Economic conditions have put some pressure on our operating portfolio. Clearly, retailers are struggling, and consumers are pulling back on spending.

Yet the news isn't all bad.

Although occupancy at the end of 2008 was below our historical average, at 93.8 percent we were still comfortably above the nine-year NCREIF average of 91.5 percent. Our same store growth was 2.6 percent and rental rates on new and renewed leases grew by more than 10.5 percent. We leased more than 4.7 million square feet of space in the operating portfolio and another million in our developments.

Our teams are intensely focused on leasing, striving to achieve 95 percent occupancy in both our operating and development portfolios. Given this focus and the caliber of the centers available for lease, we are confident that retailers will continue to gravitate toward quality and as the markets improve occupancy goals will be met.

We continued to see strong occupancy and solid rent growth in some of our largest markets: California, where the vast majority of our operating properties are in coastal and infill markets and in Texas. Our Florida properties remain strong; however, we do expect occupancy to soften over the next year.

While we will not be insulated from the economic pressures, necessity-driven retail has held up better in past recessions. Given the quality of our portfolio, strategy and team, Regency will continue to provide an attractive investment through market cycles.

We believe our remarkable results are a testament to the resiliency of Regency's strategy of quality real estate - excellent demographics, largely grocery-anchored centers and best-in-class retailers.

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