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PS Business Parks, Inc. Reports Results For The Fourth Quarter Ended December 31, 2012

PS Business Parks, Inc. (NYSE:PSB) reported operating results for the fourth quarter ended December 31, 2012.

Funds from operations (“FFO”) allocable to common and dilutive shares before non-cash and other adjustments were $38.3 million, or $1.20 per common and dilutive share for the three months ended December 31, 2012, a 6.2% per share increase from the three months ended December 31, 2011 of $35.6 million, or $1.13 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 $150.4 million, or $4.74 per common and dilutive share for the year ended December 31, 2012, a 6.3% per share increase from the year ended December 31, 2011 of $142.6 million, or $4.46 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 months and year ended December 31, 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 $39.9 million, or $1.25 per common and dilutive share for the three months ended December 31, 2012, a 20.2% per share increase from the three months ended December 31, 2011 of $32.8 million, or $1.04 per common and dilutive share. FFO allocable to common and dilutive shares was $134.5 million, or $4.24 per common and dilutive share for the year ended December 31, 2012, a 9.6% per share decrease from the year ended December 31, 2011 of $149.8 million, or $4.69 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 payments and acquisition transaction costs on the Company’s FFO per common and dilutive share for the three months and years ended December 31, 2012 and 2011:
    For The Three Months

Ended December 31,
    For The Years

Ended December 31,
 
  2012       2011   Change   2012       2011   Change
 
FFO per common and dilutive share, before non-cash and other adjustments $ 1.20 $ 1.13 6.2 % $ 4.74 $ 4.46 6.3 %
Non-cash distributions related to the redemption of preferred equity (0.55 )
Gain on the repurchase of preferred equity 0.23

Lease buyout payments (1)
0.06 0.06 0.09
Acquisition transaction costs   (0.01 )   (0.09 )   (0.01 )   (0.09 )
FFO per common and dilutive share, as reported $ 1.25   $ 1.04   20.2 % $ 4.24   $ 4.69   (9.6 %)
 
(1)       Represents a lease buyout payment recorded in the fourth quarter of 2012 associated with a 39,000 square foot lease in Virginia which terminated as of December 25, 2012 and a lease buyout payment recorded 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”). The Company defines Same Park to include all operating properties owned or acquired prior to January 1, 2010. Operating properties that the Company acquired subsequent to January 1, 2010 are referred to as “Non-Same Park.” For the three months and years ended December 31, 2012 and 2011, the Same Park facilities constitute 19.2 million rentable square feet, representing 67.7% of the 28.3 million square feet in the Company’s portfolio as of December 31, 2012.

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