will happen as described (or that they will happen at all). You can identify forward-looking statements by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates" or "anticipates" or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, dependence on tenants' financial condition, and competition from other developers, owners and operators of real estate); adverse economic or real estate developments in the life science industry or our target markets; risks associated with the availability and terms of financing and the use of debt to fund acquisitions and developments; failure to manage effectively our growth and expansion into new markets, or to complete or integrate acquisitions successfully; risks and uncertainties affecting property development and construction; risks associated with downturns in the national and local economies, increases in interest rates, and volatility in the securities markets; potential liability for uninsured losses and environmental contamination; risks associated with our potential failure to qualify as a REIT under the Internal Revenue Code of 1986, as amended, or the Code, and possible adverse changes in tax and environmental laws; and risks associated with our dependence on key personnel whose continued service is not guaranteed. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this report. In addition, we discussed a number of material risks in our annual report on Form 10-K for the year ended December 31, 2006. Those risks continue to be relevant to our performance and financial condition. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Overview
We operate as a REIT focused on acquiring, developing, owning, leasing and managing laboratory and office space for the life science industry. Our tenants primarily include biotechnology and pharmaceutical companies, scientific research institutions, government agencies and other entities involved in the life science industry. Our properties are generally located in markets with well-established reputations as centers for scientific research, including Boston, San Diego, San Francisco, Seattle, Maryland, Pennsylvania and New York/New Jersey.
As of September 30, 2007, we owned or had interests in 68 properties, consisting of 103 buildings. Our portfolio was comprised of the following, with our operating portfolio 93.3% leased to 111 tenants, as of September 30, 2007:

                                                            Rentable
                                                          Square Feet
            Operating portfolio                             6,626,723
            Repositioning and redevelopment properties      1,871,353


            Construction in progress                        1,941,000
            Land parcels                                    1,293,000

            Total proforma portfolio                       11,732,076

Factors Which May Influence Future Operations Our corporate strategy is to continue to focus on acquiring, developing, owning, leasing and managing laboratory and office space for the life science industry. Approximately 0.4% of our leased square footage expires during the remainder of 2007 and approximately 6.7% of our leased square footage expires during 2008. Our leasing strategy focuses on leasing currently vacant space and negotiating renewals for expiring leases and identifying new tenants or existing tenants seeking additional space to occupy the spaces for which we are unable to negotiate such renewals.

The success of our leasing and development strategy will depend upon the general economic conditions in the United States and in our target markets of Boston, San Diego, San Francisco, Seattle, Maryland, Pennsylvania, New York/New Jersey and research parks near or adjacent to universities. Critical Accounting Policies
A complete discussion of our critical accounting policies can be found in our annual report on Form 10-K for the year ended December 31, 2006. New Accounting Standards
See Notes to Consolidated Financial Statements (Unaudited) included elsewhere herein for disclosure of new accounting standards. Results of Operations
Comparison of the Three Months Ended September 30, 2007 to the Three Months Ended September 30, 2006
The following tables show operating revenues for same properties (all properties except redevelopment and new properties and discontinued operations), redevelopment properties (properties that were under redevelopment or development during either of the three months ended September 30, 2007 or 2006 and not included in new properties), and new properties (properties that were not owned for each of the full three months ended September 30, 2007 and 2006), in thousands:

                       Same Properties           Redevelopment Properties           New Properties
                      2007         2006           2007               2006          2007        2006
Rental              $ 42,044     $ 40,525     $      1,775       $      6,536     $ 5,563     $ 2,136
Tenant recoveries     13,474       12,622              630              1,772         980         238
Other income             366            9                -                  -           -           -

Total revenues      $ 55,884     $ 53,156     $      2,405       $      8,308     $ 6,543     $ 2,374

Rental Revenues. Rental revenues increased $185,000 to $49.4 million for the three months ended September 30, 2007 compared to $49.2 million for the three months ended September 30, 2006. The increase was primarily due to acquisitions during 2006 and 2007, partially offset by properties that generated rental revenue in 2006, which are currently undergoing redevelopment. In addition, same property rental revenues increased $1.5 million, or 3.7%, for the three months ended September 30, 2007 compared to the same period in 2006. The increase in same property rental revenues was primarily a result of a full three months of rental revenues for new leases in the period ended September 30, 2007 at our Bayshore, Graphics and Landmark at Eastview properties.
Tenant Recoveries. Revenues from tenant reimbursements increased $452,000 to $15.1 million for the three months ended September 30, 2007 compared to $14.6 million for the three months ended September 30, 2006. The increase was primarily due to acquisitions during 2006 and 2007, partially offset by properties for which tenant recoveries were recognized in 2006, but which are currently undergoing redevelopment. In addition, same property tenant recoveries increased $852,000, or 6.8%, for the three months ended September 30, 2007 compared to the same period in 2006 primarily as a result of a full three months of tenant recoveries for new leases in the period ended September 30, 2007 and increases in utilities and other recoverable costs at certain properties compared to the prior year.
Other Income. Other income was $366,000 for the three months ended September 30, 2007 compared to $9,000 for the three months ended September 30, 2006. The increase was primarily due to construction management and development fees earned from the PREI limited liability companies.

The following tables show operating expenses for same properties, redevelopment properties, and new properties, in thousands:

                               Same Properties                 Redevelopment Properties                 New Properties
                             2007            2006              2007                 2006             2007           2006
Rental operations          $ 11,503        $ 10,339        $        551         $        587        $   735        $   104
Real estate taxes             4,173           4,309                 239                1,223            667            150
Depreciation and
amortization                 14,638          14,553               1,025                3,102          2,002            826

Total expenses             $ 30,314        $ 29,201        $      1,815         $      4,912        $ 3,404        $ 1,080

Rental Operations Expense. Rental operations expense increased $1.8 million to $12.8 million for the three months ended September 30, 2007 compared to $11.0 million for the three months ended September 30, 2006. The increase was primarily due to the inclusion of rental operations expense for properties acquired during 2006 and 2007, as well as an increase in same property rental operations expense of $1.2 million, or 11.3%, for the three months ended September 30, 2007 compared to the same period in 2006. The increase in same property rental operations expense was primarily due to the hiring of additional property management personnel and related expansion of our operations in 2006 and 2007 and higher utilities and other recoverable costs compared to the same period in the prior year.
Real Estate Tax Expense. Real estate tax expense decreased $603,000 to $5.1 million for the three months ended September 30, 2007 compared to $5.7 million for the three months ended September 30, 2006. The decrease was primarily due to the capitalization of property taxes in connection with the development of new buildings at our Landmark at Eastview property, partially offset by properties acquired during 2006 and 2007. A decrease in same property real estate tax expense of $136,000, or 3.2%, for the three months ended September 30, 2007 compared to the same period in 2006 was due in part to tax refunds resulting from successful appeals.
Depreciation and Amortization Expense. Depreciation and amortization expense decreased $816,000 to $17.7 million for the three months ended September 30, 2007 compared to $18.5 million for the three months ended September 30, 2006. The decrease was primarily due to the cessation of depreciation on certain properties, or portions thereof, currently under redevelopment, which is expected to continue through 2007, and a decrease in amortization expense of acquired intangible assets, which were fully written off in prior quarters, at our properties with recent lease terminations. The decrease was partially offset by depreciation and amortization expense for the properties acquired in 2006 and 2007 and the acceleration of depreciation on assets related to an early lease termination in the amount of $1.6 million, which is included as a redevelopment property.
General and Administrative Expenses. General and administrative expenses increased $674,000 to $5.3 million for the three months ended September 30, 2007 compared to $4.6 million for the three months ended September 30, 2006. The increase was primarily due to growth in the corporate infrastructure necessary to support our expanded property portfolio and an increase in stock compensation costs.
Equity in Net (Loss)/Income of Unconsolidated Partnerships. Equity in net
(loss)/income of unconsolidated partnerships decreased $281,000 to a loss of ($261,000) for the three months ended September 30, 2007 compared to income of $20,000 for the three months ended September 30, 2006. The decrease was primarily due to our proportionate share of the losses generated by the PREI limited liability companies, offset by our allocation of the net income in the McKellar Court partnership. Interest Expense. Interest cost incurred for the three months ended September 30, 2007 totaled $21.9 million compared to $14.1 million for the three months ended September 30, 2006. Total interest cost incurred increased primarily as a result of higher borrowings, but also due to increases in the average interest rate on our outstanding borrowings. During the three months ended September 30, 2007, we capitalized $14.9 million of interest compared to $714,000 for the three months ended September 30, 2006. The increase in capitalized interest reflects our increased development and redevelopment activities. Capitalized interest for the three months ended September 30, 2007 was primarily comprised of amounts relating to our Center for Life Science | Boston development and Pacific Research Center redevelopment projects, which were acquired on November 17, 2006 and July 11, 2006, respectively. The Company expects to continue to capitalize significant interest costs on these properties, and other properties currently under development or redevelopment through the end of 2007, including the construction of new buildings at our Fairview, Landmark at Eastview, and Towne Centre Drive properties. Net of capitalized interest and the accretion of debt premium, interest expense decreased $6.3 million to $7.0 million for the three months ended September 30, 2007 compared to $13.3 million for the three months ended September 30, 2006.

Minority Interests. Minority interests decreased $12,000 to ($494,000) for the three months ended September 30, 2007 compared to ($482,000) for the three months ended September 30, 2006. The decrease in minority interests was related to an increase in income before minority interests allocable to minority interests in our Operating Partnership, partially offset by an increase in losses in minority interests in consolidated partnerships due to a lease expiration.
Discontinued Operations. In May 2007, we completed the sale of our Colorow property and recognized a gain upon closing of approximately $1.1 million. The results of operations and gain on sale of the property have been reported as discontinued operations in the consolidated statements of income for all periods presented. Income from discontinued operations for the three months ended September 30, 2007 was comprised primarily of additional costs related to the sale of the property in May, compared to income of $366,000 generated by the property for the three months ended September 30, 2006.
Comparison of the Nine Months Ended September 30, 2007 to the Nine Months Ended September 30, 2006
The following tables show operating revenues for same properties (all properties except redevelopment and new properties and discontinued operations), redevelopment properties (properties that were under redevelopment or development during either of the nine months ended September 30, 2007 or 2006 and not included in new properties), and new properties (properties that were not owned for each of the full nine months ended September 30, 2007 and 2006), in thousands:

                                Same Properties                  Redevelopment Properties                  New Properties
                             2007             2006               2007                 2006              2007            2006
Rental                     $  82,944        $  81,242        $     12,568         $     14,498        $ 50,839        $ 20,068
Tenant recoveries             36,985           35,404               5,701                3,355           4,578           1,111
Other income                   1,272               78               7,173                    1               -               -

Total revenues             $ 121,201        $ 116,724        $     25,442         $     17,854        $ 55,417        $ 21,179

Rental Revenues. Rental revenues increased $30.6 million to $146.4 million for the nine months ended September 30, 2007 compared to $115.8 million for the nine months ended September 30, 2006. The increase was primarily due to acquisitions during 2006 and 2007. In addition, same property rental revenues increased $1.7 million, or 2.1%, for the nine months ended September 30, 2007 compared to the same period in 2006. The increase in same property rental revenues was primarily a result of a full nine months of rental revenues for new leases in the period ended September 30, 2007 at our 21 Erie, Industrial, Landmark at Eastview, 6828 Nancy Ridge, and Phoenixville Pike properties, partially offset by the loss of rental revenues related to early lease terminations and higher vacancies.
Tenant Recoveries. Revenues from tenant reimbursements increased $7.4 million to $47.3 million for the nine months ended September 30, 2007 compared to $39.9 million for the nine months ended September 30, 2006. The increase was primarily due to acquisitions during 2006 and 2007. In addition, same property tenant recoveries increased $1.6 million, or 4.5%, for the nine months ended September 30, 2007 compared to the same period in 2006 primarily as a result of tenant recoveries for new leases in the period ended September 30, 2007, partially offset by the loss of tenant recovery revenues for lease terminations and higher vacancies.
Other Income. Other income was $8.4 million for the nine months ended September 30, 2007 compared to $79,000 for the nine months ended September 30, 2006. Other income for the nine months ended September 30, 2007 included $7.7 million of gains on early termination of leases and $738,000 of development fees earned from the PREI limited liability companies.
The following tables show operating expenses for same properties, redevelopment properties, and new properties, in thousands:

                               Same Properties                 Redevelopment Properties                 New Properties
                             2007            2006              2007                 2006              2007           2006
Rental operations          $ 32,406        $ 28,192        $      4,015         $      1,510        $  2,363        $   328
Real estate taxes            11,001          11,415               2,393                2,100           3,144            894
Depreciation and
amortization                 33,270          33,970               8,028                7,291          13,258          5,022

Total expenses             $ 76,677        $ 73,577        $     14,436         $     10,901        $ 18,765        $ 6,244

Rental Operations Expense. Rental operations expense increased $8.8 million to $38.8 million for the nine months ended September 30, 2007 compared to $30.0 million for the nine months ended September 30, 2006. The increase was primarily due to the inclusion of rental property operations expense for acquired properties during 2006 and 2007, and an increase in same property rental operations expense of $4.2 million, or 14.9%, for the nine months ended September 30, 2007 compared to the same period in 2006 due to the hiring of additional property management personnel and related expansion of our operations in 2006 and 2007, higher utility expenses, and increased rental operations expense at our 21 Erie, Industrial, Landmark at Eastview, 6828 Nancy Ridge, and Phoenixville Pike properties for new leases.
Real Estate Tax Expense. Real estate tax expense increased $2.1 million to $16.5 million for the nine months ended September 30, 2007 compared to $14.4 million for the nine months ended September 30, 2006. The increase was primarily due to the inclusion of property taxes for the properties acquired in 2006 and 2007, offset by a decrease in same property real estate tax expense of $414,000, or 3.6%, for the nine months ended September 30, 2007 compared to the same period in 2006. The decrease in same property real estate tax expense is primarily due to the capitalization of property taxes in connection with the development of new buildings on a portion of our Landmark at Eastview property.
Depreciation and Amortization Expense. Depreciation and amortization expense increased $8.3 million to $54.6 million for the nine months ended September 30, 2007 compared to $46.3 million for the nine months ended September 30, 2006. The increase was primarily due to the inclusion of depreciation and amortization expense for the properties acquired in 2006 and 2007 and the acceleration of depreciation on assets related to an early lease termination in the amount of $1.6 million, which is included as a redevelopment property. The increase was partially offset by the cessation of depreciation on certain properties, or portions thereof, currently under redevelopment, which is expected to continue through 2007, and no amortization of acquired intangible assets in 2007 at our Bunker Hill property as compared to a full nine months of amortization for the same period in 2006 (the acquired intangible assets were fully amortized in 2006).
General and Administrative Expenses. General and administrative expenses increased $2.8 million to $16.0 million for the nine months ended September 30, 2007 compared to $13.2 million for the nine months ended September 30, 2006. The increase was primarily due to growth in the corporate infrastructure necessary to support our expanded property portfolio, and an increase in stock compensation costs.
Equity in Net (Loss)/Income of Unconsolidated Partnerships. Equity in net
(loss)/income of unconsolidated partnerships decreased $756,000 to a loss of ($694,000) for the nine months ended September 30, 2007 compared to income of $62,000 for the nine months ended September 30, 2006. The decrease was primarily due to our proportionate share of the losses generated by the PREI limited liability companies since formation in April 2007, offset by our allocation of the net income in the McKellar Court partnership for the full nine months ended September 30, 2007. Interest Expense. Interest cost incurred for the nine months ended September 30, 2007 totaled $61.7 million compared to $31.7 million for the nine months ended September 30, 2006. Total interest cost incurred increased primarily as a result of higher borrowings, but also due to increases in the average interest rate on our outstanding borrowings. During the nine months ended September 30, 2007, we capitalized $40.6 million of interest compared to $1.3 million for the nine months ended September 30, 2006. The increase in capitalized interest reflects our increased development and redevelopment activities. Capitalized interest for the nine months ended September 30, 2007 was primarily comprised of amounts relating to our Center for Life Science | Boston development and Pacific Research Center redevelopment projects, which were acquired on November 17, 2006 and July 11, 2006, respectively. We expect to continue to capitalize significant interest costs on these properties, and other properties currently under development or redevelopment, through the end of 2007, including the construction of new buildings at our Fairview, Landmark at Eastview, and Towne Centre Drive properties. Net of capitalized interest and the accretion of debt premium, interest expense decreased $9.4 million to $21.0 million for the nine months ended September 30, 2007 compared to $30.4 million for the nine months ended September 30, 2006.

Minority Interests. Minority interests decreased $866,000 to ($1.9) million for the nine months ended September 30, 2007 compared to ($1.0) million for the nine months ended September 30, 2006. The decrease in minority interests was related to an increase in income before minority interests allocable to minority interests in our Operating Partnership and income in minority interests in our consolidated partnerships for the nine months ended September 30, 2007 compared to net losses in our consolidated partnerships for the nine months ended September 30, 2006.
Discontinued Operations. In May 2007, we completed the sale of our Colorow property and recognized a gain upon closing of approximately $1.1 million. The results of operations and gain on sale of the property have been reported as discontinued operations in the consolidated statements of income for all periods presented. Income from discontinued operations was approximately $1.7 million for the nine months ended September 30, 2007 (representing the results of operations through the date of sale in May and the gain on sale of $1.1 million) compared to income of $1.1 million from discontinued operations for the nine months ended September 30, 2006.
Cash Flows
Comparison of Nine Months Ended September 30, 2007 to Nine Months Ended

September 30, 2006

                                                                  Nine Months Ended September 30,
                                                                    2007                    2006                 Change
                                                                                     (In thousands)
Net cash provided by operating activities                     $       83,064          $       71,706          $   11,358
Net cash used in investing activities                               (325,824 )              (801,375 )           475,551
Net cash provided by financing activities                            235,520                 756,675            (521,155 )
Ending cash and cash equivalents balance                              18,424                  47,318             (28,894 )

Cash and cash equivalents were $18.4 million and $47.3 million, respectively, at September 30, 2007 and September 30, 2006.
Net cash provided by operating activities increased $11.4 million to $83.1 million for the nine months ended September 30, 2007 compared to . . .