Good afternoon, ladies and gentlemen, and welcome to the AvalonBay Communities First Quarter 2013 Earnings Conference Call. [Operator Instructions] I would now like to introduce our host for today's conference call, Mr. Jason Reilley, Director of Investor Relations. Mr. Reilley, you may begin your conference.

Well, thank you, Sarah, and welcome to AvalonBay Communities First Quarter 2013 Earnings Conference Call. Before we begin, please note that forward-looking statements may be made during this discussion. There are a variety of risks and uncertainties associated with forward looking statements, and actual results may differ materially. There is a discussion of these risks and uncertainties in yesterday afternoon's press release, as well as in the company's Form 10-K and Form 10-Q filed with the SEC. As usual, this press release does include an attachment with definitions and reconciliations of non-GAAP financial measures and other terms, which may be used in today's discussion. The attachment is also available on our website at www.avalonbay.com/earnings, and we encourage you to refer to this information during the review of our operating results and financial performance. And with that, I'll turn the call over to Tim Naughton, CEO and President of AvalonBay Communities, for his remarks. Tim?

Thanks, Jason, and welcome to our first quarter call. Joining me today are Sean Breslin, EVP of Investments and Asset Management; and Tom Sargeant, our Chief Financial Officer. Sean, Tom and I each have some prepared remarks, and then the 3 of us will be available for questions. I'll begin by summarizing our results for the quarter, discussing apartment fundamentals and providing some additional details on the Archstone acquisition. Sean will then comment on operating performance disposition activity during the quarter and provide an update regarding our acquisition and disposition plan for 2013. And finally, Tom will share some remarks on development and capital activity, and finish with an overview of revisions to our 2013 outlook. Beginning with the results for the first quarter, last night, we reported EPS of $0.63 and FFO per share of $0.78. Adjusting for nonroutine items, which primarily include transaction cost and dilution related to our pre-funding efforts associated with the Archstone acquisition, FFO per share increased by 17% from the same period last year. These results were driven by continued strength in our established portfolio, where same-store NOI was up over 5.5% and contributions from new lease-up activity, where achieved rents are above initial expectations and leasing velocity remains healthy. Turning to the macro environment, the first quarter unfolded more or less as expected. Economic and job growth were solid, although still well under what the U.S. economy has produced in past recoveries. Having said that, the economy appears to be on a path of sustainable growth. U.S. businesses have healthy balance sheets and plenty of liquidity, sitting on nearly $2 trillion of cash. Consumer debt has declined to levels not seen since the early '90s. And finally, the housing market continues to strengthen in its recovery, which should stimulate economic growth going forward.…

Thanks, Tim. As Tim mentioned, I will comment on portfolio performance during the quarter, current trends and provide a brief update on our transaction activity. Starting with our same-store results for the quarter, year-over-year total rental revenue increased 4.9%, consisting of a 4.7% increase in rate and a 20 basis point increase in occupancy. Same-store expenses increased 3.3% and were primarily driven by higher property taxes, utilities and insurance costs. We continue to feel pressure on property taxes from local municipalities, especially in suburban New York, Seattle and the D.C. Metro area, where increases in both rate and assessed value are projected to drive double-digit property tax growth in 2013. In terms of regional performance, Seattle and Northern California continue to produce strong results, generating year-over-year total rental revenue increases of 8.9% and 8.7%, respectively. These regions also produced sequential revenue growth of about 1%. Job growth remains robust in Seattle and continues to fuel apartment demand. Boeing has a healthy backlog of orders for new aircraft, as airlines work to replace aging fleets across the globe. In the tech space, Google recently announced that it was doubling the size of its campus in Kirkland, which should add about 1,000 jobs to the area. The Seattle apartment market is also benefiting from an extremely low inventory of single-family homes for sale. Current inventory is at a 15-year low and reflects about 1 month supply, which is putting pressure on single-family pricing. Median price of a single-family home has risen close to 20% over the past 12 months. Northern California, like Seattle, has experienced job growth well in excess of the national average over the past 6 months. Facebook, Salesforce, LinkedIn and Samsung have all committed adding jobs or in increasing office space over the last several months. Also like Seattle,…

Thanks, Sean. As Tim noted in his comments, I'll share a few remarks regarding our development and capital activity. I'll add some color on our revised outlook with a focus on how lower Archstone transaction cost impacts our outlook. Turning to development, we completed 3 AvalonBay developments this quarter for a total capital cost of about $180 million. These communities were delivered ahead of schedule and have outperformed our original expectations. Each completion is projected to produce an initial stabilized yield of 7.5% or better. For those communities under construction and in lease-up for the entire quarter, performance is equally impressive with achieved rents that are about $80 ahead of pro forma and projected initial yields that are about 60 basis points better than pro forma. We also started 2 new AvalonBay developments this quarter, totaling $260 million, and acquired 5 Archstone developments underway for another $280 million in projected costs. Altogether, we had 30 communities under construction during the first quarter, representing $2.4 billion in total capital investment with a projected stabilized yield of 6.7%. We're also active with the development pipeline, adding 4 AvalonBay Development Rights with over $300 million in projected capital investment and 6 Archstone Development Rights for another $700 million in capital, and our shadow pipeline now stands at about $3.6 billion. We expect construction underway to continue to grow over the next several quarters before peaking in the first half of 2014 in the $3 billion to $3.5 billion range. Turning to capital activity. Now that the Archstone transaction is closed and funded, we now have greater clarity and visibility regarding our funding needs for the year. Our initial outlook called for between $700 million and $900 million of new capital during 2013. Our revised plan now calls for expanded sales and reduced acquisitions,…

Thanks, Tom. So in summary, the first quarter was certainly an exciting and rewarding one for the company with the closing of the Archstone acquisition, a solid portfolio performance and the continued success of the development portfolio. Our revised outlook for operating FFO growth for 2013 is more than twice the sector average. In addition, our $5.7 billion development pipeline provides compelling source of earnings and NAV accretion over the next few years. And as Tom shared, we currently have significant liquidity, a strong balance sheet and the financial flexibility to fund this growth in a cost-effective manner for the balance of 2013 and beyond. Lastly, before opening up the call, I'd like to take a moment to acknowledge the outstanding contributions and leadership over the last 20 years -- 28 years of our Chairman, Bryce Blair, who, as many of you know, has chosen not to stand for reelection to the board later this month. During his career at AvalonBay, Bryce has literally touched and influenced every part of the organization, helping lead our company from its roots as a private development firm to one of the largest and most respected public real estate companies in the country. As colleagues, we'll certainly miss his leadership and guiding hand, but as his friends, we wish him the best as he moves onto the next chapter of his life. And with that, operator, we're ready to open the call for questions.

[Operator Instructions] Your first question comes from Rob Stevenson of Macquarie.

Can you guys just talk about with the Archstone assets you guys are up to a $2.2 billion development pipeline, what's the appetite from here to start new projects over the remainder of this year and the first part of next year until a lot of these bigger dollar volume ones burn off?

Rob, this is Tim. I think, as Tom mentioned, we do see the pipeline continuing to grow to $3 billion to $3.5 billion early next year, when we -- at which point we expect that roughly would peak just based upon the existing -- the projected timing of the deals in terms of when they'd be ready to start. Obviously, we tried to position the balance sheet and our liquidity to give us plenty of flexibility in terms of how we fund that. But in terms of the economics of the business, as I mentioned in my prepared remarks, it continues to be very compelling, with projected yields on the stuff that's under construction of 6.7%, but oftentimes, the deals once they start leasing up, particularly in this kind of market environment, we've been seeing improvement. As Tom mentioned in his remarks, the 3 deals that we just recently were completed -- were completed at more like a kind 7.5% stabilized yield. So tremendous profit potential embedded in our pipeline. So we'll continue to move forward with development, whether that's funding that through new capital or through recycling capital through disposition program. But we expect it to peak around $3 billion to $3.5 billion early next year, which would represent around 13%, 14%, 15% of total enterprise value, which is the number we've talked about in the past that we'll be comfortable seeing it get up to.

I mean, obviously, you guys control land development rights for some period of time before you start construction in a lot of cases, but what do you -- and so the land costs are somewhat less variable for you guys than they are for competitors. But what are you seeing right now in terms of construction costs. I mean, in terms of both stick and steel build and concrete, et cetera, I mean how much inflation are you seeing on that side and what is that doing to expected returns on stuff that you'll start later this year or early next?

Yes, Rob, I mean, obviously something we've been talking about the last few quarters. We have been seeing movement back up in construction costs, back towards the prior peak from 2007. So we are still talking about costs that were 6 years ago in terms of where they peaked previously. But it's very much market dependent. Right now, we're seeing a lot more pressure on the West Coast, particularly California, where the subcontractor market continues to be a little thinner, where we have seen pressures there on a year-over-year basis, double digit, 10%, 11%, 12%. On the East Coast, in D.C., interestingly where there's been a lot of production or even in places like Seattle, it's been more modest, it's been more in the 5% to 7%, 8% range in terms of construction pricing growth. But -- so there hasn't been a material impact in terms of yields, as you've mentioned, land is locked in. So construction generally represents about 65% of the total capital, so to the extent that's grown at 5% to 7% or 8%. But it's only representing 2/3 in lands fixed. As long as NOI is growing around 5%, your yields really haven't moved that much. I think you'll see that as you look back over the last several quarters in terms of what our average projected yield. It just hasn't moved that much off that kind of high 6% range.

Are you guys expecting to start any material amount of redevelopment of the Archstone assets?

Rob, this is Sean Breslin. As it relates to redevelopment, we do believe that a majority of the Archstone assets have redevelopment opportunities. Our teams are going through all the assets and re-sequencing our redevelopment pipeline to integrate the new Archstone assets in with the AvalonBay assets. We probably have more clarity on that over the next couple of quarters in terms of what the dollar volume out of the Archstone assets specifically would look like, but my expectation is, particularly later this year and as we get into '14 that we'll start to ramp up.

Okay. And then just lastly, on the expiration lockup, I mean, has there been any consideration on accelerating the disposition program in order to raise capital to try to buy back shares from Lehman?

No, not really, Rob. I mean, it really speaks more to how we've been funding the base business, the ongoing business in terms of funding development. As you know, as our share price has drifted into the low 130s, we think dispositions are more compelling source of capital right now than equity. So that's really what's been driving it.

Your next question comes from Alexander Goldfarb of Sandler O'Neill. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Two questions. The first, you guys talked about integrating the 2 platforms and both on the operations and development front. Just sort of curious how much -- how different the 2 platforms as far as the people and systems are between the way Archstone did things and the way AvalonBay does things, both on the operations and then also with respect to development.

Alex, this is Sean. I'll pitch on the operation side and then maybe Tim could comment on development. On the operation side, first and foremost, critically important is the cultures of the 2 organizations are very similar. So in terms of the integration of people and operating within the framework of the organization, that's gone extremely well. And as it relates to systems, there are a lot of systems that are similar in terms of safe rents, LRO, MRI, et cetera. There are different variations in terms of how they use those systems that we have now modified for the majority of our main operating systems. We are still investing in technology to upgrade some of our systems in terms of our resident portal and things like that to enhance the capabilities there. But in terms of systems integration itself, to operate the sort of core business, significant overlap there in terms of use of the same systems, and that allowed us to basically transfer everything onto our technology platform within the first 30 days that we owned the assets. So as it relates to the development. Tim?

Yes, and so probably the biggest difference on the development side is they use construction managers, third-party construction managers to build out their deals. We typically self-perform. So that's been -- we inherited some of those contracts. So we stepped into some of those. So that's a little bit -- a little different. But in terms of the people, I mean, we hired a lot of the folks, several of the folks on the development and the construction side. In terms of just discipline in terms of how they budget and report, quite similar to how we look at running and managing the business. So not a lot of disparity there. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Okay. And then the second question is, and maybe this goes to the $0.10 of out-performance or maybe this is in addition to. In the supplemental, where you guys break out the NOI and rental revenue, et cetera, it looks like the Avalon portfolio runs about 40 basis points more efficient from an NOI margin perspective despite the fact that Avalon and Archstone on the same-store basis have similar rental revenue rates. So should we expect that there's -- this 40 basis point gap will close and that's opportunity for more upside? Or maybe that's the $0.10 number that, Tom, you spoke about earlier?

Alex, why don't I take the first part of that. In terms of the operational efficiencies, one, I'd be a little bit careful about extrapolating based on what's essentially 1 month of data. That being said, we don't expect the operating margins to be materially different. We do expect some improvement based on how we plan to operate the properties, but it probably is a little bit too early for me to go into that level of detail at this point in time.

Alex, on the $0.10, that really is more of a true-up of how we saw the portfolio performing in March and then into April as we've got some of our first of month billing data. So the budgets that they -- that Archstone had prepared, we adjusted them for differences in accounting and a couple of other areas, but largely adopted those budgets. And we -- and those budgets were done last fall. So there was -- some of that $0.10 per share was really just true-ing up for better than expected performance out of those budgets.

Your next question comes from David Toti of Cantor Fitzgerald. David Toti - Cantor Fitzgerald & Co., Research Division: Just a quick question, Tim. Are you guys seeing any kind of pricing power differentials between the difference sub brands now that you've been operating for some time?

David, nothing that we would be sort of comfortable. I think, kind of -- sort of on Sean's last comment really extrapolating from. I mean, clearly, there's -- we -- there's a couple AVA deals in particular that we've opened that are quite distinct and differentiated within their submarkets. And they appear to be a little bit more insulated from some of the pricing pressure that we've seen in those submarkets. I think AVA H Street here in D.C. is a great example of that, where we've been able to keep rents and push rents despite a fair bit of supply coming on in the district. And it really is a unique and differentiated asset there. It's one that we intend to take. If you're going to be at our Investor Day in late June, it's one that we intend to take people around and hopefully get a flavor for. But it's more anecdotal at this point. But clearly, one of the swaps [ph] behind the branding is to try to create more of a differentiated offering to the market that's more targeted that you would hope would insulate you a little bit more from pricing pressures as markets soften. David Toti - Cantor Fitzgerald & Co., Research Division: Great. And then I just want to expand on some of the questions Rob was asking earlier about development. What kind of rent growth are you underwriting in your developments that you're starting to be able to see the first 1 or 2 years, and maybe we can look at some of the recent starts like Huntington or Stuart Street maybe as examples?

Well, in terms of what's listed on Attachment 8, there's effectively no rent growth embedded in that, David. So the only rent growth would come through when we're actually start leasing and then, that's effectively when the asset is -- the asset's rents, if you will, are mark to market. But up until that time, we typically don't adjust rents or reflect any movement in market rents. There is occasionally an exception to that where there's been such an adjustment or movement in the market up or down that we might make an exception. But in this particular schedule, there's no exception, and rents are reflected at what they are, what they were set at pro forma or at the start of construction until the time at which we start leasing, and we usually don't adjust until we clear maybe about 20% of the units through the lease-up process. David Toti - Cantor Fitzgerald & Co., Research Division: Okay. And I think you might have touched those, but just -- I'm sorry, I jumped in a bit late. If you were seeing any kind of construction cost increases, I assume you pushed those through to the rent line before leasing commences. So that's not impactful necessarily to margins either?

Well, in terms of Attachment 8, usually we're locking down construction cost at the time we start. So we don't -- we wouldn't necessarily anticipate the cost on Attachment 8 to move as it relates to movement in construction price in the market given that these are typically fixed at the time we start. So it could have an impact on the shadow pipeline as we start deals over the next 6 to 7 months, and I did mention as a response to Rob's question, we are seeing uneven pressure across our markets from mid-single digit to low double digit in the case of California on a year-over-year basis.

Your next question comes from Nick Joseph of Citi.

You gave stats on renewals 30 and 60 days out, but can you talk about new and renewal lease rates trended through the first quarter by month?

Sure, Nick, this is Sean. I'll give you sort of the overview. In the first quarter, overall rent change averaged about 3.5% during what is, as you know, probably the seasonally slow first quarter. That's about 100 basis points lower than what we experienced in Q1 2012. And as you probably know, Q1 is where we're really trying to build occupancy for the Q2 and Q3 rent push. So we're pretty well positioned going into the stronger leasing season right now with occupancy greater than 96% and availability below 5%. So I think we're in pretty good shape there overall. In terms of the monthly trends, certainly, if you sequenced it by month, it moved up through the quarter, starting in the low 3s and ending basically in the high 3s to get to the 3.5%.

Okay. And then in terms of development, how did expected stabilize yields for the acquired Archstone development assets compared with your existing pipeline?

Nick, this is Tim. Somewhat similar a little lower, and I think we've spoken to this in the past and that the way that we valued those development deals, it's a little bit different. Obviously, you have less risk stepping into a deal that was already permitted and then titled and where the costs were already negotiated. So you really just had market risk at that point. So the pricing in terms of how we price those deals reflected that it was less risk, but it's roughly in the mid-6s to give you a sense that basket of communities that came onto schedule 8 Archstone.

Your next question comes from Jeff Spector, Bank of America Merrill Lynch.

This is Jana for Jeff. You mentioned how the integration was going well and I was just curious on the branding side. Are you looking to make some of the Archstone communities Eaves or planning for them to be more AvalonBay communities?

Yes, Jana, this is Sean. We do expect to re-brand all of the communities to -- at least a majority of them in our core markets, at least, non-core markets we may not, but to 1 of our 3 brands. And there will be a mix of all 3 brands, AVA, Avalon and Eaves that will come out of the Archstone portfolio. So we're going through that process right now on our expectations that we would be rebranding all of the communities within 12 months.

And maybe a little bit longer term, how are you thinking of the portfolio composition between the 3 brands?

Overall, what we've talked about in the past is -- and these are rough numbers just depending on what the opportunities are as we roll forward in development and redevelopment acquisitions, et cetera, but generally somewhere in the 75% range, 70%, 75% range in terms of Avalon, 20% range in terms of Eaves and the balance to AVA, which is the smaller, more boutique kind of specialized brand.

Your next question comes from of Dave Bragg of Green Street Advisors.

You touched on this a little bit earlier, but can you elaborate more on the thought process behind increasing your net disposition plans and therefore reducing your capital needs? Was it driven primarily by a desire to reduce equity needs or the perception of those?

Dave, this is Tom. When we prepared our plan earlier in the year, we identified $700 million to $900 million of capital needs, and we generally wait until the market conditions are set, and when we need that capital to decide whether it's debt, equity or asset sales. As the year progressed and as we look at the transaction markets, it just became -- the markets became increasingly tighter. And if you look at the expected performance on our dispositions and the -- really struggling to get acquisitions, we felt like expanding dispositions in a tight market and the fact that we weren't able to really identify any strong acquisition candidates made a lot of sense. Certainly, if you look at that source of capital dispositions versus selling equity or selling debt, we felt like that disposition activity was a better source of capital for us, and we've actually started putting in place the steps that we need to take to expand that disposition activity. So it really is driven off of a tight transaction market and the fact that our needs are less because of less transaction costs on the Archstone side as we settled that portfolio. Tim, I don't know if you wanted to add anything?

Yes, and Dave, maybe just a follow-up from last quarter, I think, we talked about our capital needs for this year were really backloaded, and typically we look at our disposition plan a couple of times a year, usually going into the end of the year and then mid-year. So it was just -- it's also just part of a normal process of updating our transaction plans, as market conditions shift, and about twice a year, it feels about right to us to do that. So it's just sort of lined up with our normal business process anyway. And as Tom mentioned, obviously, dispositions look to be more compelling relative to some of the other sources of capital as we thought about capital -- bring on the capital that we needed for the back half of the year.

And another question is on Archstone, can you talk a little bit more about the performance of the portfolio, perhaps first quarter revenue growth or -- and also your outlook for revenue growth for the full year, do you expect it to be within the same range as your same-store portfolio or different?

Dave, this is Sean. I indicated that we're -- the initial performance is above our expectations on the revenue side, about 2% to 3%. At this point, given where we are in the process, we're not prepared to talk about some of the exact things that you requested. I can tell you from a renewal point of view, as we look out over the next 2 to 3 months, renewal increases are relatively consistent with what we're seeing in our same-store portfolio on average. But there are some market-by-market differences. So for example, here in D.C., renewals are going out a little bit higher rate on the Archstone assets than the AvalonBay assets. And that's just a function of where those assets are located, the supply that's coming online, current availability, et cetera, et cetera. So if I have more information for you in the future on that, but that's sort of as far as we're willing to go right now in terms of general commentary about the performance of the properties.

Your next question comes from Andrew Rosivach of Goldman Sachs.

This is Caitlin Burrows. We just have a quick question. We are wondering if the higher development yields that you're projecting had any impact on the increase in your full year guidance?

Caitlin, no, not really. I think, as Tom mentioned, the guidance was really driven by just greater visibility into the closing cost of the Archstone transaction, how those closing costs would be booked and then just again, a greater visibility related to the overhead that was required to bring on these additional assets as well as just the fact that now -- we now have owned the assets a couple of months and just have -- just more knowledge of how they're operating. So it was really driven by the Archstone transaction and, as Tom mentioned, the base business, whether it's development or same -- or the AvalonBay same-store portfolio, is performing as expected.

[Operator Instructions] Your next question comes from Tayo Okusanya of Jefferies. Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division: Thanks for the rundown on how each of your markets are performing. Just curious, based on that analysis, markets that you think are performing better than you expected versus markets where you're performing a little bit worse than expected and why?

Sure, this is Sean Breslin. In terms of how they're performing relative to expectations, obviously, we just sort of set expectations not too long ago. So I'd say, generally speaking, the same-store portfolio is operating, I think as Tom alluded to, about where we expected it in terms of performance. The Archstone assets, as I mentioned, are performing a little bit ahead of expectations. But I think that really is more a reflection of sort of true-ing up, where those assets are performing relative to the budgets that were established before the end of 2012. So on a same-store basket basis, things are pretty much about where we expect it. And I think that's about it in terms of any variance.

Your next question comes from Rich Anderson of BMO Capital Markets.

I just have one quick one. Do you guys feel like -- I know you brought in a lot of folks from Archstone, but what about at the executive suite level, do you guys feel like you are good to go? Or do you need any more talent at your level with the bigger portfolio?

Rich, this is Tim. Maybe you're a better judge of that than we are. But no, we think we're at the executive level -- C suite level, we're set. Just to be clear, we have hired 5 officers, which is an expansion of about 10% from our existing officer base from Archstone, so including 1 SVP and 4 VPs. So we have tried to improve in certain areas where we thought we had something to learn from Archstone. And we think by bringing on some leadership in some key areas, we're going to be able to do that.

And your last question comes from Michael Salinsky of RBC Capital Markets.

First of all, with the step-up on dispositions, any particular focus, maybe reducing your market exposure, increasing urban exposure, anything like that?

Mike, this is Sean. Not on a global sense. I'd say it's really pretty pruning around the edges, as I would describe it. So I mean, we're comfortable in terms of our overall allocation to each market. Completing the Archstone acquisition allowed us to sort of be where we wanted to be in terms of macro allocation. Now really comes down to vetting properties within certain submarkets, which submarkets are performing better than others within our markets, and then really asset level performance issues. So it's going to be a sort of trimming around the edges as opposed to anything. I'd say that it's more strategic in nature if you want to think of it that way.

That's helpful. Tom, what was the debt mark-to-market noncash benefit there in the first quarter and what's kind of the expectation for the second quarter now that you've gone through most of the financing transactions? And then, as we think about CapEx plans for the year, can you kind of give us an update?

Well, in the first question, let me take that one and I might kick the CapEx over to Sean. But as I recall, it was $0.03 a share for just March of the mark-to-market, and it's $0.28 on the entire year, $0.28 per share.

That's $0.28 from -- when the transaction closed or $0.28 on an annualized basis?

It's $0.28 for this year.

So for 10 months, Mike. So the $0.03, $0.03 a month, we owned it for 1 month this quarter, so $0.03 for Q1 makes sense.

Okay, that's helpful. Then final question probably for Tim there. As you look at the Archstone portfolio today having owned it for 2 months, where do you see the most opportunities for improvement kind of over the next couple of years?

I think I'll turn that actually to Sean who's -- he obviously oversees it both operationally from an asset management perspective.

Yes, Mike. Sean here again. First, just the second part of your question for Tom on CapEx, in terms of the AvalonBay bucket of CapEx, the expectation is to be sort of where we've been trending, maybe a little bit higher but somewhere in that 700 to 800 home range in terms of recurring CapEx. The expectation for the Archstone assets, given the vintage, as well as some of the product being more high rise, as an example, and mid-rise is probably closer to 900, 950 on a recurring basis. And then in terms of opportunities, we look at it through a few different filters. I think, as I mentioned earlier, we see opportunity across most of the assets in terms of redevelopment potentials, some are more moderate, some are more significant. Certainly in, I'd say, L.A. in the near term is probably the market that offers the most opportunity just because of the size of the portfolio we acquired, and the vintage of the assets there tend to be a little bit older, mid-rise and garden deals. And Southern California, as you guys know, has lagged the rest of the country in their recovery, so we still think there's pretty good rent growth ahead of us in Southern California. So L.A. is probably the biggest opportunity in the near term in the next year or 2.

The portfolio specific as opposed to market specific?

Portfolio specific, meaning?

To operate -- improved operations, redevelopment.

I would say in redevelopment. Yes, and redevelopment is what I was talking to, there are things we're doing on operational side as well in terms of enhancements, but I was talking about mainly in terms of repositioning of the assets and offensive opportunities. Archstone was investing a lot of capital into the assets in their -- and the state of balance sheet was in the entity they were owned by for a number of years. So they did a fine job maintaining the assets and keeping them up and doing what they needed to do. But there wasn't capital available to capitalize on redevelopment opportunities, and we plan to take advantage of that pretty aggressively.

There are no further questions queued up at this time. I turn the call back over to Mr. Tim Naughton for closing remarks.

Well, thank you, operator, and thanks to all of you for joining us today. We look forward to seeing many of you at NAREIT in Chicago in early June and hopefully at our Investor Day in D.C. on June 26. Have a great day. Thank you.

And this concludes today's conference call. You may now disconnect.