Good day everyone, and welcome to the Mack-Cali Realty Corporation’s second quarter 2008 financial results conference call. Today’s call is being recorded. At this time, I would like to turn the call over to the President and Chief Executive Officer, Mr. Mitchell Hersh. Please go ahead sir. Thank you. Good morning everyone and thank you for joining Mack-Cali's second quarter 2008 earnings conference call. With me today are Barry Lefkowitz, Executive Vice President and Chief Financial Officer, and Michael Grossman, Executive Vice President. On a legal note, I must remind everyone that certain information discussed on this call may constitute forward-looking statements within the meaning of the Federal Securities Law. Although we believe the estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. We refer you to our press release and annual and quarterly reports filed with the SEC for risk factors that could impact the company. First, I'd like to review some of our results and activities for the quarter and what we are seeing in our markets. And then Barry will review our financial results, and Mike will give you an update on our leasing results. FFO for the second quarter of 2008 came in at $0.93 per share as compared to $0.88 per share for the second quarter 2007. Despite the market’s overall sluggishness, I’m very pleased to report that we had a good quarter with respect to our leasing accomplishments. We had about 1.3 million square feet of lease transactions, and as a result, our portfolio ended the quarter at 92.3% lease, up from last quarter’s 92.1%. Rents rolled up this quarter by 6.5% compared to last quarter’s 0.8% roll downs with roll ups in almost all of our markets, a reflection of the…

Thanks, Mitchell. Net income available to common shareholders for the second quarter of 2008 was $18.3 million or $0.28 a share, versus $51.1 million or $0.75 a share for the same quarter last year. For the six months ended June 30, 2008, net income available to common shareholders amounted to $33.3 million or $0.51 a share, as compared to $69.7 million or $1.04 a share last year. FFO available to common shareholders for the quarter amounted to $75.2 million or $0.93 a share versus $73.2 million or $0.88 a share in ’07. For the six months ended June 30, 2008, FFO available to common shareholders was $146.1 million or $1.81 a share versus $143.4 million or $1.74 a share in ’07. Other income in the quarter included approximately $141,000 in lease termination fees. Second quarter last year had lease termination fees of about $873,000. And for the six months of the year, termination fees totaled $879,000 as compared to $990,000 in ’07. Same store net operating income which excludes lease termination fees increased by 0.7% for the second quarter of ’08 on a GAAP basis, and for the six months, increased by 0.8%. Same store net operating income on a cash basis increased by 1.4% for the second quarter of ’08 and for the six months, increased by 2.6%. Our same store portfolio for the second quarter and six months was 28.5 million square feet, which represents about 97.6% of our portfolio. Our unencumbered portfolio at quarter end totalled 239 properties aggregating 25.8 million square feet of space, which represents 88.3% of our portfolio. Currently, our short-term bank borrowings are about $320 million. At quarter end, Mack-Cali’s total undepreciated book assets equaled $5.5 billion and our debt to undepreciated asset ratio was 40.6%, and debt to market capitalization ratio was…

Thanks, Barry. Our 1.3 million square feet of leasing activity in the second quarter brought us to a total of 2.1 million square feet year-to-date which is in line with the same period of last year. We signed 158 transactions during the second quarter of which 80% were for leases of 10,000 square feet or less. In spite of the turbulent economic news and stagnant market conditions, the efforts of our leasing teams and the outstanding relationships we have developed in the business and brokerage communities have yielded positive results. Occupancy gains in our Central New Jersey portfolio contributed to a 20 basis points increase in space leased, and as a result, we finished at 92.3% for the quarter. Leasing cost per square foot per year remained in line with last quarter at $2.86, and we retained 70.3% of our outgoing space. 2008 remaining rollover is 728,000 square feet, representing 2.6% of our leased space. Second quarter lead activity was below first quarter levels by about 13%. With fewer tenants in the market, the competition for deals remains fierce. Given the current economic climate, future space needs are more difficult to define, and in many cases, cause prospective tenants to crest [ph] more flexibility in lease structure. This adds another layer to the process for the slowing lease commitments and make negotiations a little more complex. Quarter-to-quarter vacancy rates and asking rents in our markets showed little movement. Northern and Central New Jersey were virtually unchanged from March 31 levels. The largest vacancy rate changes occurred in suburban Philadelphia with 100 basis point reduction and Westchester County and New York with a 90 basis point reduction. Year-over-year, the combined Northern and Central New Jersey vacancy rates have increased by 220 basis points. AS discussed last quarter, a major factor in the Central New Jersey market was the addition of the former 1.9 million square foot leasing facility in Monmouth County. This space is not being presented to the typical sized user, but the remaining additional vacancy represents yet more competition for the fewer tenants we are seeing in the markets. Vacancy rates in our other suburban markets were either flat or down slightly from this time of last year. Regardless of vacancy rate fluctuations, asking rents have held steady or increased slightly in all of our markets. So far, we have seen only minor changes in sub-lease space availability both in our own portfolio and throughout our suburban markets. As Mitch noted, we are pleased with our second quarter leasing results and maintained a cautious outlook for the rest of the year. We still face significant competition for tenants and uncertainty in the business climate, but are working diligently to maintain our dominant presence in our markets. Mitch?

Thank you, Mike. As I like to do when we meet up on these calls, provide some what I call factoids about some of the metrics that affect our company and our performance. For the second quarter, I would like to reiterate our same store, which is on a cash basis, was up 1.4%. Generally, from the expense side of the equations, we’ve actually seen favorable expense reductions in most areas with the notable exception of utilities where energy cost continued to spiral as a result of the global issues surrounding the cost of oil and related products. And so, we are continued to be challenged with respect to maintaining efficiency in the cost of energy and of course, a large percentage of that cost increase is paid for by our tenants. And so, we ended the quarter at 92.3% lease with the CAD [ph] payout ratio of under 96%. And so, for the quarter, we were actually cash flow or free cash flow positive by about $2 million, a very favorable result after spending about $18 million on tenant improvement, work commissions, and some building improvements. And so, we view that as a real positive. Looking at the rollover picture going forward, as I mentioned in my remarks, we have about 2.6% or about 700,000 square feet – 2.6% of our annual base rent remaining to rollover for the remainder of 2008. Next year in 2009, that figure is about 8.4% of our base rent or about 2.2 million square feet. We continue to benefit from annualized contractual rent increases. The remaining six months of this year, we have increases on an annualized basis of about $2.8 million, and next year about $7.7 million in similar amounts moving into 2010 and 2011. We had what we view is a…

Thank you, sir. (Operator instructions) And we'll take our first question from Michael Bilerman with Citigroup. Irwin Guzman – Citigroup: Hi, good morning, it's Irwin Guzman here with Michael. Mitch or Barry, I'm not sure if you mentioned this earlier, but I was wondering if you would care to sort of revisit you guidance for the full year just based on where you're trending and what you've already accomplished in the first half and the fact that you don’t have a lot of leases rolling in the back half. You seem as though you would be fairly comfortable coming in either at the high end or maybe even slightly above.

Yes, certainly we can talk about that. We have obviously outperformed in this quarter. Certainly, exceeded consensus by about a nickel, and the transaction that was just completed that I alluded to and Barry also mentioned it in his comments when we talked about the $7 million on a straight line basis that would be applied to the third quarter, we've taken a very careful look at where we think we're going to be given what should be a very significant third quarter as a result of that transaction, the Arch Insurance transaction and accordingly have moved our midpoint guidance by about $0.16. So, it’s a reflection of some outperformance during the first half of the year and a reflection of what we already have in the bank, so to speak, for the third quarter as a result of a very unique transaction. Irwin Guzman – Citigroup: And based on your comment, on the debt market, would it be safe to assume you sort of put the (inaudible).

You are breaking up. I could not understand your question. Irwin Guzman – Citigroup: Sorry. Is that better?

Yes, that's much better. Irwin Guzman – Citigroup: Would it be safe to assume based on your comment on the debt market that you're sort of shelving the flex portfolio sales that you talked about earlier this year?

Yes. That would be a safe assumption. I had a fair amount of discussion with a very credible buyer who had done business with us in terms of asset dispositions and our recycling of capital efforts in the past. And I guess much to their surprise given their great track record, they were unable to get that capital to finance their deal. And while we did look at the potential of applying some mezzanine financing to it, at the end of the day, it really didn’t make sense for us. They are excellent cash flowing assets, no reason or compelling strategic reason to sell them. And certainly, to do sort of a mezzanine type of financing, layering on financing at fairly low rates to make the deal work given the limited amount of debt capital that this particular buyer was able to find in the marketplace, it just didn’t make sense. And so, the portfolio is well leased, we have a great franchise down in the South Jersey, Moorestown area, Burlington County, and we'll see what the future holds. But right now, it’s off the table. Irwin Guzman – Citigroup: Thank you, great quarter.

Thank you very much.

And we'll go next to Jordan Sadler, KeyBanc Capital. Jordan Sadler – KeyBanc Capital: Thanks. Good morning, guys. Mitch, I just wanted to – congratulations on your successful leasing effort in the quarter. I just wanted to ask you what the momentum look like if they continued and spill over into the third quarter or if the sort of the sluggish economy is getting the better of you at this point?

Yes. Thank you, Jordan. I would tell you that the market is very sporadic at this point. I would submit that in general, given the uncertainty in the economy, tenants are looking for a lot of optionality. There's clearly some consolidation occurring in a number of industries from pharmaceutical to financial services. And so, there’s a tremendous amount of uncertainty in the marketplace right now and what used to be what I would call a slam dunk transaction on a five-year renewal is now, can we do a five-year renewal with a cancelation and we'll pay for it after three years because we don’t know what the shape of our company is going to be, whether it's going to be larger, smaller, or part of another company in a couple of years. And we see that sort of psychology in almost all of the markets that we are operating in. So, my view is that we're going to be, in turbulent times, in the United States economy if not the greater global economy for probably a couple of years. And I don’t think that the banks and the Fed and all of the intervention that's going on is going to necessarily unlock a liquid debt marketplace for a couple of years. And so, it's hard to predict what leasing velocities and how consistent they will be. Obviously, tenants have leases that expire and they need to deal with that and certainly, we try to provide flexibility while maintaining the best interest of our shareholders. I would also tell you that some of the remarkable gains that we've been able to achieve in Jersey City as one location and I suspect it will be result in a few other locations, is the result of price point affordability. And there's no question…

I think that we certainly here at Mack-Cali have done about 0.25 million square feet of deals in the quarter with engineering or infrastructure type engineering firms. So, I think a combination of the global need for highly talented, sophisticated engineering firms even if it's doing work in Asia and other parts of the globe that right now are expanding, although of course the theory is that they are linked pretty closely at the hip and it's only a matter of time before they face some economic stress. That in combination with the need for improvement in our domestic infrastructure seems to be fueling what perhaps at one point was more of a cottage industry and now has become more of a mainstream industry. And I think that locationally in New Jersey, great location, easy access to airports and international travel, as well as being part of the financial capital of the world has demonstrated that these companies are growing here as well, as a fact that highly educated talent is available in this marketplace, whether it was the result partially of Tullett communications engineers have migrated now into different disciplines within engineering, the talent is here. So, we have seen great expansion in that area. There’s a lot going on right now in pharmaceuticals. I mean, you saw the announcement today of Bristol-Myers making an offer for ImClone. There's a lot of expansion and consolidation in pharma right now that’s occurring and New Jersey still is the medicine chest of the United States So, I think that we will continue to see some good expansion within that industry. Insurance companies, well, you see it with Arch, you have seen it historically. We have done a number of major transactions with the components of AIG. They are continuing to migrate some of their workforce to take advantage of a variety of things including business continuity. And so, I would say that those are probably infrastructure engineering, pharma, the insurance industry, which of course is part of fire, have continued to demonstrate strength in the New Jersey marketplace. Jordan Sadler – KeyBanc Capital: Lastly, just on the guidance coming back to it, I saw the $0.16 per share increase at the midpoint. You’ve mentioned the $7 million or I guess about $0.09 coming from the lease termination fee. The other $0.07 is coming from, is that purely from the core, so better occupancy?

Yes, I think it is better, occupancy, it's better traction on some rent growth, yes, it’s core growth. Jordan Sadler – KeyBanc Capital: Lastly, I forgo about this. The hotel, it looks like the hotel had a good quarter, anything different going on there or one time or is it – should that be recurring?

I think the hotel – we've been able to migrate ADRs over a period of time and then for the first half of 2008, it was about on budget occupancy, just hovering in the mid to high 80s. So we think we benefit from being an affordable alternative and a very high caliber facility to some the constraints in New York City. We are close to New York airport; that continues to be a benefit from both business and leisure travel. The corporate facilities, meeting room-type facilities have done well there. And so, we're optimistic about the continued performance of the hotels. I think I've heard from the lodging industry that some of the – just the pressure on the airline industry has resulted in – some of their contractual rack rate arrangements they've had have diminished because of layoffs in flight cruise and things like that. We haven't experienced that in the high end. So we are optimistic about it going forward. Jordan Sadler – KeyBanc Capital: Thank you.

You're welcome.

And our next question comes from Ian Wiseman of Merrill Lynch. Ian Wiseman – Merrill Lynch: Yes, good morning. A question on the Arch deal, was that a consolidation out of New York City?

Yes, they maintain a large – they will continue to maintain a facility in New York City but this is a major consolidation and out of lower Manhattan. Ian Wiseman – Merrill Lynch: And was the deal a rent roll up or roll down?

Well, from a pure rent prospective, dollars, escalated rent to new face rents, it's a roll down. But I think you have to look at the fact that there's a major contribution being made to mitigate against that and to mitigate against the cost of TI's and leasing commissions from the existing tenants. So, I think the timing of the transaction with respect to the former tenants lease term or remaining lease term was fortuitous for us. It's a 15-year deal commencing in November. So, it’s a long-term deal with a very high credit quality tenant with very acceptable rents for the Plaza 3 components of Harbor Side. Ian Wiseman – Merrill Lynch: Could you just quantify what the rent roll down was?

I would tell you that – I don't have the figures in front of me but I would say on average, it's a mid $30 deal and the rent was slightly more than $40 plus or minus on the existing tenants fully escalated with a lease that will expire or would have expired in about four years. Ian Wiseman – Merrill Lynch: Okay. And final question, I know we have sort of heard a lot about consolidation out of New York City. We've heard recent talk about you talking to a major financial services industry about a potential development in Jersey City. Obviously, the financial services companies are thinking about cost reductions. Can you just update us on any additional discussions or progress made on that front?

I'm meeting with one today that has a 500,000 square foot requirement that at the very least is considering a bifurcation. Now, I've met with a lot of financial service tenants among others over the course of the last couple of years and for one reason or another, it hasn't resulted in what I would call build to suit opportunity. It has in fact resulted clearly in maintaining almost 100% occupancy plus or minus a few basis points in our 4.3 million feet in service in Jersey City. There have been so many ephemeral events, as you know, occurring in the marketplace within your own firm among others that to make these long term or the longer ranged decisions has been very difficult for the leadership of these companies because it’s sort of, they wake up the next day and they don’t know what’s going to hit them in terms of mark to market and sub-prime write-downs, et cetera. I can only tell that there continues to be a high level of interest in reducing cost of occupancy among other costs as I expressed before. And frankly, as I said, I'm meeting with a principal and their broker of a firm today that I’ve never talked to before. Ian Wiseman – Merrill Lynch: I was going to ask you whether that was an initial meeting or a lease signing.

Yes. I wish it was both, but I can only say the former is accurate. Ian Wiseman – Merrill Lynch: Okay.

But look, that's the business we are in. You go through this process and nobody more than I would like to say that we've signed 0.5 million foot lease for a pre-lease and we are going to start a building down in Jersey City. But certainly, the interest is there and certainly, the economics are compelling. And if things continue to go the way they have been going with the write-downs in some of these firms and the need to control costs because they are getting whacked left and right from securitized financing that at some point, I suspect it's going to happen. Ian Wiseman – Merrill Lynch: Okay, thank you very much.

You're welcome

And we'll now go to Sloan Bohlen of Goldman Sachs Sloan Bohlen – Goldman Sachs: Good morning guys. Just one clarification on the guidance portion of the increase, you said was due to the outperformance on an operating standpoint. Just to clarify from here, are you expecting that occupancy and your same store growth stays flat from here or continues to get better, or how should we think about that?

Well, we said last quarter that we thought the same store growth would be sort of in a zone of flat to up about 2%. I think that’s how you should think about it. We haven't seen enough of a track record to suggest that it would be higher than that. So, that would be the zone. Sloan Bohlen – Goldman Sachs: Okay, and on occupancy (inaudible).

Yes, occupancy is going to fluctuate within the zone as well. There’s not enough traction in the marketplace right now, in my opinion, to take more optimistic views on that. Sloan Bohlen – Goldman Sachs: Okay. And another one, quick one for Barry, you guys have mentioned some slight increase or slight improvement in joint venture income on the G&A side as well. Should we consider this quarter a good run rate going forward or was that kind of just a one time thing?

In terms of G&A, I would say that we are probably around the $48-ish million annual basis, we would look at that. In terms of joint ventures, this is probably a little bit higher than what we would expect going forward. I mean, the hotel had a really good quarter this quarter, as well as some of the other joint ventures. At least the other one’s more one time kind of small things, but the hotel continues to perform well, and quite frankly, has done better than what we had originally anticipated for this quarter. Sloan Bohlen – Goldman Sachs: Okay. Thank you guys very much.

And next is John Guinee with Stifel. John Guinee – Stifel Nicolaus: Hi, how are you. A very nice job, Mitchell and Barry. Can you spend some time just updating us on the other JVs that haven’t been discussed yet (inaudible)?

Well, let see. Where shall I begin? We have our joint venture with SL Green. What I would call, although there are minimal interest in the number of properties, the real joint venture is on the seven building portfolio which is a little more than 800,000 square feet. And it's today about 70% lease with many challenges moving forward, so it’s plus or minus 70% leased and we're working it and SL Green is our equal partner in that. Princeton Forrestal is a 10% position. GE Capital is the majority ownership. A number of families own another 10%. We manage it. We do the leasing. We do the construction management, and it's performing well. As far as other joint ventures, we have our project in Boston with Vornado and JP Morgan and Gale International. And while we've done some remediation on the site and we've certainly have gotten all of our approvals for about 1.25 million square foot mix to use project, about a $720 million project, plus or minus. At this point, until we are sure that we have construction financing which would be somewhere around $400 million, we're going to go real slow on that project. I would tell you that the office leasing demand as well as retail demand seemed to be quite reasonably strong in Boston. We have another joint venture what we called the Callahan portfolio in Boston. It's in the suburban markets in Del Rica [ph] and Andover up in the Route 93 corridor. We bought the complex at very low cost. Again, it's a joint venture with JP Morgan and Gale International and we are at 30% and JP is 70%. We bought it pretty much empty and we have achieved, I guess, right now somewhere – I think we have a couple of deals that we have that we are hopeful of signing, that would be about 40% leased, minimal capital investment there, fully financed. So, that is performing little obviously slower than we had hoped and unanticipated, but it’s performing okay. The hotel we talked about, that's our joint venture would Hyatt and Plitzger [ph] family, and that addressed your – John Guinee – Stifel Nicolaus: Yes. One last question. Hey, Barry, how much of your guidance increase is attributable to interest savings?

We think that there’s probably about $0.03 for the remainder of the year that's attributable to savings from what we have booked previously in terms of interest costs. John Guinee – Stifel Nicolaus: Got you. Thank you very much, nice job. Barry Lefkowitz/ Mitch Hersh: Thank you.

We will now go to Mitch Germain with Bank of America. Mitch Germain – Bank of America: Congrats and good quarter guys.

Thank you. Mitch Germain – Bank of America: Just your plans for the $300 million unsecured in the first quarter '09?

Yes. We have our first tranche of senior unsecured coming due in mid March 2009. It has got about 742 all in coupon on it or all in interest cost. We are in the midst of doing some what I would call a secured financing on one or two assets that we feel pretty comfortable that we will take in proceeds that would roughly approximate that tranche. That's a $300 million tranche. And so, we will be under no pressure in our opinion to deal with – to enter the unsecured markets, should they remain as illiquid as they have been with so few trades in any sector of the corporate environment. And so, we would expect that somewhere in the late part of the fourth quarter, we will have this liquidity event, and if all things remain equal, and that will remove any pressure from having to redeem that on our line. But having said that, the world changes quickly as I alluded to before, and should we need to take that down on our line, we have the capacity to do so. We are about $320 million drawn. We have good cash flow, so we expect by the end of the year, we'd be in that zone borrowing this $250 million or $300 million that I'm talking about in terms of the secured type financing. And so, with our $775 million line plus our $75 million overnight note program, we will be in a very liquid position should we want to take that down on our line. Mitch Germain – Bank of America: Great. And I apologize if you already mentioned it, what was the buyer's or the potential buyer’s LTV requirement on the flex portfolio sale?

What was their what requirement? Mitch Germain – Bank of America: Loan to value, what were they looking?

They were looking to apply approximately 60% to 65% and they couldn't achieve that. Mitch Germain – Bank of America: Appreciate the comments, thanks.

You’re welcome.

And now to Michael Knott of Green Street Advisors. Michael Knott – Green Street Advisors: Hi, Mitchell or Mike, can you just comment on the 2009 lease expirations in New Jersey? It looks like about 1.3 million square feet, a big chunk of the small lease rollovers in '09. Thanks.

Yes. I mean, there is nothing looming large in '09. We have made a fair amount of progress with some of those tenants as we stand now. Some of what we consider to be potential move outs, we think we're actually going to be able to renew. But right now, the stats indicate that we have, as of June 30, about $49 million of rollover rent for the year or roughly 2.2 million square feet. We're working every situation. Like I said, we don’t have a Hewlett Packard so to speak in 2009. And so, these are more mainstream commodity type transactions and frankly in this environment, probably more susceptible to renewal than larger ones who are worried about the dragons coming to slay them as we're seeing today in the corporate environment. Michael Knott – Green Street Advisors: And then any update on the property in Greenbelt, Maryland?

Any sort of government leasing has absolutely been frozen because of the election. And so, some of the benefits that we thought we might see earlier as a result for the GSA or even the NHA and some of the large governmental entities and institutes that do business in the region have really done nothing in terms of leasing because their budgets have been frozen. Hopefully, as we get closer to the election, we'll see some of that unlocked and we'll see better activity and better velocity. We think we've got a great product, a great location, great infrastructure serving the area and good affordability on a relative basis to some of the adjacent markets. But there just hasn't been a lot of leasing activity right now because of the election. Michael Knott – Green Street Advisors: And you are still expecting that will stay vacant until 2009?

Yes. I mean, we might make some headway into leasing it, but in terms of an income perspective, we're really not including anything until 2009. Michael Knott – Green Street Advisors: Okay. And then lastly, can you just update us on your perspective on allocating capital? In the last couple of calls, you've been very negative on the economy and investment opportunities. How does your stance on that issue compare today versus maybe three months ago?

Well, as I'd mention before, Michael, there have been so few trades in the marketplace other than in New York City, the (inaudible) trade. Really, the markets have been generally extremely quiet. And if you look at the major investment sales brokerage firms and even the public components of those companies have had major earnings disappointments because there just hasn't been any activity in that marketplace. There have been a few deals that have gone to contract. They haven't closed yet. Deal in (inaudible) park in New Jersey, premier properties trading at probably 30% less than the institutional seller had hoped for, because of the illiquidity in the market, but still at a relatively rich pricing level compared to replacement costs, and these deals just don't close. So, I just don't think there's a clearing price in the market. I don't think there is a compelling reason to do anything until there is more clarity in the marketplace. I would tell you and I'm sure you know this, that there is an enormous amount of equity from every part of the globe sitting on the sidelines waiting for the next RTC to occur in whatever sector of the real estate community that might be, bad debt or whatever it might be. But you've got high net worth equity funds, you've got sovereign wealth equity funds, you've got institutional allocations that need to be put to work. So, there's going to be a lot of competing equity if and when the markets begin to unlock themselves. But, this has been a period of time where there has been relative dormancy in the marketplace and I have not changed my view. I prefer to be in a liquid, strong cash and strong balance sheet position to have a war chest to put to work and/or to weather a protracted economic downturn, and that's what we are going to do here. So, I really haven't changed the view. Michael Knott – Green Street Advisors: Thanks for the comment.

You're welcome.

And next, we'll go to Chris Haley of Wachovia. Chris Haley – Wachovia: Mitch or Barry, I have question for you related to your expense levels. Looking at your margins in the second quarter, we see either seasonality impacting or benefiting your results. Could you give us a sense as to whether or not this is temporary or are there any initiatives that you can point to suggest that your current margin levels are sustainable for the second half of ’08?

Yes. We think the margins are sustainable. We don't see any extraordinary or anomalies or aberrations. Again, we had relatively high second quarter utility expenses but frankly, we all know what that's due to and the margins, some 60-ish% on escalation recoveries we believe we will maintain. Naturally, you set some new base here. So you erode your margins a little bit but we've been able to offset that to some degree in maintaining a better level of efficiency in our operating and services. And we also have seen a slight decline; I wouldn't call it necessarily a major trend, but a slight decline in real estate taxes. They struggle. What's going to exist in that area, is that some of the reliance that tax assessors have had on this extraordinary pricing levels on building sales and trades have created frictionality with regard to diminishing income streams. And now, that is exacerbated by the fact that with all of the states, in New Jersey, New York, I mean, they are all operating on deficit financing, are eliminating some of the aid to municipalities. So that puts pressure on the municipalities to maintain their services and their school systems and they are more reluctant to be cooperative on sociary [ph] reviews. But we have had, in this company, a good trend in reducing our real estate tax expenses. So, that's a little bit of mitigating factor, Chris.

And now, we'll here from Jamie Feldman with UBS. Jamie Feldman – UBS: Great, thank you. Mitch, did I hear you correctly that leasing spreads were 6.5% on cash basis in the quarter?

Yes. For the quarter, they were and that was largely a result of a couple of transactions in Jersey City, about 135,000 square foot of transactional activity in Jersey City that ranged from mark up, so mark to market, or increases rather, roll ups of anywhere from about 12% to actually about 33%, and the 138,000-foot field that was a combination of Moorestown and Horizons Center in Hamilton was also about a 28% roll up on about 75,000 feet. So, I don't necessarily think that the 6.5% roll up represents a trend either. As I said before, we do feel relatively sanguine that we have marked our portfolio to market. It was about five or six very painful years. And so, we think that borrowing any major shifts in economic activity that would impact where we think we're going to be in leasing, we should be flat to positive going forward. Jamie Feldman – UBS: Okay. Can you talk a little bit about – I think you addressed more of the larger tenant demand, can you talk a little about what you are seeing in your portfolio from smaller tenants and kind of how resilient they are in the downturn, and maybe what your tenant watch list looks like right now?

Yes. We maintain obviously a very, very careful tenant watch list. Sometime ago, we implemented even in a email system – just talk about differential levels that we see within the parking lots which is sometimes a good indicator. Once or twice through our corporate relationships, I found out about offices closing although they are very credible lease-paying tenants before the on-site manager in the office knew it. So we maintained a very careful credit watch list. We have excellent diversity within our income stream. In our filings, you'll see on page 43 for example the industry diversification. We do it by SIC number, we do it by specific industry, and we talked about how much or what component of our rent is attributable to what is a very, very long list of way. We break it down so that you get a really good complexion on the income quality within the company. We have obviously reserved where we think that there could be some potential problems. But we thankfully haven't had significant issues. We had a couple of pretty small residential lenders. And these were the midnight move out-type tenants for a couple of thousand square feet. And when we saw that happened, we implemented what we call a tenant notice email system just to observe day-to-day activity. But we are pretty comfortable that we've properly assessed our credit risk that we have reserved, where we have some level of apprehension and of equal importance, I would tell you, that we're not shy about asking for security deposits where we feel that at least the money that we might spend for TI or brokerage commissions could be at risk given tenuous industries right now. And so, we do a real careful analysis in that sector. I'll tell you, we are pit bulls when it comes to collecting money owed and due to this company. We are very, very aggressive and not that we have to do a lot of these, but we're not the bank. We were tenants, lots of extra construction. They need to pay us for part of it upfront, and that sort of thing. So we maintain, I think, a very high level of awareness and controls on accounts receivable, and what's happening within our buildings. Jamie Feldman – UBS: Yes. I guess what I'm asking is like how is that number changed from the last quarter, you watch list, is it about the same?

Yes, it really hasn’t changed. Jamie Feldman – UBS: Okay.

I mean, we kind of looked at a year ahead and then we scrub it probably every 30 days. Jamie Feldman – UBS: Okay. Can you talk a little bit about, I mean, it sounds like there is potentially some big user demand coming out from the city. Can you talk about may be beyond Jersey City what you are saying in terms of conversations on some of your other land parcels or is that off the table for a while here?

We're having, what I would consider, the minimal conversation in Morris County at out business campus with an existing tenants that is thinking about expansion. I’m not talking about Wyndham, another tenant, that might necessitate a new building to accommodate their needs. It's in the very early stages of discussion, but I think outside of that and the waterfront, it's pretty quite out there with regard to built-to-suit activities other than maybe healthcare right now, which is also a large industry in New Jersey. There's not a lot of major expansion going on. Jamie Feldman – UBS: Okay, all right. Thank you very much.

You're welcome.

And we have a follow-up from Chris Haley of Wachovia. Chris Haley – Wachovia: Mitch, I am sorry. I wanted to come back, I want to ask you – I'm not sure if you comment on this earlier about what your capital expenditure budget looked like under your new assumptions for the calendar year ’08, and if you had any preliminary thoughts about how that might look in 2009?

Chris, you’ve asked about capital expenditures this year – because you broke up a little bit? Chris Haley – Wachovia: Sure, I did, yes. So if there's any, if you could comment on what your current annual expenditures look like for 2008 and any directional input on 2009?

Yes. If I look at the non-incremental building improvements and the TI and leasing commissions that we did in ’07, we were about $67 million and we have budgeted for ’08 about $75 million. This quarter, we've spent about $17.8 million but we think that the run rate will be somewhere around $75 million for the year. I would guess '09 is going to be in that zone. Chris Haley – Wachovia: Okay, all right. Thank you, Mitch.

You’re welcome.

And with no additional questions, Mr. Hersh, I'd like to turn it back over to you for any additional or closing remarks.

Yes, thank you. Again, I would like to thank all of you for joining us on today's call. We look forward to reporting to you again next quarter and I wish you all a good day. Thank you.

Ladies and gentlemen, that does conclude today's conference. We thank you for your participation. You may now disconnect.