Welcome to Boston Properties fourth quarter 2008 conference call. (Operator Instructions) I would like to turn the conference over to Mr. Arista Joyner, Investor Relations Manager for Boston Properties. Please go ahead, Ma’am.

Good morning, and welcome to Boston Properties fourth quarter earnings conference call. The press release and supplemental package were distributed last night, as well as furnished on Form 8-K. In the supplemental package, the company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg. G requirements. If you did not receive a copy, these documents are available in the Investor Relations section of our website at www.bostonproperties.com. An audio webcast of this call will be available for 12 months in the Investor Relations section of our website. At this time, we would like to inform you that certain statements made during this conference call which are not historical may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Boston Properties believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks that could cause actual results to differ materially from those expressed or implied by forward looking statements were detailed in Wednesday’s press release, and from time to time in the company's filings with the SEC. The company does not undertake a duty to update any forward-looking statements. Having said that, I'd like to welcome Mort Zuckerman, Chairman of the Board; Ed Linde, Chief Executive Officer; Doug Linde, President, Ray Ritchey, Executive Vice President and National Director of Acquisitions and Development, and Mike LaBelle, Chief Financial Officer. Also during the call, a question-and-answer portion will be available, our regional management team will be available to answer questions as well. I’d now like to turn the call over to Doug Linde for his formal remarks.

Good morning everybody, and thanks for joining for our fourth quarter call. It may feel late but happy New Year to everybody we haven’t spoken with. For many of us, the close of 2008 probably didn’t come too soon. The continuation of the unwinding of the excessive leverage in the financial system along with what is clearly a deep lack of confidence among consumers across the world certainly had a profound and a very negative impact on financial performance as measured by either stock price or bonds spreads over 2008. Unfortunately, neither the duration nor the depth of the economic challenges across the globe is still fully understood. The continuous announcement of revenue shortfalls, spending cuts from public officials and bankruptcies from retailers and of layoffs from business leaders like Microsoft Steve Ballmer who even announced for the first time that Microsoft was going to experience job cuts is a clear reminder that the current recession has a very, very wide reach. And yet, as Mike Labelle is going to talk about in a few minutes, if you pull out a non-cash impairment charge due to the application of that fair value accountings to our equity increased in our unconsolidated joint ventures, that’s in itself is a mouthful. Our 2008 results were ahead of our guidance, a 3% increase over 2007. The fourth quarter leasing statistics still show us 39% net increase in rents, with the majority of the increase coming from New York City which was over 60% and clearly the news from New York City is about as bad as it has been anywhere. But lest we be accused of being Pollyanas, leasing activity with few exceptions has been largely non-existent in our markets during the fourth quarter and into the New Year. And I would say that…

Thanks, Doug. Good morning everyone. Before I go into details about our fourth quarter including a discussion about the impairment charges that we detailed in our press release, I wanted to start by discussing the leasing activity that we experienced this quarter. We had another successful quarter with 675,000 square feet of new leases commencing. On average, these leases have rents that are 39% higher on a net basis that are prior leases. New York City posted a 61% increase with multiple leases at 599 Lexington Avenue and Times Square Tower including the real leasing in December of the former Heller Ehrman space at Times Square Tower at a net-to-net rental increase of 19%. In Boston, a roll-up of just 11% would have been even higher at 31% if not for one large 70,000 square foot lease in one of our RND properties in suburban Boston that experienced a 34% decline. Our other market had only modest activity with Princeton showing a 10% rent decline based on just one transaction this quarter. Our weighted average transaction costs were down this quarter at $28.84 per square foot. The transaction costs are in line with our projection and they were impacted by the significant amount of New York City leasing which was 36% of our total leasing that had strong rents but also high leasing commission. The terms of most of these leases were negotiated several months ago and as Doug discussed, with the lack of recent activity, there is the perception of a pretty dramatic decline in rent particularly in New York City even though there have been very few actual transactions. As always, it is important to bear in mind that only a small percentage of our portfolio is subject to repricing annually due to our practice of signing long-term…

Thanks, Mike, hi everybody. I'm just going to spend a minute or two providing somewhat more color on the 250 West 55th Street leasing status. We've told you in successive quarters that we’ve been working on a lease. And a transaction that would bring the amount of space leased at 250 West 55th Street to about 70% and that remains true as I speak to you today. There has probably been some question on people's minds as it would have been on mine as to what's taking so long to get this transaction done? Let me just give you a couple of facts, first of all, in addition to the need to reach an agreement between us and the perspective tenant the tenant also had to reach an agreement with its existing landlord on various items. And so that – and those were not simple items and as a consequence introduced a certain amount of complexity into the whole negotiation. That being said we had reached what everybody believed was a reasonable transactions and were moving forward into documentation when the very dramatic changes that have occurred in the New York City office market came to the floor over the last let's say four or five months. And the result of that was a rather lengthy, I won't characterize it, but a lengthy re-negotiation. Suffice it to say that at this point we and the tenant have agreed upon terms which are satisfactory to both sides. And so I have every reason to believe that this transaction will, in fact, go to completion and execution. But once again the documentation still remains in front of us and as you know from listening to our calls in the past we don’t put anything in the win column until the fat lady sings to mix metaphors. So there could be something that occurs between now and the time that the documents get executed. That would make the transaction – that would cause the transaction to come undone. I don’t expect it but it's a possibility. If that occurred we, of course, would have to re-evaluate our plans for 250 West 55th Street. But we would – I'm not going to cross that bridge until I have to and hopefully we never will have to. So with that I just wanted to add that and I really given the lateness of the hour I will turn it over to Mort to see if he has any comments and then we'll open this up to Q&A. Mort?

Yes, good morning, everybody. I think one could spend quite a bit of time on various interpretations of where the economy is going. But the real question is we all know where it's going the question is when does it come out and at what point of the tailspin that it currently is in. And to a degree I think that that's going to be a function of both the government stimulus program which I have to say is more upsetting than I thought it would be. And the government program which is going to announced by Tim Geithner, the new treasury secretary, which I think will be even more important than the stimulus program as to how to unlock the credit system and to release the pressure on the financial system from what has become known as toxic assets. These are all going to be resolved I suspect within the next 60 to 90 days and we'll just have to wait until then. It doesn't mean that the economy is going to stop declining. It does mean, however, that if those are effective programs and I hope that the treasury secretary's program is more effective than the stimulus program. And I think it's also more important because this is an economy that rests and relies on credit and that credit has just become more or less frozen, perhaps not entirely but dramatically more frozen than in any time since the end of World War II. I think we are just going to have to wait and see how that goes. I believe that that will begin to at least relieve the problems in the credit markets. Not totally but over time. So that I hope is going to take place within the next 30 to 60 days in terms of a legislative program and a policy program. And just hints of it, if you saw yesterday, really have a fairly significant impact on the shares of financial firms and indeed on REIT's stocks, as well. That's basically all I have to say. I think we are still in a very testing and trying time for the economy. But as you have heard before we do believe that the basic strategy that we have followed now for virtually 40 years is to stay and supply constrained markets and this is certainly the same in virtually every one of the markets. And stay – and build and own buildings to purchase at the highest end of those markets because there are always tenants who want to move into those buildings. And there are always tenants who can afford to move into those buildings. So we are, I think, still relatively well situated and I expect that that will be demonstrated over the next year in terms of the performance of whatever leasing we have to do. That's really all I have to say and why don’t we move on from here.

Okay operator would you please open up to questions.

(Operator instructions) Our first question comes from the line of J. Habermann with Goldman Sachs. Please go ahead. Jonathan Habermann – Goldman Sachs: Hey, good morning everyone. (Inaudible) as well. I guess just to start with your comments on the dividend. It seems as though the market would appreciate obviously conserving cash in this capital constrained environment. So I'm just curious I know you said it's a very difficult decision but you know what would the argument for keeping this dividend as is?

Mort, do you want to start with that one?

Yes, I am not sure that we agree with your assessment of the market and I think we will make this decision based on our own assessment of how we should properly treat our shareholders. A lot of our shareholders, I think, are assuming that we are going to continue with the cash payment and we feel that we work for them, as well. And if we do not have any particular pressing need for additional cash and think we can afford based on our operating profitability and our financing of the capital costs that we expect to incur and the availability of capital costs and the credit market free up we think we would rather make these judgments over time and only under the conditions that we feel we cannot comfortably finance the things that we have in mind going forward would we feel that we should change the structure of our dividend. I think a lot of companies may be in a different position than we are but I would point out to you that we sold a lot of buildings at what turned out to be the peak of the market. We did a lot of good financing including a $747 million financing for the company on August the 19th of last year. So we are in fairly strong financial condition and Mike and Doug have done a great job in terms of arranging for corporate credit lines. So we are – we will make the decision as to what we do probably sometime in the next six months when we see how the credit markets have reacted and what our own credit needs or cash needs may be. Jonathan Habermann – Goldman Sachs: Great, thanks for the commentary then. And then with regard to Lehman at this point I mean do you have any confirmation that they will stop paying rent after March or is that an assumption that you've made?

Here's our perspective. Our perspective is that you know they're not using all the space they're in, that they are out in the marketplace looking for a two to three year sublet or you know direct lease depending on whether not a landlord has the existing space or a subtenant does. We have been told that they are looking for as inexpensive a transaction as they possibly can. And that they real question is whether or not we're prepared to forego the opportunity to lease to space to somebody else over the next two to three years to keep them at a very, very low rent or whether or not we're simply just going to be you know chasing ourself down. And our expectation is that we're not going to be the least expensive choice for Lehman Brothers legacy company to you know fulfill that obligation and that requirement for the next couple of years. I can't tell you if they're going to move out March 31st or April 12th or May 3rd. But I think the team leads are suggesting that they're having to move out at some point relatively soon. Jonathan Habermann – Goldman Sachs: Okay with regard to CitiGroup…

Let me just add one thing to that, okay. They are in 399 Park which is one of the best buildings in New York and as long been seen as such and in fact is to this day one of the best properties in New York – in Midtown New York, on Park Avenue and the Lehman Space has been substantially fixed up and is a very attractive space. And we do not want to tie it up at a really uncomfortable rent. If that's Lehman's choice we wish them well but we are talking to a number of other tenants, as well. There are always tenants in the market and the only question is whether or not we can agree on price. So I just want to put that out there as the background of this thing. Jonathan Habermann – Goldman Sachs: Okay and then also it was mentioned on an earlier call this week that CitiGroup will be consolidating in two of their buildings, you know 388 Greenwich, as well as, Long Island City are you seeing any of that in your conversations with the company?

We've been having conversations for two and a half years with Citi Bank and it's been very clear to us that for the (inaudible) transaction they would move out of virtually any space in mid-town Manhattan that (inaudible). And we have been as you know I think we've talked on previous calls in conversations with you know a number of larger tenants who have them move out of a significant portion space at the CitiGroup center. They are currently using that space and so you know it will cost them something to move out of that space. But I think they are fully engaged in trying to reduce their operating expenses as quickly as possible. And that really isn't a change from our perspective, you know pre the new administration or leadership at Citi Bank. I mean this has really been going on for the last two or three years. Jonathan Habermann – Goldman Sachs: Right, and just last question, the law firm that's considering the West 55th site in terms of the space needs there and the requirement is that going to be an expansion. And I guess what other sort of options are they considering you know obviously staying put, as well.

There are other options open to them but as I said to you -- as I said in my remarks at this point they are – we have reached agreement for them to come to 250 West 55th. So I don’t – they are not considering other options at this point. Jonathan Habermann – Goldman Sachs: Okay, thank you.

Thank you our next question comes from of Mark Biffert with Oppenheimer, please go ahead. Mark Biffert – Oppenheimer & Co: Ed, just added to that the 1.5 million square feet of new leasing that you guys talked about does that include the West 55th Street expected lease?

I don’t remember the contents of the 1.5 million…

No, that's lease up in the portfolio, the in-service portfolio today. Mark Biffert – Oppenheimer & Co: Okay. And then regards to the $300 to $350 million of debt that you expect to raise you know in 2009 does that include the Rush to Work construction financing or the construction financing that you might have to raise for the Biogen project?

It doesn't, that $300 to $350 million is you know more long term you know fixed rate financing that we would raise to supplement our liquidity. You know we also expect to be re-financing some of the maturities that Doug spoke of. He spoke of $70 million worth of maturities in 2009. And then the extension of a $200 million loan that we have. In addition to that we expect to close (inaudible) and we anticipate to enter the market to look for construction financing on some of the other developments including Biogen that we are doing. Mark Biffert – Oppenheimer & Co: Okay and regards to the Biogen project what type of yield have you targeted on that?

We are – you know our goal is to at a minimum have a kind of cash-on-cash basis be in double digits. Mark Biffert – Oppenheimer & Co: Okay and in regards to the rest of the space that Biogen has in Cambridge are they planning on moving out of any of that space and moving into the Cambridge site?

Yes, there is a portion of space that they have with us in what is referred to as 4 Cambridge Center and that 's a multi-tenanted building and right now it appears that a portion of that lease which is I think about 100,000 square foot would be vacated towards the end of the 2010. Mark Biffert – Oppenheimer & Co: Okay and then lastly related to the impairments that you took can you provide a little bit of color on why the GM building in terms of you know where rents would have to go in the GM building for you to have to record an impairment on that?

You know I'll be honest with you we didn’t do that analysis that way. We didn’t look and see where rents would drop to. What we did is we said here is where we think rents are in our best estimation, here's what we think terminal cap rates, here's what we think the right discount rates and we threw all that stuff into the sausage maker and we came up with our evaluation. And the valuation was well in excess of what our book value is for GM and we stocked it. Mark Biffert – Oppenheimer & Co: Okay, thanks.

Thank you. Our next question comes from the line of Lou Taylor with Deutsche Bank. Please go ahead. Louis Taylor – Deutsche Bank Securities: Thanks, good morning, Ed, just along similar lines, maybe Doug or Mike can you just share us some of the assumptions that you used in doing that JV analysis as you know we're trying to determine whether you know you might have another impairment in future quarters. Whether it's you know terminal value or discount rates but can you give us some comfort that you know this may not – we may not see this charge again maybe for the rest of the year if ever.

Sure. I will – let me try to put the context to this. We took a rather conservative perspective and the question that we were answering was what would someone pay for an equity interest in this property today? And given that nobody has paid anything for any property today you can obviously recognize the difficulty we had coming up with that. And so I think fundamentally the decision model calculations that were the most important were what are market rents and I gave you some of our views on what the market rents were. And I would say were – we assumed that rents were not going to be improving anytime soon. In fact they may be going in the wrong direction in our (inaudible) discounted cash flow model. We assumed that you know unlevered IRR expectations for real estate were hundreds of basis points in excess of where they were a year ago. And we assumed that cap rates on the terminal side were significantly higher than where people were underwriting them you know six months or a year ago. And we – and so I would hope that the probability of us having to deal with this again on the assets is highly unlikely. But you know if the things get really, really bad you never know what could happen. But I would say we took an exceedingly conservative perspective when coming up with these valuations so that the question you asked is the right one and one that we hope we do not have to answer again. Louis Taylor – Deutsche Bank Securities: Right.

Just to also remind you this is just on our JVs and we looked at all of our JVs and all of our other JVs were way, way, way above book value and remember that part of this is you know this is accounting mumbo jumbo. So to the extent that a property was put – in service a number of years ago and it's been depreciated the book value has gone down for GAAP purposes and so the measurement that you're looking at gets wider and wider from what the market value is. Louis Taylor – Deutsche Bank Securities: Great, thank you.

Thank you, our next question comes from the line of Jordan Sadler with Keybank Capital. Please go ahead. Jordan Sadler – Keybank Capital: Good morning, just a quick follow-up on the impairment Doug. The – is that from an accounting perspective a write down of the real estate investment – the investment in real estate or is the intangible the FAS41 adjustment also written down?

I believe it's the equity carry value that is written down. Jordan Sadler – Keybank Capital : Okay and so it won't affect the amount of the accrual going forward?

Correct. Jordan Sadler – Keybank Captial: Okay so that stays the same.

Yes, it should have no impact on going forward P&L issues. Jordan Sadler – Keybank Capital: Okay and then as it relates to the (inaudible) can you give us any color on terms?

I guess what I can tell you is that you know we are in the process of you know putting a syndicate of things together. And we believe that we have sufficient banks that are telling us that they are interested in the deal to close the transaction. The majority of those banks have already approved the transaction. There still remains a couple of them that are going through their approval process. But all of them have agreed on you know terms and a term sheet and based upon that we are moving forward through the documentation phase with our lead bank to try to close this loan in the next you know 30 to 60 days. I really don’t want to quote on specific terms, I mean I can tell you that the construction loan market today you know is generally you know three year terms with a two years extension so they get five years in total. You know pricing is generally somewhere from 300 to 400 over LIBOR today. You know there is upfront fees of somewhere between you know 75 basis points and 150 basis points maybe, something like that depending on the transaction of the you know the pre-leasing that is involved, the location, and the quality and the quality of the sponsor. All of those things go into how the banks are assessing you know the pricing involved in these transactions. Jordan Sadler – Keybank Capital: That's helpful. And then just on the Biogenetic deal can you maybe elaborate on sort of the – what sort of return expectations you would have for a build to suit in this environment?

Going forward again? Jordan Sadler – Keybank Capital: When you did that deal you signed that lease I think in November, December.

Yes, as I said, you know our anticipated cash on cash return is a double digit return. And you know the rent obviously goes up. We've viewed the environment in which we were going to be buying this building as one that would be hospitable to developers and so the opportunities for good things to happen on the cost side to enhance that return were you know significant. And so you know as I said I am not going to tell you if they're you know how far above you know double digit is but it's going to be a double digit return. Jordan Sadler – Keybank Capital: Okay and that's on a going in cash basis?

That's a going in cash basis. Jordan Sadler – Keybank Capital: And will you lose Biogenetic at all occupancy in Cambridge?

Yes, just to reiterate what I said the Biogenetic is in three of our buildings. One of the them is a manufacturing building, one of them is a corporate headquarters like building and one of them is just an office and administration building. And we expect that there is a – we have a lease that is expiring sometime at the end of 2010 for about 100,000 square feet and that's the only lease that we will lose with regards to our occupancy of Biogenetic in Cambridge. Mortimer Zuckerman But I think it's fair to say we would have lost that in any event, right? (Inaudible) but they were looking to relocate to "less expensive space."

We also – this is Bryan Koop, Regional Manager, we also had the (inaudible) low vacancy in Cambridge at this time. So (inaudible) at this time with their vacancy when it does come. Jordan Sadler – Keybank Capital: Thank you, that's helpful.

Thank you, our next question comes from the line of Michael Bilerman with Citi, please go ahead. Michael Bilerman – Citigroup: Mike, good morning. (Inaudible) on the phone with me, as well. I wanted to come back to the dividend question. And it sounds like you're taking it very seriously in terms of any potential reduction and any potential payment of that dividend in stock and it sounds like your preference it to continue to pay that dividend given what you see today, is that correct?

You know, can I just comment on that? For the longest time as managers of REIT I think we were indoctrinated with the idea that a REIT was impacted dividend paying stock. And that the REIT shareholders liked the idea of a steady increasing flow of dividends. You know we still think that that notion has not been totally discredited by the fact that capital has been so difficult to access in the REIT field and so or in any field, really. To the extent that we feel it important to free up capital by changing our dividend policy we fully expect that we will – that we would do that. We just are not at the point today where that seems to be a necessity. And there is nothing you know we're going to do in the short term that's going to prevent us from making that judgment a little bit further down the calendar than now or maybe even when we declare this first quarter dividend. So that's how we're looking at. I mean we're not – we not suggesting that changing our dividend payout based on a policy (inaudible) is necessary for meeting the REIT regs in terms of the taxable income or paying it out part in stock and part in cash are not viable and valuable tools at our disposable. It's just a question of not being forced to decide which of those tools we want to use at this particular point in time and also not wanting to sort of give up what we were – what were taught as being important in the REIT field. Michael Bilerman – Citigroup: Right, and I guess from a magnitude perspective you're paying out almost $400 million of annual dividends, it sounds like $100 million just going down to the minimum payout would be one step and then you would have to decide if you pay it out in stock you would be able to conserve or effectively raise equity for you know 90% of it or $360 million if you didn't cut it. Doug, I just wanted to go back to one of your comments, you were talking about where you stock price was and effectively your implied cap rate being in the 7.8 to 8.3% range. And that not having much clarity or any clarity or values today. But you made a couple of comments about the public markets overshooting today and also that you're effectively trading at a discount to NAV but just don’t know how wide of a discount. I am just trying to determine sort of where your mindset is about justifying where your implied cap is versus where you perceive market to be.

Sure, well, I mean, I will give you a couple just sort of data points, the first is that, from our perspective, when we went to market with our building in Washington DC and we ask to brokers community where he thought this thing would trade, they sort of said, well, we think this could trade somewhere in the high sixes low seven on a quote, unquote going in basis, and this is a building, that’s you know basically effectively market rent. So I said to myself okay so GSA building in Washington DC is a -- I think it was $450 to $500 square foot that was of our cost we traded at a somewhere between high sixes low seven going in return. And I am saying my whole company which has predominance of assets in Manhattan, it’s a predominantly got the low market trend the highest quality CBD assets in a portfolio in the country just trading at a 83 to 77 I don’t know I think that’s the market is overstocked when I hear that the Bertelsmann Building is going to be trading for $400 plus or minus per square foot and its going to be at a 6 type of cap rate with 190,000 square feet of vacancy. And I think in my portfolio at $370 to $400 square foot I would say, this is kind of feel like I better set of building than the Bertelsmann Building 1540 Broadway and I get better leases and I have got better credits, its kind of feel like the market is over shot. So that sort of where am I guess my predication to saying that I think the private market has not quite caught up with the public market.

I would say one other thing, in that context it also affects our views as to whether or not we wanted strategic stock at a considerably below value, below NAV in lieu of paying out the cash dividend, its another one of the things that I think is a relevant factor for us to keep in mind. Michael Bilerman – Citigroup: Right, and just lastly just on the evaluation of the unconsolidated JVs, when you think about your exit cap, and I assume a lot of the value in terms of what you are looking at has to come in your terminal value, you could see market trends going forward in a building. What was sort of the differential between the GM building relative to the other three macro assets that would because one hand at least medical write down on the equity versus none on the GM building?

There was not – there wasn't a number okay, so we did a whole bunch of ranges when we did in the business, you know the terminal cap rates ranges were couple of hundred basis points, and then we sort of look at the various what that sort of whole grouping valuations came out to be. I think the thing about the GM building, is that the GM building doesn't have any lease roll over through that effectively being on 2020, 2010 period of time and one would hope that between now and 15 years from now market rents will have at least started to recover. And so when you get to the valuations in the terminal cap rates that you have on a building like that, you don’t get hopefully you are not too far off where you would have otherwise been and just recall following which is when, when we bought that property. We made the comment that if rents didn't move at all, operating expenses continued to grow at 3% a year at that unlevered return on that investment at a terminal cap rate 6 to 6.5% was in the 12 to 14% range and so its hard to put ourselves in a position where we think that there is going to be any requirement to consider that building value is going to down to a point where at a much lower discount rate than 14% or 12% that you would have any type of – Michael Bilerman – Citigroup: Okay. Thank you.

Thank you our next question comes from the line of Ian Wiseman with Merrill Lynch. Please go ahead.

Yes, good morning, just a follow up question on the West 55th Street development. I think a year ago you said that the returns -- stabilized return was about 8.5%. Clearly the markets change you said its been renegotiate what is an acceptable return hurdle to continue with that project today.

Let me answer the question in a following way, we have put in starting amount of capital in the building into the land, and we have two choices at this point. We have the choice of postponing the project theoretically, and waiting for a better day or we have the choice of putting incremental capital into the building. And to be honest with you, we are looking at an incremental capital basis. And we are saying to ourselves okay, no ones where we are today how can we do on that incremental capital and return on incremental capital is significantly in excess of 10% at years, it's a significant double digit type return and that’s how we're looking at the return on the asset. Now, what that implies or the overall return is going to depend on budget things but you can obviously assume that its not an acceptable return vis-à-vis how we're looking at what overall project is but an incremental basis it is an acceptable way of allocating a capital.

So, with assuming the 77% or so the building is technically leased at this point what do you, what are the projections for the return on that development right now.

I don’t think we are going to, we will answer the question in total I think Doug, just answered as far as our incremental capital and for the return is in a very attractive two digit number and the decision that we have to make is, are we better off simply moth balling things and waiting until the market improves are we better off going ahead. I think you all know us well enough to know that we believe in -- that we believe that we do not make the market. And we believe that, we do what is appropriate at any point in time rather than well, we'll speculate on the future, and so with leasing if leasing goes as we expect, in makes very, very good sense to proceed with the building and we will get very acceptable return on the capital we putting to it.

Does Gibson Dunn have an out or an ability to renegotiate its lease with you guys and say assume sign that the peak?

No.

Okay. Thank you.

Thank you our next question comes from the line of John Guinee with Stifel. Please go ahead.

Hi, thank you. Two questions I think one for Doug and one for a Ray Ritchey. First, Doug in for private owner operators in general they don't have much in the way of dollars or TI leasing commissions. Can you comment on the ability of your TI and leasing commission dollars to come down over the next couple of years. And then the question for Ray, is the college board lease at Reston Town Center I think saw may even want to elaborate on why they choose to move?

John, on your question on TI. I think two things are going to happen, I think that there are number of landlords who are going to be very undisciplined about their ability to control their nervousness associated with having vacant space. And the first thing they are going to do is offer free rent and a lot of free rent. And the question is are the tenants that are going to be looking at that space may be comfortable with out of pocket for the capital associated with doing those transactions. And then there are landlords who may just say while we're better off putting 40 to 50 or 60 or 70 or $80 square foot depending upon the market. In to the space that we think the credit because we know there are no alternatives. And with that sort of set of pressures I think I am not sure I am, we are going to see tenant improvement dollars going down. On the other hand I think as you said there are going to be a number of landlords who physically are in capable of raising the capital to put into their assets unless they are effectively given ownership over to financial institution, in order to obtain those new dollars. And I think we will be very well served competing with those type of landlords and we are obviously trying to be as prudent and as thoughtful about existing improvements and doing renewals with tenants and being using the advantages associated with the lack of capital would have to be put into transaction by both parties to keep our rental rates at a modest increase relative to where we might have otherwise have thought, what we would get and to therefore reduce our TI's. But if you say to me, in 2010 if you look at average TI's across the marketplace will they be higher or lower then they are today, I am afraid that I have to tell you that I think they are going to be higher. History is any guide, our ability to prudently but our ability to do tenant improvement cost for tenants. Have enabled us to do deals rather than to be very competitive and in fact to win deals that other landlords couldn't win, because they had inability to that. So another way of answering the question is TI's historically didn't come down in a market like this, but our ability to keep our buildings at a lower vacancy rate is really where we are well served by having a capital that we have at our disposal. Peter, do you want to comment on them, remarks you have?

Yeah. Go ahead, Peter?

Well, I was just going to say, I think there were probably three principle reasons. One was that the college board by the time that lease was going to roll and they are going to move in to our building that’s third generations place that building will be 20 year’s old. The principle reason I think had to do with the efficiency to layout as well. And at a time they were looking that deal was done probably 18 months ago. Their existing landlords probably taking a more aggressively approach. And the other would be the image and visibility they were going to get in the new buildings.

I would just add also they weren't the original tenants in Reston Town Center, 15, 20 years ago when they went out and looked at the market. And in spite of the fact they could get substantially less expensive options outside the Town center. Not only are they going to continue to occupy space, but they are looking at major expansion including relocations in the Town center from other markets in United State. So it’s just a continued validation of Reston Town Centers' market superiority of other options.

Ray any comment on the current landlords' ability to actually write a check to TI’s etcetera?

I best left to the current landlord to make comment on that other than us speculating.

Okay, thanks.

Thank you. Our next question comes from the line of Michael Knott with Room Street Advisors. Please go ahead. Michael Knott – Green Street Advisors: Hey, guys I am just wondering if you can give us your updated thoughts on sort of the future of New York given the drastic reduction and what appears to be the financial sector slice of the domestic economy and sort of the long-term outlook for New York in your portfolio there?

Well, Mort why don't I respond to that. Look there is no doubt that in the short-term there would be pressure on lot of what used to call the, or still call the shadow banking system. Nevertheless, I think that if you get past this current crisis, I still think that New York is going to be a very strong office market for two reasons. One is there is very little new space coming on the market, in fact in the next three years or four years in Midtown New York, I am not talking about Downtown New York, because that's a very different market, we are not in downtown, all of our buildings are in Midtown New York. All of our buildings are at the upper end of that market, there is very, very, there really only two buildings, and we are one of them on 8th Avenue coming on the next four years. And what does that tell you? It tells you that the increments to the new supplier are going to be extraordinarily limited in relation to the entire markets. So one of the advantages of New York is while there will be a contraction, there were always firms that are growing and expanding. This isn't probably going to be case in the year 2009, but I suspect once some of the federal programs become liable within the next 12 months you’ll see again some modest growth starting in 2010. The other thing is the best part of Manhattan and the reason why it is such a unique market is, because it has for years now attracted the kind of people that a lot of these firms want to hire. And they are in Manhattan to win Goldman Sachs for example built a building, and on the…

No, I don’t think that will happen. Don't get me wrong. I think there is going to be short-term pressures on the city, but there is literally, virtually no growth in the city's office space for three or four years. And so you do have to operate within that context. I do think there is going to be great pressure in the short-term. And this is what we are trying to contemplate in relation to the rents we are expecting. We happen to have fairly low level of turnout over that phase and as I said. And as we have said many times, our experience has been that the buildings at the higher end of a quality of spectrum of quality always generally tend to do better in challenging times. People like to move in to them. And frankly when you, we had the experience with Heller Ehrman space. You have to understand that a lot of these leases are six, seven, eight years old and they are therefore at much lower rents than what we can get even in today’s market. Secondly, a lot of tenants particularly the high quality financial tenants have spent an enormous amount of money fixing up their space. So when they leave their space they leave that fix up. If that’s, if they do leave the space, but it’s a great incentive for them to remain in that space, because otherwise they’ll have to put in a $150 a foot in tenant improvement improvements in any new space they go to. And they need to have this kind of attractive environment for the kind of people that they are going to be employing. So there is no doubt that we are going to go through a very difficult time in the next couple of years. And if any of have heard me speak on this subject, I have been pessimistic a lot earlier than most people and I am still more pessimist than most people. But I do still think that Manhattan, and I’ve said this many times. I think the long-term viability of Manhattan I think it's still going to be the best office market in New York, in the United States.

Okay, and then my last question is regards to Russia Wharf. Can you just comment on how the change to reduce the size of the residential component affects the strategy there, and also on the return profile?

Right well I guess, let me answer the question in a couple of ways. Our view is that the office space that is going to be assuming we complete all of our permits to be replacing the residential and what is referred as the tough Graphic Arts building will be high-quality relatively an efficiently bright space, because of its location in the base at the building. And also happen to have terrific views on the water. And we believe that, that is going to be high quality well thought about and well, very marketable space. For us the issue was more a question of the type of residential property that was going to need to be built on that space and whether or not we would be able to effectively market those units either to ourselves and if we can provide ourselves and we were going to end up only at work through a development partner. And having talked to a bunch of potential development partners in the marketplace, I think there was a concern not about the location, not about the number of units but just about the styles of the floors and the shape of the units and the inefficiency associated with the space that we would have to devote to potential atriums and things like that that made it less attractive quite frankly to our residential owner operators. There will still be in the residential component, but it's going to be in the Russia building to 90,000 with the building and it sits on the Greenway and it’s an eight story building and it's going to have terrific -- high ceilings and going to have terrific exposure on this new Greenway that's been created and it is a relatively small number of units, so there will be more of a scarcity factor associated with it. Net-net, it's going to improve the project. I can't tell you if it's going to improve the project by 25 basis point or a 100 basis points, because I'm not sure we are going to know that until we get to the market and it really is effectively based upon what our assumptions would have been on the residential side, and those assumption were hopefully it going to glad we don’t have to worry about.

And what are the prospects for leasing the balance of the increased office space?

The prospects are good. I think Doug hit on the main point, which is we haven't had, we're still finishing up a up a few of the minor permitting so it's really relatively new news to us in terms of our ability to go out and market. We haven't not taken it to market, we had several inquiries about it because as Doug mentioned you are right on the waterfront and it's very similar to as reference points, for a building further down, a boo teak that is occupied by Goulston and Stuarts as an example. And then you have the additional component of this right by South Station so the transportation is just really excellent. So, we're really excited about the opportunity to take it to market, but we haven't formulated our marketing pitch etcetera, but we've had several inquiries.

Thank you. Our next question comes from the line of Jamie Feldman with UBS. Please go ahead.

Thank you very much. Doug or Mike, can you just walk us through what you think occupancy would be if you included space that's leased but not occupied?

You are asking what's the shadow vacancy in our portfolio?

Exactly.

I am going to be honest with you Jamie, what we have done today is we have spent a lot of time walking through our private law firm tenant spaces and to sort of determine the use of that space from a productivity perspective and there have been virtually no situations where we have seen the spacing. As I said to you before, the trouble with the larger firms is that their space is really transferable so for example, if you were to walk into Citigroup Center and you were to walk on to the 16 floor, as an example, you with see lots of people on that floor. But given the choice of getting out of 150,000 square feet place of Citigroup Center and reducing their rent, which is $65 a square foot, and being able to move those people to Long Island city where they are paying $45 per square foot. They do that in a minute, and so there is probably more shadow space in our portfolio that we know, but it's also at least for long-term to credit clients hopefully. At rents that are significantly below we think we can release that space. And so I just can't give a number within our portfolio whether or not if our vacancy is [7.5% 3:31], the vacancy is really 6.9% or 7.3% based upon that "vacant space". And there is very little space in our portfolio where we don’t know tenant is actually leaving as an example. Michael talked about (inaudible), which is the tenant that's going to be leaving from 200 West Street. It's moving into a building across the street we've leased him already and they are moving some people to a lower cost of space to the north, and we know that is 150,000 square feet that will be vacant in August 2009. Mike's comment that we are going to see our vacancy go down to or increase to call it 91%, 91.5% over the years, we see those sorts of things happening.

Okay.

I think there is very little in a way of space, purely vacant and lease by somebody, because we talked to our regional people consistently and whenever there are situations where that occurs of the red flag raised up and we have start to analysis on the quality of that company and whether there going to be a continue to pay their rent. And the instances where those cases have risen have been typically very small space and I can't put the exact square footage but it's now like it something in hundreds and thousands of square feet. It's moderate amount here and there in the portfolio.

And do you know the amount of square feet there actually on the market for sublease? Is that a better way to ask it?

In our portfolio?

Yes.

I mean, because as I said, you just don't know. I can give you an example, capital source, okay? Is the new tenant that's going into the space in Chevy Chase, and they have probably the entire suite other than one floor on the sublet market. But if they don’t sublet it, they're going to move into it, and they have a lease expire in some place else, so, its as I said these are intangible decision that are being made based upon the opportunities that might come to them and they desired that reduce the cost of occupancy across their "operating base" and whether or not our space fits into that from an actual feasible use perspective is hard to determine.

I also picked out on this time around it has been difference in say the 2001, 2002 market where people took not only their space, but took incremental growth thinking that thkey would continue to expand. I think the tenants has been much more prudent this time around in there space consumption, so that there isn’t a lot of excess space sitting around just marginal space is very hard to sublet anyways.

Okay, and then just one for the follow-up on that. What's your typical right in blocking the sublease? Or how do you get involved in the negotiations?

It varies by lease and it varies by market. As an example, I'll give you the most stringent is that there are situations where if a tenant is in a multi-tenant building, then they have no ability to lease to any tenant that's otherwise looking at space in our portfolio in that building. So if you know someone has 5,000 square feet as an example, on a a sublet market and a tenant comes to market and looks at another suite of ours in that building and the sublet tenant has no ability to lease it. It's prohibit it from their lease. Okay, that’s where the one extremes. The other extreme is you have a tenant who is in a building that’s a fully leased building and it may compete with other buildings in our marketplace, but if they that whole building they have very liberal sublet rights in terms of their ability depending upon where they are in lease to lease it for an extended period of time.

Okay. And then another issue, and this maybe a very short to answer. I know you spent a lot of time talking to Foreign Capital Partners for the GM Building. How would you characterize for the mood is for both foreign and domestic opportunistic buyers for real estate today given the evaluation seems to have gone insular?

(Inaudible).

That’s the answer?

That's my answer.

All right, fair enough.

Thank you. Our next question comes from the line of Wilkes Graham with FBR. Please go ahead. Wilkes Graham - Friedman, Billings, Ramsey & Co.: Hey, guys. Doug you want a role a bit before where you see secured coupons in this environment. I think you said 8%. Can you just go over that again and where do you see debt coverage ratios and I know you talked about it, but just go over that again and how sustainable you think those underwriting standards are, given more hopefulness that some of these federal programs will work and do you think we have ever shot on any of those terms. I'll start with that.

Well, what I said was that we're seeing is that on the best assets, the high quality buildings and Mike sort of described it as bullet proof underwritings, the secured lenders on a long-term basis are taking a perspective that there a few of them and they have the leverage, no pun intended, and so what they are doing is that they are saying we're going to use the 12% or 13% debt constant, and the interest rate is between 7% to 8%, probably closer to 7.25% to 8.5% in terms of where they according things to that least. You use a 13% constant on a cash flow that sort of size the loan that you're getting the coverage ratio of 175 to two times, which from our perspective is exceedingly conservative. And probably get to you based upon a loan to value perspective, 45 maybe at the high end, maybe 50% depending upon where the building is located. That’s sort of where the levels are today, which effectively is I assume what they are doing is they are comparing it to what the people refer as super senior AAA CNBS securities. And we've ask the question as many probably people have asked, if we can get AAA super CNBS or 1,100 basis points over, why would you even been thinking about quoting a loan at, 7.5% to 8%. And they say, well, because we can't have a 100% of our real estate assets in AAA CNBS, we have to diversify. And relative to the other alternative, which are corporate bonds and TARP bonds and other credits spread, we think the risk premium associated with an underwriting like that on a highly quality piece of real estate in the CBD market or suburban market of our choosing, which the building…

I might add, if this remains the conditions of the credit markets, the addition of new supply anywhere is going to be dramatically needed for quite a long period of time and at some point when the market turns, it's going to make existing real estate. Shall we say relatively more attractive than it would otherwise be. Wilkes Graham - Friedman, Billings, Ramsey & Co.: Okay. That’s great and then Ray, just here in D.C., if there are general level of hope out there that these TARP programs are going to work and there is going to be increased regulation and the treasury is going to take part in some of it's recovery and there is going to be increased spending over the Obama administration. Are you guys seeing any tangible evidence of any of that translating over to improving office fundamentals, and if not, what you are expectations?

I think we do. First of all there will be expanded GSA consumption, which really will not affect the trophy market, but they are really good for the secondary markets. Again, we don’t operate in like Crystal City or the ballpark district or Noma. I think where what we've seen in Washington and Canada is that really haven't softened that much, but its more optics. We’re chasing that after user for our 2010 Penn Building, a very solid stable users, head of modes way of and we approached them as timing is perfect for the delivery of the building and we approached to about coming over to 2010 and he basically said to both, Mort and myself that it's not about coming to building. In fact we would probably reduce our cost coming 2010, but just the optics of making a move at this point of time of the economic cycle, will not be good his investors, or not be good for his employees or just would not be due to the positive thing go. Here in Washington at least, while we have had taken a little bit of breath here and having just concluded the Hunt and Williams deal, which kicked off almost 40% pre-lease to 2010 and signed Microsoft up Chevy Chase. We are feeling still fairly good about the market here. Wilkes Graham - Friedman, Billings, Ramsey & Co.: Okay thanks.

Thank you. And at this time I am sorry, no further questions in the queue. I will like to turn the call back over to management. Please continue.

Okay, we will wrap up there. Thank you for your attention. Sure you will be hearing more news from us overtime, and we’ll be getting back to you, when have important things to say and have a good quarter. Thanks, bye, bye.

Ladies and gentlemen, this thus concludes the Boston Properties fourth quarter 2008 conference call. If you like to listen to a replay today's conference, please dial 303 590 3000 or 800 405 2236 with the access code of 111 24 985 pound. Thank you for your participation and you may now disconnect.