UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 19, 2013
PS BUSINESS PARKS, INC.
(Exact name of registrant as specified in its charter)
California |
(State or Other Jurisdiction of Incorporation) |
1-10709 | 95-4300881 | |
(Commission File Number) | (I.R.S. Employer Identification Number) |
701 Western Avenue, Glendale, California | 91201-2397 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (818) 244-8080
N/A
(Former name or former address, if changed since last report)
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Conditions
On February 19, 2013, PS Business Parks reported its results of operations and financial condition for the quarter ended December 31, 2012. The full text of the press release is furnished as exhibit 99.1 to this Current Report on Form 8-K. The information in Item 2.02 and Exhibit 99.1 are being furnished in accordance with General Instruction B.2 of Form 8-K and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit 99.1: Press release dated February 19, 2013.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PS BUSINESS PARKS, INC. | ||
Date: February 19, 2013 | ||
By: /s/ Edward A. Stokx | ||
Edward A. Stokx | ||
Chief Financial Officer |
INDEX TO EXHIBITS
Exhibit No. |
Description | |
99.1 | PS Business Parks, Inc. Earnings Press Release dated February 19, 2013. |
Exhibit 99.1
News Release
PS Business Parks, Inc.
701 Western Avenue
Glendale, CA 91201-2349
www.psbusinessparks.com
For Release: | Immediately | |||||
Date: | February 19, 2013 | |||||
Contact: | Edward A. Stokx | |||||
(818) 244-8080, Ext. 1649 |
PS Business Parks, Inc. Reports Results for the Fourth Quarter Ended December 31, 2012
GLENDALE, California 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 Companys 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, |
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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 | ) | ||||||||||||||||
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FFO per common and dilutive share, as reported |
$ | 1.25 | $ | 1.04 | 20.2 | % | $ | 4.24 | $ | 4.69 | (9.6 | %) | ||||||||||||
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(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. |
1
Property Operations
To evaluate the performance of the Companys 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 Companys portfolio as of December 31, 2012.
The following table presents the operating results of the Companys properties for the three months and years ended December 31, 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 Months Ended December 31, |
For The Years Ended December 31, |
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2012 | 2011 | Change | 2012 | 2011 | Change | |||||||||||||||||||
Rental income: |
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Same Park (19.2 million rentable square feet) |
$ | 63,489 | $ | 62,816 | 1.1 | % | $ | 253,303 | $ | 253,194 | | |||||||||||||
Non-Same Park (9.2 million rentable square feet) |
23,952 | 11,747 | 103.9 | % | 91,462 | 41,377 | 121.0 | % | ||||||||||||||||
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Total rental income |
87,441 | 74,563 | 17.3 | % | 344,765 | 294,571 | 17.0 | % | ||||||||||||||||
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Cost of operations: |
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Same Park |
20,779 | 20,696 | 0.4 | % | 82,920 | 83,997 | (1.3 | %) | ||||||||||||||||
Non-Same Park |
8,203 | 4,632 | 77.1 | % | 31,188 | 15,920 | 95.9 | % | ||||||||||||||||
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Total cost of operations |
28,982 | 25,328 | 14.4 | % | 114,108 | 99,917 | 14.2 | % | ||||||||||||||||
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Net operating income (1): |
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Same Park |
42,710 | 42,120 | 1.4 | % | 170,383 | 169,197 | 0.7 | % | ||||||||||||||||
Non-Same Park |
15,749 | 7,115 | 121.3 | % | 60,274 | 25,457 | 136.8 | % | ||||||||||||||||
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Total net operating income |
58,459 | 49,235 | 18.7 | % | 230,657 | 194,654 | 18.5 | % | ||||||||||||||||
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Other: |
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Lease buyout payments (2) |
1,783 | | 100.0 | % | 1,783 | 2,886 | (38.2 | %) | ||||||||||||||||
Facility management fees |
160 | 167 | (4.2 | %) | 649 | 684 | (5.1 | %) | ||||||||||||||||
Other income and expense |
(4,804 | ) | (1,787 | ) | 168.8 | % | (20,377 | ) | (5,234 | ) | 289.3 | % | ||||||||||||
Depreciation and amortization |
(28,072 | ) | (21,291 | ) | 31.8 | % | (109,398 | ) | (84,391 | ) | 29.6 | % | ||||||||||||
General and administrative |
(1,802 | ) | (1,557 | ) | 15.7 | % | (8,569 | ) | (5,969 | ) | 43.6 | % | ||||||||||||
Acquisition transaction costs |
(192 | ) | (2,796 | ) | (93.1 | %) | (350 | ) | (3,067 | ) | (88.6 | %) | ||||||||||||
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Income from continuing operations |
$ | 25,532 | $ | 21,971 | 16.2 | % | $ | 94,395 | $ | 99,563 | (5.2 | %) | ||||||||||||
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Same Park gross margin (3) |
67.3 | % | 67.1 | % | 0.3 | % | 67.3 | % | 66.8 | % | 0.7 | % | ||||||||||||
Same Park weighted average occupancy |
92.3 | % | 91.8 | % | 0.5 | % | 92.1 | % | 91.2 | % | 1.0 | % | ||||||||||||
Non-Same Park weighted average occupancy |
81.7 | % | 76.6 | % | 6.7 | % | 81.9 | % | 75.3 | % | 8.8 | % | ||||||||||||
Same Park annualized realized rent per square foot (4) |
$ | 14.34 | $ | 14.27 | 0.5 | % | $ | 14.34 | $ | 14.47 | (0.9 | %) |
(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 Companys 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 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. |
(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. |
2
Excluding the lease buyout payment noted above, rental income increased $12.9 million, or 17.3%, from $74.6 million for the three months ended December 31, 2011 to $87.4 million for the three months ended December 31, 2012 primarily as a result of a $12.2 million increase in rental income from Non-Same Park facilities, which includes the 5.3 million square foot portfolio acquired in December 2011, combined with a $673,000 increase from the Same Park portfolio driven by an increase in occupancy rates. Including the lease buyout payment noted above, rental income increased $14.7 million from $74.6 million for the three months ended December 31, 2011 to $89.2 million for the three months ended December 31, 2012. Net income allocable to common shareholders increased $959,000, or 10.9%, from $8.8 million, or $0.36 per diluted share, for the three months ended December 31, 2011 to $9.8 million, or $0.40 per diluted share, for the three months ended December 31, 2012. The increase in net income allocable to common shareholders for the three months was primarily due to an increase in net operating income, partially offset by increases in depreciation and amortization, preferred equity distributions and interest expense.
Excluding the lease buyout payments noted above, rental income increased $50.2 million, or 17.0%, from $294.6 million for the year ended December 31, 2011 to $344.8 million for the year ended December 31, 2012 as a result of a $50.1 million increase in rental income from Non-Same Park facilities, which includes the 5.3 million square foot portfolio acquired in December 2011, combined with an increase in rental income from the Same Park portfolio of $109,000 due to an increase in occupancy rates, partially offset by a decrease in rental rates. Including the lease buyout payments, rental income increased $49.1 million from $297.5 million for the year ended December 31, 2011 to $346.5 million for the year ended December 31, 2012. Net income allocable to common shareholders decreased $32.4 million, or 62.0%, from $52.2 million, or $2.12 per diluted share, for the year ended December 31, 2011 to $19.8 million, or $0.81 per diluted share, for the year ended December 31, 2012. The decrease in net income allocable to common shareholders for the year was primarily due to the net impact of non-cash distributions and gain related to preferred equity transactions and increases in depreciation and amortization, interest expense and preferred equity distributions, partially offset by an increase in net operating income.
Preferred Equity Transaction
On October 9, 2012, the Company completed the redemption of its 6.70% Cumulative Preferred Stock, Series P, at its par value of $132.3 million.
Property Acquisition
On December 19, 2012, the Company acquired three multi-tenant flex buildings in Austin, Texas, aggregating 226,000 square feet for $14.9 million. The park was 86.1% occupied at the time of acquisition.
Property Disposition
On October 11, 2012, the Company completed the sale of Quail Valley Business Park, a 66,000 square foot flex park in Houston, Texas, for $2.3 million, resulting in a net gain of $935,000.
Financial Condition
The following are key financial ratios with respect to the Companys leverage at and for the three months ended December 31, 2012:
Ratio of FFO to fixed charges (1) |
12.0x | |||
Ratio of FFO to fixed charges and preferred distributions (1) |
3.1x | |||
Debt and preferred equity to total market capitalization (based on common stock price of $64.98 at December 31, 2012) |
39.7 | % | ||
Available balance under the $250.0 million unsecured credit facility at December 31, 2012 |
$250.0 million |
(1) | Fixed charges include interest expense of $4.9 million. |
3
Distributions Declared
The Board of Directors declared a quarterly dividend of $0.44 per common share on February 19, 2013. Distributions were also declared on the various series of depositary shares, each representing 1/1,000 of a share of preferred stock listed below. Distributions are payable March 28, 2013 to shareholders of record on March 13, 2013.
Series |
Dividend Rate | Dividend Declared | ||||||
Series R |
6.875 | % | $ | 0.429688 | ||||
Series S |
6.450 | % | $ | 0.403125 | ||||
Series T |
6.000 | % | $ | 0.375000 | ||||
Series U |
5.750 | % | $ | 0.359375 |
Company Information
PS Business Parks, Inc., a member of the S&P SmallCap 600, is a self-advised and self-managed real estate investment trust (REIT) that acquires, develops, owns and operates commercial properties, primarily multi-tenant flex, office and industrial space. The Company defines flex space as buildings that are configured with a combination of office and warehouse space and can be designed to fit a number of uses (including office, assembly, showroom, laboratory, light manufacturing and warehouse space). As of December 31, 2012, the Company wholly owned 28.3 million rentable square feet with approximately 4,600 customers located in eight states, concentrated in California (11.1 million sq. ft.), Virginia (4.2 million sq. ft.), Florida (3.7 million sq. ft.), Texas (3.5 million sq. ft.), Maryland (2.3 million sq. ft.), Washington (1.5 million sq. ft.), Oregon (1.3 million sq. ft.) and Arizona (0.7 million sq. ft.).
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 Companys facilities; the Companys ability to evaluate, finance and integrate acquired and developed properties into the Companys existing operations; the Companys 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 Companys 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 Companys 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 fourth quarter operating results, is available on the Internet. The Companys website is www.psbusinessparks.com.
A conference call is scheduled for Wednesday, February 20, 2013, at 10:00 a.m. (PST) to discuss the fourth quarter results. The toll free number is (888) 299-3246; the conference ID is 95910222. The call will also be available via a live webcast on the Companys website. A replay of the conference call will be available through February 28, 2013 at (855) 859-2056. A replay of the conference call will also be available on the Companys website.
Additional financial data attached.
4
PS BUSINESS PARKS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, 2012 |
December 31, 2011 |
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(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents |
$ | 12,883 | $ | 4,980 | ||||
Real estate facilities, at cost: |
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Land |
793,352 | 772,573 | ||||||
Buildings and equipment |
2,235,448 | 2,155,772 | ||||||
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3,028,800 | 2,928,345 | |||||||
Accumulated depreciation |
(942,639 | ) | (845,700 | ) | ||||
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2,086,161 | 2,082,645 | |||||||
Properties held for disposition, net |
| 1,218 | ||||||
Land held for development |
6,829 | 6,829 | ||||||
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2,092,990 | 2,090,692 | |||||||
Rent receivable |
4,754 | 3,198 | ||||||
Deferred rent receivable |
25,329 | 23,388 | ||||||
Other assets |
15,861 | 16,361 | ||||||
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Total assets |
$ | 2,151,817 | $ | 2,138,619 | ||||
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LIABILITIES AND EQUITY | ||||||||
Accrued and other liabilities |
$ | 69,454 | $ | 60,940 | ||||
Credit facility |
| 185,000 | ||||||
Term loan |
200,000 | 250,000 | ||||||
Mortgage notes payable |
268,102 | 282,084 | ||||||
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Total liabilities |
537,556 | 778,024 | ||||||
Commitments and contingencies |
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Equity: |
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PS Business Parks, Inc.s shareholders equity: |
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Preferred stock, $0.01 par value, 50,000,000 shares authorized, 35,400 and 23,942 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively |
885,000 | 598,546 | ||||||
Common stock, $0.01 par value, 100,000,000 shares authorized, 24,298,475 and 24,128,184 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively |
242 | 240 | ||||||
Paid-in capital |
537,091 | 534,322 | ||||||
Cumulative net income |
967,783 | 878,704 | ||||||
Cumulative distributions |
(944,427 | ) | (832,607 | ) | ||||
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Total PS Business Parks, Inc.s shareholders equity |
1,445,689 | 1,179,205 | ||||||
Noncontrolling interests: |
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Preferred units |
| 5,583 | ||||||
Common units |
168,572 | 175,807 | ||||||
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Total noncontrolling interests |
168,572 | 181,390 | ||||||
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Total equity |
1,614,261 | 1,360,595 | ||||||
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Total liabilities and equity |
$ | 2,151,817 | $ | 2,138,619 | ||||
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5
PS BUSINESS PARKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
For The Three Months Ended December 31, |
For The Years Ended December 31, |
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2012 | 2011 | 2012 | 2011 | |||||||||||||
Revenues: |
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Rental income |
$ | 89,224 | $ | 74,563 | $ | 346,548 | $ | 297,457 | ||||||||
Facility management fees |
160 | 167 | 649 | 684 | ||||||||||||
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Total operating revenues |
89,384 | 74,730 | 347,197 | 298,141 | ||||||||||||
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Expenses: |
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Cost of operations |
28,982 | 25,328 | 114,108 | 99,917 | ||||||||||||
Depreciation and amortization |
28,072 | 21,291 | 109,398 | 84,391 | ||||||||||||
General and administrative |
1,994 | 4,353 | 8,919 | 9,036 | ||||||||||||
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Total operating expenses |
59,048 | 50,972 | 232,425 | 193,344 | ||||||||||||
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Other income and (expense): |
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Interest and other income |
81 | 47 | 241 | 221 | ||||||||||||
Interest expense |
(4,885 | ) | (1,834 | ) | (20,618 | ) | (5,455 | ) | ||||||||
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Total other income and (expense) |
(4,804 | ) | (1,787 | ) | (20,377 | ) | (5,234 | ) | ||||||||
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Income from continuing operations |
25,532 | 21,971 | 94,395 | 99,563 | ||||||||||||
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Discontinued operations: |
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Income from discontinued operations |
10 | 63 | 42 | 360 | ||||||||||||
Gain on sale of real estate facilities |
935 | | 935 | 2,717 | ||||||||||||
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Total discontinued operations |
945 | 63 | 977 | 3,077 | ||||||||||||
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Net income |
$ | 26,477 | $ | 22,034 | $ | 95,372 | $ | 102,640 | ||||||||
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Net income allocation: |
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Net income allocable to noncontrolling interests: |
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Noncontrolling interests common units |
$ | 2,935 | $ | 2,664 | $ | 5,970 | $ | 15,543 | ||||||||
Noncontrolling interests preferred units |
| 100 | 323 | (6,991 | ) | |||||||||||
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Total net income allocable to noncontrolling interests |
2,935 | 2,764 | 6,293 | 8,552 | ||||||||||||
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Net income allocable to PS Business Parks, Inc.: |
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Preferred shareholders |
13,750 | 10,450 | 69,136 | 41,799 | ||||||||||||
Restricted stock unit holders |
32 | 19 | 138 | 127 | ||||||||||||
Common shareholders |
9,760 | 8,801 | 19,805 | 52,162 | ||||||||||||
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Total net income allocable to PS Business Parks, Inc. |
23,542 | 19,270 | 89,079 | 94,088 | ||||||||||||
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$ | 26,477 | $ | 22,034 | $ | 95,372 | $ | 102,640 | |||||||||
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Net income per common share basic: |
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Continuing operations |
$ | 0.37 | $ | 0.36 | $ | 0.79 | $ | 2.03 | ||||||||
Discontinued operations |
$ | 0.03 | $ | | $ | 0.03 | $ | 0.10 | ||||||||
Net income |
$ | 0.40 | $ | 0.36 | $ | 0.82 | $ | 2.13 | ||||||||
Net income per common share diluted: |
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Continuing operations |
$ | 0.37 | $ | 0.36 | $ | 0.78 | $ | 2.02 | ||||||||
Discontinued operations |
$ | 0.03 | $ | | $ | 0.03 | $ | 0.10 | ||||||||
Net income |
$ | 0.40 | $ | 0.36 | $ | 0.81 | $ | 2.12 | ||||||||
Weighted average common shares outstanding: |
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Basic |
24,288 | 24,128 | 24,234 | 24,516 | ||||||||||||
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Diluted |
24,361 | 24,209 | 24,323 | 24,599 | ||||||||||||
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6
PS BUSINESS PARKS, INC.
Computation of Diluted Funds from Operations (FFO) and Funds Available for Distribution (FAD)
(Unaudited, in thousands, except per share amounts)
For The Three Months Ended December 31, |
For The Years Ended December 31, |
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2012 | 2011 | 2012 | 2011 | |||||||||||||
Computation of Diluted Funds From Operations (FFO) (1): |
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Net income allocable to common shareholders |
$ | 9,760 | $ | 8,801 | $ | 19,805 | $ | 52,162 | ||||||||
Adjustments: |
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Gain on sale of real estate facilities |
(935 | ) | | (935 | ) | (2,717 | ) | |||||||||
Depreciation and amortization |
28,072 | 21,342 | 109,494 | 84,682 | ||||||||||||
Net income allocable to noncontrolling interests common units |
2,935 | 2,664 | 5,970 | 15,543 | ||||||||||||
Net income allocable to restricted stock unit holders |
32 | 19 | 138 | 127 | ||||||||||||
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FFO allocable to common and dilutive shares |
$ | 39,864 | $ | 32,826 | $ | 134,472 | $ | 149,797 | ||||||||
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Weighted average common shares outstanding |
24,288 | 24,128 | 24,234 | 24,516 | ||||||||||||
Weighted average common OP units outstanding |
7,305 | 7,305 | 7,305 | 7,305 | ||||||||||||
Weighted average restricted stock units outstanding |
102 | 60 | 107 | 64 | ||||||||||||
Weighted average common share equivalents outstanding |
73 | 81 | 89 | 83 | ||||||||||||
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Total common and dilutive shares |
31,768 | 31,574 | 31,735 | 31,968 | ||||||||||||
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FFO per common and dilutive share |
$ | 1.25 | $ | 1.04 | $ | 4.24 | $ | 4.69 | ||||||||
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Computation of Funds Available for Distribution (FAD) (2): |
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FFO allocable to common and dilutive shares |
$ | 39,864 | $ | 32,826 | $ | 134,472 | $ | 149,797 | ||||||||
Adjustments: |
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Recurring capital improvements |
(1,857 | ) | (2,830 | ) | (8,394 | ) | (8,173 | ) | ||||||||
Tenant improvements |
(6,155 | ) | (9,536 | ) | (34,236 | ) | (27,292 | ) | ||||||||
Lease commissions |
(2,258 | ) | (3,361 | ) | (7,244 | ) | (8,089 | ) | ||||||||
Straight-line rent |
(3 | ) | (569 | ) | (2,686 | ) | (1,228 | ) | ||||||||
Non-cash stock compensation expense |
1,373 | 763 | 5,434 | 1,965 | ||||||||||||
In-place lease adjustment |
99 | 200 | 501 | 843 | ||||||||||||
Tenant improvement reimbursements, net of lease incentives |
(754 | ) | (154 | ) | (1,315 | ) | (769 | ) | ||||||||
Non-cash distributions related to the redemption of preferred equity |
| | 17,316 | | ||||||||||||
Gain on repurchase of preferred equity, net of issuance costs |
| | | (7,389 | ) | |||||||||||
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FAD |
$ | 30,309 | $ | 17,339 | $ | 103,848 | $ | 99,665 | ||||||||
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Distributions to common and dilutive shares |
$ | 13,935 | $ | 13,854 | $ | 55,678 | $ | 56,005 | ||||||||
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Distribution payout ratio |
46.0 | % | 79.9 | % | 53.6 | % | 56.2 | % | ||||||||
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(1) | Funds From Operations (FFO) is computed in accordance with the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts (NAREIT). The White Paper defines FFO as net income, computed in accordance with GAAP, before depreciation, amortization, gains or losses on asset dispositions, net income allocable to noncontrolling interests common units, net income allocable to restricted stock unit holders, impairment charges and nonrecurring items. FFO should be analyzed in conjunction with net income. However, FFO should not be viewed as a substitute for net income as a measure of operating performance or liquidity as it does not reflect depreciation and amortization costs or the level of capital expenditure and leasing costs necessary to maintain the operating performance of the Companys properties, which are significant economic costs and could materially impact the Companys results from operations. Other REITs may use different methods for calculating FFO and, accordingly, the Companys FFO may not be comparable to other real estate companies. |
(2) | Funds Available for Distribution (FAD) is computed by adjusting consolidated FFO for recurring capital improvements, which the Company defines as those costs incurred to maintain the assets value, tenant improvements, lease commissions, straight-line rent, stock compensation expense, amortization of lease incentives and tenant improvement reimbursements, in-place lease adjustment and the effect of redemption/repurchase of preferred equity. Like FFO, the Company considers FAD to be a useful measure for investors to evaluate the operations and cash flows of a REIT. FAD does not represent net income or cash flow from operations as defined by GAAP. |
7