PS Business Parks, Inc Q2 2010 Earnings Call Transcript
We acquired the assets for a $131 per square foot and will need to invest additional dollars to deliver multi-tenant space to the market. All-in-cost, will still be well below replacement cost, allowing us to aggressively market the park to drive occupancy and economic performance.
The current tenancy is already in our preferred zone, with an average tenant size of 3,000 square feet. Over the next several quarters we will launch a rebranding and repositioning effort by inserting our own personnel into the project, coupled with our traditional marketing, leasing and property management strategy.
Initial occupancy is 47% and note the immediate return on the asset will be impacted until occupancy is corrected. The closet asset PSB owns in this market is Prosperity Business Park, a 658,000 square foot multitenant office and Flex Park that was 97.5% occupied at June 30.
With Tycon, PSB has completed four separate transactions this year deploying approximately $162 million in asset purchases. The theme of these transactions is as follows. We are pursuing well-located, underperforming assets that need some repositioning effort. We take the risk of reformatting the asset to a PSB user standard and with that effort, capture the upside that our low cost bases and improved occupancy provide.All assets have been acquired below replacement cost with average in-place occupancy of 71%. This gives us the ability to lease up assets and deliver far better returns than acquiring more stabilized but lower-yielding properties with far fewer competitors chasing these types of opportunities.In addition, each of these transactions have enhanced PSB's footprint in markets we know quite well. Collectively, these newly acquired parks broaden our ability to offer existing and new customers more choices, while giving PSB's leasing and property management teams' additional scale to leverage our competitive position. We are confident that PSB's track record will play out with the approximately 1.6 million square feet of acquired inventory and we intend to deliver good results with this well located parks.Read the rest of this transcript for free on seekingalpha.com
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