HRPT Properties Trust Q1 2008 Earnings Call Transcript

HRPT Properties Trust (HRP)

Q1 FY08 Earnings Call

May 8, 2008, 10:00 AM ET

Executives

Timothy A. Bonang - Manager of IR

Adam D. Portnoy - Managing Trustee

John C. Popeo - Treasurer and CFO

Analysts

Michael Bilerman - Citigroup

John Guinee - Stifel Nicolaus & Company

David Cohen - Morgan Stanley

Philip Martin - Cantor Fitzgerald

Ian Weissman - Merrill Lynch

Charles Place - Ferris, Baker Watts

David Rodgers - RBC Capital Markets

Jamie Feldman - UBS

David Shapiro - Aegis Financial

Presentation

Operator

Good day and welcome to the HRPT Properties Trust first quarter 2008 financial results conference call. This call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to the Manager of Investor Relations, Mr. Tim Bonang. Please go ahead, sir.

Timothy A. Bonang - Manager of Investor Relations

Thank you and good morning. Joining me on today’s call are Adam Portnoy, Managing Trustee and John Popeo, Chief Financial Officer. The agenda for today’s call includes a presentation by management followed by a question-and-answer session.

Before we begin today’s call, I would like to read our Safe Harbor Statement. Today’s conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Federal Securities Laws. These forward-looking statements are based on HRPT’s present beliefs and expectations as of today, May 08, 2008. The company undertakes no obligation to revise or publicly release the results of any revisions of the forward-looking statements made in today’s conference call other than through filings with the Securities and Exchange Commission or SEC regarding this reporting period.

In addition this call may contain non-GAAP numbers including funds from operations or FFO. Reconciliation of FFO and net income is available in our supplemental package found in the Investor Relations section of our website.

Actual results may differ materially from those projected in forward-looking statements. Additional information concerning factors that could cause those differences is contained in our Form 10-K filed with the Securities and Exchange Commission and in our Q1 supplemental operating and financial data found on our website at www.hrpreit.com. Investors are cautioned not to place undue reliance upon any forward-looking statements.

And now, I would like to turn the call over to Adam Portnoy.

Adam D. Portnoy - Managing Trustee

Thank you, Tim. Good morning and welcome to everyone, who is joining us on today’s call. For the first quarter of 2008, we are reporting fully diluted FFO of $0.27 per share compared to $0.28 per share in the same quarter of 2007. Although FFO per diluted share is flat with fourth quarter 2007 results, we have made great improvement in reducing our capital expenditures.

As a result, this quarter first quarter in the last 16 quarters, where we have generated more cash more operations then paid in dividends. In addition, earlier this week, we announced the sale of 48 medical office clinic and biotech lab buildings for $565 million to Senior Housing Properties Trust. And we expect to realize gains of above $215 million from the sale. The sales price equals the 7.1% cap rate based on these building in place cash NOI.

Over the short-term, we expect to use the proceeds from the sale to repay debt and over the long-term, we expect to recycle this capital and take advantage of current favorable market conditions to purchase properties at higher cap rate than the properties being sold. As a result, we may be able to increase our FFO per share in the future by reinvesting the proceeds into higher yielding investments. A combination of an improved payout ratio and our efforts to recycle capital into accretive acquisitions are two important steps for our company, which may better position HRP in the market place going forward.

Turning back to our results for the first quarter. We signed leases for about 826,000 square feet during the quarter and 67% were renewals and 33% were new leases. Leasing activity during the first quarter resulted in a 2% roll up in rents and about $11 per square foot in capital commitments. The average lease term was 5.6 years and the average capital commitment per lease year was $2.04, which is an improvement from the prior year.

Although, we are pleased with our ability to sign renewals with many of our tenants to the attractive terms, the pace of new leasing activity or leasing of currently vacant space has slowed significantly since the end of 2007. Within most of the markets, where we operate net effective rents are trending downward. This is the result of a slowing economic, which is leading to relucting sub-companies to commit to expansion space or lease new space.

This trend is evidenced by the reported decline and office net absorption and occupancy rates across the country in the first quarter. At the same time, development activity has not yet slowed with many new projects scheduled for completion during the remainder of 2008. As a result of these market dynamics, overall company occupancy of March 31st was 91.6%, which presents a 120 basis point decrease from the prior year.

Despite the difficult market environment, we are doing a good job of outperforming in most of our market areas. Although our total same-store NOI declined by 2% in the first quarter, this decline is primarily the result of a decline in occupancy in our Boston market, which we anticipated and I have discussed with investors in the past. Excluding this decline in same-store NOI in our Boston market, our total same-store NOI would have been flat this quarter.

In Oahu, the market for industrial property is the strongest in the country with gross industrial rents approaching $40 per square foot in certain areas. As a result, the Oahu industrial real-estate market continues to experience one of the most dramatic increases in rates among all real-estate segments in the United States. HRP is largely benefiting from this market improvement because we are largest owner of industrial properties in the state of Hawaii.

During the first quarter, we saw rents roll up by almost 40% in this market and we anticipate significant roll ups in rents to continue in the future. During the quarter, same-store NOI increased by around 7.5% in Oahu reflecting rent growth on recent renewals.

Our Austin, Texas portfolio continues to post strong leasing results at a 9% increase in same-store NOI during the quarter. These results came from rent growth on leases signed during the past few quarters partially offset by the decline in our occupancy from the expiration of over 200,000 square feet of space in one of our industrial parks during 2007.

Our Philadelphia portfolio experienced a 7.4% increase in same-store NOI, reflecting $300,000 of nonrecurring lease termination revenue and an increase in operating expense recovery income. The Philadelphia leasing market has shown steady improvement during the last year especially in the downtown market, where we own a larger percentage of assets.

As announced previously, we have pre-leased over 50% to space Comcast vacated in April and we hope to report additional progress with this re-leasing effort in the future. We continue to believe that we are well position in this market with less than 1% of our total square feet rolling to the end of 2008 and in placements equal to a below market rents.

Washington DC is a market experiencing weakening fundamentals, with between 1 million and 2 million square feet coming online per quarter. Our same-store NOI in this market decreased by 1% during the quarter, driven by the increase in utility expenses in real estate taxes.

Southern California is also market experiencing weakening fundamentals. In the first quarter, we saw decrease in same-store NOI of around 2% and a decrease in same-store occupancy of 2.5% in this market.

Boston same-store NOI decreased 23.6% during the quarter, reflecting almost 300,000 square feet of space vacated in two of our south suburban office buildings. Unfortunately, we currently have no commitments to lease this space at this time. Boston is our only major market, we will continue to expect lease rolled outs.

And our other markets located throughout the country, our portfolio experienced a 1.2% decline in occupancy, which contributed to a 4% decline in same-store NOI during the quarter. We have 3.8 million of total square feet schedule to expire during the remainder of 2008, which represents approximately 6% of our total square feet and 8% of our annualized rents.

Excluding Boston the majority of the leases schedule to expire to the end of 2008 at in place rent that are below current market rents, which may lead to some rent roll ups in the future. But these roll ups are expected to be offset by some occupancy declines in other markets. For example, we are expecting occupancy decline by around 4% during the second quarter of 2008 in our Philadelphia market because of the Comcast vacating their space in April.

As I discussed earlier, this past Tuesday, we announced the sale of 48 Medical Office, Clinic and Biotech Lab buildings with 2.2 million square feet for $565 million. The sale is schedule to close in phases throughout the next year, with the first closing scheduled in August for $113 million, another $207 million schedule to close prior to year end and the remaining $245 million schedule to close in the first four months of 2009.

Also the timing of the sales maybe accelerated by mutual agreement of both HRP and Senior Housing. These properties are located throughout the country. We have owned them for an average of nine years. The sale represents about 6% of our existing portfolio and the sale will not result in any meaningful changes and any of our operating metrics on a companywide basis.

As a result of this sale, we will be exiting the Medical Office, Clinic and Biotech Lab market. However, we will continue to own 45 properties with 4.6 million square feet, which have principally leased to tenants and medical related businesses are generally not used for Medical Office, Clinical or Biotech Lab purposes.

As I said previously, we anticipate using the proceeds from the sale over the long-term to take advantage of current favorable market conditions, the purchase properties at higher cap rates than the properties being sold.

A good example of this is our first quarter purchase of one of the best Class A office towers located in Cleveland, Ohio with 878,000 square feet of space for about $124 million. These properties over 90% occupied with almost half of the building leased to a national law firm for over 10 more years. We purchase this high quality asset and a cap rate of over 9% and as a result of recycling capital from the announced sale of properties, this purchase is expected to be accretive to FFO per share in the future.

Also as of today, we have one other property under contract to purchase for price of $53 million. Obviously, the closing of this acquisition is subject to completion of diligence, we may or may not occur for variety of reasons. Looking forward, we continue to believe that our FFO per share is likely to decline by at least one penny per share in the second quarter of 2008.

This temporary decline relates to loss of rent in Philadelphia, resulting from Comcast vacating in April and getting the space ready for new occupancy later in the year. We also expect in order to maintain our FFO per share in this weakening market environment, the capital expenditures may increase in the remaining quarters of this year.

Nevertheless, we anticipate overall continued improvement with our payout ratio in the future. Even though it appears the economy is slowing and office fundamentals are weakening in 2008, HRP is still well position in the market place. We currently enjoy high occupancy rate, long remaining lease terms and among the highest credit quality tenants in the entire office REIT sector.

As a result our cash flow and our dividend payments are very secure and our stock represents a great defensive income oriented investment in today’s environment.

I will now turn the call over to John Popeo our CFO.

John C. Popeo - Treasurer and Chief Financial Officer

Thank you, Adam. Looking first to the income statement, rental income increased by 5% and total expenses increased by 8% during the first quarter of 2008. The year-over-year quarterly increase in rental income, operating expenses and G&A expense reflects properties acquired between January 2007 and March 2008 partially offset by the decline in occupancy and same-store NOI.

Depreciation and amortization increased by 11%, reflecting properties acquired and to a larger extent depreciation and amortization related to building and tenant improvements. Our consolidated NOI margins were 60.5% for the first quarter of 2008 and 61% for the first quarter of 2007. Current quarter EBITDA increased by 3.6% from the same period last year, primarily reflecting property acquisitions since December, 2006.

Interest expense increased by 12.3% reflecting property acquisitions. Net income available for common shareholders for the first quarter of 2008 was $14.7 million compared to $17.7 million for the first quarter of 2007. The decrease reflects depreciation and amortization related to building improvements and leasing costs incurred since December 2006, and the decline in occupancy partially offset by the reduction in preferred distributions on $125 million of Series Billion preferred shares redeemed in November 2007, and earnings from properties acquired since December 2006.

Diluted FFO available for common shareholders was $0.27 per share for the first quarter compared to $0.27 per share last quarter and $0.28 per share for the prior year. The year-over-year decrease primarily reflects the decline in occupancy and same-store NOI, partially offset by the reduction in preferred distribution and earnings from properties acquired since December 2006.

As mentioned before FFO per share in the second quarter of 2008 may temporarily decline by at least $0.01 per share as we transition the space lease to Comcast in Philadelphia. Of course the 2008 estimates are not guarantee to occur and maybe lower than expected.

In April 2008, we declared a dividend of $0.21 per share, which represents 75% of our first quarter FFO. Our Board considers the dividend level on a quarterly basis and they are comfortable with this current payout ratio.

During the quarter, we spent $9 million on tenant improvements and leasing costs and $2 million or $0.03 per square foot for recurring building improvements including lobby and [inaudible] renovations, elevator upgrades, and other capital projects throughout the portfolio. Combined CapEx declined by more than 40% from the same quarter last year. We paid $3 million on development and redevelopment activities during the first quarter.

Turning to the balance sheet, on March 31st, we have $32 million of unrestricted cash, the $4 million increase in rents receivable reflects straight line rent accruals and seasonal expense recovery accruals during the quarter. Rents receivable includes approximately $162 million of accumulated straight line rent accruals as of March 31st. Other assets include approximately $93 million of capitalized leasing and financing and cost.

On March 31st, we had $508 million of floating rate debt, $364 million of mortgage debt and $2.1 billion of fixed rates senior unsecured notes outstanding. The weighted average contractual interest rate on all of our debt was 6.1% at the end of the quarter and the weighted average maturity was 6.2 years.

We prepaid $29 million of 8.5% mortgage debt in January 2008 and at no other debt maturing in 2008 or 2009 and only $50 million of senior notes maturing in 2010. Our senior unsecured notes are rated BAA2 by Moody’s and BBB by Standard and Poor’s. The book value of unencumbered property pool totaled $5.7 billion at the end of the quarter.

A secured debt represents 6% of total assets and floating rate debt represents 17% of total debt. At the end of the first quarter, our ratio of debt to book capitalization was 50%. Our EBITDA and fixed charge covers ratios were 2.7 times and 2.1 times respectively. As of the end of the first quarter, we were comfortably within the requirements of our public debt and revolver covenants. As of the end of the quarter, we had $308 million outstanding on our revolving credit facility with $442 million of additional borrowing capacity at a current interest rate of less than 3.5%.

In summary, we think this quarter produced good results in light of a difficult market environment. We also think that the combination of an improved pay out ratio in our efforts to recycle capital into accretive acquisitions a two important steps for our company, which may better position HRP in the market place going forward.

We continue to believe HRPT strong tenant base, limited near-term lease expirations, strong balance sheet and current annual dividend yield of almost 12% make HRPT a logical choice for long-term income oriented investors.

That concludes our prepared remarks. Operator, we are now ready to take questions.

Question and Answer

Operator

Thank you very much. [Operator Instructions]. The first question is from Michael Bilerman from Citigroup. Please proceed with your question, sir.

Michael Bilerman - Citigroup

Hi. Good morning. Alan is on the phone with me as well. Adam, maybe you can just walk through the decision of selling the assets and then using the proceeds to go out and by new assets. How did you evaluate your payout ratio on a cash basis about 145% currently? How did you think about perhaps paying at a special dividend reducing the come in to get your payout ratio in line with peers just more towards 90% versus going out and just redeploying into acquisitions?

Adam D. Portnoy - Managing Trustee

Sure, Mike. There is a lot there. Well, first of all we’ve thinking about dispositions for sometime at the company over the last year and half and we’ve been thinking about what was the best portfolio to think about selling and at the same time the credit markets deteriorated and asset prices also deteriorated.

So, we thought about what to sell it seem that portfolio was likely to going at the most the highest prices in the marketplace would seem to be our Medical Office buildings and it seem to be part of our portfolio that. We didn’t think we were getting much credit, where in the marketplace and at the same time by selling them, we didn’t think, which going to have material changes to the overall metrics of our company. And once we decide on selling it, it became pretty obvious that the logical buyer that was likely to pay the most part because they had something else to be gained besides just buying assets, where Senior Housing Properties Trust. So, that’s primarily how the transaction came about.

And why we decide to use it to the cycle capital I think initially what we are planning on doing is using most of the proceeds to repay debt and de-lever the company and over time we’ll redeploy it then into higher accretive acquisitions. And I think the reason the company and management is focused on that, is I think the Board and Management are confident that we are going to be able to get the payout ratio under control, just by making some operational changes. I know you’ve been following the company for sometime and others on the call have been too. I think it’s important to recognize that one quarter does not make a trend, but this is the first quarter that in the 16 quarters, where we are generating a cash flow in excess of our dividends.

And you’re right, if you look at just the last four quarters combined, where the fourth quarter only right, it’s well and excess of 100%. But I think just normal operating changes and some adjustments we are making in the field throughout our regions we’re going to be only get the payout ratio under control without the need to make any sort of dividend cut. And I’m very confident about that aspect. I’m very confident we’ll be able to do that actually.

And so that’s primarily what the Board’s being considering, in a way we thought about the acquisition, we think we got the payout ratio, we’re going to get it under control, and we look at this sales is very opportunistic and as a way to initially de-lever the company, but also take advantage of this market environment. Because we’ve been honestly being able to look at some very interesting acquisitions, that have been priced at very attractive prices, this acquisition in Cleveland, I know its Cleveland and people say, well that’s not a great market to be, but if you’re going to be in Cleveland, you are owned the best building in the market. And we really did buy, what I would call one of the two best buildings in the entire market. It’s one of the newest buildings. It’s one of the nicest by for Class A1 in Cleveland. It’s got some of the best tenants in the marketplace as tenants in the building so, we are able to buy that building in over a 9% cap rate. And so, I think that’s the way the Board looked at it and I think it’s going to create great value for shareholders and stakeholders in our company over the long-term.

Michael Bilerman - Citigroup

And Adam you talked about the trend of genesis of the transaction, you talked about it from HRP’s perspective of thinking about doing dispositions and determining what’s the best portfolio or of assets within the company should be sold and it sounds that you had come to decision that medical office portfolio was the one to be sold then you approached the sister company in that case?

Adam D. Portnoy - Managing Trustee

No, it always mutual. I mean honestly SNH, the Senior Housing had been for a couple of years Senior Housing as wanted to get those assets because many of the investors in that company…that company has been hampered by it’s inability to expand into the Medical Office space, where many of it’s peers have been able to do it.

And so it had a desire, to expand into that space and so it was mutual. I mean, I don’t who approached. The idea had been kicked around for some time and then…I can tell you from HRPT’s standpoint, we stepped back and before we decided that this was the right thing to do. We obviously step back and said, it is the right portfolio generally. And it was our view, it was and it was our view they are approaching working with SNH made the most sense, because SNH they had the incentive to pay the most for the properties because they were getting something besides just these properties.

They were getting the ability of a release of a covenant and for everyone’s benefit, you may not know, what’s going on…what I’m talking about, Senior Housing Properties Trust would spun out of HRPT in late ‘99. And when we spun it out, we subjected that company to a covenant that said they were prohibited from investing in Medical Office buildings. If those types of assets would state HRPT and HRPT would invest in those assets.

And so we were releasing Senior Housing from that covenant. So, it made sense that they had the most to gain and we will be willing to pay the most for the released for those assets because they were getting something in addition to it.

Michael Bilerman - Citigroup

Right, so you felt going out and sort of broadly doing a broadly market that are offering versus the appraisal in terms of setting the price, but that was from an HRPT perspective, the best that HRP shareholders can do?

Adam D. Portnoy - Managing Trustee

We felt, yes. We also felt that was important to…we felt the time was also important and we also want to have some certainty of closure in this environment. And it is our view that…

Michael Bilerman - Citigroup

Isn’t our financing contingency on the second half?

Adam D. Portnoy - Managing Trustee

There is contingency about, yeah just under half of it. But we also…that’s correct there is a financing contingency on the second half, little less than half of that.

Michael Bilerman - Citigroup

All right. So, I am just trying to piece together, how you come to decision to sell it internally versus if HRPT had made the decision to liquidate and sell assets to fund your growth and get accretion up, why not go out and try the broadly market, just to make sure that you test the market to make sure that for HRPT shareholders you are getting the highest price possible. I misunderstand all the…

Adam D. Portnoy - Managing Trustee

No, I understand. Look I…because back to again speed…getting the deal done as fast as possible because we all, there is an advantage to the fact that both companies are being advised and managed by RMR and that is that our day-to-day basis the properties management doesn’t change. And so there is, we have a very high degree of confidence that the SNH could be able to move quickly in terms of reaching agreement.

Once we reached the negotiation and the entire negotiation, which I was not part of and nobody… no senior, nobody in our model participated in. It was all done between the independent directors of HRPT and SNH and I can tell you that, there were long and tedious negotiations that took place. And I feel very good that 7.1 in this marketplace is a very good price. I mean when we did the appraisal we also looked at what other properties we are selling at in this environment and not looking what properties we are selling in 2007 or 2006.

We are looking for what properties we are selling by today and is our view…we think this is a very aggressive price. We think it’s a very good price…Mike its not also [unheard] of in a capital constraint market…to go, to do separately negotiate transactions. There are not a lot of groups.

When there are some, but there are not of lot of groups, we could approach that we feel confident could close on this transaction quickly and that we have confidence they would close.

Michael Bilerman - Citigroup

But no and this is helpful just trying to understand…what happened behind the scenes it sounds like there was one appraisals or wasn’t like both boards got an appraisal, you sort of take the mid-point of both appraisals that was…

Adam D. Portnoy - Managing Trustee

No, actually there was one appraisal, but it was done jointly by independent directors of both Boards. There was a special committee formed of just the independent directors from each company. They hired independently an appraisal. There was range provided for the appraisal of values and I can tell you that the purchase price that was decided on was the high-end of that range what the appraisal gave us and the reason it was the high end. Is HRPT and the Independent Directors of HRPT really felt the most important thing they should be seeking was price and we also felt that and I think the SNH Board, I think we willing to pay at the high end of the appraisal, because there were getting something besides just the building.

Michael Bilerman - Citigroup

Right.

Adam D. Portnoy - Managing Trustee

And we’re getting an intangible value, intangible assets in the sense they can now go out and buy Medical Office buildings.

Michael Bilerman - Citigroup

Right, and just from the Independent Board Members, there is one a common Independent Board Members did he refuse himself and it was…

Adam D. Portnoy - Managing Trustee

He recruits himself. There was only…

Michael Bilerman - Citigroup

Two on the side.

Adam D. Portnoy - Managing Trustee

Yeah, there was only two…from HRPT side it was Pat Donelan and Bill Lamkin and on the SNH John Harrington and Frank Bailey.

Michael Bilerman - Citigroup

Okay, great. Thanks for all the color. I appreciate it and I think the best questions best on call.

Adam D. Portnoy - Managing Trustee

Thanks.

Operator

Thank you very much. The next question is from John Guinee with Stifel. Please proceed with your question.

John Guinee - Stifel Nicolaus & Company

Hi, gentlemen.

Adam D. Portnoy - Managing Trustee

Hi, John.

John Guinee - Stifel Nicolaus & Company

Hi, few quick questions on this building you bought in Cleveland. It looks to me like you’ve got it about 870,000 or 880,000 square feet on your acquisition page. CoStar has it about 820,000 square feet and then you’ve got it at 797,000 square feet on page 32 under your square foot lease. How big is the building on a net rentable area?

Adam D. Portnoy - Managing Trustee

878 John, in square feet leased, is just that square feet leased. So, I mean there is, that building is not 100% occupied.

John Guinee - Stifel Nicolaus & Company

Got it, okay. When you are out there buying in Cleveland or I guess you’re about to do a deal in Milwaukee, who else is bidding out there? I appreciate, the competition, I can’t imagine there is no, it’s a long list of people

Adam D. Portnoy - Managing Trustee

Yeah, I think you would be surprised. I think, they are still long listed there is local players. There is still private equity money, smaller funds. There is still some REITs playing. I mean I think you would be surprised the list is pretty long. We are not the only group looking at these assets.

John Guinee - Stifel Nicolaus & Company

And then the last question. You are at somewhere between 91%, 92% occupied now. What’s your…when you gave your implicit guidance? What’s your expectation on occupancy between now and the end of 2009?

Adam D. Portnoy - Managing Trustee

At the end of 2009, I am more comfortable talking about, where we might be at the end of 2008.

John Guinee - Stifel Nicolaus & Company

Okay.

Adam D. Portnoy - Managing Trustee

But 2008, I think you are going either end up right about where we are or little bit less. I don’t think, 91% maybe at the end of the year around there. And really 2009, depends too much on, what’s going to be going on in the economy in different markets. But I feel much more comfortable talking about, where we are going to be at the end of 2008.

I think we are…we somewhere between 91% and 92%. Probably on the lower end of that range as well I think will be at the end of the year.

John Guinee - Stifel Nicolaus & Company

Okay. Thanks a lot.

Adam D. Portnoy - Managing Trustee

Yes.

Operator

Okay. Thank you very much. [Operator Instructions]. The next question is from David Cohen with Morgan Stanley. Please proceed with your question.

David Cohen - Morgan Stanley

Hey, good morning.

John C. Popeo - Treasurer and Chief Financial Officer

Good morning, David.

David Cohen - Morgan Stanley

Just want to follow-up on the transaction again. Can you just reconcile you have on the SNH, press release you had a GAAP cap rate of 7.9%. How is that compare to the 71 is that a forward looking, it was your press release cash base, what was the difference?

John C. Popeo - Treasurer and Chief Financial Officer

Sure. Thanks for the question. It’s above current in place numbers meaning that NOI being generate today. The difference is on the HRPT press release that’s cash and on the SNH press release that is the GAAP rate that SNH will realize from the transaction including straight line rents. That it get included in GAAP for an income statement purposes.

David Cohen - Morgan Stanley

When you look on a forward basis, what would that cap rate. What with those cap rates look like?

John C. Popeo - Treasurer and Chief Financial Officer

If for 2008.

David Cohen - Morgan Stanley

Yeah.

John C. Popeo - Treasurer and Chief Financial Officer

From an HRPT, what we expect to those properties to generate about 72.

David Cohen - Morgan Stanley

Okay. And just want to be clear, are you guys now restricted from buying Medical Office. Did you switch or was that?

John C. Popeo - Treasurer and Chief Financial Officer

Yes, we are now restricted, that’s correct.

David Cohen - Morgan Stanley

And why did you guys…I guess that just to avoid the complex with SNH then?

John C. Popeo - Treasurer and Chief Financial Officer

That’s right.

David Cohen - Morgan Stanley

And then on the additional 45 building is that they SNH has a right to buy first I mean why was there a decision to include that in this type of transaction?

John C. Popeo - Treasurer and Chief Financial Officer

Sure. Again it’s not we bought it first, there was a lot first refusal. If we decide to sell them and we get offers then they have the right to match. The reason that was included and again this was negotiation between the independence. In my understanding of what happened was in exchange for getting going to the higher end of the range that was presented by the appraisal SNH want it something else beside we lease of the covenant and the Independent Directors decides the other thing to give them was the write a first refusal on those building. So, again remember it’s only if we decide to sell them they may get the right to buy them, if you go and switch it off, that’s all.

David Cohen - Morgan Stanley

And what is your desire to eventually sell those buildings?

John C. Popeo - Treasurer and Chief Financial Officer

Short-term I don’t think there is a desire to sell them. Short-term I can’t speak. Long-term, what happens in 2009 or 2010 I can’t speak too. It depends on higher the performance of HRPT…how success we are recycling this capital and reducing leverages result of it and creating improvement for our company at HRPT will dictate whether or not we think about this type of transaction going forward again. So, we want to see how this plays out in the next few months and then whether or not that group of properties would be the few group of properties that HRPT would eventually decide to sell I don’t know.

David Cohen - Morgan Stanley

And if given their letter of refusal is that prohibit you from actually going on and kind of finding doing it auction to find highest bidder and allowing SNH to match that or would it mean that you specifically have to offer it to them first?

John C. Popeo - Treasurer and Chief Financial Officer

No, no. It’s you go out and get the highest bid and then they get the match.

David Cohen - Morgan Stanley

Okay. And then just want to talk to you had higher lease term fees, can you just talk about …what you are saying in terms of bankruptcies, where do that lease term fee come from…what you’re expecting going forward there?

Adam D. Portnoy - Managing Trustee

Go ahead John.

John C. Popeo - Treasurer and Chief Financial Officer

Lease term fees amounted to around $1 million during the quarter in total. Little less than half of that came from Philadelphia it was not a significant, it wasn’t a large space. It’s not really a trend we’re seeing I mean. We don’t really have a run rate for termination revenue, but if once right around $300,000 or $400,000 per quarter is not unusual, the balance of the lease termination revenue was in the other markets.

David Cohen - Morgan Stanley

Okay. And when you report your same-store results it was like minus 2%. Is that include or exclude lease term fees?

John C. Popeo - Treasurer and Chief Financial Officer

It includes it.

David Cohen - Morgan Stanley

It includes it. So, you would have been more like minus 2.5 without it?

John C. Popeo - Treasurer and Chief Financial Officer

Well, if you considered the fact that there was termination revenue in the prior year.

David Cohen - Morgan Stanley

Right.

John C. Popeo - Treasurer and Chief Financial Officer

The net impact is probably around $500,000.

David Cohen - Morgan Stanley

Okay. And then just you talked about Oahu being extremely strong, what was the decline in occupancy related to?

John C. Popeo - Treasurer and Chief Financial Officer

That was an occupied a tenant lease had terminated late in the quarter, so you’re really not going to see an impact, and if just a natural termination and we have a lot of significant interest in that space and we are petty confident will have that [re-let] and have something to announce next quarter.

David Cohen - Morgan Stanley

Right, thank you.

Operator

Thank you very much. The next question is from Philip Martin with Cantor Fitzgerald. Please proceed.

Philip Martin - Cantor Fitzgerald

Good morning, gentlemen.

Adam D. Portnoy - Managing Trustee

Hi, Philip.

Philip Martin - Cantor Fitzgerald

A lot of my questions have been answered. But first of all, what is the thought within HRPT to redeem your preferred the 8.75% preferred was some of the net proceeds from the sale to SNH?

Adam D. Portnoy - Managing Trustee

Yeah, it’s a great question. Few months ago, I would have said, absolutely we will take out those preferred rates, they are very high cost. I would say, it’s a little bit up in the air right now, what we are going to do and we are going to redeem he multi proceeds.

The reason, I say that is because the preferred market is suffered tremendously as a result of what’s going on in the credit markets, and high even though it’s at [inaudible] and $175 million of it. I don’t believe…

Philip Martin - Cantor Fitzgerald

To the place that [inaudible].

Adam D. Portnoy - Managing Trustee

The refinance today believe it or not, I think would be 9% in today’s market. And so we could take it out, and just replace it with debt. And that’s one option and maybe as a result of all this we will do that. But, we used to typically look at preferred usually refinancing and I and others like it preferred and hopefully at the lower cost. But right now that option is not really open to us. So, the answer is, a very good question and the jury is out. And I can’t tell you exactly which way we are going on it.

Philip Martin - Cantor Fitzgerald

And I guess from your commentary it sounds like your acquisition pipeline is producing some pretty good opportunities at or above 9%. So, I am just looking at ways for this to be accretive and I now its stays over the next year and well [Inaudible] year. So, it gives you some flexibility, but my question just…with respect to the transaction being accretive and how potential accretive it could be.

Secondly, in terms of your portfolio and this is answered as a bit earlier I believe, but in terms of tenant retention going forward, I mean that appears where in period of economic slow down certainly as weaker out there. But as you talk to your tenants then you look at your portfolio is that fair to say…is that the portfolio still better able to whether these economic downturns better than most because of the tenant base, significant government, healthcare, etcetera, which the healthcare portion is diminishing, but what you’re selling these healthcare assets, how does that impact your portfolio and it’s ability to whether these downturns better than some of your peers?

Adam D. Portnoy - Managing Trustee

Okay. I think it’s on the portfolio, will not have much impact on our overall metric and sense so how we think about our portfolio. When we go out in the market, when we talk about our secure portfolio, which is government lease buildings and investment grade rated companies and other large publicly traded companies and good credit tenants like law firms and accounting firms and consulting firms.

It really…it’s a little weaker because Medical Office building you right. They do tend to regular renew, but it’s very, very small change. And I still think that the company is very, very well positioned to whether downturn and I think that’s when evidenced by the renewal rates we are seeing. I mean generally speaking, whenever there is a slowdown tenants typically renew rather than go look for new space because it’s cheaper to do that.

And that’s not only different in our portfolio maybe in another portfolio, what’s different in maybe our portfolio from others is that we don’t have a lot of tenants and I think I am worried about going bankrupt or disappearing. We have a lot of consistent tenants that I think a very high credit quality that will likely renew and likely renew at the same square footage that they are currently leasing.

So, I still feel very good about the portfolio and I think in the press release we stuck, we put on last Tuesday we had a some attachments to, when we have talked about, we look at the portfolio and we broke down the different aspects of that and really hasn’t changed much as a result of selling these Medical Office buildings. One good metric to look at it occupancy, I think occupancy if you pro forma for the entire sale of the all the buildings goes down by two tens of 1% or 20 basis points on a companywide basis that’s not a meaningful change in my view.

Philip Martin - Cantor Fitzgerald

Okay perfect. Okay, thank you for your answers.

Timothy A. Bonang - Manager of Investor Relations

Welcome.

Operator

Thank you very much. The next question is from Ian Weissman with Merrill Lynch. Please proceed.

Ian Weissman - Merrill Lynch

Hi, good morning. Most of my questions have been answered, but can you guys talk about a little separate, the demand drivers between your CBD and suburban markets and you talked I think actually had pretty bears [ph] comments about the office market in general, but maybe if you can compare and contrast it to?

Adam D. Portnoy - Managing Trustee

Sure. I think it’s generally even in our CBD’s it’s weaker than it has been, it’s been trending down. We actually don’t see a big difference I mean the one of the image is having a large portfolio, what we do in many different markets and difference types of markets. When I can point to you to some suburban markets that are doing really well and I can point you to some CBD’s are struggling.

So, I think overall, there is no real. I have not noticed the trend what say the CBDs are doing better or worse and what’s going on in suburban markets. I have not noticed that because I can point a three or four, I can point some CBDs they are doing well. I can point to some suburban markets that are doing well.

I mean, well again we don’t own property in some of the larger gateway cities. We don’t own much and we don’t own anything in New York City. That could be a different world and what’s going on the rest of the country. We don’t own anything in market like San Francisco that could be a different world and what’s going on.

But we do own the last stuff in southern California, in Los Angeles, in San Diego and I can tell you San Diego market…some of the infield urban areas of the San Diego market not the outline areas are experiencing a lot of weakness. Surprisingly, for some reason and I haven’t quite figure out, why it, but our up state New York, Syracuse portfolio, which is extremely suburban is doing very well right now. And that could be what’s going on in specific market dynamics in Syracuse.

In other market, Memphis it’s a small market, but we own buildings right in the middle of the CBD and they are good buildings. I can tell you that the CBD is doing much worse there than the suburbs around Memphis, suburbs are much stronger than the CBD. So, it really, it depends where you are…I’m going to turn this in to a positive for HRPT, which is that we benefit because we are very diversified and so luckily we’re not concentrating in any one area that and as a result of that, we don’t get penalized for weakness in that one specific area. So, that’s what we are seeing.

Ian Weissman - Merrill Lynch

When you buy an asset like in Wisconsin where you have really no presence or this Cleveland asset, just walk me through the sort of the underwriting, what type of unlevered IR are you assuming in your model?

Adam D. Portnoy - Managing Trustee

Well, low teens

Ian Weissman - Merrill Lynch

Low teens with no rent growth or…?

Adam D. Portnoy - Managing Trustee

A little bit of rent growth, but again, buildings we are buying don’t have a lot of role. So, we’re not… I think it’s fair to say we are very conservative on our underwriting. We don’t anticipate… we don’t buy buildings that have a lot of role, and we don’t just pay it. But even though the Cleveland building is 90% occupied, we underwrite it at 100%. I can guarantee you we underwrote it that it would stay at 90% and once we go and take this to keep at 90%.

Ian Weissman - Merrill Lynch

Okay. Thank you very much.

Adam D. Portnoy - Managing Trustee

You’re welcome.

Operator

Dave, thank you very much. [Operator Instructions] The next question is from Charles Place with Ferris, Baker Watts. Please proceed.

Charles Place - Ferris, Baker Watts

Good morning.

Adam D. Portnoy - Managing Trustee

Good morning. How are you doing?

Charles Place - Ferris, Baker Watts

Just a little housekeeping items. How much was raised this quarter in your stock program?

Adam D. Portnoy - Managing Trustee

None, zero.

Charles Place - Ferris, Baker Watts

The shares has increased to a couple of million over yearend. Was that just… what accounted for that on the diluted basis?

Adam D. Portnoy - Managing Trustee

Well, we did…

Charles Place - Ferris, Baker Watts

You did some in the fourth quarter.

Adam D. Portnoy - Managing Trustee

Yeah, we were raised equity in the fourth quarter.

Charles Place - Ferris, Baker Watts

Okay. I apologize for that. Secondly, are these… the assets… the healthcare assets, are they going to be reclassified at discontinued operations in the second quarter?

Adam D. Portnoy - Managing Trustee

I am looking at John. In the second quarter, we are going to classify the MOBs as discontinued operations.

John C. Popeo - Treasurer and Chief Financial Officer

Yes.

Adam D. Portnoy - Managing Trustee

Yes.

Charles Place - Ferris, Baker Watts

Okay. So that will fully be reflected there?

John C. Popeo - Treasurer and Chief Financial Officer

Yes.

Charles Place - Ferris, Baker Watts

And you talked about how the Boston vacancy and the Comcast move out is going to impact second quarter by about a penny. Is it where you sit right now, Adam? When you look at the marketplace, do you think that’s a one-quarter phenomenon or is that something that might drag into the second half of ‘08 as well?

Adam D. Portnoy - Managing Trustee

We believe where we sit right now that that’s one-quarter phenomenon.

Charles Place - Ferris, Baker Watts

Okay. That’s all I had on mind. Thank you.

Operator

Thank you very much. The next question is from David Rodgers with RBC Capital Markets. Please proceed.

David Rodgers - RBC Capital Markets

Hey, Adam, really quickly, I was hoping… I didn’t get all the numbers down. If you could run through the timing of the sales of the medical office a real fast as well as talk about if you provided or would consider providing any seller financing, particularly on the contingency part of the second half of that sale?

Adam D. Portnoy - Managing Trustee

Sure. It’s $113 million scheduled for August, 207 scheduled between August and the end of the year, $245 million scheduled in the first four months of 2009. I never say never, but it’s not something we are currently contemplating in terms of providing seller financing.

David Rodgers - RBC Capital Markets

Okay. And the second question related to, I guess, the accretiveness or dilutiveness of the transaction with John talking about near-term debt at about 3.5% rate looking at those transactions for the second half of the year, I guess could you give us some comfort with how big your acquisition pipeline might be today such that those wouldn’t have an impact or an operating impact this year?

I understand long term, obviously, the goal is to get the proceeds reinvested, but trying to kind of gauge the impact of this year.

Adam D. Portnoy - Managing Trustee

Yeah that’s part, that’s one of the advantages of staging it over time, is that we hope and that what I believe that we won’t have a period where we will be able to match, fund it as we go along in terms of reinvesting. Hopefully there might be some periods of short-term debt repayment, but we don’t believe it’s going to result, today we don’t believe its going to result in any short-term dilution, because of the timing now. On hedging because it could depending on what happens and how the rest of the year looks, but it’s our hope that we can turn it pretty quickly, then we’ll have no negative impact and hopefully only turn it into positive impact going forward that’s our hope.

David Rodgers - RBC Capital Markets

Within your acquisition pipeline, I guess what you are looking at today in terms of deals would be sufficient or is it sufficient volume to be able to do that?

Adam D. Portnoy - Managing Trustee

We are seeing significant... we’re looking at a lot of things, I am hopeful that that will happen. I can’t guarantee that we will be able to close. I am not going to change our underwriting standards just so I can make sure, I can turn this into a, just a week and recycle the capital quickly. I want to really take advantage of the marketplace and buy good assets at good prices and so we’d maintaining our discipline on the buying side.

So it’s tough to give an answer rather than to say that, I think we’ll be able to do it, and I am hopeful but you should understand we do look at a lot of stuff. I mean, any one week we could look at, anywhere from two to half a dozen opportunities in one week. And we are keeping our underwriting very disciplined in this market, because we think it’s a market to be disciplined in. So assuming we get some other... assuming we start winning some of those bids and our conservative underwriting then I think it would be easily done, but I don’t know, if it’s going to happen. I’m trying to be... give you a real answer.

David Rodgers - RBC Capital Markets

Fair enough. Thank you.

Operator

Thank you very much. The next question is from Jamie Feldman with UBS. Please proceed.

Jamie Feldman - UBS

Thank you, good morning.

Adam D. Portnoy - Managing Trustee

Good morning Jimmy.

Jamie Feldman - UBS

What kind of fees will RMR get for any kind of transaction between the two companies?

Adam D. Portnoy - Managing Trustee

Thanks for asking the question, there is absolutely zero benefit to RMR from this transaction, zero. The fees that RMR currently collects from HRPT for these properties is an asset management fee based on its historical book value of those properties that were owned by HRPT. The fee that SNH will pay on those properties will be based on HRPT’s historical cost, not the new acquisition cost, so there will be no increase in fees that RMR generates.

RMR also generated a 3%... RMR [Inaudible] receives a 3% management fee for managing those properties, you will see that in the operating expense line. That will also occur at SNH but as a result of this there will be no change in the cash flow generated from these properties to RMR as a result of the transaction. And I should also point out there is no transaction fee, there is no acquisition fee, there is no disposition fee, nothing, there is absolutely zero economic benefit to RMR from this transaction.

Jamie Feldman - UBS

Okay. And then certainly the sale of assets is a bit of change in strategy for you guys. Can we expect more of this going forward? I know you mentioned more of medical office but are you going to take at a deeper dive in to the portfolio here?

Adam D. Portnoy - Managing Trustee

We could I won’t anticipate large asset sales in the remainder of this year. As I look out, for the rest of 2008. I don’t... we are not currently planning on any other large assets sales. There could be some other smaller assets sales. But any larger ones, for the remainder of this year. But again, things could change and I don’t know what 2009 and 2010 may bring.

Jamie Feldman - UBS

Okay and then finally can you just give us an update on how valuations and cap rates have moved? Maybe your Suburban markets for sure CBD markets?

Adam D. Portnoy - Managing Trustee

Again, in all of our markets both CBD and Suburban. I feel confident to saying cap rates have moved a 100 basis points. Its a pretty fair statement at minimum. Some, I have seen things trade that we have won, and things trade that we didn’t win. But at much higher cap rates spent I thought they would have traded at a year or two ago. So, I think at least a 100 basis points across the board where we are operating.

Jamie Feldman - UBS

And then what’s the most severe change you have seen?

Adam D. Portnoy - Managing Trustee

Well places like, we are not buying in this market. But Detroit is a market that things are well into the... they probably move 200, 300 basis... 400, 300 basis points. I mean there has been a big move. You’ve got to convince someone to buy properties in some of those markets.

Jamie Feldman - UBS

And Cleveland is different?

Adam D. Portnoy - Managing Trustee

Cleveland, what we have noticed. Yeah Cleveland is different. It’s got different drivers going on in Cleveland than you do in Detroit. Detroit is really... of all the markets we operate in, and all the markets we see, I think it’s fair to say the toughest economic area, that we are operating is Detroit, in the Detroit metropolitan area. It’s really… it’s may I know if you’ve been there recently, but you drive down the street and one in four homes is vacant and foreclosed... I mean it’s very… there is lot of office. It’s sort of frightening.

Jamie Feldman - UBS

Okay. Thank you.

Adam D. Portnoy - Managing Trustee

Yeah.

Operator

Okay. Thank you very much. And the last question is from David Shapiro with Aegis Financial. Please proceed.

David Shapiro - Aegis Financial

Hi guys.

Adam D. Portnoy - Managing Trustee

Hi David.

David Shapiro - Aegis Financial

Quick question were there any third party commissions associated with the sale outside of RMR or now?

Adam D. Portnoy - Managing Trustee

Only the payment of the appraisal fee.

David Shapiro - Aegis Financial

Okay, just the appraisal.

Adam D. Portnoy - Managing Trustee

Just the appraisal.

David Shapiro - Aegis Financial

Okay. And then on the structure of the transaction here, whether anything outside of those three mortgages I think that were mentioned that were any other mortgage that was associated with this transaction was the rest sort of revolver back?

Adam D. Portnoy - Managing Trustee

There is no other mortgages that are moving with the transaction other than those... than those three. So you are…

David Shapiro - Aegis Financial

Okay.

Adam D. Portnoy - Managing Trustee

Yeah.

David Shapiro - Aegis Financial

Okay. And then on the Cleveland property that 9% cap rate, was that a GAAP cap rate or was that more like the cash cap rate that you associated with this transaction?

Adam D. Portnoy - Managing Trustee

That’s GAAP cap rate, based one what we are going to recognize including straight line rents.

David Shapiro - Aegis Financial

Okay. And you talked about adjustments to lift FFO besides selling lower cap rate investment some recycling to higher cap rate. What other adjustments were you talking about?

Adam D. Portnoy - Managing Trustee

I think what you are talking is the... just making an effort to reduce our capital expenditures and specifically with regards to leasing. That’s what I was talking about. Our efforts at trying to drive cash flow at our properties for long-time HRPT was very focused on maintaining high occupancy and that worked... really that worked for the company for a long period of time and I think about a year ago we made a strategic shift and really moved away from occupancy and focused much more on cash flow and that’s what I am talking about.

David Shapiro - Aegis Financial

Okay so you’re just going to examine the benefit of doing the investment a little bit more carefully at this point?

Adam D. Portnoy - Managing Trustee

That’s right, and I think if he lowers the company’s occupancy, I mean we are probably running at some of the lowest occupancy the company has been at in years and that’s a direct result of giving up some occupancy and some cash flow that would flow to FFO but we are also not spending... we are not doing those high CapEx or high tenant commission... high tenant improvement deals we are trying to stay away from them.

David Shapiro - Aegis Financial

So on the remaining medical portfolio the one that’s sort of first right of refusal. Are you thinking that similar cap rates would be applied on that, if there was a sale. I mean obviously the market may change somewhat, if and when that occurs but lets say here in today if that was to happen are we talking a similar type of range?

Adam D. Portnoy - Managing Trustee

Its probably a little higher I am guessing a little higher than what this went for. May I still think its probably less than nine, but its some where between seven one and nine, I mean that’s a pretty big range. But it’s a little more, medical office is very coveted investment class in today by many investors. And many of these medical office buildings were located next to or on hospital campuses and so those are considered to be very valuable to most investors. Now many of these buildings that are on the list of properties that we could sell and they would have or and SNH would have a right of first refusal, some of them are great, also great buildings and have their own reasons that I think people would pay a lot of money for them. But as an asset class generally speaking, I think people might... I think the industry, pundits in the industry would argue that, general medical office buildings command a little bit lower cap rate than I would say traditional office buildings.

David Shapiro - Aegis Financial

Okay, and then is there any consideration in to doing anything in the CMBS arena. Is there any portfolios out there that would be even more attractive than managing the actual buildings, certainly it would seem like the costs would be heck of a lot less?

Adam D. Portnoy - Managing Trustee

You’re talking as investments?

David Shapiro - Aegis Financial

Yes.

Adam D. Portnoy - Managing Trustee

Dave that’s a really good question. We have and I can tell you, it’s been a lot of time looking at that and what’s going on in the dislocation in the market. It is a long answer to this, but give the short, the short answer is we’re probably not... we’re not going to be making I believe any investments in CMBS debt. What is an interesting asset class for us and simply because you can get control of the entire asset might to look at some whole loans. There is a lot of investment banks that are sitting on whole loans that are backed by real estate.

The reason for that is because if there is a default or nonpayment, you can get control of the entire asset, when you are dealing with CMBS you buy a tranche even if you have some of the highest grade tranches, lets say AA or even A. You will probably will get your principal back, but you’ve got to have a strong stomach for withstanding perhaps not receiving some interest payments along the lines, because even if the lower tranches fail or if there is a sizeable amount of defaults in that portfolio. Even though your principal is probably secured you got to be worried about. You got to be cognizant the fact, that the service there has been right. To withhold interest payments as it pursues collection, of those lower... of those assets that defaulted in the lower tranches.

So simply because, just because the complexity of it and there are higher risks. I believe it’s involved in it, will probably shy away from any CMBS investments. And people are going to make an investment sort of as a result of what’s happened in the dislocation. We have looked at whole loans, that’s what we even looked at. And obviously we would only do something, if we felt that we are going to get a return... an outsized return for moving away from what is our core. But we would also do it because it there was a problem, we felt confident, we could actually get control of the asset. That’s what.

David Shapiro - Aegis Financial

Last question on paying down this debt here. Clearly, it seems like it’s going to the revolver at least in the near term. It seems given your conservative asset base, I’m speaking of the Government, the Medical and then the Hawaiian land, which is undoubtedly pretty darned secured the span age. What could be more accretive than buying back shares of your stock at these type of yield. Even if you adjust with the CapEx. A normalized CapEx, it seems like stock at this point is probably superior to almost any piece of property, that you could come up within the market today and given that you still have a very conservative investment base. I am just wondering what could be accretive than that?

Adam D. Portnoy - Managing Trustee

It’s very good question David and I am surprised it took me near the end of the call for someone to ask it. But we the management and the Board has considered very seriously, when our stock buyback makes sense. It’s our view that in the current credit markets in a current capital constrained environment that doing a stock buyback is not what we believe is the best interest of the company in the long term holders of the stock, but be it again over the long term.

As you said our initial use of the proceeds is to de-lever the company and I think that’s important for us. I think that is something that we are... that I think is something we are very focused on and then recycling the capital eventually into higher yielding assets to take advantage of this market environment and the dislocation in the office market, industrial market. We believe benefits the company and the stakeholders in the company over the long term the best.

I don’t want you to think that we’d never do a stock buyback. We have done them in the past, like in 2001 we did a stock buyback. So, it’s not that we have a phobia of it. But then we did a stock buyback and our experience was it gave a short-term bump to our stock and once the stock buyback program stopped the stock sort of settled back into where it was. I didn’t do very much to increase the stock price for shareholders over the long term. And so that is a factor that we think about when we think about doing another stock buyback program.

David Shapiro - Aegis Financial

Okay thank you very much and good luck.

Adam D. Portnoy - Managing Trustee

Thanks.

Operator

Great, thank you very much, gentlemen. The question-and-answer session has now concluded. I’ll turn the call back over to Adam Portnoy.

Adam D. Portnoy - Managing Trustee

Okay, thank you everyone for joining us on our call today and I look forward to seeing some of you at NAREIT in June thanks.

Operator

Ladies and gentlemen, thank you for joining the HRPT Properties Trust, first quarter 2008 financial results conference call. Today’s call has concluded. You may now disconnect.

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