Ladies and gentlemen, thank you for standing by. And welcome to the Duke Realty Fourth Quarter and Year End 2012 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer period. Instructions will be given at that time. (Operator Instructions) Also, as a reminder, today’s conference call is being recorded. I would now like to turn the conference over to your host, Mr. Ron Hubbard. Please go ahead.

Thank you, Ann. Good afternoon everyone. And welcome to our fourth quarter earnings call. Joining me today are Denny Oklak, Chairman and CEO; Christie Kelly, Executive Vice President and CFO; and Mark Denien, Chief Accounting Officer. Before we make our prepared remarks, let me remind you that statements we make today are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. For more information about those risk factors, we would refer you our 10-K that we have on file with the SEC dated February 25, 2011. Now for our prepared statement, I’ll turn it over to Denny Oklak.

Thank you, Ron, and good afternoon, everyone. Today I will highlight some of our key accomplishments during 2012. Christie will then address our financial performance and progress on our capital strategy. We’ll then share more details on our 2013 guidance. Our solid operational performance, strong new development starts and continued progress in repositioning the composition of the portfolio consistent with our strategic plan resulted in an outstanding year for Duke Realty. A few of the highlights for the year were as follows. We signed a near record 29 million square feet of leases and achieved a record 83% tenant retention rate. We improved in-service occupancy to 93% and grew same property NOI 2.5%. We commenced $520 million in new development starts and acquired over $800 million of industrial and medical office properties, and completed $153 million in dispositions, again in accordance with our repositioning strategy. And we issued $600 million of unsecured debt at weighted average yield of 4.2%. I’ll now touch a little bit on the overall market conditions that we are experiencing and how that is affecting our business. First, let me say that we did not really feel the effects of the fourth quarter negative GDP growth announced yesterday. Overall activity in all product types was reasonably consistent for us this quarter. Industrial market across the country remained solid as reflected in our portfolio. All the three of our markets are over 90% leased and nine are over 95% leased. Leasing activity is robust and build-to-suite development is active on a national level. Net demand for warehouse space was 40.8 million square feet in the fourth quarter, making it the second strongest quarter since record keeping began in 1993. An example of this strength is Indianapolis industrial market which is just 3.3% vacant, only 1.7% vacant in…

Thanks Denny, and good afternoon everyone. As Denny mentioned, I would like to provide a recap of our 2012 financial performance and progressed on our capital strategy. I’m please to report that core FFO for the quarter was $0.27 per share, up from $0.26 per share in the third quarter and $1.02 per share for the full year. Core FFO for the year was at the midpoint of our previously communicated guidance of one penny per share higher than consensus. More significantly, we are pleased to report AFFO of $0.82 per share for the full year and $0.21 per share for the quarter. AFFO per share for the full year represents over 5% improvement from 2011 results and translates into a conservative payout ratio of slightly below 83%. As we projected this growth in AFFO over the prior-year as a result of executing our strategic asset repositioning, which was accelerated by the Blackstone office disposition in December 2011, while steadily increasing our investment in less capital intensive bulk industrial properties and medical office facility. As Denny mentioned earlier, our near-record leasing volume in 2012, combines with the fact that we enjoyed our first full year of rental rate growth on lease renewals since the beginning of the Great Recession, enabled us to achieve 2.5% same property NOI growth over 2011. Our efforts to reposition our investment from suburban office properties into what we believe to be stronger bulk industrial and medical office product types were also key in achieving this growth. From a capital strategy perspective, we issued 22.7 million shares of common stock during the year pursuant to our ATM program, generating net proceeds of approximately $315.3 million. We also generated $600 million of capital through two unsecured debt offerings that bear interest in an average interest rate of…

Thanks, Christie. Yesterday, we announced a range for 2013 FFO per share with a midpoint of $1.07 and AFFO per share with a midpoint of $0.86 per share. This guidance supports what we have been saying for the past three years that our asset repositioning strategy would not be dilutive on a cash-flow basis and would ultimately put the company on an upward plain of growth which is now occurring. Overall, we expect continued slow economic environment in 2013 which is reflected in our guidance. A few specifics on some of the anticipated key performance metrics outlined on the 2013 range of estimates page provided on our website are as follows. Our average portfolio occupancy range for 2013 is expected to be 92.0% to 94.0%. Lease expirations are slightly below average at 9%. Same property NOI is projected at a range of positive 1% to positive 4% growth. Occupancy growth is slowing but we expect slightly improved rental rate growth. On the capital recycling front, we project proceeds from building dispositions in the range of $400 million to $600 million and proceeds from land dispositions of between $15 million and $25 million. Again, our disposition program will focus on suburban office assets and our remaining retail properties. As previously noted, we are already under contract on 25% of the high-end of our guidance. Acquisitions are projected in the range of $300 million to $500 million. We remain selective and focused on high-quality industrial assets in alignment with our long-term strategy. Development starts are projected in the range of $400 million to $500 million. These will be primarily industrial and medical office building build-to-suit projects. We’re very pleased with where we are in our strategic plan efforts and the result is producing for our shareholders. We’ve consistently believe that execution of both our asset repositioning and capital de-leveraging strategies would drive above sector average performance and that is reflected in our strong performance in 2012 and are expected continued growth in 2013. With that, thank you again for your support in 2012 and for joining us today. And now, we will open it up for questions.

(Operator Instructions) And our first question comes from Paul Adornato from BMO Capital Markets. Please go ahead.

Hi. Good afternoon. Denny, in your prepared comments, you mentioned that spec development is returning in a lot of markets but it’s still had a level that’s very not very concerning. I was wondering if you could just tell us who is developing spec now and how they’re getting financing?

I would say it’s a mix Paul of the usual suspects, I guess I would say. I think there is some of the public REITs that have started spec project in some of the major markets. I think we’ve seen a little bit from again the usual folks, PLD, EGP started some in their market’s, DCT. On the private side, again I would say it’s some of the usual suspects. IDI has several speculated projects underplay in various markets around the country. But again the interesting thing is I would say with the possible exception of Southern California, we’re only seeing maybe one or two in most markets. So it’s really nothing that’s -- really overwhelming out there today.

Okay. And looking at the suburban office portfolio, what’s the appetite out there for acquiring suburban office assets that is what are your disposition prospects. And do you have any buildings or markets that are for sale?

I think the advertise is pretty good, Paul. The interest rates obviously have remained low. And the banks are lending. What we’ve really found which is pretty consistent with what we’ve been saying, I would say over the last year or so. Is that in order to have a successful sale today, we really need properties that are in -- at least the mid-80s lease, so above 85%. We are paying a lot of attention to the lease expiration schedule during the next three years. And if you can keep that at a fairly reasonable level, those properties are very saleable today. We’ve seen different folks buy. We are seeing some private, smaller private equity folks. We’ve seen some larger, I would say private equity folks in the market. And we’ve been actively marketing certain properties and I think you will see us actually list some additional properties for sale here in the next month or so. And again, it’s really focused on the markets that we want to downsize our suburban office presence in, which is really our remaining Midwest cities because that’s really where our older suburban office projects are today.

Okay. And what kind of cap rates are you seeing in suburban office these days?

Well, I think we are probably going to be seeing somewhere again in the 8.5% to 9% on in place NOI today. Again, it just depends on the portfolio. I think we’ll do better than that on some properties, and maybe a little bit worse than on some depending on how old they are and just really the quality of the property. We’ve got some, I would say real true Class-A properties in the suburbs and I think today they are probably at sub-A percent cap. And then again, when you look at some of our 25 or 30 year-old industrial projects, those are probably going be closer to the low 9s.

Okay. Thanks very much.

Thanks, Paul.

Thanks, Paul.

And our next question comes from Josh Attie with Citi. Please go ahead.

All right. Good afternoon. It’s Michael Bilerman here with Josh. Denny or Christie, I’m just curious just in terms of the way you approach sort of capital plans and capital issuances, and whether that’s going to change in the future. And I guess, I’m sort of thinking back to, when you did the medical office portfolio in the fourth quarter and put it on the line with the target to do asset sales and those asset sales ended up falling out of bed. And the market with hospitable at the time you did the offering, which was good. But there was a significant likelihood that it may not have been, clearly everything that happened in D.C. with the fiscal Cliff. The market could have reacted a lot different. We could have been in a much weaker situation, and then you would have been in a very difficult situation with high leverage and extended underlying the credit. So, I’m just curious sort of as you go forward, are you going to shift to make sure that you are even more under leveraged to be able to not put yourself into any sort of box where you are going to be the hold into the equity market to delver?

Michael, I’ll start off. First, just from an operating perspective, we’ve been very conservative in terms of managing our line of credit and our liquidity has been quite, quite strong. As you know, we rarely, outside of just timing differences run any balance on our lines and that’s been since the ‘09 time period. And we’re continuing to focus on that operating principle. Nothing has changed here at headquarters in Indianapolis. And specifically as it relates to the third quarter, we were looking at a strong disposition pipeline, a couple of those dispositions. As we discussed in the process and in the presentation, for the equity offering moved away for us. But again, we are looking at this year with a very strong disposition pipeline. And in fact we went to the market here at the beginning of January and executed an excellent transaction for our shareholders and have put the capital strategy, goals and objectives substantially behind us as we had articulated. And then as I mentioned in my comments, we are going to continue delevering as the opportunity presents itself and we continue to drive value for our shareholder with our exceptionally strong development pipeline.

Okay. I guess, how do you think about the offering also relative to your own views of NAV? I think you have expressed at Investor Meetings, an $18 to $19 number, and while the stock is above you need to be offering at $14, $25, obviously doing the amount of that you did as well as the ATM in the fourth quarter. It obviously has a pretty big dilutive effect to NAV. It was earnings enhancing because you didn’t sell assets but it was NAV dilutive. I guess how do you think about those dynamics?

I think there are couple of things, Michael. First of all, we did a significant amount of third party diligence in order to be able to really stand behind this equity offering. And bottom line, our stock price over the past 12 months had traded below our issuance price, 70% at the time. And as we said in ‘09, the things aren’t always going to work out perfectly and that it is going to be a sequence of events with the journey and I think to that point, the $590 million overnight offering that we executed was [de-tighted] as side offer discount that had been seen one of the tide as they’ve been seeing in the market over the past 12 months. And our investors have responded extremely favorably and our stock prices up over 7% since then. And so from that perspective very well received, well retimed and excellent results for our investors and we will continue to approach the market with the same focus, diligence and prowess.

Christie or Denny, this is Josh. Can you talk about in more detail, why the sales didn’t occur in the fourth quarter? Was there a lack of demand or was an inability to kind of to get the price between with you and the buyer?

Josh. Really, there was one larger transaction that we had been working on for a period of time prior to our call at the end of the third quarter, call at the end of October. And that transaction just -- the buyer just walked away from it and I quite honestly can’t -- I can’t explain why the buyer walked away from it because we had essentially agreed on price long before that. So, I wish I could give you a better answer but I can’t.

And just lastly, I know there was a smaller dollar amount but the $25 million of assets sales in the fourth quarter and in the ‘11 cap, can you just explain why that cap rate was so high?

Yeah. That was a small portfolio. We called it industrial, but it was really much less. I mean, it was really sort of single-story suburban office stuff that had been built and it was in Indianapolis and it was -- I think it was 440,000 square feet or something like that and it was built in the early 80s. It just was -- it’s not great property and it was just again one of those projects we had taken off the list. And as you saw, it was $120 million transaction.

And did you mentioned -- I’m sorry if I missed it. But did you mentioned, what cap rate you are assuming on $400 million to $600 million of sales in the 2013 guidance?

Around 8% in place cap rate.

On a cash basis?

Yeah.

Okay. All right. Thank you.

Thanks, Josh.

And our next question comes from Brendan Maiorana from Wells Fargo. Please go ahead.

All right. Thanks. Good afternoon. So, Denny, I just wanted to clarify. So, I thought you said cap rates were 8.5% to 9% on in place NOI for suburban office assets that were 85% leased kind of give or take. But then did you just say 8%, you thought was included in guidance.

I think overall, that’s what we are assuming in our 600 million acres we’ve got some of our retail assets that we believe we’ll sell this year and I think those will sell for a cap rate a little less than that.

Okay. Yeah.

It’s really significantly less than that.

Yeah. So, I had a couple of questions. One, I guess if I look at your suburban office exposure and what you like to sell. St. Louis is 74% occupied, Cleveland 75% occupied, Cincinnati is 85. Is that -- is that 85% threshold number sort of a hard number or do you think that you sell? Do you sell St. Louis and Cleveland which are materially below that number?

But I think what you are going to see us do initially is take the assets that within those markets that are at the 85% plus, lease up occupancy and put those on the market and sell those and then our local teams are working on leasing up that vacant space. So as you will see us as project -- projects are leased up and ready to go, we will start listing those. So that’s really how it’s going to work I believe, Brendan.

Okay. And if I go back to, I think you guys provided maybe with NAREIT, maybe it was sometime around then. My recollection was there was $500 million of non-core suburban assets left to sell and then $300 million I think was retail. So at the midpoint of your guidance for ‘13, you are about $300 million short. Is that just something that maybe bleeds into ‘14, just to give it -- it’s hard to get $800 million of sales done in a year?

Well, right now, what we put in on the range of estimates of $400 to $600 million is really just our best guess of what we can get done this year. So, I believe I would answer your question, yeah. And I just point out something again on the range of estimates. We’ve been doing that every year for a long time now and I think you can look at 2012, but you can look at previous years and we are pretty accurate on all those, and getting our numbers to fall within those ranges. Probably the couple that we occasionally missed are the size of our disposition pipeline and the size of our acquisition pipeline, because that’s really hard to predict. And it’s been harder because we have been doing more recycling in the last couple years. As you know, we are now a lot closer to our target product mix. So that recycling is slowing down a little bit but those are very hard to predict because you don’t know if a big transaction is going to come along or not. So the $400 million to $600 million is really our best guest right now.

Sure. And then as I look at that capital plan for the year, I just wanted to clarify what’s in guidance, I know the development starts at the $400 million to $500 million, if I look at what’s in the current pipeline and what the spend is likely to be, it’s probably in that range too. So Christie, if I heard your comment correctly on the ATM issuance, I guess that probably implies $250 million or $300 million of ATM during the year and is that accurate and is that included in your FFO range?

Yeah. We’ve got cash Brendan. And we’ll be generating operating cash flow and we’ll be going forward essentially matching dispositions with acquisitions. So from an ATM perspective that’s a little high and we’ll see how the development pipeline comes about.

Yeah I mean I know you’re retaining some cash flow as you get the AFFO payout at and give or take 80% but you’ve got and your dispositions are offsetting your acquisitions as you mentioned, but you’ve got the development spend. So I think you mentioned in your comments 60% of the development spend is likely to be funded on ATM is that how we should be thinking about it going forward?

Yes. We should but that’s also you’ve got to take into account the cash, with that cash in the offering.

We actually overfunded that equity with the offering earlier this month Brendan.

But is that really the case - I mean if I look at your debt-to-EBITDA trailing, I think it’s, I don’t have the numbers right in front of me but I think in itself, that’s like 8.2 times and I think your target debt plus preferred and I think your target 7.75 and if I look at debt plus preferred, this is pro forma after the equity offering and then if I look at your debt plus preferred to GAV it’s $52 million and I think you target is some $50 million, so I mean have you really over capitalized as you guys look at it, or am I just missing something on those?

But I think we’re pretty much there.

We are.

Okay. All right. Thanks.

Thanks, Brendan.

We go to the line of James Sullivan from Cohen & Company. James Sullivan - Cohen & Company: Thank you. I have a couple of question on the development pipeline, Denny one of the things that I found pretty impressive over the last six months is how rapidly that’s grown. And so going back to the just kind of midyear 2012 and where you ended the year and what I’m focusing on is the page in the supplement that provides the in-service date by quarter. And I suppose in industrial of course we’re used to that kind of product going up pretty quickly but not so much in Medical Office and so maybe, you can just think a little bit about how rapidly you’re growing that Medical Office development pipeline? And whether all of these projects of project that Duke has developed from the ground up and by that I mean these are not projects that someone else maybe the user had started and you took them over or what but they’re coming from announcement to completion and service they’re coming fairly rapidly. And also part two to that question, you talked in your prepared comments about being very pleased with the backlog, I think you specifically referred to your Medical Office Building and I am curious whether you think that’s - whether that backlog at this point this year how that compares with where it was a year ago. So maybe if you could talk about to those points?

Sure, Jim. Yes. All those projects are projects that we started from the ground up. And my comment on those would be substantially all of these projects are with healthcare systems where we have really a fairly long relationship. You look at places like (inaudible), [Tri Health] that’s a group in Cincinnati, where we’ve had long relationship. Scott & White is healthcare system in Central Texas that we’ve, I think now done four or five projects with over the last roughly 12 to 18 months. [Baylor], we done a number of projects with Baylor over the last five years primarily in the Dallas area market. So of all those healthcare systems that we have these relationships with are really growing they’re very, very solid healthcare systems they are highly rated they are growing as I mention there are also gearing up for this portable care act as it’s going to drive more folks into the system. We’re also seeing a trend of more acuity type services going into the MOB facilities and that’s something they’re gearing up for. So we’re seeing just a lot of growth in that area and those are all projects all those MOB projects are projects, we’ve sourced directly with the healthcare institutions. We’ve done the predevelopment services, we’ve done the development services on the land and we’re in some cases, we’re actually doing the construction in a lot of cases, the healthcare systems have relationships with general contractors and we’re using their general contractor relationship folks to actually built them but again it’s a great business right now. And then looking back I would say today the backlog is probably maybe a little bit higher than it was last year but again if you these projects tend to take longer than say an industrial project on a spec or build-to-suit basis, either one, and so we had a pretty strong pipeline at the beginning of last year when you think that we actually started almost $200 million worth of projects during 2012. James Sullivan - Cohen & Company: And I guess the follow-up question as you talked to potential requires obviously we know the product in the segments that you’re interested in selling and I’m sure that some of the folks you’re talking to would be interested maybe in buying some MOB assets as well and the MOB market has been fairly strong. And I’m curious what your opinion is if you think back over the last 12 months is to how cap rates might have moved down for any particular segment in your portfolio, how you would rank to movement in the cap rates for MOB, some of that period?

Well, I think, I just make a couple of specific points on their one is I think the cap rates have been decreasing very significantly and relatively rapidly on the MOB product and in the MOB space in general and the reasons for that as I think people are now starting to understand that product type better and realize all the benefits including long-term leases very high credit, very stable tenant base, low lease expirations. So I think that’s a trend that’s been going on probably for 2 or 4 years now, those cap rates keep going down and down and down. And then again just looking in our portfolio, we’re really not trying to sell our Medical Office portfolio, I would say, we have a couple of isolated assets in there that we might move this year because they just don’t for whatever reason strategically fit-in with what we’re trying to do, but generally speaking, again we really like that product type, we want it to be around 15% of our business right now as of today its about 15% to 16%. We have opportunities to continue to grow that business as we grow our company and again I think it’s a great product type for us to own long term to provide very good stable and growing cash flow for our shareholders. James Sullivan - Cohen & Company: Okay. Then finally from me in this respect the as you commented the business that has been done primarily so far has been very much relationship driven, where you’re doing multiple projects for healthcare services and then practices that you’ve done business with before, and I’m just curious geographically whether there is in your opinion also scope to grow this your portfolio into geographic markets where you really are less well represented in terms of MOB business.

The answer to that question is yes, Jim. And the first point I’d make on that is when we talked the last quarter about doing the Seavest acquisition in the MOB space that we did early in the fourth quarter, one of the reasons of that was very attractive to us, is it helped us begin relationships with some new hospital systems. A Florida hospital in Florida, we did not have a relationship there and we didn’t really have any MOB in Florida and no healthcare system which is in the basically in the Washington DC, the mid-Atlantic region. And that’s helped us start some relationships with those hospital systems. And then one of the things we really haven’t done yet is look much in the Western half of the country for that piece of the business, but with our abilities there, I think going forward there will continue to be opportunities for us to expand geographically including west. James Sullivan - Cohen & Company: Okay. Thank you.

Jim.

Thanks Jim.

We’ll go to the line of [Eric Franco] with Green Street Advisors.

Good afternoon. I was just wondering could you go through disposition pipeline and just give a broad mix of what will be retail, will be office?

Well again, I think Brendan said it a little earlier, I think if you look at our target disposition less its probably, roughly 50% suburban in office and may be 30% the retail assets that we have left, which again primarily consist of 3 assets and then a little bit as I said, we’ve got a little bit of MOB probably 2 or 3 projects we may try to move this year and then we still have a little bit of that flex industrial space but not much of that as we continue to sell that. So that’s really what the pipeline is and again in dollar perspective, the MOB is probably in the 300 to 500, excuse me, the suburban office is in the $300 million to $500 million range. The retail is in the $250 million to $300 million range, the Medical Office will certainly be below $100 million and I would say the Flex product price below $50 million.

Okay. And is that a (inaudible) interest as well, like is that gross number?

Yes. That’s a gross number.

Gross number, okay. And Denny, I think you talked about last call which is about couple of move outs in your industrial portfolio including a Walmart warehouse in Savannah, just wondering is that included in guidance that is maybe progressed in really some of those spaces?

Well, I’m glad, you asked that Eric. Actually yesterday we signed 500,000 square foot backfill of that 800,000 square feet, come on down time with Walmart and in the new tenant moving in. So we’re pretty excited about that and quite honestly we didn’t have all of that in our guidance but that’s not a -- in the overall scheme of the company it’s not that but what I would say that’s say as and as I said in the prepared remarks, the industrial business is really pretty strong all over right now.

Great. Congrats on that. Just also curious on the development starts, do you intend on purchasing additional land or most of the stock land bank or I guess some of your Medical Office projects?

Well first of all I start on the MOB side, we virtually acquired no land there. 95+% of those projects are on leased land that the hospital owns. And then any other land there is just land that we acquire as we do the project. So we don’t really care any land bank inventory for the MOB business. On the rest of the development, again virtually all of that will come out of our land bank that we have today we’re not acquiring any new land. Occasionally, on the build-to-suit industrial business we would also acquire a parcel of land that the building is starting on as immediately as we’re starting destruction.

Would it be difficult to venture a guess of how much you intend to monetize that (inaudible) in this year, I think you said about $500 million in your developable land bank is that right?

Yes. That’s about right. I would say this year we probably used $25 million to $40 million I would say roughly, I would say probably in that range again this year somewhere between $25 million and $50 million.

Okay and then I guess just follow-up question on development, how far are you away from spec development a lot of different markets are rents still pretty low or where ours or is it just not enough tenant demand to justify it?

Well we started a couple of spec projects last year I guess three including the office building and that I mentioned. We have a spec project under construction in Indianapolis, 600,000 square feet, we have the spec project out in [Chino] which is finishing up here shortly of 420,000 square feet. I think you’ll probably see us start a few more spec projects and again on the industrial side this year, but under a handful is what I would think. Again demand is good, our occupancy is good but the demand backlog has been good but I wouldn’t say again that’s a solid enough position that we will be thinking about starting any more spec buildings in that this year.

Okay. Thank you.

Thanks, Eric.

Next we’ll go to the line of Jamie Feldman with Bank of America-Merrill Lynch

Thank you. So I am looking at sequential occupancy growth in suburban office. Can you talk a little bit more about where you are seeing some strengthen in that portfolio then your expectations?

Well I would say, if I am looking at the markets where I’ve seen some pretty considerable strength clearly Raleigh has been a very strong office market, it continues to do well. Indianapolis has done fairly well. We have seen some big lease activity in what is not a very big portfolio that we have here, but it’s doing well. Activity we have signed a few leases in Cleveland and that in those handful of remaining buildings that we have. We’ve seen some increase in activity in Cincinnati and in South Florida. St Louis has a few larger prospects they are working on. So I mean again that business isn’t booming Jamie, but we’re starting to see a little bit more consistent leasing activity again around the system. Again I am -- Houston is pretty much unbelievable on the office side right now. I think there are like seven or eight spec office buildings going up down there now and proposed signing our lease this month I think those are in the 50% to 60% lease range now. So and again I can’t really think of another market where we’re seeing any speculative office projects. So and any other one I would say South Florida we’re starting to see some bigger interest from some of the tenants down there.

With you is there any -- characterize the kinds of tenants like are there certain sectors that are coming back to life maybe more housing related or is there anything where we are in the cycle you can point to?

Jamie I would say no. I think it’s fairly broad based, I can’t think of any one sector that we’re starting to see a lot of activity in. Clearly Raleigh is always driven a lot by tech and pharmaceutical and I can’t, nothing is jumping out me that I would say is an industry that’s really growing.

Okay and then I am sorry if I missed it. Did you guys give any expected yield on your acquisition activity?

We did not, but I think again we’re focused on the bulk industrial in the key distribution markets around the country. So today on acquisitions if we’re doing some core acquisitions it’s probably 6.5 to 7.25 maybe. If we’re doing some value add like the one we did in Chicago its probably 7.5 to 8. So that’s really where we are looking for these yields to fall this year and again that’s an in place yield.

I thought [Clove] was lower.

Depends on what markets you go to. It’s clearly lower in Southern California today, but you haven’t really seen as buy much there since towards the beginning of last year we didn’t really do a whole lot in Southern California in the second half of the year, because it’s gotten very expensive. But I think the core properties again in markets outside Southern California, but still core distribution markets are in that range.

Okay. And then of the $300 million to $500 million range how much of that you think will be core versus value add?

Well it’s a little hard to say because generally the value add are probably going to be more one-off buildings. Core could be not large portfolios, but portfolio so I think it will probably be 50-50 or maybe 60-40 core to value add this year.

Just to give you a little perspective Jamie, since fourth quarter of ‘09, we have moved or we’ve invested in and what’s better than core and value add I’d call it over 90% leased and under 90% leased. We have invested over $1 billion and a billion and some change in 90% leased or higher, and we’ve invested $1.4 billion at less than 90%. So I think some of these numbers are pretty good and I wonder further out there because we get a lot of commentary around, gee with why don’t you guys do a little bit more on the lease up side and I just think it’s important to remind ourselves that we’ve actually done a lot of investment as it relates to less than 90% and really driven the performance in those investments as well as on top of the development that we have.

Okay. So just to make sure, you said $1 billion is 90% or higher and $1.4 billion is 90% or is lower than 90%.

That’s correct.

Okay. Then finally just thinking on medical office and healthcare in general, what are your basic thoughts just on, I mean, there is a lot of discussion about Medicare reimbursement risks or public pay. How are you guys thinking about just the changes and the potential cost structure changes as you guys are putting money to work in that sector.

Well again this has I would say relatively little effect on the portfolio that we own if any, because this is all healthcare systems that for the most part are private pay. Now that doesn’t mean that there are some Medicare reimbursements from patients that are in those hospitals and are being served by the doctors in those facilities, but again it’s just not a very significant piece of the kind of business we are doing. So we don’t have any concerns about any changes there at all.

If you underwrite their credit with some lower revenue in the future or not really, or you think it’s not even that significant?

It’s not even as significant, but I am telling you the credit we are getting in these MOB’s is unbelievable. I mean, we are getting generally above A rated credit on all of our leases, because the trend that’s happening now Jamie is the hospital systems themselves are buying these physician practices and they are putting them in their MOB’s on their campus and the hospitals are actually on the leases themselves. So we are getting better and better credit in those facilities too.

Okay. All right. Thank you.

Thanks.

Our next question comes from Michael Salinsky with RBC Capital Markets. Please go ahead.

Good afternoon. Just want to go back to Brandon’s question. Is the ATM issuance needed to fund the pipeline you betted in the guidance at this point or is it not?

We are substantially done Michael. I mean, you know to the extent that we issue on the ATM. I mean, you’ll see us do that very selectively. We overfunded on the equity offering. We are driving cash from operations and were net disposition activity based on our plans. So…

Okay. So the balance is expected to be funded with net disposition proceeds and available cash?

Potentially yes, that’s correct.

Okay. You gave expectations for the overall portfolio. Can you give kind of same store expectations for the industrial portfolio in ‘13, kind of your thoughts in terms of rent rules as well as kind of the occupancy target for year end?

Well, I think, you know, we had very nice same property NOI growth in the industrial portfolio in 2012 at 3.1%, which I think was very strong which included - again some of that was from some average occupancy increase and some of that was from the increase in rental rates. Obviously at 94.6% leased at the end of the year I think in the industrial portfolio there is going to less improvement in NOI growth from occupancy pickup, but we do have some good rental rate growth and now embedded in that portfolio particularly on acquisitions as we have done more and more of the markets we operate in have annual rent bumps in the industrial leases. So I think you will see that the NOI growth on the industrial business fee in the probably 1% to 1.5% range this year and then a little bit more of that growth coming from the suburban office just as we anticipate some occupancy increases and from the strong MOB portfolio, which will again come from a little bit of occupancy improvement. Some of our acquisitions had some vacancies in them. Some of our, I would say a little bit older developments had some vacancy that we are getting leased up and then those leases all have very strong rental rate growth built into it.

Hopeful, of the $400 million to $600 million that you expect to sell, how much of that is currently on the market and you have $150 million under contract and how much of that would be on the $150 million that’s under contract how much of that would you expect to be kind of portfolio sales versus kind of one off transaction?

It’s always a little hard to define what’s on the market. I mean, a lot of people know what we are trying to sell so we get, we are in discussions with a lot people that on selling some of those assets it may not necessarily directly be marketed through a broker. So a fair amount of that is already out there on the market. I would say on the retail side those three centers we have will probably be one off transactions just because of their geographic location. The suburban office sales will probably be a combination of single asset sales and smaller portfolios more two, three, four assets rather than I don’t anticipate this year seeing a bigger portfolio transaction occur.

Okay. That’s helpful. As we think about the mix between development and acquisition, what spread do you need between let’s say a speculative property versus - a speculative construction versus an acquisition as well as a build-to-suit versus an acquisition today, just given the 7.25 that your pipeline is currently going at?

Well, I would say today probably there is not a whole lot of difference between the build-to-suit and the acquisition yields today in this market to be honest with you. In previous cycles there was probably more, but today it’s maybe 25 to 50 basis points. Then I would say between acquisition yields and spec development it’s probably 150 to 200 basis point spread before we are willing to take that lease up risk today.

That’s across the MOB sector as well as the suburban office sector as well?

Yeah. But we’re, two things on MOB. First of all as we said we are really not looking for acquisitions there. We did the one, larger one last year to again because it was very strategic for us and then we are really focused more on the development side there and any more there is very little speculative space in that MOB stuff that we are developing. It’s for the last, you know, I would say year and half it has been almost all substantially preleased.

That would characterize you come by that kind of 20 to 30 basis point spread you talked about for build-to-suit. Am I looking at that correctly?

Yeah. But I guess I would clarify that that I think our yields on the development even the build-to-suit development on the MOB side are probably more in the 120 to 150 basis point spread above acquisition yields today.

And we are good at that.

That’s from me guys. Thank you.

Thanks Michael.

And our next question comes from [Thom Tupelo] with Bank of America. Please go ahead.

Hi, the equity issuance, obviously you guys came a long way in getting towards your balances sheet goals that you outlined in that strategic plan and assuming that you do achieve the kind of the growth in the portfolio, you’ve laid out and you do accomplish all those goals. Do you think these goals are still appropriate, since you laid them out all of your competitors had a delevered even further. And even there’s new balance sheet goals that still seem a little out of (inaudible) versus your peers, a little too wide so just some commentary on whether or not you think it’s still appropriate there?

I think what I had mentioned in the remarks is that, we’re substantially of the way there, as it relates to the capital strategy goals that we set out in the ‘09 time period and we’re going to continue to work at - even further strengthening our balance sheet while maintaining substantial liquidity. So we’re going to keep at it, and we’ve made a lot of great progress, as you know.

Sure.

And our next question comes from Dave Rogers with Baird. Please go ahead.

Hey, Denny you mentioned you were positive on both industrial and office and then at least your outlook in your view, how much of the activity that you’ve seen if you can [handy camp] it would be, kind of reconfiguration, trading up or actually net growth in the market?

I would say, let’s start with the industrial business. But I think more of it is net growth to date, than we’ve probably been seeing over the last 3 or four years, but clearly when you look at the overall industrial statistics Dave. For the last, really two and a half to three years, it’s been positive net absorption, here so, it’s net growth. I would say there’s a little less consolidation than we saw inactivity of probably two or three years ago, although there’s still some of that going on. So I think mostly it’s net growth. Again, on the office side today I would tell you it’s mostly net growth also. These are tenants that are whatever reason are their business is good, getting better and so they need space to grow. There’s still some consolidation going on there that we try to be a beneficiary of with our product but we’re starting to see some true net growth in the office sector too.

Thanks. And maybe just focusing on industrial then real quickly, it sound like you expect to see some positive rents spreads for the year, but are you surprised that you haven’t seen more positive moves in market rent growth, and do you expect to see more of the market rent growth in the course of the next 12 months?

Well, I think we’ll see some Dave. One of the issues, it’s still in the industrial businesses is the low interest rates are keeping the cap rates really low. And so that could pressure on the rental rate growth but now as you’re starting to see a lot of these markets get up into the mid-90%s percent leased overall and again still fairly limited spec development. And they’re starting to be some nice upward pressure on rental rates which is great.

You are starting to see that okay. And then how much development do you think you can handle with your current G&A load before you want add some personnel?

I think we can easily wherever we are today and probably, if you think we start at $520 million last year I think easily another $100 million to a little bit more. You know, and some of it depends on the mix, as I mentioned earlier, a fair amount of our healthcare related development is built by outside contractors but, bottom line is, you’re not going to see us adding any overhead, because I just don’t think. We’re not inclined to grow that development pipeline, you know a whole lot more than the $500 million to $600 million. And that’s pretty good, that’s a pretty good annual pace.

And to that point Dave, remember sort of back in the ‘09 time period we really sized our business to that $500 million to $600 million development pipeline that Denny’s talking about. Two points, you know, one; we want to manage the development pipeline and risk profile appropriately, in relation to our total growth assets, to make sure that we are performing above our ratings as it relates to Moody’s and S&P. The second thing too is that, as it relates to spec, as a piece of development within, there we’re also managing that such that the speculative developments that we take on is also appropriately managed. So that it doesn’t take away from the overall strong performance of our company in terms of occupancy and total dollars if you will at risk from a spec perspective.

Okay. I don’t know if there’s a fair question, but I’ll ask it anyway, how much better would the balance sheet need to be if the build-to-suit pipeline became a more speculative oriented pipeline? Would that change your view on where leverage and coverage metrics were?

No. No it wouldn’t. I mean, a couple of the things as it relates to leverage. If you guys look at sort of the leverage at debt plus preferred, less than 50% as well as driving our coverage ratios below 7.75 and above 2 fixed charge coverage, we’ve made substantial progress in that regard and you know the rating agencies are pleased with our progress and we’re going to continue to drive that EBITDA particularly given the strong performance at the investments that we’ve made today, together with the strength of our development pipeline. So no, it would not. And leverage to part of that just from a total market cap perspective, will also come into play are multiple further improves.

Okay. Great. Thank you.

You bet.

(Operator Instructions) And there are no further questions in queue.

Thank you everybody.

I’d like to thank everyone for joining the call today. We look forward to seeing many of you during the year at various industry conferences as well as getting you out towards some of our regional markets. Thank you.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and you may now disconnect.