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

Property Operations

In order to evaluate the performance of the Company’s portfolio over comparable periods, management analyzes the operating performance of 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 are referred to as “Non-Same Park.” For the three months ended June 30, 2012 and 2011, the Same Park facilities constitute 19.2 million rentable square feet, representing 70.7% of the 27.1 million square feet in the Company’s portfolio as of June 30, 2012.

The following table presents the operating results of the Company’s properties for the three and six months ended June 30, 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 Months

Ended June 30,

 

For The Six Months

Ended June 30,

 

2012       2011 Change 2012       2011 Change
Rental income:
Same Park (19.2 million rentable square feet) (1) $ 63,457 $ 63,245 0.3 % $ 126,472 $ 127,338 (0.7 %)

Non-Same Park (8.0 million rentable square feet) (2)

  22,170     9,725   128.0 %   43,832     19,093   129.6 %
Total rental income   85,627     72,970   17.3 %   170,304     146,431   16.3 %
Cost of operations:
Same Park 20,218 20,497 (1.4 %) 40,951 42,376 (3.4 %)
Non-Same Park   7,499     3,659   104.9 %   14,881     7,435   100.1 %
Total cost of operations   27,717     24,156   14.7 %   55,832     49,811   12.1 %
Net operating income (3):
Same Park (1) 43,239 42,748 1.1 % 85,521 84,962 0.7 %
Non-Same Park   14,671     6,066   141.9 %   28,951     11,658   148.3 %
Total net operating income   57,910     48,814   18.6 %   114,472     96,620   18.5 %
Other:
Facility management fees 164 169 (3.0 %) 330 347 (4.9 %)
Other income and expense (5,133 ) (1,102 ) 365.8 % (10,438 ) (2,223 ) 369.5 %
Depreciation and amortization (27,198 ) (20,988 ) 29.6 % (54,442 ) (41,718 ) 30.5 %
General and administrative (2,412 ) (1,530 ) 57.6 % (4,685 ) (3,100 ) 51.1 %
Acquisition transaction costs       (218 ) (100.0 %)       (218 ) (100.0 %)
Income from continuing operations $ 23,331   $ 25,145   7.2 % $ 45,237   $ 49,708   (9.0 %)
Same Park gross margin (4) 68.1 % 67.6 % 0.7 % 67.6 % 66.7 % 1.3 %
Same Park weighted average occupancy 91.9 % 90.9 % 1.1 % 92.1 % 91.0 % 1.2 %
Non-Same Park weighted average occupancy 82.8 % 75.0 % 82.0 % 74.0 %

Same Park annualized realized rent per square foot (5)

$ 14.40 $ 14.51 (0.8 %) $ 14.32 $ 14.59 (1.9 %)
 
      (1)     See above for a definition of Same Park.
(2) See above for a definition of Non-Same Park.
(3) 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”).
(4) Same Park gross margin is computed by dividing Same Park NOI by Same Park rental income.
(5) Same Park annualized realized rent per square foot represents the annualized Same Park rental income earned per occupied square foot.
 

Preferred Equity Transactions

On May 14, 2012, the Company issued $350.0 million or 14.0 million depositary shares, each representing 1/1,000 of a share of the 6.00% Cumulative Preferred Stock, Series T, at $25.00 per depositary share. The Company used the proceeds from this issuance to redeem $158.5 million, or 6,340,776 depositary shares, each representing 1/1,000 of a share of the 7.00% Cumulative Preferred Stock, Series H; $68.6 million, or 2,745,050 depositary shares, each representing 1/1,000 of a share of the 6.875% Cumulative Preferred Stock, Series I; and $5.6 million, or 223,300 units of its 7.125% Series N Cumulative Redeemable Preferred Units during June, 2012. The remaining net proceeds were used to reduce the Company’s unsecured debt.

Stock quotes in this article: PSB 

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