• Balance sheet stress became a topic of great focus for real estate companies during the second half of 2008. For many asset classes outside the apartment sector, a reduction in transactional and operating income and the inability to access credit or capital have created significant challenges in meeting debt maturities, dividends and other obligations. Some companies have reduced dividend payments to common shareholders, and, in certain cases, common stock has been issued to pay a portion of the dividend. For the most part, the apartment sector has been able to avoid these measures to date. The presence of Fannie Mae and Freddie Mac as ready sources of secured lending for apartment REITs has served to bridge the tumult in the public markets. At BRE, our operating income remains sufficient to maintain the dividend at current levels, but it is subject to review on a quarterly basis. Our balance sheet remains relatively strong. We have sufficient liquidity to meet all obligations for the next two years, without raising external capital. For years, we have maintained very small amounts of secured debt on the balance sheet, so we have ample room to add secured financing to meet our debt maturities in 2009 and 2010 without depleting internal sources of liquidity. The effort to raise secured debt is in process, and will extend our liquidity reach beyond the next two years.
• For the year, we sold six communities (four in Sacramento, one in Northern California and one in Seattle) with net proceeds totaling approximately $163 million, and recorded a gain on sale of approximately $66 million. While community dispositions are proving difficult to transact, we have been successful in working with private buyers who have paid cash or were able to access secured debt financing. During 2009, we will continue to sell some of our older communities in Sacramento and Seattle, and have the next round set up to present to the market.
• Subsequent to year-end, we announced a deceleration of our development program. We recorded a $5.1 million nonroutine charge in 2008 to abandon three sites we had under control. We reduced our workforce, eliminating 33 positions, mostly in the development area, reducing that team by 36%. While we are mindful that this decision caused disruption to the lives of our associates, it was the appropriate course of action, given the magnitude of the current economic crisis.

When you realize that the current economic environment is the first global recession in the post-securitization age and that many of the forces at play are deflationary and unprecedented, it gets easier to understand the massive shift to liquidity that has diminished shareholder returns. As we stated earlier, we understand the reality and gravity of the situation, which has shaped our tactical decisions and strategic planning for 2009, and beyond.