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Essex Property Trust Management Discusses Q2 2012 Results - Earnings Call Transcript

We view these announcements as typical and necessary for technology companies. Tech companies of all sizes are forced to innovate or fail, as timely product R&D, product updates and similar advancements are necessary to survive. When innovation fails, companies are quickly forced into a restructuring mode, and layoffs are a common result. Our expectation is that a relatively small number of tech companies will be in a restructuring mode nearly all the time.

Despite the concerns noted above, current trends support continued job growth in technology. In Silicon Valley, for example, year-over-year job growth accelerated from 2.9% in 2011 to 3.8% in June 2012, with no slowdown in Q2. And the labor force grew by over 2.5%.

Commercial activity continues to be positive and steady, and many large-scale commercial real estate projects have been started. We provide our annual job growth estimates that are part of our market forecast on Page S-16 of the supplement. This quarter, we increased our estimated job growth for 2012 in Northern California from 1.9% to 2.4%, and in Seattle from 2.0% to 2.4%.

Our primary economic concerns relate to the ongoing uncertainty within the broader business environment, including the effects of public sector indebtedness, the potential impacts of the fiscal cliff and global financial issues. These issues threaten to derail the fragile U.S. recovery. We believe that these issues are best addressed by a strong balance sheet and a conservative capital structure.

In development, we announced new apartment projects containing 971 apartment homes with an estimated total cost of $422 million. This brings our development pipeline outlined on Page S-9 of the supplement to almost $1 billion. I'm very pleased with the performance of our development team led by John Eudy, as the locations, designs and expected financial benefits from our apartment development activities are exceptional.

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