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

Stocks in this article: PSB

The following table presents the operating results of the Company’s properties for the three and nine months ended September 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 MonthsEnded September 30,

 

 

 

For The Nine MonthsEnded September 30,

 

 

2012   2011 Change 2012   2011 Change
Rental income:
Same Park (19.2 million rentable square feet) $ 63,342 $ 63,039 0.5 % $ 189,814 $ 190,378 (0.3 %)
Non-Same Park (8.9 million rentable

square feet)

  23,678     10,538   124.7 %   67,510     29,630   127.8 %
Total rental income   87,020     73,577   18.3 %   257,324     220,008   17.0 %
Cost of operations:
Same Park 21,190 20,925 1.3 % 62,141 63,301 (1.8 %)
Non-Same Park   8,104     3,853   110.3 %   22,985     11,288   103.6 %
Total cost of operations   29,294     24,778   18.2 %   85,126     74,589   14.1 %
Net operating income (1):
Same Park 42,152 42,114 0.1 % 127,673 127,077 0.5 %
Non-Same Park   15,574     6,685   133.0 %   44,525     18,342   142.7 %
Total net operating income   57,726     48,799   18.3 %   172,198     145,419   18.4 %
Other:
Lease buyout income (2) 2,886 (100.0 %) 2,886 (100.0 %)
Facility management fees 159 170 (6.5 %) 489 517 (5.4 %)
Other income and expense (5,135 ) (1,224 ) 319.5 % (15,573 ) (3,447 ) 351.8 %
Depreciation and amortization (26,884 ) (21,382 ) 25.7 % (81,326 ) (63,100 ) 28.9 %
General and administrative (2,082 ) (1,313 ) 58.6 % (6,767 ) (4,413 ) 53.3 %
Acquisition transaction costs   (158 )   (52 ) 203.8 %   (158 )   (270 ) (41.5 %)
Income from continuing operations $ 23,626   $ 27,884   (15.3 %) $ 68,863   $ 77,592   (11.2 %)
Same Park gross margin (3) 66.5 % 66.8 % (0.4 %) 67.3 % 66.7 % 0.9 %
Same Park weighted average occupancy 91.9 % 90.9 % 1.1 % 92.0 % 91.0 % 1.1 %
Non-Same Park weighted average occupancy 82.0 % 76.1 % 82.0 % 74.8 %
Same Park annualized realized rent

per square foot (4)

$ 14.37 $ 14.46 (0.6 %) $ 14.34 $ 14.54 (1.4 %)
 
(1)    

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”).

(2)

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.

(3)

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

(4)

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

 

Total rental income, including the lease buyout income noted above, increased $10.6 million, or 13.8%, from $76.5 million for the three months ended September 30, 2011 to $87.0 million for the three months ended September 30, 2012 primarily as a result of a $13.1 million increase in rental income from Non-Same Park facilities, which includes the 5.3 million square foot portfolio acquired in December 2011, partially offset by a $2.6 million decrease from the Same Park portfolio. Excluding the lease buyout income, rental income from the Same Park portfolio increased $303,000 due to an increase in occupancy rates, partially offset by a decrease in rental rates. Net income allocable to common shareholders decreased $10.3 million, or 66.5%, from $15.4 million, or $0.63 per diluted share, for the three months ended September 30, 2011 to $5.2 million, or $0.21 per diluted share, for the three months ended September 30, 2012.

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