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PS Business Parks, Inc. Reports Results For The Second Quarter Ended June 30, 2013 And Acquisition Of A $14.8 Million Flex Park In Dallas, Texas

Stocks in this article: PSB

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 Same Park portfolio includes all operating properties owned or acquired prior to January 1, 2011. Operating properties that the Company acquired subsequent to January 1, 2011 are referred to as “Non-Same Park.” For the three and six months ended June 30, 2013 and 2012, the Same Park facilities constitute 21.4 million rentable square feet, representing 76.0% of the 28.2 million square feet in the Company’s portfolio as of June 30, 2013.

The following table presents the operating results of the Company’s properties for the three and six months ended June 30, 2013 and 2012 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 June 30,

   

 

   

For The Six MonthsEnded June 30,

   

 

  2013         2012   Change   2013         2012   Change
Rental income:
Same Park (21.4 million rentable square feet) $ 74,572 $ 73,815 1.0 % $ 148,847 $ 147,044 1.2 %
Non-Same Park (6.8 million rentable

square feet)

  13,358     11,812   13.1 %   27,203     23,260   17.0 %
Total rental income   87,930     85,627   2.7 %   176,050     170,304   3.4 %
Cost of operations:
Same Park 24,485 24,080 1.7 % 49,645 48,562 2.2 %
Non-Same Park   4,235     3,637   16.4 %   8,459     7,270   16.4 %
Total cost of operations   28,720     27,717   3.6 %   58,104     55,832   4.1 %
Net operating income (1):
Same Park 50,087 49,735 0.7 % 99,202 98,482 0.7 %
Non-Same Park   9,123     8,175   11.6 %   18,744     15,990   17.2 %
Total net operating income   59,210     57,910   2.2 %   117,946     114,472   3.0 %
Other:
Facility management fees 157 164 (4.3 %) 315 330 (4.5 %)
Other income and expense (3,892 ) (5,133 ) (24.2 %) (8,437 ) (10,438 ) (19.2 %)
Depreciation and amortization (26,629 ) (27,198 ) (2.1 %) (53,590 ) (54,442 ) (1.6 %)
General and administrative   (2,370 )   (2,412 ) (1.7 %)   (4,769 )   (4,685 ) 1.8 %
Income from continuing operations $ 26,476   $ 23,331   13.5 % $ 51,465   $ 45,237   13.8 %
Same Park gross margin (2) 67.2 % 67.4 % (0.3 %) 66.6 % 67.0 % (0.6 %)
Same Park weighted average occupancy 91.9 % 91.4 % 0.5 % 92.0 % 91.5 % 0.5 %
Non-Same Park weighted average occupancy 82.7 % 82.8 % (0.1 %) 81.8 % 81.9 % (0.1 %)
Same Park annualized realized rent

per square foot (3)

$ 15.15 $ 15.08 0.5 % $ 15.10 $ 15.00 0.7 %
 
(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) Computed by dividing Same Park NOI by Same Park rental income.
(3) Represents the annualized Same Park rental income earned per occupied square foot.
 

Property Acquisition

On July 26, 2013, the Company acquired a 389,000 square foot multi-tenant flex park consisting of 18 single-story buildings located in Dallas, Texas, for a purchase price of $14.8 million. The park was 66.5% occupied at the time of acquisition. The acquisition was funded with cash on hand.

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