GLENDALE, Calif.--(BUSINESS WIRE)--Oct 22, 2019--

PS Business Parks, Inc. (NYSE:PSB) reported operating results for the three and nine months ended September 30, 2019.

Acquisition and Disposition Update

During the quarter ended September 30, 2019, the Company acquired Hathaway Industrial Park (the “Park”) located in Santa Fe Springs, California, for a total purchase price of $104.3 million, inclusive of capitalized transaction costs. The Park consists of ten buildings totaling 543,000 square feet situated on 27 acres of land and is 100% occupied with suites ranging from 5,000 to 288,000 square feet. The Park is located in a prime last-mile location in the heart of the Los Angeles Mid-Counties submarket with access to strong demographics of over 6 million people within a 15-mile radius.

Subsequent to quarter end, the Company completed the sale of three business parks located in Montgomery County, Maryland: Metro Park North, Meadow Business Park and WesTech Business Park. The parks, consisting of 28 buildings totaling approximately 1.3 million square feet, sold for a gross sales price of $148.8 million. The Company retained one single-tenant government building totaling 113,000 square feet and a long-term ground lease at Metro Park North. The portfolio of assets which sold had been classified as held for sale for the three and nine months ending September 30, 2019 and all comparable periods.

Operating Results for the Three and Nine Months Ended September 30, 2019

Net income allocable to common shareholders was $26.3 million, or $0.96 per diluted common share, for the three months ended September 30, 2019, an increase of $1.2 million, or 4.7%, from $25.1 million, or $0.92 per diluted common share, for the same period in 2018. The increase was mainly due to an increase in net operating income (“NOI”) with respect to the Company’s real estate facilities partially offset by an increase in general and administrative expense primarily from a one-time charge to stock compensation expense of $1.1 million resulting from a modification to the Retirement Plan for Non-Employee Directors. The increase in NOI includes a $2.4 million, or 3.6%, increase attributable to Same Park facilities driven by an increase in rental rates, combined with increased NOI from Non-Same Park and multifamily assets, partially offset by reduced NOI generated from assets held for sale as of September 30, 2019.

Net income allocable to common shareholders was $81.2 million, or $2.95 per diluted common share, for the nine months ended September 30, 2019, a decrease of $60.2 million, or 42.6%, from $141.4 million, or $5.16 per diluted common share, for the same period in 2018. The decrease was mainly due to the gain on sale of real estate facilities sold during the first nine months of 2018 that did not recur in 2019, partially offset by an increase in NOI with respect to the Company’s real estate facilities. The increase in NOI includes an $8.6 million, or 4.4%, increase attributable to Same Park facilities driven by an increase in rental rates, combined with increased NOI from Non-Same Park and multifamily assets, partially offset by reduced NOI generated from facilities sold in 2018.

Funds from Operations (“FFO”), Core FFO and Funds Available for Distribution (“FAD”)

FFO increased 4.6% during the three months ended September 30, 2019 compared to the same period in 2018, increasing to $1.71 per share from $1.64 per share in the prior period. FFO increased 6.7% during the nine months ended September 30, 2019 compared to the same period in 2018, increasing to $5.13 per share from $4.81 per share in the prior period. FFO is a non-GAAP (generally accepted accounting principles) measure defined by the National Association of Real Estate Investment Trusts and generally represents GAAP net income before (i) real estate depreciation and amortization expense, (ii) gains or losses on sales of operating properties and (iii) land and impairment charges on real estate assets.

Core FFO per share was exactly equal to FFO per share for the three and nine months ended September 30, 2019 and 2018. Core FFO is also a non-GAAP measure that represents FFO excluding the impact of (i) charges related to the redemption of preferred stock and (ii) nonrecurring income or expense items, neither of which were incurred by the Company during the three and nine month periods ended September 30, 2019 and 2018.

FAD was $51.4 million for the three months ended September 30, 2019 as compared to $45.6 million for the same period in 2018, an increase of 12.7%. FAD was $149.9 million for the nine months ended September 30, 2019 as compared to $136.3 million for the same period in 2018, an increase of 9.9%. FAD is a non-GAAP measure that represents Core FFO adjusted to (i) deduct recurring capital improvements and capitalized tenant improvements and lease commissions and (ii) remove certain non-cash income or expenses such as straight-line rent and stock compensation expense.

FFO, Core FFO and FAD are not substitutes for GAAP net income. Other real estate investment trusts (“REITs”) may compute Core FFO and FAD differently, which could inhibit comparability. We believe our presentations of FFO, Core FFO and FAD assist investors and analysts in analyzing and comparing our operating and financial performance between reporting periods.

Property Operations–Same Park Portfolio

We believe that evaluation of our Same Park portfolio, defined as all properties owned and operated as of September 30, 2019 that were acquired prior to January 1, 2017, provides an informative view of how the Company’s portfolio has performed over comparable periods. As of September 30, 2019, our Same Park portfolio consisted of 25.8 million rentable square feet, or 89.6% of the 28.8 million rentable square feet in the Company’s total portfolio, and excludes our 95.0% interest in a 395-unit multifamily property. Approximately 1.3 million square feet of flex and office business parks located in Rockville and Silver Spring, Maryland, have been classified as held for sale as of September 30, 2019; therefore, these parks have been removed from Same Park results for the three and nine months ended September 30, 2019 and 2018. Subsequent to September 30, 2019, the Company completed the sale of these parks for a gross sales price of $148.8 million.

The following table presents the unaudited operating results of the Company’s Same Park facilities for the three and nine months ended September 30, 2019 and 2018 (in thousands, except per square foot amounts):

 

 

For the Three Months

 

 

 

For The Nine Months

 

 

 

Ended September 30,

 

 

 

Ended September 30,

 

 

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

Rental income (1)

$

96,234

 

$

92,356

 

4.2%

 

$

287,872

 

$

275,976

 

4.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted cost of operations (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property taxes

 

10,302

 

 

9,726

 

5.9%

 

 

30,638

 

 

29,238

 

4.8%

Utilities

 

5,309

 

 

5,438

 

(2.4%)

 

 

14,825

 

 

15,010

 

(1.2%)

Repairs and maintenance

 

5,940

 

 

5,358

 

10.9%

 

 

17,666

 

 

16,485

 

7.2%

Snow removal

 

 

 

 

 

 

1,049

 

 

655

 

60.2%

Other expenses

 

6,173

 

 

5,730

 

7.7%

 

 

18,935

 

 

18,452

 

2.6%

Total

 

27,724

 

 

26,252

 

5.6%

 

 

83,113

 

 

79,840

 

4.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI (2) (3)

$

68,510

 

$

66,104

 

3.6%

 

$

204,759

 

$

196,136

 

4.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Statistical Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI margin (4)

 

71.2%

 

 

71.6%

 

(0.6%)

 

 

71.1%

 

 

71.1%

 

-

Weighted average square foot occupancy

 

94.7%

 

 

95.1%

 

(0.4%)

 

 

94.6%

 

 

94.7%

 

(0.1%)

Annualized revenue per occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

square foot (5)

$

15.74

 

$

15.05

 

4.6%

 

$

15.72

 

$

15.05

 

4.5%

Revenue per available foot (RevPAF) (6)

$

14.91

 

$

14.31

 

4.2%

 

$

14.87

 

$

14.26

 

4.3%

(1)

Same Park rental income includes lease buyout income of $183,000 and $213,000 for the three months ended September 30, 2019 and 2018, respectively, and $1.1 million and $463,000 for the nine months ended September 30, 2019 and 2018, respectively.

(2)

Adjusted cost of operations, as presented above, excludes stock compensation expense for employees whose compensation expense is recorded in cost of operations, which can vary significantly period to period based upon the performance of the Company. Beginning January 1, 2019, the Company has recorded our divisional vice presidents’ compensation costs within general and administrative expense as we determined that the nature of these individuals’ responsibilities is more consistent with corporate oversight as opposed to direct property operations. As a result of this change, we have reclassified divisional vice presidents’ compensation costs totaling $281,000 and $936,000 for the three and nine months ended September 30, 2018, respectively, from adjusted cost of operations into general and administrative expenses in order to conform to the current period presentation. Non-cash compensation expense for our divisional vice presidents, which totaled $143,000 and $445,000 for the three and nine months ended September 30, 2018, respectively, had previously been excluded from adjusted cost of operations.

(3)

We utilize NOI, a non-GAAP financial measure, to evaluate the operating performance of our business parks. We define NOI as rental income less adjusted cost of operations. We believe NOI assists investors in analyzing the performance and value of our business parks by excluding (i) corporate overhead (i.e., general and administrative expenses) because it does not relate to the direct operating performance of our business parks, (ii) depreciation and amortization expense because it does not accurately reflect changes in the fair value of our business parks and (iii) stock compensation expense because this expense item can vary significantly from period to period and thus impact comparability across periods.

(4)

NOI margin is computed by dividing NOI by rental income.

(5)

Revenue per occupied square foot is computed by dividing rental income during the period by weighted average occupied square feet during the same period. For the three and nine month periods ending September 30, 2019 and 2018, rental income amounts have been annualized.

(6)

Revenue per available foot (RevPAF) is computed by dividing rental income during the period by weighted average available square feet during the same period. For the three and nine month periods ending September 30, 2019 and 2018, rental income amounts have been annualized.

The following table summarizes unaudited selected quarterly financial data with respect to the Same Park facilities (in thousands, except per square foot amounts):

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

March 31

 

June 30

 

September 30

 

December 31

Rental income

 

 

 

 

 

 

 

 

 

 

 

2019

$

95,693

 

$

95,945

 

$

96,234

 

$

2018

$

91,678

 

$

91,942

 

$

92,356

 

$

92,459

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted cost of operations (1)

 

 

 

 

 

 

 

 

 

 

 

2019

$

28,442

 

$

26,947

 

$

27,724

 

$

2018

$

27,222

 

$

26,366

 

$

26,252

 

$

25,495

 

 

 

 

 

 

 

 

 

 

 

 

NOI (1)

 

 

 

 

 

 

 

 

 

 

 

2019

$

67,251

 

$

68,998

 

$

68,510

 

$

2018

$

64,456

 

$

65,576

 

$

66,104

 

$

66,964

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average square foot occupancy

 

 

 

 

 

 

 

 

2019

 

94.7%

 

 

94.3%

 

 

94.7%

 

 

2018

 

94.5%

 

 

94.5%

 

 

95.1%

 

 

95.4%

 

 

 

 

 

 

 

 

 

 

 

 

Annualized revenue per occupied square foot

 

 

 

 

 

 

 

 

 

2019

$

15.66

 

$

15.77

 

$

15.74

 

$

2018

$

15.04

 

$

15.08

 

$

15.05

 

$

15.01

 

 

 

 

 

 

 

 

 

 

 

 

RevPAF

 

 

 

 

 

 

 

 

 

2019

$

14.83

 

$

14.87

 

$

14.91

 

$

2018

$

14.21

 

$

14.25

 

$

14.31

 

$

14.33

(1)

Beginning January 1, 2019, the Company has recorded our divisional vice presidents’ compensation costs within general and administrative expense as we determined that the nature of these individuals’ responsibilities is more consistent with corporate oversight as opposed to direct property operations. To conform to current period presentation, we have reclassified divisional vice presidents’ compensation costs totaling $366,000, $289,000, $281,000 and $281,000 for each of the three months ended March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018, respectively, from adjusted cost of operations into general and administrative expenses. Non-cash compensation expense for our divisional vice presidents had previously been excluded from adjusted cost of operations.

Distributions Declared

On October 22, 2019, the Board of Directors declared a quarterly dividend of $1.05 per common share. Distributions were also declared on the various series of depositary shares, each representing 1/1,000 of a share of preferred stock. Distributions will be payable on December 30, 2019 to shareholders of record on December 13, 2019.

Company Information

PS Business Parks, Inc., a member of the S&P MidCap 400, is a REIT that acquires, develops, owns and operates commercial properties, primarily multi-tenant industrial, flex and office space. As of October 22, 2019, the Company wholly owned 27.5 million rentable square feet with approximately 4,900 commercial customers in six states and held a 95.0% interest in a 395-unit apartment complex.

Forward-Looking Statements

When used within this press release, the words “may,” “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” “intends” and similar expressions are intended to identify “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results and performance of the Company to be materially different from those expressed or implied in the forward-looking statements. Such factors include the impact of competition from new and existing commercial facilities which could impact rents and occupancy levels at the Company’s facilities; the Company’s ability to evaluate, finance and integrate acquired and developed properties into the Company’s existing operations; the Company’s ability to effectively compete in the markets that it does business in; the impact of the regulatory environment as well as national, state and local laws and regulations including, without limitation, those governing REITs; the impact of general economic conditions upon rental rates and occupancy levels at the Company’s facilities; the availability of permanent capital at attractive rates, the outlook and actions of rating agencies and risks detailed from time to time in the Company’s SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.

Additional information about PS Business Parks, Inc., including more financial analysis of the third quarter operating results, is available on the Company’s website at psbusinessparks.com.

A conference call is scheduled for Wednesday, October 23, 2019, at 10:00 a.m. PDT (1:00 p.m. EDT) to discuss third quarter results. The toll free number is (877) 876-9173; the conference ID is PSBQ319. The call will also be available via a live webcast on the Company’s website. A replay of the conference call will be available through November 6, 2019 at (800) 839-8708, as well as via webcast on the Company’s website.

PS BUSINESS PARKS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

2019

 

2018

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

6,749

 

$

37,379

 

 

 

 

 

 

Real estate facilities, at cost

 

 

 

 

 

Land

 

837,891

 

 

762,731

Buildings and improvements

 

2,212,166

 

 

2,157,407

 

 

3,050,057

 

 

2,920,138

Accumulated depreciation

 

(1,152,946)

 

 

(1,097,748)

 

 

1,897,111

 

 

1,822,390

Properties held for sale, net

 

124,937

 

 

128,093

Land and building held for development

 

30,515

 

 

30,848

 

 

2,052,563

 

 

1,981,331

Rent receivable

 

1,752

 

 

1,403

Deferred rent receivable

 

35,548

 

 

33,308

Other assets

 

21,122

 

 

15,173

Total assets

$

2,117,734

 

$

2,068,594

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

Accrued and other liabilities

$

92,252

 

$

85,141

Credit facility

 

50,000

 

 

Total liabilities

 

142,252

 

 

85,141

Commitments and contingencies

 

 

 

 

 

Equity

 

 

 

 

 

PS Business Parks, Inc.’s shareholders’ equity

 

 

 

 

 

Preferred stock, $0.01 par value, 50,000,000 shares authorized,

 

 

 

 

 

38,390 shares issued and outstanding at

 

 

 

 

 

September 30, 2019 and December 31, 2018,

 

 

 

 

 

at liquidation preference

 

959,750

 

 

959,750

Common stock, $0.01 par value, 100,000,000 shares authorized,

 

 

 

 

 

27,435,139 and 27,362,101 shares issued and outstanding at

 

 

 

 

 

September 30, 2019 and December 31, 2018, respectively

 

274

 

 

274

Paid-in capital

 

734,760

 

 

736,131

Accumulated earnings

 

64,775

 

 

69,207

Total PS Business Parks, Inc.’s shareholders’ equity

 

1,759,559

 

 

1,765,362

Noncontrolling interests

 

215,923

 

 

218,091

Total equity

 

1,975,482

 

 

1,983,453

Total liabilities and equity

$

2,117,734

 

$

2,068,594

PS BUSINESS PARKS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

 

 

For The Three Months

 

For The Nine Months

 

Ended September 30,

 

Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

$

108,064

 

$

103,808

 

$

323,671

 

$

309,391

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Cost of operations (1)

 

32,468

 

 

31,197

 

 

97,521

 

 

94,449

Depreciation and amortization

 

26,220

 

 

25,207

 

 

75,863

 

 

73,505

General and administrative (1) (2)

 

4,051

 

 

2,882

 

 

10,111

 

 

8,560

Total operating expenses

 

62,739

 

 

59,286

 

 

183,495

 

 

176,514

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

1,384

 

 

488

 

 

2,766

 

 

1,066

Interest and other expense

 

(199)

 

 

(167)

 

 

(484)

 

 

(499)

Gain on sale of real estate facilities

 

 

 

 

 

 

 

85,283

Net income

 

46,510

 

 

44,843

 

 

142,458

 

 

218,727

Allocation to noncontrolling interests

 

(7,020)

 

 

(6,514)

 

 

(21,670)

 

 

(36,814)

Net income allocable to PS Business Parks, Inc.

 

39,490

 

 

38,329

 

 

120,788

 

 

181,913

Allocation to preferred shareholders

 

(12,959)

 

 

(12,959)

 

 

(38,877)

 

 

(38,921)

Allocation to restricted stock unit holders

 

(219)

 

 

(239)

 

 

(699)

 

 

(1,592)

Net income allocable to common shareholders

$

26,312

 

$

25,131

 

$

81,212

 

$

141,400

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.96

 

$

0.92

 

$

2.96

 

$

5.18

Diluted

$

0.96

 

$

0.92

 

$

2.95

 

$

5.16

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

27,432

 

 

27,339

 

 

27,411

 

 

27,310

Diluted

 

27,543

 

 

27,442

 

 

27,512

 

 

27,412

(1)

 

We have reclassified our divisional vice presidents’ compensation costs totaling $457,000 for the three months ended September 30, 2018, consisting of $305,000 of compensation costs and $152,000 of stock compensation expense, and $1.5 million for the nine months ended September 30, 2018, consisting of $995,000 of compensation costs and $466,000 of stock compensation expense, from cost of operations into general and administrative expenses on our consolidated statements of income in the three and nine months ended September 30, 2018 in order to conform to the current period presentation.

(2)

During the three and nine months ended September 30, 2019, we recorded a one-time charge to stock compensation expense of $1.1 million resulting from a modification to the Retirement Plan for Non-Employee Directors.

PS BUSINESS PARKS, INC.

Computation of Funds from Operations (“FFO”), Core FFO and Funds Available for Distribution (“FAD”)

(In thousands, except per share amounts)

(Unaudited)

 

 

For The Three Months

 

For The Nine Months

 

Ended September 30,

 

Ended September 30,

 

2019

 

2018

 

2019

 

2018

Net income allocable to common shareholders

$

26,312

 

$

25,131

 

$

81,212

 

$

141,400

Adjustments

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of real estate facilities

 

 

 

 

 

 

 

(85,283)

Depreciation and amortization expense

 

26,220

 

 

25,207

 

 

75,863

 

 

73,505

Net income allocated to noncontrolling interests

 

7,020

 

 

6,514

 

 

21,670

 

 

36,814

Net income allocated to restricted stock unit holders

 

219

 

 

239

 

 

699

 

 

1,592

FFO (income) loss allocated to joint venture partner

 

(39)

 

 

(3)

 

 

(105)

 

 

8

FFO allocable to common and dilutive shares (1)

$

59,732

 

$

57,088

 

$

179,339

 

$

168,036

 

 

 

 

 

 

 

 

 

 

 

 

Core FFO allocable to common and dilutive shares (1)

$

59,732

 

$

57,088

 

 

179,339

 

 

168,036

Adjustments

 

 

 

 

 

 

 

 

 

 

 

Recurring capital improvements

 

(2,728)

 

 

(3,556)

 

 

(6,336)

 

 

(7,016)

Tenant improvements

 

(3,331)

 

 

(4,654)

 

 

(11,898)

 

 

(12,411)

Lease commissions

 

(2,654)

 

 

(2,504)

 

 

(6,027)

 

 

(6,277)

Straight-line rent

 

(977)

 

 

(981)

 

 

(2,286)

 

 

(2,325)

In-place lease adjustment

 

(20)

 

 

12

 

 

5

 

 

35

Tenant improvement reimbursement amortization,

 

 

 

 

 

 

 

 

 

 

 

net of lease incentive amortization

 

(125)

 

 

(556)

 

 

(788)

 

 

(1,690)

Non-cash stock compensation expense

 

2,102

 

 

1,152

 

 

3,991

 

 

2,933

Cash paid for taxes in lieu of shares upon vesting of

 

 

 

 

 

 

 

 

 

 

 

restricted stock units

 

(620)

 

 

(426)

 

 

(6,120)

 

 

(4,955)

FAD allocable to common and dilutive shares (2)

$

51,379

 

$

45,575

 

$

149,880

 

$

136,330

 

 

 

 

 

 

 

 

 

 

 

 

Distributions to common shareholders, noncontrolling interests and

 

 

 

 

 

 

 

 

 

 

 

restricted stock unit holders

$

36,728

 

$

36,681

 

$

110,132

 

$

96,032

Distribution payout ratio

 

71.5%

 

 

80.5%

 

 

73.5%

 

 

70.4%

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Earnings per Share to FFO per Share

 

 

 

 

 

 

 

 

 

 

 

Net income per common share—diluted

$

0.96

 

$

0.92

 

$

2.95

 

$

5.16

Gain on sale of real estate facilities

 

 

 

 

 

 

 

(2.45)

Depreciation and amortization expense

 

0.75

 

 

0.72

 

 

2.18

 

 

2.10

FFO per share (1)

$

1.71

 

$

1.64

 

$

5.13

 

$

4.81

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average outstanding

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

27,432

 

 

27,339

 

 

27,411

 

 

27,310

Operating partnership units

 

7,305

 

 

7,305

 

 

7,305

 

 

7,305

Restricted stock units

 

113

 

 

163

 

 

126

 

 

183

Common share equivalents

 

111

 

 

103

 

 

101

 

 

102

Total common and dilutive shares

 

34,961

 

 

34,910

 

 

34,943

 

 

34,900

(1)

FFO and Core FFO are defined above. For the three and nine months ended September 30, 2019 and 2018, Core FFO was exactly equal to FFO as the Company did not incur any preferred share redemption charges or nonrecurring income or expenses in either period.

(2)

FAD is defined above.

PS BUSINESS PARKS, INC.

Reconciliation of Selected non-GAAP Measures to Analogous GAAP Measures

(Unaudited, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For The Three Months

 

 

 

For The Nine Months

 

 

 

Ended September 30,

 

 

 

Ended September 30,

 

 

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

Rental income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Park (1)

$

96,234

 

$

92,356

 

4.2%

 

$

287,872

 

$

275,976

 

4.3%

Non-Same Park

 

3,598

 

 

2,355

 

52.8%

 

 

9,508

 

 

2,982

 

218.8%

Multifamily

 

2,519

 

 

1,895

 

32.9%

 

 

7,492

 

 

5,057

 

48.2%

Assets sold or held for sale (2)

 

5,713

 

 

7,202

 

(20.7%)

 

 

18,799

 

 

25,376

 

(25.9%)

Total rental income

 

108,064

 

 

103,808

 

4.1%

 

 

323,671

 

 

309,391

 

4.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of operations (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Park

 

27,724

 

 

26,252

 

5.6%

 

 

83,113

 

 

79,840

 

4.1%

Non-Same Park

 

1,137

 

 

753

 

51.0%

 

 

3,304

 

 

977

 

238.2%

Multifamily

 

1,045

 

 

1,043

 

0.2%

 

 

3,118

 

 

3,013

 

3.5%

Assets sold or held for sale (2)

 

2,253

 

 

2,793

 

(19.3%)

 

 

7,076

 

 

9,556

 

(26.0%)

Stock compensation expense (4)

 

309

 

 

356

 

(13.2%)

 

 

910

 

 

1,063

 

(14.4%)

Total cost of operations

 

32,468

 

 

31,197

 

4.1%

 

 

97,521

 

 

94,449

 

3.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Park

 

68,510

 

 

66,104

 

3.6%

 

 

204,759

 

 

196,136

 

4.4%

Non-Same Park

 

2,461

 

 

1,602

 

53.6%

 

 

6,204

 

 

2,005

 

209.4%

Multifamily

 

1,474

 

 

852

 

73.0%

 

 

4,374

 

 

2,044

 

114.0%

Assets sold or held for sale (2) (5)

 

3,460

 

 

4,409

 

(21.5%)

 

 

11,723

 

 

15,820

 

(25.9%)

Stock compensation expense (4)

 

(309)

 

 

(356)

 

(13.2%)

 

 

(910)

 

 

(1,063)

 

(14.4%)

Depreciation and amortization expense

 

(26,220)

 

 

(25,207)

 

4.0%

 

 

(75,863)

 

 

(73,505)

 

3.2%

General and administrative expense (3)

 

(4,051)

 

 

(2,882)

 

40.6%

 

 

(10,111)

 

 

(8,560)

 

18.1%

Interest and other income

 

1,384

 

 

488

 

183.6%

 

 

2,766

 

 

1,066

 

159.5%

Interest and other expense

 

(199)

 

 

(167)

 

19.2%

 

 

(484)

 

 

(499)

 

(3.0%)

Gain on sale of real estate facilities

 

 

 

 

 

 

 

 

85,283

 

(100.0%)

Net income

$

46,510

 

$

44,843

 

3.7%

 

$

142,458

 

$

218,727

 

(34.9%)

(1)

Same Park rental income includes lease buyout income of $183,000 and $213,000 for the three months ended September 30, 2019 and 2018, respectively, and $1.1 million and $463,000 for the nine months ended September 30, 2019 and 2018, respectively.

(2)

Amounts for the three and nine months ended September 30, 2019 reflect the operating results related to 1.3 million square feet of flex and office assets held for sale as of September 30, 2019; amounts shown for the three and nine months ended September 30, 2018 reflect the operating results related to 1.3 million square feet of flex and office assets held for sale as of September 30, 2019 as well as operating results related to 899,000 square feet of assets sold in 2018.

(3)

We have reclassified our divisional vice presidents’ compensation costs totaling $457,000 and $1.5 million for the three and nine months ended September 30, 2018, respectively, from cost of operations into general and administrative expenses on our consolidated statements of income in the three and nine months ended September 30, 2018 in order to conform to the current period presentation. Of this amount, $152,000 and $466,000 of stock compensation expense for the three and nine months, respectively, have previously been excluded from NOI.

(4)

Stock compensation expense, as shown here, represents stock compensation expense for employees whose compensation expense is recorded in cost of operations. Note that stock compensation expense attributable to our executive management team (including divisional vice presidents) and other corporate employees is recorded within general and administrative expense.

(5)

NOI from assets held for sale was $3.5 million and $4.2 million for the three months ended September 30, 2019 and 2018, respectively, and $11.7 million and $12.8 million for the nine months ended September 30, 2019 and 2018, respectively. The three and nine months 2018 remaining NOI balances relate to assets sold during 2018.

 

CONTACT: Jeff Hedges

(818) 244-8080, Ext. 1649

KEYWORD: CALIFORNIA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: COMMERCIAL BUILDING & REAL ESTATE COMMUNICATIONS CONSTRUCTION & PROPERTY PUBLIC RELATIONS/INVESTOR RELATIONS

SOURCE: PS Business Parks, Inc.

Copyright Business Wire 2019.

PUB: 10/22/2019 05:08 PM/DISC: 10/22/2019 05:08 PM

Copyright Business Wire 2019.