Welcome to the Alexandria Real Estate Equities, Inc., First Quarter 2013 Earnings Conference Call. My name is Aran and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Ms. Paula Schwartz. You may begin, ma'am.

Thank you, good afternoon. This conference call contains forward-looking statements within the meaning of the federal securities laws. Actual results might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company’s Form 10-K, Annual Report and other periodic reports filed with the Securities and Exchange Commission. Now, I would like to turn the call over to Mr. Joel Marcus. Please go ahead.

Thanks, Paula, and welcome everybody. We’ll try to be somewhat shorter in format; hopefully, we leave more time for Q&A and efficiency on a busy earnings day. Starting on the macro, we’re obviously fortunate that Alexandria Real Estate Equities has a very good business with the highest quality team, Class A assets, cluster hub locations, and really world-class tenants, and I hope that continues with really great disclosure. We’re blessed to have significant opportunities to grow in our core CBD cluster markets and luckily don’t need to stray away from world-class locations. I think it’s fair to say that we have finally achieved a renaissance for life science R&D in the best cluster sub-markets where we dominate. If you read the April 29 edition, there was a great quote in there, let me share it with you: we could be witnessing a substantial re-rating where instead of a discount on R&D premium, a premium could ultimately be awarded for the potential option value of curing disease, and therefore our focus is and has been on bio and pharma in our core cluster markets. It’s important to note that area has only about 7% exposure to those specific universities and non-profits in the tenant sector which are much more heavily dependent on government financing. We seek to do business with those that have large endowments in the center of the clusters. On internal growth for a moment, let me just transition there, we had a very solid leasing quarter of almost over 700,000 square feet; we’ve only got about 568,000 square feet left to lease in the balance of 2013 on lease rolls and about 309,000 unresolved. So this is actually pretty minor compared to the usual strong effort is being made to lease up purely vacant space by our first-class regional teams and that should positively impact occupancy across all regions, both starting in the second quarter and beyond. San Diego decreased a bit due to some vacancy and newly operating properties, but once again, our strong domination of the San Diego lab leasing market will move that very positively through the balance of 2013 and we feel very comfortable with our year-end occupancy forecast of 93.9% to 94.3%, and certainly hope to beat that. On the external growth side, we have had a very solid leasing quarter for redevelopments and developments of almost over 450,000 square feet, heavily attributable to the Onyx leasing area. And we'd like to know an improved disclosure on developments and redevelopment that should make it very clear to follow these projects and visualize the high quality and the details of what we’re doing in those value-add programs. On the development leasing, we have signed a 131,000 square foot LOI with a credit tenant at the Alexandria Center for Life Science, New York City, and several other LOIs are in process. We actually have quite a number of active prospects, probably more than half a dozen, who are actively engaged with us and interestingly enough, coming from both Japan and Europe from Pharma. We expect to be hopefully close to 50% leased as we head into the summer months. We expect in the June and July timeframe to have 499, substantially fully leased and resolved, so stay tuned. On the balance sheet and Dean will speak about this a bit, we’re on target to hit our leverage target by the end of the year and refer you to the details in our press release. On the expected sales, we have $45 million of non-income producing assets under negotiations right now. $65 million is projected from the partial sale into the joint venture from the 75/125 Binney, which is ongoing, and the remainder would be about $125 million coming from additional domestic and potentially international sales of non-income producing assets. We think it’s imminently achievable and highlight the EBITDA onboarding through the end of the year. On the sales of income producing assets and a recycling program, we’re mostly done for 2013 for income producing assets, with a very modest amount planned for 2014. The total NOI loss is anticipated to be a maximum of less than $2 million for 2013 and 2014. We hope to restore the valuation for these great projects over time and finally, on the dividend side, I would expect that the Board would continue to look at sharing increasing cash flow with our shareholders. So stay tuned on that. So let me turn it over to Dean.

Okay. Thank you, Joel. Let me just start with our balance sheet. We made good progress in the first quarter and I’d like to provide an update on important initiatives through the remainder of the year. Cash flows from operating activities after dividends are on track at $130 million to $150 million. We are basically done with the sale of income producing assets; we completed $124 million in sales in the first quarter. We have three properties held for sale as of the quarter with a net book value of approximately $7 million, including about $4 million that was sold in April. Briefly on our unhedged variable rate debt, over the near term, we expect our unhedged variable rate debt to range up to approximately 30%. Our strategy includes having an amount outstanding of unhedged variable rate debt to allow us to opportunistically issue unsecured bonds and repay outstanding unhedged variable rate bank debt. Moving on briefly to our guidance on our unsecured bond offering, clearly our first priority is our 10-year bonds as far as ten-year goes to extend our maturity profile and transition variable rate debt to fixed rate debt. Our pricing for a ten-year paper for Alexandria is approximately in the mid-3% range. And to just give you some other data points, seven-year paper is approximately 2.75% for the company. We expect to prudently manage our maturity profile ten years from now. So a midpoint target for our ten-year unsecured bond offering this year is in the $400 million range. We will look opportunistically to issue additional unsecured bonds to reduce our unhedged variable rate debt to less than 18%. As Joe highlighted, we remain focused on reducing our leverage to approximately 6.5 times targeted by the end of the year. The majority of the improvement in leverage will occur in the second half of the year, and we expect our EBITDA growth from the first quarter to the fourth quarter to range from $10 million to $13 million. Moving on to our construction forecast for 2013, you probably noticed it’s up about $25 million at the midpoint. Our current range is $570 million to $620 million, with $13 million of the increase related to the commencement of our build-to-suit for Onyx Pharmaceuticals at 269 East Grand. We also have about a $10 million increase attributed to the timing of construction and the completion of our joint venture transaction for the project for ARIAD Pharmaceuticals at 75/125 Binney Street. Briefly to update on two construction loans we have in process, the first is for 269 East Grand, the project for Onyx Pharmaceutical. We expect the closing to occur in the second quarter with about a $36 million loan at approximately 70% loan to cost and pricing is probably about 140 over one month LIBOR. The other loan that’s in process is for 75/125 Binney; again, it’s construction financing in the low $200 million range, the loan to cost in the 60% to 70% range, and pricing is somewhere in the upper 2% range over one month LIBOR. Moving onto same-property performance, we really delivered our fourth consecutive quarter of upward trend in cash NOI growth, 2%, 4%, 6%, and now 8.8% for each quarter from the second, third, and fourth quarter of 2012 through the first quarter of 2013 respectively. You're probably noticing that we've provided two other calculations for same-property performance in comparison to our historical same-property performance, as shown on Page 16 of our supplemental package. From 2008 through 2012, including the first quarter, our same-property performance was generally consistent over this period with the other calculations. For the first quarter of 2013, our same-property performance including our redevelopment properties would have been meaningfully higher, as shown in the chart at approximately 11% on both the GAAP and cash basis in comparison to 0.4% on a GAAP basis and 8.8% on a cash basis. Same property performance, including redevelopment properties, will from time to time have significant growth in net operating income as a result of the completion of the conversion of non-laboratory space, generally with lower net operating income, to laboratory space, generally with higher net operating income through our redevelopment process. We believe our traditional method of reporting same property performance is a more useful presentation since it excludes the potential significant increases in performance as a result of completion of significant redevelopment projects. Same property expenses for the quarter were up about 6% driven by an increase in recoverable property taxes and colder weather this year in 2013 versus 2012, and as a result, we had higher snow removal costs and steam utility expenses. Lastly on our guidance, our guidance for 2013 was updated to reflect the tightening of our range by $0.02 for both the upper and lower ends of the range. EPS diluted was given at a range from $1.43 to $1.59, FFO per share diluted was given in a range from $446 to $462. And lastly, our assumptions detailed out in our forward guidance for 2013 are included on pages three through six of our earnings release and supplemental package. With that, I will turn it over to Joel.

Well operator, we are ready to open it up for Q&A.

Thank you, sir. (Operator Instructions) And we’ll take our first question from Emmanuel Korchman with Citigroup.

Hi guys, good afternoon.

Hi.

I was just wondering with so much capital activity included in your new guidance for this year? Could you give us a better idea of timing of perhaps the ATM and unsecured bond issuance and kind of why not the bond issuance now given trying to break some of the market?

Well, I guess that’s a question you could ask of almost any offering one does. I think we’ve been heavily focused on a number of other things in the first quarter, completing our asset sales, and certainly in the second quarter, we’re heavily focused on the financing, the bank financing of the construction loan financing of the two projects that Dean referred to. We’ll probably look to tap the ATM a little bit over the coming second and third quarters into the fourth quarter, and we’ll look probably as we start to get into early summer at the bond market. We’re pretty comfortable with the state of the overall bond market. We don’t think the Fed is moving in any different direction, but we’ll clearly monitor it and as Dean outlined, our goal is to reach the targeted numbers that we said likely of a $400 million bond offering and obviously turn that out. So I think I’d stay tuned. We no longer necessarily commit to any particular time, but as we get closer to the summer months and finish up some of the other critical priority transactions, especially non-income producing sales, we’ll clearly turn to the bond market.

Joel, it's Michael Bilerman. You just never know what external forces could have an impact on the bond market or the equity markets for that matter and moving out. So even if you have a desire to wait until all the summer, I guess would you at least do a rate lock so that you can lock in where you stand rather than take any risk, or just issue it? You can wake up tomorrow morning and issue bonds; it’s not like you need to do a lot of work to do that construction financing or mortgage won’t take a lot more time, but doing an unsecured issuance seems to be pretty simple.

Yeah, well everything takes time and it’s a matter of allocation of resources. I think on the rate lock, my own view is I think the economy is actually going to get worse, not better. So I think you actually may see rates come down even more than they are today. So I think I would watch the rate lock pretty carefully, and I’m not sure that we are going to see rates move against us, but clearly we’re paying close attention to that for sure.

Thanks for that, guys.

Yeah. Thank you.

We will take our next question from Jamie Feldman with Bank of America Merrill Lynch.

Great, thank you. Can you talk a little bit more about your increased confidence on leasing at 499 Illinois and also at West Tower?

I can’t on 499 Illinois other than to say what I said; I think we’re relatively comfortable after a long period of waiting—almost two years here—that we will substantially sell the building, and I would say just stay tuned for an announcement. I don’t want to say more than that and that is to relatively sell the building. On the New York project, I think I gave color on that; I’m not sure what else you want to know, but feel free to ask it specifically.

And you talked about European and Japanese former tenants. What’s the average size of some of these leases, and then where do you think rents are in both that versus your underwriting for that project in 499?

Yeah, on 499, I don’t want to make any comments at the moment on New York, as I said, we’ve signed a LOI with rental rates very much along the lines as we expected and they would not negatively impact our yields. There might be some bump coming up over time; that fourth floor is 131,000 square feet, we’ve got another half of a floor under active LOI negotiations; another half floor got put back a few months due to financing, so we’re waiting on that, and we have a number of LOIs that are out waiting for sponsors. I would say on Japanese interest and European interest, there seems to be substantial from something like half of a floor and as much as a floor, but again, it’s early on and I can’t say too much, but we’ve got a number of European firms and a number of Japanese firms; one who is already a sizable tenant of ours and another market actively looking. So we feel pretty good about things. And I don’t know, Peter, do you want to make any comments overall on yield?

I guess the only thing I would say is that the rental rates are holding very well in what we’ve underwritten and put into the disclosures. I would say that we’re doing better in absorption. We had a much more conservative absorption period in our numbers, so we’re looking to improve on that, and if everything goes as planned, we should.

That’s helpful.

Sorry, I can’t say more on 499, but I’d say stay tuned.

Okay. And then can you just talk about any change in appetite for the asset class, the life science office asset class? We’ve seen with CMBS improving, you’ve just seen more capital flowing into either secondary markets or just different property types in core Class A office. Has anything changed in the last three months in terms of appetite?

As far as for acquisition or financing, Jamie?

It’s sales of your—people are more interested in your asset.

Sure.

Well, we’re kind of done with the income-producing asset sales. But we did have a cadre of folks that we’re kind of in each and every deal that we were looking at that were interested in the repositioning of the assets and maybe taking on some of the capital that was going to be needed to reposition more to potentially be a lab owner in Suburban. I can’t really tell you if anything has changed recently, because we haven’t really marketed much of anything outside of the one property that we closed this last quarter in Pennsylvania, and that was sold to a company that was actually purchasing the main tenant of that property. So that was more of a user sale. So I’m not sure I can give you any more color.

Okay, thank you.

Yeah, thanks, Jamie.

We’ll take our next question from Matt Rand with Goldman Sachs.

Hi. Thanks for having the detail this quarter on the land bank. It looks like two-thirds of your pre-construction and future development land is in four parcels in Cambridge and the San Francisco Bay. Can you talk through those four parcels to make up that value and kind of what your timeline is for starting developments there?

Yes, for a second, yeah, so I guess 33 and 34 you may be referring to. So on 33, the two important parcels, they are pretty well highlighted as to geography, square footage, etcetera: 100 Binney and 50 Binney. We’ve talked about each of those a little bit on past calls and then in conferences. Our timeline, I think, would be to try to monetize those in a one-to-three year period. We think that demand in Cambridge would allow us probably to move forward with 100 Binney potentially sooner, and then potentially 500 Binney. We are also looking at doing two buildings at 50 Binney. But I would say monetizable, our goal is within a one-to-three year range and hopefully even sooner. On the right-hand side, you see the Illumina campus. There are two additional buildings totaling almost 400,000 square feet. We are moving forward with certain San Diego permitting as requested by Illumina there. In fact, their stock and their earnings have been pretty strong, so as they decide if and when they need to expand, we’ll be ready; we’ve just delivered a number of buildings to them. So we think over the short-to-medium-term, those are eminently monetizable by building for them, but we’ll wait to hear further from them. On the next page, Campus Point, which is virtually full at the moment, we’ve got one existing tenant and potentially two kind of clambering for space, so we’re working on getting the San Diego entitlement to build something up to close to 150,000 square feet. We think this is eminently monetizable in the more near term; and actually the construction path that we mentioned down below is one type of 452 to 505—not 550 to 605. So we think that is a near-term opportunity with the one to two existing high-quality tenants there. And then finally, on the Salt Lake Union land, we’ve got a number of opportunities both from potentially institutions and potentially even tech tenants which are starting to take over that market. We’re doing some entitlement work and working hard to see if we can monetize which we expect on at least one or two of these parcels probably in the relatively near-term as well. So we feel pretty good about that. If you flip over to page 36, once we put 499 to bed, our attention will turn to 1600 because we think there is some pent-up demand down in Mission Bay. Certainly institutionally, we think with coming on of half the three hospitals and the demand for a variety of users that then becomes center stage. We’ve had a number of employees, one in particular from a major hospital system, working with us there. So that could, we think that’s maybe a little bit more out beyond the year but hopefully maybe sooner than we think. Again, once we finish with 499. And then on Page 37, we’ve highlighted the Phoenix campus and what else we can do; we can build another building there, north of 100,000 square feet. We feel that they will probably fast-growing companies; their stock has been on fire, their cancer products have really been well-received in the markets, so we fully expect to build that project. And then finally in 9800 Medical Centre, we really have two great buildings there, but I think given the market in Maryland at the moment, and until that market further strengthens, we likely wouldn’t be building that. So I think that is more out beyond the near to medium-term. So hopefully that’s helpful.

:

Those are—we originally aggregated a series of parcels right after the time when the Genentech business, pre-Roche acquisition, filed their overlay to the South San Francisco planning district, and I can’t remember the year but it probably was right around 2007 or 2008. They expected to double the size of their campus in South San Francisco, so what we tried to do, in working closely with them, was to align a series of properties. It’s pretty clear that that’s not going to happen, and so I think we would probably look to either find users for those where we could build or potentially exit those assets.

Okay. Thank you. And then one last quick one; there’s been some talk in the industry about the opportunities that do you kind of on-campus university deals. How do you look at that model generally and is that an opportunity that you guys are pursuing?

Yeah, we had looked at it. We were involved with some; I think it’s practically very hard because of 501(c) rules. So I don’t think the opportunity is as great as one would imagine. I think also one would have to look today again with the challenges of federal funding and lesser dealing with the credit strength of universities like MIT or others, Harvard. Dealing with universities could prove to be very challenging because their financial situation, certainly under government budget pressure, is going to be tough. So that’s not something we are particularly pursuing.

Okay. Thank you.

We will take our next question from Sheila McGrath with Evercore Partners.

Yes, good afternoon. Joel, I was wondering if you could talk about acquisition opportunities in your markets. Is there anything noteworthy that you’re looking at or that you attempted to bid on and weren’t the winning bidder?

Yeah. So far this year, we really haven’t been active in bidding. We do have a pipeline in each and every one of our core cluster markets. We’ve been really stringent not going outside of those. So we are focused on the best markets in downtown Seattle, clearly the West Bay of San Francisco, where we did buy one great set of assets up there last year in the spring, which we will redevelop over the coming year. In the downtown area, we are looking at opportunities and probably may be in and around New York City potentially if we have a large firm that comes from overseas that we couldn’t accommodate at the Alexandria center. We might look for another Manhattan site. But we’ve very carefully stayed out of the suburbs because we think the best growth, the highest quality cash flow is going to be in the CBD cluster market. Peter, you could comment broadly too.

I just—Sheila, that I think we’ve been out of the acquisition game for a little bit, but in looking around at all the different regions, as Joel said, there are probably as many opportunities today as there were the last time we were in the market. So that’s encouraging. There are some really interesting high-quality assets that could be immediately accretive if we were able to get them at the right price. So we’re keeping our eye out but focused on all the other goals we have right now.

Okay. And then Joel, I noticed in your annual report you mentioned that NYU Neuroscience is a Tower Two, and I was just wondering if you could give us a little more detail on that?

Yeah, they are in Tower One.

Okay, I thought it’s…

Yeah, that’s in Tower One and they are funded by the Druck and Miller Family. So actually, it’s specific funding from an outside source, and they hired a world-class—actually, he is pictured in the annual report, Richard Jen; his brother is a Nobel Prize winner, who is having, really searching for answers and ultimately half some products to unlock some critical diseases including dementia, which is probably the biggest market opportunities that exist. So they are in a couple of floors in the East Tower.

Got it. And then Dean, on Tower 2 it is stated to come online in the fourth quarter. Is that really late in the fourth quarter?

Yeah, as you can imagine, we had a pretty short timeline in order to deliver Roche, the space to Roche. So we are really looking for a December, early to mid-December delivery of the first phase in the second tower.

Yeah, we get or we’re on track to do a TCO by December 15, Sheila, and actually tomorrow I will be in New York for the topping out ceremony at the West Tower. It’s moving as fast as I think any vertical construction has literally ever moved in New York, and we expect to have Roche starting to move in there hopefully in December.

That’s great. One last question on leasing spreads in the quarter on a GAAP and a cash basis were ahead of your guidance and pretty strong. Were there one or two standout leases or markets that we should know about that moved the number as fair?

Yeah, I think San Francisco was importantly important in that number, and I think San Diego was as well. So it varies, but I’d say those were the standout markets this quarter.

Okay, all right, thank you.

Yeah, thanks.

We’ll take our next question from Jeff Theiler with Green Street Advisors.

Just a question about the long-term potential of the Mission Bay area. You’ve obviously got some good near-term traction with 499 Illinois or at least starting to get some good traction there. What’s the timeframe for that market fully developed, and does that get the hospital once that and that gives the market critical mass? Or are you assuming some additional tenants to move in there to build a long-term sustainable cluster? And how do you expect to be working with Salesforce going forward to I guess maintain your presence in that market?

Well, I would say that is a viable ongoing vital cluster today. If you’ve been down there, you’ll see the UCSF’s research campus is relatively fully developed, housing is amazing, and we’re seeing increased retail. Obviously, we’ve got a number of commercial centers there; the hospital, when it comes on in late 2014 or early 2015, will really create an explosion of people down there. The Third Street Light Rail is in. I don’t think there’s anything left to do except continue to build it out. I think this cluster has moved, if I think about Cambridge in the early days and University Park for the city, we really pioneered that took about a ten-year effort. This has really taken a lot less in a sense. Susan Desmond-Hellmann, who is the new chancellor of UCSF, used to run Genentech’s product division—she is a very heralded person. She is building her headquarters building, if you will, down there. So it’s great. I think the only thing that is really missing is probably an even more robust tech presence; but I think with Cisco down there, I think you’ll see some other great entities, and again, you’ll hear about some of those coming down there. I think it’s a thriving, fully integrated cluster, and we’re very appreciative to have the really ground floor opportunity there. I think we’ll continue to monitor Salesforce; I mean if they continue to grow, who knows, they may end up building some stuff down there, and if not, maybe we’ll have a chance to do some things further down there as well. But luckily it’s off our balance sheet for the moment.

Okay, that’s great color. Thank you.

Yeah.

We will take our next question from George Auerbach with the ISI Group.

Great, thanks, guys. Joel, thanks for the color on the land sales and the asset sales this year. I guess if you could focus on the $125 million of non-income producing sales that have yet to be identified?

Yeah.

Can you break down for us as you’re sort of thinking through that bucket? How much is land and how much is under-leased or vacant buildings?

There might be a little bit of the latter, but mostly, I mean if you could imagine if we joint venture one of the Binney projects 50 or 100, that would more than enough to take care of that amount; and we have active discussions on that right now. We have some active tenant discussions going on. So if we do what we did or what we’re planning on doing, and Peter is really heading up this project with Tom Andrews, if we JV the 100 or 50 Binney, we’re done.

Okay, so we shouldn’t be surprised if part of that source of capital is JVs of developments?

That’s correct.

Okay. And I guess maybe to tie back to Jamie’s question, I guess any thoughts about increasing the income producing asset sales target for the year? Just given where…?

So we’ve kind of done what we’ve wanted to do. I don’t see us doing anything more there. We’re comfortable with our position. We’re getting more fully leased there, and rental rates are finally taking hold, and we’re not having design roll down leases, so that’s a good sign. We like our asset base in North Carolina by and large in the triangle. We like to exit New Jersey, and you’ll probably see us do that. But those are kind of minor assets. We’re trying to exit Pennsylvania; you’ll see more in this quarter and maybe another. I think we might have one asset left. And we might lighten up a little bit in San Diego, as you see in the discontinued operations in Sorrento Mesa on a couple of assets where we think we’d like to put that money more in University Town Center, where we have a lot of activity and our leasing has been pretty much superlative. So I think we don’t have anything more we have to go, we’re pretty much done by and large.

Okay, that’s helpful. And I guess just one last question. Some of those yet to be identified, it sounds like some of that might just be potential JVs, but other assets that you might identify for sale, I guess at what point in the year do you have to identify those assets by just given the timing to just sell assets?

Yeah, my guess is over the next several months, George, because it does take time to execute on the transaction, so if we’re not there in the next three to five months, I think we would have a challenging time to complete it by the end of the year.

Great, thank you.

Yeah. Thanks very much.

We will take a follow-up from Emmanuel Korchman of Citigroup.

Hey guys. There are a couple of follow-ups from me. If we're looking at your leasing schedule, it looks like the renewal leases were done for shorter terms than typical and also at higher TIs. Can you help us kind of compare those two numbers and previously on there?

Yeah, I would say don’t read anything into any particular quarter; shorter-term leases, sometimes we’ve had bounce around two, three, four years whereas development and redevelopment tend to be five, ten, fifteen plus. So I don’t think there is anything you could read as a big trend. And then I think on TIs and so forth, again, I think I wouldn’t read anything special. They’re kind of one of the mill; I don’t think anything and I ask Dean, I can’t remember anything this quarter that was particularly unusual. So it’s a pretty average quarter.

And I think on Page 17, we’ve added trailing 12 months disclosures on leasing activity to give you a sense that a quarter can be anomaly because it’s relatively small amount of activity, but on a trailing 12, you can see the statistics are pretty similar over the last several years.

Sure, thanks. And then Joe, in your opening remarks, you mentioned that some of the non-income producing sales could be international, which actually means India…?

Yeah, we have a non-income producing land parcel or an unoccupied building. We might choose to monetize that because we’ve got some great location. So those would be I think relatively easily achievable. But I think the bulk of what we’re talking about is domestic. So I wouldn’t, don’t hold your breath on that.

Great, thanks for the clarification.

Yeah, sure.

(Operator Instructions) We will take our next question from Michael Carroll with RBC Capital Markets.

Yeah. Thanks. And Joe, I guess from that last question, I know you indicated previously that you might want to find a partner for China and India asset, is that simplifying?

Yeah, we think that it’s important because capital allocation, as you clearly see from our schedules, is heavily weighted to large-scale development. To the extent that we see opportunistic acquisitions that make sense, we want to look at those from time to time in our core cluster markets. And so we clearly would like to have a partner who can help us finance those operations, and we think there are strong group of international folks who would like to have high-quality assets with good quality tenants, much like you’re in the U.S. So that’s kind of our game plan.

Have you started those discussions yet?

Yes.

Okay. Can you give us any timing as if whether '13, '14 event?

Not yet.

Okay, great. And then my last question on 499 Illinois maybe you can talk about it. Could you kind of tell us where you’ve seen more of the activities from for the last tenant or from the traditional office tenants?

Yeah, we’re not currently engaged with what we have requirements from office tenants, but that’s not what we’re moving with.

Okay, great. Thanks, guys.

Yep.

We’ll take our next question from Anthony Paolone with JPMorgan.

Thanks. So where are cap rates for, say, roughly a life science asset and your key cluster markets?

Hey Tony, it’s Peter. It’s going to vary, but I would say that in Cambridge right now, you’re probably sub-six if you’ve got good credit behind the tenant. New York would probably be around five to maybe less than that considering what I’ve been looking at through some of the market reports from brokers. Then you go down to San Diego; it’s a very strong market too, but cap rates don’t tend to go that low. So you’d probably be something with the six and a low there, as long as you had a high-quality building, something like the Kansas point though or the Illumina Kansas. I wouldn’t want to sell, because it’s so valuable, but if I did, I would definitely look for something sub-six. Maryland and RTP in the suburban markets, it goes up quite a bit. You’re probably talking about a couple of hundred basis points above the clusters. Nothing that we’ve sold that you’ve seen recently can really be a good comp, because of things we saw that have really been coming off leases, so income wasn’t behind those values. But I would imagine that if we sold something like a West Watkins or Clopper that was sold last quarter, and those—the income was perpetual, we would have been able to sell those something around mid-sevens to eight.

Okay, thank you. And just on the idea of joint venturing 75/125 Binney and just perhaps some other stuff, just curious how you landed on that asset versus, say, some others that might be either development or redevelopment or even an existing asset that might be a bit more stabilized at this point?

Well, it’s a good opportunity for balance sheet purposes to do that. There is a huge amount of interest in Cambridge Class A assets with strong tenants. So, and the numbers are sizable, and we’ve got a sizable construction pipeline. So it made sense to look at that. I mean, if we did an Onyx, which is much smaller, it’s a lot of brain damage for not a lot of return. So that’s the one that makes eminent sense, and there is some risk of future lease-up that we can take advantage of I think as well.

Okay, thank you.

Yeah, thanks, Tony.

And we have no further questions at this time.

Okay, well, thanks everybody. We did it in less than 45 minutes. So we’ll look forward to talk to you on the second quarter. Thank you.

That does conclude today’s conference. We thank you for your participation.