PS Business Parks, Inc. (NYSE:PSB) announced that it has acquired a 5.3 million square foot industrial and flex portfolio for $520 million. The portfolio consists of 18 multi-tenant business parks comprised of 2.9 million square feet of light industrial space and 2.4 million square feet of flex space. Located in the Bay Area, with concentrations in Oakland, Hayward, Fremont, Milpitas, San Jose, Santa Clara and Sunnyvale, the acquired portfolio is currently 82.2% leased to 216 tenants. Joseph D. Russell, Jr., President and Chief Executive Officer, commented, “This portfolio acquisition significantly enhances PSB’s presence in Northern California, providing a strong concentration of parks in markets that are poised for continued recovery. PSB has a deep understanding of these markets, and we are confident their economic strength and stability will provide opportunities to create value from this unique opportunity.” With this acquisition, the Company now owns 7.2 million square feet of multi-tenant industrial and flex space in 30 business parks in Northern California, which now accounts for 26.3% of the Company’s total portfolio. Russell continued, “With its strong market concentration and occupancy upside, this acquisition is in many ways similar to PSB’s 2003 acquisition of Miami International Commerce Center, where we were able to leverage our operational experience to exceed market occupancy. We anticipate having a similar opportunity with this portfolio.” The seller was RREEF America REIT II Corp. and its affiliate, Northern California Industrial Portfolio, Inc.

In connection with the transaction, the Company assumed a $250 million secured loan. The interest only loan has a fixed interest rate of 5.45% and matures in December 2016. In addition to the secured loan, the Company also entered into a three-year unsecured term loan for $250 million with Wells Fargo Bank. Interest on the unsecured term loan is based on LIBOR plus 1.20%. The balance of the funds for the acquisition came from retained cash and the Company’s credit facility. In connection with the acquisition, we have incurred approximately $2.8 million in third party costs which will be reported as additional G&A expense in the fourth quarter.

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