a GAAP basis. These increases will primarily offset by slightly lower occupancy in the quarter. Rents in multifamily continue to lead the way with 4.3% increase of NOI growth across portfolio. Retail continues to experience solid rent growth increases on new leases. Office is definitely more mixed but consistent with our prior statements that it would increase on a GAAP basis but ominously negative on a cash basis. The most challenging rents trends were medical office. It's usually one of our most steady sectors. In this sector we're seeing some tenants push back with our market higher rents in this sector in certain buildings. In the quarter, we were still able to grow a positive 9% rent growth on a GAAP basis, with negative 3% on a cash basis in the medical portfolio. We thought it…

Thanks, Mike. I'd like to make one final comment before we open up the call for questions. Last night, we announced our 200th consecutive quarterly dividend. This is a proud milestone for our company and our Board and we believe it shows our continued dedication to our shareholders during a difficult economic time. The performance of our property portfolio looked sharply over the past several quarters and has allowed us to keep our dividend a priority. Many public companies, REITs especially, can't say the same. We would like to thank our investors for the continued support. With that, I'd now like to open up the call for your questions.

(Operator Instructions) Our first question is coming from Michael Knott of Green Street Advisors.

Just fascinated by your comments about thinking about lessening or exiting Suburban Maryland office over time. Let's say it's about 13% of your portfolio. Just curious how you're thinking about that. And in particular, it seems like that lessening of the margin your ability to continue paying your dividends at the current level. It seems like if you recycle into lower cap rate type assets, that might make it a little tough at the margin.

We're not settling it. There are certain assets there that will be primarily affected. But we have some great assets. So by no means, consider the entire Maryland office portfolio. But you're right that the percentage of our GAAP NOI is about little over 12% of our NOI. Given de minimis nature as it affects everything, I don't believe at all it's going to have an impact on our ability to pay our dividends. I do agree with the premise to the extent there is a trade out there on a one-for-one basis that we'll be trading assets with a little bit lower cap rates. But I don't think it's of a magnitude that's going to impact our dividend.

What's driving that decision? Obviously, just a preference for the district or Virginia office over Suburban Maryland, or is that you might not rotate into other office but into other property sites?

We've said about our strategic plans. Some of the Maryland Off assets may not be on a metro or relocation, some of them, not all of them. And those are the assets that we're targeting. I mean you could pretty much go through our property list yourself and identify the properties that don't sit what we've stated to be our strategic plan this year.

I think Mike touched on this in his comments that the environment is conducive to high CapEx on the office side. Just curious if you can touch on your outlook for that? Is it going to be kind of as it is in this current marketplace through the election, or is there any glimmer of both, that things might get a little better?

One facet of that is the cash CILC, which is just timing. As we're getting to the end of the year, we just noted there's a lot of construction projects that went slower, that will catch up with us in the fourth quarter that we'll be paying. However, on the second front, with the new acquisitions obviously coming more inside the beltway and coming more into D.C., those naturally are generating some higher TI requirements as opposed to, for example, things that we've had in summers. So downtown, we're much more involved with a little bit higher concession packages. We offset that obviously with much more higher rents for this product.

Michael, I would add on that is that when you compare quarter-over-quarter and you look back at supplemental from of course second, third quarters, those are all going to be weighted down by the fact that there is very little TIs in the industrial world. And now we don't have an industrial portfolio anymore. So everyone should expect that going forward, just the math is going to be that they look higher. Because we own a portion of the portfolio, that will always bring the average down.

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

Drill down a little bit on what you think is going to happen in some of your focus markets. For example, Tysons Corner, you're clearly making the decision to get near the metro locations. What's going to take that particular submarket to really turn around? The other is what you've done, which I would not disagree with is kind of buy the B-product A-location in the traditional CBD. Can you drill down on those particular submarkets?

Sure, I'll at least give you my own review, there's certainly many different opinions on these market. In Tysons specifically, we're at huge goal on Tysons long-term. We believe that Tysons is going to be a fantastic market over the long-term. However, I would admit over the next few years, while this metro project and the hot lanes, which is another transportation initiative, high occupancy transit lanes are being constructed, is a very difficult area just to navigate through with an automobile. We're not so bullish in term of leasing traffic over the next several years until this metro project. And that's why we made note of the fact with respect to the new acquisition and at least though 2016 throughout this construction process. Now having said that and acknowledging the difficult leasing conditions, we're actually seeing some pretty good activity at our 7900 Westpark property right now. So that's in line a little bit in the face of that. But I think if I would give you the sort of the overall my perspective on it, leasing in the Tysons area for the next couple of year will be difficult. But I think for long-term with three metro stations being there is going to be a great long-term market. And we're looking for other opportunities there currently. In downtown D.C., it's always been historically a fantastic market. And I will admit that this year has been off of our traditionally high expectations in D.C. There is positive absorption in the market. I think Delta reported 500,000 square feet year-to-date something like that, which is still lower than what we use to having. It's not like the good old days. But we still believe that if you're near metro in D.C., at long-term it's going to be a great location. But I think and as we stated in our overall comments that up until the elation you're going to see a lot of blocking and tackling. A lot of tenants looking to get shorter-term lease extensions, rather than sign on for the long-term. I just think it's going to be somewhat of a flat year or so in the district.

John, I would embellish one other item. I mean the recent acquisitions in the CBD and those C-class, puts us in a very unique situation. People just will be very close to each other, it allow us to do a lot of repositioning of tenants within a combination of buildings now with the exception of one. And then the last peace of the puzzle is, the game plan down there now is working very heavily to distinguish ourselves. The renovation programs and other things going on that will hopefully distinguish ourselves a lot differently from our competition.

Next question is coming from Dave Rodgers of RBC Capital.

First one's for Skip. It was a reduction in the acquisition guidance I guess for the year at least for the tone. 30, 60 days ago, even most recently I think you were fairly bullish on the opportunity to closing transactions with irons in the fire by the end of the year. Have those slipped or those gone? Can you give us some more color on the acquisition market and what you've been looking at?

No. I mean at that time I was referring to the three properties that closed that quarter. So that's what I was acknowledging at that time. Before the last call, we had all the three transactions closed either previously announced or were in the pipeline. So with respect to slip, I sort of knew in the back of my mind that these were projects that we're going to close. Right now, I'll be quite honest that we do not have anything under contract. And we're not in due diligence on anything right now. However, as I mentioned in my comments, we'll looking at a number of things. And I'm hopeful that we'll be successful in lining something up in the next 70 days, whatever is left to the end of this year. But we certainly don't have anything under our belt at this minute. Now, I'd make an overall comment that I do think that although there's a number of things out there, that the offerings have dialed back a little bit. I'd say there's a little bit less opportunity than there was at the end of the prior quarter.

And then on the apartment, I think throughout the year obviously the growth rate you've expected there slowed a little bit, some of that would be effective running off of concession, pre-rent and others. But are you seeing a meaningful difference there move out, rising on rental rate pushes, a little more color on apartment would be helpful?

We think the apartment market is great. And that quarter where we had 13.7%, we cautioned everybody that this is not only non-sustainable, you probably won't see it again, because it was occupancy put out. When you're operating around the 95% level or 96% level where we've been hovering, and you're going to see ups and downs in occupancy. You can't maintain it and especially if you're pushing rents. So we're very comparable with where we are. We don't think that the market is going backwards or anything of that nature. I think this is a natural fine curve around a normal good market condition in terms of occupancy. And now if you were to see our rent starting to go down then you should raise an eyebrow. But I feel very comfortable about where we are. I'm just saying now, because obviously we got much of the quarter left to go, so there'll be an uptick in occupancy at the end of the third quarter multifamily. As again we hover around that 95% level.

Dave, I think one of the things in the quarter if you look at the multifamily stats, you're going to see some pretty good extent growth in the quarters. Keep in mind July and August. I don't know if it was the hottest summer on record, but it was certainly close. So that and because of our success our real estate taxes were higher. So in the quarter we got hit by both of those. Obviously utilities will probably back off in the fourth quarter like we fully expect. So if you take that and normalize the utility and the real estate taxes, the same-store NOI growth number would have been more normal instead of 1%.

Our next question is coming from Brendan Maiorana of Wells Fargo.

So I think Bill mentioned that you expected Q1 '12 occupancy will get better and I'm just trying to reconcile that comment with the outlook that things are going to be in a holding pattern until post election, which would suggest that I'd be in Q4 '12 or maybe early '13. Can you just help me reconcile those two?

I would agree that macro market conditions are going to be flat. The worldwide Washington D.C. buildings will be relatively flat. I think Bill is just referencing some in particularly. We have known retail leases that are signed in House that are taking occupancy over a period of time that are fairly substantial. And we're anticipating some of these leases that we have discussions with in office sector to hit over the next month or so. But I would certainly agree that from a market macro level that there's going to be minimal positive news on a market-wide basis. It is very specific things that we have going on.

And Mike mentioned in his comments that over the last couple of quarters we've signed basically 60,000 feet of vacancy in our retail space, so that's the big one. And I maybe crazy, but I do think our multifamily will pick up in the fourth quarter in terms of occupancy. So that will push overall numbers up a little bit, is the guess. And when you look at with the exception of the one vacancy that we know is coming on December 31, in the office sector in Tysons at 7900. With the exception of that we actually think there is probably some pick up based on some of the leases that we're looking at signing in the office. So there should be a pick up in office, but probably office will be flat to modestly down if I had to guess, going into the first quarter just because of that one vacancy.

But we would consider a very low rollover year for us. It's only 11% of the portfolio on rentable square feet and annualized rent basis turning over. The other significant aspect of it is over a lot of lease transactions, which will tend to be smaller.

The average lease coming up next year, on average if you just do the math, I think it's something like 4,400 feet.

So do you view that as a competitive advantage relative to your roll and your retention ratio? Or is that something that is challenging, because there's probably a lot of 4,400 square foot leases are available?

Well, I would just say there's a couple of thing. Where we are seeing a lot of indices of this as it relates to the budget, it relates to elections and things like that, clearly on larger tenants. Tenants want to go take much larger, bigger blocks of space, and we've had some couple in the pipeline we thought we were going to complete which then went into a hold mode. Many of these smaller tenants particularly that are in the rollover stage, basically steady the ship as it is so to speak. We feel a high confidence level that we'll continue to renew them.

And then Mike, what was in particular that drove that CapEx level that was up significantly in the quarter and relative to kind of the lease rate that you guys got there? It seemed like high CapEx.

I think we might have mentioned at last quarter, Brendan. We did two leases with ULTA, which is the cosmetic, one of the better retailers in the industry. And you can see that that's one of the reasons our rent spreads popped up high for those two leases, which were for fairly large boxes, one in Hagerstown and one in Frederick, had a decent TI component on. But it's the type of tenants that are sort of must have in the world of retail. And maybe one of the best retailers currently out there. So we were extremely pleased to do those leases. And that's really primarily where the excess TIs went.

Like I understand your access TIs and that can make sense. But your sense is getting ULTA in there, is it benefit for the overall center because related TI dollars, is relative to the rent was about 30% of your over all rent, which is, I mean typically for your retail portfolio you guys run, kind of, mid-to-upper single-digits on that metric.

Those are large extremely good credit, high producing as of retailers.

Corporately, higher rent.

Okay. And then Braddock Place I think there's a large GSA exploration at the end of next year. Is that underwritten in, kind of that vacancy that I think, Skip you might have mentioned in your prepared remarks?

Yes, we underwrote that in our analysis. And that vacancy doesn't come till November of next year.

Okay. And what do you guys think of prospects are like for a lease-up of that space?

I think these are excellent, to be honest with you.

I wouldn't be a bit surprised if we actually kept the GSA in there of all things. But we don't have anything in place.

There is two elements. Element number one obviously is directly across the street from the metro which is harder and harder to find near the DC metro region. The second thing, it's within miles of one of the major BRAC relocations. Up to 9,000 people will be moving into that up to an area about five miles away, which creates another major important resource for that property.

So, you think they may stay with a level of discussion that you're having with them, which is about a year-out from their exploration, very high.

This specific tenant will not steady. They may put another GSA user in there. The tenant is one actually going down to Quantico. One of the reasons we will bullish about our Quantico tenant because we knew the tenants were going down there. But it would be replacement. Perhaps, this is completely speculative. We don't have the lease signed or RFP or anything like that in hand, but we feel pretty good about it with the different user, due to the rent levels and metro locations that we can offer vis-à-vis competition.

Our next question coming from Steve Benyik of Jefferies & Company

Just wanted to try to make sure that I understood your revised guidance range and what's really driving that. And I think, Bill you mentioned a negative picks and impacts from just the aggregate sales and excess of the acquisitions. But then that's of $0.04 net, sort of reverse impact related through the industrial sales occurring a bit later in the year. So that is sort of $0.02 negative impact just from the capital recycling fund, is that the way of think about it?

That's a good way to look at it. Now keep in mind that the $0.04 of the industrial timing that includes everything like difference in interest expense and everything else, just because we didn't give the proceeds to pay off line balance and various others. So there's a fully loaded impacts from various parts of the income statements. So you can just can't look at it as just an in and out thing.

So you if you still look at the $0.02 net impact there and you look at the guidance midpoint coming down $0.045. What's the balance of the difference there? Because it looks like from an economic occupancy perspective you are not that far below with the low end of these sort of positive 150 to 200 basis point improvement that you originally had built into the 2011 guidance? I'm just trying to understand where the other $0.025 are coming from?

We're down on average about 100 basis points on occupancy, which is about $0.04, so $0.02 from transaction activity and $0.04 on occupancy roughly. I mean if there's some rounding going on here. So you're really talking about $0.06 on a big picture basis, where we originally projected. And quite honestly when, you'll look at it, I would say we were fairly aggressive on our original assumptions by going up 150 to 200 basis points in occupancy. That wasn't like it was going to happen on January 1, it was going to happen over the year, so if you want to average it like we're going to end up somewhere around there at the end of the year, we're down from there. That's where it is.

So what's the current expectation for yearend economic occupancy with the guidance there?

We think that is going to be about a 100 below where we originally said.

And then just thinking about sort of allocating incremental capital, the acquisition, I know it's not completely in your control, but is your goal that over the next two, three quarters you have $100 million plus of net positive acquisitions or it's just the timing issue in terms of reallocating this capital? Or is it sort of the new leverage level and the way you guys are going to be operating?

I mean I wouldn't set a specific number on over the next couple of quarters. We expect to do this specific number. Obviously we're very focused on acquiring the right kind of assets. And if they're there, if it's $200 million its $200 million, if it's $50 million it's $50 million. I wouldn't put a circle around the number over the next couple of quarters, because we have not done so.

And then just lastly, I guess, when you look at just the higher CapEx cost to release some of the space through the back half of '11 and narrowly 2012. And when u look at where your dividend coverage is today. What's the view on dividend and when you think you might be able to get closer to coverage it? Could that potentially be, you know, a year end 2012 thing or something beyond that?

Steve, I would go out and say, we believe we will cover the dividend when our occupancy gets back to normal levels. And we're not necessarily forecasting exactly when that will happen but that is what we've been saying forever to basically all our investors and our analyst. We're hopeful it will happen sooner rather than later but every time we talk about occupancy it seems its back on exactly the same way we wanted to. So we're working on it. If you look at the acquisitions versus the dispositions we did this year, and we were basically $0.50 basis points dilutive on those trades. So that obviously put a little pressure on it. But at the same time we're buying assets that have better growths. So we think we will still be able to continue to grow into the existing dividends.

Our next question is coming from Mitch Germain of JMP Securities.

Bill, just a quick question on the accounting for the debt repayment charge, that's not going to be recognized at all.

It will be recognized. We will actually have a fourth quarter charge for early extinguishment as debt of about $1 million. And then the reimbursement, I mentioned in my comments will come through in a slightly higher purchased price. So it is two different parts of the world in terms of accounting.

And then, just a little more detail on your capital plan. You said you're paying off a $50 million in notes. Just walking you though the kind of ins-and-out on how you are approaching the balance next year?

We haven't given guidance for next year so I'm not really prepared to talk about how I'm going to do that. But suffice it to say, I am going to collect. So hopefully when the last transaction in industrial sale happens that's around to $68 million transaction and then that $193 million on the line rate now. So you're basically looking at probably paying down the line to getting down to the $130 million range, something like that. So I have plenty of capacity, if it comes up and I'm not prepared to access the markets to refinance it, I'll just pay it off with the lines temporally.

Skip, just looking at the macroenvironment and fundamentals and everything going on, the government, the pause, how are you approaching underwriting today? Have you downwardly adjusted kind of how you're approaching rent growth and vacancy moving forward?

Yes, we usually add a little more into lease-up times essentially. We're a little more conservative on rental rates, particularly vacant space. It's generally how we approach it.

Is your competition doing that as well?

I can't comment on what everybody else is doing. We seem to be finding assets that we must be on competitive out there. But it's hard for me to comment on exactly what everybody else is doing.

Our next question is coming from Bill Crow of Raymond James.

We'll take one more shot at the multifamily in the quarter and not from an NOI prospective, but really from move-out perspective. Rents were up 4%. Is there that much consumer sensitivity that that forces move-outs? So where are these tenants going? Is there any return to homeownership? Is there any sort of move from the Greater D.C. area? What you're seeing from that perspective?

I think two elements are still occurring that we're seeing. One is job change, just relocation in the area, and some is job loss frankly. So I mean it's sort of the consistent aspects of what we were seeing on a turnover, but adding to that, we're refilling this phase. I mean we're maintaining very high occupancy levels and once that space goes, we're filling it.

Hey, Bill. I mean a historical turnover is around 50% multifamily. I don't think where anyone out of the ordinary there. So I mean some of this is a little bit in terms of the occupancy levels, some of this just a little bit of timing. And we have a tremendous amount of our leases that come during the third quarter. And when you got 50% turnover, you're going to have some units that are going to be vacant for a few weeks until you going to fill the name across over the quarter.

I think the element is, always remember, better in our residential portfolio. It's primarily inside the Beltway. It's primarily extremely located, while some of it into the classes. It's got that excellent location.

Do you think your experience in the quarter was kind of in line with the market? And what are you seeing from the traffic perspective?

I don't think that is off. The market is on. We have not really seen a decline in traffic?

And I don't think we've seen a down draft and how much we'll push in rent either. If you look at the actual numbers, if you look at just rent growth and occupancy loss in the quarter that changes in occupancy and the changes in rent. We've more than offset our shift in occupancy by renovate gross. So I don't feel pretty good about it.

Our next question is coming from Chris Lucas of Robert W. Baird.

Just a follow-up question on the traffic issue. Skip on the office side, over the last four months. So I'd like to include October, if I could, what are you seeing in terms of traffic through your vacant or space available. What sort of trend, is it stabilize? Was it slowing? Was it picking up as we get into this quarter?

I'll say it picked up a little bit after the summer and it sort of flat lined a little bit. And you know it depends by sub-market. So it's tough to make a macro, macro comment on this. But I would say it did pick up after the summer. I mean, that's one of the problem with the third quarter is the seasonality effect in the office leasing. We've seen pretty much every year, July and August tend to be relatively slow months from a pure traffic perspective and that's what you're talking about. But I would say while it's come up from a fierce seasonal perspective it's still lower than what we normally enjoy in Washington, D.C.

And then if you look out into next year's exploration, given the market, the lease role, the length of term, what sort of a mark to the market should we be thinking about for 2012 exploration.

I would say that we're somewhere in that. I'm speaking on a cash basis now. I'm speaking from the closer rents in place now at the end of lease vis-à-vis to new ingoing cash rents. I'm not speaking GAAP. I would say that we're at a single-digit negative or somewhere like a minus-5% on a cash basis and it would be up on a GAAP basis. Well, our performance has been better than that. But I think it will be single-digit negative on a cash basis.

Through the acquisition timing issue, I know you mentioned the choices out there weren't sort of diminished as we got toward the end of the year. What do you think driving that, is there been any push back on pricing and therefore sellers are less willing to move forward, or is there dynamics that changed and say may be the summer, when you actually, you announced the sales transaction? Is there anything going on there that you should be thinking about?

I think there's a little bit of confusion out there. We've seen some acquisition that we were blown away by some of the offers that we were knocked-out of the game on well beyond where I thought the world was. And then there's been some opportunities out there where the sellers haven't archive the number and they pull properties off the market. So there's been a little bit of both. I sort of feel and again, we're waiting for the evidence to point to it that there's a little bit of price discovery going on in the fourth quarter. And while some assets are getting some crazy numbers at really good locations, I think there is little be of swappiness out there. Because I've both, I've seen deals pull off the market because sellers didn't get the number they want and I've seen numbers that really exceeded my wildest dreams.

The volume of deals getting pulled, is that larger than what it was happening in the first half of the year, or?

I'd say there's been a handful of them and we usually don't see very many at all.

And then, Will, just a last question just on the dividend issue again. You commented about the need to get back to historical occupancy. I guess could you maybe a little more specific about what that delta is today whether it's an economic occupancy delta or just overall?

I would put it in 300 or 400 basis point improvement category.

(Operator Instructions) Our next question comes from Michael Knott of Green Street Advisors.

Guys, David Anderson has one question.

Just wanted to get your thought on some of the underwriting for some of the deal you did you quarter, specifically Olney Center. I think in the positive you outlined in the press release, strong demographic, T.J. Maxx credit. Possibly maybe some of the downside risk there is in the supermarket maybe the fact that there are several other supermarkets in that area. Do you see when you underwrite that six, seven yield, is that as good as it's going to get. Or what generally on IRR basis, are you looking at, when you're underwriting on some of these retail yields that you've done recently?

Okay, let me talk this generically about. Let me take this piece-by-piece. You raised a comment about the supermarket, in that particular center just to go back to remind everybody, where the shoppers move warehouse, this 54,000 fee and at least expires in 2013 at the end of 2013 specifically. Whether they are the survivor in that market, and store does well by the way it's a well-performing store, there is a lot of competition. Our analysis of that is if the store stays we're happy with that. And they have an option to stay at, when these situations relatively low rent. If they leave, we are very confident that based where that is we would probably split that space and increase the rents dramatically with two other users, and perhaps not a supermarket, but based on the strength of the market in the location that if that supermarket pulls out, we're very confident on our ability to release that and actually have a rent part. No suffer, no perhaps a little bit a downtime, but we'll dramatically increase rent. So that's how we analyze that exposure. Now on an ongoing basis, we don't particularly spent a lot of time on IRRs, because we're really focused on in-place rent and rent growth, moving out of that. And that asset showed very steady rent growth over a period of time, based on the rents in place and the demand for space in that market. So in the absence of the supermarket leaving, we'll see good steady growth going forward from there. If the supermarket leaves, we'll have one year where there's a dip then a sort of dramatic pop after that. But we're very confident that returns will be significantly above our cost of capital for that asset.

Thank you. At this time, I'd like to hand the call back over to management for any closing comments.

Okay, no further comments. Thank you everybody and we look forward to update you at the end of the fourth quarter. Thank you everybody. Have a good weekend.

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