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PS Business Parks, Inc. Reports Results For The First Quarter Ended March 31, 2012

Property Operations

In order to evaluate the performance of the Company’s portfolio over comparable periods, management analyzes the operating performance of stabilized properties owned and operated throughout both periods (herein referred to as “Same Park”). Effective January 1, 2012, the Company revised its Same Park definition to include all operating properties owned or acquired prior to January 1, 2010. We believe that this will provide the most meaningful perspective on how our assets are performing period to period, while not inflating comparative growth results with the continued lease-up of recently acquired assets. Operating properties that the Company acquired subsequent to January 1, 2010 or those that are not deemed to be stabilized are referred to as “Non-Same Park.” For the three months ended March 31, 2012 and 2011, the Same Park facilities constitute 19.2 million rentable square feet, representing 70.7% of the 27.2 million square feet in the Company’s portfolio as of March 31, 2012. Acquired assets are generally considered stabilized when occupancy is within a range of comparable Company assets.

The following table presents the operating results of the Company’s properties for the three months ended March 31, 2012 and 2011 in addition to other income and expense items affecting income from continuing operations (unaudited, in thousands, except per square foot amounts):

For The Three MonthsEnded March 31,

2012   2011 Change
Rental income:
Same Park (19.2 million rentable square feet) (1) $ 63,066 $ 64,144 (1.7 %)
Non-Same Park (8.0 million rentable square feet) (2)   21,662     9,368   131.2 %
Total rental income   84,728     73,512   15.3 %
Cost of operations:
Same Park 20,790 21,932 (5.2 %)
Non-Same Park   7,382     3,776   95.5 %
Total cost of operations   28,172     25,708   9.6 %
Net operating income (3):
Same Park (1) 42,276 42,212 0.2 %
Non-Same Park   14,280     5,592   155.4 %
Total net operating income   56,556     47,804   18.3 %
Other income and expenses:
Facility management fees 166 178 (6.7 %)
Interest and other income 43 94 (54.3 %)
Interest expense (5,348 ) (1,215 ) 340.2 %
Depreciation and amortization (27,299 ) (20,754 ) 31.5 %
General and administrative   (2,273 )   (1,570 ) 44.8 %
Income from continuing operations $ 21,845   $ 24,537   (11.0 %)
Same Park gross margin (4) 67.0 % 65.8 % 1.8 %
Same Park weighted average occupancy 92.2 % 91.1 % 1.2 %
Non-Same Park weighted average occupancy 81.2 % 72.9 %
Same Park annualized realized rent

per square foot (5)
$ 14.21 $ 14.63 (2.9 %)
(1)   See above for a definition of Same Park.
(2) See above for a definition of Non-Same Park.


Net operating income (“NOI”) is an important measurement in the commercial real estate industry for determining the value of the real estate generating the NOI. The Company’s calculation of NOI may not be comparable to those of other companies and should not be used as an alternative to measures of performance in accordance with generally accepted accounting principles (“GAAP”).


Same Park gross margin is computed by dividing Same Park NOI by Same Park rental income.


Same Park annualized realized rent per square foot represents the annualized Same Park rental income earned per occupied square foot.

Preferred Equity Transactions

On January 18, 2012, the Company issued $230.0 million or 9.2 million depositary shares, each representing 1/1,000 of a share of the 6.45% Cumulative Preferred Stock, Series S, at $25.00 per depositary share. The Company used the proceeds from this issuance to redeem $79.6 million, or 3,182,000 depositary shares, each representing 1/1,000 of a share of the 7.20% Cumulative Preferred Stock, Series M, and $84.6 million, or 3,384,000 depositary shares, each representing 1/1,000 of a share of the 7.375% Cumulative Preferred Stock, Series O, during February, 2012. The remaining net proceeds of $58.6 million were used to reduce the balance outstanding on the Company’s credit facility.

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