Good day, ladies and gentlemen and welcome to the Fourth Quarter 2014 Kilroy Realty Corp. Earnings Conference Call. My name is Lisa and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] And as a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Tyler Rose, Executive Vice President and Chief Financial Officer. Please proceed.

Good morning, everyone. Thank you for joining us. On the call with me today are John Kilroy, Jeff Hawken, Eli Khouri, David Simon, Heidi Roth and Michelle Ngo. At the outset, I need to say that some of the information we will be discussing is forward-looking in nature. Please refer to our supplemental package for a statement regarding the forward-looking information in this call and in the supplemental. This call is being telecast live on our Web site and will be available for replay for the next seven days by both by phone and over the Internet. Our press release and supplemental package have been filed on our Form 8-K with the SEC and both are also available on our Web site. John will start the call with a review of the fourth quarter and the year. Jeff will address conditions in our key markets. I will finish up with financial highlights and initial earnings guidance for 2015. Then we will be happy to take your questions. John?

Thanks, Tyler. Hello, everyone. Thank you for joining us today. I am pleased to report that we had a better than forecasted fourth quarter performance, completing another solid year for KRC. We leveraged our larger operating platform and management teams to meet or exceed our all of our operations, development, acquisitions and capital recycling. We added several exciting development opportunities to our pipeline. We continue to transform our real estate portfolio to meet the changing needs of the 21st century workforce, increasing the portfolio’s long-term value and we delivered strong financial results including an impressive total return for our shareholders. Here is a recap of 2014, we signed 3.2 million square foot of leases across our stabilized and development portfolios and we ended the year with occupancy of 94.4%, the highest level since 2008 and the portfolio is now 96.3% leased. Our same-store portfolio generated adjusted cash NOI growth year-over-year of 7.5% and we delivered two Northern California development projects totaling 479 million in aggregate investment ahead of schedule and under-budget, creating approximately 225 million to 300 million of incremental value assuming a range of conservative cap rates. And we reloaded our development pipeline with three San Francisco sites that are expected to have a total investment of up to 1.5 billion. We signed a purchase and sale agreement to acquire a South Lake Union development site in Seattle for approximately 50 million. The preliminary forecasted total development cost is approximately 350 million to 400 million depending on the ultimate project size and mix of office, retail and residential. We acquired two economically attractive projects for 207 million that were immediately accretive to earnings and added meaningful future value creation opportunities to the portfolio. We generated 138 million in proceeds from our capital recycling program selling five non-core assets. We…

Thanks John, hello everyone. Our West Coast real-estate markets have strengthened in every quarter of 2014, driven by steadily improving economic conditions, net positive job growth and rising business confidence and expansion, especially among the regions many tech, social media, entertainment, life science and communication industries. This growth has been concentrated in urban centers already dense with these kinds of knowledge-driven innovation-oriented companies and the millennial workers they employ. This creates a virtuous circle of attraction growth that we see continuing well into the future. Now let’s take a market-by-market look starting with the leaders, San Francisco. San Francisco Bay area once again outperformed every real-estate market of the West Coast and across the country with technology continuing to drive growth. San Francisco had 2 million square feet of positive net absorption for the year, a highest level in 10 years with 16 leases executed over 100,000 square feet aggregating more than 3.5 million square feet. There are currently only six blocks of space greater than 100,000 square feet available with 4 million to 5 million square feet of demand including 10 users looking for 100,000 square feet or more. Class A direct vacancy for SOMA is now a near 0%, 9.2% for South Financial district and averaging 5.3 for the Silicon Valley markets. Strong demand and a limited supply pipeline continue to drive asking rents higher. Brokers have reported 88% rent growth since 2010 and approximately 11% year-over-year on a full service gross basis. Currently we’re 99% leased in the Bay Area. Greater Seattle also outperformed in 2014. Bloomberg recently named Washington the most innovative state in the nation based on its large technology workforce, high productivity rates and diverse public technology tenants, but another survey noting that Seattle is now the number destination for millennial jobseekers. Demand in…

Thanks, Jeff. FFO was $0.78 per share in the fourth quarter and 2.85 per share for the year. FFO continues to improve on higher average occupancy and stronger rents. Fourth quarter FFO was higher than expectation, largely due to better than expected operating results. The early delivery and stabilization of the Synopsys Campus, the November closing of our fully leased Chesapeake Commons acquisition in Sunnyvale and $0.02 of non-recurring items related to tenant reimbursements and legal settlements. We ended the year with stabilized occupancy of 94.4% up from 94.1% at the end of the third quarter and 93.4% at year-end 2013. Same-store NOI has grown steady through 2014 in step with higher rents and higher average occupancy. For the fourth quarter on an adjusted basis, GAAP NOI rose 8.8% and cash NOI rose 4.4%. For the full year on an adjusted basis GAAP NOI was up 6.9% and cash NOI was up 7.5%. From a capital outflow perspective in the fourth quarter, we acquired Chesapeake Commons and the two Flower Mart sites for approximately $171 million we repaid with cash the remaining 136 million of principle on our extendable notes in November. We also reissued approximately 1.3 million common shares to the value that was above the strike price. These shares are already reflected in our financial statements. Through funding transactions we sold two properties in the fourth quarter and a land part in January for growth proceeds of $86 million given the low basis in the land side we will have a $17 million gain in the first quarter that will be included in FFO on a per share basis the impact to FFO will be approximately $0.19. We also issued 82 million of equity under our ATM program during the quarter. Taking into account all these transactions we…

[Operator Instructions] And your first question comes from the line of Craig Mailman of KeyBanc Capital Markets. Please proceed.

On the sales John I know you said you've the San Diego portfolio and Redmond coming in the market rate now. Would that get you more to the low-end of the range of the 250 to 400 or closer to the midpoint, and what other -- how much non-core do you guys have left at this point?

Well let's deal with the first point. What we have in the market right now in San Diego and building up in Redmond we'd be somewhere nearing the midpoint plus or minus of the range we gave. With regards to the second point how much more non-core, remember we're not going to restrict ourselves this is not a signal but just a comment that we have outsets that are well leased for long-term that could be appropriate to sell at some point as well. We are very focused as I've said before on numerous occasions on debt-to-EBITA and so forth that’s one the metrics we look at. So when we look at the potential of selling something that is long-term leased that could be big we're going to take that into consideration. But ultimately some of those things could be sold we'll see.

And how do you sort of balance that cap rates keep moving down but so does your cost of equity and you guys have the ATM which you hit a little bit this quarter. Kind of how do you look at the levers of funding development between asset sales and equity?

Tyler you want to take that one.

Yes that’s a good question I mean we think about keeping our company leverage neutral. And so as we work on dispositions it makes sense for us longer term that will impact the amount of equity so as we said all along we're going to raise debt and we're going to raise -- we are in the position and we are to raise equity to keep that balance there and we want to focus on debt-to-EBITDA and overall leverage.

Then just a last one, the LinkedIn subleased to Apple, I don’t know if you guys know but where that sublease was struck is that sort of in line with that LinkedIn was paying. And do you guys have any agreements in your leases that is tenant sublease you guys share and any potential upside or is it kind of go to them?

I wouldn’t think there is going to be much upside as I understand it it’s and correct me if I am wrong Tyler that it’s basically the deal that we have with LinkedIn that Apple is taking, we could have done a direct deal with them but there is an accounting cost, when you do a -- if we were to transfer to a direct relationship with Apple. The nice thing is it works for LinkedIn’s strategic planning, it works well for Apple’s long-term strategic planning, it’s great credit, a tenant for Kilroy to have, but if you are asking if there is upside to us in the terms of immediate earnings the answer is no.

I would say the diversification of tenant base adds value to the asset itself, if we were on the market it would have gone up in value by virtue of the Apple sublease as opposed to stay static.

And your next question comes from the line of Michael Bilerman with Citi. Please proceed.

Hey guys Manny Korchman here with Michael. Tyler if we think about your 4Q results you gave guidance at the end of October, what sort of was the biggest change that you guys weren’t anticipating that would have caused you to be so far beyond your internal expectations of where the year would end up?

Yes I mean it was the lot of little things. I mean the Synopsys deal came in a little bit earlier than we anticipated. The acquisition closed a little bit earlier. We had higher occupancy than we had forecasted, the disposition was a little bit later obviously our operating results whereas the occupancy was better. And then we had the as I mentioned $0.02 a share of one-time items and that related to pulmonary maintenance recoveries and some legal settlements. So there was nothing that drove the whole thing it was a lot of little things.

And if we are thinking about the Flower Mart and the fact that you can be anchoring it with a new Flower Warehouse, how should we be thinking about the rents that that Flower Warehouse will be paying, are you going to have to offer a discount because of sort of the deal in the process of getting the building built or is it going to be sort of one market?

Well the 125,000 the deal is -- we have subsidized, and it’s not a by itself an attractive yield. But when you take a look at what we think we are likely to get in the way of entitlements based upon the zoning of the city is going to do there, and consider all the cost to new facilities above grade the new Flower Mart the land cost and everything else we think we are going to do exceedingly well.

And your next question comes from the line of Vance Edelson with Morgan Stanley. Please proceed.

When we think about the quarterly pattern of lease expiration this year, could you remind us is the third quarter relatively higher? And could you just comment on how you are addressing that proactively and just how good you feel about the mark-to-market there?

Yes, this is Jeff. So mark-to-market for 2015 it’s roughly 8% to 10% below market. I think as I mentioned in my remarks we have really brought down the number of expirations from the high of 17.7 down to 8.7. We have got five leases of 50,000 square feet or more that have started to roll, two of those we think were re-lease, two of these were negotiations and as I mentioned on the prior call there is one lease 123,000 square feet in the second quarter they will be vacating. So we will have to reposition that space. And all-in-all I feel pretty good about the role this year, we have done a lot of work proactively we have a very manageable role this year now.

And then with a 1.05 billion to be invested in development and more over the long-term, could you comment on construction cost and the impact on yield one of the large REITs in another subsector seem to emphasize earlier this week that rising costs are not going away. So do you still feel good about all your yield projections and how you are feeling on the construction cost?

Yes, this is John. We feel good, we have been able to we saved money on the LinkedIn deal we saved money on the Synopsys deal both of transactions when we did them a few years back. We projected higher cost and we actually realized we are really in good shape on everything we have got going on right now. And when we forecast what things are likely to be, our tendency has been to forecast greater increases than we have actually seen. So I think we have a very sophisticated and very -- generally pretty conservative underwriting with lot of contingency and so forth. So I think we are looking good. I don’t see any headwinds there.

That’s great and then just back on the Flower Mart given the level of excitement there, in terms of your best guess as to when it will be opened for business, are we still thinking 2018 or ’19 or is there any emerging clarity on that?

Well I think that it is going to take a couple of years to go through all the entitlement stuff then it is going to take a better part of a couple of years to build. So that kind of looks like 2019 and that’s our best guess at this point, whether we can accelerate that some, or whether it slips a little bit I can’t tell you more to come, but we are very engaged in the process.

And your next question comes from the line of Brendan Maiorana with Wells Fargo Securities. Please proceed.

Tyler, when did the Synopsys development deliver?

November.

In November, so the change in the straight-line rent adjustment was pretty significant in the quarter, I think it went up about 9 million sequentially from Q3 to Q4, I would guess that the Synopsys deal maybe added a couple of million dollar on that but that what sort of makes up the remaining $7 million change between Q3 and Q4?

I think it was a total of eight and most of it was from LinkedIn and some of it was from Synopsys as you’re pointing out, so LinkedIn who came into portfolio in September so there was a little bit in September but the bulk of it was related to LinkedIn.

Okay so that’s not much on the existing portfolio so if I think about the same-store guidance of 2.5 to 3.5 for 2015, it feels like occupancy is going to be about flatfish, rent spreads are and I think as Jeff mentioned up 8 to 10 last year you had rent spreads that were up 13% and you’ve got bumps, it feels maybe 2.5 to 3.5 would be a little bit lower just sort of based on those major inputs but I would guess is there anything else like some free rents or something like that that’s going impact the number there otherwise?

No I think you got it right, I mean, the one other thing that impacts the number and we did a fairly large lease in San Diego last year which had around roll down and it has free rent it kicked in January this month, so that it was a fairly substantial lease so that actually had the reasonable impact on the same-store results.

Okay and that kind of stuff burns off as you move later in the year?

Exactly, and so by the end of the year the same-store numbers will be improving.

Okay and then last one, you mentioned development spending 450 million, CapEx spending of 90 million, is there any other capital spending like first generation CapEx spending that doesn’t hit development or if we’re thinking about sources and uses is that pretty much it?

We have some minor first generation but it’s probably 20 million or less so it’s not material.

And your next question comes from the line of Jed Reagan with Green Street Advisors. Please proceed.

Just a question on cash releasing spreads, those were really strong last quarter and quite a bit higher than the mark-to-market rents, you guys have talked about just wondering if you can talk about what drove that was it market mix or is there some lumpy leases with some outsider markups maybe just a little color on that?

Yes I mean I don’t think there was one thing, I think Seattle was in particularly, had good rental rate up this last quarter but there was nothing that really jumped out.

And you mentioned the leasing LOIs, do you offer any more details on that maybe which markets or projects those are concentrated and especially on the near-term development LOIs that you talked about?

We have a lot of confidentiality and non-disclosure agreements regarding this kind of stuff. All these tech companies particularly are nuts about confidentiality, so the 25,000 feet we mentioned was at Columbia Square, the 360,000 square feet in the core Jeff can speak to in a minute, the 300,000 square feet that is not under construction but a near-term development, there are not that many I mean you would kind of figure out, I am not trying to be cute but I have to maintain confidentiality.

Sure.

Yes, Jed, this is Jeff, in terms of LOIs and the stabilized portfolio it’s pretty diverse 35% is in LA, San Diego is probably 15%, and San Francisco is about 30% and Washington is 20% so we got a pretty good dispersion of LOIs across the portfolio.

Okay and just last one, one per se I think you’ve got that Council hearing coming up next month maybe just how you’re feeling about chances there and then what additional hoops you might have to jump through beyond that if that was successful?

Well, this is John again, one per se I think you all coined the terms that I use regularly now when I speak to the City Council people in the Meridian, San Diego entitlement purgatory. I follow that phrase, Jed, I like it and it sounds like whether that would -- I don’t know whether that was Michael who came up with that but that’s a good one. And you can’t get into purgatory here in California and we got into because of the Mayor that was a creep and thrown out and so forth, but in any event we are feeling pretty good about getting a City Council approval at the end of next month and assuming we do and we think we will based up on what we’re hearing today that the likelihood is that we’ll get a CEQA challenge and CEQA is the California Environmental Quality Act which is a nice name but like so many of these laws really is for 38 bucks anybody can file a lawsuit against you and as you know you have to have -- you have to then go court if you get such a challenge. And you then debate it on the merits of your environmental impact report and to give you an idea in our environment act impact for not only did we have all traffic consultants and all the other people that are applying on the environmental impacts. But then we did peer reviews then we did triple peer reviews then we did quadruple peer review the same things with lawyers and all the rest so our feeling is by based upon on what our lawyers are telling us and all our advisors that if we have a CEQA challenge we should do well. But again anytime something goes into the legal system there is uncertainty. But we're feeling good about getting City Council approval from what we think, the way we're reading the tea leafs and then we will see if we get the challenge and if we do that can be a six to 12 month process. And our hope is that we get through all this stuff because the markets come our way there is very strong demand for the retail, very strong demand for the apartments, and win a very good demand at rates that makes sense for the office so we will hopefully get this thing out of entitlement purgatory and on the books.

And your next question comes from the line of John Guinee with Stifel. Please proceed.

A couple of questions here first just as curiosity somebody told me and correct me if these numbers are wrong. But the salesforce.com now has leased space or committed space of about 3 million square feet in San Francisco and 150 square feet per person that’s 20,000 employees. Are those numbers even close to correct because that’s an amazing employee base for that company?

Yes, this is John, obviously I can't speak other than what I read and what I've been told and I can't speak for Salesforce. But I do know that Salesforce has been getting out of quite a bit of space there enchant as I understand it is to occupy 53 Fremont which they are in the process of buying from TIAA-CREF which is already in about half a million square feet or so the entirety of our building 350 Mission and then the bottom of the Transbay Tower. And get out of the other space that they are in the city I know their expirations on that space are sort of 2017 which sort of fits when they are getting into some of the other space that I mentioned that’s under construction. So I think we're going to see is a kind of the student body shift from the buildings they have been in and to the building that they want to be in and trends up the number of people that you mentioned I know they have 16,000 people worldwide I don’t know how many of them are in San Frisco.

And then the second question probably for Jeff. It's a little bit surprising to see the TIs and LCs still being about 35 box of square foot on average. And so the question is how much of that is driving rental rate growth, two, should that number come down and three how do you look at the commodity markets or commodity assets in secondary markets and their ability to graft off the better markets in your primary or geographic areas?

Jeff do you want to take the first two and I'll take the third.

Sure yes so I think the $35 of TI John it's obviously space-by-space but I think that still feels like on average what we're seeing obviously in some of our bigger deals we're actually putting up less TI in some cases we're putting up more. So I think $35 still feels sort of down in all the fairway. So I think that answers the first question your second question was.

Does the TI packages drive rent growth?

Yes I don’t think so for the most part we're seeing here, what does it take to outfit the space to get the high market rents and obviously we got great buildings in great locations. So we're not really putting a lot more TI to get rent growth we're putting in the TI dispense rate to deal with the tenant that need to occupy the space. We really push really hard with our construction teams they have the high residual value and tried out engineering so that we’re maximizing the type of improvements we're putting in the design we're putting in. So we have life after tenant so I think that feels still pretty good and we're still seeing in concessions dropping in a lot of our markets as the markets tighten up. So I think that trend will continue as we look down the field here.

John with the third question how should the lower asset drops off the rents and performance of the top assets is that kind of your phrase in?

Yes there has been a couple of Bay transactions lately of commodity product and sort of commodity sub-markets particularly in the Bay area and the question is whether the rent growth you're seeing in the primary markets and a quality assets if the secondary asset can draft off of that or not?

Well I am going to ask Eli along to pine on that as well I mean obviously if there is a very little available in the market and people need to be in that market then they have fewer choices and to the extent that they decide to stay in that markets then they're going to have to take lower quality product by definition. So yes in that context it is pretty basic economics. But moving out to lower quality areas I mean I still look at some of the San Jose market in South San Jose and say it is a no man's land you really wonder when that would come back obviously B quality buildings are going to move up the ladder as the tide comes in and there is less space in the A market. But I think in the longer term what we're seeing and I’d just put it this way in terms of strength of demand in the markets and where we see big companies going and medium sized companies beyond all the comments that Jeff or I made in our formal script we're having far earlier than expected discussions for meaningful amounts of space with a number of companies for the projects that we have on the boards, whether it’s the project in Seattle or the project at the Exchange at 16th or Flower Mart or San Diego far earlier than you normally have these discussions for huge blocks of space that are -- and these are with companies that are generally not on any brokers’ list and the common theme is we need to step-up and provide the environment that attracts and retains people. So I think in the short-term in hot markets where there is little space it does impact positively the B products and it does impact positively the little more outlined product, but long-term I believe and this is where we I think have made some good bets that have paid off, longer-term there is this need and recognition of the need to upgrade facilities. So longer-term I don’t know what that means to those assets, you can see what we think as we have been selling those kinds of assets of. You want to add anything there Eli?

That’s pretty thorough. I would add one thing which is the way it is right now is at least from a radius perspective, when you go to the edge of the radius where things are strong and you compare it to some other historical time, seven or 10 years ago the drop off is quicker, location and the locations that we’re putting our buildings or have our buildings are within that circle. And sometimes that circle expands and when it does the rents go up very quickly in those outlined buildings, they go up more than they would have because the gradation between being in tied in the circle and being further out used to be gradual, now it’s a broad. So that is and you covered it pretty well, so.

And your next question comes from the line of George Auerbach with Credit Suisse. Please proceed.

Jeff your comments on San Diego were more positive than I think we have heard in some time. To what do you attribute the positive momentum in occupancy and pricing power, just given that I was sort of thinking about San Diego is more of a fire tenant market than a technology new media driven market that seems to be driven most of West Coast’s markets so far this cycle?

Yes this is David George, I will answer that. I think what we are seeing is we are seeing a lot of biotech and life science growth down there, and that’s where we are seeing a lot of the push and lot of the expansion. And this continued -- it looks like they are going to continue to grow. So that speaks to I think most of it. There is technology down there as well and there is the industries that have been there for a long period of time that are continuing to expand they are getting another things like robotics there is med tech and there is a lot of healthcare, so I think that’s where most of it is coming from.

I would add to that, that what we are also seeing is a continuing kid of trend of law firms to be more in the Del Mar market than some of the other market and of course the money managers the same way money managers tend to want to be around where the wealthy people live and where they live in the wealthy communities and that bodes well I think for that space. But it’s the hard category, you are right George that has been big in San Diego and it continues to expand and from all these things collectively of consume most of the quality products and so there are a lot of discussions now about people needing space and we hope that bodes well for us. By no means is it robust like San Francisco but it is moving in the right direction and we are very pleased to see that.

And last one for me a question for Tyler. I guess to follow-up on Brendan’s question on straight line rent. Is it fair to think that if you have $17 million of straight-line and free rent in the fourth quarter, but that’s a pretty good number to use again in the first quarter just given the free rent period to some of these development leases, and then in sort of the second quarter and third quarter we should be more like a $10 million or $11 million run rate for straight-line rent?

For the first part you are right, so it’s approximately same as the fourth quarter and then it has trailed off, I think one of the developments rents starts in April so that will trail off in the second quarter. So it will move down to that $12 million-$10 million level by the end of the year.

And your next question comes from the line of Jamie Feldman with Bank of America. Please proceed.

I guess Tyler just sticking with that topic, did you provide a per share FAD outlook for ’15? Seems like you have the moving pieces on the adjustments?

Have we provided them, no, we haven’t never done that before and we gave a payout ratio forecast in the high-80s. But we haven’t done that.

Okay. And then how do we think about dividend growth and your prospects in ’15?

John you want to handle that?

Well it’s more to come, don’t have a statement for you right now.

Okay, but you said that 85% is a FAD payout ratio of the dividend right?

Yes, yes.

Okay.

Yes I mean yes but as John said I mean we are not going to comment on the dividend policy but then we are covering the dividend nicely this year.

Okay. And then I think you said that 2.5% to 3.5% same-store that’s on a cash basis?

Yes.

Do you have a sense what it would be on GAAP, because it seems like you have a lot of swings in the straight-line rent?

Yes, it’s going to be a little bit higher than that on a GAAP basis.

And then I guess just thinking about the market themselves can you guys talk a little bit about what you are seeing in terms of cap rates maybe move in the quarter or maybe the last six months especially and like a San Diego or some of the markets that have been a little bit more of a laggards in the cycle?

Sure, this is Eli. Yes, we have definitely seen movement in the last three months as well this last six months, if you look back a year ago we kind of talked about overall returns, if you look about a year ago maybe we were at 6.5 for call it core IRR targets and I think when I was asked about this last quarter, I thought we’ve gotten to 6 flat and frankly I’ll just give you one data point that I think that will be emblematic that and then a little more color. At this point I think we cracked down to 5 and 3 quarters on core stuff and I think that’s a combination of a moderate level of inventory. The debt rates are lined up so well, I mean, right now if you combined rates and spread the only limiting factor is, now banks are putting a floor on how low they’ll go because the spreads plus the underlying rate is down in the low 3s for the 10. And so there maybe cap in the 3.5 and then the foreign capital flows continue to strengthen there was a recent transaction here in a very strong location on. The San Francisco Peninsula, the top five buyers were foreign from three different continents and the pricing was $1,800 a foot. So I think that’s emblematic that it is tight it has continued to tighten there and then you asked sort of outline, what I can tell you is that on the things that we’re selling we get robust interest. We have things in the market in San Diego and we’re in the middle of that so I don’t want to talk about them too much, but for example something like that we received 130 confidentiality agreement signed about people -- assigned from people who are interested in producing that and that is really deep activity and we have deep interest and deep activity for those assets. And so yes I think it’s strengthened for core and I think it’s strengthened for things below core, materially notably, not notably I would say.

And then I guess Tyler one more question on the guidance, do you include any equity in your ’15 outlook?

Yes, it depends obviously on the disposition level, right, so we have different models for different levels but as I said we sort of manage the equity with the dispositions and the debt to sort of keep our leverage neutral, so you can back into that number.

So there is an assumption in the base case?

Yes, and we assume ATM issuance over the year.

And you last question comes from the line of Gabriel Hilmoe with Evercore. Please proceed.

Tyler just going back to the occupancy guidance, I know you mentioned the 120,000 square foot move out in San Diego but just curious, is that asset in a bucket that’s being marketed for sale?

Yes.

So I guess even if I include that large move out I guess I would have expected the occupancy numbers for next year to be a little bit higher given where you ended ’14 on a leased rate basis, can you just walk through some of the other ins and outs that are driving that number the 94%?

Right, well you may be right but that tenant obviously is in the building at the end of the last year so that’s one reason the number is going to be higher, but it is just were frictional occupancy and so with the ins and outs and some explorations our base case is 94% obviously we hope to do better than that but we are in spitting distance than where we ended last year.

There are no additional questions at this time. I would now like turn the presentation back over to Tyler Rose for closing remarks.

Thank you for joining us today. We appreciate your interest in KRC.