First, I must remind all of you at the outset that certain statements made during this call regarding anticipated operating results and future events are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although such statements and projections are based upon what we believe to be reasonable assumptions, actual results may differ from those projected. These factors that could cause actual results to differ materially, include, without limitation, the ability to renew or re-lease space under favorable terms, regulatory changes, changes in the economy, the successful and timely completion of acquisitions and development projects, changes in interest rates and other risks associated with the commercial real estate business, as detailed in our filings from time to time with the Securities and Exchange Commission.Now, I will turn the call over to Rand. Rand Griffin Thank you, Mary Ellen, and good morning, everyone. We're reporting FFO excluding acquisition costs of $0.54 per diluted share for the quarter. This is a 19% decline in FFO per diluted share, compared to the same quarter last year. The result for the quarter was in line with our expectations. We tend to take a long term view, and as previously discussed, expected the first half of the year to be difficult. Turning to our operating portfolio, we continue to be in a difficult operating environment for a portion of our portfolio, similar to that reflected by number of other office REITs. Although it varies by market, we are seeing a bottoming process. Corporate America in non-defense sectors continues to downsize with tenants requesting space reductions and leasing concessions. Although we think the rate of decline has bottomed, we may not see much improvement for another year. As we said, last quarter occupancy and same office rents will be under pressure throughout 2010, and we are seeing a continuation of that trend. Offsetting this trend during the second half of the year, will be positive impacts from development NOI for assets placed in the service, and acquisitions that have and will close in the last half of the year.
In addition, we have built into our guidance a fairly large potential gain from an investment in one of our tenants KEYW. This tenants specializes in cyber security and is considered a super core tenant. We believe this investment is a natural extension of our business model. We are supporting a startup company, whose management team previously created a very successful defense contractor company that was one of our growth tenants. They executed a sale several years ago to a defense company. This investment allows us to grow our tenant base and create future leasing demand, and through this type of investment we gain additional knowledge that helps us understand where our niche business is going, and where we can take advantage of opportunities to create value for our shareholders. Steve will provide more information regarding the effect of KEYW on our guidance.We recognize that our guidance implies a significant ramp up in the second half of 2010, but we believe we have the pieces in place to accomplish this ramp-up, and therefore we still feel good about the year, although we slightly lowered the top-end of the guidance range. As we indicated last quarter, we are starting to see some acquisition opportunities in our markets. We believe we have a window of opportunities to buy well leased super core product at attractive yields. We closed on the first acquisition of a super core property in the second quarter and we are under contract for a $120 million second super core property with an assumable loan that we expect to close in the third quarter. Based on these transactions combined with other activity, we now expect to acquire over $300 million of properties by the end of the year. Due to the exchangeable note issuance and expansion of our revolver through the accordion, as well as low debt maturities for the balance of the year, we have the capacity to take advantage of these opportunities. Read the rest of this transcript for free on seekingalpha.com