Good afternoon, ladies and gentlemen, and welcome to AvalonBay Communities' First Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following remarks by the company, we will conduct a question-and-answer session. Your host for today's conference call is Mr. Jason Reilley, Senior Director of Investor Relations. Mr. Reilley, you may begin your conference.

Thank you, Augusta. And welcome to AvalonBay Communities' first quarter 2015 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's 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 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, Chairman and CEO of AvalonBay Communities, for his remarks. Tim? Timothy J. Naughton - Chairman, President & Chief Executive Officer: Yeah. Thanks, Jason, and welcome to our first quarter call. With me today are Kevin O'Shea, Sean Breslin, and Matt Birenbaum. We'll each provide some comments on the slides that we posted this morning, and then be available for Q&A afterwards. Our comments will include a summary of the Q1 results. We'll highlight a few areas of focus that we discussed in connection with the Archstone acquisition that closed a couple of years ago, but are now starting to pay off for the company, including an increased presence in Southern California, greater efficiencies from increased scale and expansion, enhancement of important strategic capabilities. Lastly, we'll touch on the development funding and activity. Starting on slide 4. Overall results in Q1 were largely as expected for our business plan and we're off to a strong start as we enter the peak…

Thanks, Tim. As we mentioned at the time that we announced the Archstone transaction back in late 2012, the Archstone acquisition really helped us achieve our long-term portfolio allocation goals. Slide 9 shows how the geographic distribution of our NOI across our six regions has changed over the past two years, primarily as a result of the addition of the Archstone assets, but also due to lot of organic growth from the legacy AVB platform as our development activity ramps up early in the cycle. The region that has seen the greatest growth is Southern California, which grew from 14.5% to 19.6% of consolidated NOI over the last two years. We have been under-allocated to this region for many years and had always been challenged to increase our exposure to the broadly diversified economy and consistent long-term performance that Southern California has delivered for us for decades. By growing our presence here, we were also able to decrease our relative allocations for the Northeast from 50% to 38% of our NOI, which provides better long-term balance. Turning to slide 10, you can see how momentum has really been building in our Southern California portfolio over the past five quarters, with year-over-year revenue growth increasing each quarter. Right now, we are seeing market rents in all of the Southern California sub-regions accelerate into the 6% range on a year-over-year basis. We are well-positioned for another strong year of same-store revenue growth in Southern California, and that growth will contribute more to overall revenue growth for the company given our increased allocation to this region. Looking more closely at where our portfolio growth has occurred across the region, slide 11 shows the locations of our communities with the size of the dots proportional to the size of each property. There are a…

Thanks, Tim. Shifting gears now, we thought it'd be helpful to talk a little bit about the efficiency and effectiveness of our operating platform and, maybe along the way, highlight some initiatives that will continue to enhance our operating performance in the future. So starting with slide 13, these metrics reflect not only the benefits associated with our larger scale, but also our ability to deliver more cash flow per dollar of revenue generated from the portfolio over time. The chart on the left reflects our operating overhead, which includes G&A as a percentage of NOI both in 2007 and what's expected for 2015. While our portfolio NOI has increased about 250% from organic growth, new development and the Archstone acquisition, we've been able to contain operating overhead growth to about 20% of the rate of NOI expansion over the total eight-year period. The net result is that overhead is now only 7% of NOI, down about 500 basis points or 40% from 2007 levels. The chart on the right reflects our same-store NOI margins in 2007 and what's projected for 2015. Margins have expanded by about 200 basis points over the last eight years to 70%, putting us essentially at the top of the multi-family sector. And when you think about our NOI margins, you really have to remember two important facts: first, we have not enhanced our margins by simply reshaping the portfolio, that is exiting lower rent markets and acquiring assets in the higher rent coastal markets. And second, rental rates declined during the financial crisis and economic downturn, which put pressure on operating margins. In fact, if you look at the rent levels today compared to where they were in 2007, the CAGR over the past eight years is only about 3%, which is well below…

Sure. Thanks, Tim. Turing to slide16, we highlight the current performance of the five communities under construction that are in lease-up. As you can see from the slide, the performance of communities undergoing initial lease-up is quite strong and continues to exceed our original underwriting expectations. Specifically for these five communities, which represent $455 million in total capital costs, the current weighted average monthly rent per home is $215 or about 9% above initial expectations. In terms of yield performance, the weighted average initial projected stabilized yield for these communities is projected at 6.9% or 60 basis points higher than our original projection of 6.3% for these communities. Turning to slide 17. Our development activity remains well funded today. In fact, as of quarter-end, our development underway of $3.6 billion was completely match funded by the combination of $2.5 billion in capital spent to-date, plus over $1.1 billion from cash on hand, projected free cash flow, and our equity forward. As a result, funding risk for this investment activity is essentially eliminated while the opportunity to realize a substantial amount of value creation as these communities are stabilized has been locked in for our shareholders. Turning to slide 18. This slide demonstrates more clearly how our being match funded on this investment activity leaves us exceptionally well-positioned from both the cash flow growth and credit perspective. In particular, the projected NOI from recently completed development and from development under construction totals about $225 million on an annualized basis, as shown in the chart on the left. This represents more than a 20% growth in our annualized adjusted EBITDA for the last quarter. Moreover, to give insight on how this projected EBITDA growth enhances our leverage metrics, particularly given that no incremental capital is needed to complete construction, the chart on…

Thank you. Our first question will come from Nick Joseph of Citi.

Thanks. I'm trying to reconcile 1Q same-store revenue growth of 4.3%, the growth you saw in January and February. I think in early March at our conference, year-to-date same-store revenue growth was 4.4% to 4.5%. And then from the presentation, the March rent change actually accelerated in terms of the spread year-over-year from February. So what drove the reduction of growth for the quarter relative to where you were in early March? Timothy J. Naughton - Chairman, President & Chief Executive Officer: Hey, Nick, this is Tim. You're correct. When we met at the Citigroup Conference, we gave a mid quarter update and we said our expectation would be we'd be at the top end of the range for the year, for the quarter being 4.4% to 4.5%. The reality is numbers like 4.34% and some of it's on the non-rental revenue side that gets rolled up at the end of the quarter. So really nothing is different than what we expected and anticipated in early March when we met – when we met and spoke with investors at your conference.

Okay. Thanks. So then in terms of D.C., it looks like the quarterly year-over-year growth was the strongest you've seen since mid 2013. Can you talk more about what you're seeing on the ground there and expectations for the rest of the year?

Sure, Nick, this is Sean. In terms of D.C., I mean from a broader perspective, it's certainly still a weak market relative to other markets and there's still a fair amount of supply coming online. The expectations for 2015 are still for supply growth somewhere in the mid 3% range, but what has improved certainly is job growth, it's now running closer to 1%. So it's in a position now where from a kind of macro perspective across the region, we're seeing some improvements. And as you think about it in terms of the three markets: the District, Suburban Virginia, and Suburban Maryland, it does depend on the nature of your portfolio, whether it's higher price point, lower price point, and the distribution within the submarkets of each one of those markets. But for us at least, right now, D.C. is performing the best as producing slightly positive revenue growth in rent change. The two weaker markets are Suburban Virginia and Suburban Maryland, with Suburban Maryland being the weakest right now, particularly given all the deliveries that are coming through in Rockville, Bethesda, Chevy Chase, all in that area. But if you look at it in terms of maybe trends from the first quarter to what we're seeing in the second quarter, first quarter rent change across the region overall is basically around flat. But as you move into the second quarter, it's trending slightly positive to the tune of about 100 basis points in terms of blended rent change. So we're seeing sort of that second derivative move positively, but at a relatively slow pace, and I'd say with still a fair amount of risk given the supply that's been delivered in the region relative to the anticipated job growth.

Great. Thanks.

Yeah.

Our next question comes from Jana Galan with Bank of America Merrill Lynch.

Thank you. Good morning. Your turnover continues to decline and you saw the first quarter homeownership rate drop below 64%. I was just wondering how long do you think you'll continue to see turnover decline, and how that's helping your expenses, and then any changes in reasons for move-outs?

Sure, Jana, this is Sean. In terms of predicting turnover, it's a little bit difficult to predict. It's really a function of, I'd say, job mobility, probably first and foremost, as well as choices in terms of within a local market what choices people have. They feel like they have more choices at the right price that influences turnover. And the reason I'd say that is relocation is still the top reason for move-outs and our portfolio runs around 20%, I think that's consistent with most REITs. So, as people are relocating for job reasons, et cetera, that really tends to influence the total amount of turnover. And then on the other topics, home purchases are still running well below long-term averages in the range of 13% and has been pretty flat, not really moved much. It's down a little bit year-over-year, but not really moving the needle. And then the other reasons are really financial, including rent increases as well as intercommunity transfers, rent increases tends to run a little bit higher, closer to 16% to 18%. But at this point in the cycle, you expect it to be trending upwards. But in terms of actually predicting what turnover will be, it's a function of the macro variables that I've mentioned. And so we are not yet at a point where we are predicting it. But given what we're seeing across the portfolio as well as with housing and the single-family market and the production levels, it's not farfetched to assume that turnover will remain below historical averages for the next few quarters for sure. Timothy J. Naughton - Chairman, President & Chief Executive Officer: Sean, maybe just add to that. Jana, as Sean mentioned, move-outs and home purchase has been relatively stable. And it's been our expectation that homeownership rates are going to be stabilize roughly in this area in the 64%, 65% range. And so we don't really have a view that homeownership rates are going down meaningfully from here. It's been our view that you are going to see more of a balanced housing picture over the next few years as the housing markets continue to recover and a lot of that's being driven by some of the things we've been talking about, which is demographics and lifestyle behavior in terms of what type of housing choice best sort of fits the need of the emerging population. So we do expect it to be more balanced over the next few years.

Thank you. And then just maybe on the Southern California expense savings this quarter seemed very impressive. I think some of that might have been benefiting from tax appeals, but maybe if you could talk to what else's in there?

Yeah. This is Sean. That's exactly right. The main benefit that came through in the first quarter was a successful appeal of an asset in Southern California and that represented the majority of what you're seeing there in terms of the expense change.

Thank you.

Yes.

We'll go next to Dan Oppenheim with Zelman & Associates. Dan M. Oppenheim - Zelman & Associates: Great. Thanks very much. Just wondering if you can talk a little bit in terms of expectations for some of the pricing power, you talked about the best start in terms of rental growth here at the start of the year and also some prior cycles. As you think about the balance across the regions, do you think this accelerates further as the Mid-Atlantic and Northeast gradually improve here? How are you thinking about that overall in terms of the rental rate power?

Sure. This is Sean. Just a few comments on that. From a macro perspective, certainly across the markets, pricing power is improving at this point. Tim alluded to the rent change in his prepared remarks, not only for the first quarter, which trended higher in each month of the first quarter, but also continue to trend higher into April, where on a blended basis, we're running at about the 6% range. And, I guess, the way I'd describe it is we're seeing increased pricing power across all the markets, but the rate of acceleration is slightly different. The rate of acceleration is probably the strongest right now in Southern California as well as Northern California, those two markets. Northern California, obviously, has been a discussion point for several quarters now in terms of the momentum there. And it'll be interesting as we move later in the year and more supply comes online, particularly in the submarket of San Francisco, Northeast San Jose, whether that starts to throttle back a little bit of the pace in Northern California, which we saw a couple of years ago when we saw blocks of supply come through San Jose. Southern California, job growth has certainly ramped up, and supply remains pretty muted relative to other markets. And if you look at a place like Orange County, job growth has really made the difference there, where it's up closer to 2% over the last six months. And so while there's still a meaningful amount of supply coming on in certain submarkets there, Huntington Beach, Anaheim, et cetera, Irvine, the job growth has really caught up to a point where it's pretty healthy. So the momentum in Northern California is strong, Southern California is strong. Now in the East Coast markets, the Mid-Atlantic, certainly helpful to…

Yeah, this is Sean. I mean, certainly a conversation we have all the time in terms of optimizing the performance of the portfolio. But at this point, we feel pretty comfortable that we're handling it in a way that's not only optimizing the performance, but also is based on what we think the customer's reaction will likely be, given available choices within their specific submarket and general geography. And one thing to keep in mind is people focus a lot on the renewal numbers versus the move-in rent change. You really have to look at it on a blended basis because it really depends on – if you talk about same-unit rent change when the last person moved in, if they moved in five years ago, it's very different potential rent they're coming out of five years later as compared to someone who has been there two years. So if you look at it on a blended basis, it's probably more appropriate. And the other thing that we look at is how wide is the gap getting between the absolute rent that a customer is paying as they move into an apartment relative to someone who is renewing in that same apartment type or the same community. And that spread today on an absolute basis is only about 2%. So when you think about it, it's not that wide in terms of an existing customer going to a website and looking at pricing for their particular apartment home for someone who is moving in. And, obviously, they have switching costs in terms of their move and everything else. So that's a relatively reasonable spread 2%. We'd probably be a little more concerned as that number was approaching 5%, as an example, but across the portfolio, I think we're in a pretty good shape on that.

Our next question comes from Nick Yulico, of UBS.

Thanks. Tim, I was hoping to just start off with the guidance again. I mean, you guys are at the high-end year-to-date on same-store revenue, above on same-store NOI, you talked about really good trends so far and even in April. So how do we balance that against you guys not deciding to raise guidance? Is there something in the back half of the year that you're concerned about or you just want to take a wait-and-see approach for another quarter? Timothy J. Naughton - Chairman, President & Chief Executive Officer: Yeah. Nick, I mean, first of all, the first quarter more or less played out the way that we expected, particularly as it relates to the top line. So, that alone wouldn't sort of drive a need to rethink our outlook at this point. We are moving into the peak leasing season. While we're well-positioned and we're off to a strong start, we're going to have a lot more visibility mid-year, and that's typically when we do a more robust re-forecast process and sort of reopen the property budgets, if you will, and feel like we'd be in a much better position to give the investor and analyst community a sense of where we think we're going to end up for the year. So we're neither changing or affirming outlook at this point, but we would look to do so mid-year.

Okay. And then on the development pipeline, two questions. One is, should we assume the forward gets settled all in the third quarter, and then how are you thinking about funding the next wave of development? I think you guys were saying you would do $1.4 billion in starts this year, would you consider another forward? How are you thinking about that over the next couple of quarters from a funding standpoint? Thanks.

Sure. Nick, this is Kevin. I guess, there's a few questions in there. First, as it relates to when we draw capital down under the equity forward. As I think we indicated in the fourth quarter call, our expectation is that we do so in the second and the third quarters. Really no new news on that front. It's somewhat dependent upon what we do in terms of incremental capital activity going forward over the next couple of quarters otherwise in terms of disposition activity and raising debt capital pursuant to our capital plan that could affect the timing there. I think it's probably fair to assume that probably at least two-thirds of it would be in the third quarter and a third or less would be in the second quarter, but that number bounces around quite a bit. And there what we're looking at is just trying to balance cash on hand and minimizing our costs – interest expense costs under our line of credit with our other activity on the capital markets front. The second question, just to sort of answer that, it might be helpful just to give a refresh on our capital plan for the year. If you look back at our initial outlook, we had total sources and uses of $2.35 billion. And in terms of the sources, we had cash on hand and an expected drawdown on unrestricted cash account for about $600 million of that. As you'd probably noticed, we drew down cash by $300 million during the quarter to fund Columbus Circle, so that has happened as planned. That left us with about $1.75 billion of external capital in our capital plan for the year. About $650 million of that relates to the forward, which we just talked about, leaving $1.1 billion.…

Okay. Thanks, guys.

We'll go next to Haendel St. Juste of Morgan Stanley. Haendel E. St. Juste - Morgan Stanley & Co. LLC: Hi, it's Haendel. Good morning. So a couple questions here on development. So first, you guys started a couple of projects, two that I'd characterize as ex-urban or well outside of the core of the MSAs, your Hunt, Chase (41:06) and Lynnwood projects. And you're not seemingly slowing down on your development pace as much in a time period where your peers are slowing more so. But specifically these two projects, what is it about these projects that makes you excited, especially in light of the Suburban Maryland weakness comment? Are you gearing yourselves to capitalize on a perceived pent-up demand in the suburbs? And if so, how much more of your near-term development start could be more suburban in nature versus urban?

Hey, Haendel, this is Matt. I can speak to that one. It was actually a light quarter for us for starts, $100 million, and we're on track to start $1 billion, $3 billion, $3.5 billion for the year, and that is obviously a very small portion of our kind of development activity planned for the year. The Alderwood deal was just a second phase of the deal that actually completed this quarter, and that deal completed at a yield of around 7%, so – and again, Seattle market, even there Suburban Seattle, that's probably a mid 4%s cap. So that's incredibly compelling value creation, second phase incremental economics. We just phased that deal, phased the land take-down, which was great. The other one that we started this quarter, Hunt Valley, that's a bit of a unique asset for us. It is a suburban location, but it's a transit-oriented suburban location. It's actually at the end of the rail line; it's right next to a Wegmans, it's an old mall that has been turned into a town center and it's a submarket that has seen no new supply for probably 30 years. So in some ways, it's a lot like our kind of older Northeastern stuff where we're bringing a luxury product to a submarket that has very high homeownership cost and very high-end homes, estates and such up in that area as well as a decent amount of employment, a lot of other amenities, but just hasn't seen luxury rentals. So we think we're actually creating a bit of a market there and we don't get that opportunity very often. It also increases our exposure a little bit to the Baltimore Metropolitan area, which has done quite well this cycle, and where we're probably a little bit under-allocated in the…

We would love to see some of that come through. The subcontractors have been holding on to it so far. Generally speaking, when we underwrite our business, we underwrite everything on a current spot basis. So we don't trend rents, we don't trend expenses and we don't trend capital costs. When we sign up a new deal, we say, if we were building this project today, here's what it would cost us to build it and here is the NOI we would expect to get out of that. And generally speaking, depending where you are in the cycle, we may be looking for a higher or lower spread between where that yield is and where cap rates are; if we're in a market, whereas, earlier in the cycle where we think there's better rent growth ahead relative to cost growth, we might be willing to go in at least to the initial due diligence with a tighter margin than if it was the other way around. But generally speaking, we're still seeing costs grow at a pretty rapid clip in most of our markets. And again, it's driven mostly by subcontractor, by labor availability, which is getting tighter, and by subcontractor margins and just the volume of business out there. There is a lot of construction out there, the subs are busy, so they can afford to be pretty aggressive in the pricing they offer. And other than in Metro DC, where they're probably coming off of more production ramping into less production, and so they are a little hungrier. Other than in DC, pretty much all of our other markets, it's going the other way still. Haendel E. St. Juste - Morgan Stanley & Co. LLC: Okay. And the last one on Edgewater. Now you've had a chance to go through the insurance assessment and recovery process. The $793,000 net loss figure you quote in the press release, is that the final figure? Could there be additional costs? And any updated thoughts on your plan to that project going forward? Could you – if you could term it if you're going to rebuild, sell et cetera?

Yeah. Haendel, this is Kevin. I'll answer, I guess, the first part with respect to some of the costs. The $800,000 of costs that you see flowing through with respect to Edgewater were essentially our initial response costs with tenant displacements, fire wash, et cetera. We'll see what rolls forward. There probably are some modest costs, but nothing very significant in that regard going forward since we're clearing the site and the other building has been reoccupied. So not much in the way of Edgewater related costs that we expect. In the quarter, what we did in the first quarter is we wrote off the net book value of the building that was the story, which was $22 million. It turned out the net third-party insurance proceeds that had been received during the quarter was $22 million, so that was an offset. So that really had no impact on our financials for the quarter. Going forward, we continue to work with the insurance companies on securing the balance of the insurance proceeds that we expect. And in our initial outlook, we indicated that the casualty loss was likely to be, with respect to the story building, greater than $50 million where we have 12% self-insured exposure of about $6 million. So we're still working on that. It's a matter of just working through the documentation and obtaining final sign-off. And going forward, as we noted in our release, in the event that we receive additional insurance proceeds related to the casualty loss on Edgewater, those additional insurance proceeds will be reflected in the casualty gain, which would flow through in increased FFO, but will be pulled out for core FFO purposes. Timothy J. Naughton - Chairman, President & Chief Executive Officer: Haendel, Tim here. Just in terms of your second…

We'll go next to Rob Stevenson with Janney.

Hi. Good morning, guys. Tim, can you talk about how robust the condo development and condo conversion process is in your core markets today? Timothy J. Naughton - Chairman, President & Chief Executive Officer: Yeah, Rob, I don't know if they want to join in as well. I wouldn't say it's all that robust. You're certainly seeing some signs of it in New York and perhaps San Francisco. If you just looked at where apartment valuations are relative to condo valuations or for-sale valuations, it still really doesn't make sense in most cases to actually convert an asset to condominium and take that market risks and you're just not going to get enough compensation in order to do that. I think in some cases, and DC may be an example where it actually does make sense to think about new ground-up development, and certainly New York and San Francisco that makes some sense. But we're just not seeing a lot of – frankly, a lot of unsolicited interest in our assets like we did in the mid 2000s to potentially convert – it's pretty isolated, I will tell you at this point. And it just makes sense when you go back and you track what apartment valuations have done over the last 10 years to 15 years versus what for-sale condominium values have done during that same timeframe. I think it's really going to be isolated at least over the next couple of years to really micro-locations and really kind of one-off type opportunities.

Okay. And then when you look at your redevelopment pipeline today, what's the expected returns on that and how many more projects do you expect to add to the pipeline this year?

Yeah, Rob, this is Sean. In terms of redevelopment, the pipeline's pretty plentiful, particularly given what we acquired from Archstone. And I think what we've indicated in the past is that we'll probably start somewhere in the neighborhood of $100 million to $150 million a year, roughly, in terms of redevelopment activity. Some from the Avalon legacy assets, but also a relatively high percentage of the Archstone assets, would be in that pool. In terms of the returns, the returns so far this cycle have been actually very healthy. And the way that we look at it is, if you take the overall investment into the enhancements at the assets, we typically look at our returns that are probably underwritten in the 10% to 12% range, but actual results have been more in the mid-teens, and that excludes components that if you just have to replace the roof as part of a redevelopment or something where you're not really getting an economic return, it's more like CapEx. But in terms of the actual redevelopment opportunity, kitchens and baths and other enhancements in common areas underwritten again 10% to 12% and producing mid-teens recently.

Okay. And then last question. The 35 projects on the developments right page, I mean how many of those are shovel-ready today, and is there any sort of issue or reason why you guys only started two this quarter? In terms of your thinking, is that that's what was available and that's where the yields were. Is there a situation where the starts are, on some of the stuff that you're planning for the rest of the year, sort of back-end weighted towards more urban, complex deals et cetera? Can you talk a little bit about that?

Sure, Rob, this is Matt. Pretty much when they're shovel-ready, we generally tend to start them. So we're planning a fair number of starts this next quarter here in the second quarter. And it just tends to work out that way; it's as much to do with weather as anything else you wind up with. Generally speaking, the deals in the pipeline, we're bidding them, we're finalizing the plans and permits. When we get the final bid numbers and we find the economics satisfactory, we tend to start them. So I wouldn't read anything into that except this next quarter we should have a pretty healthy amount of starts, and there isn't really anything in there that's ready to go that we're just sitting on.

Okay. Thanks, guys.

Our next question comes from John Kim with BMO Capital Markets.

Thank you. I had a couple questions on your asset sale of Stamford Harbor. You provided the unlevered IRR of 11.9%. But can you also provide the leverage return given it's going to have mortgage debt? And also maybe share some of the characteristics of the buyer?

Yeah. This is Matt. We generally haven't provided those numbers. The deal was originally developed off the balance sheet; it was put into a pool. When? 2009 or...?

Yeah.

So it's hard to kind of isolate that. And the buyer, I think it was a private buyer, folks that we've done other business with before.

Regional player.

Yeah, regional player.

Where do you think your dispositions will come in this year versus your average run rate of $380 million?

Well, I think we've provided some guidance at the beginning of the year with our outlook in terms of the total disposition volume.

Yeah. John, this is Kevin. As I mentioned in my early remarks, I went through sort of the capital plan that we announced at the beginning of the year, and much of that capital, at least externally, is yet to be formed apart from the equity forward and sale of Stamford Harbor. That leaves about a $1 billion of net incremental capital pursuing to our initial plan for the year. We don't break it out further than that other than to say that the predominant amount of that capital, we expect, will come in the form of unsecured debt and the balance would be in the sale of assets, partly because we don't really want to be overly precise with respect to our anticipated debt capital markets activity by giving specific amounts and, plus, because the capital market conditions can change and the precise amount may change throughout the course of the year. But it'll be mostly in the form of unsecured debt, at least that's our plan and hope, and the balance would be sale of assets.

Okay. Just a follow-up question on Edgewater. According to your disclosure, the lender of the mortgage debt can decide how you use the insurance proceeds, whether or not to repay the loan or redevelop the asset. So if the lender chooses to redevelop, do you have a choice and can you potentially change the scope of the project?

Yeah, John, this is Kevin again. As Tim noted, we're still in discussions with respect to – with the lender and also evaluating what our plans are for the asset. So it's a little bit early to say what's going to happen with respect to whether we're going to redevelop – whether we're going to rebuild Edgewater and what's going to happen with our discussions with the lender.

Okay. And then just one final bigger term question. But California continues to be very strong. At what point do you become concerned of the state's ongoing drought and maybe the potential impact on the economy? Timothy J. Naughton - Chairman, President & Chief Executive Officer: I'm not sure. John, Tim here, I'm not sure how to answer that really just in terms of the drought's potential impact on the economy. It's obviously affecting our properties in terms of we're subject to the same constraints that other homeowners are. And Sean, you might want to just talk about a little bit about that.

Yeah. I mean... Timothy J. Naughton - Chairman, President & Chief Executive Officer: But as it relates to its economic impact, it'd be total wild speculation on our part.

Yeah, John. This is Sean. I mean there has been plenty of press out there about the state mandated reductions in water usage and higher rates as a result of exceeding the 25% targeted reductions for the state. So I think people are getting their arms around that in terms of how that actually flows through to communities and to residents who ultimately pay the majority of the water bill. But I think the general expectation is certainly that there will be potentially higher utilities cost across the board in that market, which would impact just choices in terms of residential dwellings, whether it's multi-family, single-family, whatever your choices are. And in terms of our response, our response is, as you might imagine, trying to be as efficient as we can. And before this even came out, we have already started initiatives related to smart irrigation systems and things like that to try and be as efficient as possible as it relates to water usage, because there had already been pressure on rates, water rates, in California as a result of the drought.

There have been some market reports that developments are slowing down. Are you seeing this at all?

Developments are slowing down as a result of the water issue?

Yes.

I've not heard that.

Okay. Thank you.

We'll go next to Vincent Chao with Deutsche Bank.

Hey. Good morning, everyone. Just a quick question. In terms of New England, you outlined the sort of snow removal cost impact on expenses. Just curious what impact you saw on the leasing side? I mean it seems like things did track a little bit higher than last quarter on a year-over-year basis, but just curious how much of an impact you saw on leasing and if there's been a notable improvement since things have started to fill out here?

Yeah. Vincent, this is Sean. Yes, we did quantify the OpEx impact in New England. And if you had excluded the impacts of those storms on OpEx, our year-over-year growth rate in OpEx was about 100 basis points less. In terms of the impact on the revenue side, it's a little bit difficult to quantify. I mean you could look at traffic and net leases and things of that sort to try to quantify it as best as you can. We had a difficult winter there last year; it's worse this year. So you know there's some impact, but it's really hard to quantify what that is in terms of who didn't show up. New England is a market sort of like Seattle that's a little more seasonal than the average market, specifically is relatively soft or quiet in the first quarter in terms of what you might you see in market rent growth and then it ramps up materially as you get into March and April through about July, and that's pretty much the pattern we've seen this year. So it's not terribly different from what we've seen in the past. We structure our lease expirations in New England in the first quarter to be pretty low, lower than the average across the portfolio for the first quarter, and that diminishes the level of activity in the region to begin with.

Got it. Okay. Thanks. And then just another question, last quarter, I think there was a question about the remaining Houston assets and they're getting ready to be marketed. I was just curious if you had any color on what you're seeing in terms of demand for those assets and pricing and that kind of thing?

Yeah, Vincent, this is Matt. We have two assets in Houston. One of them we did market in the last several months; it is under contract now, so I can't really comment any further than that. I can let you know more when it closes. And we have one other asset there that we are positioning for sale, but we have not brought to the market yet.

I mean, I know it's under contract, but I mean any comment on the demand you saw for that asset, was it better than expected, in line?

I really can't get into that when it's a pending transaction.

Okay. Thank you.

We'll go next to Dave Bragg with Green Street Advisors.

Hi. Thank you. And thank you for all of your thoughts earlier on your portfolio allocation goals and accomplishments. It's been a very busy period, but I want to revisit one goal or idea that you had suggested back at your Investor Day in 2010. At the time you said that your portfolio was 15% Class B but the efficient frontier analysis indicates that 25% would be optimal. Where do you stand as it relates to that? Timothy J. Naughton - Chairman, President & Chief Executive Officer: Yeah. Dave. This is Tim. I think as we talked about maybe in the last few calls, we think about really more from a brand allocation standpoint at this point, but you can think just sort of roughly eaves as a Class B generally suburban and Avalon largely is Class A, and AVA can be bit of a mix, but probably more Class A than it is Class B. And what we said is it's less about a target allocation for the entire portfolio than trying to optimize positioning of assets within target submarkets. And that sometimes is going to be a more affordable asset; in other cases, it's going to be more of Class A or newer build type asset. And we were just trying – back in November 2010, we were trying to give an indication what we thought the outcome of that strategy might look like. But as we've mentioned in the last few calls, we're active developers right now and we're allocating more capital through new development than we are through acquisition. And so, you might expect that weighting to continue to be a little bit more weighted towards Avalon then eaves over the next couple of years as we build out the portfolio.

Right. That makes sense. I know you've published this many times but I don't see it in front of me. What's eaves as a percentage of the portfolio? Timothy J. Naughton - Chairman, President & Chief Executive Officer: Eaves today is about 17%, AVA is about 6% and the remaining 75%, 76% is Avalon today, and that's by sort of fair market value of the assets, if you will. So, on a unit count, it would be a little different than that.

Okay. Thanks. And the other question relates to the American Bible Society deal, seems really interesting. We're hoping you could provide a little more detail on that including your expectations for Street retail rents in that sub-market.

Hey, Dave. This is Matt. We are actively working that project; obviously we closed at the end of January. We've put the design team together, are working through the concept designs right now, moving it as quickly as we can towards hopefully a start sometime the second half of next year. And as part of that process, we are talking to potential retail partners, and it is quite possible that we'll wind up doing a transaction there to bring in somebody either on a forward sale basis or on a current basis to take the retail. We do have some estimations of what we think retail rents are there, but ultimately we know that that is a material part of value of that asset, and that is not our area of expertise obviously as much as the residential. So, we may well bring in a partner there. It's about 55,000 feet of retail divided between three levels: the ground floor, the second floor and some cellar space, and obviously the rents are very different, depending which of those floors you're on, and even if you're on the Broadway frontage versus the 61st Street frontage. But we're looking at in terms of what the total value of the retailers and therefore what the total value of our net investment will be after that, assuming that somebody else ultimately owns that.

Okay. So, lot move in pieces, nothing else that you can share right now?

Right.

All right. Thank you.

We'll go next to Ann Weisman of Credit Suisse.

Hey, guys. This is Chris (01:05:33) for Ann. In your prepared remarks you talked a little bit about how you strategically increased your exposure to the West Coast over the last 7 years to 10 years. But when you look at your $3.3 billion shadow pipeline, the vast majority of that comes from your East Coast markets. So, can you talk a little bit about what you're going to do in terms of develop those assets or those land parcels or are you going to be going out to buying more land in order to increase your exposure to the West?

Yeah. That's a fair question. This is Matt. I can get into that a little bit. Obviously you're right. Our development rights pipeline is more heavily weighted to the East. I think that's a function of a couple of things. One is the entitlement cycles tend to be very extended particularly in the Northeast, so some of those deals are in there for a long period of time, three years, four years, five years. So that isn't necessarily reflective of the balance of the way the starts will be. The West Coast deals have tended to come in and move out more quickly, particularly early in the cycle where we were buying sites that maybe someone else had entitled. So, some of it is just timing mix, some of it is market timing though that the West Coast markets are more volatile, as Tim had mentioned, and so, we were trying to be very aggressive about getting in early in the West Coast markets, where the development window can be a little narrower. So I think we are more careful about that. But having said that, we are looking at some pretty significant West Coast land opportunities right now and we're continuing to pursue those. So I think you may see that mix change a little bit over the next couple of quarters. But generally speaking, the deals in the West do seem to come in and out of the pipeline a little bit more quickly. Timothy J. Naughton - Chairman, President & Chief Executive Officer: Yeah. And, Chris, just one last thing to add. As we feel like we're getting out of balance between the East and West, you can obviously manage that through just buying and selling assets as well. So...

Yeah. Timothy J. Naughton - Chairman, President & Chief Executive Officer: While opportunity may not allow us to do that through development based upon where you're in the development cycle in particular markets, we do have a little bit more flexibility as it relates to buying and selling assets.

Great. That's really helpful. I appreciate it. Just now a couple of questions about like impairments and how those hit the income statement. It looks like you have about roughly $5.8 million impairment hitting the income statement where $4.2 million is coming from Northeast weather and then about $800,000 from the loss on Edgewater. What's the remaining $800,000?

Chris, this is Kevin. The remaining $800,000 is an impairment charge on land that is about to go under contract for sale that we expect to close in the second quarter.

Got you. And then in terms of the Northeast storm impairment, it's reversed above NAREIT FFO. Is there any reason why that's the case?

It's a casualty on depreciable real estate, which under the NAREIT definition of FFO is added back to FFO.

Okay. That's helpful. And then, last, of the $3.2 million you have added back to core FFO, I assume the $793,000 is for the actual impairment and is the balance kind of the opportunity cost of lost trends. And of the, I think $0.09 to $0.11 you have in the guidance for the full year, is that also a mix of opportunity cost and actual cost?

On the first part, the $3.2 million that is added back in our Attachment 13 of the release is added back to Core FFO from FFO. It consisted about $1.6 million in lost NOI from Edgewater. So, we expect roughly speaking that – that to recur throughout the balance of the year. $800,000, as you point out, is tied to Edgewater's, the incident response costs that we incurred during the first quarter and the remaining $800,000 is the land impairment costs for the wholly owned parcel that we just mentioned a moment ago. Can you repeat the second question again?

No. I think you pretty much got it, but it sounds like that's going to be recurring throughout the year and that the $0.09 to $0.11 will be a mix of those two things?

Well, I think it's probably – we can follow-up afterwards, but basically just to be clear in terms of what I just was describing. Of the $3.2 million, $1.6 million relates to lost NOI from Edgewater and that will recur throughout the back half of the year.

Right, right, yeah.

So you just multiply that by three and that's what we expect to receive over the next three quarters. The other two items, the $800,000 in response costs from Edgewater and $800,000 in land impairment costs, those are one-time items that we experienced in the quarter and do not expect to recur over the balance of the year.

Got it. That makes sense. Thanks a lot, guys.

Okay.

We'll go next to Alex Goldfarb of Sandler O'Neill. Alexander D. Goldfarb - Sandler O'Neill & Partners LP: Hi. Good afternoon, and thank you for taking the questions. Just two that are really quick. First, Kevin, you talked about potential debt issuance. Going back a few months ago, the rating agencies seemed to be indicating they may be looking to upgrade you guys. Although based on the conversations, it's like the debt markets already priced you guys like an A type credit. So, as you are thinking about debt issuance or capital for the rest of the year, are you obligated to change any of your thoughts or this is all the rating agency is doing, you guys aren't asking for any of this, and therefore you're not changing the way you view your capital structure or development spending, et cetera?

Alex, this is Kevin. Our thoughts around our capital structure hasn't changed. The rating agencies have taken their own action of their own accord based on whatever they're seeing in terms of both the evolution of our business and the current capital market condition. So that's sort of the set of actions that are happening independently of us. In terms of our capital plan for the year, our decisions around how much to raise is a function of how much we expect to expend on development and other activities. So it's driven by our uses. And so, as I mentioned earlier, we expect about another $1 billion of incremental activity on the sourcing front in the form of dispositions and unsecured debt issuance really because of the investment activity we have in our capital plan. In terms of our choices around what to raise, it's really a function not of the rating agencies but rather what are the most cost-effective sources of capital at any given point in time. And as things stand today, unsecured debt pricing is relatively attractive. Moreover, as you can see in our initial outlook from the fourth quarter, we have $650 million of debt that we expect to refinance, so that's a use. And on a leverage neutral basis with NOI on stabilized portfolio growing and development NOI coming online, we can add more than that amount in the form of newly issued unsecured debt and still grow on a leverage neutral basis. So that's how we're trying it around our total incremental need and how much of it might be in the form of unsecured debt. But at this point, as you know, we haven't issued anything in terms of debt, so we'll just have to wait and see what happens as we progress through the year. Alexander D. Goldfarb - Sandler O'Neill & Partners LP: Okay. And Kevin, can you remind us what cap rate they used for your unsecured debt – for the unencumbered pool – sorry, what cap rate they use?

I'm not sure if I'm following your question. We have disclosure in our press release that talks about the cap rate that pertains to our line and I think that's a 6% cap rate, if I'm recalling it correctly, but you can just look through the attachment for that. But in terms of the cap rate that the rating agencies use, I don't have that information. I don't know that it will be something I'd want to share, if I did. Alexander D. Goldfarb - Sandler O'Neill & Partners LP: Okay, that's cool. And then separate question, are you now done with any of the legacy Archstone dispositions or gains or is there still potential for more to come?

Well, I guess, one point I'll mention. This is Kevin again, Alex, and others may want to comment. We expect potentially in the second quarter – and you probably saw this in the JV income line item – to receive some additional settlement proceeds related to some pre-acquisition activity that will likely flow through in the second quarter and be included within reported FFO, but it's carved out for core FFO. Alexander D. Goldfarb - Sandler O'Neill & Partners LP: But, I mean, in addition to what you've already disclosed, is there anything future beyond this or versus second quarter basically clears the deck and that's it?

Alex, this is Matt. There is one more asset. There were two parcels of land that went up in the parking lot, one settled earlier this year, there is one other parcel of land out there that it will eventually settle – may settle this year, it may not settle for a while longer, we'll see how the market plays out on that, but that's relatively minor one-time adjustment if it clears.

Well, it's been actually reflected in the first quarter. Alexander D. Goldfarb - Sandler O'Neill & Partners LP: Okay. Perfect. Listen, thank you.

Yeah.

We'll go next to Tayo Okusanya of Jefferies.

Hi. Just along Alex's line of questioning, can you just talk a little bit more about what you're expecting for the rest of the year in regards to acquisitions overall, and generally what kind of pricing you're seeing in most of your key markets – I'm sorry, dispositions, not acquisitions?

Tayo, this is Kevin. I think overall, as I mentioned, there's probably an incremental $1 billion of capital we expect to source pursuant to our plan for the year. Most of that we expect to source in the form of unsecured debt; the balance will be dispositions. In terms of the dispositions that we contemplate – I think Matt outlined a moment ago that two of them relates to Houston, one we completed in Stamford Harbor in the first quarter. So there is overall and you step back there's not an awful lot of disposition activity that's anticipated within our capital plan and probably those two sources represents the bulk of that.

Okay.

And Matt, anything you want to add just in terms of just the transaction market generally with what we are seeing out there?

The transaction market has been very hot. There is clearly more demand from buyers to buy high quality multifamily assets and there are assets on the market for sale generally speaking. Obviously, it varies a little bit market-to-market. So like Kevin said, it's our need to fairly model it. We are always looking to transact. On the margin, if we can shape the portfolio, so we make some additional asset if we are using those funds to buy an asset, it may be in a submarket we like better, but right now the market is very active, very liquid.

Got it. Thank you.

We'll go next to Michael Salinsky with RBC Capital Markets.

Hey, guys. Just in the nature of time as this call is going on a little bit long. But just the late additions over the last couple of quarters seems to be a little bit more of an urban focus particularly with the New York asset there. Is there any shift as you think about starts maybe two years, three years down the road kind of moving more urban – moving more back into that urban core as opposed to the suburban? And then just given the starts in D.C., you guys were among the first to sell out to reduce your exposure to D.C., ahead of the kind of the downturn. Can you just talk about your outlook for D.C. over the next, call it, two years to three years? Has the worst already passed, and do you expect kind of 2016 and 2017, would you expect D.C. to perform more in line with the rest of the portfolio or do you think there is a recovery potential there?

Yeah, Michael, this is Matt. I can speak a little bit to the first part of the question, and then maybe Sean or Tim might want to add some color as well on D.C. longer term. In terms of our development rights, obviously, that Columbus Circle deal is a very large deal, so that does move the needle in terms of when you start looking at the numbers and weighting it by urban, suburban and those things. But, as I mentioned earlier, generally speaking, we're still finding – just when you look at overall supply/demands fundamentals and you look at where land is pricing, the cost of construction, we're finding better risk-adjusted returns, generally speaking, on new land deals in suburban markets. And again, a lot of this is infill suburban transit-oriented in-suburban job centers. Some of it is for that bedroom suburbs, but most of it is that kind of in a ring suburbs, I'll call it. So I would not expect our development rights mix to change materially one way or the other, but it's really bottom-up. So we don't sit here and say to the local teams, go find us five deals in an urban market and now go find us five deals in a suburban market, it's find us the best deals in your market. And they respond to what they're seeing on the ground and sometimes those are more urban deals, sometimes they're more suburban deals. But, at this point in the cycle, they are still more suburban Columbus Circle notwithstanding. As it relates to D.C., we are planning a couple of starts in Metro D.C. here over the next couple of quarters, some of those are legacy positions, one of them is a large deal in the District that we had inherited the land…

Thanks for the color, guys. Thank you.

We'll go next to William Kuo of Cowen & Company. William Kuo - Cowen & Co. LLC: Great. Thanks, guys. Appreciate the color in the presentation. The additional data points are in the development pipeline. Just looking at page 16 where the five communities under construction in lease-up, whether the current projected yield is 6.9% versus the 6.3% original, so about 10% higher. Given your view of the extended nature of the current cycle and, call it, two years to deliver the rest of the pipeline on average, is there any reason to think that the current pipeline – if I estimate about 6.2% yield that that won't stabilize at 10% higher as well? Timothy J. Naughton - Chairman, President & Chief Executive Officer: Yeah, William, it's Tim. I mean, if you look over the last three or four years, the deals that we completed have all stabilized on average for each vintage year, if you will, above what we had anticipated upon original projection. It's just really just rent growth. So I think it's going to come down to how you underwrite rent growth over the next four or five years. To the extent we continue to see a long sustained cycle where we're getting trend to above trend rent growth, we'd expect stabilized returns to be above what we first report in the release when it initially goes on the schedules. William Kuo - Cowen & Co. LLC: Okay. Thanks. And then just quickly, I know that High Line, West Chelsea is 97% leased. Can you talk about the performance of the two different segments versus original expectations and how splitting up that into the two segments has performed?

Yeah. William, this is Sean. In terms of the performance, we've been happy with both the AVA and the Avalon product. AVA delivered first a little bit bigger building and Avalon followed. But when you look at it just from a lease-up pace perspective and what happened with rents through the course of the different seasons, the lease-up performance relative to the original expectations was pretty similar between the two, both Avalon and AVA. William Kuo - Cowen & Co. LLC: Okay. Thanks so much.

Yeah.

We have no other questions at this time. I'd like to turn the conference back to Tim Naughton for closing remarks. Timothy J. Naughton - Chairman, President & Chief Executive Officer: Thank you, Augusta. Well, thanks for being on today. I know it's been a long call, so we won't take any more of your time, but we do look forward to seeing all of you in June at NAREIT.

That does conclude today's conference. Thank you all for your participation.