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PS Business Parks, Inc. Reports Results For The Second Quarter Ended June 30, 2012

Stocks in this article: PSB

PS Business Parks, Inc. (NYSE:PSB) reported operating results for the second quarter ended June 30, 2012.

Funds from operations (“FFO”) allocable to common and dilutive shares before non-cash and other adjustments were $37.3 million, or $1.18 per common and dilutive share for the three months ended June 30, 2012, a 5.4% per share increase from the three months ended June 30, 2011 of $36.0 million, or $1.12 per common and dilutive share before non-cash and other adjustments. FFO allocable to common and dilutive shares before non-cash and other adjustments was $74.4 million, or $2.35 per common and dilutive share for the six months ended June 30, 2012, a 6.3% per share increase from the six months ended June 30, 2011 of $71.0 million, or $2.21 per common and dilutive share before non-cash and other adjustments. The increase in FFO per common and dilutive share before non-cash and other adjustments for the three and six months ended June 30, 2012 over the same periods in 2011 was primarily due to the increase in net operating income from Non-Same Park facilities partially offset by increases in interest expense, preferred equity distributions and general and administrative expenses.

FFO allocable to common and dilutive shares was $29.1 million, or $0.92 per common and dilutive share for the three months ended June 30, 2012, a 17.1% per share decrease from the three months ended June 30, 2011 of $35.8 million, or $1.11 per common and dilutive share. FFO allocable to common and dilutive shares was $61.0 million, or $1.92 per common and dilutive share for the six months ended June 30, 2012, a 21.0% per share decrease from the six months ended June 30, 2011 of $78.2 million, or $2.43 per common and dilutive share. In order to provide a meaningful period-to-period comparison, the following table summarizes the impact of non-cash and other adjustments which include non-cash distributions related to the redemption of preferred equity, the gain on the below par repurchase of preferred equity and acquisition transaction costs on the Company’s FFO per common and dilutive share for the three and six months ended June 30, 2012 and 2011:

                       
For The Three Months

Ended June 30,

For The Six Months

Ended June 30,

2012       2011 Change 2012       2011 Change
 
FFO per common and dilutive share, before non-cash and other adjustments $ 1.18 $ 1.12 5.4 % $ 2.35 $ 2.21 6.3 %
Acquisition transaction costs (0.01 ) (0.01 )
Non-cash distributions related to the redemption of preferred equity (0.26 ) (0.43 )
Gain on the repurchase of preferred equity               0.23  
FFO per common and dilutive share, as reported $ 0.92   $ 1.11   (17.1 %) $ 1.92   $ 2.43   (21.0 %)
 

Rental income increased $12.7 million, or 17.3%, from $73.0 million for the three months ended June 30, 2011 to $85.6 million for the three months ended June 30, 2012 primarily as a result of a $12.4 million increase in rental income from Non-Same Park facilities. Net income allocable to common shareholders decreased $10.0 million, or 87.6%, from $11.4 million, or $0.46 per diluted share, for the three months ended June 30, 2011 to $1.4 million, or $0.06 per diluted share, for the three months ended June 30, 2012. Rental income increased $23.9 million, or 16.3%, from $146.4 million for the six months ended June 30, 2011 to $170.3 million for the six months ended June 30, 2012 as a result of a $24.7 million increase in rental income from Non-Same Park facilities, partially offset by an $866,000 decrease from the Same Park portfolio. Net income allocable to common shareholders decreased $23.1 million, or 82.5%, from $27.9 million, or $1.13 per diluted share, for the six months ended June 30, 2011 to $4.9 million, or $0.20 per diluted share, for the six months ended June 30, 2012. The decrease in net income allocable to common shareholders for the three and six months was primarily due to the net impact of non-cash preferred equity transactions and increases in interest expense, depreciation and amortization and preferred equity distributions, partially offset by an increase in net operating income.

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