Good morning, and welcome to Boston Properties Fourth Quarter Earnings Call. This call is being recorded. [Operator Instructions] At this time, I'd like to turn the conference over to Ms. Arista Joyner, Investor Relations Manager for Boston Properties. Please go ahead.

Good morning, and welcome to Boston Properties' fourth quarter earnings 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 those 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 Tuesday'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 statement. Having said that, I'd like to welcome Mort Zuckerman, Chairman of the Board and Chief Executive Officer; Doug Linde, President; and Mike LaBelle, Chief Financial Officer. Also during the question-and-answer portion of our call, our regional management team will be available to answer questions as well. I would now like to turn the call over to Mort Zuckerman for his formal remarks.

Good morning all. Thank you for joining us for this discussion about the company and the environment in which it works. I'm going to spend most of my comments just sort of describing the general macroeconomic environment. It is still a time, it seems to me, when we have to be very cautious about where the economy is going in general. The unemployment numbers are very weak, the housing prices continue to go down, consumer sales are still weak, inventory buildup is primarily accounting for a good part of the growth that we've had. We face the risk of a situation in which, while there isn't that much in the way of additional layoffs, still that there are some, there's very little hiring going on across the country. Nevertheless, within this context, the basic business strategy of Boston Properties still seems to be working out fairly well for the following reasons: Number one, we are in unique markets and the markets that have by and large done relatively well in this weak economy, and those markets are cities. And cities, which have certain characteristics including the level of employment that requires, shall we say, a knowledge base for their flourishing and, indeed, survival. And that is true of the cities that we are in: Cambridge and Boston and New York and Washington and its suburbs and San Francisco. San Francisco was the last city to sort of really get its gear in forward. But in the last year, 1.5 years, particularly as the social media boom spread throughout that community, we have seen a dramatic turnaround in the performance of that city and in the performance of our real estate in that city and in its surrounding areas. But in the other cities, we have continued through this entire period…

Thanks, Mort. Good morning, everybody, and thanks for joining us. Happy new year to those of you who I haven't personally seen or talked to. We finished 2011 with a total return to shareholders of 18%. We completed about 5 million square feet of leases. We delivered $932 million of developments, which we expect to have all stabilized by the third quarter, with a yield of about 7.4%. And we have another $1.8 billion of active developments, which are going to be delivered between 2014 and 2012. Those include 2 recent developments, which are the Reston Residential and 17 Cambridge Center, which I believe are in the supplemental as of this quarter. In addition, as our operating earnings improved, we increased our dividend in the fourth quarter by 10% to an annual rate of $2.20. So it was a really, really good year for Boston Properties. As Mort described, our corporate strategy of selecting on select markets, submarkets and buildings with unique and differentiated demand characteristics and limits on new supply, and we support that with a terrific operating platform with an amazing group of associates, has really allowed us to be very successful in spite of I think what Mort would describe as an unpredictable macroeconomic environment. So last quarter, we talked about our baseline earnings for 2012, and Mike's going to update that. But I thought I would keep my remarks this quarter contained to the operating fundamentals in our markets and those expectations for 2012. So that's really where I'm going to focus my time. In 2011, it was the second time we surpassed 5 million square feet of annual leasing. It was about 1.3 million square feet in the fourth quarter, which was a pretty consistent pace through the year. We had about 85 transactions with…

Great. Thanks, Doug. Good morning, everybody. Before I jump into our earnings for the quarter, I want to mention what we completed in the capital markets. In early November, we issued $850 million of senior unsecured bonds for a 7-year term at a yield of 3.85%. The 7-year term fit nicely into our maturity schedule and the deal represents the lowest coupon we have ever issued in the bond market. This capital is dilutive to our earnings in the short term until we repay other debt maturities. Last quarter, we bought back $50 million of our 2012 exchangeable notes. We paid off $50 million of mortgage on our Reservoir Place project in suburban Boston, then we extinguished our Atlantic Wharf construction loan. For the rest of 2012, we have about $810 million of debt expiring, with higher GAAP interest rates than the new bonds. As we stated in our press release, we'll be redeeming the remaining $576 million of our exchangeable notes in February that have a GAAP rate of 5.63% and a cash coupon of 2 7/8. We also expect to repay $144 million mortgage on Bay Colony with a 6.53% interest rate and a $65 million loan on One Freedom Square that has a 7.75% interest rate. Also, as we noted in our press release, despite substantial efforts to work out a resolution for our Montvale Center property, we expect to transfer the property during the first quarter to the lender, a servicer for a CMBS trust, extinguishing a $25 million loan that is accruing interest at 9.9%. The property's annual FFO is negative $1.2 million and the transfer will result in a gain of approximately $18 million. This is reflected in our first quarter and full-year 2012 net income guidance but is excluded from FFO. Upon completion…

Thanks very much. This is Mort Zuckerman again. I'm going to have to excuse myself. I have to attend a funeral service for the former mayor of Boston, and I hope I'll be able to catch up with you on the next call. Thanks very much.

Okay. Operator, you can open up the queue again. So I apologize that Mort can't be here for the Q&A. But the former mayor of Boston passed away on Friday and the funeral starts at 11:00, and the good news is in terms of Mort's attendance here, is that the funeral is literally down the street so he was able to stay as long as he could. But we will endeavor to answer all of the questions that you ask of us. Hopefully, you won't be asking me political questions because I'm going to refrain from answering those. Go ahead, operator.

[Operator Instructions] Your first question comes from the line of Jeff Spector.

I guess the first question, we did not -- and I'm here with Jaime, we did not hear any details on your acquisition from the quarter on 2440 West El Camino Real. Could you just discuss that acquisition please?

Sure. So I did -- I think I did mention that. It's 7.5% on GAAP yield and a 6.3% cash yield. The building is fully leased. I also said that the market rents were $33.25 in a market where rents currently are about $42 a square foot. So I didn't -- I don't think I -- I want to make sure that you did hear that. It's a good solid Mountain View building. We view Mountain View Palo Alto as the premier area for office ownership in the Silicon Valley. This is a multi-tenanted building that is likely to have users of between 5,000 and 100,000 square feet, no real lease rollover until 2014 and beyond. It's just at an excellent intersection, it's pretty close to Caltrain. It's got retail and high-end housing around it, and we just -- we thought it was a -- it allowed us a good entry point into a market that we feel pretty good about the long-term prospects of.

And Doug, did you say how you sourced the deal?

The deal was out in the brokerage realm. I would say we had a pretty unique way of acquiring it. We -- from the time that we entered our contract period in terms of negotiating a PNF to closing with 7 days.

Okay. And then I just have one more question before I pass it on to Jamie. I think in the introductory comments, Mort was talking about some of the -- that you're in reasonably good markets. I guess, of the markets you're in, which 1 or 2 are you most concerned about?

Well, this is one of those trick questions, right? So you're asking me to tell you what I like least. But I like everything. So I'll just start that way. I would say in the short term, I'm glad I don't have a lot of availability in Washington D.C. and I'm glad they don't have commodity product in Washington D.C. Because I think that, that's probably in our portfolio, where the weakest amount of demand will come from. I think after that, everybody has, I think, recognized that the financial services sector in New York City is not in a mode of growth at the moment. And so it is putting some degree of pressure on the question of where our tenants are going to be coming from. We again are fortunate to have a unique product availability and we are marketing it towards what we think is a relatively attractive demand generator in the form of smaller financial institutions, a.k.a. hedge funds and money managers and small law firms and small business services companies that are not larger users of premium space. But clearly at 2012, I think, as I've said in my comments, it's going to be a pretty flat year in Midtown Manhattan and likely in other parts of Manhattan given what's going on in the financial services side.

And then if I could -- this is Jamie. If I could just ask a quick question for Mike. Based on your higher guidance and the higher CapEx spend in the fourth quarter, what's your outlook for AFFO for 2012?

Well, if you look at -- let me just kind of go through the pieces a little bit. The -- our projection for occupancy is 91% to 93%, so we expect it to improve through the year. Our rollover is about 2.5 million square feet, so I mean we expect that we're going to do somewhere between 3 million to 3.5 million square feet of leasing next year. So if you look at transaction costs on average, I would expect that it would cost us $120 million to $140 million. If you assume kind of $35 to $40 per square foot, which I think is what we kind of traditionally or typically average, which just actually lines up pretty well with what Doug mentioned where he felt that our average was as well. The CapEx side, we've got -- I would expect our recurring CapEx to be $30 million to $35 million. Now we do have what we call nonrecurring CapEx, which is the money that we're spending at Bay Colony and money that we're going to be spending at the Hancock Tower, primarily on the garage that is adjacent to the Hancock Tower. And we expect that we're going to spend somewhere between $20 million and $22 million on those 2 projects next year. But those were kind of underwritten in our acquisition, that's why we separate them. The straight-line noncash rent I mentioned was $67 million to $72 million, and $60 million to $65 million in the JV portfolio. And then offsetting that, we have noncash interest expense and noncash compensation that is somewhere between $50 million and $60 million and some noncash ground rent. So you kind of add up all those adjustments and you get somewhere between $210 million to $240 million off of our FFO, somewhere in that range, would be where we would call our FAD.

Your next question comes from the line of Jordan Fent [ph].

I just wanted to follow up on New York. Doug, you obviously went through sort of the market commentary a little bit, I was trying to keep up. But I'm just kind of curious, I know you said big blocks are down year-over-year, but what are your expectations sort of given what's going on in the financial services sector and what seems to be happening with the rest of tenant demand, meaning some going downtown, some going to Hudson Square? What's sort of your expectation for market rents now? And I know you had discussed in the past couple of quarters that you saw a little bit of a slowing, but I'm just curious what you've seen in the last 90 days.

What we've seen in the last 90 days has really been a continuation of what we saw through the larger portion of the year, starting in July when things, I think, started to slow down from a velocity perspective, which is the high-end deals in the premier buildings are still achieving in excess of $100 per square foot. And there is -- as I think I tried to illustrate, the demand isn't anywhere where it once was call it back in 2007, 2008, but it increased significantly since -- from where it was in 2010 and 2009. That being said, there are not a lot of high-paying big block users currently in the market today. So as we think about what our pricing is for 250 West 55th Street, we priced it accordingly. We priced it in the 80s because we think that's the price point for new constructions that is very attractive to the tenants who are interested in continuing to locate in Midtown Manhattan and are not interested in being in a secondary location or secondary building, prewar or east of Lexington Avenue. So we think that's a pretty good pricing point and it's really a question of lease expirations. There's not a lot of incremental growth from large institutions. I've been talking for 2 years about what's been going on in the law firm economy with the reduction in the overall footprint of the legal industry firm-by-firm, but they're all -- there happens to be consolidation that's also going on, which is increasing the size of certain firms and other firms are just no longer doing very well. So we continue to have a tenant in the market list, the tenant list as we call it, that's not insignificant for blocks of space in excess of 100,000 square feet at 255 West 55th Street. It's just these tenants are taking their time making decisions, but they do have lease expirations, and so they're going to act. It's just a question of how quickly they act. So that's where we think rents are. I think that they're trying to get $100 a square foot on a block of space, a big block of space on Park Avenue in the first or second quarter of 2012, given where the economy is and where financial services employment is. It's not going to be an easy thing to do, when quite frankly, we're not pricing big blocks of space that way. That's why, in fact, we're going into the prebuilt market to get some velocity in and be able to achieve what we think are a fair rent for the type of product and location we have.

Do you think net effect of market rents are up, flat or down in New York from here by the end of the year?

I think they're flat.

Okay. Separately, on the investment market, can you talk a little bit about maybe opportunities you're seeing? Has the pipeline started to build a little bit? Obviously, you got this deal done in Mountain View, which looks like an opportunity. Anything else behind it you could speak to?

Sure. So we had a -- I obviously, purposely spent my comment on operations, but any operating platform issues, I expected the question. I would say where we are today versus where we are 3 or 6 months ago, the pipeline is more significant largely because there's a lot more better product that we are looking at today than what we were looking at in the second and the third quarters of 2011. We knew there were some better stuff that was going to hit the market, it has hit the market. Some of it is off market or transactions where there were a relatively few bidders or people being talked to about the acquisitions and there are others that are going to be these fully auctioned, broker-type solicitations that some of the properties are the ones that we might be interested in. So -- and I would articulate that by saying they are in all of the markets we're in. So there is stuff in the CBD of San Francisco, there is stuff in the CBD of Boston, there is stuff in Washington D.C. and then there is stuff in New York City that we are looking at on a pretty continual basis today. And we continue to explore other places, and we are endeavoring to put ourselves in a position where the pricing makes sense and the opportunity is there. We have the capital and the opportunity to close in a very efficient manner and use that as a quiver in our -- an arrow in the quiver.

We have a question from the line of Ross Nussbaum.

I'm here with Dave Hilmo [ph]. I want to follow up on Jordan's question and specifically about the investment market, Doug. Do you think that following what the Fed said last week, do you think that there's any probability here that the market takes the bait, if you will, and drives cap rates lower in response to a view that interest rates may be anchored here for a couple of years?

I think that the overall interest rate environment is clearly impacting people's perspectives on what their return expectations are. I would endeavor to say that it is highly unlikely that a high-quality premier office building is going to be trading at anything above a 7-ish type of an IRR on a long-term basis, assuming a moderate view on where rental rate growth might be. If you want to pretend that there are going to be spikes or that there's going to be significant inflation in rates at some point in time, you can drive those numbers much higher. But my sense is -- and that has clearly been affected by interest rates and the view that people are saying, look, I can -- and you see it. People can borrow money on a 5-year basis if they choose to at somewhere between 3.25% and 3.5%. And you can get a very satisfactory yield on a private basis for that, and there's a lot of capital that's prepared to step into that particular type of a transaction and sort of hold on for what the long-term might be in terms of interest rates. There's also, I think, clearly this sense that there is no yield available in very many types of investments, and it is clearly driving people to real estate asset, particularly the types of buildings that we own and the type of buildings that we would like to own, which is impacting pricing again. I can't tell you if I think the overall cap rate is going to be going down much more than it already is, because if you look at the deals that have been done in the better markets, if you have available space in those buildings, people are bidding those assets at below 5% going in cash on cash return. If the buildings are stable and there is not much in the way of lease expiration, the sort of going in returns in our estimation are somewhere in the mid 5 to the low 6s. And depending upon where those market rents are, that may -- the lower the market rents are versus what's in place, the better the yield is going to be and vice versa. So I have a sense of where that sort of where things are. And the fuel that the Fed has put on the fire in terms of saying that they think where interest rates are going to be lower for a longer period of time, I think, is just adding to people's appetite.

Are you targeting 7% unlevered IRRs or do you expect to be doing better than that?

I think that our expectation on a long-term basis is higher than that. We are looking for assets where we might be able to do something that is sort of not "underwritten in the asset" from a cash flow perspective because of our portfolio and because of our experience, where we can share in [ph] buildings and do things that you have to sort of take a little bit of leap and faith in that will get us to returns that are significantly higher than 7%. But if you said to me, what is sort of our typical pricing view of where buildings are, if we're assuming very little in the way of rental rate growth and very little in the way of appreciation, that's where the numbers are. I think that we have other ways of sort of skinning the cat in terms of our underwriting and where we can create value in the assets that allow us to convince ourselves with some degree of accuracy that we can do better than that.

Your next question comes from the line of Jay Habermann.

Doug, you mentioned a firm downsizing in the Back Bay, I think, by roughly 30%, but obviously, keeping jobs about the same. Can you give us some sense of what sort of activity? You mentioned some of the forward leasing you're doing and the strong rent growth. Can you give us some sense of perhaps that growth that you're seeing in rents there?

Well, it's -- the growth in rents is really because of the product that we have, Jay. So as an example, the average rent in, at the Hancock Tower on the highrise floors is in the mid-50s, and we're going to end up doing deals in the high-60s to low 70s. That's where the renewals are going to get end up being done in our prediction, so that's pretty strong embedded growth. The growth from a tenant demand perspective is coming from those smaller financial institutions. So there's an asset management company, for example, at the Hancock Tower that's currently in 45,000 square feet and is looking for 90,000 square feet. There's another one that's in 30,000 square feet that's looking for another 15,000 square feet. It's those types of -- that's where the sort of the incremental growth is on the demand side.

And on average, what sort of terms are you seeing for those transactions?

We're doing -- lease length terms or market terms?

Lease length terms.

So it's generally, the leases that we're doing there are forward 7 to 8 years after 2013 to 2015.

Okay. And just switching gears...

Jay, this is Bryan. The other thing that's been the benefit of Back Bay is, of course, in the supply side. If you take that look from year-to-date last year where the vacancy, direct vacancy for the cult of pure class that we focus on, 30-some buildings, it's dropped from 7% to 3%. So that's been a big benefit as well.

Okay, that's helpful. And then on Silicon Valley, Doug, you mentioned some risk of supply. I guess how quickly could you see this ramp up?

So there is new construction as we speak. There's probably 1 million square feet block of buildings that are on the docket. So there's probably, I'd say, half of that is pure spec and half of that has got tenant commitment. And the buildings that are going up are generally 3 to 6 stories, suburban office buildings that probably have a total development period of between 12 and 15 months.

Okay. And then lastly, just on 399 Park, can you get -- you mentioned the rent of $90 a foot. What's your expectation there and I guess which floors as well in 2013?

There's 140,000 square foot of block. It's in the mid to highrise of the building in the 20s, I believe. And we're hoping that we're going to be able to achieve rents in or around $90 a square foot in the 90s depending upon the size of the block and the amount of capital we put in. If we're doing prebuilts, I think we'll try and get more. And if we're doing multi-floor deals with traditional concession package, which today is probably 9 to 12 months of free rent and $60 a square foot for a 10-year to 15-year commitment, we'll be in the low 90s. That's my expectation.

Your next question comes from the line of Michael Bilerman.

It's Josh Attie with Michael. Doug, you gave some really good color on rents for large blocks of space in New York. Can you also talk about the lease economics at some of the smaller prebuilt spaces, including 510 Madison, maybe how has that changed, if at all, relative to your initial underwriting and also relative to the first half of 2011?

Well, it's -- I'm going to bait myself. Our initial underwriting, we are underwriting rents at the top of building in the high 90s, low $100 a square foot, and at the base of the building, in the high 70s to low 80s. And we are asking for 125 plus or minus at the top of the building. And we are achieving rents that are in the low 90s at the base of the building on both our prebuilt suite as well as our "floor -- made by floor" deals, where we're providing a tenant allowance. And I think those are very consistent with what we were pricing to the space at last year in the second, third and fourth quarters.

That's helpful. And can you also give us an update on the 601 Mass redevelopment? I know you have some time before NPR moves out, but were you in the process of finding a tenant for that project?

Mr. Ritchey?

Well, NPR doesn't move out until the first quarter of 2013, but construction's going on very well and we have got 3 different proposals out, 2 major law firms and another entity for anywhere between half the building to about 3 quarters of the space. One would be occupancy immediately upon completion in '15, the others go around end of '16. But when you look around D.C., while the existing portfolio may be on the soft side, the availability of sites to build first class buildings is very limited, and we feel really great about the 601 Mass site.

Your next question comes from the line of John Guinee. John W. Guinee - Stifel, Nicolaus & Co., Inc., Research Division: A few very quick questions. First up, Doug, on the prebuilts with startup companies, do you get any personal guarantees on that or is it just kind of essentially a month-to-month? Second, I think you're $450 million of exchangeable notes due in mid '13 are now in the money. Will you change the accounting on that? Third, you've gone from very little in terms of ground leases to about $5 million a quarter in ground lease expenses, can you give a little more color on that situation, which building, if you look at that, is implicit leverage? And then last, if Ray can comment on the Springfield, Virginia submarket.

This is Mike. I'll try to cover most of those except for probably Springfield. On the prebuilt deals with smaller companies, they're not necessarily startup companies, obviously. But with all of our leases anywhere where we're making any kind of investment, we're getting security deposits. And those security deposits for companies that don't have strong balance sheets are generally somewhere between 6 months and 12 months of rent. I would say when you're doing a prebuilt space, when you know what is going into the space and you feel confident that on a second-generation basis, that it's going to be releasable with minimal additional improvements, and we have not seen this because we did a bunch of prebuilts at Times Square Tower that have rolled over, and we brought new tenants in those spaces and it's costing us $10 or $15 a square foot to get those new tenants in. We may -- the security might be a little bit less and maybe towards the 6 months, because again, they're not doing any kind of specialized improvement. We don't typically see personal guarantees, but certainly, security deposits. On the exchangeable notes, we do have additional share count that leaks into our equity side every quarter, and you will see that in the last few quarters whenever the stock goes above that strike price, which in the high 90s.

$99.

Yes, $99. So you will see that go in. So when we quote our diluted FFO per share, it includes the additional shares for the quarter based upon where our stock price is in that period. And then the ground leases, we actually started cleaning up the ground leases, I think, 2 quarters ago, and it's all about 2200 Penn and the Avenue in D.C., where we -- that building is on a ground lease with George Washington University. That ground lease has steps to it, so there's a big noncash portion to it. So those buildings are pretty close to stabilization now. So the amount of quarterly ground lease payment that you're seeing this quarter on our highlights page, which I think is $7 million, is pretty -- should be stable going forward. And then you will see on our FAD page that we back up the noncash piece. So that noncash piece over the 65-year term of this ground lease will change. But that's how we handle the ground leases. And we don't really have any other meaningful ground leases in the portfolio. This is really the only large one. Ray, do you want to comment on Springfield?

Sure. John, as you probably know, NGA is now fully in place and operational. In fact, I went for a tour last week at that facility and it's an extraordinary facility. The one thing that is poorly evident when you go there is the lack of parking. And while the defense contractors are on the sidelines just in terms of trying to take down space in response to demands coming out of the NGA, the contractors may be forced out of the headquarters just because they ran out of parking. So while we're not starting, we're having discussions with some contractors and with NGA about future requirements. But clearly, we're not going to go on speculations unless we feel a little bit comfortable about the market. One surprise about Springfield is the fact that there has been a greater supply potential there that we originally anticipated because people are converting old 1950s suburban residential projects into office space and knocking down old hotels and going vertical and office. So there is some supply there. Well actually, one interesting thing about Springfield, for those of you who are familiar with the Washington area, is the FBI is being considered the new law [ph] Pennsylvania Avenue's headquarters, and they're working to identify a government on site that can support up to 2.2 million square feet. Well, that is one of the winning candidates at the GSA warehouse that really is adjacent to our buildings down in Springfield and was the one motivation we did when we bought the site about 7 to 8 years ago. So Springfield in general is flat, nothing really specifically a new site, but we still have long-term optimism about the success of the development.

Your next question comes from the line of Alex Goldfarb. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Just going back to the New York market for a minute. Doug, it sounds like on 250 West 55th, did you guys reduce the asking rents that you're -- for that property? And where I'm coming from is there's clearly been a sort of pause on new leases or leases for the new developments that are scattered around the city. I'm just trying to get a sense for what jump starts that market. Is it purely landlords cutting rent or is it offering increased leasing concessions to compensate tenants who would have to pay the cost of first generation space? Just...

I would -- let me try to answer that question delicately. The rents that I've been discussing have been to the base of the building. We have -- I don't think you would -- you could say we've reduced our rents. I think our expectations for the building was that we were going to be in the low 80s at the base of the building and in excess of $100, hopefully, at the top of the building, which is pretty consistent with where we've been for the last 12 months. Has the concession offering increased? We aren't close enough with a deal that I want to describe that we're -- we have put on the table more or less concessions. I think that the overall concession package is if you're signing a 15- or 20-year lease, you're getting 12 months of free rent and you're getting a tenant improvement allowance of somewhere between $65 and $70 a square foot depending upon sort of what's defined as the base building. The -- I think that the opportunity for new construction in these large platform-type opportunities that the folks have on the far west side are going to have to follow what we are doing in -- see, I could give you West 55th Street because I think they're going to need a larger tenant commitment to get those buildings going, and I think that the overall pricing/value equation is going to have to be more expensive from the tenant's perspective to go into one of those buildings and want to be in what we are offering at 250 West 55th Street. So I'm not sure you can sort of use the 2 sites and opportunities as sort of a, as a good sort of catalyst. We're talking about how we're thinking about it versus how other people are thinking about it. Overall, our view is that there are not a lot of large, large users in the market today that are looking for 400,000 or 500,000 or 600,000 square feet. And I believe that's sort of the type of dialogue that at least others have talked about in terms of what it would take to get one of those other developments going. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: But just even on the existing, it sounds like for a tenant to either renew in their existing space or move to another existing building, the rent differential and the fit-out differential is meaningful enough where people are happy to pay the $80 or $90 on maybe an existing asset, but not the $100-plus moving to a new one. And just sort of wondering, does it just take an improved economy or is it something else that can help fill up, whether it's at 510 Madison or 250 or even some of the other existing developments?

I don't think it's going to take an improved economy to do the leasing that we're doing at 510 Madison. I think we have a unique product and we have a unique product offering, and our market target from a demand perspective is strong enough that we feel very comfortable with our ability to lease space under traditional market conditions as I've described today and in previous calls. With regards to the base of 250 West 55th Street, as I've said, we're pricing our block sort of in the middle of the stuff that's available in Midtown on the east side and what I would deem to be sort of the high-quality expensive blocks like 9 West 57th [ph] Street, where I think they're asking $125 or $175 a square foot for the big block of space there. It's totally different market decision in terms of a tenant who's looking at that versus looking at our building. We are -- the efficiencies associated with what we are building at 250 West 55th Street and the ability to use that space in a manner that is cost-effective for -- particularly for law firms and other smaller financial institutions, I think is very, very attractive. And I believe that the value that we are offering to tenants is something that is enticing them to spend a lot of time and a lot of energy thinking about how that building might fit into their own overall operating profile from a profit and loss perspective. And so we're getting good activity on that. And we're confident that we're going to be filling the building up at our current pricing, but I don't think we're going to be offering the same type of transactions at the top of the building. But the market for the top of the building is a different market than the market for the base of the building in terms of what we -- our expectation is for the types of users that are going to be up there. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Okay. And just second question is, if you think about the next generation of the $100 rent payers for New York, you guys do not -- you don't own anything in Midtown South. It's not been a market that you've traditionally been focused on. But clearly, there have been a lot of tenants flocking to that area, especially in media and tech. How do you -- do you have to own something in that submarket to cultivate relations with those tenants or is it just simply through the broker networks? You actually don't need to own assets in that market.

I don't think you have to own buildings to have good relationships with tenants. I mean we have relationships with lots of high-tech tenants, the more mature high-tech tenants in either Cambridge or in San Francisco or in Reston or in Chevy Chase that allow us to have good dialogue with the tenants that understand what they're looking for. I think that the most interesting question to ask yourself is whether or not there's going to be a migration of the more mature tech tenants as they grow into more traditional higher-quality office buildings because the product that is located south of 20th Street is a unique product, but it is not the type of product where a 300,000 or 400,000 or 500,000 square foot tenant can be. It's where a 20,000 or a 30,000 or 40,00 square foot tenant can be. And as we are witnessing in San Francisco, there's a limited amount of better quality space or brick and beam cool space that these types of tenants can go into, and over time, the more mature ones migrate to the traditional office buildings. And if the building has the right image and it's marketed appropriately and is positioned appropriately, it can be a very attractive place for a tenant that's not a traditional financial services firm to create the image that it wants to create and the cool factor they need to attract employees over a long term. So we'll see what happens with Midtown South in terms of sort of how the supply and the growth of those tenants sort of move. If for the next 4 or 5 years the growth in that market is based upon new venture capital startup companies that are 5,000 to 10,000 square feet and they're going to grow at 2,000 or 3,000 square feet per year and they don't -- none of them sort of take off, I don't think that they're going to migrate to Midtown. I don't think they're going to migrate downtown to the new inventory there. But if some of those companies really explode and become larger mature companies, I think that's the question. It will be, where will they go then? And there are -- they have opportunities in both places.

Your next question comes from the line of Rob Stevenson.

Doug, can you just talk a little bit about, given your comments on the various markets, which projects on your 9-million-and-change of owned and optioned land might make sense to start the next 12 months?

I don't think that there is an expectation that we're going to start anything on spec in the next 12 months other than if we are successful at leasing up this 120,000 square-foot building outside of Fort Meade. And if the leasing activity really is as strong as we think it might be, the building could be filled by the end of 2012, and we would start another building if that were the case. So I think that will be the one place where we would consider a speculative building. Other than that, it's going to be based upon finding a tenant to be a lead or a significant occupant in one of our assets. And I can't tell you where that might occur, but there are conversations that are going on in Waltham and there were conversations that have gone on in some of our product in the Washington D.C. area. But there's no sort of specific site that I can point to and say, that's the one that's going to go next.

Okay. And then your land bank has been sort of relatively stable for a while now. I mean, how aggressive are you guys these days on pursuing land for future development given those comments?

We are aggressive about looking at sites, so as an example, if we could find another couple of sites in Cambridge, Massachusetts, I think we would be aggressive about taking a land position there. We are looking for additional sites in Midtown Manhattan and other parts of that city. Obviously, just simply buying land and hoping that the market is going to improve over the next 10 years is not a terribly ideal structure. So if in effect, you can option land or you can put yourself in a position where you can control a parcel, that sort of would be more attractive to us. There are a number of sites in Mountain View that our San Francisco team is in discussions with that might be long-term development opportunities or redevelopment opportunities, and we're in [ph]. And the folks in Washington D.C. continue to figure out where the next area of opportunity from a new development growth perspective is going to be, and these are not traditional sites that you sort of look at and say, oh, well there's a parking lot and we're going to put a building up there. It's how do you reposition a building or how do you take a building down, or is there a particular public action committee or a lobbyist or entity that owns a particular piece of property that might be prepared to move and have a higher-density product put on, on that current piece of ground. I mean, there are -- we are constantly engaged in those types of conversation.

Okay. And then one quick for Mike. After -- you've got $1.8 billion of cash on the balance sheet and you talked about the debt, the $800 million or so of debt that you're going to take out in this year. I mean, what's the sort of optimal cash balance for you guys to be running at on a go-forward basis given the financing needs for the current development pipeline, as well as any being able to fund acquisitions on the spot?

Well, I mean, I think that we're comfortable with where we are today. Our development pipeline has a little under $800 million to spend, but it's going to take 3 years to spend it. So after we refinance our 2012s, we'll be just over $1 billion. And we got probably $300 million to spend in 2012 on our development approximately. So we should have a pretty decent cash balance throughout the year, and we're constantly looking at what the opportunities are in the acquisition side. So with that, we have the liquidity to be able to act quickly on any type of acquisition. And given our line of credit that has $750 million and our cash balances, we have more than sufficient liquidity today to be able to act on anything that we could imagine on the acquisition side. So do we have too much liquidity? I don't think you could ever say you have too much liquidity. But we're certainly comfortable with where we are, and if we had a little bit less than this, I think we would still be comfortable with that level of liquidity.

Okay. So currently, you're comfortable with whatever the dilution winds up being on running at that sort of cash balance, given the inability to invest that in any meaningful manner. I mean from a cash management standpoint at 10 basis points, so whatever you're getting.

We are because we think that we are going to have the opportunities to put that money to work. In the relative near term, if you look at the last couple of years and our success in making acquisitions in 2010 and 2011, it's been pretty strong. And I think we will continue to look at our cost of funds and our opportunities because as rates continue to be low and borrowing costs continue to be low, if we are successful in spending some of this capital or we feel our opportunities are stronger, there's certainly the possibly that we would raise capital at these rates, on a long-term basis, again to, as Mort said, take advantage of that. So that when we do find these opportunities, which we believe we will, the margin will be that much better on those opportunities.

Your next question comes from the line of Chris Caton.

Just wanted to follow up on a comment you had on the investment environment. I think you said that last year, you expected better opportunities in 2012. I wonder, was there anything specific you are watching in terms of a catalyst that would drive asset sales?

If you're talking about a macro trend, the answer is no. If you're talking about discussions that we've been having with various owners of pieces of our property and institutions that we expected would likely sooner rather than later do something with their assets, I think that those conversations led us to believe that the sooner was coming in 2012 and probably was not going to be delayed further than that in terms of their own expectations. And today, that's what we have seen occurred.

Yes, just I meant thematically. Is it funds on [ph] setting or debt maturities, is there anything thematic that you are watching?

I think most of the entities that are doing this are doing it for different reasons. Most of the funds that own assets will still have 3 to 4 years of debt extensions to go. But quite frankly, they're looking at the interest rate environment today and saying, geez, 2014 is interesting, but expectation that 2014 interest rates going up are probably better managed with period of time between now and then. So the value that we think we might be gaining from that interest rate environment is heightened today versus what it might be if we sort of hold on. I also think that a lot of owners of assets are becoming less enamored with this prospect of growth in the cash flows from their assets over the next couple of years, particularly if they're not on the ground and they don't have an operating team that can actually do something creative about improving the cash flow characteristics of those buildings. So they look at the underlying interest rate environment and they look at their own opportunity set to increase cash flows and say, aside from the fact that we're borrowing money at a very low rate or however it may be and we're getting a good yield on a relative basis from a spread investing, if we have to exit, now's probably not a bad time to exit.

And I have a quick one for Ray, just on 601 Mass Ave [ph]. The added availability, as Doug noted in the market, is that affecting rate negotiations or discussions that you're having on a forward basis?

Well, one of the great things about having a building situation is we don't have to lease the building. In other words, we'll do deals that make sense to start it. There are a couple of large blocks, especially in the Metro center area. The Howrey space coming back, the relocation of McDermott Will & Emery by us over to Capitol Hill, the spec space at City Center [ph], all of that has responded to the market. The fact we haven't put a shovel on the ground means that we can only do what we do -- we're at liberty to do a deal that will make sense to us. So we don't have to respond to the market and build something that doesn't make any sense.

I guess, and then asked in a different way, timing-wise, have these added availabilities kind of delayed your expectations?

No, actually. The availabilities that are just identified now are currently in the market. We're not going to deliver this building well into '15. And if you look -- and we talked about this at the investor conference, we have a huge bubble of law firm expirations coming in '15, '16 and '17. And we think 601 is ideally positioned to knock off one of those major law firms in that timeframe. Virtually, every major law firm is going through a restacking and a downsizing, which is very hard to do in place. And as we demonstrated here at 2200 Penn, even though we may be charging higher rents, if we can get them in a space that is 30% or 40% more efficient than their current facility, we can be very, very competitive even at rental rates that are higher than existing buildings.

Your next question comes from the line of Caitlin Burrows [ph].

My first question was already answered, but I'm also wondering, why did you increase your 2012 guidance? Was it because of greater acquisitions, better operations or something else?

No, it was -- we did have an acquisition, which was not in our guidance before, so that was -- that added about $5.4 [ph] million. And as I mentioned, both in our joint venture portfolio, which we're seeing some modest improvement, and in our core portfolio, where we've had signed leases and lease starts going quicker than we have previously anticipated, it is driving the leasing that we did anticipate to happen in 2012, just starting to be renting sooner than we had anticipated. So it was really those 3 things, and then you offset that by the interest expense, which is only the first couple of months of the year, which is higher, and then it gets to a pretty stable run rate.

Your final question comes from the line of Steve Sakwa.

Just, Doug, I had one question on dispositions. You guys marketed the Princeton portfolio maybe 6 months ago or 9 months ago, it didn't happen. I guess, given the continued low interest rate environment, the improving employment outlook, I'm just wondering, is your sense that there is an increased appetite for suburban assets? And is there something you guys would look to take the market in 2012?

I think there's an expectation that there's going to be an increased appetite for suburban markets. Remember that one of the big issues that we had with Princeton when we sold it, and I think we were pretty forthright about this, was that there's an enormous gain associated with that, and we're really not looking to create an opportunity to have to reduce the liquidity of the company through huge onetime dividend payments at the end of the year at this moment in time. So to the extent that, again, we're acquisitive and there are some 1031 reverses [ph] that we could do, I think that we would consider looking at some of our suburban assets. In fact, we are -- we've identified 2 or 3 buildings that are currently on the market in suburban Boston that are sort of maxed up with the purchase of the Mountain View assets. So that, in sort of the vein of your question. With regards to Princeton, we really want to get a higher level of occupancy and a better set of cash flows going before we think seriously about the disposition there again. Because our view is that there is an opportunity to dramatically improve the occupancy at Carnegie Center. Right now, it's running in the low 80s and we should be able to get it into the high-80s, mid-90s over the next year or so. And that would clearly improve our desirability of selling that building, those assets if we got there.

Do you see enough demand drivers in Princeton to actually get that done in the next 12 months?

It's all a question of the pharmaceutical and the biotech companies because they are the ones that are, I think, that -- they are the ones who could give you the big prop. There are 2 or 3 large deals that we've done last year. There's pretty good activity in terms of market demand, a lot of it is musical chairs with incremental growth. We are optimistic that we're going to see improvements over the next year or so in the Princeton portfolio, and our team down there is very motivated to get the occupancy up.

At this time, I would like to turn the call back to management for any additional remarks.

Thank you all for your patience, and we think to all the questions that were answered, I hope we were able to provide you with some insight. We will be talking to you, many of you in Florida in a couple of weeks, and again, we'll see you at the next NAREIT event in June, as well as our conference call in April. Thanks.

This concludes today's Boston Properties conference call. Thank you again for attending, and have a good day.