Adam Wyll - SVP and General Counsel Ernest Rady - Executive Chairman John Chamberlain - President and CEO Bob Barton - EVP and CFO Jim Durfey - Head, Office Leasing

Mitch Germain - JMP Securities

I'd like to thank everyone for joining us today for American Assets Trust third quarter 2014 earnings conference call. Joining me on the call are Ernest Rady, John Chamberlain and Bob Barton.

These and other members of our management team are available to take your questions at the conclusion of our prepared remarks. Also please note that certain of our executives have a flight to catch to NAREIT today, we will have a hard stop at the top of the hour 9 am Pacific time for our remarks and questions and answers.

Our third quarter 2014 supplemental disclosure packet provides a significant amount of valuable information with respect to the Company’s operating and financial performance. The document is currently available on our Web site.

Certain matters discussed on this call may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any annualized or projected information, as well as statements referring to expected or anticipated events or results.

Although we believe the expectations reflected in such forward-looking statements are based on reasonable assumptions, our future operations and our actual performance may differ materially from the information contained in our forward-looking statements and we can give no assurance that these expectations will be attained. Risks inherent in these assumptions include, but are not limited to future economic conditions, including interest rates, real estate conditions and the risks and cost of construction.

The earnings release and supplemental reporting package that we issued yesterday, our Annual Report filed on Form 10-K and our other financial disclosure documents provide a more in-depth discussion of Risk Factors that may affect our financial conditions and results of operations. Additionally this call will contain non-GAAP financial information including funds from operations or FFO, earnings before interest, taxes, depreciation and amortization or EBITDA and net operating income or NOI.

American Assets is providing this information as a supplement to information prepared in accordance with generally accepted accounting principles. Explanations of such non-GAAP items and reconciliations to net income are contained in the Company's supplemental operating and financial data for the third quarter of 2014 furnished to the Securities and Exchange Commission and this information is available on the Company's website at www.americanassetstrust.com.

I'll now turn the call over to our Executive Chairman, Ernest Rady to begin our discussion of third quarter results. Ernest?

Thanks Adam and good morning everyone, and thank you again for joining American Assets Trust third quarter 2014 earnings call. I am very pleased to report that our FFO per share has increased 8% and 4% year-over-year for the three months and nine months ended September 30, 2014 respectively.

Additionally the Board elected to increase our quarterly dividend 6% to $0.2325 per share of common stock. We are delighted to be source of steady and increasing income as well as wealth creation.

As Bob will describe in greater detail, we have increased our guidance for 2015 by 6% over the 2014 annual guidance midpoint. The approximately 300 million of construction we have underway in various stages is on track and on budget and we are excited about the outcome.

Leasing continues at a brisk case, consistent with our previous forecast. We do not operate or decisions are not made with the view of how things will look next quarter or even the quarter after that.

Our view of value creation for our shareholders is long term. Nearly four years of being public and we have continued to brew success of 20% annualized compounded total returns for our stockholders.

We believe that over the next 10 years, we can produce a compound total return of 10% annually including divined. On top of that acquisitions, developments, opportunities and the recycling of equity, it was I’d like to call I think icing on the cake.

Some years will come and be up and some years will be down, but on the long run, our focus will be always to keep our performance continually creating value. It’s what we’ve been for almost half the century.

On behalf all of us and American Assets Trust, we thank you very much for your confidence in allowing us to manage your Company and we look forward to your continued support. Looking forward, we continue to feel confident about our assets, our momentum and our strategy for remainder of this year and into 2015.

I would now like to turn it over to our President and CEO John Chamberlain. John, would you please take it from here?

Good morning and thank you Ernest. In addition to the FFO performance Ernest just mentioned, net income available to common stock holders was $6.4 million for the three months ended September 30, 2014, or $0.15 per basic and diluted share, compared to $4.2 million or $0.11 per basic and diluted share for the same period last year.

Bob will provide more details on our FFO and same-store NOI shortly. Overall conditions in our core markets -- Seattle, Portland, San Francisco, San Diego and Oahu, continue to show significant signs of strength in all three of our asset classes.

We expect this to continue into foreseeable future. In San Diego Phase 4 of Torrey Reserve, both on track and on budget is still anticipated to be complete in April of 2015.

Building 6 is 100% leased. Buildings 4 and 5 are experiencing considerable tenant interest with a recently executed letter of intent for all of Building 4.

Our photovoltaic or solar panel installation completed and attached to the grid on July 21st, now generates approximately 800,000 kilowatt hours of electricity annually, enough to power over 1,800 light bulbs per day. The final steps are still taking place in the building permitting process for Sorrento Point, our approximate 90,000 square feet two building complex across the freeway from Torrey Reserve.

Grading is now anticipated to commence in the first quarter of 2015. Also in San Diego, at Carmel Mountain Plaza, deliveries of the two out parcel buildings to their respective tenants Verizon and Jarrod's is anticipated later this month with the rent commencing in early 2015.

In Bellevue, Washington, our tenant VMware took occupancy of their 17,000 square foot premises in September. Our 493,000 square foot building is now 97.9% leased.

In Portland, Oregon, construction continues on our Hassalo on 8th project. Approximately 350,000 man-hours have been expended to date.

A three city block subterranean garage is complete and all three blocks are quickly taking shape. Block 92 and 100 are topped off and block 101 is currently 15 floors high and will top out at 21 floors.

Approximately $101 million of the budgeted $192 million has been expended to date. We are on track and on budget.

The apartment occupancies and rent growth for the Lloyd District continue to tighten as does the greater Portland metropolitan statistical area. According to MPF Research, vacancy of 1.2% in the East Portland submarket as of the end of the third quarter is the lowest in the Portland MSA.

During the year ending September 2014, rents in Portland jumped 5.8%, the 7th highest growth among the nation’s top 50 metros. As we’ve mentioned many times previously, what is underway in the Lloyd District is the first phase what will likely be several phases to be built out as market demand dictates over the years ahead.

To that end, the second phase, which will involve the four block redevelopment of what is currently referred to as Oregon Square is now in the initial planning stages. The timing of this phase will follow the completion and stabilization of Hassalo on 8th.

Our preliminary estimate puts a shovel in the ground in the third quarter of 2016. This is obviously subject to many outside influences.

As you know, each of these potential development and redevelopment opportunities are subject to market conditions and results may vary. In September the Hawaiian economy continued to show strength although slightly trailed its performance year-over-year.

Total visitor arrivals decreased by 1.3% to 730,000 over the same period last year. Total arrivals to Oahu fell 0.8% to 476,000 visitors contributing to the decline in expenditures to $618 million, a 7.8% PTRs per person.

Our Embassy Suites at Beachwalk continues to exceed our competition in ADR and RevPAR measurements for the month. According to Smith Travel Research report for the month of September, the property’s ADR and RevPAR index were 125.8 and 109.6 respectively.

The Hula Tower hotel room refresh commenced September 8th and is expected to be complete in early December. Finally, for the retailers at Beachwalk, tenant sales continue to increase up 15.9% for the month of July over the same month last year.

The performance of this asset continues to astound us. Our acquisition and venture efforts remain in full swing; however, the pricing of assets equal to or greater in quality than our existing portfolio provide returns of unacceptably low levels.

Disciplined investing is a core metric at American Assets Trust. If it is dilutive to shareholder value, we just won’t do it.

Nonetheless, we continue to evaluate growth opportunities and the recycling of capital where the probability to increase internal growth exists. I would now like to turn the presentation over to our Chief Financial Officer, Bob Barton, Bob?

Thank you, John and good morning everyone. Last night we reported third quarter 2014 FFO of $0.42 per share.

Net income attributable to common stockholders was $0.15 per share for the third quarter. Company’s Board of Directors has declared a dividend on its common stock of $0.2325 per share for the quarterly period ending December 31, 2014.

The $0.125 dividend increase represents approximately a 6% increase in the quarterly dividend rate. For the third quarter, our dividend payout ratio was approximately 67% of AFFO or FAD.

Our target payout ratio is approximately 85% of AFFO or FAD. We believe that our high quality portfolio, combined with strong operating results and solid balance sheet management will allow us to continue to grow our dividend for years to come.

American Assets had a solid third quarter performance. Our high quality costal west coast diversified strategy continues to have stellar performance.

Our retail portfolio ended the quarter with 98.7% occupancy, combined with the highest annualized base rents amongst our peers. This occupancy is 320 basis points higher than a year ago and represents less than 40,000 square feet of vacancy in the 3 million plus square foot retail portfolio.

Our office portfolio ended the quarter at approximately 89.9% occupancy as we expected. Total office vacancy represents approximately 267,000 square feet in a 2.6 million square foot office portfolio approximately 66% of the vacancy relates to our development projects at Torrey Reserve campus and the Lloyd District portfolio due to tenants that have been impacted ongoing construction activity.

For this reason, we continue to exclude these two projects from same-store NOI metrics. The Tax and Treasury Administration based at our First & Main building in Portland, Oregon represents approximately 20% of the vacancy and is consistent with our expectations from our initial underwriting when we acquired the property.

In fact during Q3, we signed a lease with a law firm for approximately 23% of the approximately 70,000 square feet vacated by the Tax and Treasury Administration at rates consistent with our market expectations leaving a remaining 54,000 square foot of availability in our First & Main building. Portland continues to achieve levels of job growth with year-over-year expansion hitting 2.7%, one of the highest levels of major western metro areas.

Accordingly to recent research report from JLL, the rents for Portland's Central City Class A and B properties have increased substantially in the past eight quarters as availability has steadily decreased. Demand for the best spaces has been driven largely by high tech employment growth and accompanying business expansions.

However, financial companies and law firms still hold a strong stake in CBD as we have recently experienced. Vacancy in Portland CBD Class A has decreased dramatically hitting its lowest level in over 10 years of 7.1% for the third quarter.

CBD Class A availability has fallen markedly as occupiers continue to grow with almost no new supply delivered. There are currently no existing options for any Class A tenant meeting over 75,000 square feet in the CBD.

Large tenants, those over 50% square feet have seen their leverage shift dramatically in the past three quarters. Overall CBD Class A asking rents have jumped 6.3% year-over-year and other concession are moderating.

And the construction pipeline is expected to deliver limited product over the next two years. There are currently only four spaces 50,000 square feet currently vacant in the CBD and the Lloyd district combined.

We view this as an opportunity for our First & Main building Portland Oregon. The remaining vacancy in our office portfolio relates the general vacancy from smaller tenants in our other office buildings and we continue to limit our office NOI to approximately 35% of our total NOI as part of our diversified costal west coast strategy.

Let’s talk about same-store NOI for a moment. Same-store retail cash NOI significantly increased in the third quarter to 2.9%.

The increase was mostly attributable to a full quarter of rents from Saks OFF 5th Avenue at Carmel Mountain Plaza and higher percentage rents at Alamo Quarry Regional Shopping Center. We are still anticipating full year 2014 retail same-store growth to be down approximately 1.3% primary as a result of the Foodland vacancy at our Waikele Shopping Center in Hawaii as we have expected.

Our retail portfolio remained 98.7% leased which ranks number one amongst our peers. It's also important to point out that we have approximately 30,000 square feet of retail expiring in Q4 and approximately 70,000 square feet of retail expiring in 2015 and assuming all remaining lease options have been exercised at a time when their in-place retail rents are approximately 10% below market on a cash basis.

This is also consistent with our re-leasing spreads shown in our supplemental filing which reflects 11 comparable retail leases that were signed during the quarter at 16% cash increase over prior rents and a 16.8% increase on a straight line basis over prior rents. The retail portfolio is poised for an excellent 2015 which I will discuss later when I cover our 2015 guidance.

Same-store office cash NOI was up 9.8% in the third quarter and up 5.3% for the nine months ending September 30, 2014. The same store growth in the third quarter was due to a new lease with VMware at City Center, Bellevue and significant contractual rent bumps at both City Center Bellevue building in Washington and our Landmark building in San Francisco.

For the full year, we are anticipating office same store cash NOI to be up 5.9%. Our supplemental filing shows the releasing spreads on eight comparable office leases that were signed to the quarter at a 3.3% cash increase over prior rents and 11% increase on a straight line basis over prior rents.

This, combined with the fact that our in place office portfolio rents are approximately 19% below market on a cash basis is a picture forward-looking growth in a high quality coastal West Coast office portfolio. Same store multifamily NOI, which comprises approximately 6% of our total NOI was up 6% on a cash basis for the third quarter.

Higher year-over-year average occupancy and higher rents are the main drivers of the same store growth for the multifamily portfolio. We continue to be pleased with the execution and direction of our multifamily portfolio.

We have increased our anticipated full year same store cash NOI growth to approximately 5.3% for the multifamily portfolio. Waikiki Beachwalk, our mixed used property which represents approximately 16% of our NOI reported same store cash NOI growth of 5.1% in the third quarter.

As you may recall the second quarter was impacted by the room renovation at the Embassy Suites Hotel for the first tower which began on March 8th and ended on June 8th, so that all rooms would be available during the peak season over the summer months. The second and final tower at our Embassy Suites Hotel commenced renovation beginning September 8 and is expected to be completed by approximately December 8.

Approximately 6,700 room nights or 20% of our total room nights are expected to be offline in the seasonally slower months of October and November due to the room renovation, or as we call it, a room refresh during the fourth quarter. Waikiki Beachwalk retail continues to benefit from New Hilton Grand vacation high end timeshare called the Hokulani, that recently opened above our end cap retailer Quicksilver, which runs Kalakaua Boulevard, the main boulevard in Waikiki and has increased foot traffic and sales in our retail center.

Tenant sales at WBW retail were up over 11.5% on a year-over-year basis as the center continues to outperform. We expect full year 2014 same store cash NOI to be flat for mixed used assets as results were impacted from the room renovation in 2014.

Now turning to our results, third quarter FFO increased approximately 1.9 million or approximately 8% to $0.42 per FFO share compared to second quarter 2014 FFO of $0.39 per FFO share. The increase in quarterly FFO was mostly attributable to three things.

First the Embassy Suites Hotel in Hawaii added approximately $0.035 of FFO due to the seasonality of the hotel from their peak summer season. Secondly, the retail portfolio added approximately $0.014 of FFO due primarily to the higher percentage rents at Alamo, Del Monte and Waikiki Beachwalk.

The office portfolio added approximately $0.01 of FFO, primarily due to higher rents and parking income at City Center, Bellevue and higher rents at the Lloyd District from new tenants. And lastly other income decreased FFO by approximately $0.028 of FFO as a result of the non-recurring termination fee income, net of acquisition due diligence cost that we received in Q2 related to a break fee that we had built into a binding letter of intent, combined with the increase in the tax provision in Q3 primarily for the Embassy Suites Hotel that resides within our taxable REIT subsidiary.

Let’s talk about the common shares that we have issued during Q3 for a moment. During the third quarter we sold 999,582 shares of common stock, totaling net proceeds of approximately $34.2 million.

599,582 shares of common stock were sold through the ATM equity program at a weighted average price per share of $35.01 resulting in net proceeds of approximately $20.7 million, and 400,000 shares of common stock were sold in a private placement transaction to Insurance Company of the West, which is an affiliate of our Executive Chairman at a closing price of $33.76 per share, resulting in net proceeds of approximately $13.5 million to our Company. Combined with approximately 2.1 million shares issued through the ATM in Q1 and Q2, Q3 FFO dilution was approximately $0.018 per FFO share, based on the 999,582 common shares that were sold.

These proceeds will be used in funding our development activities at both the Lloyd District in Portland Oregon and at our Torrey Reserve campus portfolio in San Diego. We estimate the year-to-date FFO dilution from the ATM proceeds raised to be approximately $0.03 per FFO share.

On an NAV basis, which is our primary focus, we estimate that focus the full year dilution to NAV will be approximately $0.18 per share compared with approximately $2 per share in net asset value that we estimate we are creating through our accretive developments at our Hassalo on 8th of 657 multifamily apartment units in Portland, Oregon and Torrey Reserve campus expansion San Diego and Sorrento Point office development in San Diego which we believe will offer the best office location in San Diego at the confluence of three major freeways and unobstructed views of the Pacific ocean. For more detailed calculations on how we calculate our $2 per share of net asset value that we are creating, I would refer you to our Q1 earnings calls script.

Although the Company’s balance sheet is strong and provides ample capacity to fund its in-process and existing development, we thought it was prudent to raise the additional cash in the balance sheet during the third quarter, because it allows the Company to maintain financial flexibility as we continue to pursue three things. First is accretive developments within our existing pipeline.

Second is accretive and opportunistic acquisitions. And lastly it allows us to maintain a conservative leverage profile as we continue to align our balance sheet with investment grade metrics.

I also want to point out that there are other options that are also available to us, other than using cash on the balance sheet or using the line of credit or issuing shares of common stock. We also the ability to sell other assets that we continue to evaluate on a quarterly basis, as to their future internal cash flow growth.

Suffice it to say that we have many options, but it’s key to maintain financial flexibility and overall strategy of NAV accretive transactions. So everything we do is focused on creating net asset value for our shareholders.

We are very thoughtful when it comes to the issuance of additional common shares. We believe that from time to time it is prudent to incur short term earnings dilution that will increase both long-term NAV and earnings growth.

Now as we look at our balance sheet liquidity at end of the third quarter, we had approximately $345 million of liquidity comprised of $95 million of cash and cash equivalents and $250 million of availability on our line of credit. Our leverage at the end of Q3 remains low at 34.3% total debt to total capitalization and a net debt to EBITDA of 6.1 times, which we would like to see reduced to five handle overtime.

Our interest coverage and fixed charge ratio ended the quarter at 2.9 times. Lastly, we have updated our 2014 guidance and introduced our initial 2015 guidance.

Let’s talk about the 2014 guidance first. We are narrowing the guidance range for our full year 2014 FFO per share to a range of $1.59 to $1.61 with a midpoint of $1.60 from our most recent guidance of $1.56 to $1.62 per FFO share, with a midpoint of $1.59.

The $0.01 increase in the midpoint in our 2014 guidance range is most impressive when you factor in the Q3 equity issuances which were dilutive to both Q3 and Q4. Effectively adjusting for the equity issuances in the quarter, our guidance midpoint range was increased by approximately $0.025 mostly attributable to a stronger summer season than anticipated at Embassy Suites, higher rents and operating margins in the office and multifamily portfolios and lower interest expense from higher capitalized interest and lower cost of debt on our private placement bond.

Additionally operational capital expenditures are expected to finish the year at approximately $25 million to $28 million with our AFFO or FAD coming in a range of $1.16 to $1.22 per share. We are below our original estimate of CapEx in 2014 due to the following factors.

Our room renovation project at Embassy suite came considerably below budget due to using our in-house construction management expertise for the design and purchase of the raw materials instead of outsourcing to third party construction management. We also have factored in a 25% premium for materials being transported to Hawaii combined with a higher construction cost from all of the construction activity taking place in Waikiki.

We were fortunate to avoid both of these additional costs by actively overseeing the renovation design, bidding process and execution of the renovation. Secondly tenant improvements for Reading Cinema have been moved to 2015 due to the timing of movie renovation at Carmel Mountain Plaza.

And, third, our scheduled capital items relating to building maintenance at Lloyd District and City Center Bellevue have been moved into 2015 due to logistical reasons. On October 31, 2014, we entered into a no purchase agreement with a syndicate of 12 insurance companies that provided for the private place of total of 350 million of unsecured senior guarantee notes in three separate delayed draws as follows.

First we had a 150 million funded on October 31 with a coupon of 4.04% in the seven year term. During Q3, we entered into a forward-starting swap that provided an effective interest rate hedge that reduces the effective interest rate to 3.88%.

The proceeds of this 150 million funding were used to repay our 5.15% fixed rate, 140.7 million CMBS loans secured by our Waikele property that matured on the same date. Secondly, we have a $100 million that will be funded on February 2, 2015 with a coupon of 4.45% and a 10 year term.

We will use the proceeds to repay $82.3 million Del Monte Center, 4.93% CMBS loan that can be repaid six months early and the $90 million loan secured by the shops at Kawakawa which is at 5.45% and it can be repaid 90 days early also. And lastly, we have -- our last draw is a $100 million which will be funded on April 1, 2015 with a coupon of 4.5% and a 10 year term.

We will use the proceeds to repay the $133 Landmark at One marketplace, 5.61 CMBS loan that can be repaid 90 days early with the balance coming from cash on the balance sheet. So, we will have raised $350 million in unsecured debt commitments, subject to customary closing conditions through the private placement market to pay off $375 million in secured debt, the balance coming from cash on the balance sheet.

Once the final delayed draw of 100 million is funded during the first week of April 2015 our secured debt is expected to be less than 30% of our total gross assets and our unencumbered NOI is expected to be approximately 59%. We will have reduced our weighted average cost of debt from 5% down to 4.7% and we’ll have extended the weighted average term to maturity from 2.9 years to 5.7 years.

Additionally, we have structured our debt maturity schedule so that there isn’t any one year that has more than $200 million of loan maturities. We originally approached the unsecured private placement market to refinance our $140 million Waikele maturity on October 31, 2014 with a strategy of approaching the unsecured investment grade market in Q2 2015 to refinance the remaining 2015 maturities.

What we encountered was an overwhelmingly positive response in the private placement market that allowed us to remove both the interest rate risk and the execution risk approximately six months ahead of time on not only our Waikele maturity but also all of our remaining 2015 maturities and at rates and spreads which we believe are equal if not better than what we could have achieved in the unsecured investment grade bond market. We also believe that approaching the unsecured private placement market is a prudent step in achieving a positive rating on our investment grade balance sheet.

Our next step will be to secure an investment grade rating later in 2015. Now let’s talk about our 2015 guidance.

We are introducing our 2015 FFO guidance range of $1.65 to $1.73 per share with a midpoint of $1.69 per share which is an increase of $0.09 per FFO share over the 2014 FFO guidance midpoint of $1.60 per FFO share. For comparable purposes it is important to point out included in our 2014 results were $0.03 of non-recurring termination income.

Excluding the termination income from our 2014 results, our anticipated 2015 FFO per share growth is 7.6%, which is an increase of $0.12 to our 2015 midpoint of $1.69. Our 2015 guidance range is based on the following assumptions.

First, we are anticipating a 5% increase in 2015 same store retail cash NOI which is expected to increase FFO by approximately $0.505 per share. The increase of the retail same store is mostly attributable to new leases signed with Home Goods at Lomas Santa Fe in San Diego.

Gold’s Gym at Alamo in San Antonio, Petco and UFC Gym at our Waikele property and a full of year of rents from Saks OFF 5th Avenue at Carmel Mountain Plaza in San Diego. We expect to see continual same store growth in the years ahead for our retail portfolio as in place rents are approximately 10% plus below market on a weighted average portfolio basis.

In fact, several of our retail properties range from 11% to 20% below market. Secondly, we are anticipating a 6% increase in same store office cash NOI, which is expected to add $0.04 per share to FFO.

The increase in the office same store is mostly attributable to new leases with VMware at City Center Bellevue, a new law permit at First & Main and contractual rent bumps at Landmark in City Center Bellevue. We are also anticipating speculative lease up assumptions at First & Main and One Beach which are impacting our same store forecast.

We continue to see strength in our core office market as current in place leases are approximately 19% below market on a weighted average basis. Our properties in San Francisco are over 20% below market versus in place.

And City Center Bellevue and Seattle is approximately 17% plus below market versus in place rents. Third for officer properties underdevelopment and not included in same-store, nonrecurring termination fee income from a law firm tenant at Torrey Reserve in our San Diego campus of approximately $1.4 million in 2014 will reduce FFO by $0.023 in 2015.

Fourth, we are anticipating a 3% increase in same-store multifamily cash NOI, which is expected to add half of penny per share to FFO. We are also anticipating the Lloyd multifamily development known as Hassalo on 8th will be fully operational in Q4 2015.

For guidance purposes we are forecasting that Hassalo on 8th will be 30% preleased and will break even on a cash NOI basis during fourth quarter of 2015. Fifth, we are anticipating a 7.7% increase in same-store mixed used NOI, which is expected to add $0.025 to FFO.

The majority of the increase is from Embassy Suite in Honolulu which was forecasted to be up 15% on a same-store basis as the hotel will have all its rooms back online from the room refresh. On a more comparable basis, we are estimating average daily rates at the hotel will increase between 3% and 4% in 2015.

Sixth, G&A budgeted at 19.4 million for 2015 which is expected to reduce 2015 FFO by a penny per FFO share. On a percentage basis we are anticipating a 3% increase in the G&A for 2015.

Seventh, we are anticipating a reduction in interest expense of approximately $4.3 million from higher capitalized interest from our ongoing developments and lower interest cost on the 2014 and 2015 CMBS maturities which are being refinanced with unsecured private placement notes and we expect our interest savings in 2015 to add approximately $0.07 per share to FFO. Eight, we are anticipating our 2015 GAAP income adjustments for straight-line rents and above and below market adjustments to total approximately $3.2 million which is expected to reduce FFO by approximately $0.045 per share over 2014.

Straight-line rents were impacted by three major tenants K-Mart, Salesforce.com, and Autodesk which have negative straight-line amortization in 2015. Ninth, we will have lowered other income in 2015 as we’ve recorded a net $700,000 termination fee in 2014 for cancel break fee in connection with an acquisition where we had a binding letter of intent.

This will reduce 2015 FFO by approximately $0.015 per FFO share. Finally we have forecasted additional ATM issuances in Q2 of 2015 for approximately 32 million to complete the ATM program.

Issuing remainder of the ATM would be a prudent step to match fund the completion of Lloyd development and maintain a low leverage balance sheet with a focus on net asset value. Typically our guidance excludes equity issuances but it is likely that this transaction will occur at some point in 2015 and as a result we have factored it into 2015 guidance.

The reaming ATM issuance would be approximately $0.0125 diluted to 2015 guidance. Additionally our 2015 operational CapEx or capital expenditures are expected to be in the range of 33 million to 37 million.

Our AFFO and FAD will be in the range of approximately $1.15 to $1.23 per share. Our guidance excludes any impact of additional acquisitions, depositions, equity issuances and repurchases, debt refinancing or repayments other than those discussed above.

We will continue to do our best to be as transparent as possible and share with you how we are thinking about quarterly numbers and we are well prepared with a strong balance sheet to capitalize and execute on the opportunities that we believe will present themselves over the coming quarters. Operator, I’ll now turn the call over to you for questions.

So, the original mixed use guidance was about a year ago for 2014 was 5%. Now it's flat.

Bob, just remind me the ins and outs that kind of gets us from 5% to flat.

Yes, not only it’s the refresh but it was also the expectation of our average daily rate and during that refresh point in time. So we were hopeful that we would get 5%.

That was the input from our folks at Outrigger and during the year that just flattened out. So we expect to see that grow in 2015.

So basically the rate got impacted by the refresh. Is that a better way to look at it?

That’s a better way to look at it.

Okay, great. And then, John, with regards to your comments on acquisitions, I guess we all kind of know where pricing is in the markets.

I'm curious where are your bids relative to where assets are trading?

There are very few assets that we’ve actually made bids on. We’ve tracked properties.

We’ve underwritten them. We’re provided feedback from the broker regarding where pricing is coming in on assets and at that point generally we just pass.

Okay, great. Remind me about Foodland.

Is that still vacant at this point?

No, it’s actually never been vacant. It was a subtenant of Foodland.

It’s now a month to month tenant with us. We are continuing to evaluate our different options with the property.

We have not made a decision at this point as to which way we may go. It could be simply re-tenanting and it could be repositioning.

That’s something that’s under evaluation right now.

Great. And last one for me, the Tax and Treasury space.

I know that, I was under the impression that you guys were marketing it as 70, it looks like now it’s 50,000. I guess; A, it looks like there may be more demand in the market for 50; and that maybe, B, how much downtime was in your original underwriting?

In our original underwriting we left out the 70,000 square feet for the entire year.

Okay. And then with regards to kind of tenants in 50 versus 70, is there more demand for that sort of size, or is the plan just to multitenant the entire space?

Well, if we had our brothers we would lease it at three different tenants or four different tenants. Going multi-tenant is a better end result for us than having one big tenant especially when it comes to turnover.

Mitch, we have Jim Durfey leads up our Office Leasing. Jim maybe you can shade some light on the marketplace you’re seeing up there.

Sure. Good morning Mitch.

We’ve got about 53,000 square feet left in the First & Main building. Of which about 28,000 fees were insurance negotiations to lease.

When we complete that process we’ll have one full floor of 21,000 feet plus another 4,700 and that will be the end of it. So the market has improved markedly.

We see a lot of activity up there. We have a number of prospects in the 25,000 to 50,000 square foot range that are marching around Portland.

So we’re optimistic that we’re going to do this 28,000 foot deal and it kick off another full quarter tenant here in next few months.

Thanks very much for your interest. We hate to cut this short because we’re on our way to NAREIT and we’ll look forward to seeing many of you there who couldn’t be on the call.

But we’re optimistic about the future and we’re proud of the past. So thanks for staying with us.

And we look forward to next decade.