Good day ladies and gentlemen and welcome to the first quarter 2008 Essex Property Trust earnings conference call. My name is Angelique and I’ll be your coordinator for today. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, President and CEO Keith Guericke. Please proceed sir.

Thank you. Welcome to our first quarter earnings call. Today we’ll be making some comments in the call which are not historical facts such as our expectations regarding markets, financial results and real estate projects. These statements are forward looking statements which involve risk and uncertainty which could cause actual results to differ materially. Many of these risks are detailed in the company’s filings with the SEC and we encourage you to review them. Joining me on today’s call will be Michael Schall, Michael Dance and John Eudy. Included in the earnings release on our website you’ll find our market forecast for 2008. Please note we have made some changes to our rent growth forecast. We will discuss the highlights in the market sections. Also included with our earnings release is a schedule entitled New Residential Supply which includes total residential permit activity for the larger U.S. markets as well as information on mean home prices and affordability as compared to Essex market. To get those details visit our website under investors and media. Last night we reported another strong quarter with core FFO increasing 10.1% per share for the quarter and the portfolio grew revenues at 5.7%, greater than the same quarter in ‘07 and 0.6% on sequential basis. The strong performance was driven by the fundamentals in our supply constrained markets. On today’s call I’m going to concentrate my comments on Southern California where the fall-out from the single family market in manufacturing has led to a weaker job market. Briefly, Seattle and Northern California, the economies and apartment markets in these markets are performing as expected through the first quarter with occupancy rates well above 95% and rent growth on pace to meet our forecast for the year. Going to Southern California, those economies are less reliant…

Good morning – or afternoon and thank you for joining us. Based on the feedback from prior calls I’ve scaled back my prepared remarks to allow more time for the Q&A session. Once again as Keith indicated we had a strong quarter operationally. As expected Northern California reported superior results leading the company with 11.8% seeing property revenue growth well above guidance of 5.5 to 7%. Our Seattle results were also stronger than expected and above guidance. In Southern California our revenue growth was within our 2008 guidance range of 1.5 to 3%, although we continue to see deterioration in operating performance in several submarkets attributable to increasing multifamily supply and/or job losses in specific areas. Operating expenses grew at 4.4% for the quarter, slightly above our guidance range of 2.5% to 4%. Most of this increase as well as the 5.8% increase in Northern California operating expenses was due to our Hillsdale Garden property in Northern California which reported unusually low expenses in the first quarter of 2007 and had a property tax reassessment related to the formation of the joint venture with land owner. In addition we discussed unusually large property tax reassessments at many of our Seattle properties which was also included in our guidance. Accordingly, operating expense expectations remain within our guidance range for 2008. I would like to highlight progress made in improving our operating platform. Our conversion to Yardi’s Property Management and General Ledger System is now 85% complete with 18 properties awaiting conversion at this point in time, everything else being done. We are now running Yieldstar’s Price Optimizer at 24 properties and we’ve implemented call center support at 98 properties and expect to complete the call center roll-out by May 16th. Next topic is loss to lease which estimates the difference on…

Thanks Mike. My comments today will briefly highlight our first quarter financial results and provide an update on the 2008 guidance. After excluding non-recurring items of $.23 a share of preferred interest income, the recurring funds from operations for the quarter was $1.44 per diluted share, an increase of $.10 over the $1.31 reported in 2007. The March quarter results beat the first cost consensus estimate for funds from operations by $.05 a diluted share. The same property NLI growth at 6.4% beat the high end of our 5.4% guidance. And this outperformance contributed $.03 per share to the first quarter’s funds from operations. Our 2008 guidance did not forecast the 100 basis point drop in interest rates on the variable rate debt. This significant drop in short-term rates added another $.02 per share to the quarter’s funds from operations. On S5 in the Supplemental Financial Information attached to our press release we disclosed almost 240 million in tax exempt variable rate mortgages with a weighted average interest rate in the first quarter of 2008 of 3.8% compared to the 4.8% paid in 2007. These mortgages are variable rate demand securities and are exempt from federal income tax. They also are credit enhanced by either Freddie or Fannie. And even though the debt has 20 to 30 year maturities investors are guaranteed repayment at par when the bonds are repriced every seven days. We are currently benefiting by the increased demand for this debt as investors seek low risk, short-term investments. As a result of severable interest rates on our short-term variable rate debt we have revised our estimate for 2008 interest costs, net of capitalized interest to 84 million compared to original guidance of 87 million. This severable variance is offset by the impact to net operating income from the revisions to our total Southern California job estimate. With the new estimate we have decreased our estimated rental revenues in Southern California by approximately $1 million. If the economy stays weak through 2008 we believe that short-term interest rates will stay low and the reduction to our interest expense will serve as an economic edge to our FFO forecast. Other than the $.23 of non-recurring interest income from a repayment of our investment in Mount Vista the first quarter results have no unusual items and we believe that the March results will approximate the operating results that investors can expect for the next three quarters of 2008. With no other significant changes to our 2008 guidance I will conclude my remarks and turn the call back to the operator for questions. Operator?

(Operator Instructions) Gentlemen, your first question comes from the line of Michael Billerman with Citi. Please proceed. Michael Billerman – Citi: Good morning out there. Craig Nelcher’s on with me as well. Mike, just a quick question on the guidance. I guess you take the core results out of the first quarter, you annualize them and then you add the gain you had, you sort of get to the midpoint of guidance. So I guess sort of what takes you, if you’re going to have some sequential growth during the year, I guess below that? And sort of, what sort of gets us to either end?

I’m not sure I understand the question. Michael Billerman – Citi: Well effectively if you annualize your first quarter results and you add the $.23 of gain you get the $6 a share –

Right. Michael Billerman – Citi: – which is effectively in the midpoint in your guidance. So it sounds like you’re going to have some growth – continued growth in NOI as you go through the year. So I’m just not sure why you would not lift guidance further. I’m just trying to understand how you think you’re going to fall out.

Again I think just the uncertainties in the economy. We’re being cautious. We do not want to be overly optimistic and be accused of being Polly Ann-ish. So we’re just kind of assuming the status quo for the rest of the year. And that’s why we have a range of guidance. So if we – if the economy remains strong and interest rates stay low we can expect to beat the midpoint of our guidance. Craig Nelcher – Citi: And on the [inaudible] NOI guidance for the year, is there – do you have a new range for that or did the softness in Southern California get offset by strength in Seattle and Northern California?

That’s right. That’s a good point. And it’s really the favorable news and Seattle and Northern California was offset by the reduction in jobs in Southern California. Craig Nelcher – Citi: I’m just looking at a development pipeline page, a couple of the development starts were pushed back a little bit. Can you talk about what that was driven through, whether it was just the development timing issue or a decision that you made internally?

On Belmont Station we put a – I’m sorry?

Starts, he’s asking about starts.

Oh, starts? Craig Nelcher – Citi: The start date.

Yes, start dates are as you know on the estimated dates that we put out, there’s a lot of future guessing as far as the exact timing. There are variables that can happen. We have extended a couple of underlying leases to basically time the delay for example. Essex Hollywood would be one. We were going to start it sooner. We chose to extend the current lease with the tenants in the building out until September of ‘09. That’s one example. Beyond that, do you have specific ones you – Craig Nelcher – Citi: No, that was specifically – so is that for timing just uncertainty in the market conditions or on liquidity size or –

We had the ability to extend the lease and we chose to do that. So we’re pushing the development out a little bit. And as comments have indicated that the market might be a little bit soft there we figured delivery in 2011 would be a better timing execution. In the meantime the return that we get on the lease is in the 6% range, just over 6% range on our acquisition price.

Your next question comes from the line of Karen Ford of Key Bank Capital Markets. Please proceed. Karen Ford – Key Bank Capital Markets: Hi, good morning. Just a clarification. You said in the first quarter that you received $7.5 million of preferred income but recognized 6.3. Will you be recognizing that balance or has that already been recognized?

We have an investment balance of 1.3 million so they were completely paid off. We got a – similar to a Mez loan with an equity kicker. So we’ve been completely paid off and we will no longer have any – Karen Ford – Key Bank Capital Markets: No more recognition then.

Yes. Karen Ford – Key Bank Capital Markets: Okay. Next question is it’s kind of like from your commentary that based on the work you’ve done on the sources of the job losses in Southern California that you think most of the bleeding is going to be done by the end of ‘08. Is that accurate?

That’s correct. The way we address that is we try to look at the – define the new jobs as sort of this housing bubble which started in 2002. And so what we’re really doing is we’re looking at what happens if all those jobs go away. And with current rates we’re seeing the majority of that bubble goes away by – depending on the submarket, third quarter, fourth quarter of this year. And so yes, that would define our expectation of the outside. Karen Ford – Key Bank Capital Markets: Great, last question is what do you think the biggest risk is to performance in Seattle? It’s been quite the juggernaught. We keep hearing things about some new supply coming in. What do you – is that sort of the biggest risk that you see in Seattle?

It’s always a combination I’d say between – as long as the job growth continues at the current level I think there’ll be the demand that’s required to support the new supply driven online. There are large concentrations of new product. I’d say especially at Belleview. And, you know, and our portfolio’s pretty interspersed throughout the Seattle economy so we’re not necessarily, you know in the hotbed of the new supply, that, anyway our view right now is that the combination of jobs on the one hand, job growth on the one hand and supply on the other hand and we should be fine up there. If that changes then, yeah, the market could soften up because we know with 100% certainty that obviously the supply comes online.

Great, thank you.

Your next question comes from the line of Dustin Pizzo, Banc of America Securities. Please proceed.

Thanks, good morning. Keith, on last quarter’s call you discussed that there was, you know, a clear disconnect between the buyers and the sellers in the marketplace and it’s something that we have continued to hear on various turn-ins calls this quarter. Have you seen any change in that in your markets in that dynamic recently, either for the better or worse?

No. I think it’s—we’re still very consistent. The stats that I gave you with respect to cap rate were based on, in northern California, five or six closings, in Seattle, less than that, you know, California or similar sorts of things, just a handful of closings. You know, there was a lot of listings, especially in southern California right now by privates as well as public companies and, you know there is a lot of activity but it seems like things go into contract and buyers come back for very large price hits and things generally fall out because, you know, again it’s not like the early ‘90s when you had, you know, when you had leverage that was out of hand. Today there’s not a lot of pain. The sellers, if they’re selling, are looking for, you know, for an opportunity and so, you know if they can’t hit somewhere close to their, to the yields they need and they’ve got good occupancy and generally have loans in place and generally whether its’ rent growth or flat-rate growth they’re not going backwards. So there’s just not a lot of pain so I don’t think you’re going to see cap rates move much more because, I don’t know, sellers just don’t have to.

So do you think then that you just continue to see essentially a stall out in transaction buying rather than pricing change to get the deals flowing again?

I would think that, in my mind, it’s either going to take a very long time or it’s just not going to happen because, again, if sellers don’t have to sell, unless they see better opportunities, I mean if you can sell an existing deal and you’re willing to take a higher cap rate because you can redeploy that money at a better yield somehow, that might happen. But I just don’t see that happening. And so I would think that it’s just going to stall out and you’re going to see very few transactions over the next 12 to 18 months.

Okay. So then, you know, given your comments there and given that in the past you guys have been one of the companies to take a more opportunistic approach on investments, I mean, can you just talk a little bit about how you view the risk reward equation for, you know, investments on various sides of the capital structure right now?

Well, again, we think that, you know, the development piece is clearly where we can create some value. The other area and, you know, this is not from new acquisitions but from our existing portfolio, redevelopment is a place where you can see yields on our dollars spent in the 8 to 10% range. So clearly that’s an opportunity for us. You know, we are actually looking at some opportunities where lenders are involved because there is some pain there. And so I think you’re going to have to find those areas where there is pain involved in order to get a better than normal return.

So that would be kind of a tough situation where you may look to do, you know, sort of a loan-to-own type of deal?

A loan-to-own or a buying out a piece of debt that’s underwater or some combination of the above.

Okay, thanks guys.

Your next question comes from the line of Alex Goldfarb of UBS. Please proceed.

Thank you. Good morning.

Yeah, good morning.

Just following up that one little bit on the financing side, what are you guys seeing as far as the Life Companies and Fannie and Freddie? We’ve heard some comments on the call before yours that it sounds like Fannie and Freddie are now lowering their spreads after widening them. What are you seeing on that end and then what are you seeing on the life company?

Yeah, Freddie and Fannie are still about 200 basis points, spreads on a 10-year mortgage which is what we attempt to do. And, you know, Life was probably about 75 basis points more than that.

Okay, are you seeing the Life Co.’s getting — want to be more aggressive in the apartments or more rested on the development side or no change?

Really no change. Alex Goldfarb – UBS: And then as far as portfolio allocation, just listening to your comments on Seattle and just looking at what you’ve done in exiting Portland, if you were going to think about doing some repositioning on the portfolio are there any markets that you’re inclined to increase investment in or decrease investment in?

Yes. The reality of our business is that it’s a combination of cap rates and growth. And, you know, clearly we had the most exciting growth in northern California and Seattle, but it’s also the most difficult cap rates. I mean clearly everything else equal we’d like to see a more opportunities in those two markets. Unfortunately, I mean, everything is cyclical and, you know, these markets, you know will also over time soften and southern California as it gets speeding up is going to create opportunities. So, you know, we’re going to have to look at the combination of cap rates and growth rates over a three-year horizon to really, you know, make those decisions. But I would tell you just, you know, the easy decision sitting here today is, you know, northern California and Seattle is, would be the place that we’d, you know, we feel very comfortable today. Alex Goldfarb – UBS: Okay, and then the final question is just on the new Sunnyvale deal. It seems to — if you cold just provide some background on that. Obviously, it’s come about and now it’s already in the development stage, so if you could provide some color background on that as well as how you’re going to handle the retail aspect of it.

Sure. John Eudy again. We had that in contract for almost two years if you recall, Alex. And we got it entitled in February, got past the SEQUA [ph] challenge period in March and then just closed the property last — about a week ago. In terms of start, we’ve got it anticipated to start February of next year. We’re starting working drawings as we speak. It is a mixed use deal that has about 48,000 square foot of retail. We’ve got a pad out front of just under 15,000 square feet that we have a lease in negotiation right now with a small anchor grocery store and then the rest is in line underneath the footprint of the building of approximately, you know, 32,000 square feet plus our leasing office. Alex Goldfarb – UBS: Okay, thanks.

Your next question comes from the line of Steve Swett with KBW. Please proceed. Stephen Swett - Keefe, Bruyette & Woods: Thanks. You know, Keith, just to follow up on the questions on the cap rates, I understand there’s not a whole lot of data and there’s no pain to force some of the sellers to execute transactions today, but you reference some rental growth rates that may turn negative. And so from a return perspective, you know, it may look that, you know, some of these owners in southern California, you know, a sale might be a better option than a hold. Could you just provide maybe your feel for what cap rate differences might be between, I don’t know, northern California and southern — I’m sorry, northern Orange County, southern Orange County or the, you know central areas of L.A. versus the inland empire? You know, the discrepancy between those areas?

Sure, you know, I don’t have — I have a little bit of data. I was talking to our acquisition guy down there in preparation for this and it’s tough to differentiate a lot. I would tell you that southern Orange County is generally newer product, more A’s. Northern Orange County is sort of the solid, you know, B’s and, you know, A minus, B plus kind of market, so that would just tell you that the cap rates that I discussed for A’s in L.A. or, you know, probably 50 to 75 basis points in south Orange County. I would tell you that Inland Empire, not because we’re looking out there, but because brokers give us feedback all the time, cap rates are probably six-and-a-half to, you know, say [inaudible] point 6.5 so maybe 6 to 7 depending on the quality of the real estate because I think everybody is recognizing that there’s going to be a lot of pain out there for a fairly long period of time. Stephen Swett - Keefe, Bruyette & Woods: Okay, and then Mike, a couple of operating questions. On the gain-to-lease that you referenced in southern California, have you seen any change in, as the spring has progressed, I mean, I think you referenced that you had to get more aggressive in rents to hold occupancy. Has it changed with the typical seasonal pattern or is it still weak?

Really Steve, it’s — very little time has passed since, you know, the quarter ended, so I don’t think that we’ve seen a change thus far. But I will say that if you look at that number it is highly concentrated in our larger buildings so, you know, for example Hillcrest Park which is 600 units right next to Ventura County, is about 800,000 of the three million. Southern California gained the least number and so it tends to be heavily focused on larger buildings in a couple of those markets and I think it’s too early to tell if things have changed. What we’re trying to do it be a little bit defensive about it and try to make sure that, you know, if the world — if we don’t see a lot of evidence that the world is getting better then we’ll assume that it’s getting worse and we will just hold occupancy wherever we can. And so I think it’s sort of — it’s the right strategy given that market and, you know, if we get surprised on the upside with better traffic patterns and job growth then, you know, that’s great. Too early to discern whether it’s changed from the first quarter, though. Stephen Swett - Keefe, Bruyette & Woods: Okay, and then last question, sort of related, as you roll out Yield Star you obviously have various strength across all your different markets. As it gets implemented is it something that you expect that Yield Star will provide the rents and you’ll go with those? Or is it something that you’ll roll out a little more slowly and just let your leasing people get their hands around, you know, how it works and what the numbers are that are recommended?

Well at least initially I think the beginning part of the roll out has been a little bit slower just because you do end up with some data conversion issues and, you know, making sure that you have [inaudible] codes and things like that correctly working. And so that part of the roll out has been a little bit slower. And then we are, the second part of that is, you know, we are constantly testing the Yield Star results against what we know about the market and so we want to be, yes, we want to be very careful in terms of how we roll it out. So, you know, that we expect to roll out, you know throughout the rest of the year and essentially be close to done some time in 2008. And do we’ll speed up from here unless we have some difficulties. But it is a more, you know, the level one conversion was started at the beginning of the year and it’s almost done so that was a very quick roll out. Yield Star is a bit more complicated and therefore could possibly have more air and also it’s critical importance to us. So we are being pretty cautious when it comes to that roll out. Stephen Swett - Keefe, Bruyette & Woods: Okay, thanks.

Your next question comes from the line of Rich Anderson of BMO Capital Markets. Please proceed.

Thanks, and on Yield Star, when do you expect that to be fully rolled out?

By the end of the year.

Okay, I don’t know if you said that, but I know it now. You know, nobody should be assuming 10 to 12% revenue growth in any market, you know, in your case Seattle and northern California for any length of time. It’s not sustainable. So in your mind what are some of the factors besides maybe supply and affordability, maybe that’s it, that are sort of inflating revenue growth there and what would you sort of say to people about the longer term expectations for revenue growth in those two, you know, good supply-constrained markets?

Well, I think if you track revenue growth for Seattle and northern California, you know, over a longer period of time you get somewhere in the 4% long term average, you know, rent growth. So you’re right. Those are not sustainable over the long haul. Having said that you also have, you know, sort of the cumulative effect of this business and, you know, it’s really what loss-to-lease has meant to capture in that we had pretty significant increase in rent last year in 2007 and really we’re turning — we’re continuing to turn leases so we have — we will continue to capture some portion of loss-to-lease which won’t be, going forward, at double digit range but it’ll slowly taper off throughout the year as we price more and more units in the inventory. So does that answer your question?

Yeah, and for northern California, the Bay area, what would you call sort of the long term trend?

I think it’s about the same. I think those two are pretty similar, Seattle and northern California, somewhere around 4%.

Okay, would you guys be buying back stock at $120 a share?

No reason to.

Okay, and then just a question on just sort of the makeup of the market in terms of the tenants. How open are you to, you know, bringing in tenants that may have just lost a home, you know, angry tenants that are upset about their circumstances. I mean, are they in some cases very good tenants and how are you tackling that opportunity?

You’re saying someone that lost their home in foreclosure?

Yeah.

Yeah, we are making an exception for that person because, you know, in general we don’t want people that are either as a result of foreclosures living in, you know, apartments where they have, you know, where it goes into the credit history. But in that case given what happened there were many, may people that are very good credit risks that just got in essentially over their head. They bought off on very expensive homes and, you know 95 to 100% financing that they couldn’t afford and everyone knew they couldn’t afford it but they took it anyway. If we find people in that scenario we will make an exception and for a sublet, you know, I don’t remember exactly, but it’s slight increase in deposit we will accept them as tenants and we’ll do that throughout our, well, the entire west coast.

Any idea what percentage, I mean, of new tenants are of that category?

You know, I don’t track it. I know that there are several, you know, in that category. So we do make exceptions on an ongoing basis but I don’t have a number for you.

Great, and kudos on the brief comments. I think that that’s a better use of your time for the opening remarks. Thank you.

Your next question comes from the line of Jay Haberman of Goldman Sachs. Please proceed.

Hey guys, good morning to you. Keith, you mentioned some of the impact obviously on the construction job losses as well in manufacturing. I just wondering, you know, obviously given the decline in single family home prices what are you seeing outside of that in terms of say retail for example and employment there?

You know, in — and we can take those markets sort of one by one. In Seattle, you know, everybody talks about all the cranes. And the cranes aren’t all residential. There’s a lot of office et cetera being built. So in Seattle the retail and office market seems to be going at sort of the same level it had been. Northern California is very similar. It’s got a strong new construction especially in the office in Silicon Valley. I don’t know if you can hear this but we’re getting some feedback buzz here. Anyway. And then in southern California it is slowing down a little bit but not, you know, I don’t think we’ve been able to measure that yet.

Okay, just trying to get a sense, I mean, it sort of sounds like you’re indicating the bottom might be late this year and I’m just sort of wondering what gives you that confidence given that home prices are continuing to decline and some estimate that we’re only sort of half way through the price declines so far?

Okay, there’s sort of two questions there. Are you talking about the decline in single family or just generally in retail office?

Decline in single family but ultimately your expectation that sort of job losses sort of bottom out late this year?

And the reason for that is, what we do when we look at jobs relative to each of these sectors, is we sort of look at what’s the long term trend has been for those jobs. And then what we’re really doing is we’re saying that the jobs that we’re talking about going away has been the bubble piece of the job formation. So take that and then you look at how the permit activity has dropped off and in our markets, even thought we’re producing in generally in the California markets, a half to three-quarters of 1% of existing stock, the permit activity is dropping off. So as that permit activity drops off, obviously there’s nothing to follow up. Anything that’s in construction today is going to get finished so we’re assuming that we see the existing project finish up and then we’re going to see a drop off back to sort of historical norms with respect to anything that gets started.

Okay, and just, you know, switching gears in terms of redevelopment you mentioned the returns there, seemingly attractive versus obviously current cap rates, but do you plan to expand that program much from the current base?

Over time we will expand it. We are retrenching a bit there and trying to compress turn times for units in the redevelopment programs. And we’re also mindful of the fact that we really don’t want to be tearing apart our buildings when we’re struggling a little bit sort of economically so we’re being a bit more selective as to redevelopment activity, but the long term implications, the long term opportunities of redevelopment remain very strong.

Okay, great, thank you.

Your next question comes from the line of Michael Salinsky of RBC Capital Markets. Please proceed.

Good morning, a quick question. Coming and just looking at what you’re seeing in the markets right now, looking at asset pricing, maybe a way to come at it differently, have you made any changes in your acquisition or development underwriting assumptions over the, let’s call it, six months?

Well, in our acquisition, we haven’t bought anything for, or closed anything for six months so the answer is we’re looking at how can we make transactions accretive in today’s world given our — and again it’s not just the asset price. It’s the asset price coupled with our capital cost. And in today’s world given where, you know, thank God our share price has come up recently, but when our share price was down where it has been in the early part of the quarter, interest rates the spreads on Fannie and Freddie are up from 80 basis points to 200 basis points and cap rates haven’t moved comparably. You’re just not going to do anything. So the answer is, yeah, we’re looking for, you know, on the acquisition side a minimum of five-and-three-quarter, preferably above that. And on the development side we haven’t put anything new in contract other than we’ve got the portfolio that’s been there for a long time, but we haven’t put anything new in contract in a couple of years. So yeah, we are being mindful of the changing asset values.

Okay, no, that’s helpful. Second question, in terms of your guidance that you originally provided for ‘08 you had $100 to $200 million of projected dispositions. Have you outlined those assets first of all? And second of all, if you have outlined what do you expect the timing on those transactions to be?

We did not identify them necessarily in the guidance. We are generally looking at our lower quality assets in southern California, which is going to imply a slightly cap rate for those dispositions. We’ve got a couple that we’re working on right now but nothing far enough along to report on. We generally don’t report those until they’re in contract with contingencies removed. But that’s where — that’s the profile that we’re working on.

Okay, any thoughts at this point in April about starting another fund?

We’re looking at it. When our share price was in the $100 range the fund cost of capital made tremendous sense as our share price continues to pick up some, you know, pick up a little bit it becomes more of a difficult comp, I mean we have to compare the cost of our equity on balance sheet versus the fund. I mean clearly, I think some of our peers who have gone into the fund business look at it as a separate business. We look at it as an alternative cost of capital and I think today if we can get a little bit more traction our share price were to move a little bit better, the balance sheet’s probably a better place to finance. But we are — right now that is an ongoing discussion in-house.

Okay, related to that, what kind of referral rates would institutional investors be looking for at this pong?

Well, that’s part of the problem is that we have a cadre of investors that invest with us, Fund One and as a result of the great results of Fund One are in Fund Two and they have a certain expectation. If we were to go out and try and find lower hurdles we’d probably have to go out and approach new investors, which is a lot of work and it’s very expensive. So I think that we can probably expect sort of the low to mid-teens generally in the marketplace but we have not proved that at this point.

Okay, and then finally you had the $0.23 cent gain here in the first quarter and I know your guidance for the full year doesn’t assume any additional transaction activity. I mean, is it covered completely there at this point or are there a couple opportunities that you’re looking at that could produce some additional income maybe in the second half of the year at this point?

Yeah, we’ve always go things that are there and depending on the opportunity we can pull the trigger or now. Nothing significant though.

Okay, thanks guys.

(Operator Instructions) Your next question comes from the line of Steven Rodriguez of Lehman Brothers. Please proceed.

Hi guys, forgive me if you talked about this already, but I was wondering if you could give us an update on funding the development? I see you guys have about maybe another 350 million of remaining costs of the End Place development?

Yeah, this is Mike Dance. We have a pipeline of unencumbered assets that, you know, as we, for example John mentioned we can close on Tasman [ph]. This last quarter we put an unencumbered asset into a [inaudible], see which one gives us the most attractive pricing and coverage and to win. We measure them on several different metrics and make a decision to move forward on them. And so we just keep an unencumbered pool going from the development pipeline. On a short term basis we have the bank line and that’s got about 150 million in capacity on it so it’s kind of the combination of the bank line for short term needs and the secure line for taking down the equity piece.

And then probably the other piece that I discussed earlier, the disposition program is looking at 100 plus million which would be, as I said, selling some of these lower brand stuff in southern California which is higher cap rates. Those higher cap rates will certainly marry up with a development deal much better than they would with a reinvestment in acquisition.

Is it fair to say that, I mean, should you sell in the lower range? Say 100 million or less of assets? You could expect a lot more secure debt, maybe 50 to 100 million or even more so?

That’s right.

All right, thanks.

Your next question is a follow-up from the line of Michael Billerman of Citi. Please proceed. Michael Billerman – Citi: Can you talk about how the development lease-ups are going and in particular looking on the pipeline? Belmont Station’s operations was pushed back a couple of months and the Grand was pushed back a couple months.

Yeah, Belmont, delivery of the physical product got delayed for a combination of reasons and that’s the reason the lease-up hasn’t really ensued yet. We open up a temporary leasing office next week and within this next quarter we’ll have pretty good visibility on how that’s going. As far as the Grand, we pushed it to January just because we’ll have our pre-leasing — we’re going to physically complete the building just around Christmas time and the initial occupancy in January is more realistic at this point. The one fund asset that we have, East Lake opened up about a month-and-a-half ago up in Seattle on Lake Union. That’s at about 67 or 68 leases as of the beginning of this week and it’s going, you know, fairly well. Michael Billerman – Citi: And how’s the rents you’re receiving compared to what your expectations were say a couple months ago?

Slightly up by a couple of pennies. Michael Billerman – Citi: Okay, thank you.

Ladies and Gentlemen there are no further questions in the queue at this time. I’d like to turn the presentation back over to your host for today’s call, Mr. Keith Guericke. Please proceed.

Thanks for joining us on the call and we are here for any follow-ups if you need it and we hope to have you on the call next quarter. Thank you.

Ladies and gentlemen this concludes the presentation for today. You may now disconnect. Have a wonderful day and thank you for enjoying today’s conference.