Welcome to the Alexandria Real Estate Equities’ Second Quarter 2015 Earnings Conference Call. My name is Vicky 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 this conference is being recorded. I will now turn the call over to Paula Schwartz. Please go ahead.

Thank you and good afternoon. This conference call contains forward-looking statements within the meaning of Federal securities laws. The company's 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 periodic reports filed with the Securities and Exchange Commission. With that, I'll turn it over to Joel Marcus. Please go ahead, Joel.

Thank you very much. With me today are Dean Shigenaga, CFO; Steve Richardson, Chief Operating Officer; Peter Moglia, Chief Investment Officer; Tom Andrews, Executive Vice President, and Dan Ryan, Executive Vice President, so welcome to our second quarter call. I think the second quarter has really two key storylines for our best in class office REIT, the first one is price discovery for ARE and its assets and I believe deserving of cap rate compression and multiple expansion and secondly would be the sheer historic leasing volume in the second quarter, testament really to the locations quality of assets and really the leasing team. Dean will go through the balance sheet and guidance in detail but we did increase guidance to 524 so when you take our projected FFO for the year plus the dividend we're looking at a low double digit total return. On the science and technology front the industries themselves remain at the forefront of growth and leadership in our innovation economy seeking to attract the best talent and really the best urban submarkets where now as you can from the supplement ARE now derives 75% of our annual base ramp from class A assets and AAA locations and we're very proud of this really crowning achievement and coupling that with investment grade client tenants of about 53% of our ABR we feel that we really accomplished something pretty special. The demand for our urban campuses have really never been stronger. On the FDA front again increases in the FDA approvals as I've said before have been driven by better understanding of the disease biology and very much improved regulatory process year to date for 2015 there've been 20 approvals and ARE client tenants have garnered 60% of those, again we’re very proud of that. I think…

Alright. Thanks Joel. Dean Shigenaga here. Good afternoon everybody. I have got three important topics but really wanted to take a brief moment to express our appreciation for our team for recognition as the 2015 recipient of the NAREIT Gold investor, communication and reporting excellence award. It truly is an honor for the company to receive this award and our team will continue to focus on transparency, quality and efficiency of reporting and communication to the investment community. I have three topics today. First, I want to cover the continued strong performance from our Class A buildings in AAA locations. Second, provide an update on our solid balance sheet, access to diverse sources of capital and brief comments on key items for the second half of '15. And third, briefly on our disciplined allocation of capital and management of our value creation pipeline. So kicking it off with our continued strong performance, our strategic focus on unique, collaborative campuses and urban innovation, cluster sub markets continue to drive very strong operating and financial results. We reported FFO per share of $1.31, up 10.1% over the second quarter of 2014. Demand for our Class A assets in AAA locations also continues to drive strong leasing activity. We updated our guidance and increased the midpoint of our range of FFO per share from $5.22 to $5.24. FFO per share growth for 2015 is now greater than 9% representing our second consecutive year of very strong growth above 9%. We remain on track to reach our occupancy guidance range of 96.9% to 97.4% by year end. However as disclosed over the past couple of quarters, two lease expirations in the second quarter drove a temporary decline in occupancy. One lease was for a 128,000 rentable square feet at 19 Presidential located in the…

Thank you very much, so that's our formal comment. Operator, do you want to open it up for Q&A please?

Thank you [Operator Instructions]. We’ll take our first question from Smedes Rose with Citi.

I wanted to ask a little more about the San Diego purchase for $105 million. What do you expect to spend to upgrade the facility thinking about Lilly’s new? And how do you think about the stabilized returns there? And then just want to make sure you were far along on the entitlement process for construction at adjacent building, that about to be put on hold now?

So let me -- I am going to ask Dan to comment. But we haven’t projected fully construction cost, so Dan is just going to give you rough estimate. Same thing with yields when we develop our full budget, we’ll take them into the supplement but we hope it to be north of 7 broadly, but Dan can comment on the deal.

So we expect that we’ll be north of 7 in terms of cash and GAAP on that opportunity. You’re mostly right about the -- so two, there are two components To Lilly; one is we have their existing space in 10300 Campus Point Drive plus we have executed a -- it's actually a built to suit building for them, which would have been adjacent to that 10300 building. So we terminated the built to suit in favor of this new acquisition. And we are reworking, basically reworking the site plan now to consolidate the entitlements into a new building which will be on the 10290 site.

And Steve maybe construction of…

I guess we’re estimating maybe 300 plus or minus.

Yes, exactly.

Yes, so it’s about 300 plus or minus on the redevelopment.

And then I just want to ask you on 225 Binney, obviously is very attractive cap rate and you mentioned the number of potential buyers there. So could you talk about a little more kind of the range of buyers? I mean were they mostly institutional like TIAA or were they family office as well or foreign sovereign funds or anything on that?

Well, we talked to quite a number of people. And I would say there was a large group of very interested buyers including a number of sovereign wealth funds. But because of certain investment restrictions for sovereign funds, as you know, if they were to hold over a majority of an interest creates tax issues for those and it is we finally ended up focusing on domestic high quality institutions that could own greater than 49%. So, it was a great mix and it was mostly high quality institutions and foreign sovereign funds.

We’ll go next to Sheila McGrath with Evercore.

On the San Diego acquisition, I was just wondering if you could help us understand how that all slow through. Will it be like an acquisition of 105 million with the Qualcomm lease and then start capitalizing? Or how will that hit the P&L, or just teens?

You’re correct Sheila, there is a short lease back for about 90 days and then the project I think effective October will enter our redevelopment program and we’ll commence the process of converting that to its assets lab use. So there is a very short lease back period.

And then on 505 Brannan Street, in supplementary you talk about -- it was pretty significant up zoning. And I am just wondering, how long that will take and your confidence level with achieving that zoning, up zoning?

Sure, as you saw, phase one is fully entitled that first 135,000 square feet and then the phase two will be part of the adoption of the Central SoMa plan. So we have a number of thought about strategies to lock that down. But ultimately I think it will be a couple of years out before we do lockdown the propM allocation for that property as well.

So, you’ll go forward with just phase one initially?

Yes, we will.

And do you think that will be tech or life science?

It could be either, and we have strong demand from both sectors.

We’ll go next to Jamie Feldman with Bank of America Merrill Lynch.

I guess starting out on 225 Binney, are you going to receive a management fee on that 70%? And if so, what’s the percentage rate?

Yes, we are going to receive standard property management fees, but we have been asked by our partners not to disclose that percentage, so I am sorry I can’t give that to you.

And then I think you guys had about an $80 million change in investments on the balance sheet to getting flow through earnings. Can you talk about what’s in there?

Not Company specific, but you’re correct our unrealized gains are up to almost 140 million. It’s handful companies that more initial invested in when they were private and they’re not publicly traded companies with a significant after market. I think somebody asked the question maybe a year or year and a half ago about what the mark-to-market potential and I conservatively mentioned it was 2x. And so I think you get some sense for the upside in that investment goal. And I think from a P&L perspective we have been realizing some gains but they've been fairly modest time-to-time and that gives us a steady flow of other income. I think what we might consider overtime is selectively monetizing some of that portfolio and reinvesting that capital into our business.

And is any of that in your guidance in terms of source of capital or income or anything?

Only from the standpoint of the normal run rate Jamie we typically have 1 million to 2 million of investment gains a quarter typically more like $1 million. So that run rate is in there but anything large we would try to carve out and identify for you. So the answer is no, there is nothing lumpy included in our guidance.

Okay. And then I guess bigger picture, we've seen a lot of health insurer consolidation over the last month or so. Can you guys talk about what impact do you think that may have on the broader healthcare space and your business potentially?

Well I think that chapter is yet to be written. I guess you could draw some analogy as to the airline industry that it's going to be bumpy and you can't always get deeps when you want. So I think that now with the Affordable Care Act having been reconfirmed in a number of specific areas by the Supreme Court I think what will shake out is you will have three or four, it looks like three, but you will have others dominant providers and they will be important in influencing how they insure under the law and under the ACA and obviously important in negotiating with the industry. So but that's yet to play out.

What impact you think it might have on just capital flows to pharmaceuticals, is there a talk of that CapEx?

I don’t think so. I think it certainly is as strong as we've ever seen it. If you just look at the M&A activity almost everyday, although a lot of that's in the generic space, certainly you look at the venture side and what's big in the venture side is not only venture but institutional crossover, investors putting large, large sums of capital into companies that are private and that ultimately go public and you see that both in life science and tech and then obviously the IPO market I think remains pretty strong. Remember something else that I think is going to be a huge benefit to this industry and nobody has really talked about it, is there is a bill working its way through Congress and I have a high degree of feeling that it is going to pass and that is a one-time tax Obama is in favor of it on companies that have large foreign cash overseas, a lot of in the tech sector, pharma itself has over $200 billion of cash, significant amount of that is overseas. So if there's a one-time tax or something they are projecting between 14% and 16% that will fund infrastructure in the U.S., that's going to mean that there could be 100 billion plus money flowing back to the U.S. for reinvestment. I think that's going to be a huge boom to this industry.

Okay. And then just my final question. Good execution on 225 Binney, are you getting more assets you want to put in the market for sale?

I think you will see us look at another core asset, there certainly we've been contacted by quite a few people, I wouldn’t say there is alignment or door but there is quite a few people looking and so we're looking at a couple of core assets and then clearly we have a number of non-core assets and land parcels that we're working on. So the answer is yes.

We will go next to Kevin Tyler with Green Street Advisors.

Hi guys. Policy on the tenant at 225, they've been in the news , stocks selling off 20% plus as drug sales slowed down. Can you comment a bit on the broader state of the market, the biotech market and then some of the read through on such a large company loses that much of its market value overnight?

Yes, remember too that, that company has increased its valuation dramatically. I actually did an interview of George Scangos about a year ago at a I think it was an event in San Francisco and I remember asking him what the market cap of Biogen Idec was the name previously when he started and it was $14 billion and asked him what his worry was and he said he thought that market capital is going to go down in negotiating his contract. So you saw it go to north of a 100 billion and they did have a sell off. Let me speak to Biogen itself, I think the management team is a great team. George is a highly seasoned professional. Obviously they lowered estimates for their multiple sclerosis franchise and that was not welcoming to the street and obviously significantly cut value and this is by analysts and others the value attributed to their pipeline. One of the really big potential value from that pipeline was their Alzheimer's drug and obviously the drug missed hitting a significant response on key measurements and it also demonstrated I guess some evidence of brain swelling among some limited number of patients but one believes that they still have a good chance of having good phase three results, it's difficult, expensive and risky but that's where they're headed. Anybody who can crack Alzheimer's really will be the beneficiary of just an unending number of patients unfortunately. I think you know you have to look at a lot of the tech and lot of the biotech companies and obviously their price based on their revenues and on their pipeline of products or opportunities and I think when somebody has to bring a little more reality to guidance than they had I think you see a pretty large sell off but I think some of that bounce back and I think the company over time will recover much of that valuation so it still is a very-very well valued company so we aren't worried. But I think you know in any industry that has, mean look what happened to Google on the Plus side, their CFO came in and announced some really disciplined approach to cost cutting and the stock just popped dramatically. So that's the marketplace.

Okay, I appreciate that. In terms of, Dean this one might be for you, in terms of the acquisition guidance for the year I think you brought it down 50 million this quarter versus last quarter. Just wondering what might have driven that move, was it a capital allocation decision or was there something else driving it.

There's some details on page three of our supplemental package for reference but in short we had one transaction including our guidance last quarter, was about a $135 million transaction and really at the seller's request timing has been moved back to the first quarter of '16, so that transaction's still there, it's just not part of 2015 anymore. Offsetting that reduction of a 135 was the purchase of the Campus Point building.

We'll go next to Mike Carroll with RBC Capital Markets.

Can you guys describe what you've planned for 10300 Campus Point, when Eli Lilly decides to vacate, well, when they vacate to go to 10290.

I'll ask Dan to comment.

Hi, this is Dan again. We feel really good about the prospects of backfilling that. It's a barely, it's a very highly built out lab office space that really was in, they spent a significant amount of their own capital that we will be the net beneficiaries for . We are currently in paperwork with four plus tenants already. This is going to be some of our best phase in the portfolio. So we generally expect a significant you know 15% plus or minus increase in current rent at the release. We feel the downtime will be very short given where we are with current discussion and fairly modest amount of capital to get there.

I should clarify that lease is about a 125,000 square feet and the contractual expiration is in the fourth quarter of '16.

Okay then how your discussions I guess progressing with the city on the north tower land site option are those just a formality and that site is going to be yours.

Well, I don't know that anything's ever a formality but we do have a legal option that lasts for 17 years so I feel good about that but we are in deep discussions we had several meetings with the city this week, we have a discussion going-on on increasing the FAR and how that might work and so that's where we are but we expect you know a resolution to that and some decision this year maybe within the next quarter or so. So that's moving along pretty intensively.

We'll go next to Ross Nussbaum with UBS.

Can we talk a little bit more about page four in your supplemental, I just want a little more clarity on the asset sales that you're targeting through the end of the year. I guess the first question is, where are you processalized with 500 Forbes in South San Francisco, I know that was listed last quarter in the south as well, is that, where are you in terms of getting that thing professionally.

So, let me comment briefly and then Steve can add some comments. The, everything in the category of pending and targeted, the only transaction that is under contract today is 225 Binney which you're well aware of, everything else is not at that stage yet but moving through various areas I don't know if Steve wants to comment anything further.

Hi Ross, it’s Steve Richardson. Yes we've fully engaged the marketing team now. We've got packages out, we've been touring prospective buyers through the property so we're in the early innings of the overall marketing process. We'll keep you updated as time moves along.

And then somebody asked before Ross about would with our success at 225 Binney would we look at another core asset sale and the answer is yes, we're in active, we're active on another core asset potentially so that, stay tuned on that. The 240,000 square feet with $8.2 million of NOI that get identified as other, what exactly is that?

We’re not prepared to provide more color on what we have. But let me just say that we have a number of assets that we’ve targeted that could allow us to achieve our targeted dispositions. So we have flexibility in what we execute there, and we have a number of projects where our operating assets were looking at.

And how does that other category defer from what you been laid out is projected remainder/asset sales, that additional $195 million $245 million, that stuff that’s not on the market yet. I am trying to understand the new launch there.

Yes, the stuff that’s not quite as advanced as what totals up to roughly the midpoint of $550 million which includes the pending and targeted. So we have a little bit of work her to quickly resolve over the next few months. And we expect to be in a position to give you better color on this entire targeted disposition here for ’15.

And one asset in that other for example is a important project that we have gone to the tenants who has expressed interest in potentially acquiring it, so we have a discussion there. But we also are working on a sale package, so these are all not just imaging that we’re going to sell something, but these are actually pretty active and trying to move them to an active sale position.

And then my last question is really around the last footnote on that page, and you guys have made a pretty hefty profit being biotech investors over the past few years. What’s preventing you from, just from a risk standpoint given the massive run up in biotech stocks in the last four-five years? Why not take pretty hefty profits sell down a lot of those positions rather than, I don’t want to guess that we’re gamble. But gamble those on biotech continuing to run up.

I am going to let Dean answer that he did addressed it in a previous question to some extent. But I think to some extent we have taken some. There are a number of companies there that have achieved pretty nice valuation. So you have to remember too, these are -- a number of them are development stage companies. And to the extent they turn out to be future Amgen’s, Biogen’s, Celgene’s and so forth, the upside is even far greater than one can imagine with the realization of that pipeline. But we get your question, so Dean can answer it.

It’s a balance there at the end of the day part of our focus over the next four quarters will be looking to monetize components of that so we can reinvest the capital. So we are looking at that. Couple of them recently had their Initial Public Offerings, so it’s a bit of lock up period as well they can see.

But we do see that as the source for our development pipeline as we needed.

We’ll go next to Dave Rodgers with Baird.

Maybe just a broader question on the development pipeline, I think Dean mentioned that the value creation pipeline has come down and the size of the Company overall. But how do you envision that going forward? As you move into ’16, are there sufficient projects and span that you’ll be able to kind of keep that pipeline at a fairly large level, or do you see it coming down before you can kind of get entitlements and everything ready for another round?

Well, I think....Yes, go ahead.

I was going to say Mike there is two things to consider, our active projects under construction today are highly leased and are going to be delivered over the next number of quarters. Page two of our press release highlighted as well as page 30 or so in our supplemental 32, highlights the rough time line of near term projects. But the stuff that we’re going to commence in the second half of ’15 that fits in the near term pipeline today, 1.1 million square feet is 80% leased and 20% under negotiation. So we do have very good visibility into really high quality developments that will generate EBITDA and cash flows going out into basically ’16, ’17 and ’18, in that time frame. So you got this visibility from a siding perspective. The overall value creation pipeline might grow and dollar value temporarily but it will sell back down as we deliver a number of projects call it over the next six quarters.

And then I guess with regard to and maybe more acquisition of redevelopment assets to get product to market little bit faster. Should we expect as you move late into this year, or maybe even early in the next year, that you start looking at a greater number of acquisitions to bring that product in line faster, or are you pretty happy just going ground up development and those discussions that you’re having?

Well, I don’t think we have to, I think you get great value. If you just look at the pipeline that’s being articulated and you look at the page 22 spreadsheet, it’s pretty robust. There are too many people out there that have control on their balance sheet of future value creation and future cash flowing assets out 2016, 2017, 2018, and then overtime maybe beyond. And we only look at the acquisition market really opportunistically, we underwrite everything but look at it pretty carefully. And a lot of times you don’t even see things coming up like the Qualcomm deal, if you were to look at that a year ago or six months ago, you don’t even know some of these things happen. So we're not so focused on acquisitions. I don’t think we need to do that as a elevated for this, the company as a mainstay. But we clearly look at it as a way to build our franchise where it makes sense and where we have great in-sale sites or projects.

Obviously a lot of asset sales in the pipeline and that's the primary source of funding for new development. The equity is still off the table and not something that you are considering for this year and early next year?

Well as I think we've said before, it's our lowest priority as far as funding. And so we think that free cash flow obviously that, that we can generate by bringing on additional cash flow and then obviously asset sales, land sales are our primary focus.

We will go next to Rich Anderson with Mizuho Securities.

Thanks. Good afternoon. Is it correct that the original discussion with 225 Binney was 80% not 70% of the value of the asset?

Yes, I don’t know that we had, we talked to a pretty broad range of people running from 49% to 100% depending upon what people we're thinking and then we came upon what we felt was appropriate for our continuing interest and the partner's long-term interest. So that's how we felt about it.

Okay. So definitely.

Richard it's Dean here. I would only add one other comment. I think our guidance last quarter gave a range from 70% to 90% …

Okay.

… when we were airing down the terms of the deal.

That's fair. Very, very thank you. And as far as TIAA's perspective, what it is for them in your mind besides obviously high valuable asset until 2028 there is nothing going to happen on their 4.5% return. So is that purely just, they are just a believer in Cambridge for the long-term, is that where their mind is do you think?

Well, I think in my introductory comments I spend actually quite a bit of time going through how I think they look at it and institutional investors looked at I won't go and repeat that at the moment but I think the investors we have talked to and they are quite a few certainly well more than a dozen, had a very, very positive and strong view of that market and wanted to have a strong foothold in a AAA location in a Class A building with a great tenant. I think that's where institutional money is certainly part of it is focused today.

My, I apologize I missed the beginning of your call. So pardon.

It's okay, okay.

Okay. And.

It's Peter Moglia, I just wanted to add one other very important factor that drove TIAA do this transaction which was they wanted to do something with Alexandria, I mean they work with the best operators in the best locations and they identified us as that and that was a very important aspect of this transaction for them. So we are very proud of that and we think that their brand and their acumen in examining our real estate and us is a great testament to our quality.

I guess the question I was having was is this is going to be reoccurring relationship going forward with them?

Very well could be.

Okay. Regarding the investments in companies and Dean you spoke about. Is there any situation where you are both an investor and a landlord?

There are I would say the investments probably 80% are non-tenant investments and probably 20% or so are that are fair number.

That's correct, in that range.

Is there any kind of restrictions about selling or buying stock if you are also, have business as a landlord tenant, I don’t know if you would be?

Not regulatory but I can tell you internally we ensure that we look at these transactions separately. In other words the lease is a separate transaction and if we decide to invest we handle that separately from that decision to lease space.

Okay. And then last question. Joel you I think you referenced 20 FDA approval so far in 2015 I got that much detail at the beginning of the call. But is it true also that not many in the way blockbusters in terms of profitability of those drugs, is that, would you say that that's a fair statement relative to previous years? And maybe just some color around the profitability as opposed to just the straight on approvals of the drugs?

No I don’t think that's true, I think you're also seeing a new class of cholesterol lowering drugs which are likely to be kind of new era blockbusters, clearly some of the cancer drugs will be I think it remains to be seen if any of the CNS drugs get approval and become, they likely would become but that's something that remains to be seen. But now I think that the drugs that are being approved today, you have to remember too we're also in an era of as I said precision medicine, so a lot of drugs that are being approved are for various targeted rare and often diseased patient population, patients that you know haven't been able, haven't been responsive to mainline therapy so you see some of that so don't assume they're not profitable but you can assume that they're more niche drugs and that's a matter of just better biology and better science and better regulatory science as I was saying earlier. You know you do have some pretty big blockbusters like you know the Hep C curance of all the and others so this is the new generation of drugs I think is a very great set of promising opportunities so we view it as pretty highly positive.

We'll go next to Jim Sullivan with Cowen Group.

Thank you, good afternoon. Joel I'm curious with the benchmark pricing here 225 Binney and continuing discussions in some other assets and some other markets. I wonder if you could give us kind of a handle if you will on how we should think about cap rates in Cambridge versus cap rates for the rest of the portfolio and particularly I'm thinking about New York City and San Francisco, San Francisco generally and to what extent we should expect differential cap rates, higher lower in either of those markets and then also if you could touch on to what extent kind of the ratio of general office space to lab space might impact the cap rates.

So maybe take it one by one, so I think in, and Tom hearing can come in on that Cambridge cap rate beyond 225, but I think it's fair to say that we see continuing cap rate compression in that market, I think it's true. We may end up selling one or more assets in the San Francisco Bay Area that I think will bring I think good cap rate data to the table as well and so I think you're going to see again some cap rate compression in that market certainly vis a vis your assets. New York City we don't plan to sell the New York Center but I think Peter reported back a quarter or two ago I think FL Green sold an asset or bought an asset I can't remember not too far from our estate and it was on a long term ground lease I think at a… There was a seven cap rate, actually we talked about that at Investor Day. It seems like New York is probably the only major market that from first quarter to second quarter had a small uptick in their cap rate according to Corpax but all our other markets actually they stayed stable or even dropped. One thing that I really noted to Joel before this call when I was doing some researches that since the suburban Maryland market actually had a 22 basis point decrease in cap rate so found that to be very encouraging considering we do have holdings there but overall I think cap rate Jim are going to remain stable. You know the tenure has gone up about 25 basis points from the last quarter, there's still about a, close to a 400 basis point slack between the historical cap rate and the margin it usually has with the tenure, so if it goes up if interest rates go up even more I don't think it's really going to affect cap rates until maybe it starts to go up by a 100 basis points or so, I think we're going to have a long run of continued stabilization maybe even some more compression as the sovereign funds continue to pour money into these markets that we're in and as Joel alluded to we had a quite a number of investors looking at 225 Binney, I think we'll have quite a number of investors looking at the next project we have, so overall I think to answer your question I think the Cambridge cap rate that you saw was very healthy I would expect that assets of that quality will continue to trade at that level and I think we're probably looking at least another 12 months of stable cap rates and then we'll see how external factors affect that.

I would say also Jim in thinking about our asset base as I mentioned actually in the second page of the supplement before the press release we start to try to highlight what we think are the important best in class office REIT attributes that we have and then highlighting 75% of our ABR now comes from these class A assets and AAA locations with the 53% of ABR from investment rate tenants so I got to believe that as people look at NEB and look at cap rates with respect to our asset base they'll take note and I think adjust them appropriately down. I think on the office lab side, not sure I can comment. Tom can maybe give you some color in Cambridge or in cap rate office versus lab.

I think there's not been comparable prices covering Cambridge and I think that maybe the -- versus one of the ACP trade, but that -- for city interest that University part. But that had a lot of leases of their durations, building that were certainly older. I think the average age is 19 years old or something like that, and not quite the Class A new assets that are prevalent to Kendall Square.

It was also a minority non-controlling interest as well, so that certainly could have discounted the price. So I think…

Okay, and then finally from me. Can you give us an update in terms of the demand for space in Cambridge, and what impact that’s having on market rents? And maybe if you kind of relate that to your Cambridge portfolio, your 100 owned portfolio. How you feel about where those rents are versus the market?

Yes, Jim. So we’re observing obviously the very tight market conditions that are Cambridge right now. We have active negotiations underway and proposals going out for the balance of our space at -- and let me clarify, we have proposals going after the balance of our space. The 100 Binney as you know we committed about half of that building to -- leased about half of that building to Bristol-Myers Squibb. We are seeing significant upward movement and we’re including our sales pretty aggressively increasing rent close to perspective tenants due to the scarcity of available space in the market and the number -- I think quantity, quantity of perspective tenants there in the market.

And Jim this is Peter Moglia, one other thing I wanted to ground out is as Tom mentioned rents have been continuing to increase in Boston, rents are continuing to increase in San Francisco they’re continuing to increase in San Diego. We’re even seeing it in Seattle as well for life science space, and that’s just going to continue to put pressure on cap rates, so I guess kind of round up your original question.

So on Cambridge just to get back to one number, I think you could see something between 12% and 15% mark to market there this year.

We’ll go next to Smedes Rose with Citi.

Dean just want to come back to the investment side, can you basically tell us the largest, not by name on who it is but by dollars, the largest public holding that you have of that $173 million. What does the single largest position amount to? And the on the private side, about $190 million or so, what would be the concentration in the largest investment there?

There is probably -- we don’t have that information instantly handy. But I would say there is probably about half of dozen companies that make up the majority of that, a good portion of that mark to market Michael.

For the 140 million of mark to market that’s about six companies you’re saying?

Yes, about half of dozen that make up a good majority of that.

And how widespread is the $190 million of that, like 30 investments or 10 investments?

Well, it’s pretty widespread.

So it’s a lot?

Yes.

And then the increasing in terms of -- it looks like I guess some companies done public in the first quarter where effectively your available for sale cost downs have moved up from $22 million to $34 million, which stayed flat in the second quarter. So the big move in unrealized gains sequentially was just from the companies that have done public in the first quarter seeing in their stocks move up 50%-60%?

Yes, the big increase had a lot to do with IPOs in the current quarter.

But your cost base has stayed at $34 million. So I would have thought you would have had seen more transfer out of five bucket into the public, if they’ve done public in the second quarter?

Michael, our cost bases on these investments are really-really small.

Really on the public securities?

Yes, on the public securities. Yes, we probably had I think page four footnote five gives you a sense I think we’re -- of the $172 million or $173 million, $140 of it roughly was unrealized gains in the public securities.

And last quarter that was $83 million. And so I was just trying to figure out if you moved up sequentially $55 million, how much of that was stock just going up from the first quarter versus companies that went public is the cost base of the investments stayed flat?

The majority of it relates to two investments that went public during the second quarter, that drove the majority of the increase in unrealized gains.

And then as we think about this disposition of $195 million to $245 million, the projected asset sales have securities effectively versus hard assets versus land, because all of them have different sort of embedded cost to Alexandria?

Yes. We are not prepared to get into that specific number right now, Michael. It is a component that you will see us reinvest over, call it the next four quarters or so. Just to give you an example, in July alone I think we monetized a little bit of our balance but it's relatively small in scale of the unrealized gains. So we are focused on it and you will see us get to it overtime.

But most of the stuff is in progress, so it is 200 million to 245 million of other asset, remainder of asset sale?

No, we commented earlier Michael that the stuff that's more advanced is included in the category right above that. I am turning to the page right now. So the category that's pending in targeted asset sales 225 Binney is under P&S as you know, the rest of the transactions in that balance in the disclosure is at various stages not at the P&S level yet but actively moving through the transaction process. And we have a number, so for, it's 220 at the midpoint that we're working on at much earlier stages. But we feel pretty comfortable with what we have to execute here. Again there is good interest in our core assets along with Joel mentioned we have a tenant interest in a specific asset. So we've got good activity going on right now.

It appears there are no further questions at this time. So I'd turn the call back over to Joel Marcus for any additional or closing remarks.

I just want to thank everybody for joining our second quarter call and we will talk to you on the third quarter. Thanks again very much for your time.

That does conclude today's conference. We thank you for your participation.