Please standby, we are about to begin. Welcome to the Alexandria Real Estate Equities Inc. Third Quarter 2013 Earnings Conference Call. My name is Cathy, and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now like to turn the conference over to Rhonda Chiger. Ms. Chiger, you may begin.

Thank you and good afternoon. This conference call contains forward-looking statements within the meaning of the federal securities laws. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company’s Form 10-K, annual report and other periodic reports filed with the Securities and Exchange Commission. Now, I would like to turn the call over to Mr. Joel Marcus. Please go ahead.

Thanks, Rhonda. And welcome everybody to Alexandria’s third quarter ‘13 conference call. With me today are Dean; Peter; Steve; Marc and Andres. We’ll continue we hope a somewhat shortened format to leave adequate time for Q&A. I think management’s quick take of the quarter is that we are very pleased with an all around solid third quarter by our entire Alexandria team. Let me comment a little bit about the biopharmaceutical industry. As you know one of the nation’s most dynamic innovation and business ecosystem built upon robust foundation of company, academia and clinical that performance supported then by medical and technological R&D and really act as a funnel and distribution engine for getting life saving and quality of life improving therapeutics to the marketplace. The sector provide significant R&D north of about $65 billion, yielding new treatments and potential cures and things that actually may prevent the onset of disease and ultimately reduce the socioeconomic cost and burden of society as whole. And accomplishing the mission of bringing these treatments to patients, the sector has really sustained a large scale supply chain ecosystem both in R&D and support, production, distribution, et cetera. The value chain continues to evolve, shaped by technological advances that open up opportunities to really new goods and services, including the areas of molecular diagnostics and medical informatics we talked about that before. The sector contributes supports about 3 -- directly and indirectly about 3.4 million U.S. jobs and generates about almost $90 billion of take home income and it has compensation twice the private sector average in the U.S., which is pretty amazing. The industry accounts for almost $800 billion in economic output, almost 3% of total U.S. output. And the economic impact comprises about $375 billion in direct business and over $400 billion in…

Sure. Thanks, Joel. There were two notable trades from other investors in the third quarter I’d like to highlight. The Heights at Del Mar, a 219,000 square foot office, lab building, two building campus which is located in the Del Mar Height submarket of San Diego was sold by Prudential for $126,350,000. The property anchored by Neurocrine Biosciences is also included an 89,000 square foot developed pad. So we estimate the cap rate to be 6.3% and the price per square foot of the improvements to be about $547. So, although, we were admires of this real estate and intimately knowledgeable of the project that it was Veralliance redevelopment, we chose not to pursue this investment based on the pricing and the nature of the tenant. Also 320 Charles Street in Cambridge traded for $52 million or $523 per square foot. The property is currently occupied by the Broad Institute, but will become vacant when Broad moves to their new 250,000 square foot building at Cambridge Center in the middle of next. We decline to pursue this opportunity based on the pricing expectations for this 1940s vintage building. So, with that, I’ll pass it over to Steve.

Thank you, Peter. And I’ll start with a quick overview and then touch on specific leasing items and finish up with couple of key trends of interest. So, overall, the Alexandria's life science cluster markets are very healthy. As we’ve been discussing, the Biotech Index has hit all time highs, liquidity is very strong with 42 IPOs to date raising nearly $3 billion, as well as large and small M&A activity, all driven by genuine clinical results. Alexandria is fully integrated regional teams lease to total of 829,533 square feet and 57 leases during this past quarter at our outstanding assets, driving occupancy gains of our North American operating portfolio did 95%, up 40 bps from last quarter. Also noteworthy is the occupancy rate of 94.5% when including the company’s redevelopment set of facilities, a clear indication of our ability to attract and retain the highest quality client tenants. Cash and GAAP quarterly leasing spreads increased by 4.1% and 16.5%, respectively with the major drivers not only including activity in Cambridge, Torrey Pines in New York but also the Greater DC market in South San Francisco. Finally, as Joel touched on the redevelopment and development pipeline, continues to make steady progress with 228,000 plus square feet leased this quarter and specifically increasing the lease and negotiating percentages to 68% at our New York facility, up from 56% last quarter and now 82% at 499 Illinois, up from 73% last quarter. To touch on the markets, specifically demand in Cambridge in the inner suburbs was very strong with 11 different life science tenants leasing space in the 5 to 15,000 square feet range in the mid to high 50s triple net. We are tracking approximately 1.6 million square feet of demand in this market, split roughly in half between life science…

Thanks, Steve. Same property performance for the year of 2013 is solidly on track for our target of about 5% to 7% on a cash basis and up 1% to 3% on a GAAP basis. Cash-same property performance of 6.5% for year to date ‘13 was driven primarily by contractual annual increases in rent, lease up of temporary vacancy in the first half of ’12, specifically in Cambridge at 790 Memorial and 300 Technology Square and rent commencement for Illumina in San Diego in October of 2012. We completed 461,000 rentable square feet of development and redevelopment projects. These are detailed on Page 26 of our supplemental package, including disclosure of NOI contribution for the second quarter, third quarter and fourth-quarter for your models. On average, our initial stabilized yields on a cash and GAAP basis are up 20 basis points and 10 basis points respectively and our average cash yields are up 10 basis points over our prior disclosures. Debt to adjusted EBITDA was 6.8 times and fixed charge coverage ratio was about 2.8 times and by year-end we're projecting improvement in leverage of approximately 6.5 times and our fixed charge coverage ratio of about 3 times. Non-income-producing assets drop to 19% of gross real estate, down from 23% at the beginning of the year. Outstanding debt under our bank facilities were reduced by over $800 million, or approximately 42% since the beginning of the year. In addition to the $55 million of land under contract for sale, it started to close in December of ’13. We also have $30 million of additional land sales under negotiations that are targeted to close in 2014. The largest sale was approximately $20 million to residential developer in Seattle. As Joel mentioned, we expect to continue to identify additional land parcels for…

So, operator, we are ready for questions if we could, please?

(Operator Instruction) And our first question will come from Gabe Hilmoe of UBS.

Hi. Joel, just on 75/125 Binney and the potential increase to the cost basis in relation to Ariad’s expansion against the TI’s, just so I understand none of the proposed cost for TI’s associated with that expansion. That would bring up the basis, the projects had been spent or planned to be spent at this time. Is that correct?

That’s correct, Gabe. It’s Dean here. We’re still working on the core and sell and none of the interior improvements have started yet.

Okay. And I guess, following up on that, is there anything within the base design that is specific or unique to Ariad using the space. I guess, at this point in time why even consider a design change with an increased cost. The ultimate tenant is somewhat of an unknown at this point?

Yes. The answer is no.

Okay. Thank you.

Yes. Thank you.

Our next question will come from Jamie Feldman of Bank of America Merrill Lynch.

Great. Thanks. I guess, just sticking with Ariad and 75/125 Binney. Can you just talk a little bit more about what happened with Ariad and how we should be thinking about the similar risk and risk to your portfolio or lack of risk?

Well, I think if you think about what we just said or what I said in the opening remarks, 50% of our annual base rent is from investment grade tenants. I’m not sure how many REITs out there have that kind of credit in their portfolio especially in our world, in the biotech and pharma industry but just broadly across even the office -- the office guys. It’s such a -- over tech guys. I think it’s pretty extraordinary. I don’t see any big credit risk at all. Certainly, the -- if you take what Steve said, this has been over the past year and half, the best of times in the biotech and pharma industry. There are some exceptions by companies but industry wise, this has been the best time since really the hay day of the Internet when biotech also reached to peak back in ‘99, 2000, 2001. I think if you look at Ariad, biotech is a tough business in general of producing, inventing and then going through the development stage and then ultimately producing medicines for the commercial application. And I would say if you look at almost any number of the top-tier biotechs, virtually all of them have been on the brink at one time or another. I think Tom Andrews reminded me the other day that Ariad’s situation with safety post marketing reminded us of Biogen in the mid 2000s with Tysabri when they were approved in ‘04, pulled from the market in ‘05, put back on the market in ‘06 and had sales approaching $1 billion in 2012. My own view on Ariad is that the jury is still out. The story is still to be written. I think if you look at the deep science behind it, it's pretty clear that this product has an impressive scientific feet because it is not only able to hit the CML and the so-called gatekeeper mutations but it could be effective in a range of other potentially even more important cancers including things like GI Cancer, thyroid cancer, lung cancers, which actually have a much, much larger potential. So I think the drop of 75%, 80% in their stock that’s happened on a number of occasions to a number of the big guys today. I think it determine -- it will be determined over the coming weeks, months and over a period of time, over the next year or two to see what the ultimate story is. But we are ready for all eventualities.

Okay. And then, can you also talk about your uncovered expirations, you give a lot of color on what renewal we do next year but just talk about some of the largest leases that may move out or you just haven’t settled yet?

Are we talking about 2014?

Yes. 2014.

Yes. Fortunately, Jamie, 2014 only has a handful of leases on, I think there is two leases that are north of 60,000 square feet and their range are 60,000 to 70,000 square feet. One space, currently have subtenancy unit that will likely extend in that property. On the other space, we clearly expect a renewal on it. So again, the two largest roles for ‘14 are in the 60,000 square foot range.

And the total rolling about a million square feet is 7.4% of the portfolio. It’s actually well below the average we had. So we feel pretty good about that.

Okay. And then finally, what do you think your mark-to-market is on 2014 roll?

I think we’ll talk more specifically on our Investor Day in December but very broad strokes, Jamie, I’d say directionally, relatively in line with our overall performance on leasing or at least our goals for leasing this year.

You mean leasing the spread similar to 2014?

Yes. The mark-to-market, yes, on our leasing.

Okay. All right. Thank you.

Yes. Thank you.

And next we’ll go to Anthony Paolone of J.P. Morgan.

Thank you. Can you just step back and give us a little bit of context around Ariad in terms of the space? They're supposed to come out of how much of it, where it is and also what this may or may not do to just your plans for further projects in Cambridge over the short run?

Yes, that's a good question. I don't know the exact amount of square footage they're coming out of space in Forest City. It's about what, 120,000?

It's about 120,000 in total and two spaces and I believe their lease is currently go out to roughly 2019 on this space.

Right. I think there are 26 lands down which is in the Forest City, University Park area. Those buildings -- at least their main building which has been their headquarters building for a long time is a pretty older-like building. I don't know that it's functionally fit for the company, assuming the company continues to make and recover -- make progress and recover from this hit. So clearly that's a factor. I think the properties are well over 20 years old. So when you talk about where they're coming from, that's where they're coming from and obviously the expansion was going on one metric and given the safety issues, even though it's cancer and then the change in direction on the clinical trial obviously, they've announced they are going to do an earnings call on November 6 when they will give kind of an update. I think the larger question is, in both buildings that we have we feel very good about the ability. We had those today let's say Ariad didn't exist and we have those buildings available for lease in Cambridge, both as single-tenant, two single tenant buildings or two multi-tenant buildings. We feel very good about excellent location and they're very functional. The floor plates are really ideal for kind of lab office. I think the only impact that we see as we move along on the Binney Street project is clearly we want to see this resolved before we announce any further start which we were thinking about doing in 2014 of 50 Binney. So we will clearly wait to see how Ariad gets resolved before we do anything there. So I think that's the practical outcome. And Steve talked about we're tracking about 600,000 to 800,000 square feet of demand in the Cambridge area, some that’s even not known to brokers while we know from CEOs of companies who are looking but haven't engaged brokers. We know of a shadow pipeline that's even larger than that.

How would net rents have to stack up if you went multi-tenant with those buildings in order to get to the same economics that are penciled in for Ariad now?

Well, now construction multi-tenant probably is in the low-to-mid 60s. That’s just where they are today. Ariad’s rent is north of that. So there would be a difference but I’m presuming Ariad is not folding up its tent and going away. Very few companies do that. Beyond this drug, the company does have a pipeline but I believe and I think others believe that this drug has some greater use than the CML use. And if they are successful in treating other types of cancer, this could be a Tysabri story again. And I think again we’ll have to see.

Okay. Thanks. On acquisitions and dispositions on the land sales, what was the reason for just less of those occurring? And did that tie in at all to the acquisition pipeline? Did those come down? Did one drive the other or are they for separate reasons?

No. I think you know just in this business and in any business of selling a land, it is extraordinarily like pulling teeth. We’ve had a number of sales through the year. I think we’ve done pretty well. We’ve got a number teed up and others that were looking to move forward. It’s just one of our timing and diligence and also where you have to repurpose the use. It just takes time. Buyers aren’t willing necessarily especially if you’ve got a resi situation to take the property without contingency. So we just have to be patient and I am sure we’ll be able to do a good job of hitting some important targets as we get through the fourth quarter and well into 2014.

And, on the acquisition side?

Hey, Tony, this is Peter. There are just two good opportunities. One in our TP was a credit tenant, a tenant that we have a great relationship with, and want to build an even better one. At long term, lease and pricing was very good.

And they were actually very instrumental in getting us involved in this property which is sometimes unusual when it comes from a tenant.

Right. So we really like that one and then the Barnes Canyon one in San Diego was something that Dan Ryan had looked at decade ago. It’s near the San Diego Tech Center. It’s a very vibrant area. There are lot of tenants in and around there because of the amenities and the access to the highway. And he really came in and said look we could get this for a very reasonable price. And I’ve got plans to redevelop it. And I think we could really hit a homerun. And so far that seems to be playing out. We have two tenants in that projects right now, one of them will be expiring by the end of the year but we’re already talking to tenant to backfill that space and a nice incremental yield. So both projects were very good opportunities and we wanted to capitalize on that. So we did.

And we looked at -- I mean if you look at, there is a large volume of projects in the market today. And we have said on other calls, we kind of think strategic optionality is the best way to think about it. We look at everything and we should be aware of everything and it’s been a pretty active market issuance. Peter also highlighted two deals we looked at but didn’t pursue that ultimately closed.

Yes. Thank you.

And our next question will come from Jeff Theiler of Green Street Advisors.

Hi. Just quickly to follow up on that acquisition line of questioning. So it wasn’t necessarily that there weren’t opportunities out there? Was it just that the pricing was out of whack or are there things that are still in negotiations that might end up closing early next year? Just trying to figure out the reduction in guidance and that kind of thing?

Well I think -- I think it’s a combination of a number of things. Sometimes there are -- there may be acquisitions. Peter could tell you we’re tracking well -- well over a billion dollars and then in quite a numbers of markets, we turned down a deal in San Francisco that was almost $250 million. So we’re looking at the bunch of things but I think again what our view is at the beginning of the year obviously is tempered by what plays out during the year. Some things were put on the market, pulled off the market. So I think again we’re just looking. Our key driver is obviously to deploy capital to the highest accretive use. And Peter, you could comment further if you want?

Yes. Just to comment on the -- the reason that we haven’t met the original guidance on acquisition does not have anything to do with the amount of opportunities available. It has really been our selectivity on when where we wanted to place the capital. What we do next year, we’ll see at this point in time. I’m sure we’ll give better guidance at our Investor Day but there are plenty of thing available and not just in one or two markets but really broadly across all of our clusters.

And did you gave any updates on your progress in China and contributing your assets to the health care platform?

I would say we have no updates since last quarter. We are still working on that but Steve, you could talk about the one lease we’re about to sign in South China.

In South China, we have a lease out for signature that will be finalizing shortly here that will lease the balance of the projects there. So that one particular facility will be fully stabilized and again that should be done very shortly here with a credit tenant.

.:

All right. Okay. Thank you very much.

Thanks Jeff.

And next we have Sheila McGrath of Evercore.

Yes. Joel, I was wondering if you could talk a little bit more about 29th Street coming online in fourth quarter. That's just part of the building. So is there going to be any impact in fourth quarter and then also just on the shadow pipeline of leasing at that property, how you think demand is shaping up?

Yes. Dean can give you a little bit more details on the onboarding of income but we do -- we will deliver to Roche in December. We also have find, as you know, a lease with a credit tenant for 12000 additional fee. And as I highlighted in my commentary, we’ve got a number of tenants, both credit and non-credit that we’re actually not training people or not just -- at a lot of intent stage, we’re actually at a more robust lease negotiation stage for an additional approaching 84,000 square feet, could be three or four users. So that would bring us up and I think there’s a high probability of virtually all that happening. So that would bring us up to about 68%, almost 70% by year end. Which I think would be pretty -- pretty amazingly dramatic. We feel very good. There is a good demand in the market place. We have interest from Europe, from Japan, obviously domestically. So we see it as -- as we said and as we told the city of New York we view this as a destination. Dean, I don’t know if you want to comment on it.

Yes. Sheila, the answer to your question as far as contribution, it’s roughly call it 700,000 of NOI coming in, that’s fairly small because its being delivered, call it mid December and so -- when you roll it into the first quarter, you get a nice (inaudible) adjustment.

Yes. So if were at 68% or almost 70%, we aren’t including in there additional -- we're hoping Roche expense in the project. None of the 84,000 square feet under lease negotiation right now includes Roche expansion but we just had Franz Humer in the building. And he basically told the packed audience including the deputy mayor and quite a number of other dignitaries that he was certain that Roche would want to expanded its footprints. So we hope that it is a 2014 event as well.

Sheila, let me just add. I think as you keep in mind this project which commenced about 12 months ago. So we’re fortunate to be able to actually deliver space as quickly as we can later this year. And we’re going to continue to work on the fed up and lease up with the remainder of the space. So I think I have taken some questions over time where the capitalization would see in ‘14. I don’t expect it on the project as we had quite a bit of construction to continue to lease up.

Okay. And also Steve Richardson, I think in the prepared remarks mentioned another platform of demand. I'm not sure if I really understood that if you could just go into a little bit more detail on that?

Sheila, just to add or to clarify that. We’ve just seen a real resurgence in the emerging companies, both at the formation stage and the expansion stage. So as I referenced, the Cambridge market there had 11 different leases, all between 5,000 and 15,000 square feet. And we’ve just seen historically that those will mature and a number of them will advance. So we’ve seen quite a bit of growth. The same thing is happening in the south San Francisco market. Now historically we’ve talked about the large overhang there from the Amgen blocks of space but when you segment the market for smaller box of space say 10,000 to 50,000 square feet, you’ve only got 2.9% vacancy. So, again, field by venture capital firms that have a lot of liquidity through M&A activity, through IPOs and so you are really setting the stage for another cycle of demand as we did number of years ago.

Okay. And last question. 499 Illinois, you've made a lot of progress there, if you could give us a little bit more detail on how you think leasing shapes up in the next couple of quarters there?

Specifically, we’ve just got the 8,000 square feet left on the first floor, 28,000 square feet on the second floor. We have roughly a million square feet portfolio in Mission Bay, so this represents the last remaining space. We are in active discussions with people for all of that space and I would expect probably be two or three tenants. And if we are not completed by the end of the year, it would be very shortly after what maybe just one small piece remaining. But our hope would be we would have that completed close to year end.

Okay. Thank you.

Thanks, Sheila.

And next from Citi, we have Emmanuel Korchman.

Hey guys. If we think about the Ariad project just for one more second. Have you guys --

Hello. Are we still on?

Hello, can you hear me?

Nope, you blanked out, so repeat the questions.

Just thinking about Ariad for another second or the Binney project, have you been in any discussions with them, maybe before the November 6 plans release to get some comfort on the timing of when they might come to you and perhaps take back some of that space now while you do see other demand in the market?

We’ve had some ongoing discussions but I think it’s fair to say the November 6 is important date because they’ll publicly unveil their reorganization plan to address the issues that have been kind of trust upon them. So any substantive progress has got to wait for that public unveiling. But yes, we’ve had ongoing discussions so, but I’m not at the moment able to tell you anything more.

Thanks for that Joel and then one other one for me.

Sure.

Maybe, we all know that biotech at times can be a volatile space and we've seen Ariad news, we saw Tysabri a few years ago. Has any of that changed sort of the way you approach deals or have Amanda and her team changed the way they underwrite deals or is there anything else that you as a landlord to sort of the biotech space, can you change anything that you're doing or have been doing to get more comfort or security?

Yeah. That’s a super great question and as soon as we found out about this, we asked our self that exact same question. And so one thing that’s pretty shocking that happens rarely, Tysabri is maybe a good example. Obviously, Ariad’s drug is one of the latest example. But it’s pretty unusual when you have a product that’s been allowed on the market by the FDA and cancer is different than some of the chronic diseases because cancers are generally terminable by and large in many cases. How a safety profile arose the way it arose, I think that was pretty surprising and pretty unusual. I don’t really want to comment more beyond that but I would say that was pretty unusual. And I think there will be a lot discussed in the New England Journal commentary on November 7th about dosing and that’s obviously a critical issue. But let me just say this, this was pretty unusual. What you normally find is a company that’s working on development and then the product just doesn’t work. In other words, the clinical trial was a bust and everybody goes home and the company goes on, either with another pipeline product or if they are one-trick pony then that’s it and that’s few and far between. Most have multiple pipelines but I think the safety profile issue coming up the way it does, I think it’s unknown at the moment at least to those of us who have seen just the base data. How many people had cardio problems going into the trial who had preexisting issues? I think that’s an issue that has to be explored. There is a whole range of things, so I think the answer is you really have a couple of choices. If you do a, I mean we didn’t go forward with Ariad until the product was approved and that gave us a high level of confidence, obviously one doesn’t anticipate very often the safety issue coming back. But yeah, we will be very thoughtful and careful about how we think about development projects even the companies that have a single product on the market as we go forward in the past, I think that wasn’t of greater concern, but obviously this shows that it needs to be, even if it’s once in a every few years, it still is a big question. But I do believe as I said, I think the nature of this product I think, Ariad’s got a good shot if they can respond to the FDA properly. And if they are able to use this in a broader set of indications, this could be an interesting product, assuming it’s not CML limited. But anyway the answer in short is yes, we are clearly looking carefully.

And then maybe a quick one for either, Dean or Peter. On your acquisition commentary in the sort of lower guidance there, am I fair to assume that those projects have sort of fallen out since you raised equity and gave the higher guidance? Or better said, is the pipeline of acquisitions now just smaller as valuations have gone up?

Well, I think the set that we are looking at has stayed pretty large throughout the entire year. I think as Peter said it’s the selectivity that’s been unusual and also I think again if something doesn’t really line up, we generally pass on it. But also there is a cycle of bringing things through the acquisition pipeline in some but not ours but sellers and it takes a whole lot of time. I don’t know Peter you could comment.

Yeah. I mean, there certainly could have been a couple of things that, had they just gone another way, we could have easily sold it. But the negotiation cycle takes a while and because our product is actually a very invoked product, people -- in fact there is more and more investors that really like it. You get into some competitive situations then you feel like hey, go ahead, let this other guy pay that price forward, we will get the next one. So, I think this is just as simple as that. There has been plenty of opportunities. It’s just we are very selective and I think that you guys will quite appreciate that.

And I mean, I think one property that Peter will comment on next quarter it hasn’t closed and it’s in process is I wont say where it is. I mean, what it is, but it’s a property in Cambridge. It’s a property we were kind of interested in but as we heard the whisper number and it’s a good size property, maybe in the -- I can’t remember the exact amount but pretty good size, combination of office and lab. When we heard the whisper number, we just kind of pulled away and said that doesn’t really make sense and so we didn’t even bid on it. But there was a pretty fierce bidding war among the number of institutional investors and a whole lot of pension funds we heard. But that was one that again when it started, when it came up on our pipeline, we said wow. Given location to us, we’ve really liked it, liked the combination but then when it got to the point of what brokers were putting out on the market as the whisper number we just said, it just wasn’t of interest to us. So, I mean that’s a good example.

Thanks for that guys.

Yeah, thank you.

(Operators Instruction) We’ll go next to George Auerbach of ISI Group.

Great. Thanks guys. Dean or Joel, as you look into 2014 on the development spend number, if 50 Binney is kind of out of the running and I'd think that the third building in New York would be out just because of the leased up efforts on the second tower. How do you see development spend trending next year?

Yeah, I think what we’ll do is let and what you just said is correct, we wouldn’t see starting the Third Tower in New York, little too early. We’ve got some leasing to do and clearly until Ariad is resolved to our satisfaction, we wouldn’t kick-off another project on Binney. But we’ll update and we’ll give you very granular detail on the spend number for ’14 when we do our Investor Day. I don’t think I want to preempt at this point.

Okay. And maybe just a follow-up on, well, Tony’s question about the land sales.

Yeah.

I think you mentioned that they sort of flip into next year, so we sort of expect a similar amount of land sales in next -- in 2014?

Well, we do have under negotiation as what I commented on which is the $30 million, but we have also broadly accommodated, George, that we are looking at different parcels and I think, we will provide more color over Investor Day and possibly the next couple quarters on exactly what we might monetize next year.

Yeah. But it should, we would hope that it would be well north of that.

Great. Thank you.

Yeah. Thanks George.

Our next question will come from Dave Rodgers of Robert W. Baird.

Yeah. Good afternoon. Maybe Joel or Steve, for one of you. You have done a great job leasing up space, you have gone from a 2.5 million square feet of availability on our numbers down to closer to about a million square feet? Currently, I guess, one of the question I would have for you is, do you see more of a restricted ability to lease space just due to availability next year to that we should kind of expecting as we think about 2014 leasing guidance? And can you perhaps talk about any kind of stubborn vacancies in that number where you are seeing a little bit better traction?

Dave, I think, again, looking at the 2014 rolls and we have got probably a good 30% under negotiations there, only about 600,000 square feet remaining, half of that is in the mix of Boston in the Bay area. So I think we will have plenty of quality leasing opportunities there. We have talked about near-term development and redevelopment opportunities whether they might emerge from acquisitions that, Peters, had talked about or that we have highlighted in the supplemental as well. So, I think, we have plenty of near-term growth opportunities both in the operating portfolio and the development and redevelopment portfolio as well.

And I guess just given where the leasing spreads are, given where the vacancy in the portfolio is and the demand profile you are seeing, the question before, I guess, was would you see accelerating more development starts? I guess take it more broadly and say do you have kind of a limit or a target as percentage of enterprise value that you would like to see kind of development get up to given your comments, Joel, about how strong the market is today relative to what’s been over the last five or 10 years?

Yeah. I think we look at it on a submarket by submarket basis. I think if you look at the supplement pretty closely you can see us pushing forward a couple of parcels in Seattle. We have very robust demand up there and we have very little product to meet that demand similar in San Diego. I think that’s also true. So I think you will see those two markets will be pushing ahead both development and redevelopments, New York no, obviously Cambridge no, until 75/125 is resolved. We do have -- we have done a good job of leasing space up in Maryland. We are getting tighter there even in North Carolina. I was at the meeting the other day and there was interesting immediate requirement for a fairly large amount of space, we can’t deal with but we are hoping to capture the long-term opportunity through a development there. So, yeah, it’s a little bit of a good conundrum or quandary where we have demand and we don’t necessarily have absolutely immediately available space of the size that they are looking for, I guess that’s a good thing. And remember too, I think, this sector and the sector obviously go through its own mutations, but is less dependent upon the general economic environment and much more dependent upon, it’s really event driven and so that’s what we have to be focused on. On chronic vacancy, you mentioned, do we have any spaces? We did have a few spaces in the suburbs say at Massachusetts over the past year or two that or three years that we viewed as chronic. We had trouble getting traction. We had one tenant we do something with and then it kind of flaked out on us. But we have been very successful, Tom, in the team of leasing virtually all the chronic vacancy. I don’t know Peter or Steve if you know of anything out there that today we would say is just tough space. There are some buildings that may have like a basement level space of 5,000 to 10,000 that just happens that isn’t ideal, but short of that kind of a minor rounding everything, I don’t think we have much.

We used to do, well, we’ve focus on that pretty much but a lot of that was in the 495 corridor out in the outer suburbs of Mass.

Right.

So, we did resolve those.

Yeah. Peter Moglia And.

And we haven’t really had much out since then.

Yeah. And I think our dispositions that we made late last year and early this year helped not only to give us some capital to recycle, they helped resolve some of the submarket issues we just were in love with and I think that turned out to be a good thing for us.

Great. Thanks. And then just final question. I guess touching on those dispositions or potential future dispositions, I know you have got the portfolio largely where you would like it? But given the pricing you talked about in the market today? You can kind of re-contemplate either some joint venture sales, where you would kind of maintain some management and ownership or just more outright sales to continue to improve the balance sheet?

I think on the income producing side there might be minor things in like Pennsylvania asset, or this asset or that asset, but nothing that would be of almost any substance. We don’t have anything that we are targeting right now specifically. If somebody came by and gave us an offer we might consider it in a secondary or tertiary submarket, but we don’t have a think plan. I think on our game plan for 2014, Dean, is that a fair statement?

Yeah. That’s true. There might be a couple very small things, very small things, very small in the fourth quarter.

Okay. Great. Thank you.

So from an analyst and investors who have told us to sell like the New York asset or some like that to establish a benchmark, but we are smarter than that. Doesn’t make any sense?

Yeah. Don’t do that. Great. Thanks.

Yeah. Thank you.

And next is Michael Carroll with RBC Capital Markets.

Thanks. On page 29 your supplement, how should we think about the near-term development projects, when could these be actually be started and is there kind of a way we should think about that?

Absolutely, as I just mentioned, Mike, we clearly, while 50 and 100 residential on Binney, obviously we are moving forward with a bunch of infrastructure and things like that we have to do. But as far as moving round up we certainly aren’t going to do that till Ariad area is resolved. I think you will see us move Science Park pretty quickly. I think Illumina will move at some point here, Campus point as well, New York will hold off and then both Seattle’s will move. So I think of the ones I mentioned and I mentioned just a moment ago, San Diego and Seattle, I think you will see move pretty rapidly in 2014. We are trying to make sure we have the entitlements perfected in any upzoning for increased FAR to get maximum advantage and then in Seattle we have literary tenants in hand who we know need space, so that would probably go very fast in San Diego. We know also Illumina has certain demands. We know down there, LIlly, UCSD have demand on space and in the Science Park we have, Dean circled a tenant or two. So I think on Investor Day we will give you a more detailed rollout of those, but I think you will see those move ahead aggressively in predevelopment and hopefully as best as possible in development where it makes sense where we have got a target of tenant. We clearly won’t do just random spec development but we will make sure we have got tenants soft circled or hard circled.

Okay. And then as 50 Binney Street still kind of your mark for a tact tenant and use one to delay that project to be conservative what happened to 75/125?

Well, yeah, the answer is we are trying to get a approval to divide that building into two buildings. We think one would be easy for tech because we have been approached on that by tech opportunities and the other potentially, so it would be 200 and somewhat 1000 square feet building, so we are going through the design work and the approval work right now. But, yeah, we still would like to go maybe one tech and one lab there, but we wouldn’t start anything at all even if it was tech just until we resolve 75/125 to our satisfaction.

Okay. Is there any update on the India transaction? Have you received any significant interest from those assets?

Yeah. We are, as I said, looking for an investment partner to go forward with this platform, we think it’s a great platform, it’s lead by our number one Novartis. We think it offers a great opportunity and we are well into discussions and we hope that we can bring in a partner to really help us move that platform forward.

Okay. Thanks.

Yeah. Thank you.

And we have time for one final question and that will come from Emmanuel Korchman of Citi.

Thanks guys. Just one very quick question. Real capital analytics seems to picked up in acquisition, credited, do you guys of a Walgreen's in Anaheim. Was that...

Yeah. We did it. That’s new headquarters. Now don’t know anything about it. Let’s Peter have doing random, he has gone road.

Actually that was Steve, you’ve, it wasn’t a part of 1030.

Right. It was part of an OP unit transaction that we had consummated several years ago up in South San Francisco with a partnership there and so as part of the recapitalization in the OP units, yes, we did acquire that Walgreen’s for this partner.

Right.

Thank you for that.

But we don’t know that.

Clear.

Our partner owns it. Just to be clear.

Perfect. Thanks.

Thank you.

This was all the questions that we had for today. I’d like to turn the conference back to our speakers for any additional or closing comments.

We want to just thank you very much and we’ll talk to you on year end and fourth quarter in February. Thanks again everybody.

And with that everyone that does conclude today’s conference. Well, we’d like to thank you again for your participation.