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PS Business Parks, Inc. Reports Results For The Third Quarter Ended September 30, 2012

Stocks in this article: PSB

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

Funds from operations (“FFO”) allocable to common and dilutive shares before non-cash and other adjustments were $37.6 million, or $1.19 per common and dilutive share for the three months ended September 30, 2012, a 6.3% per share increase from the three months ended September 30, 2011 of $35.9 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 $112.1 million, or $3.53 per common and dilutive share for the nine months ended September 30, 2012, a 6.0% per share increase from the nine months ended September 30, 2011 of $107.0 million, or $3.33 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 nine months ended September 30, 2012 over the same periods in 2011 was primarily due to the increase in net operating income from Non-Same Park facilities, which includes the 5.3 million square foot portfolio acquired in December 2011, partially offset by increases in interest expense, preferred equity distributions and general and administrative expenses.

FFO allocable to common and dilutive shares was $33.6 million, or $1.06 per common and dilutive share for the three months ended September 30, 2012, a 12.4% per share decrease from the three months ended September 30, 2011 of $38.8 million, or $1.21 per common and dilutive share. FFO allocable to common and dilutive shares was $94.6 million, or $2.98 per common and dilutive share for the nine months ended September 30, 2012, an 18.1% per share decrease from the nine months ended September 30, 2011 of $117.0 million, or $3.64 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, lease buyout income and acquisition transaction costs on the Company’s FFO per common and dilutive share for the three and nine months ended September 30, 2012 and 2011:

    For The Three Months

Ended September 30,

        For The Nine Months

Ended September 30,

   
2012     2011 Change 2012     2011 Change
 
FFO per common and dilutive share, before non-cash and other adjustments $ 1.19 $ 1.12 6.3 % $ 3.53 $ 3.33 6.0 %
Non-cash distributions related to the redemption of preferred equity (0.12 ) (0.54 )
Gain on the repurchase of preferred equity 0.23
Lease buyout income (1) 0.09 0.09
Acquisition transaction costs   (0.01 )     (0.01 )   (0.01 )
FFO per common and dilutive share, as reported $ 1.06   $ 1.21 (12.4 %) $ 2.98   $ 3.64   (18.1 %)
 
(1)     Represents a lease buyout payment received in the third quarter of 2011 associated with a 53,000 square foot lease in Maryland which terminated as of August 31, 2011.
 

Property Operations

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 and nine months ended September 30, 2012 and 2011, the Same Park facilities constitute 19.2 million rentable square feet, representing 68.1% of the 28.2 million square feet in the Company’s portfolio as of September 30, 2012.

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