Brandywine Realty Trust's CEO Hosts Analyst Meeting Conference (Transcript)

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Brandywine Realty Trust (NYSE:BDN) Analyst Meeting Conference Call June 26, 2012 10:00 AM ET


Michael A. Nutter – Mayor, City of Philadelphia

Gerard H. Sweeney – President, Chief Executive Officer and Trustee

George D. Johnstone – Senior Vice President, Operations

Howard M. Sipzner – Executive Vice President and Chief Financial Officer

Thomas E. Wirth – Executive Vice President, Portfolio Management and Investments

William D. Redd – Senior Vice President and Managing Director

Robert K. Wiberg – Executive Vice President and Senior Managing Director

H. Jeffrey DeVuono – Executive Vice President and Senior Managing Director – Pennsylvania

Unidentified Company Representative

Hey good morning, everyone. We are going to start and stay pretty much on schedule. We are expecting a guest to come in just a few minutes to give an overview of the city of Philadelphia, since the big part of the focus is that today.

So I’m going to start with some of my opening comments and we’ll lead that exciting forward-looking statement disclosure up there. But first of all, we’d like to thank everyone for coming in, we know you are very busy, we need to a lot of normal travel, spend time away through your family, so we really do appreciate all of you taking time from your schedule to come in.

We have very good presentation prepared today, it will run about two hours, you will hear from the folks you normally see at REIT, Howard, George Johnstone, Tom Wirth, myself but you all see here from our four Executive Managing Directors, who head up our four regional operations, give you really good flavor for what they are seeing happen in their respective market.

What our objective for today is to by the end of the presentation this morning, and then tour this afternoon to get you a real good window into the operational growth opportunities we have in front of us as a company, the financial discipline is implicated into our business plan and the growth opportunities we have through our investment strategy over the next couple of years.

So again we really appreciate you taking the time to come in. Before we get started, I just want to take a moment to introduce some of the Brandywine team that’s here today. And we will, as we always, will take the back row. So, and this is always like the church, no one sits in the front pew. So with that as a standard predicate, we have Howard Sipzner, our Chief Financial Officer, George Johnstone, our Senior Vice President of Operations, Tom Wirth, our Executive VP of Investments and Portfolio Management, Jeff DeVuono who is our Executive Managing Director of Pennsylvania operations, George Sowa, Managing Director of New Jersey and Delaware operations, Bill Redd who heads up our Austin and Richmond operations and Bob Wiberg who heads up our Washington D.C. operations. They will all be presenting today.

In addition, some other Brandywine executives, here is George Hasenecz, our Senior Vice President of Investments, George is right there, Gabe Mainardi, our Chief Accounting Officer, Charles [Wulff] who is one of our top financial analysts and works in our financial model, Brad Molotsky, our General Counsel and we also have, I just want to take a moment. Things like this don’t happen without a great deal of work. And I want to say you guys and ladies real high maintenance, but the logistics involved in pulling together an Investor Day, as you all know, takes a lot of time. So we’d like to specifically [gives cheers] to Marge Boccuti, our Head of Investor Relations for the great job she did organizing today with a really strong assist from Melissa (inaudible) our Head of Graphics, Design, (inaudible) and Marge who just did a great job in so many other [Powerpoint].

So with that, we’ll kind of move into the presentation. We’re going to do today the company overview that I’ll walk through; George will do an operations review; Howard will do a financial update; Tom an investment review. And then we’ll spend some time going through each of the regional operations against give you a sense of what we are looking at over the next couple of years, I have a couple of wrap up comments and then certainly the floor will be opened up for Q&A. But during any of the presentations, please feel free to raise your hands, and if you can’t see one of the numbers on the screen, I know the light reflecting here somewhat challenging at times, please raise your hands.

So I’m looking at the overall company review, most of you already know the story, watched the story and our game plans towards amplify those parts for you. But the real focus we have as an organization is from an operational standpoint the focus is clearly on dominant market share, quality sub market positioning, we think that drives both near-term value, but also long-term competitive advantage. And then as we phrase it a best of market infrastructure, which relates to our products, our people in the service platform that we have tenant to our entire asset base.

This gives you a little bit of a snapshot of Brandywine portfolio you can see we have 283 buildings, sold-out 32 million square feet including our joint venture properties. Our overall core portfolio of occupancy is 87%, which is on its past even higher numbers as we look at over the next couple of years. We are just shy of 89% leased. Then we’ve also showed in the far right-hand column, the revenue contributions. Now couple of interesting points, if you go back three and a half years, the revenue contributions from Philadelphia CBD was about 12%. We have more than doubled that in the last three and a half years through some of the acquisitions we’ve made downtown including this building right here.

In addition to that one of the other points of note is the New Jersey portfolio, which has been reduced from about 18% to 19% 3.5 years ago, down towards by about a third to about 12%. So with those two variables, we’re in a position where we now have this landscape for the company.

So let me break from the presentation for a moment, because it’s my great honor to introduce the Mayor of the City of Philadelphia. Michael Nutter is in his second term as Mayor, has been a great advocate for business growth in the city. Going back to his days of the Member of City Council, he has been a great friend to the business community, has focused very much on economic development, improving Philadelphia’s competitive platform, and he has done a marvelous job, navigating the city through some very challenging economic times.

And while the city is still in the mist of a budget review this year, he is trying to balance that with the budget of the Commonwealth of Pennsylvania. There is a lot of balls in the air, but he really has become a national advocate for both sustainability and economic development and that advocacy and that expertise has been recently recognized where he was just elected as the Chairperson President of the U.S. Conference of Mayors.

So in addition to his very pivotal role here in the City of Philadelphia, he will also have a very important seat in the national dialog on how this country can address major urban issues.

So with that, I would like to welcome the Mayor. Thank him for coming. He will make a few comments. Mr. Mayor, it’s mostly investors and analysts here, no reporters, but in our world, analysts are like investigative journalists, so it’s part of us, that’s great.

Michael A. Nutter

Gary, thank you very, very much, and thanks for the invitation, but also thanks for the investment in the city of Philadelphia, one of our largest building owners, property owners, 6.8 million square feet, 11 buildings and growing. And we’re very, very appreciative of you and what you do here on the business side. And then of course Jerry is also Chair of the Schuylkill River Development Corporation, which is helping us open new parks and create additional green space and more economic opportunity here in the city on the ground making Philadelphia helping us in our goal of number one Green City in the United States of America.

So for that and many, many other things, I want to say thank you to you and thank you for bringing all of these investors and analysts together here in Philadelphia and thinks for taking this building as well. My mom used to work here. I let her know that her former place is in good hand with the Brandywine.

Welcome to the City of Philadelphia and I want to thank all of you for being here this morning. This is a quite important for us given what you do, the outlook that you have, the decisions that you make, the influence that you have all across the country in terms of where people might want to invest. And I came on this morning to talk a little about my home town, the place that I love so, so very much and the opportunity for our business here in the city and certainly in the region.

To give you a little bit of context for Philadelphia, fifth largest city in the United States of America and we experienced population growth in the 2010 census for the first time in 60 years. And the one-year subsequent survey that’s done also showed continued growth about 10,000 more of Philadelphian after the 2010 census.

And it’s due to a lot of factors, one we’re holding on to more and more of the young people to come to Philadelphia, the Philadelphia region to get great education, 101 colleges and universities in the tri-state area. And we’ve seen population growth in that 25 to 34 year old sector.

Second, we are experiencing growth because many empty nesters in the suburbs, house is gotten too big kids are away, it’s not easier to be here in the city and many of those folks wanted to do spend a lot of time in Philadelphia anyway. Constantly, going through a restaurant, renaissance we, Philadelphia was rated one of the top 10 shopping destinations in the world by CNBC. And of course hospitality, tourism, art and culture, Travel and Leisure Magazine recently rated Philadelphia, the number one city for culture.

In the United States of America and that was before the barn is open, just a couple of weeks ago, which will be an international phenomenon for us. Hospitality is a great growth industry for us. We continue to pursue hotel development and we still need nearly 1000 new rooms from the hotel sector, because we doubled, virtually doubled the size of our convention center over on with the new North Broad Street entrance.

North Broad Street is a great area of growth for the City of Philadelphia, as well as our Waterfront, which we expect to have one of the best Waterfronts anywhere in the United States of America. We are also seeing population growth from immigrant communities we had a 50% growth in the Hispanic, Latino population here in Philadelphia going from a little over 8%, to now over 12% of the population as well as from African countries, Caribbean community as well as the Asian population growing in Philadelphia as well.

So, tremendously diverse city, and we feel that diversity is one of our strength here in Philadelphia with a commercial corridors all throughout our neighborhoods and of course a strong Central Business District.

Philadelphia, unlike many other cities, not only has great a commercial sector or retail sector in Center City that as I mentioned earlier, a great residential component. So, a lot of people live in Center City, and of course, they also walk to work, or by Philadelphia has the largest percent of folks who use cycling to commute to work with any major city in the country. On the business side, we’re trying constantly to create a more friendly business environment here in the city, notwithstanding the recession, like any of the city, we were hit pretty hard, but unemployment continues to come down. One of the strengths of our city of course, is education and medicine.

One out of five doctors in the United States of America gets training in Philadelphia or the Philadelphia area. So Penn, Temple, Drexel, San José, Jefferson all of those entities continued to grow, continued to invest top children’s hospital. Philadelphia recently rated this as the number one children’s hospital in the country. For instance, we will spend $5 billion between now and 2017, investing in the area over in the University City.

The University City area continues to grow and demonstrate strength. Certainly, Brandywine has contributed to that with the Sierra and the opportunities for Sierra South the conversion of the old post office down to the IRS center upgrades at the Amtrak Station, the new port area on market street, and that continues right out and pass the 40th street with the University City Science Center, the first one of its kind as the business incubator or science incubator in the United States and that continues to grow and develop in the University City area.

Philadelphia is the classic city of neighborhoods. People strongly identify with their communities and we support that with strong commercial corridors in a variety of places, again all across the City of Philadelphia. We’ve aligned our Commerce Department to have individuals the com share a kind of model working with businesses when people call us and they get a person who work with them on a regular basis.

Customer service is a big part of what the government is about, we’ve actually taken in many of our business areas; customer service training from our hospitality sector and the hotel community to help folks when they come in. Our goal is to get you in, get you out, but having very positive experience and actually spend less time with us as we put more and more of our services, licenses, which we’ve reduced significantly online as opposed to people standing inline to try to get service.

I’ve spend a lot of time going around the city, but also developing strong partnerships throughout the region. As Jerry mentioned, I was a Member of City Council for 14.5 years before resigning and to run for Mayor in 2006. I represented an area that [bordered] Macomb County. If you know the city, the city avenue in Philadelphia is in the district of I used to represent. So I’ve spend a lot of time with my counterparts in lower Marine and Macomb County and created based on what Marydale had done a number of years ago, something called Metropolitan Caucus, bringing together the county commissioners of the other four counties around Philadelphia.

So we operate now as a region. I don’t compete with our nearby neighbors; we compete now as a region with other regions across the country and around the world, that’s Philadelphia, Berks, Chester, Delaware and Macomb Counties. Those five counties represent 40% of the economy of the Commonwealth of Pennsylvania. Pennsylvania, of course being the fifth largest state in the United States of America, number one industry in Pennsylvania is actually agriculture, which I have to remind my fellow Philadelphians that we are not the only thing going on in the Commonwealth of Pennsylvania.

My primary focus is on of course developing jobs and economic opportunity. As I mentioned even with the recession, the city was hit hard, but stabilized by education and medicine sectors. Pharmaceuticals, life sciences and bio are strong areas for the city of Philadelphia. Unemployment continues to come down as we have also announced, in 2014, FY’14 we will resume our wage and business tax reductions.

Recently, we eliminated the licensing fee for businesses and created a new opportunity for start-ups, that if you create, three jobs, three new jobs in the first year and three new jobs in the second year, you’ll pay no taxes to the City of Philadelphia for those first two years in operation.

So we’re trying to do as many things as we can. I can’t do anything much about the national economy, but we can certainly take steps here to stay focused on jobs and the economic opportunity, working with our schools that are in a financial crises right now. I don’t run the schools, but bare my children, I have daughter in public school and we take responsibility for what’s going on in the public education. We’re in the last days of a superintendent search right now. The meeting I just left was with one of the candidates and we expect to have someone on Board, somewhere within in the next week to ten days.

So public education is critically important to the future of the city, but we’re also trying to create a system of great schools, all across the city. Whether they are run directly by the district charter schools, catholic schools, religious-based schools, or private schools, Philadelphia has a wealth of educational opportunities. We believe in generating and creating quality options for education for young people and their parents.

Public safety lastly always a major focus. And yesterday we were pleased to host the Attorney General announcing the COPS Grant program nationally, but announced it in Philadelphia giving us an additional 25 officers to our police force will go into the academy later on this fall.

Just graduated 27 on Friday and 60 this past March, and so we’re constantly focused on making sure that Philadelphia is the safe city and welcoming city and open city in the place where you can do business and have a good time, raise your families and make money at the same time.

So it’s a wonderful opportunity again to have all of you here. We are of course bullish on Philadelphia, but S&P as well, recently we were upgraded to BBB+, with a positive outlook and we expect another review in the next six to eight months.

We’ve maintained our credit rating across all three agencies and as I mentioned just a couple of months ago received the positive outlook with an upgrade from S&P. The primary reason for that is we’ve maintained fiscal integrity as our bottom-line. We managed well and we do not spend, of course unlike some other governments, we don’t spend what we don’t have. We’ve managed our finances extremely tightly, and stay on our managers about how we maintain fiscal integrity and everything is focused for us on the bottom-line.

I came into government in 1992 with then Mayor Rendell; the city was in financial crisis, different than what we are going through today. And so I’ve learned very early on that the maintenance of fiscal integrity, and making sure that if you manage the dollars well, while still trying to provide high quality services at the lowest possible cost. This is a business that we are running.

The $4 billion Corporation; 22,000 employees, over 70 member city council which basically function as a board of directors and have 1.5 million shareholders. These are people who work hard, pay their taxes, they expect a return on their investment from the taxes that they pay and they want high quality service at the lowest possible cost. And if we don’t maintain our market share, they’ll find someone else to pickup their trash run, their wreck centers we put police officers out on the street. And so, constant maintenance of the market share that we have and trying to grow it just like you are. Thanks a lot.

Unidentified Company Representative

Anyone have a question in the room, we may have a moment for question. Yes sir.

Question-and-Answer Session

Unidentified Analyst


Michael A. Nutter

Sure. I think the first thing for us is that we’re not anticipating at the moment that anyone will be drilling anything here. Having said that, I’ve two primary issues with regard to shale, the first and foremost is, it is upstream foremost, and so I have to make sue that one we protect our water supply. And that this is a safe process and program and certainly watching whether it’s our own Department of Environmental Protection or the EPA or other agencies that are involved to ensure that procedures, the processes that they engage to release that gas and then water and all the other things that are part of it do not contaminate the water supply.

If we’re short of that, it is certainly my expectation that one way or the other that shale gas is going to find its way through Philadelphia at least to our Port to go a variety of place. And I think an excellent economic opportunity for the City and we’ve maintained conversations both with the Marcellus Shale Coalition, as well as with the Governor’s office to see where those economic opportunities are. But the prospect of this opportunity for Pennsylvania could be a game changer if done well, if done right, if we also figure out the economic model for cities or counties like Philadelphia to participate in the economics what shale is all about.

I want to get back to you Gerard. Thank you.

Gerard H. Sweeney

Thank you very much. Okay, to pickup back on where we were.

If you take a look at, within that broader framework of Brandywine, we just sliced some of the data little bit differently. We always talk in our investor meetings about our sub-market positioning, and with interest, take a look at our top five sub-markets, they do comprise about 60% of our NOI, the major driver there obviously is the city of Philadelphia is why we are highlighting that in today’s conversation.

The other thing we want to do is to share with you the breakdown of portfolio in terms of the urban areas and town centers, when we are talking about that as part of our investment strategy going forward, but when you take a look at the breakdown of what the composition of that is of our portfolio, we have about 45% of our total owned square footage as well as joint venture square footage in urban and urban town centers. So we will talk later about mass transportation of live, work and play environment, the emergence of town centers and mixed use communities, I think that’s one of our key focus is going forward relative to up investment strategy.

As the first slide indicates, a key issue is the strong sub-market positioning, so we are really very much focused on only being in those markets where we think our positioning can create a competitive advantage for us longer term. Through identified here is that, near-term we think that market position enhances our competitive position and you will certainly hear on that a little bit from our managing directors and they talk about how they monitor and manage adding yield flow through the various markets and we do think that long-term those solid market positions will create value.

Let me running through some of our key markets, in Philadelphia CBD in the trophy-class inventory, we’ve had a 50% plus market share, number one positions. The Crescent Market of Pennsylvania suburbs, about 25% market share, in number one position. In the Toll Road Carter, Bob Wiberg will touch on today. The long-term outlook for that market is certainly much better than near-term outlook, but we are the number two owner in that Toll Road Corridor, Richmond, number two owner of mid-rise product, Austin and suburban counties, they are number one position and in Southern New Jersey, even with the asset sales that we’ve had over the last several years, we remain in a number one position in those markets with good deal flow, excellent infrastructure and a very well connected to all the brokers instead of communities.

So looking boarder depicture on the company, the key assumptions driving our business plan, the economic recovery as we all know is going to remain slow and when we talk later one of the biggest risk we have as a company is the macro picture. But we do believe that the real estate markets have clearly bottomed. We’re seeing that tenant activity levels that are remaining on the downside static to slightly increasing in most of our markets. We do think we’ll see a continuation that we saw in 2011 of marginal increases in net absorption across most of our core markets.

We think that the stronger markets we’re in will continue to perform well, both because of the rollover composition, the management teams we have in place and internal market dynamics. So Philadelphia CBD, Austin, Texas, the [Crescent] markets of Philadelphia suburbs, we think will continue to perform well. As you’ll hear from George Sowa later this morning, we are clearly seeing better year-over-year activity levels in both our Central and Southern New Jersey operation and the Toll Road Corridor, which Bob will amplify in his presentation, it certainly remains impacted by budget and political gridlock and that is having a muting effect on tenant activity levels, different than what we saw in 2011 where we had pretty good activity levels to that marketplace.

So want to address a couple of issues head-on with all of you. The suburban space clearly is not at the top of everyone’s investment landscape. Near-term, it’s hampered by macroeconomic clouds, clearly anemic job growth, mixed economic data and clearly, as we’ve talked in lot of our meetings over the last couple of years, the impact of technology on both work culture and space utilizations.

We think certainly a point that cannot be forgotten is that there really is no new construction in the suburban office space, in the office space in general, except on a Build-to-Suit phases; that we think will be a big driver of rental values and vacancy absorption as the market recovers, and we are clearly seeing from Brandywine’s standpoint a continued like the quality across our portfolio.

So from Brandywine’s standpoint, the approach we are taking that insulates ourselves from some of these macro shifts and some product of the lessons. A strong sub-market positioning. Mass trends that does matter and a lot of our focus as you will see today and you will see, when you have taken forward some of our suburban location, railserve town centers, we think have the ability to differentiate their value and their growth drivers from commodity suburban products.

Quality product building, the scale of sustainable infrastructure, our key part of our thought process and as Tom will walk you through our investment plans over the last couple of years and certainly going forward will continue to reduce our exposure to what we view to be commodity type of product, and clearly, in market that is as competitive as ours is, where we are working hard for every single tenant, and the best of market product represents having a sustainability platforms, a tenant service platform are all creating some differentiating elements for us to mind with tenant population.

So where we are from a positive standpoint, our business plan is as you relate, they remains on track, the outlook is stable to improving in most of our markets, we do expect to continue to see positive absorption through our portfolio due to both the strength of some of our markets as well as our quality product.

The focus of the company is clearly on leasing capital recycling as we’ve talked to the number of investors meetings, we do not plan to issue equity at prices below our NAV. We will accelerate asset sales and Tom will touch on that later to improve both our long-term growth efforts as well as contribute to the de-leveraging program that we have in place.

One of the things has been great for us to witnesses, as we are leasing up space and as we are making great inroads into a number of our markets we’re accelerating our NAV growth, and certainly are very mindful of the fact that our public market pricing remains discounted versus some of our peers, now the challenging side, we are continually facing the negative settlement on suburban office space.

And we think the best way to address that frankly is by continued performance of the operating level. We recognized that the company is running today with a much improved leverage and liquidity picture that from a few years ago, but certainly more work remains to be done on the leverage point and both Howard and I will touch on that later in the presentation.

We are buying occupancy in several markets that’s the unfortunate reality of where some of the markets are today. The fortunate reality of that is given our capital capacity, the product that we have available and the leasing teams we have in place. We are in fact able to accelerate absorption levels above market averages.

Where certainly the balance of this year and looking into the early part of next year, we do expect that the high capital cost to attract and retain tenants will impact our cash flow and dividend growth at least near term. And our lower tenant retention rates George will touch on those, we’ve had lower tenant retention in our normal averages over the last couple years, we had to generate more leasing activity stay in place and it create positive momentum through the portfolio, but as George will touch on, We think that’s a very good news our rollover profile the next few years and then certainly as Bob will walk us through again is the uncertainty mass Metro D.C. and are reliance on the Toll Road Carter, but we take a look at the progression of our business plan over the last couple of years.

The ability to generate positive absorptions, positive same-store growth, meet all of our business plan projections that creates all the great tools we need to solve all these challenge as the economy recovers. So business plan predicates, operational excellence, lower leverage and we will be a net seller for the next couple of years with the objective of upgrading our portfolio, reducing leverage and providing a better growth profile, I’m going to touch on a couple of those key issues now, and then the guys will go through that in a lot more details.

But if you look at our business plans, really, we refer to as the tripod, really operational performance, balance sheet management and our growth strategy, from an operational performance, the key take-aways, we hope you agreed from today’s meeting is we will have going forward stronger portfolio metrics, we have lower forward rollover schedules and we’re in improving markets.

From a balance sheet management standpoint, the key take-away should be our de-leveraging goal remains paramount in terms of an underlying predicate for our business plan execution. We will continue de-risking our balance sheet through maintaining high levels of liquidity in a very manageable rollover schedule, and we’ll also maximize our liquidity. From a growth strategy standpoint, again net seller and submarket refinement, so looking at those items just quickly, from an operational objective, we will end 2012 between 89% and 90% occupied will end the year at 91% to 92% leased. We are focused very much on improving our tenant retention ratio. George will touch on that. We will be delivering positive Same Store growth in 2012 and we are working very hard with all of our tenant prospects to make sure that we exceed our Business Plan average lease term of 6.2 years to offset some of those higher frontloaded capital costs. An important point we look at all the time is that every 1% gain in occupancy for us will generate between $5 million to $5.5 million of annual NOI growth depending upon the composition of that absorption.

From a balance sheet management stand, a chartable review, the de-risking continues while our leverage levels are still not where we want them to be. We are very mindful of the fact that we reduced leverage by about $800 million over the last several years. We did create, as part of our bank financing, very thoughtful pre-payable debt case. So as we accelerate asset sales and accelerate absorption for our portfolio, we have debts that can pay down without the high [breakage] cost of more bonds and we have minimum floating rate risk to be part of our de-risking of the balance sheet. But our objectives remain; as we’ve articulated before, continue deleveraging as an overriding objective of the company.

As a first step our target is to be 40% debt to GAV and a 6.5 times EBITDA. Those I’ll touch on at the conclusion of the presentation. We’re certainly setting a different thought and that is a long-term run rate for the company. We will continue to assess capital market opportunities regarding liability management/bond buy-back opportunities, preferred stock. As most of you know we issued preferred stock earlier this year, a very attractive coupon that added some very attractively permanent capital to the company and we do have and had some market equity issuance program in place, as I’ve talked about a few slides ago, that is more abundant for our stock price reach is at least NAV, and frankly, even then we’ll be evaluating equity issuances in the context of our overall sales program.

The last leg of the tripod is our growth strategy, and the investment focus very much remains on increasing urban multimodel town center exposure and reducing commodity suburban in our sales, and our investment strategy in the last couple of years amplify that.

The strategy will be really recycle, deleverage and redeploy will improve our future growth rates, reduce our forward capital spend, which is the key part of how we assess the net present value of every asset we have in the portfolio. We will delever the balance sheet and we will do everything we can to balance earnings stability during this recycling phase through portfolio lease-up. The rent growth, we are seeing in other markets, as well as redeployment, but the key take-aways again, we will be a net seller to aid our growth strategy as well as our balance sheet objectives.

So with that, let me turn it over to George Johnstone, who will walk you through our operational platform.

George D. Johnstone

Thank you, Jerry, good morning everyone. So again on the operational performance the leg of the tripod, again the take-aways or stronger portfolio metrics, lower forward rollover and then I will touch on our improving market conditions.

So during our last call, we free several of our targets, our metrics are still on track, our current version of the business plan calls for leasing activity of just shy of 4.3 million square feet, 2.6 million square feet of that coming from new leasing activity and about 1.7 million square feet from rentals, $44.9 million of speculative revenue, we were 80% achieved on that target at our last earnings call. Our projected retention rate of 57% for the year, positive same store GAAP NOI ranging from 0.5% to 2.5% and on a cash basis flat to positive 2% and as Jerry touched on our average leased term is at 6.2 years.

We are still seeing get rental market-to-market stocks on a GAAP basis anywhere from negative 1% to positive 2%, and on a cash basis anywhere from negative 4 to negative 7, so while still negative improving of where we ended 2011. End of the year occupancy at 89.4% was about 200 basis points of forward leasing to end the year at 91.4% lease.

In terms of our speculative revenue as this chart outlines, we were 80% done on that $44.9 million target, since our last earnings call, we’ve achieved another 5%, so we’ve got $38.1 million achieved with about $6.8 million to go.

We do still feel confident about delivering that $44.9 million, we are seeing good levels of activity in our Pennsylvania suburban operations, Phila CBD and in New Jersey and we think we may have the potential to generate some upside in those regions to potentially cover some shortfalls that we might see in the Metro D.C. market, but again at this point we feel confident that the $44.9 million target is still be realized.

In order to achieve those target that all kind of tenant demand and this slide shows the traffic as remain steady through the portfolio for the two month ended May, we had about 2.6 million square feet of prospects come through the pipeline were averaging just shy of 300,000 square feet on a weekly basis in terms of showings. And one of the things we track here are of the prospect to came in the door, where do they currently stand within the pipeline, so of the 2.6 million square feet, 8,000 square feet of that is entered the pipeline and either April or May has executed 2 million of its still active and 459,000 square feet of its have become debt deals and we’re going to other options or just simply [stable].

Over the last four weeks, you’re going to see the trend lines here the drop during the third week was really the week of memorial day and just one of the slower traffic weeks, but again about 330,000 square feet of average pipeline activities during the four weeks of May.

The overall pipeline as we’ve talked in other meetings, we track on a nine step workflow ranging from [phone] all the way up until lease executed, you can see that the total pipeline is 353 prospects, 4.8 million square feet, about 3.1 million square feet of that are kind of in the upper end of the range, where we’ve already gotten to the proposal category, and one of the things to keep in mind is that we’re still running about a 40% conversion rates, so once a prospect gets to that proposal category, we’ve been converting that to an executed lease 40% of the time.

Our average deal is taken about a 114 days and start to finish to from that initial phone enquiry or that initial space inspection depending on where the prospect starts. We’re averaging about a 114 days to completion.

Platform stabilization, Gary touched on. Again, we’ve had fairly large levels of rollover in both 2010 and 2011, little bit of a decline in 2012. But as you can see, for the next four years, we’ve got sub 10% rollover in the portfolio and we think that with mindset maybe getting more confident, improving our retention rate obviously will lead to better occupancy levels, better retention levels and less capital spend going forward.

In terms of 2013 specifically this list peer is kind of the upper end of the prospects with a 2013 exploration, about 1 million square feet, represents 43% of all 2013 explorations. Starting at the top of the list, Intel [then in] Austin has already renewed 47,000 square feet as Bill will touch on the activity in that marketplace. So we’ve got several prospects, looking at the space will give us back.

The largest tenant that we are exposed to in 2013 is Lockheed Martin. We’ve got them in four different locations, 158,000 square feet in Pennsylvania. We feel good about our renewal in that location. Then in the I-270 Corridor in Maryland, we’ve got 216,000 square feet. I think it’s a number that you probably saw in articles last week. Lockheed is currently going through all of their states needs in that I-270 Corridor. They’ve got an own facility in Galesburg, but they are trying to figure out which business units move to.

We are underway with discussions with Lockheed as to which units may leave our buildings and which ones may stay. We think the 79,000 square foot building in Rockville with those business units will most likely relocate the 137,000 square feet, if it’s not the unit that’s currently in the building and we think it’s either potentially the units next store, or potentially other units within that 270 corridor, but we do think that a short term extension of the 137,000 square feet is the most likely outcome at this point.

Freescale, another large tenant down in Austin will be vacating and again, we’ve got multiple prospects looking that, not only the free scale space, and two Barton Skyway, but, much of those the same prospects looking at the Intel space in One Barton Skyway.

World Access Service has given us back 56,000 square feet; down in Richmond, that’s in the Innsbrook submarket and we’ve got a couple of prospects already entertaining that space. The next several are all indications are that they will renew Hewlett Packard and King of Prussia Willis and Radnor, Lockheed Martin over in New Jersey and Octagon Research out in King of Prussia. Hankins & Anderson has already renewed their 13 exploration and at the same time expanded by 5,000 square feet down in Richmond. Binswanger, next door at Two Logan, indications are that they’ll renew REIT go up in the Pennsylvania Suburbs in King of Prussia also likely to renew. Morgan Stanley, also at Two Logan we do know that they will be vacating and Northrop Grumman indications down in this (inaudible) that that business unit will stay.

So all in all, we’ve got 86,000 square feet that have already renewed. Indications are that another 430 will renew. The 216 is really the Lockheed space in Maryland and then we know that 270,000 square feet of that will vacate.

Touching on rent levels, we are seeing an improvement in most of our sub-markets and but as the headline kind of says, there is still room to run. We’ve identified here where peak rents were and at what periods and where they are today. You can see that in Austin, back in 2007, the peak was $31.25. Today, we’re at about $28.75, so still $2.50 below that peak. Down in the Toll Road the Reston, Herndon corridor, we’re about $4.30 below peak, Tysons Corner about a $1.20 below. CBD Philadelphia, kind of that trophy-class rent $34 at the peak and today, we’re kind of on average $32, depending on how far up in the stack as a building your tenancy is.

Radnor has actually surpassed the peak rents that we saw back in, I guess early 2008. We’re currently, on average of $31 today in Radnor, Conshohocken at $30, still have little bit of room to run; Plymouth Meeting just shy of that $30 mark and then Richmond mid-rise, we’ve got about $0.60 delta from the peak back in 2007.

So, again, I think the encouraging sign is that we are seeing rents starting to move, but again have a little bit of room till we get back to those peak levels.

In terms of mark-to-market and how does that play out with Brandywine’s portfolio as it exists today, you can see that our current in-place rent is $24.31. Our average market rent across this company is $24.06, so about a 1% mark-to-market of every tenant moved out today and we realize that space at markets. The encouraging thing here is that, three of the markets are already showing signs of positive mark-to-market.

Pennsylvania suburbs, Philly CBD and Austin, Metro DC still some room as that market vacancy will take a couple of years to be absorbed, a 2.2% roll down in our New Jersey portfolio and just shy of a 4% roll down in Richmond. And then we’ve also kind of noted here just as a point of emphasis, how much of the NOI is coming out of each of these regions.

So who can lease in this space? We include in our supplemental and in our quarterly investor update, kind of the SIC chart of tenancies, but we took a look specifically at, who has been leasing the space over the last two years and you can see that the number one category are law firms. So between Reed Smith and Stark & Stark, Parker McCay, Pepper Hamilton, 9% of the leasing we done over the last 17 or 15 months has been with law firms and then you can get a sense of some of the other tenancies here as well.

And then really last slide that is going to touch on is really the fact that we’ve seen significant levels of contractions over the last couple of years, which has caused us to have that lower retention rates. And we really think that these large downsizings or rightsizings are kind of behind us, and you can see that, the high levels of give backs in the third quarter of 2010, which was lot a of space coming back in that New Jersey market.

First quarter of 2011, a lot of Toll Road give backs and we really tailed off dramatically on the contractions and we’ve seen good levels of tenant expansions really over the last five quarters and hope to see that continue during the balance of 2012 and into 2013.

I think, with that we’ll turn it to over to Howard. Well, questions.

Question-and-Answer Session


Howard M. Sipzner

Yes, it did. Yes, so we think that these tenants that we’ve categorized as will renew in will renew in that expiring square footage.

Unidentified Analyst


Howard M. Sipzner

Yeah, yeah.

Unidentified Company Representative

Good morning, last time I was in this room about six months ago, we raised $1.2 billion of bank financing. So expecting at least the same from this group, not better. In terms of financial review, Brandywine really is still down to a very simple, also three legged still today, so to speak, do want to operate with a stronger balance sheet as possible, we, like, many other real estate companies came through the past couple of years, really scrambling as capital markets shutdown and traditional sources of financing dried up. So in notion of operating with those much of a fortress balance sheet be as much out of barns way as possible really drives our thinking in just about every financial decision.

We got great efforts to mitigate and manage all financial risks. As you will see later on, these will include liquidity, maturity and interest rate risk. And we think the sum total of operating with a stronger balance sheet as possible, continued emphasis on deleveraging as Jerry pointed out, at managing risks will be our road to ratings upgrade that we’re very much seeking as a company. We are currently BBB-. Baa3 and we see tremendous value moving our rating up to at least mid BBB investment grade.

This chart, some of you have seen before. It really highlights the last six plus years of activity in terms of key financial metrics. On top, it captures a very dramatic $800 million plus reduction in debt that this company has undertaken in the past three or four years, that really began in earnest in 2007, picked up steam in 2008 and 2009, it have been relatively flat for the past two, three years, but with the renewed emphasis on sales of properties and recycling capital with the return of the investment market as Tom is going to point out shortly, we think we can reaccelerate that trend line and also take advantage of improving EBITDA to improve that metric as well.

The composition of our debt has moved away from probably over 20 individual mortgage loans, going back 5, 6 years to much cleaner unencumbered balance sheet, we probably have one of the shortest list of mortgages at the company level and about 85% of our NOI remains unencumbered today and that’s a key strength when we go into talk to the rating agencies. The coverages jump around a bit depending whether we’re more floating or fixed in a given quarter.

As I noted earlier, we moved to fix our rate substantially going forward and that will enable us to set a baseline coverage or set ratios and improve from that point forward. Some of key activity over the past couple of months was of course completing our bank financing early has been widely publicized. What was noteworthy about that bank financing is we had a number of new banks come into the facility. So it highlights our efforts of outreach to new banks. It also highlights the strength of the bank market.

We were live more than typical on funded bank term loans versus the unsecured market views candidly that was where the pricing was much better and the terms were more favorable. We like the fact that that debt is repayable. We like the fact that we could structure maturities in good sizes to reflect our current maturity ladder and most importantly, if and when we get that upgrade, we’re going to benefit some pricing in terms of improvements in our cost on those underlying facilities and as many of you know, we did a $1 billion what we call a main facility, that include a $600 million revolving credit four-year term, extendable by one-year.

Two shorter-term term loans $150 million in three years, $250 million in four years. And then somewhat innovatively we did a seven-year term loan of $200 million, which enable us to extend maturity even in the bank markets.

We weren't satisfied with just with that capital. We wanted to take the risk out of the equation. So we turned around and we locked rates over a variety of maturities, on average about 5.2 years in the shorter-term loans, and that translated to an all-in cost of about just over 3%. And then we went ahead and we liked those fixed rates so much we liked that de-risking that we extended it to $78 million of trust preferred securities. And we have locking rates anywhere from five and three quarter to nine years, seven and a half years on average had an all-in cost of 3.04%. So we're in great shape in terms of fixed rates and relative amount of floating-rate risk with only $100 million of term loan remaining floating on our balance sheet.

In terms of maturity, when you factor in the financing, we did with the banks closing that in February, some of the sales that have taken place, some interim note payoffs as wells as the preferred stock transaction initiated in April and completed in May. We have a very clean maturity ladder going forward. We have no major maturities whatsoever until November 2014.

If we look ahead to our long-term modeling, we don't see ourselves doing unsecured financing until 2015 and 2016 respectively. This will be a generator of capital during most of those years. Now, I imagine you’ll see us enter the market more opportunistically earlier than, but the strength of our financial plan enables us to stay out of the market until 2015 at the latest.

In terms of cash coming out of all these financings, we created for the first time ever, a cash pool for Brandywine and somewhat opportunistically, we decided to invest about half of that in securities. We began that in March of this year and we finished that program sometime in late May.

During that time period, however we realized the risk of trade, the risk of mentality was increasing. and there was some degree of concern about that securities portfolio. So in the last couple of weeks, we’ve reduced it from a peak of about $105 million to $42 million, which we expect to be the closing balance at the end of the quarter.

We’ll look opportunistically to reduce that further as we move into the third quarter. In terms what we own today, it’s a $30 million note due in November 2012 under the credit of Banco Santander of Chile have remained AAA, AA3 rated. It’s been largely unaffected by the goings on in Spain in terms of the ratings and other credits, because candidly the credit in Chile, this bank remains very strong and we’ve complemented that with $12 million of other securities and four financials rated A- to AA+ from S&P.

The securities program has generated some excess income, and if held to maturity from all of these remaining positions, we’ll generate a total of about $0.5 million over what would have been traditional bank financing. So as we look at our balance as of yesterday in terms of liquidity, we’re sitting on about $182 million of cash held in a variety of banks, all under our credit facility, $10 million of bank CDs, and the aforementioned $42 million of securities and should close the quarter pretty much along those lines barring any movements over the course of this week.

So about $234 million of cash liquidity as we move into the third quarter. And that’s relevant as we think about our 2012 sources and uses, and remaining needs in 2013. We get a lot of questions why you’re holding this level of cash as it factor into the capital plan. A lot of numbers on this page. These are all readily available. but basically as we look ahead through the end of this quarter, we’ll end with about $234 million of a fairly active development program and capital investment program alluded to leasing and some of the small developments that are underway and that will bring our cash balance down to approximately $75 million by the end of the year, and that includes some contemplated investment sales activity. If you look at the 2013, it presented a very clean picture again minimal debt coming due a very small amount that typically where in the $500 million to $700 million annual source and use ranges of $300 million a year.

And it will bring our cash down slightly further to up $45 million. So we look at the 2014, when the portfolio should be much more substantially leased capital needs very light, we’ll still be at zero balance on our credit facility and the small amount of cash in the bank and we like that risk position quite significantly.

We’ve talked about risk let’s use the next three slides just a wrap up, how different Brandywine looks today from what it looks like several years ago. So as I think back over interest rate risks the amount of floating rate debt this company is, this is always been very low, our average over the past five years or so has been about 10%, it’s been as low as 3%, 4%, as high as 20%, as we look ahead we’re nominally 4% floating rate, but interestingly up and factored against the cash on hand, we actually really have no floating rate debt at all. We like that position, we understand that right now, today floating rates have been a bit of a boost to some of the REITs, we’d like sleeping well at night knowing that our earnings growth will be insulated, when interest rates start to rise at some point in the future.

If you look at our maturity schedule going ahead over the next three years, you’ll see the rates on the debts coming due a small amount 12, 13 and 14 are all at rates that at least today we are able to finance well inside those in a variety of markets. It’s not that’s another source of comfort as well. In terms of maturity risk going back previously we use to have 40%, 50% of our debt rolling in any three period you see the chart on the right side of the page captures that with a quite a bit in the next year. Q4 level was probably the most acute. We had quite a bit of debt coming due facing the bank markets.

Today we have just 18% of our debt rolling in the next three years and remarkably 71% of those are covered by cash on hand. So from maturity, financing risk, capital markets perspective we are really in great shape and the trip of the company, the goal will be to keep us at this low exposure level.

And lastly, in terms of liquidity, as I look back over the past five years, we would average typically about $200 million outstanding on the line, perhaps a little bit, but typically low cash on hand. So we had average liquidity of about $430 million. Look that in today’s terms, $234 million of cash and virtually the entire line fully available, $830 million of total liquidity. That’s extremely defensive position. We like being defensive in the current economy, because you just don’t know what’s coming and it also presents opportunities to play offense when the situation dictates.

So with that, I’m going to turn it over to Tom. He’ll talk about some of those opportunities, questions.

Thomas E. Wirth

I wouldn’t say there was a strategic purpose. I would say it was just an earnings offset the dilution from carrying the excess debt on some of the term loans. So we look for way over what ended up being a six to nine-month period. At one point, our longest security holding was January. We’ve sold off all the backend and now our longest [David 1] will mature in November of this year.

It’s a short-term management of cash, no strategic investment strategies. We obviously follow investment guidelines in terms of ratings and what not and off that within those parameters. Do you have some sense [Rich?]

If we had to get the six and half level of debt-to-EBITDA, that’s slightly over $200 million of debt reduction through equity issuance, which is not available. It’s a substantially larger amount of property sales depending on the amount of NOI lost, but conversely it’s also that 700 to 800 basis points pickup back to 93%, 94% that will get us the same 6.5 level. and then beyond that, we’ll have to continue to be a net seller and create more growth in the portfolio.

Unidentified Analyst


Unidentified Company Representative

By our calculation, that’s $2.5 million to $3 million interest savings a year, given me outstanding term loans and presumably at that point, some small level of usage on the line. Yes.

Unidentified Analyst


Unidentified Company Representative

Absolutely not, dollar-denominated.

Unidentified Analyst


Unidentified Company Representative

It’s a great question. And it’s what we talk about a lot internally. We have a lot of different options where to use that cash. we won’t keep it as we’ve done, eliminate the term loans and as you suggested and Gerry mentioned, we also are looking at our outstanding preferred stock series that is redeemable. So all of those are good and interesting options with different impacts on financial position, on covenants, on rating agency perception. We just decided in the short run to wait and see how the business plan develops and to retain that optionality and always make those decisions at a later date, but once that we made them they’re reversible. Yes.

Unidentified Analyst


Unidentified Company Representative

That includes assumptions for some development spend.

Unidentified Analyst

Trying to get basically...

Unidentified Company Representative

So the $89 million, okay I was thinking of the investment acquisitions, $89 million, relates to leasing that would not be replacement leasing. So we categorize our leasing expenses as either revenue maintaining where we are retaining a tenant, obviously paying lowest cost or replacing that tenant or any space for that matter that are occupancy over the last 12 months.

So when you see those numbers reflected on our CAD page, coming out of that bucket, our overall cash flow statement, of course we capture other capital expenditures. So leasing up space that had not been previously leased, for example, in the [preloaded] portfolio, some of the vacant space we acquired or some other space that was either lying vacant for more than a year was brought in that condition.

Those capital expenditures would fall in under the [rig] county. The spend rate on each of the two categories has been much lighter to-date than planned, really capturing activity through, effectively May. We were under spending the full-year rate, but that could pick up, as always, then picks up later in year. So we’re keeping that at the full level. And since we brought the $84 million of investments and acquisitions, some of those dollars would relate to the investment that Tom will talk about in Station Square and also some developments that are going on around the portfolio, use small projects that we’ve enumerated in our supplement and also the possibility, but not the certainty of addressing some of our ground lease positions we provided for those in the capital plan as well.

If does reflect the lease up. It reflects a somewhat different debt profile. This is cash flow after interest. So proportions of 2012 will carry double debt positions, so that’s reflected in there as well and of course that recovery that’s emerging that’s correct.

Unidentified Analyst


Unidentified Company Representative

Well, I mean that is based on some preliminary feedback from the field. But I would emphasize the preliminary number. It feels like a good number sitting here today in June, but that’s a number, we’ll refine much further as we come out with guidance later in the year. But, it should not vary much from that. When we’re doing normalized leasing in 2008, 2009, even 2010, we were running $10 million to maybe $13 million a quarter, so 55 should cover it and the 80 could very well be high number. It really reflects the lease up of any remaining vacant space in the portfolio, but if we are in that 91%, 92% occupied level, we’re really reaching the end game of that leased up. So that could be a reduced number as well. Sure.

Unidentified Analyst


Unidentified Company Representative

That’s correct. That’s good point. this assumes no change in the dividend in 2013. Thank you. With pleasure.

Unidentified Analyst


Unidentified Company Representative

We booked maybe $70,000 to $80,000 of loss, which for sale about $65 million was about to bid as spread of most acquisitions, so pretty neutral and what we gave up by doing that was that further excess income, but we felt in view of the sentiment and really what was going on around us those prudent to reduce that position...

And then, market condition is permitting, we will probably more of that as the third quarter goes. Okay.

Unidentified Analyst


Unidentified Company Representative

Yeah, I would say that’s probably a little bit of [trouble] if they will, we thought it was a good rationale and if you think back to March and April, when conditions were better, it probably made sense, but having have built up that portfolio into May and June when sentiment changed, we didn’t feel the credit condition, at least from a repayment standpoint I mean many of those names have in fact downgraded and you look through that of course. Notably, the pricing of the securities have not seen much, but certainly, as May turned into June and sentiment got much more negative around us, the risks of that strategy is I would call that became tighten and probably we’ll spend a lot of on that.

Unidentified Analyst


Unidentified Company Representative

Yeah. So, on the debt to GAV is interesting number, because if we achieve the gains and EBITDA that number might not move much at all, but our leverage on debt to GAV basis may reach some of those mid-six targets. Before more of a net seller, we will have to play, we will have to factor in the impact on NOI, but obviously that could move the debt to GAV quite significantly. So the near play between those and equity of course being the third tool one good play with, but really are not in our agenda today.

So depending on the path that’s chosen for future investment and growth scenarios, didn’t get a blend of some of those factors, you can rely more heavily on one of the other, when you get different results in the statistics. I will tell you, today that, we tend to publish that the GAV because the consistent metric, and we feel its useful, external constituencies and sure many of you rely much more heavily on debt to – net debt to EBITDA or one of those calculations. I’m not sure.

Unidentified Analyst


Unidentified Company Representative

Okay, so we take a purposely confusing hybrid approach here. When we present debt-to-GAV, net debt-to-EBITDA, it's fully loaded and we pass everything through proportionately. But, when we calculate debt-to-GAV, as most people historically have used the equity income balance on the balance sheet, we recalculated that way. So, it is not the use of pass through from the JVs. So, it relies on the book basis, sort of book value of JV investments.

Unidentified Analyst


Unidentified Company Representative

It will depend on, our view and our partners’ view in each situation, but at least historically going in, it has run higher. Today, necessarily if you look at debt-to-value in the JV portfolio, some of the debt positions are wound down, the actual leverage is not necessarily that much higher than the company's which is why the inclusion of the JV in the debt-to-GAV – in the net debt-to-EBITDA calculation really doesn’t changed the numbers much one way or the other. But, we like doing it that way because we feel a lot of other companies don't calculate the numbers that way and then maybe hiding a little bit behind the JVs.

Unidentified Analyst


Unidentified Company Representative

Okay. The ATM, I believe about $80 million, that’s been so long since we've used it. So, we start publishing balances – really no expectation of using in the future. One question, I didn’t answer with Michael’s is on preferred stock. So, the notion on preferred stock is very attractively priced. We may look at redeeming the existing series and one of the ways we may complement that is possibly with a small ATM program on the Series-E preferred that a number of REITs have begun using, to basically keep things in balance, so that could be a nice substitution of the lower cost Series E for the higher cost Series D, if we got or may be just do it right. A lot of people depend on the success of the sales program versus what can be reinvested so as I said earlier, we’re playing a pretty carefully in terms of making near term decisions, we have a bit more clarity on some of those factors.

Unidentified Analyst


Unidentified Company Representative

We start with talking about the commercial office market and where the commercial sales have been, we take a look at commercial in general it is up 40% between 1Q ’12 and 1Q ’11 more specifically looking at office it’s up 32%, ‘12 over a ‘11 for the first quarter. Primarily from CBD, looking at the past two quarters still overall we’re seeing an increase in the suburban markets in terms of sales, flat in the major metros and negative growth in (inaudible).

We take a look at the fire pool what we are seeing in our market, which is inside the build way and often where we are seeing in the most trades. Property, people are taking a look at four markets saying we want to have less closure to vacancy and let’s exposure to near term vacancy. So we’re looking at those – when we see trades occurring those, where we’re seeing the strength in pricing as well as in the buyer pools. Fewer buyers for secondary assets, although we’re beginning to see some better pricing. We are seeing some larger portfolios as you heard trading not only in office to another sectors where the larger portfolio, suburban assets who are in various secondary markets is receiving good pricing and we expect that to continue, because when we’re looking at acquisitions and we’re looking at transactions, the capacity of some of the buyers is very good. It’s very strong.

The investing in the core office market is still getting multiple bidders, very good underwriting, aggressive underwriting in some cases and combined with historically low interest rates, those transactions are taking place, especially when you see the lenders underwriting quality assets. And just to take a look at that, we, as you know, don’t do a lot of secured lending. We are unsecured, but when we take a look at the acquisitions that we do to the joint venture and just recently on Station Square, we get a good snapshot of what is happening in the secured lending market.

So we take a look at the composition of what’s going on in the industry today. We are seeing insurance companies are still leading the way in terms of lending for the office sector, but U.S. banks are 26%, CMBS has increased. It’s up to 17%. It’s in the international banks and then other financial institutions comprise what the lending pools are like.

If we took a look at our lending profile with Station Square, and as is mentioned earlier, we are kind of in the mid-50s, 55%, 56% loan to value. The insurance companies are very good on pricing. They are more selective on their markets. They were more competitive at the longer end of the curve that we chose to go seven to 10 years and they are lower leverage target. They kind of wanted to be in that 50%-60% range and they are very keen on who is responsive. So they really look at who is going to be the borrower.

The U.S. banks, they are using their balance sheet. So the people that we talk to are balance sheet lending. They weren’t going direct CMBS. They are most competitive within the shorter area of five to seven, which is what we’ve shown, seven obviously for Station Square. And they prefer allowance below $100 million.

CMBS, they will go higher up on the leverage curve. They will give, [competitive] rates have come down and spreads have come down and treasuries have come down. We actually received pricing at back end of November when we started looking at the initial seed portfolio versus where they are today. They were more competitive while they’re still not competitive enough for our transaction. And they are strong alternative for the secondary and tertiary markets.

International banks, also very competitive, but they are very selective and they only targets on the major metros. When we did Station Square, I think when we started that process we were expecting that to be insurance companies, but when we were done, the top five lender quotes that we shifted through and that included rates, term and some of the terms within those loans. Three of top five were banks and we actually selected a banking institution for that financing.

Talking about acquisitions, as you know, we are going to be a net seller and we’ll talk about a little bit later, but taking a look opportunistically what we will invest in and we do have some transaction volume that Howard put in there for ‘12, but we will not have any budgeted or forecasted right now for ‘13. We continue to look at our value-add and submarket position. So if we get to add positions in the Philadelphia CBD, we will do so. We continue to look for transactions in good assets well located in the Philadelphia market.

In the suburbs, we continue to look at our Crescent Market, the IMS building, which we purchased for $9 million, $59 a foot is a good example of that. It’s a vacant building. I have a slide on that in a second, and then Austin. We continue to like Austin. Almost every measure you take of growth of business, growth of employment, education of the workforce, Austin still checks a lot of [boxes] and there is still a lot of room for growth that technology companies continues to invest down there as you take a look at Apple’s recent announcement you continue to see growth in that market. We also want to take a look at our existing joint-ventures all stay obviously we did our first acquisition with them since creating the venture in December.

We’ll continue to look for investment opportunities with our JV’s partners including DRA and Beacon Capital. Third, we’ll like to look at the alternative investments; we did the investment with Thomas Properties on Thomas Square, right here in Philadelphia. We continue to want to do similar transactions, we like the idea of investing incremental capital at very good rate, but at a good price points, so that we are going in at a good price per square foot, when we look at the property and that something was to happen, we are happy at that exposure level what we may invest in.

And then also we want to look at realizing the value of our land inventory, we have a very large land inventory, obviously, most of that was for office, we continue to look at alternatives in some of the other uses for that land and they may involve not under office, but still continuing to look at that and there is a lot of interest. Nowadays in taking some of that space and putting it into another use such as multi family, I think in the past lot of [municipalities] were against that, I think with some of the recent tax revenue reductions, they can see good realization of tax revenue that we see it uses for vacant land other than just sit there and wait for office to come back.

An example of when we talk about an opportunistic acquisition is West Germen Pike, we bought that is in Plymouth Meeting it’s adjacent to with our existing assets, this is in the Crescent market area, so a very good access to transportation, good access to the highway system, 70% so when we took a look at that asset to get at a $59 per square foot, two things: one, is the great acquisition price and we feel very strong about that market and our ability for our team out there to lease it up and number two, little more defensive to say, we don’t want someone else owning this asset at $59 a square foot and competing for our tenants.

We have already pre-leased that building, we have taken some tenants that are already in our portfolio, implement the building that we’re looking to expand and found the home for them there. Targeted 11% free and clear return so a good return on investment and its well underway.

Okay, about Allstate for a few minutes. Again, just to give you a background, we closed that in December as a 50-50 Pari-Passu JV, we have received promotes after 10 levered IRR and they wretch it up from there into various abilities to go beyond just one wretch I think we have two or three ladders. Distributions are Pari-Passu at 10%, thereafter for anyone may receive promoted interest. The way our promote doesn’t work though it’s on the entire venture.

So when we have the portfolio, the portfolio have to be complete with liquidated before we start to receive those promote, so they are not going to be done out of one of transaction. We received asset management fees, so we run the venture, we also will be leasing that venture and handling portfolio management as well as property management.

The seed assets were $156 million, three buildings that we had two in Falls Church, one in Bethesda, $156 million value. The initial financing, which we felt pretty good about back in December, maybe not so much now is $90 million, but at 4.4% interest rate. We did individual loans on each buildings, so with the blend of 7.4 years of maturity, and they are not recourse and they are not cross-collateralized.

The most important point that I think leads to the station square that each partner provided $75 million of additional equity; the idea was not to just to withstand the JV where we continue to own it and have a nice return, but also grow that platform and in order to grow Inside-the-beltway, we thought this was our best avenue to get a good return on our equity be able to utilize and exploit those secured debt markets. So as you look we have initial seed assets of the 56 million, we use 66 million of equity.

We then have Station Square which is 120 point, it is really 120 points it’s not 20.7, so that $64 million of equity going in, so we used about 30% of that $75 million of equity from each partners, so with $150 million, we used $54 million so the remaining balance allows us potential buy of over plus $240 million, so that’s really the next step is then look for additional assets, but we’ll talk a little about still the spring, we announce that transaction earlier three buildings about 500,000 square feet, 93% leased, they are mid-80’s buildings but very well located, I think when you look at station square if you’ve been down there, there is a as we just talked about having a great transportation of this rail, there is park and there is another purple line coming for another rail that’s going to go across county from Bethesda over here and then across so there is a great access to all the various lines and get into the [DC] takes 15 minutes on the subway.

Historical retention rate to show that is at 80%, there is 75 tenants in the building so there is no one tenant dominating a building, the tenants are mostly local, they continue to stay and we’ve seen over the last 10 years 80% historical retention rate, and we don’t expect that to change. Although the buildings are mid 80’s, the previous owners put an $15 million of capital, so new lobbies, elevators and roofs around the building, so they are very well maintained and they do commenced some of the highest rents in the Silver Spring submarket.

The submarket itself is 3.8 million square feet, 7.9% vacant. We like the other major tenant in here, a major tenant, then our employer is Discovery Channel. They are directly, across the street, their headquarters building is there. So, it's right across very well located also on the other side of the railroad tracks you can see the east highway there, there is a NoVA has their headquarters million square feet in the couple pre-closure (inaudible) building they just renewed for 15 years.

So we see that NoVA is going to continue to have a strong dominance there. We don't have a lot of exposure. The GSA tenants directly in our building, but they're obviously, subcontract within our building. But it’s a very strong stable market. There has been a lot of infrastructure put in over the past few years, and again the retention rate tells you a lot about with the tenants they could have the market there and they had opportunities to move elsewhere.

Taking look at the economics of the transaction again $20.6 million, $241 a foot. So we look at replacement costs in this market between 350 and 375, so, well below the replacement cost when you look at the assets. Going-in returns of 7.2% cash 7.8% GAAP are returns will be enhanced anywhere from 150 to 175 basis points, based on the fees we’ll earned both on asset management, property management and leasing.

Scheduled closing date is July 10, so a couple of weeks. There is a positive mark-to-market not very large, but there is a growth in the market rents, if we look out. The financing we received is also been the tremendous with $66.5 million, 56% LTV, seven year rate 3.22% interest-only for the entire term. That’s an interest-only loans, which really helps when you take a look at again. When we look at our levered IRR for this joint venture this really helps as we look at the property. And single loan with release pricing, so we’ve decided to sell one of the three buildings, as you can see in the lower left, those are the three buildings standing together, so they are close together, but they are not necessarily have to be maintained as a portfolio.

Recycling, we’ve talked about being a net seller, we have been and we continue to be. Looking over the last four years, we sold either outright or through JV close to 22% of the portfolio. So $1 billion, 21% of our square feet in various markets as you can see. So we’ve been a net seller and we continue to look at that as being a way of sourcing capital and reducing leverage. We look at additional assets sale on our non-core markets as a pricing for secondary markets improves. We started again with the, some of the lenders have been more constructive in the suburban markets that allows the buyers to be a little more constructive on pricing.

As you’ve seen through some of the slides on our market rent, some of the suburbs are starting to improve. So people are underwriting at least rents not going down and they are getting little more constructive on retention and not seeing tenant’s leave.

Premium pricing for larger portfolios, as I mentioned earlier, we are seeing that some of the larger portfolios, some of the money sources and buyers have a lot of capital put outs. Some of those sources are not looking at small acquisitions, they’d like to do something large. So if there is an opportunity through hold together a portfolio that maybe larger in size that fits our criteria being non-core, or a slow growth, we’d consider doing that.

So far year-to-date, as our target this year $175 million, we’ve done a $123 million to-date, so we have about $50 million to go. We feel very good about that remaining $50 million. I think it will happen sooner rather than later in the year. So I would expect that to occur sooner in the calendar end of December of fourth quarter.

Looking at the sales we did do one small sale in Southern Jersey as someone came to us as reverse inquiry, Class B building doesn’t speak for anything good to get out of. It sounds like, that was a very good building in the Herndon submarket. We got a great price per foot, above replacement costs, single tenant exposure with the tenant that had a termination option. So we felt that it was a great opportunity to get a great cap rates below 7% and that’s in our exposure to the Toll Road.

And then the asset we just recently announced the sale of it in southern California Pacific Ridge, 121,000 square feet, $29 million, so close to 240 a foot. So in southern California as we’ve talked about in the past, we are looking to exit southern California marketed not being too constructive as yet. So if we get an asset that we start to stabilize and we get opportunities to sell those assets at very good cap rate, we will do that. Since the synergies of those portfolios are that their assets are in different places and they can’t be sold individually. So opportunistically we look to do that going forward.

On a blended basis, 291 a foot, and the cash and GAAP for ’012 is 6.7% and 6.9%. So good cap rates out. Currently, we have about 686,000 square feet currently in either negotiation marketing or reverse inquiry and that’s about $77.5 million.

So, again we’re going to continue to look to recycle capital and again although the target is $175 million, we would hope that there is opportunity to do more of that and either strengthen the balance sheet or recycle that into other acquisitions we will be doing that. Turning over to Bill Redd.

William D. Redd

Good morning, I am Bill Redd and I have the pleasure of talking to you guys today about Richmond and Austin. We’re going to start with Richmond and the picture of the building actually where our offices are. We [think] to take note of regarding Richmond is that Richmond was struggling in the early part of the recession, but clearly its back. We are not all the way back yet, but clearly on our way. And that’s been recognized in a couple of publications you see at the top of the page, particularly as the job growth and kind of being open for business. And clearly we’re in a very pro business State in Virginia so that’s certainly help for Richmond got that reputation as well.

Richmond also enjoys being a corporate Mecca for Fortune 1000 headquarters, which has been very good. We’re strategically located on the east coast and have a tremendous transportation infrastructure, which is a huge benefit. But from a labor force standpoint, a very young labor force, very highly educated 60,000 students in the local area and another 190,000 in a 100 mile radius, which is very strong. And you’ll see you get very similar even stronger metrics than that in the Austin, Texas market.

Richmond also enjoys being the State capital, being a very high quality of life and we enjoy relatively seeking very little unemployment rate relative to the national average of 6.2%. I don’t think not many people realized that how international Richmond is? You don’t think of it that way, when you first think Richmond, but its 140 foreign firms there and larger than 50% of our ongoing economic pipeline is international.

Next slide basically is a summary of the marketplace, it gives you an overview of our platform were about 4.1 million square feet of owned JV or managed currently an 89% lease obviously we’re going to drive that above 90% by the end of the year.

What interesting to note is we’re the second largest suburban office landlord in town and also the second largest office flex landlord in town. So we have a very good platform from which to operate.

Market conditions today, rates are backup, not totally back as George Johnstone mentioned, absorption is positive although we like to see a stronger than it is. Current market vacancy is about 12.8% we stand in about 11%. If you look over the Brandywine rollover for Richmond for 2012 and 2013, of 15% and 16% respectively not a terrible thing to be facing, but obviously want to do a very good job on that and then in 2014 and 2015 we’re down below 10% which is a very positive thing.

Job growth which we’re getting noted for of recent, you can see the average job growth over the last number of years has been in the 1.2% range. Last two years projected through 2012 somewhere and 13,000 jobs adding a year for 2.1% which is very strong relatively speaking, but again you will see how strong relatively seeking Austin is in a moment.

Recent market news and this is very, very new, is making a big investment in Richmond. Capital one continues to be a big driver in Richmond. They’re the largest employer. They’re adding space, building new space and adding huge number of employees. Allianz Global up to a thousand employees. And really in Richmond were the occupancy has been taken place is fully with the larger companies. The smaller companies have been a little slower to come along, but we’re starting to see those guys gaining greater confidence.

The key for us in Richmond is to leverage the dominant position we have to get even better leasing results and we’re obviously trying to do that. We will successfully with our 2012-2013 roll, which we’re on track to do and really try to use both of those opportunities to drive overcome the risk and just accelerate leasing throughout our portfolio.

Moving to Austin; just kind of the (inaudible) that Austin gets just kind of every week, we get some sort of raking out of there. Number one fastest growing city in the country by Forbes. It’s a $90 billion economy with 6% of economic growth projected through 2016. 3.3% annual population growth, three times of national average and again a very young, very creative, very bright workforce.

One thing to note, which is really an extraordinary stat, 40% of the people live at Austin have a college education and that relates to 27% kind of nation-wide. And it is always being the state capital like Richmond, very pro-business state obviously in Texas. Unemployment rate very strong at 5.5% and its nick name is Silicon Hills and continues to be a big beneficiary of the migration of tech companies out of California, and thus the name Silicon Hills, but you can see 101,000 employees related to tech in Austin.

Portfolio overview, which maybe a surprise to you; we have 13 properties including our JV with IBM, 2.4 million square feet, currently 99.5% leased, which is leading the company has just been extraordinary. And we have our challenges, which I’ll talk you about in a moment. But in the strongest sub-market in Austin, we are the number one landlord and in the broader Austin market, we’re number two, which also might surprise you.

Market conditions are obviously improving dramatically in Austin, last 18 months in the Northwest quadrant rental rates were up $2. Absorption is up very strong, market vacancy is at 10.8%, we’re at 0.7%, obviously doing well relative to market.

You see over Brandywine rollover for this year, not a whole lot for us to do. We’re putting knock on that we were about 98%, 99% done for the year. But our real challenge is 2013. While the bad news is we have some significant role with Intel and Freescale, which George covered with you earlier, the good news is we have numerous prospects to cover that space and the properties where we’re getting that space back, literally ground zero in the suburban office market is the most highly regarded suburban Barton Skyway is in the marketplace. And so we believe, we’ll do very well and hope we will be well ahead of schedule and getting that back fill. Then you can see in 2014 and 2015 that our roll gets to be much more – easier to deal within healthy.

Job growth obviously is a very positive thing for us. You can see a – kind of a longer-term average going back to 2002, averaging 15,000 jobs a year, a 1.7% growth which is very strong. But you can see they are up to 22,500 on average for the next – for 2011 and 2012, and the projections continue to be at about a 3% rate going forward.

Recent market news and Tom alluded to Apple’s announcement that’s kind of been the biggest news in the last couple of months there, adding 3,600 jobs that already a huge player in Austin. But they’re adding a new campus and making a huge investment and adding employees.

Marriott’s going to build a new hotel downtown 1,000 rooms. Fairmont hotel is adding a 1,000 room. There are other hotel developments going on currently and you heard the Major this morning in Philadelphia talking about a need to add 1,000 rooms. Obviously, Philadelphia is a top five city in the country and Austin is talking about adding 2,000 rooms in just two hotels. So it gives you a sense for what’s going on there.

List a couple of names that you may recognize, you’re currently out in the marketplace, we recently done deals there. What’s interesting is even though Austin is a smaller city, relatively speaking the size of the deals you see there are large. I mean 50,000, 75,000, 150,000 foot deals. We see those every couple of weeks coming to the marketplace, so it’s really extraordinary in that regard.

Cousins has announced, they like to do a building downtown in the CBD. They need a pre-lease to do it, I want to let you know that. Other than that there really hasn’t been any new developments in the submarket certainly. Driving towards success even though, we are one of the largest landlords in Austin. There is an opportunity because of the way the ownership is fragmented there for us to potentially do some ownership consolidation become the biggest player there and try to rod this growth up as we can.

Obviously, we take advantage of stronger market, how to do drive our rates up higher as we have this roll in 2013. The other thing that we’re working on that we’re very energize around as we have an IBM JV, which involves seven buildings in Austin and million square feet. And they’re going to get one of those buildings back and perhaps over time get back other building, so we’re looking to reposition the building. They are getting back and taken an overall view of the larger campus, which is very nice and a great location in Northwest Austin, we tenant that building and set up a different operation there.

Our challenge is our 2013 rollover, but we feel very confident and we do not set out. And then the other challenge is as we try to grow in Austin it’s very competitive from an investment standpoint. A lot of people want to be often lot of people own property there, so we are trying about properties while it’s got to compete going forward.

And with that, I’ll turn it over George.

George D. Johnstone

Thank you, Bill, and thank you all for coming out and learning about our company. I’d like to take sometime and talk about the New Jersey and Delaware region today. And with that, I know a lot of you come out towards before and I thought it’s certainly the quick overview in terms of the region itself. For the region, 56 properties and sold 4.2 million square feet, Princeton area is about 800,000 square feet really Princeton Pike Corporate Center is the instruction of 1,295 just outside of Princeton and very close to Princeton University for any of you (inaudible) threat, continuing down 295, Southern New Jersey consist about 2.4 million square feet. Several markets there, but again, very low well located properties. And then the third submarket within the regions is Exton, Malvern, and Delaware in the immediate suburbs that’s around the both CBD and it’s building markets there.

And clearly we got 79.6% occupied, 81.4% leased. As Jerry and Howard mentioned earlier that 4% of the company's NOI and we have 48 employees doing everything from the properties engineering side all the way through the development construction, new house design, and leasing them and property management as well.

Of course market position, we are number one in Southern New Jersey, about close to 17% of the market share and number four in Princeton with 5.7% of the market share, and number one in Delaware when you include our JV with Beacon and if I would about say 6.4% of the market share.

Of course, market conditions our average rents right now again, close to the $20 for selected across-the-board the exception is Princeton, which is going to charge with 50 (inaudible) selected rents. When you look at the average rent for the market again raging anywhere from $20 up to $26.71 for the Princeton market as well, as far as market vacancy increased in 2011 you can see the rates anywhere from the lower Princeton of 13.3% to high Delaware CBD have got 20%. Of course vacancy trends actually vacancies have been going down in all of our market with the exception of the Delaware suburbs, which again, it’s up, only up very slightly in that case. we’re seeing very good fundamentals across all of our markets actually and I’ll talk about more specifically in some slide that will address the specifically New Jersey submarket.

As far as rent, flat or stable as the new up and then again, what we will be seeing some of a momentum on the rent as it continue to make some headway on the (inaudible) that we do see. Tenant improvements, again flat across the Board there and the same troop of concessions really haven’t seen any upward pressure for the concessions right now. And one of the things we are seeing is that we’re able to buy the tenant improvement costs much more effectively than where the market is much more heat itself. We have been able to buy much more for less in that that category.

As far as speculative construction with the exception of one building going up on second roof and there really is no construction with the overall market on speculative basis, if you build the suit, that’s put again on spec basis 188,000 square foot building for Princeton.

We have a rock solid governor in a State of the State Address in 2012, this year “Today, I am proud to report that the New Jersey comeback has begun.” And I got to tell you, it’s more than the words we’ve seen the results. And the administration is extremely focused from governor Christie, we trying to governor with (inaudible) the economic development authority choosing New Jersey into the my optics focus right now on growing the economy providing jobs in New Jersey. Now I think the result is paying off as we are seeing from the slide.

Now starting with Southern New Jersey; if you go back, this graph actually starts in 2005 through 2011 and of 2011. If you see from 2005 to 2008 relatively stable as far as the activity that we saw, as far as the occupancy and the overall Class A occupancy shown in the red line and the orange line, I hope you can see that on the screen, the overall is shown in the orange, the hash line, the overall of classes.

And so again, the market itself is fairly stable across the Board in 2018. You see and really more towards the end of 2008, for the first time in years, we actually had significant negative absorption and that trend continued for three years.

Unfortunately, when you look at the blue line, which coincide with any one occupancy, we have significantly outperformed the market every year and with the exception of 2009 for few years here, we are still not performing unfortunately in Southern New Jersey, but if you look at the reasons behind it, I’m not here to make excuses, but if you look at what happened, 2009-2010 we had close to 40% of our portfolio expire during that time, kind of the perfect infra during [21%], but again we had about 40% of our portfolio expire at that point in time.

So it’s one that we had a number of companies that close its work, one company, 160,000 square foot, company’s auto building and that’s reflected in our numbers here, so, but again you look at 2010, despite in our vacancy we are still making some significant headwinds of 2%, so again we are down, its Southern New Jersey specifically about 26% and again I will talk about that more specifically here in a moment.

Looking at for instance again, the same colors were for the granite, again for anyone consistently outperforming market in every year, with the exception when you go to 2009, again a bit of a pattern here. In 2010, again this graph in this particular dataset is based on 800,000 square feet. So we had one company, 65,000 square foot company, they downsize to 15,000 square feet, so again this spike is dramatic, but its 50,000 square feet. We ended up back only with another 50,000 footer and got the line back down to where we were previously. So a lot of work to get back to where we were, but again reflective of the market and we are at the success that we have had in our portfolio, but again on 800,000 square feet phase for anyone performance is there.

But again, if you look historically, frankly we’ve been in the very low single digits for occupancy. In some cases, we are in at literally 100% occupancy over time.

What they omitted in both CBD and suburbs is a combination of two markets. Again very similar team, outperform the markets, consistent performance throughout the time here, and again if you look through 2005 to 2008 pretty consistent performance for the market, and again Brandywine consistently outperforming.

2009 again on about a 1 million square feet area in Wilmington, we end up having the few companies with bankruptcy and few other companies with the contractions. We had a spike in our vacancy in 2009, 2010. Again this makes some really nice strategy in terms [excellent] in that space. So I think really speaks the volume, but the strength of the team and the strength of the company and the relationship that we have within those market though. And again, you see consistent throughout each of the suburban that we have.

So what are the market challenges? You know one of the issues we have to concern with, we have vacancy that’s 15% and higher in some cases with over 2 million square feet available per lease. And then the other issue we constantly concern with our leasing folks with and you’re trying to balance aggressive lease up and you still preserve value work. It’s easy to be a deal with some cases, but it could be terrible deals and locking for long-term. So how that’s balance occupancy, rental rates, capital and all the metrics that we need to deal with and you can saw concern which is well in Maryland and considering which company’s invest with.

The other is the accommodating large users that have density in some cases 7% of the parking work conventionally we were building (inaudible) on parking allow users they return the tax more volume being less space, then how do we (inaudible) with that parking trend, especially on the suburbs.

As far as the opportunities in south in Brandywine we have a great inventory of quality well located large blocks of vacant space. And I will detail them in another slide. Very, very positive sign for the first time in 11 quarters, we are seeing organic growth happening within the marketplace, where it was 33 companies and again I’ll detail that as well in the next slide.

But we are starting to see that because more for longer time, just sort of that unemployment and job, office and again for the first time now and nearly three years we’re starting to see the organic growth happening. Again I mentioned earlier the virtually no new speculative development, we have a tremendous leasing pipeline of 1.1 million square feet so it’s a very strong and diverse pipeline so we should have very good to see the pipeline returning, which is indicative of where the market is right now in the economy.

And the other factor is 47% and almost 50% of our vacancy in the region concentrated in six buildings, and our next slide will show that so that 430,000 square feet in six building so nearly half of our vacancy is going to be concentrating in six buildings. These are the pictures of the six building, the 1000 Howard building, I guess to see your right, your left get there is your, but you trying to figure out but the 1000 Howard is up over building, great building right at intersection of the (inaudible) with 73 and 295 in a market but the core intersection there. We recently reposition the building and have that 55,000 square feet space available in that building.

Next that on the slide Plaza 1000 the top middle we can do about 115,000 square feet in 500,000 down in North East, 10000 Midlantic, you can do only with the 100,000 square feet, 10000 Midlantic, again great locations, great buildings, it’s not like we have evolved in (inaudible) of 5,000 square feet multiple buildings again like we have big lots of vacancy in some very nice buildings in very good locations and fortunately, we have some very good activity on the buildings as well. 11, 20 with 73 again building that we’re taking the time, we spent some money to reposition and this buildings look tremendous, they’ve been polished, they’ve, we’ve got lobbies and bathrooms and other parking lots creating the amount of the 10000 Midlantic we are creating a café, we are creating a cafe, we’re creating a fitness center. So it’s a tremendous amenities in the buildings and it showing the activity that we’re seeing 989 Lenox Drive from Princeton Pike; the 6E. Clementon building located on the Lake downtown in Southern New Jersey as well.

One of the keys to success was the New Jersey. We went for the first time we’re seeing the job growth I mentioned it’s over 50,000 new jobs in New Jersey from February 2011 to 2012, highest level since 2000. So again it’s great to see the jobs when we back to New Jersey and again it’s on the success I mentioned earlier that absolutely going to be result of that.

If you look at May 2012, 17,600 new private sector jobs for New Jersey. Highest monthly job growth in seven years and as Governor Chris he is not (inaudible) but he said he has 25% in higher jobs created in higher countries. We’re created in New Jersey in May; that’s against the backdrop of almost 250,000 jobs that were lost in accumulative basis in February 2008 to 2010. So again it’s a very, very nice job return, of jobs in New Jersey.

Before this type of jobs that we’re seeing specifically PHH is the mortgage company in Southern New Jersey, 800 jobs. At TRG, another title company, 400 jobs. Bank of America, 500 jobs they announced over the next three years down in Delaware, base to JPMorganChase 1,200 jobs down in Delaware, and Capital One again in Delaware, 500 jobs after ING merger.

Again it’s the keys to success; continue to capitalize on reputation, quality landlord and financial strength to get it done in the market presence that we had. And then also leverage all the relationships that we have with existing tenants, vendors and business organizations and that just make sure. So the bottom-line is we have the pipeline to do it. We’ve got the properties to get it done internally the people that are dedicated to do it. I’ll show you [we] will get that. Thank you.

Robert K. Wiberg

Good morning. I’m Bob Wiberg, Senior Managing Director for the Metro DC region. And this morning, I’m going to briefly cover the market, our position in Metro DC and some of the opportunities and challenges that we see. So with that we start with why we invest in the Metro DC market, and I’ve looked at some of the key attributes, but they run through them.

Our Metro DC is ranked as a number one Metro area in the United States for business in 2011. We think that’s big to the business climate there. We are ranked number two in the nation for knowledge workers, speaking to the quality of the labor force. We’re the third largest office market in the country behind only this New York City and Los Angeles. We’re the fourth largest job market in the United States with 3 million workers. We’ve the lowest unemployment rate in the nation at 5.5%.

And we are a home to 20 Fortune 500 companies and Fairfax County, where we have our largest segment of our holdings at 10 of those Fortune 500 companies itself. Our Fairfax County alone also receives more federal procurement money than 42 states and any other County in the country. And our tech employment is very large. The last survey, I saw was 2008, we had the largest tech employment for any County in the country even exceeding Santa Clara County in California.

So turning to our portfolio; our property holdings in Metro DC totaled 4.2 million square feet. And in addition, we do have the 400,000 square feet and the joint ventures with Allstate currently, plus the 500,000 be coming in with the states were in July. Our properties are distributed across the region. We have 3.3 million square feet in Northern Virginia that’s about 75% of our holdings. The other 25% are in suburban Maryland.

We also have two developments space one the Dulles Toll Road and the district we manage the 1.1 million square foot headquarters for the International Finance Corporation. This portfolio makes us the fourth largest owner in Northern Virginia and also the second largest owner in the Dallas Toll Road behind only [bulk] properties. As of the first quarter of 2012, we were 79.2% occupied and 82.5% leased in this portfolio.

So first focusing on the Northern Virginia market, it takes about 180 million square foot of office space and it has a current vacancy rate of 14.4% and that’s up from about 13.8% at year-end 2011 and the driver for that was really the negative absorption that happened this quarter with that 1.3 million square feet negative towards ever that we’ve had and the reason for that really was the BRAC move out that occurred in the first quarter and BRAC for those who aren’t familiar with it is demand dated relocation of federal workers that at leased office space, principally in all (inaudible) county and to secure facilities like Delaware. So that was a reason for this.

As you see, we are really running and start contrast to our historical absorption of about 3.2 million square feet per year, and the good news is, we are also running way below our historical 3.8 million speed of deliveries annually. In 2010, we delivered 790,000 square feet, in 2011, 1.2 million square feet, that was about 70% pre-leased, in 2012, we are up to 2 million square foot construction pipeline, but that includes principally building Arlington County and some along the metro line that is started.

So in summary observations in Northern Virginia, over the past five years, absorption in this markets run less than 6% of its 15 year average and that’s really what’s driven up the vacancy rate to the current 14.4%. For the next 12 months, we really do see the federal sector lagging, so we think the growth will occur in the private sector and probably in this technology sector within that. I think a recent example of that is Amazon web services really recently came into the market and rest (inaudible) 85,000 feet of an initial state and they’re really providing service to the government moving computing to the cloud. We think that’s a leading indicator of growth ahead of us.

with that limited amount of new construction that we do have underway, we do think they get the rates to be pretty stable over the next couple of years and over the next five years, we think Northern Virginia’s desirable infrastructure, which really includes about $5 billion of current work underway from metro and hotlines along the Capital Beltway, or educated workforce, business friendly, politics and access to government, we’ll keep that Northern Virginia, the leader to our sale growth in office absorption.

Turning to Suburban Maryland at some 88 million square foot market, 14.1% vacant currently that’s down a bit from year-end 2011. We do have positive absorption, 86,000 feet in the first quarter, still well below our 900,000 foot long-term average with positive. This is a market that delivers about 1.4 million square feet a new construction a year typically by 2010 with only 60,000 feet. 2011 about 260,000 feet about 50% pre-lease. In 2012, we do have 2.2 million feet under construction about 90% that’s pre-release, principally the federal agencies including the National Cancer Institute and the Nuclear Regulatory Commission.

Summary observations on that market, the strongest parts of that market really Bethesda and Silver Spring that I do a large part to the metro, but also both markets have to keep amenity base as well as quality housing and 2011 Montgomery County where we have the principal part of our holdings with the best performing segment of the Suburban Maryland market that’s also through first quarter 2012.

As I mentioned, there is 2.2 million feet under construction that sets 90% pre-lease and unlike Northern Virginia, which really have the negative frac impact. In Suburban Maryland, it’s actually been positive because contractors are becoming into that market is collocate with some of the fracs group going up to (inaudible). As well this is a market that has the health and life sciences sector, well represented that’s been a steady to growing part of the economy there and we’ve had fairly minimal construction, so we think that will keep vacancy rates fairly stable as well. I think there is some good news on the job front, the low point in this market with 2009 when we lost about 50,000 jobs. It’s been growing since 2010; in 2011 we generated about 30,000 new jobs.

Now local economy is predict that will had 40,000 jobs in 2013 and 2014 which is about of historical average. The majority of these jobs typically go to Northern Virginia, we anticipate that will be the case, we then receiving over 50% of the new job growth followed by the district is suburban Maryland.

So turning to our market position as of the end of the first quarter we were 78% occupied but actually 80% lease in Northern Virginia and 93% lease in suburb of Maryland. The Virginia vacancy rate was really driven up by high level of lease expirations over the past five years which averaged 672,000 square feet a year. The next five years like much better with, less that half that 308,000 feet a year expiring to that will give us a chance to build that occupancy. Of our Northern Virginia vacancy is about 50% is contained in big blocks space in five buildings and that’s important because big blocks pace are much less competitive inventory then saved under 10,000 square foot.

After 70% of our Northern Virginia vacancies are in Class A or [troppy] buildings that received to the like – we’ve been across the market and 87% of our vacancies are in the (inaudible) Toll Road which is the high growth for job. One thing we focus, I think George mentioned before was focused on renewals, we’ve renewed lot of our 2012 tenants already, we’re also currently taking to 195,000 square feet in 2013 and 2014 expirations to get them signed ahead fine.– I think its important to also mention, there are significant market drivers in our portfolio and our major markets so for instance for Tysons Corner in the Toll Road, the metro expansion we see is a major driver; then it really benefit our portfolio, because we have 350,000 feet of office space within a quarter mile of new station and we have 1.8 million square feet within half mile of a new station.

In Merrifield, Tricare, which is the military’s medical service provider, recently relocated into a new 760,000 square foot facility and that’s estimated to have about 400,000 square feet of contractors as followed it. They just came in at April, but we are already starting to get tools from the director of contractors.

And now at Reston/Herndon, where we have a big position, this is really the technology center for the entire metro DC area, we do see technology expanding here, we do think Amazon was a good leading indicator of that.

So as we look forward, there clearly are market challenges, there is limited federal leasing currently and procurement spending will probably not going backwards, loans will be growing like it has. BRAC has really impacted the market in its first quarter and its – we are going to play through it through the rest of this year and there is ongoing consolidation and drive for efficiency by Corporation here so, they are very bid conscious.

But we do have key opportunities and that include our limited rollover in 2012 and 2013, we do have a very high quality portfolio of office space, and importantly we do have signage opportunities on most of our building and that’s a important differentiating factor, particularly on the Dulles Toll Road where that’s on everyone’s checklist. We do have positive job growth in Northern Virginia underway and still continue to expand with limited amounts of new construction and we do have major infrastructure projects delivering between 2012 and 2016 including the metro and the HOT lanes.

So I think the bottom line for metro DC has been in short run, there clearly are challenges, but in the mid and long-term, this is the really attractive market. And in the short run, we are very focused on increasing our occupancy in the portfolio to bring it back to a historical level. Thank you.

H. Jeffrey DeVuono

Thank you, Bob. Welcome everyone, and I’m having the privilege of talking about our Pennsylvania operations. We are running a little short – a little behind schedule. So I’m going to try and tighten up this presentation today. But this morning or this afternoon, our tour is going to be of our Center City property.

So through this presentation, we’ll walk you through this morning. We’ll try and focus our comments a little bit more in our suburban operations that you can orient yourself with that. And (inaudible) trying to be respectful over time – we’ll try and focus on three things now given the timeframe. Really our products are positioned in the marketplace, and really why we think that brings a pretty positive future for us going forward.

So, for those of you who are familiar with this area, you’ve got a math in front of you of the Philadelphia metropolitan area. In the lower right hand corner, Center City, Philadelphia; to the left reaching out is our suburban asset. The crested markets, if you’ve heard reference to earlier this morning, highlighted in green there and that’s the real focus of the company of Brandywine going forward.

We’ve got about a 100 assets within Pennsylvania, about 12 million square feet, about 7 million square feet located in suburban operation, about 6 million square feet between the joint ventures and the wholly-owned assets downtown. But of that 7 million square feet, we have in the suburb for about 3 million of it. It’s located what we thought asset market.

Now you’ve heard referenced to it earlier today, but its important assets back (inaudible) probably highlight again. If you look at this math in the company going forward, you’re going to see most likely as opportunity present themselves and increase in our position and throughout the asset in Center City, Philadelphia and a potential increase in our position in our preference market and a decrease in what we will refer to is our more commodity side market further out in the summer.

So really as we walk through the specifics, a clear bifurcation in the performance of your commodity side suburban markets versus your Crescent markets and your gears go back and forth between the footing on all the market specifics and then try to isolate some of Crescent markets as we go forward.

So overall, we continue to be pleased with our performance as you can see in the left hand side, you’ll see the revenue sources for the company it’s about 55% of the Pennsylvania operations. But more importantly, the occupancy level goes on occupied and at least bases are pretty strong.

So this next slide does not have a fancy photograph there is that one, we actually get pretty excited about. Our suburban markets totaled about 58 million square feet, when I first got this business in 1985, it was roughly 25 million square feet with cover, you move that calendar up to 1995 to 35 million square feet, 2005 to 45 million square feet, today it’s 58 million square feet.

On a go-forward basis, we don’t really see that engine four is increasing materially. our industry is always (inaudible) we continually build products over time, it clearly outdid, the delivery of product outpaced, John Ross, which will talk about in a few minutes.

But on a go-forward basis, when you look at the corrective markets in particular, which is solid 9 million to 10 million square feet, you have less than 1 million square feet of new inventory, not all of it is EV2 detailed. and quite frankly our position in the marketplace controlled about 60% of that either portfolio and that’s our joint venture.

So a combination of these occupancy levels at this point in time and the one, John Ross, this is why we like it. That needle moving from 58 million square feet, we know it’s the future brand, but let’s say that turns into Mac 160 million square feet, a 1% change in job growth in the suburban market people that met 500,000 square feet of absorption.

We’ll talk about a little bit later, but our job growth in this urban market has been anywhere between 2% and 3% and 1% overall. And that’s our historical job growth. It’s our historical absorption level. So if you really look at the combination going forward between the job growth, the lack of inventory, it really does bode well from an ownership perspective, the [T] market rent growth.

More importantly down here as well is the top 10 Owners Control, a significant portion of the marketplace 32%, EPS 47%, other markets that Brandywine considered itself to be active in, primarily the Crescent Markets. You’ve got a fairly wide variety of owners beyond that top 10, but separating our products for a moment, think about our position in the marketplace. So in Radnor we got 85% of the Class A market, 51% of the overall market, Plymouth Meeting 77% and 34% and Conshohocken is 41% and 23%.

Just to put it in context, if you were all customers are and we were broker running you around through the marketplace, just using an easy number in Radnor. If you were looking at 10 different space auctions through that (inaudible) we would have roughly eight of them adopted, certainly can’t guarantee your outcomes, but it certainly provides you more face time with your customer, influences are definitely a little bit better and probably influences your pricing a lot better than no.

So from the company and the resources our people have between the cash available, the short decision tree for taking advantage of opportunity that these results perform, Center City, Philadelphia 38 million square feet also the consolidated ownership position, five property owners control 35% of the overall market. For those of you familiar with the City of Philadelphia, of 38 million square feet in total, 31 million is located in what we refer to as the West Market Street Corridor and that’s where the 45% ownership stake comes in, fairly wide variety beyond those top owners and our market share is really second to none, 25% of the Class A, 55% of the Trophy asset and 19% overall.

So we’ll kind of move through this slide. 2012 was, been an anomaly for us. We had more roll over than normal. But the outcome, the result has proven itself pretty well where we’ve taken advantage of that situation. The building you are in today, Three Logan had, a lot of you are familiar with this transaction. We basically had 900,000 square feet of this 1 million square foot building, rolling throughout the year in 2004 and we’re pleased to say, we have roughly 100,000 square feet remaining to deal. That really will have a successfully year and a great effort to [speed rush the rest of ’15].

Market absorption positive in Center City. The overall has been negative, but again it’s kind of important to differentiate the Crescent Markets versus the broader markets in the suburbs. When you isolate, the Crescent Markets were actually slightly positive for the first quarter of 2012 and the projection going forward is our normal run rate, several hundred thousand square feet positive for the year. So that’s going to decrease vacancy rates. The region we have, the dash there between the flat and the up, the flat and the down some of these is because not every market is equal.

So you clearly have up ticks in rents, downticks in vacancies and impressive markets, but in the northern suburban markets you have southern two or two part, was a lot of fragmented ownership, a lot of available lands on new construction. They just continue to have some challenges.

So what are the key opportunities for us? We clearly have a great product, a great position in the marketplace. We continue to probably get more than our fair share. Everybody left in this business is very good at what they do. There is no doubt about that, but again I think as earlier, the structure of the reformat is just tremendous from an operator’s perspective. You’ve got cash available, short decision tree, consolidated ownership. We have a very strong history of moving [pennies] around our portfolio. We’ve signed a lease for 10 years. That’s a very challenging, environment prediction business for that long.

People want to flexibly to make decisions and change their office environment throughout their business history and we have a great platform to do that. Purchasing power, with the exception of 2011, our fiscal run rate for the last five years, our operating expenses have increased 1% plus or minus 10 basis points. So it really has been effective for us, to aggregate the resources of the company. That’s proven well from our operating expense history and should increase our margins.

And really that rolls into the go to Landlord. So it’s real simple, workers want to be paid. They are comfortable with us. We know we have the resources to take care of them. They know we have the resources to take care of those customers. Hopefully they’ll need a [tentative] go from that. And the $1.05 million, $1.07 million, $1.06 million, as Johnstone mentioned to you earlier, not an outstanding year for us, have a normal run rate and a lot of ups taking care of.

So some great stories around here. I don’t know if your newspapers are a lot like ours, but they sell them, sell more newspapers, selling to add news and good news, but we got some great stories. Couple of years ago Wyeth was bought by Pfizer. Everybody was wondering what the impact is going to be in the market and clearly Pfizer has kept more jobs in this market than anticipated and the users out there have taken advantage of the opportunity. So Dow Chemical is relocating people to this area. They’ve got 800,000 square feet, as you can see, is the first and largest Wyeth facility. The second one has been taken down by Vanguard, which represents not a relocation of their existing offices, but a combination, more importantly of job growth.

EHR who happens to be in the healthcare reimbursement business, continues to grow like a Wyeth (inaudible) square. Their biggest challenge is just filling the number of slots they have available. Their industry benefits from how complicated healthcare is, though they have the product feature going forward. Accolade is also in benefit business. They are in the benefit business, dealing with customers and the interaction between the employees and their insurance companies continues to grow, and as Tom mentioned earlier, they were the tenant of our suite 18 months ago with 10,000 square feet, grew to 30,000 and grew to 40,000 and now they total them to 90,000 in the (inaudible).

Shire Pharmaceuticals in this marketplace, that maybe familiar, they’re rumored to be in the market for somewhere between 0.5 million and 1 million square feet. CHOP continues to grow like the Wyeth Children’s Hospital. It’s building a new 140,000 square foot facility in the suburban operation.

Saint-Gobain is an international company, has their North American headquarters located here and they are looking at moving people from outside, some other offices and outside the States into this region and increasing their expand by about 50,000 square feet.

University of Pennsylvania, it’s very hard to predict where jobs are going to continue to come from, but University City has just a tremendous track record of growth and they have realized that market is so tight at $35, $36 a foot in rent. A few years ago they started migrating over to Center City, Philadelphia and they’ve taken anywhere between 0.5 million and 1 million square feet between that growth.

And Comcast, just alone in this building have taken 140,000 square feet, one of the greatest advantages are benefit for this asset and all below then square buildings is the addition of Comcast center. In addition to the 140,000 square feet, they secure we did another 100,000 square feet transactions with a amount of suburbs and the proof is in the reporting where do we stand? What you see in red is the overall vacancy in these individual sub markets, what you see in blue is for anyone basically in those sub markets, so we have typically outperformed the market by anywhere between 300 and 1000 basis point.

One thing that we just continue to point here is the statistics is very strong in the Radnor Saint Davids, CB, we talk about later, Conshohocken very strong and solid, King of Prussia, Malvern, next and Plymouth Meeting it’s a very important difference there and probably CDs and other markets across the country, when you separate the class A or institutional type quality, the vacancy rate decreases dramatically. So you were either in the high single digits or in the low double digits some those core markets and for example Plymouth Meeting, the one thing that’s shine there is the 21% overall vacancy, we need to just look at the Class A or the institutional top quality assets here in the 9% to a 11% vacancy rate.

So what if you don’t have a job, you don’t need an office. It’s all about job growth. We mentioned earlier, we had a history of slightly above 1% job growth, there is a separation between the city and the suburbs. The inner ring suburbs have historically the present markets been 2% to 3% job growth just in the Crescent Markets alone and we grew about 100,000 square feet of absorption per year when you look at the overall suburban market it’s about half a million square feet and in Center City Philadelphia with the aggregate space down here. Then we talk about 400,000 square feet absorption. How this relates on a national basis is the projection was got it after the slide was presented, but the projection from 2012 to 2020 is about 1.2% chart growth, we think the national average go office staff broke it somewhere along 1.25 and 1.3. So we’re consistently running close or near to national performance, and our comments for the summer, trying to rush through that pretty quickly and Gerry?

Gerard H. Sweeney

Thank you, Jeff. Well, we’re coming on the home stretch. So we have a Q&A session scheduled after I do some ramp up slide, but in the interest of final, those will adjourn to the lunch room, which is right down the hall, get people settled in there, and we tend do with Q&A wide people, the where we try to keep the floor on schedule.

So hopefully enjoy those rotations with of a lot of numbers that you object with what to give you a flavor for what we’re seeing on the grassroots level in our portfolio. So the objective of this ramp up is just to give you some benchmarks to look at, when you start to view the Brandywine over the next few years.

We really kind of laid out the path ahead looking for 2013 to 2015. As you hopefully glean from the presentations of the Managing Director in George Johnstone to chat. We are in a path operational recovery. we think we’re very well positioned in our markets. thus we lay out how we defined operational excellence over the next 36 months.

We will improve our occupancy levels to between 91% and 92% by year-end 2013 and we expect that continued positive absorption for the portfolio during this time period. So this company back in 2007 was a little bit north of 94% lease back the track that we plan on being on and certainly the path and the steps over the last couple of years have it very much on that.

We do expect to continue to maintain a nice, positive spread of 100, 200 basis points between our occupancy and our forward leasing. So as you assume we have a 91% to 92% occupancy level by the year-end 2013. We would except to be 92% to 93% at least by year-end 2013.

One of the things that really does get us excited is when you take a look at this forward momentum we have in our leasing pipeline today and near-term combined with our lower roll over schedule, '13 through '15 we really do think creates a very nice traffic for the company to continue drive our NOI growth.

For a same store standpoint, we are certainly forecasting same store NOI between 3% and 5% annually during that period. Most of that initially the beginning of that will come through occupancy gains or certainly planning this towards the tail end of that will see consistent rental rate growth to our market. So the combination of both volume and rate gains driving that number and certainly just saw from the slides for each of the Managing Directors and George’s overview comments, we do except that our capital cost will remain stable.

As these markets tightened, we’re short listing no real increase on concession packages. Key driver for us is our capital per square foot for this year. And when the tactics we’re using is making us to lengthen those lease terms, building 2% to 3% annual rental rate increases during that period of time to all rented up from capital, but as you look at over the next few years you can expect that our business plan contemplates. So we’ll be looking at stable capital for us during this period of time. So that’s how we are looking at operational performance.

In terms of looking at our balance sheet, as we termed here the right side of the right side and certainly I know this, as you look at Brandywine over the last few years, while we’ve paid down a lot of debt, then it’s of lot of things to make the right steps in our balance sheet, we really do view ourselves having more work to do, and we think that’s really very an intrinsic part of our business velocity going forward and a key part of our investment strategy.

So we look at our longer term target, we certainly anticipate looking at a six times or below EBITDA multiple, and certainly, would expect over the next two years kind of a tail end of ‘14 being able to get our EBITDA target of 6.5 times. So that’s a key part of what we are looking at as a qualified year.

The current stock pricing level, leverage reductions will be evolutionary, not revolutionary, we are very mindful of the NAV creation track that we are on. So the leverage that was driven by occupancy and rental rate gains, net selling activity as Tom touched on and acquisitions that will be financed either through sale proceeds, as you just saw with our sale of the acreage property in California, redeploying that into the Silver Spring Project. So we will do acquisitions will be financed through either sale proceeds or when we get to that point, NAV plus equity issuance.

We will maintain a very balanced managed, forward debt maturity schedule with no more than 35% of our debt coming due in the next four or three years. We are of to a great start with that. Remember the slide that Howard presented where about 18% of our maturities over the next several years; that’s a good starting point to maintain that dynamic, and we certainly anticipate continuing to maximize our liquidity position and minimize our line of credit usage and as a predicate of that minimizing our exposure for floating rate debt.

In terms of looking at our growth strategy in terms of our investments, our key targets looking for 2013 through 2015, we are looking at annual dispositions ranging between $100 million to $250 million per year. You can see that for 2012, we’ve got a $174 million and we’re confident we will achieve. And then we look from an acquisition standpoint somewhere between $75 million and $150 million. You’re obviously modulated by the faith and success of our sales programs.

The investment focus will remain increasing our urban and town center concentrations, Jeff did a very nice job laying out for you how we bifurcate our view of the Pennsylvania suburban markets. The clear bias for those crescent market, much less emphasis on Southern [toll] and some of the more commodity based horizontal development market.

We’ve reduced that commodity suburban exposure going forward. We will exit California certainly within that timeframe and we took the first step on that yesterday. And we will expand in Austin, but a key qualifier there is that we expand that one of the challenges as Tom outlined and Bill outlined in terms of the competitive set in that market that we still do reserves of right of Austin and as trading market there.

We have an incredibly strong market position and unencumbered asset base. We know we have work to do through 2013 with the Freescale and Intel rollover, confident we’ll get that done. And that really does for this company in a great position, consolidate our market position or maximize our profitability and move out that market.

And I want to close on just our game plan that’s been alluded to a couple of the speakers on our approach on our land bank. We have about $109 million land bank and our game plan is over the next couple years to monetize at least 35% of that. So how we’re going to do it? Refresh our course, we have about 500 acres of ground. They can do that 6.7 million square feet of office space. $109 million carrying value that only represents about 2.4% of our asset base though we certainly have over land it, but it’s still $110 million. Our investment base is very attractive about 16 bucks that’s our foot so very much in line with economic office development, if when rental rates present themselves, so attractive investment base, well located for the most part all entitled, so we’re also very mindful the shift has been taking in place in some of these suburban counties whether due to infrastructure improvements, mass transportation or simply changes appetite in some of these localities.

To our approach that where appropriate, we’re targeting rezoning to non-office use, we’ll shift from office either residential, retail or hotel, I’ll give you a couple of quick examples of that in a moment, but the timeline for that deployment, we view as anywhere from 6 to 36 months. We took – look at the, the overlay of the office development landscape and certainly have seen for movements everyone of the presentations, rental rate levels today are well below replacement cost with very few exceptions, when you see those exceptions, they’re still not attraction of support sustainable office development.

We’ve also seeing an acceleration of land value primarily in hotel, retail and multi-family at a far rapid, far quicker pace than we’ve seen the acceleration of office land values. And we laid out here just where a large concentrations of land our so for in that $109 million, we have 41% that land bases got up in 12 sites in Pennsylvania, 29% of $32 million have tied up in 10 sites in New Jersey, you will see later today, we have three land sites at 18% of our land based here in the city of Philadelphia, and the rest is about 12% primarily just got between two very nice office place in Metro DC and a couple of place in Richmond, Virginia for the total $109 million, we have about $40 million of land that’s currently in either re-zoning or planning, now we’d expect to be able to monetize over the next several years. So what’s the base business model on that in terms of creating value?

For the property it is always in the right path. And I’ve think we’ve done that in the past, and you will see us do that that in the future, unless there is an alternative value proposition for us. And if we windup joint venturing, and it is land development. We will be doing that with a residential developer, who is well capitalized, and it is not to say developer, but also becomes a significant investor in the project.

We were most likely augment that with institutional financial equity financing sources. And the project that we are looking at is distributing land at fair market value, which in many cases will be the lion’s share of the equity required for Brandywine to retain an ownership stake in that development.

From a near term land deployment, I think Tom touched on this, we have a (inaudible) meeting Pennsylvania, we did perfect the approvals for 400 department units, we are in discussions with very well capitalized residential development company who would take the lead development role on that property and generated significant rate of returns for Brandywine.

Cira South, which is you’ll see later the it has two pads like the Chestnut three pad services, the northern one and the one that was the southern side that for rents to be mixed use residential and we are in discussion with a residential company to do that as well. And then the 1919 markets we say it was located with markets adjacent to our partnership project with Thomas properties is again programmed to be a mixed use JV, we own that land on a 50/50 basis with independent will (inaudible) in the city of Philadelphia bought it through an option process of the foreclosure options and it is being programmed for a apartment to retail and parking. In addition to that we’re also have in planning our Main Street land site, George have touched on the Main Street developments around that Plaza 1000 buildings or a number of parcels of ground that would our residential and another site on Route 38 in Southern New Jersey, our 10000 Midlantic, Drive site is in zoning change right now from office to residential and hotel as our several other Pennsylvania sites.

So this take-away point, I think on the land site of the thing very active in accelerating the rezoning, reflating, reapproval process for a number of (inaudible) ground that land will be deployed to both direct sales and in several cases through contributions of that lands to joint ventures.

That really wraps up our presentation for this morning. I appreciate your patience. We’re looking forward to whatever questions you have. We’ll break from this room and move down the hall where there will be lunch will be served at fine sound schedule, couple of things at your seat there are, there is a little companion of information we pulled together was really the stores of the Center City District, the University City District here in the city, right there on the City of Philadelphia, don’t forget your core book which kind of lays out with steps that we’re going through for our tour between 1’o clock and 3’o clock this afternoon, and then finally, we have a small little gift probably one that is handed is an iPad holder, certainly there is feel free to take it if you like or leave it behind if you feel this can’t take it but it was just our way of expressing in small way our appreciation piece of coming down and taken the time from your sched to learn more about our company.

So thank you very much, we’ll break now and we will do analyst Q&A over lunch. Thank you.

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