The earnings at first glance look poor. However, there are two positives -

#1 is a small thing that FFO is virtually the same. This suggests that expenses are being held in line and tennant improvements are not wiping out the cash flow. Remember it is not GAAP earnings, but rather FFO that matters for a REIT.

#2 is the following "HRP also sold seven properties during the third quarter of 2009 with 374,000 square feet of space for $144.6 million, excluding closing costs, and realized a gain on sale of properties of $50.1 million." This is a reminder that we all forget that HRP has owned many of its properties for a very long time. While prices are down in the last two years, they are hugely up relative to ten years ago. This suggest the real value of HRP is much greater than the book value.

Problem #1 is indeed the vacancy rate and rental rates on renewal for those same older properties. Would think we will get continued asset sales and 1031 exchanges to move the conmpany into newer buildings. As the economy improves, rents and demand will finally follow too.

Problem #2 - Does management get it? They still seem to look at what is good for them and not the shareholders. Maybe the disposition of some properties shows they are moving toward a position more aligned with us. Hope so!

ARB