Good morning, and welcome to Boston Properties Second 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 second 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 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 statements. Having said that, I'd like to welcome Mort Zuckerman, Executive Chairman; Owen Thomas, Chief Executive Officer; Doug Linde, President; and Mike LaBelle, Chief Financial Officer. During the question-and-answer portion of our call, Ray Ritchey, our Executive Vice President of Acquisitions and Development, and our regional management teams will be available to address any questions. I would now like to turn the call over to Mort Zuckerman for his formal remarks.

Good day, everyone. Look, we are having a quarterly conference call in the context of the general macroeconomic condition of the United States. And if the Wall Street Journal is to be believed, they did a survey of a number of economists who work for major financial firms and there seems to be, amongst those people, in terms of the national economy, a kind of sense of continued decline to the point where the sense is that, in the most recent quarter, the GDP was growing at less than 1%. But that's, of course, an overall average. And a part of the long-standing strategy of Boston Properties was to focus on certain specific markets, where we felt that these markets would do relatively better than the national economy in good times and in bad times. And frankly, we have also in the way that we focused our efforts within those economies that would be performing relatively better than the national economy, we tried to establish ourselves as the owners of and the developers of buildings in outstanding locations and buildings that would be considered to be the Class A buildings in their respective markets. And I must say that although we are not, of course, happy to be a part of a national economy that is so weak, the basic theory is that the we, in a sense, and strategy that we undertook years and years ago, have been borne out in this, the worst of recessions that we have all experienced since Boston Properties was started over 40 years ago. So that in the markets that we are in, primarily San Francisco and Washington and Boston and Cambridge and the Boston area, these markets are not just the downtown areas, but the markets in general, and of course, New…

Okay, thank you, Mort. Good morning, everyone. This is Owen Thomas, and I'm joined here in Boston by Doug Linde, Mike LaBelle and several other colleagues. Before I get started, I wanted to note an important event that we have going on here in Boston today. That is, today is Doug Linde's 50th birthday, and I wanted to -- I didn't want to start the call without wishing you, Doug, a very happy birthday on behalf of everyone at Boston Properties.

I really appreciate that, Owen. Very good.

Any hope you had of this being a secret event is now over. Anyway, moving to more serious matters. Myself, Doug and Mike will provide more color on the operating environments that we are experiencing. We will outline our current positioning from a capital allocation perspective and describe our performance and results for the second quarter. So as Mort described, we are experiencing a sluggish recovery in the overall U.S. economy. However, this recovery is multi-speed, depending on industry and specific location. As you know, we are focused on 4 primary geographic areas. And fortunately, in most, though not in all, the markets we serve, we're experiencing reasonably sustained economic recovery and leasing activity. Industries such as technology, life sciences, health care and even smaller scale financial services firms are performing well and creating demand for our properties. In the second quarter, we executed 77 leases, representing 970,000 square feet, with reasonable balance in leasing across our portfolio geographically. Our properties in the aggregate are 92.1% leased, which is up from 91.7% leased at the end of the first quarter. Doug will be providing more detail on our leasing activities later in the call. In terms of capital strategy, we're experiencing what I would describe is an atypical economic and real estate capital market cycle. What I mean by this is interest rates have been at historic lows, creating strong capital flows into the property markets well ahead of an underlying property market recovery. Cap rates are very low, while rent growth is still in early stages. This is particularly true for the quality of assets and markets that are essential to our strategy. What this means for us, from a capital allocation perspective, is that we are finding new acquisitions challenging. We continue to aggressively pursue acquisition opportunities, but…

Thanks, everybody. I hope that you can hear me now that I'm so old and my voice starts to tremble when I'm speaking. Good morning. The press release does a pretty good summary of describing our capital activities, but I thought would just add a couple of color commentary thoughts to that. So the first thing is that we signed our agreement for the sale of 1301 New York Avenue in Washington, D.C. for $135 million. This is a, I guess a B+ building. It's fully leased to the GSA, flat lease with a 2029 lease expiration and the in-place cash NOI is about $7.2 million. So that results in a cap rate of 5.3%. The sale has been set up as a reverse-like kind of exchange, which means we are fortunately able to retain all the proceeds from this sale. Second, we unwound our joint venture activities with related on Eighth Avenue and 46th Street, which was also detailed in the press release. And I just -- I want to be able to color on that. Effectively, we really couldn't come to an acceptable valuation on the remaining parcels of the assemblage. And so as a partnership, we decided to sell the parcels. So to date, in 2013, our gross asset sales have been about $690 million. When we were at NAREIT a few months ago, we described that we were in discussions on the sale of Times Square Tower. This transaction could ultimately be in the form of a 100% sale or a partial interest with a new joint venture partner. The investor interest is robust. Pricing is in line with our expectations, and we are going to refrain from making any specific comments on who the buyer -- buyer or buyers -- that we're talking to might…

Great, thanks, Doug. Good morning, everybody. Happy birthday. No better way to spend your birthday than on a conference call. I will cover some of the capital markets and projections. We had a very, very busy quarter, at least on our release in the capital markets. Doug talked a little bit about the acquisition, disposition activity. We also refinanced 2 mortgages on joint venture assets, completing a 10-year $105 million financing on 500 North Capitol Street at a fixed rate of 4.15%, and we did a 5-year $120 million bank loan on 540 Madison Avenue that was priced at LIBOR for 150 basis points. As we discussed on our call last quarter, we issued $500 million of unsecured notes in early April. And given the evidence of the acceleration of rising rates, we made a tactical decision to enter the market in late June and raise an additional $700 million of 10.5 year on senior bonds at an all-in yield of 3.92%, effectively prefunding our 2014 debt maturities. We had originally projected to complete this financing in early 2014. But given the enhanced volatility in the markets, we decided to complete the deal early. We also redeemed $450 million of our exchangeable notes. In connection with the redemption, we paid the principal in cash and we issued approximately 420,000 shares of stock to pay the premium, as our stock price exceeded the exchange strike price in the security. A significant portion of these shares were already included in our diluted share count last quarter, so the change in our share count is only about 182,000 shares. The credit markets have been extremely volatile over the last couple of months, with the 10-year treasury climbing from a low of 1.63% in early May up to 2.17% when we did our deal…

[Operator Instructions] Your first question comes from the line of Jamie Feldman from Bank of America Merrill Lynch.

So I guess, Doug, going back to some of your commentary where you are saying that markets are getting better but you are concerned about new supply. Can you talk about how you think this plays out over the next couple of years in your largest markets of New York, Boston and San Francisco?

Sure. So I think that, largely, the expectation that we have is that the growth from tenants that are in the nontraditional office use category, [indiscernible], are going to expand enough to absorb a portion of the supply that is being left over by tenants that are moving into new buildings, and a portion of that supply is also going to become -- B-ish quality or lower quality in its nature and it's going to be less attractive to tenants that are trying to become more efficient. And so, over time, you'll actually see an improvement in the economics that we're going to see in those marketplaces but it's not going to be the same kind of spike that you have in rents that we saw, call it, in 2005 to 2007, because there just is this torrent of cost compression that is out there that's just sort of pushing a governor on it on the other direction.

So I guess, as you're thinking about that, I mean the market concern is that interest rates are rising, cap rates probably go up. But for the higher-quality assets, there's an expectation that NOI and rent will increase commensurate with that, or hopefully will. How are you guys thinking about that as you're underwriting assets and as you're just thinking about valuations in general?

A couple of things. The first is that, if we really do have significant interest rate expansion and we have inflation that's associated with that, it's not just sort of a technical change in interest rates, the cost of construction is going to go through the roof. And we're seeing a little bit of that right now in some of the markets because, during the last portion of the recession, there was a tremendous amount of capacity on the construction side in terms of companies that were actually out there doing the work, particularly on the subs, that are just gone. They just -- they evaporated. They weren't making any money, so they went away. So there is some cost escalation, but it's manageable right now. So if it actually takes off, then you're going to see the pricing required to build new buildings go up significantly. And, honestly, that gives us a huge runway and an ability to raise our rents. And that's a good thing if that happens. With regards to pricing expectations, I think it's fair to say that, where we are today in terms of CBD buildings, and Owen described it as atypical, the expected return that investors are looking at today, based upon where current interest rates are, is not something that we presume is going to be sustainable. If the average 10-year treasury is at 5% and there is inflation expectation, it's much harder to think that you're -- that people are going to be buying CBD buildings at 3% or 4% cap rates, which hopefully gives us more opportunity, as Mort suggested, to be much more acquisitive. Today, we're not there, but hopefully, we'll be in the future.

Okay. And then turning to Mike LaBelle, can you talk about how you're thinking about investment firepower today. I know you said you've pre-funded your 2014 debt maturities. But how should we think about what you have now to spend on incremental investment?

Well, I think part of it depends on the sales activity and what that creates for us. We've got more than sufficient liquidity to deal with our debt maturities and our pipeline that we have. If you look even further out, our debt maturities even further out are also significantly lower. So if you solely look at those things, our need to raise additional debt next year is limited. But obviously, a lot of things can change. Because there could be a lot of other investment opportunities that pop up or development opportunities that we pursue that increase our need to raise capital to fund those opportunities. So it really depends on how that plays out.

Okay, and then just finally, do you know what your GAAP leasing spreads were for the quarter?

No. I mean, I don't have it offhand. We can go back and look and give you a call.

Your next question comes from the line of Jordan Sadler of KeyBanc Capital Markets.

I just wanted to just look at development for a second here. Doug, you mentioned that you're cautiously optimistic, I heard, in your prepared remarks, about conditions in the markets. And I was curious, if that -- how that will translate into new development and potential additions to the pipeline. Could we expect, or should we expect, some more speculative development to come online? And sort of what kind of pace would you envision over the next sort of 12 to 18 months?

I think that, given where our current pipeline is in San Francisco right now, where we do have some speculative development underway, I would say that, that is probably the primary area that you might see speculative development in the short term, i.e., there's probably not a lot of speculative development that you're going to see. We have a site in Boston in the suburbs that we have made a significant number of proposals on, where the tenants will be taking somewhere between 60% and 70% of the building. So there will be a speculative component. The building at 888 Boylston Street has had some tenant interest, and some of the tenants who have taken -- have been interested in the whole thing and some of the tenants have been interested in 40% or 50% of it. So there's potentially a speculative component associated with that. Outside of those 2 projects, the other things that we're looking at are the land that we have in greater Washington D.C. I think we would anticipate having a significant pre-leasing associated with it. And then we actually do have a build-to-suit that's in the works in Princeton, at Carnegie Center. Again, it would be almost 100%, if not 100%, leased if we started construction there. And then in Midtown Manhattan, at the moment, we're really not in a position to have additional sites that are anywhere close to being ready for construction.

Okay. And then the dispositions on the opposite side, I mean, Mike, what are you sort of budgeting in terms of cash? It sounds like you're going to pay off the $750 million or so with cash in '14 but you're assuming, essentially, maintaining this cash, just a gradual spend down. And what happens to the extent that some of these other assets that you have up for sale start to hit?

Let me answer the question in the following way, which is I think Mort sort of indicated that having available cash is a strategic advantage, assuming that there are opportunities to purchase things. And if that set of circumstances occur, we'll be in a position to do that. We have not tried to line up the sale of our assets with that specific cash need that we have. I think we're being much more opportunistic about the sale of the buildings and the fact that, as Owen's described, we're in a very unusual period vis-à-vis where operating fundamentals are and where interest rates, and therefore, valuations are. So we're taking advantage of what we think is a very optimal time to sell assets without a clear place that we sort of are pointing to towards where those dollars are going. We would hope that we will find development opportunities within our markets where we can deploy that money in 2013 and 2014, in addition to what we currently have in our pipeline. But that's a -- it's a little bit of a nebulous answer because I don't think we have a clear indication of where the money is going to go to.

Your next question comes from the line of David Toti of Cantor Fitzgerald. David Toti - Cantor Fitzgerald & Co., Research Division: All the discussion I heard earlier was sort of indicating that you guys are pretty comfortable to potentially kind of thinking about this as a bottom in the market, relative to both low cost of debt and where you're seeing cap rates on stabilized CBD assets. If you think we're an upswing in one direction or another with either of those variables, does this begin to force up your yield hurdles on some of the developments that you're thinking about that are in the pipeline? Is there sort of a lockstep movement in those expectations as well?

It's Owen. Yes, I think that, over time, as interest rates increase, the returns that we would expect from developments should have some incremental increase over time. That being said, I think if interest rates go up it's going to be because the economy is improving and, therefore, demand for real estate will go up and rents will go up. So there would likely be some offset in terms of rental increase. But, yes, I think required returns will go up. David Toti - Cantor Fitzgerald & Co., Research Division: And then sort of along the same lines, you speak about selling mature assets with compressed cap rates a little bit more aggressively into this market. What are your thoughts around some of the weaker assets, potentially in this market? In particular, some of the New Jersey suburban assets?

So I would, I guess, beg to differ with you that they're weak. What we've seen, from an activity perspective in Princeton has been probably second to what we've seen in suburban Boston, the most active part of our portfolio in the last, call it, 3 to 4 months. And there are, again, similar types of companies that are growing in that portion of New Jersey that are similar to the types of companies that are growing in San Francisco, but more importantly, in greater suburban Boston. So I beg to differ it was a weakness. I think we've made it clear that, at the right time, with the right pricing, the Carnegie Center is an asset that we will consider disposing of. And we'll revisit as we continue to have even higher occupancy and we have more tenants that are looking for space and we have less and less lease expiration. David Toti - Cantor Fitzgerald & Co., Research Division: Okay. And then my last question is just, and maybe I missed it. Did you guys comment on joint venture partner activity on Transbay? Are there any ongoing discussions or new discussions taking place there?

Well, as Doug described, we're in the process of bringing the asset to grade and we are, obviously, marketing the building to prospective tenants and we are considering our capital structure for the property. We certainly have made no decisions with respect to how we're going to ultimately capitalize the project. But bringing in a joint venture partner is something that we will consider over time.

Your next question comes from the line of Michael Bilerman of Citi.

I'm not sure if this question is best answered by Mort, Owen or Doug. I know you're all on the board. But can you sort of just discuss, after sort of the nonbinding say-on-pay, which only got 19% approval from shareholders, I guess, how is management, how is the board sort of reacting to that? Will there be any changes or you sort of just stick with the agreement that's already been signed?

This is Owen. The board has certainly taken note of the say-on-pay vote, and it's been having conversation with us and among themselves. And I do think we'll be reaching out to shareholders in the coming months.

To get their views and potential changes down the road?

To get their views, yes, and in response to the say-on-pay vote.

Okay. And just on asset sales, in addition to Times Square Tower, what other assets are on the market? Have you sort of put others as you sort of evaluate the marketplace? Just for us to get a sense of total volume.

I think that, Michael, for calendar 2013, we had been marketing 140 Kendrick Street, and the pricing that we got on 140 Kendrick Street was really not, quite frankly, up to what we expected we would need to sell the asset. And so I'd say we sort of pulled back on that particular asset, and that was about a $130-plus million building. We are about to hit the market with another few assets. We haven't "made a formal decision" yet, but we're talking about on a magnitude of $250 million, plus or minus, that unlikely would close in 2013, probably closer to 2014. And Owen, I think rightly so, every time he comes to Boston and when he goes to the other regions, is saying, "So what should we be thinking about putting on the market potentially in 2014, if things are in a similar environment as we are today?" And so I'd say the regions are thinking long and hard about what their views are on what assets are mature or not and don't have enough growth left in them to keep in the portfolio. And that's sort of an ongoing conversation.

Right. So from a cash perspective, once you include 1301 and these $250 million of sales, call it $400 million, and then Times Square Tower, which obviously, from a size perspective, would dwarf that significantly, that's what we should be thinking about in terms of capital raising?

I think that's what you should think about for capital raising over the next, call it, 6-plus months.

Okay. And the tax basis just on Times Square Tower, the undepreciated book is 630. Is that approximately what sort of tax basis is as we think about potential sale and tax and gain and things like that?

Yes. I think you got the 630 from our K, I assume, and that's a pretty good approximation.

Your next question comes from the line of Rob Stevenson of Macquarie.

Most of my questions have been answered. But just wanted to ask about the residential side of the business. You guys have 1 under -- still under construction, 2 operating properties. What's been the experience? And with that, how good are you feeling about being in the residential business? And as you look for additional development opportunities, are you likely to have some residential component going forward?

So I'll answer the question as follows. So what we've said previously is that we think we have the competency and the skill set to design, develop and construct in-fill residential properties in the markets that we are operating in. And as a developer, we think we can make a lot of money building in those types of places, largely due to the similar characteristics on the office side, which is this is where people want to live because this is where the companies that are growing and that are attracting labor want their people to be. So there is sort of a confluence of strategies implicit in both sides of that. We recognize fully that we do not have either the competency at the moment or the portfolio size to be a great operator of residential properties. And so we recognize that we have to hire people who have that competency, and it costs us something to do that. I think that we also have a perspective that they're not core long-term holds for us, necessarily, but they could be. So to the extent that we've created a lot of value, if we're developing a residential property in an in-fill location to a 7-plus percent cash-on-cash return and it's worth 3.5% or 4% cash-on-cash return, as Owen -- well, as he goes around to the regions, we'll say, "Is that the kind of asset that we should monetize potentially?" And based upon Safe Harbor and the 2 years and all the other sort of things, those are the types of things we're thinking about. So I think that in all of our regions, we have sort of put it on the table that our regional teams should be thinking about locations where we can potentially productively put capital to work and put our expertise to work on the residential side.

Okay. And then just lastly, what's the internal feeling on special dividends? I mean, is it just a necessary evil? Is it something that you're ambivalent about doing? Is it something that you'd rather not, if you can find some way of avoiding it?

The short answer is, is that we think that our shareholders value cash no differently than they value, in terms of special dividend, an appreciation in the stock price. And so to the extent that we have a special dividend, we don't look at it as a sort of necessary evil, if that's what you're asking. So one concern that we would have is we want to make sure that we're doing this in an appropriate manner in that we want to maybe able to maintain the earnings power to pay out our existing dividend on a consistent basis. And we also don't want to use the payment of special dividends as a way to leverage up the company because we don't think that would be an appropriate capital strategy. So those are sort of the 2 governors that we think about with regards to special dividend.

Let me just say -- this is Mort speaking. I do want to add just 1 other comment with respect to the possibility to be involved in the residential side of the real estate business. As you know, we've done occasional projects in the residential area, and frankly, we've had a good experience with them. And we feel that it gives us another arrow in our quiver to work with in the real estate business. And so we will continue to look for opportunities on the residential side, providing they meet the standards that we hope for in terms of both scale and quality and long-term appreciation.

Your next question comes from the line of Alexander Goldfarb of Sandler O'Neill. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Mort, since you're still -- since you're on the line there, just the first question is for you. Obviously, a lot of discussion with the Fed replacement potential. You had your editorial last week. Just sort of curious. One, why do you think that the President hasn't let Ben Bernanke determine his future? And two, are you ambivalent whether it's Yellen or Summers? I mean, it seems -- given the impact that the Fed is going to have on interest rates, which obviously impacts the value of your office buildings, just sort of curious if it makes a difference whoever replaces him.

Well, I think it often does make a difference. I think the fact that Ben Bernanke was the Chairman of the Federal Reserve at this particular time was almost a gift because he had had all of the great experiences and academic and understanding of what happened during the Great Depression. He was a great authority on what happened during the Great Depression, and he understood how critical it was that we keep the financial system well-lubricated. And he did more than almost anybody else in the world, in fact, not almost than anybody else in the world. In fact, he was a leader in trying to get other countries to open their particular financial channels as well. But the end result of it was then instead of getting a financial system that could have gotten completely clogged, we ended up with a financial world that remained open, and the banks did not fail. And the -- what should I call it, the economy did not suffer from a huge contraction of the availability of credit, which, frankly, when there was those few moments of panic in the world back in 2008 and 2009, could very well have been one of the outcomes. So I have the greatest of respect for him. My concern about the way he was handled, as I try to indicate, was that he should have been given the chance to announce his own departure in a slightly more dignified way, given the extraordinary contribution he made. And I thought it was really unbecoming of the way to treat somebody who had made such a major contribution to the economy and to the financial system of the United States and, indeed, to -- in fact, since he led a lot of other countries and influenced a…

It's Owen. To answer your question, we are considering, as we discussed at NAREIT, looking at some of the emerging/emerged neighborhoods in Manhattan where there is significant tenant demand growth and rent growth. We will continue to focus on quality. A core to our strategy that Mort has reiterated over and over again, and Doug, is having A-quality building, and that will continue to be our focus. Exactly how that's defined is to be determined, but we will be focusing on maintaining a high-quality portfolio of buildings.

Your next question comes from the line of Vance Edelson of Morgan Stanley.

Just update us on your thinking on what amount of pre-leased square footage you'd like to have before deciding to move beyond grade in the fourth quarter of '14. Is it in the neighborhood of several hundred thousand square feet? And would having a JV partner, if you chose to go that route, would that potentially reduce the threshold?

You're not going to like the answer that I'm going to give you because it's not going to -- you're not going to find it satisfying, but I'm going to give it to you, anyway, which is it depends. So as an example, if the market in San Francisco were -- a year from now, we're trading in a level where space at the Embarcadero Center and space at Foundry Square were all leased and there was a much lower vacancy factor and there was significant expansion of existing tenants and new technology tenants that are continuing to come into the city, I think our threshold for how much square footage of leasing we would need to start on the Transbay would be lower. If it were similar to a situation like it is right now where things are good, things are strong, things are, I would say, healthy, there is a modest amount of growth going on in the city, I think the number is going to be significantly higher than that. And the good news is that we don't have to make that decision right now. If we had a joint venture partner, clearly, the risk that each partner is taking is significantly reduced, and, clearly, that would be a factor as well in the decision that we would make.

Okay. That's very fair. And on 601 Mass Ave and perhaps using that as a barometer of D.C. strength, in general, is 79% pre-leased about where you expected to be at this point? Is it better or worse than you would have hoped? And how much higher would you like to see that figure upon completion?

So all of the remaining space at 601 Mass Avenue is stuck in neutral at the moment because the existing pre-leased commitment to Arnold & Porter effectively put us in a situation where we had to hold all their remaining space off the market until October, I think, right, of 2013. So we've been in no position to be -- even be able to offer the space to the market. So it is exactly where we would have expected it to be.

I guess, Doug, we can always be 21% better.

Your next question comes from the line of John Guinee of Stifel. John W. Guinee - Stifel, Nicolaus & Co., Inc., Research Division: Hey, Ray, a lot happening in Washington, D.C.. Got the Silver Line finishing soon. You've got the hot lanes open in Northern Virginia. The Freeze the Footprint seems to be really on its -- here to stay. National Science Foundation did a build-to-suit in sort of a secondary Metro location. Fish and Wildlife seems to be maybe getting done over in Skyline. Can you sort of, without pumping your own submarket concentration, give an arbitrary or an honest assessment of how all these changes will affect the leasing velocity in various submarkets?

That's a pretty open-ended question, John. And you know me, I can never stop pumping our own products in our own markets. But I do think the fundamental change we've seen with the Silver Line is that what used to be the Rosslyn-Ballston corridor in Arlington is now the Rosslyn out to Tysons corridor. And those Defense users that may look to go inside the Beltway will now certainly consider Tysons as a secondary location and, eventually, hopefully, Reston. But, again, to go to the bottom line, I'm not going to critique other REITs markets. But I just really like our position in Reston Town Center. As Doug detailed, we are effectively 99% leased out there. The highest net effective rents probably in the city of Washington, D.C. and virtually no new supply forthcoming. So without, again, casting negative views towards the other options, we continue to like our position.

Your next question comes from the line of Michael Knott of Green Street Advisors.

Question on just development mindset. You have a large pipeline already, but you are seemingly somewhat bearish on real estate value since you're selling assets and not finding value in acquisitions. So just curious if your appetite for additional development is somewhat muted. Or is it just -- are you willing to add new projects if the pre-leasing hits your targets?

So I guess I'll take exception to saying that we're bearish on valuations because we're selling and not buying. I think what we've identified is a situation where there are assets where the growth profile, from our perspective, is less than what the growth profile or value might be from a third-party owner's perspective. And so we think there's a great opportunity to both enhance the overall growth rate of the company going forward and raise a lot of cash at the same time. So I think that's why we're selling assets, not because we think they're overvalued and on the decline. With regards to development, I think we believe that we can get significantly enhanced yields on development, particularly in the markets where we have sites and access to sites, over and above where we could otherwise deploy that money into existing assets. And existing assets obviously have the hindrance of having leases in place. And to the extent those leases in place lock in the returns for an extended period of time and we can achieve returns that are significantly higher than that, then we think, incrementally, we're better off putting our capital into development. That's not to say that we're not prepared to -- if we have the right opportunity on the acquisition side and it's got the right lease profile and we're comfortable with where we think either we can reposition the asset or how we can implement change to the asset and, therefore, drive enhanced yields in terms of where current rents are or we like the leasing exposure, that we wouldn't jump into that. I mean, there's a building, for example, in the New York metropolitan area that we're looking at, where there's good rollover in 2016 and we like where the asset happens to be positioned. And if we can figure out a way to purchase the asset from the existing owner, I think it would be a great acquisition opportunity, largely because of where it's located. So we're not -- it's not we're either on or off with regards to acquisitions and dispositions. We're smart enough, we think, to be open to looking at lots of different ways to recycle and invest capital through good and bad markets.

Earlier in the call, when you expressed some hope of maybe in the future being able to buy again when the 10-year was at 5% and there were higher inflation expectations built into fixed income pricing, that was not necessarily your expectation but just sort of a hopeful commentary down the road?

Yes.

Okay. And then the commentary on leasing activity at 250 West 55th seemed like one of the more positive things that I heard on the call so far. I'm just curious, did it just sort of -- did a light switch go off? Or what was sort of the impetus for the market finally seeming to come your way on that building a little bit more? At least it sounds like. And then just curious if you have a stabilization timeline for that building.

I'll answer the last question first, which is I don't think we yet have a stabilization time frame. We are hoping that we will do enough leasing in 2013 and 2014, so that by the time Kaye Scholer starts paying rent, which is I think in 2015, we will be stabilized. I mean, that's our hope. I mean, I want to say it's sooner than that, but that's where our sort of expectations are right now. In terms of why things are better in terms of the level of activity, I would say that as we got to the point where the building was ready to be opened and it was an easy tour for a broker to bring someone to the building and they could see a working lobby and they could get into a passenger elevator as opposed to a hoist and the floors were clean and ready and we started having broker open houses and basically pushing the pavement in terms of getting the word out that the space was available and you could start construction on it, it sort of naturally became, I think, more real to the marketplace. And I -- but I can't tell you why in the last 3.5 months, Owen or Mort or Robert has toured the space with a prospective tenant at a minimum of twice a week. And we've got more than a handful of multi-floor tenants that are actively studying the building with architects and have provided us with request for proposals and, in some cases, given us responses and are encouraged by the -- we are encouraged by the overall level of activity. Now we haven't made any deals yet. So I guess I'm somewhat skeptical of giving you a firm date on when we're going to have a lease because you never know with real estate transactions how long they take and what the path to getting a lease signed is. But we're optimistic that between now and beginning of 2014, we'll have some strong leases signed, and the building will feel even better than it does today.

This is Robert Selsam. I can add a little bit of color to Doug's answer. Some of the tenants have just recently entered the market. So every tenant has its own time frame. They typically select a broker, and then they do surveys. And then, finally, they get out in the market. And it just happens to be that several of these tenants have just recently entered the market in a serious way.

Your final question comes from the line of Tayo Okusanya of Jefferies.

Just a little bit more detail around San Francisco. I mean, there's been a lot of news saying Google is expanding within their current location, and some other guys like Kaiser Permanente are likely to do the same thing. Just kind of given all the spec development that's going on in San Francisco, I mean, does that kind of change your view in regards to what yields could look like for new developments, if all these potential new demand people were thinking could show up suddenly is kind of staying put?

I guess I'm a little unclear as to your -- the question. I'll try and answer what I heard, and you can ask a follow-up. So a lot of the growth that you're describing is down in the Valley. So Google, for example, has taken a significant amount of additional space in the Valley, both from an ownership perspective, as well as from a lease perspective. And they seem to be having an insatiable demand for space. And there are 3 or 4 tenants like that down in the Valley. Google also is rumored to be renewing and expanding in the city of San Francisco, at a building where they're currently located and don't look like they're going to be moving to a new facility. And so there is, in fact, growth both down in the Valley, as well as in the CBD of San Francisco from a tenant like Google. And I think we're seeing consistent growth like that from other tenants that are located in and around the San Francisco area. I mean, it's no secret. People talked about it for quite some time that there is a transportation issue associated with moving people who would want to live in the urban locations in the city of San Francisco down to the Valley. So each of these companies has fleets of buses that are moving people back and forth all day long. And to the extent that they find it palatable to have their people located in the city and can make a rationalization in terms of how those operating groups are working with the employees who are "off-campus," they're doing that. With regards to yields, I'm not entirely sure how those 2 things necessarily come together. Our view on yields right now is based upon sort of where we see overall investment returns and where we see IRRs and where we see interest rates. And I -- and so the demand equation I certainly think would help us in terms of starting more -- with more speculative space. But I don't think it would necessarily help us make a decision with regards to whether we're more or less interested in development.

Yes. So this is Mort. Let me add one -- can I add one thing to that commentary in San Francisco? We think that the assets that we are in the throes of developing in San Francisco will -- particularly will become the iconic buildings in San Francisco and the preeminent buildings. And we've always found that when those buildings get to be clearer in the vision, the lines of vision of the markets, that we get a very, very strong response. So I think people are, I think, beginning to understand what we are committed to in terms of the quality of design and function of the buildings we're going to be building. And so we think that will spark a lot of interest in this space that we'll be bringing to the market.

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

I think that covers everything that we had. Hopefully, everyone will get through the conference call season and enjoy a couple of weeks of August before we get back to having conferences in September. And we'll look forward to seeing you -- each of us will be at different places at different times, so you'll see a smattering of Boston Properties folks as you make the -- do the conference call circuit. And we'll talk to you again officially in about 90 days. Thanks.

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