EX-99.2

EX-99.2 3 d145223dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

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SUPPLEMENTAL INFORMATION

FIRST QUARTER 2021

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701 WESTERN AVENUE | GLENDALE, CA 91201 | 818.244.8080 | PSBUSINESSPARKS.COM

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ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION FOR

THE THREE MONTHS ENDED MARCH 31, 2021


			Page

Consolidated Balance Sheets			3

Consolidated Statements of Income			5

Portfolio Summary			7

First Quarter Fact Sheet			8

Same Park Cash NOI by Region and Type			9

Analysis of Capital Expenditures			10

Funds from Operations (FFO), Core FFO and Funds Available for Distribution (FAD)			11

Capital Structure and Financial Condition			13

Portfolio Operating Analysis and Statistics			14

Lease Expirations			18

First Quarter 2021 Production Statistics			21

Definitions and Non-GAAP Disclosures			22

Forward-Looking Statements

When used within this supplemental information package, 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 duration and severity of the COVID-19 pandemic and its impact on our business and our customers; 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 and business conditions, including as a result of the economic fallout of the COVID-19 pandemic; rental rates and occupancy levels at the Company’s facilities; and changes in these conditions as a result of the COVID-19 pandemic, 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.

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	March 31, 2021		December 31, 2020
ASSETS

Cash and cash equivalents	$	69,492	$	69,083	(a)

Real estate facilities, at cost
Land		865,081		864,092
Buildings and improvements		2,196,781		2,186,621

		3,061,862		3,050,713
Accumulated depreciation		(1,199,381)		(1,181,402)

		1,862,481		1,869,311	(b)
Properties held for sale, net		25,698		26,273
Land and building held for development, net		42,870		40,397

		1,931,049		1,935,981

Rent receivable		2,686		1,519	(c)
Deferred rent receivable		37,996		36,788
Other assets		14,716		14,334	(d)

Total assets	$	2,055,939	$	2,057,705


LIABILITIES AND EQUITY

Accrued and other liabilities	$	82,925	$	82,065	(e)

Total liabilities		82,925		82,065

Equity
PS Business Parks, Inc.’s shareholders’ equity:
Preferred stock		944,750		944,750
Common stock		274		274
Paid-in capital		736,336		738,022	(f)
Accumulated earnings		72,809		73,631	(g)

Total PS Business Parks, Inc.’s shareholders’ equity		1,754,169		1,756,677
Noncontrolling interests		218,845		218,963

Total equity		1,973,014		1,975,640

Total liabilities and equity	$	2,055,939	$	2,057,705

See following page for additional detail related to the tickmarks shown in the table above.

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(a)	Change in cash and cash equivalents
	Beginning cash balance at December 31, 2020					$	69,083
	Net cash provided by operating activities						68,824
	Net cash used in investing activities						(16,424)
	Net cash used in financing activities						(51,991)

	Ending cash balance at March 31, 2021					$	69,492


(b)	Change in real estate facilities, at cost
	Beginning balance at December 31, 2020					$	1,869,311
	Recurring capital improvements						648
	Tenant improvements, gross						2,925
	Capitalized lease commissions						1,848
	Nonrecurring capital improvements						411
	Depreciation and amortization of real estate facilities						(22,289)
	Transfer from land and building held for development, net						9,052
	Transfer to properties held for sale, net						575

	Ending balance at March 31, 2021					$	1,862,481


						Increase
(c)	Change in rent receivable	March 31, 2021		December 31, 2020		(Decrease)
	Non-government customers ⁽¹⁾	$	1,818	$	646	$	1,172
	U.S. Government customers		868		873		(5)

		$	2,686	$	1,519	$	1,167


						Increase
(d)	Change in other assets	March 31, 2021		December 31, 2020		(Decrease)
	Lease intangible assets, net	$	8,043	$	9,058	$	(1,015	)
	Prepaid property taxes and insurance		4,450		3,121		1,329
	Other		2,223		2,155		68

		$	14,716	$	14,334	$	382


						Increase
(e)	Change in accrued and other liabilities	March 31, 2021		December 31, 2020		(Decrease)
	Customer security deposits	$	39,304	$	38,457	$	847
	Accrued property taxes		10,748		12,513		(1,765)
	Customer prepaid rent		13,236		12,518		718
	Lease intangible liabilities, net		6,046		6,392		(346)
	Other		13,591		12,185		1,406

		$	82,925	$	82,065	$	860


(f)	Change in paid-in capital
	Beginning paid-in capital at December 31, 2020					$	738,022
	SEC offering registration costs						(105)
	Stock compensation expense, net						1,616
	Cash paid for taxes in lieu of shares upon vesting of restricted stock units						(3,197)

	Ending paid-in capital at March 31, 2021					$	736,336


(g)	Change in accumulated earnings
	Beginning accumulated earnings at December 31, 2020					$	73,631
	Net income						40,096
	Distributions to preferred shareholders						(12,046)
	Distributions to common shareholders						(28,872)

	Ending accumulated earnings at March 31, 2021					$	72,809

⁽¹⁾	Included in the balance at March 31, 2021 is $1.2 million of prior year expense recovery billings billed in the month of March 2021.

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	For the Three Months
	Ended March 31,
	2021		2020

Rental income	$	108,047	$	106,216	(a)

Expenses:
Cost of operations		33,218		31,263	(b)
Depreciation and amortization		22,985		26,619
General and administrative		4,382		3,323	(c)

Total operating expenses		60,585		61,205


Interest and other income		256		557	(d)
Interest and other expense		(211)		(161)	(e)
Gain on sale of real estate facility		-		19,621

Net income		47,507		65,028
Allocation to noncontrolling interests		(7,411)		(11,092)

Net income allocable to PS Business Parks, Inc.		40,096		53,936
Allocation to preferred shareholders		(12,046)		(12,046)
Allocation to restricted stock unit holders		(164)		(275)

Net income allocable to common shareholders	$	27,886	$	41,615


Net income per common share
Basic	$	1.01	$	1.52
Diluted	$	1.01	$	1.51

Weighted average common shares outstanding
Basic		27,495		27,448
Diluted		27,594		27,550

See following page for additional detail related to the tickmarks shown in the table above.

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		For The Three Months Ended				Increase
(a)	Rental income:	March 31, 2021		March 31, 2020		(Decrease)
	Same Park ⁽¹⁾ ⁽²⁾	$	99,558	$	98,377	$	1,181
	Same Park non-cash rental income ⁽¹⁾ ⁽³⁾		437		753		(316)
	Non-Same Park ⁽¹⁾ ⁽²⁾		2,899		2,278		621
	Non-Same Park non-cash rental income ⁽¹⁾ ⁽³⁾		870		143		727
	Multifamily		2,327		2,560		(233)
	Rental income from assets sold or held for sale ⁽⁴⁾		1,956		2,105		(149)

		$	108,047	$	106,216	$	1,831


		For The Three Months Ended				Increase
(b)	Cost of operations:	March 31, 2021		March 31, 2020		(Decrease)
	Same Park ⁽¹⁾	$	29,684	$	28,380	$	1,304
	Same Park non-cash expense ⁽¹⁾ ⁽⁵⁾		435		263		172
	Non-Same Park ⁽¹⁾		1,153		829		324
	Non-Same Park non-cash expense ⁽¹⁾ ⁽⁵⁾		13		6		7
	Multifamily		1,067		1,016		51
	Operating expenses from assets sold or held for sale ⁽⁴⁾		866		769		97

		$	33,218	$	31,263	$	1,955

		For The Three Months Ended				Increase
(c)	General and administrative expenses:	March 31, 2021		March 31, 2020		(Decrease)
	Compensation expense	$	1,643	$	1,753	$	(110)
	Stock compensation expense		1,324		668		656
	Professional fees and other		1,415		902		513
		$	4,382	$	3,323	$	1,059

		For The Three Months Ended				Increase
(d)	Interest and other income:	March 31, 2021		March 31, 2020		(Decrease)
	Management fee income	$	68	$	70	$	(2)
	Interest income		4		303		(299)
	Other income		184		184		-
		$	256	$	557	$	(301)


		For The Three Months Ended				Increase
(e)	Interest and other expense:	March 31, 2021		March 31, 2020		(Decrease)
	Interest expense	$	-	$	-	$	-
	Credit facilities fees & other charges		(211)		(161)		(50)
		$	(211)	$	(161)	$	(50)

⁽¹⁾	Refer to page 22, Definitions and Non-GAAP Disclosures, for the definitions of Same Park and Non-Same Park.

⁽²⁾

Same Park rental income is presented net of (a) accounts receivable write-offs of $0.0 and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and (b) rent deferrals and abatements of $0.3 million and $0.0 for the three months ended March 31, 2021 and 2020, respectively. Non-Same Park rental income is presented net of (a) accounts receivable write-offs of $0.0 for both the three months ended March 31, 2021 and 2020, and (b) rent deferrals and abatements of $0 for both of the three months ended March 31, 2021 and 2020.

⁽³⁾

Non-cash rental income represents amortization of deferred rent receivable, amortization of above and below market rents, net, and amortization of lease incentives and tenant improvement reimbursements. Same Park non-cash rental income is presented net of deferred rent receivable write-offs of $0.1 million for both of the three months ended March 31, 2021 and 2020. Non-Same Park non-cash rental income is presented net of deferred rent receivable write-offs of $0.0 for both of the three months ended March 31, 2021 and 2020.

⁽⁴⁾

Amounts shown for the three months ended March 31, 2021 include operating results attributable to assets held for sale comprising 442,000 square feet. Amounts shown for the three months ended March 31, 2020 include operating results attributable to assets held for sale comprising 442,000 square feet and assets sold in 2020 comprising 153,000 square feet.

⁽⁵⁾	Non-cash expense represents stock compensation expense attributable to employees whose compensation expense is recorded in costs of operations.

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PROPERTY INFORMATION

	For The Three Months Ended March 31,
	2021		2020		% Change
Total Portfolio ⁽¹⁾
Total rentable square footage at period end		27,369,000		27,040,000		1.2%
Weighted average occupancy		92.4%		92.9%		(0.5%)
Period end occupancy		92.8%		92.6%		0.2%
Cash rental income per occupied square foot^(2) (3)
Industrial	$	13.84	$	13.48		2.7%
Flex	$	19.83	$	19.36		2.4%
Office	$	25.05	$	25.26		(0.8%)
Total cash rental income per occupied square foot	$	16.23	$	16.02		1.3%
Cash rental income per available foot^(2) (3)
Industrial	$	13.02	$	12.54		3.8%
Flex	$	17.85	$	18.03		(1.0%)
Office	$	21.77	$	23.20		(6.2%)
Total cash rental income per available foot	$	15.00	$	14.89		0.7%

Same Park Portfolio ⁽²⁾
Total rentable square footage at period end		26,271,000		26,271,000		-
Weighted average occupancy		92.4%		92.8%		(0.4%)
Period end occupancy		92.9%		92.4%		0.5%
Cash rental income per occupied square foot^(2) (4)
Industrial	$	13.99	$	13.57		3.1%
Flex	$	19.79	$	19.34		2.3%
Office	$	25.05	$	25.26		(0.8%)
Total cash rental income per occupied square foot	$	16.40	$	16.15		1.5%
Cash rental income per available foot^(2) (4)
Industrial	$	13.17	$	12.60		4.5%
Flex	$	17.81	$	18.01		(1.1%)
Office	$	21.77	$	23.20		(6.2%)
Total cash rental income per available foot	$	15.16	$	14.98		1.2%

Non-Same Park Portfolio ⁽²⁾
Total rentable square footage at period end		1,098,000		769,000		42.8%
Weighted average occupancy		92.6%		98.5%		(6.0%)
Period end occupancy		91.5%		98.8%		(7.4%)
Cash rental income per occupied square foot^(2) (5)
Industrial	$	11.13	$	11.13		0.0%
Flex	$	22.41	$	21.32		5.1%
Office	$	-	$	-		-
Total cash rental income per occupied square foot	$	11.98	$	12.12		(1.2%)
Cash rental income per available foot^(2) (5)
Industrial	$	10.31	$	11.05		(6.7%)
Flex	$	20.71	$	19.70		5.1%
Office	$	-	$	-		-
Total cash rental income per available foot	$	11.10	$	11.94		(7.0%)

Multifamily Portfolio
Number of units		395		395		-
Weighted average occupancy		94.2%		94.9%		(0.8%)
Period end occupancy		93.6%		94.1%		(0.5%)

⁽¹⁾	Excludes multifamily assets, assets held for sale comprising 442,000 square feet and assets sold in 2020 comprising 153,000 square feet for the periods shown.

⁽²⁾	Refer to page 22, Definitions and Non-GAAP Disclosures, for the definitions of Cash Rental Income per Available Foot, Cash Rental Income per Occupied Square Foot, Same Park, and Non-Same Park.

⁽³⁾

Included in the calculation of Total Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.4 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively, (b) accounts receivable write-offs of $0.0 and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and (c) rent deferrals and abatements of $0.3 million and $0.0 for the three months ended March 31, 2021 and 2020, respectively.

⁽⁴⁾

Included in the calculation of Same Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.4 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively, (b) accounts receivable write-offs of $0.0 and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and (c) rent deferrals and abatements of $0.3 million and $0.0 for the three months ended March 31, 2021 and 2020, respectively.

⁽⁵⁾

Included in the calculation of Non-Same Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.0 for both the three months ended March 31, 2021 and 2020, (b) accounts receivable write-offs of $0.0 for both of the three months ended March 31, 2021 and 2020, and (c) rent deferrals and abatements of $0.0 for both of the three months ended March 31, 2021 and 2020.

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NET OPERATING INCOME


	For The Three Months Ended March 31,
	2021		2020		% Change
Rental income
Same Park ^{(1) (2) (3)}	$	99,995	$	99,130		0.9%
Non-Same Park ⁽¹⁾		3,769		2,421		55.7%
Multifamily		2,327		2,560		(9.1%)
Assets sold or held for sale		1,956		2,105		(7.1%)

Total rental income		108,047		106,216		1.7%

Adjusted cost of operations ^{(1) (5)}
Same Park ^{(1) (6)}		29,684		28,380		4.6%
Non-Same Park ⁽¹⁾		1,153		829		39.1%
Multifamily		1,067		1,016		5.0%
Assets sold or held for sale		858		764		12.3%

Total		32,762		30,989		5.7%

Net operating income
Same Park ⁽¹⁾		70,311		70,750		(0.6%)
Non-Same Park ⁽¹⁾		2,616		1,592		64.3%
Multifamily		1,260		1,544		(18.4%)
Assets sold or held for sale		1,098		1,341		(18.1%)

Total net operating income	$	75,285	$	75,227		0.1%


CASH NET OPERATING INCOME

	For The Three Months Ended March 31,
	2021		2020		% Change
Cash rental income ^{(1) (5)}
Same Park ^{(1) (2) (4)}	$	99,558	$	98,377		1.2%
Non-Same Park ⁽¹⁾		2,899		2,278		27.3%
Multifamily		2,327		2,559		(9.1%)
Assets sold or held for sale		1,956		1,938		0.9%

Total cash rental income		106,740		105,152		1.5%

Adjusted cost of operations ^{(1) (5)}
Same Park ^{(1) (6)}		29,684		28,380		4.6%
Non-Same Park ⁽¹⁾		1,153		829		39.1%
Multifamily		1,067		1,016		5.0%
Assets sold or held for sale		858		764		12.3%

Total adjusted cost of operations		32,762		30,989		5.7%

Cash net operating income
Same Park ⁽¹⁾		69,874		69,997		(0.2%)
Non-Same Park ⁽¹⁾		1,746		1,449		20.5%
Multifamily		1,260		1,543		(18.3%)
Assets sold or held for sale		1,098		1,174		(6.5%)

Total cash net operating income	$	73,978	$	74,163		(0.2%)


EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre) ⁽¹⁾

	For The Three Months Ended March 31,
	2021		2020		% Change
Net income	$	47,507	$	65,028		(26.9%)
Net interest (income) expense		132		(166)		179.5%
Depreciation and amortization		22,985		26,619		(13.7%)
Gain on sale of real estate facilities and development rights		-		(19,621)		(100.0%)

EBITDAre	$	70,624	$	71,860		(1.7%)

⁽¹⁾	Refer to page 22, Definition and Non-GAAP Disclosures, for the definitions of Same Park, Non-Same Park, Cash Rental Income, Adjusted Cost of Operations, and EBITDAre.

⁽²⁾	Same Park rental income and cash rental income include lease buyout income of $0.4 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively.

⁽³⁾	Same Park rental income is presented net of (a) accounts receivable write-offs of $0.0 and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and (b) deferred rent receivable write-offs of $0.1 million for both of the three months ended March 31, 2021 and 2020.

⁽⁴⁾

Same Park cash rental income is presented net of (a) accounts receivable write-offs of $0.0 and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and (b) rent deferrals and abatements of $0.3 million and $0.0 for the three months ended March 31, 2021 and 2020, respectively.

⁽⁵⁾	Refer to page 6 for a reconciliation of cash rental income to rental income and adjusted cost of operations to cost of operations as reported on our GAAP statements of income.

⁽⁶⁾	The table below details Same Park Adjusted Cost of Operations:


	For The Three Months Ended March 31,
	2021		2020		% Change
Cost of operations
Property taxes	$	11,424	$	11,056		3.3	%
Utilities		4,637		4,972		(6.7	%)
Repairs and maintenance		5,468		5,364		1.9	%
Compensation		4,280		4,270		0.2	%
Snow removal		1,019		71		1,335.2	%
Property insurance		1,178		879		34.0	%
Other expenses		1,678		1,768		(5.1	%)

Total cost of operations	$	29,684	$	28,380		4.6	%

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	For the Three Months Ended
	March 31, 2021								March 31, 2020								Total % Change
	Industrial		Flex		Office		Total		Industrial		Flex		Office		Total		Total % Change
Cash rental income ⁽¹⁾
Northern California	$	22,376	$	2,401	$	2,605	$	27,382	$	21,039	$	2,579	$	3,127	$	26,745		2.4%
Southern California		9,430		4,941		192		14,563		9,002		4,898		187		14,087		3.4%
Dallas		3,066		4,824		—		7,890		3,168		5,430		—		8,598		(8.2%)
Austin		2,205		6,428		—		8,633		2,184		6,100		—		8,284		4.2%
Northern Virginia		5,063		5,431		8,990		19,484		5,017		5,317		9,089		19,423		0.3%
South Florida		11,257		487		42		11,786		10,608		502		32		11,142		5.8%
Seattle		3,031		1,754		135		4,920		3,004		1,735		186		4,925		(0.1%)
Suburban Maryland		1,148		—		3,752		4,900		1,042		—		4,131		5,173		(5.3%)

Total		57,576		26,266		15,716		99,558		55,064		26,561		16,752		98,377		1.2%

Adjusted cost of operations ⁽¹⁾
Northern California		4,928		674		742		6,344		4,737		648		781		6,166		2.9%
Southern California		2,317		1,300		75		3,692		2,299		1,353		73		3,725		(0.9%)
Dallas		1,103		2,006		—		3,109		1,011		2,034		—		3,045		2.1%
Austin		799		2,416		—		3,215		745		2,214		—		2,959		8.7%
Northern Virginia		1,647		1,800		3,592		7,039		1,483		1,506		3,474		6,463		8.9%
South Florida		3,024		140		20		3,184		2,844		134		14		2,992		6.4%
Seattle		812		410		70		1,292		803		420		54		1,277		1.2%
Suburban Maryland		405		—		1,404		1,809		351		—		1,402		1,753		3.2%

Total		15,035		8,746		5,903		29,684		14,273		8,309		5,798		28,380		4.6%

Cash NOI ⁽¹⁾
Northern California		17,448		1,727		1,863		21,038		16,302		1,931		2,346		20,579		2.2%
Southern California		7,113		3,641		117		10,871		6,703		3,545		114		10,362		4.9%
Dallas		1,963		2,818		—		4,781		2,157		3,396		—		5,553		(13.9%)
Austin		1,406		4,012		—		5,418		1,439		3,886		—		5,325		1.7%
Northern Virginia		3,416		3,631		5,398		12,445		3,534		3,811		5,615		12,960		(4.0%)
South Florida		8,233		347		22		8,602		7,764		368		18		8,150		5.5%
Seattle		2,219		1,344		65		3,628		2,201		1,315		132		3,648		(0.5%)
Suburban Maryland		743		—		2,348		3,091		691		—		2,729		3,420		(9.6%)

Total	$	42,541	$	17,520	$	9,813	$	69,874	$	40,791	$	18,252	$	10,954	$	69,997		(0.2%)

⁽¹⁾	Refer to page 22, Definitions and Non-GAAP Disclosures, for the definitions of Same Park, Cash Rental Income, Adjusted Cost of Operations, and Cash NOI.

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	For the Three Months Ended March 31,
	2021		2020
Commercial recurring capital expenditures ⁽¹⁾
Same Park
Capital improvements	$	640	$	1,162
Tenant improvements		2,764		3,402
Lease commissions		1,791		1,822

Total Same Park recurring capital expenditures		5,195		6,386
Non-Same Park
Capital improvements		6		3
Tenant improvements		92		3
Lease commissions		49		7

Total Non-Same Park recurring capital expenditures		147		13

Total recurring capital expenditures		5,342		6,399
Assets sold or held for sale recurring capital expenditures		63		452

Total commercial recurring capital expenditures		5,405		6,851
Non-recurring property renovations ⁽¹⁾		411		93

Multifamily capital expenditures		—		—

Total capital expenditures	$	5,816	$	6,944

Same Park recurring capital expenditures as a percentage of NOI		7.4%		9.0%

⁽¹⁾	Refer to page 22, Definitions and Non-GAAP Disclosures, for the definitions of Recurring Capital Expenditures and Non-recurring Property Renovations.

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	For the Three Months Ended
	March 31,
	2021		2020
Net income allocable to common shareholders	$	27,886	$	41,615
Adjustments
Gain on sale of real estate facility		-		(19,621)
Depreciation and amortization		22,985		26,619
Net income allocable to noncontrolling interests		7,411		11,092
Net income allocable to restricted stock unit holders		164		275
FFO allocated to joint venture partner		(27)		(43)

FFO allocable to diluted common shares and units ⁽¹⁾		58,419		59,937
Core FFO allocable to diluted common shares and units ⁽¹⁾		58,419		59,937
Adjustments
Recurring capital improvements		(646)		(1,165)
Tenant improvements		(2,856)		(3,405)
Capitalized lease commissions		(1,840)		(1,829)
Total recurring capital expenditures for assets sold or held for sale		(63)		(452)
Non-cash rental income ⁽²⁾		(1,307)		(1,064)
Non-cash stock compensation expense		1,780		942
Cash paid for taxes in lieu of shares upon vesting of restricted stock units		(3,197)		(3,655)

FAD allocable to diluted common shares and units ⁽¹⁾		50,290		49,309
Distributions to common shareholders		(28,872)		(28,817)
Distributions to noncontrolling interests - common units		(7,671)		(7,671)
Distributions to restricted stock unit holders		(164)		(182)
Distributions to noncontrolling interests - joint venture		(17)		(38)

Free cash available after fixed charges		13,566		12,601
Non-recurring property renovations ⁽¹⁾		(411)		(93)
Investment in multifamily development		(9,485)		(875)
Investment in industrial development		(1,123)		(437)

Retained cash ⁽¹⁾	$	2,547	$	11,196


Weighted average outstanding
Common shares		27,495		27,448
Operating partnership units		7,305		7,305
Restricted stock units		47		77
Common share equivalents		99		102

Total diluted common shares and units		34,946		34,932


FFO per share	$	1.67	$	1.72
Core FFO per share	$	1.67	$	1.72
FAD distribution payout ratio ⁽³⁾		73.0%		74.4%

⁽¹⁾	Refer to page 22, Definitions and Non-GAAP Disclosures, for the definition of FFO, Core FFO, FAD, Non-Recurring Property Renovations and Retained Cash.

⁽²⁾	Non-cash rental income includes amortization of deferred rent receivable (net of write-offs), in-place lease intangible, tenant improvement reimbursement, and lease incentive intangible.

⁽³⁾	FAD distribution payout ratio is equal to total distributions to common shareholders, unit holders, restricted stock unit holders and our joint venture partner divided by FAD during the same reporting period.

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	As of March 31, 2021									As of December 31, 2020
				% of Total									% of Total
				Market			Wtd Avg						Market			Wtd Avg
	Total			Capitalization			Rate			Total			Capitalization			Rate

Unsecured Debt:
Credit facility borrowing ($250.0 million at LIBOR + 0.825%)	$	-			-			-		$	-			-			-
Unrestricted cash		(69,492	)								(69,083	)

Net debt	$	(69,492	)		-			-		$	(69,083	)		-			-


Preferred Equity:
5.200% Series W preferred stock (7,590,000 depositary shares outstanding) callable 10/20/21	$	189,750			3.0	%				$	189,750			3.5	%
5.250% Series X preferred stock (9,200,000 depositary shares outstanding) callable 9/21/22		230,000			3.7	%					230,000			4.2	%
5.200% Series Y preferred stock (8,000,000 depositary shares outstanding) callable 12/7/22		200,000			3.2	%					200,000			3.6	%
4.875% Series Z preferred stock (13,000,000 depositary shares outstanding) callable 11/4/24		325,000			5.2	%					325,000			5.9	%

Total preferred equity	$	944,750			15.1	%		5.10	%	$	944,750			17.2	%		5.10	%



Total net debt and preferred equity	$	875,258			14.0	%		5.10	%	$	875,667			15.9	%		5.10	%

Common stock (27,516,939 and 27,488,547 shares outstanding as of March 31, 2021 and December 31, 2020, respectively) ⁽¹⁾	$	4,253,568			68.0	%				$	3,652,403			66.4	%
Common operating partnership units (7,305,355 units outstanding as of March 31, 2021 and December 31, 2020)⁽¹⁾		1,129,262			18.0	%					970,663			17.7	%

Total common equity and operating partnership units ⁽¹⁾	$	5,382,830			86.0	%				$	4,623,066			84.1	%


Total implied market capitalization	$	6,258,088			100.0	%				$	5,498,733			100.0	%


	For the three months ended March 31, 2021									For the year ended December 31, 2020
Interest expense and related expenses ⁽²⁾	$	136								$	548
Preferred distributions		12,046									48,186
Total fixed charges and preferred distributions	$	12,182								$	48,734

Ratio of EBITDAre to fixed charges and preferred distributions		5.8x									5.7x
Ratio of FFO to total fixed charges and preferred distributions ⁽³⁾		5.8x									5.7x
Ratio of net debt and preferred equity to EBITDAre ⁽⁴⁾		3.1x									3.2x

⁽¹⁾

Total common equity is calculated as the total number of common stock and operating partnership units outstanding multiplied by the Company’s closing share price at the end of each respective period shown. Closing share prices on March 31, 2021 and December 31, 2020 were $154.58 and $132.87, respectively.

⁽²⁾	Interest expense and related expenses includes facility fees associated with our unsecured credit facility.

⁽³⁾	Ratio of FFO to total fixed charges and preferred distributions is calculated by dividing FFO excluding fixed charges and preferred distributions by total fixed charges and preferred distributions.

⁽⁴⁾	Ratio of net debt and preferred equity to EBITDAre is calculated as total net debt and preferred equity divided by EBITDAre. Ratio of net debt and preferred equity to EBITDAre as of March 31, 2021 is calculated using annualized EBITDAre for the three months ended March 31, 2021.

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Industry Concentration as of March 31, 2021 ^(1) (2)

					Percentage of
					Total Rental Income
Business services						20.8%
Logistics						13.1%
Technology						10.5%
Retail, food, and automotive						9.1%
Construction and engineering						8.4%
Health services						7.2%
Government						6.3%
Electronics						3.1%
Insurance and financial services						2.6%
Home furnishings						2.5%
Aerospace/defense						1.8%
Communications						1.8%
Education						1.0%
Other						11.8%

Total						100.0%


Top 10 Customers by Total Annual Rental Income as of March 31, 2021 ⁽²⁾

Customer	Square Footage		Annualized Rental Income ⁽³⁾		Percentage of Total Annualized Rental Income

US Government		605,000	$	14,554		3.4%
Amazon Inc.		543,000		6,670		1.6%
KZ Kitchen Cabinet & Stone		370,000		5,353		1.3%
Luminex Corporation		198,000		4,490		1.1%
ECS Federal, LLC		134,000		2,898		0.7%
Lockheed Martin Corporation		124,000		2,687		0.6%
Carbel, LLC		236,000		2,470		0.6%
CentralColo, LLC		96,000		2,417		0.6%
Applied Materials, Inc.		162,000		2,416		0.6%
Quanta Computer Inc.		179,000		1,941		0.4%

Total		2,647,000	$	45,896		10.9%

⁽¹⁾	Industry concentration is categorized based on customers’ Standard Industrial Classification Code.

⁽²⁾	Excludes assets held for sale as of March 31, 2021.

⁽³⁾	For leases expiring within one year, annualized rental income includes only the income to be received under the existing lease from April 1, 2021 through the respective date of expiration.

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Rentable Square Footage of Same Park Properties by Product Type as of March 31, 2021 ⁽¹⁾


Markets	Industrial		Flex		Office		Total		% of Total

Northern Virginia		1,564		1,242		1,726		4,532		17.1%
South Florida		3,728		126		12		3,866		14.7%
Silicon Valley		3,094		367		-		3,461		13.2%
East Bay		3,297		53		-		3,350		12.8%
Dallas		1,300		1,587		-		2,887		11.0%
Austin		755		1,208		-		1,963		7.5%
Los Angeles County		1,256		317		31		1,604		6.1%
Seattle		1,052		270		28		1,350		5.1%
Suburban Maryland		394		-		751		1,145		4.4%
Orange County		810		101		-		911		3.5%
San Diego County		233		535		-		768		2.9%
Mid-Peninsula		-		94		340		434		1.7%

Total		17,483		5,900		2,888		26,271		100.0%

Percentage by Product Type		66.5%		22.5%		11.0%		100.0%

Same Park Weighted Average Occupancy Rates by Product Type for the Three Months Ended March 31, 2021 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				93.8%		96.2%		86.6%		91.7%
South Florida				95.9%		83.1%		100.0%		95.5%
Silicon Valley				95.9%		87.7%		-		95.0%
East Bay				92.5%		94.5%		-		92.5%
Dallas				87.4%		79.8%		-		83.3%
Austin				95.5%		94.8%		-		95.1%
Los Angeles County				98.5%		93.6%		95.1%		97.5%
Seattle				93.5%		95.4%		64.7%		93.3%
Suburban Maryland				86.0%		-		89.5%		88.3%
Orange County				93.4%		96.7%		-		93.7%
San Diego County				98.4%		92.4%		-		94.2%
Mid-Peninsula				-		84.0%		82.1%		82.5%
Total				94.2%		90.0%		86.8%		92.4%

⁽¹⁾	Excludes assets held for sale as of March 31, 2021.

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Rentable Square Footage of Properties by Product Type as of March 31, 2021 ⁽¹⁾



Markets	Industrial		Flex		Office		Total		% of Total

Northern Virginia		1,810		1,242		1,726		4,778		17.5%
South Florida		3,728		126		12		3,866		14.1%
Silicon Valley		3,094		446		-		3,540		12.9%
East Bay		3,297		53		-		3,350		12.2%
Dallas		1,383		1,587		-		2,970		10.9%
Los Angeles County		1,946		317		31		2,294		8.4%
Austin		755		1,208		-		1,963		7.2%
Seattle		1,052		270		28		1,350		4.9%
Suburban Maryland		394		-		751		1,145		4.2%
Orange County		810		101		-		911		3.3%
San Diego County		233		535		-		768		2.8%
Mid-Peninsula		-		94		340		434		1.6%

Total		18,502		5,979		2,888		27,369		100.0%

Percentage by Product Type		67.6%		21.8%		10.6%		100.0%

Weighted Average Occupancy Rates by Product Type for the Three Months Ended March 31, 2021 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				93.5%		96.2%		86.6%		91.7%
South Florida				95.9%		83.1%		100.0%		95.5%
Silicon Valley				95.9%		88.4%		-		94.9%
East Bay				92.5%		94.5%		-		92.5%
Dallas				85.9%		79.8%		-		82.6%
Los Angeles County				97.6%		93.6%		95.1%		97.0%
Austin				95.5%		94.8%		-		95.1%
Seattle				93.5%		95.4%		64.7%		93.3%
Suburban Maryland				86.0%		-		89.5%		88.3%
Orange County				93.4%		96.7%		-		93.7%
San Diego County				98.4%		92.4%		-		94.2%
Mid-Peninsula				-		84.0%		82.1%		82.5%
Total				94.1%		90.0%		86.8%		92.4%

⁽¹⁾	Excludes assets held for sale as of March 31, 2021.

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⁽¹⁾	Excludes assets sold or held for sale as of March 31, 2021.

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Lease Expirations - Total Portfolio ⁽¹⁾

			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		% Total		Rental Income

2021		3,972	$	69,987		15.6%		15.6%
2022		6,018		105,557		23.5%		23.5%
2023		5,271		89,545		19.9%		19.9%
2024		3,795		67,189		15.0%		15.0%
2025		2,873		49,723		11.1%		11.1%
Thereafter		3,725		67,057		14.9%		14.9%

Total		25,654	$	449,058		100.0%		100.0%


Lease Expirations - Industrial

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		Industrial		Rental Income

2021		2,479	$	36,321		13.6%		8.1%
2022		3,900		56,895		21.3%		12.7%
2023		3,724		54,620		20.5%		12.2%
2024		2,649		41,218		15.4%		9.2%
2025		1,955		28,307		10.6%		6.3%
Thereafter		3,019		49,747		18.6%		11.1%

Total		17,726	$	267,108		100.0%		59.6%


Lease Expirations - Flex ⁽¹⁾

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		Flex		Rental Income

2021		1,028	$	20,718		18.3%		4.6%
2022		1,482		30,889		27.3%		6.9%
2023		985		19,997		17.7%		4.4%
2024		795		16,677		14.8%		3.7%
2025		706		15,857		14.0%		3.5%
Thereafter		431		8,912		7.9%		2.0%

Total		5,427	$	113,050		100.0%		25.1%


Lease Expirations - Office ⁽¹⁾

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		Office		Rental Income

2021		465	$	12,948		18.8%		2.9%
2022		636		17,773		25.8%		3.9%
2023		562		14,928		21.6%		3.3%
2024		351		9,294		13.5%		2.1%
2025		212		5,559		8.1%		1.3%
Thereafter		275		8,398		12.2%		1.8%

Total		2,501	$	68,900		100.0%		15.3%

⁽¹⁾	Excludes assets held for sale as of March 31, 2021.

⁽²⁾	Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

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Lease Expirations - Northern California

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		No. CA		Rental Income

2021		963	$	19,852		15.6%		4.4%
2022		1,197		21,657		17.0%		4.8%
2023		1,261		23,116		18.2%		5.1%
2024		987		17,411		13.7%		3.9%
2025		755		11,124		8.8%		2.5%
Thereafter		1,856		33,965		26.7%		7.5%

Total		7,019	$	127,125		100.0%		28.2%


Lease Expirations - Southern California

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		So. CA		Rental Income

2021		618	$	12,044		16.6%		2.7%
2022		1,189		21,918		30.2%		4.9%
2023		779		15,050		20.7%		3.4%
2024		477		9,951		13.7%		2.2%
2025		288		5,228		7.2%		1.2%
Thereafter		503		8,429		11.6%		1.9%

Total		3,854	$	72,620		100.0%		16.3%


Lease Expirations - Dallas

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		Dallas		Rental Income

2021		470	$	6,571		19.6%		1.5%
2022		542		6,179		18.4%		1.4%
2023		665		8,601		25.6%		1.9%
2024		300		4,698		14.0%		1.1%
2025		247		4,979		14.8%		1.1%
Thereafter		230		2,555		7.6%		0.6%

Total		2,454	$	33,583		100.0%		7.6%


Lease Expirations - Austin

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		Austin		Rental Income

2021		323	$	6,091		16.4%		1.4%
2022		413		7,759		20.9%		1.7%
2023		248		4,910		13.2%		1.1%
2024		298		6,429		17.3%		1.4%
2025		397		8,409		22.7%		1.9%
Thereafter		204		3,475		9.5%		0.7%

Total		1,883	$	37,073		100.0%		8.2%

⁽¹⁾	Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

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Lease Expirations - Northern Virginia ⁽¹⁾

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		No. VA		Rental Income

2021		615	$	11,193		12.7%		2.5%
2022		1,284		27,221		31.0%		6.1%
2023		648		13,054		14.8%		2.9%
2024		705		13,757		15.7%		3.1%
2025		586		11,039		12.6%		2.5%
Thereafter		575		11,561		13.2%		2.6%

Total		4,413	$	87,825		100.0%		19.7%


Lease Expirations - South Florida

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		So. FL		Rental Income

2021		622	$	7,273		15.1%		1.6%
2022		974		12,701		26.4%		2.8%
2023		974		12,530		26.0%		2.8%
2024		710		9,354		19.4%		2.1%
2025		328		4,189		8.7%		0.9%
Thereafter		131		2,089		4.4%		0.5%

Total		3,739	$	48,136		100.0%		10.7%


Lease Expirations - Suburban Maryland

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		Sub. MD		Rental Income

2021		174	$	3,201		14.8%		0.7%
2022		168		3,385		15.6%		0.7%
2023		272		5,950		27.5%		1.3%
2024		122		2,697		12.5%		0.6%
2025		122		2,288		10.6%		0.5%
Thereafter		163		4,107		19.0%		0.9%

Total		1,021	$	21,628		100.0%		4.7%


Lease Expirations - Seattle

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		Seattle		Rental Income

2021		187	$	3,762		17.8%		0.8%
2022		251		4,737		22.5%		1.1%
2023		424		6,334		30.1%		1.4%
2024		196		2,892		13.7%		0.6%
2025		150		2,467		11.7%		0.5%
Thereafter		63		876		4.2%		0.2%

Total		1,271	$	21,068		100.0%		4.6%

⁽¹⁾	Excludes assets held for sale as of March 31, 2021.

⁽²⁾	Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

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	Total Portfolio Activity ^{(1) (2)}
	Wtd. Avg.		Leasing		Customer		Transaction Costs		Transaction Costs		Cash Rental Rate		Net Effective Rent
Industrial	Occupancy		Volume		Retention		per Executed Foot		as a % of Rents ⁽³⁾		Change ⁽³⁾		Change ⁽³⁾

Northern Virginia		93.5%		145,000		88.6%	$	3.75		7.0%		5.3%		8.0%

South Florida		95.9%		283,000		75.1%		1.35		4.1%		8.4%		24.7%

Silicon Valley		95.9%		209,000		88.0%		2.25		3.3%		24.1%		51.3%

East Bay		92.5%		204,000		73.5%		1.33		3.3%		6.3%		16.4%

Dallas		85.9%		216,000		94.0%		2.97		18.6%		2.8%		6.8%

Suburban Maryland		86.0%		42,000		89.6%		2.92		5.5%		-0.6%		8.0%

Austin		95.5%		26,000		0.0%		5.87		19.0%		16.7%		38.0%

Los Angeles		97.6%		150,000		88.1%		1.43		3.8%		7.6%		13.9%

Seattle		93.5%		74,000		92.1%		2.43		6.9%		17.9%		34.7%

Orange County		93.4%		82,000		56.1%		3.92		8.8%		5.2%		11.6%

San Diego		98.4%		25,000		79.0%		0.62		2.2%		1.3%		4.5%
Industrial Totals by Market		94.1%		1,456,000		82.8%	$	2.28		5.6%		9.5%		21.2%

Flex ⁽¹⁾

Northern Virginia		96.2%		87,000		70.4%	$	6.13		19.6%		-2.0%		5.8%

South Florida		83.1%		14,000		90.0%		0.39		1.2%		7.5%		19.5%

Silicon Valley		88.4%		37,000		73.9%		2.00		6.5%		-6.6%		-4.1%

East Bay		94.5%		4,000		37.3%		0.46		0.8%		-5.3%		0.0%

Dallas		79.8%		108,000		93.5%		2.50		8.4%		-3.9%		-5.2%

Austin		94.8%		27,000		35.4%		5.35		12.3%		4.8%		14.0%

Los Angeles		93.6%		38,000		89.2%		2.31		4.9%		-1.0%		4.8%

Seattle		95.4%		27,000		69.4%		0.95		2.4%		5.3%		13.3%

Orange County		96.7%		3,000		35.3%		—		0.0%		5.1%		8.9%

San Diego		92.4%		54,000		59.2%		1.99		6.6%		1.5%		4.6%

Mid-Peninsula		84.0%		7,000		35.3%		0.71		2.8%		-8.7%		-11.0%
Flex Totals by Market		90.0%		406,000		72.1%	$	3.09		9.1%		-1.0%		2.7%

Office ⁽¹⁾

Northern Virginia		86.6%		68,000		51.6%	$	6.91		16.7%		-8.6%		-2.1%

South Florida		100.0%		—		0.0%		—		0.0%		0.0%		0.0%

Suburban Maryland		89.5%		18,000		86.4%		1.54		3.1%		-2.6%		6.1%

Los Angeles		95.1%		3,000		32.3%		4.08		9.5%		3.3%		9.6%

Seattle		64.7%		—		0.0%		—		0.0%		0.0%		0.0%

Mid-Peninsula		82.1%		14,000		80.4%		0.79		1.4%		-2.8%		0.8%
Office Totals by Market		86.8%		103,000		58.5%	$	5.09		11.3%		-5.8%		0.2%
Company Totals by Type		92.4%		1,965,000		78.2%	$	2.59		6.6%		5.7%		14.8%

⁽¹⁾	Excludes assets held for sale as of March 31, 2021.

⁽²⁾	Average lease term for leases executed during the three months ended March 31, 2021 was 3.2 years.

⁽³⁾	Refer to page 22, Definitions and Non-GAAP Disclosures, for the definitions of Transaction Costs as a Percentage of Rents, Cash Rental Rate Change, and Average Net Effective Rent Growth.

LOGO

Provided within this supplemental information package are measures not defined in accordance with U.S. generally accepted accounting principles (“GAAP”). We believe our presentation of these non-GAAP measures assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. These non-GAAP measures discussed below are not substitutes of other measures of financial performance presented in accordance with GAAP. In addition, other real estate investment trusts (“REITs”) may compute these measures differently, so comparisons among REITs may not be helpful.

Adjusted Cost of Operations – Adjusted cost of operations represents cost of operations, excluding non-cash 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. The GAAP measure most directly comparable to adjusted cost of operations is cost of operations.

Assets sold or held for sale – Assets sold or held for sale represents 113,000 square feet of assets sold in January 2020 and 40,000 square feet of assets sold in September 2020 and includes 442,000 square feet of assets held for sale. The assets held for sale represent a 244,000 square foot office business park located in Herndon, Virginia, and a 198,000 square foot office oriented flex business park located in Chantilly, Virginia.

Average Net Effective Rent Growth – Average net effective rent growth represents the weighted average percentage change in net effective rents for leases executed during a period compared against the prior leases for the same units. Net effective rent represents average rental payments for the term of a lease on a straight-line basis, excluding operating expense reimbursements

Cash NOI – We utilize cash NOI to evaluate the cash flow performance of our business parks. Cash NOI represents NOI adjusted to exclude non-cash items included in rental income and in cost of operations. The non-cash rental income includes amortization of deferred rent receivable (net of write-offs), in-place lease intangible, tenant improvement reimbursement, and lease incentive intangible. The non-cash expense is equal to stock compensation expense for employees whose compensation expense is recorded in cost of operations. We believe that cash NOI assists investors in analyzing cash flow performance of our business parks. The GAAP measure most directly comparable to cash NOI is net income.

Cash Rental Income – Cash rental income represents rental income, excluding non-cash rental income, specifically amortization of deferred rent receivable (net of write-offs), in-place lease intangible, tenant improvement reimbursement, and lease incentive intangible.

Cash Rental Income per Available Square Foot – Cash rental income per available square foot is computed by dividing Cash Rental Income for the period by weighted average available square feet for the same period. Cash rental income per available square foot for the three month period is annualized.

Cash Rental Income per Occupied Square Foot – Cash rental income per occupied square foot is computed by dividing Cash Rental Income for the period by weighted average occupied square feet for the same period. Cash rental income per occupied square foot for the three month period is annualized.

Cash Rental Rate Change – Cash rental rate change percentages are computed by taking the percentage difference between outgoing rents (including estimated expense recoveries) and incoming rents (including estimated expense recoveries) for leases executed during the period. Leases executed on spaces vacant for more than the preceding twelve months have been excluded.

Core FFO and Core FFO per share – Core FFO represents FFO excluding the net impact of (i) income allocated to preferred shareholders to the extent redemption value exceeds the related carrying value and (ii) other nonrecurring income or expense items as appropriate. Core FFO per share represents Core FFO allocable to diluted shares and units divided by the weighted average diluted shares and units. We believe our presentation of Core FFO and Core FFO per share assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. The GAAP measures most directly comparable to Core FFO and Core FFO per share are net income and earnings per share, respectively.

Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”) – EBITDAre is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and is often utilized to evaluate the performance of real estate companies. EBITDAre is calculated as GAAP net income before interest, depreciation and amortization and adjusted to exclude gains or losses from sales of depreciable real estate assets and impairment charges on real estate assets. We believe our presentation of EBITDAre assists investors and analysts in evaluating the operating performance of our business activities, including the impact of general and administrative expenses, and without the impact from gains or losses from sales of depreciable real estate assets. The GAAP measure most directly comparable EBITDAre is net income.

Free Cash Available after Fixed Charges – Free cash available after fixed charges represents FAD less dividends and distributions.

LOGO

Funds Available for Distribution (“FAD”) – FAD is a non-GAAP measure that represents Core FFO adjusted to (a) deduct recurring capital improvements that maintains the condition of our real estate, tenant improvements and lease commissions and (b) remove certain non-cash rental income or expenses such as amortization of deferred rent receivable and non-cash stock compensation expense. We believe our presentation of FAD assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. FAD is not a substitute for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because they exclude investing and financing activities presented on our statements of cash flows. The GAAP measure most directly comparable to FAD is operating cash flow from our statements of cash flows.

Funds from Operations (“FFO”) and FFO per share – FFO and FFO per share are non-GAAP measures defined by NAREIT and are considered helpful measures of REIT performance by REITs and many REIT analysts. FFO represents GAAP net income before real estate depreciation and amortization expense, gains or losses on sales of operating properties and land and impairment charges on real estate assets, which are excluded because it does not accurately reflect changes in the value of our business parks. FFO per share represents FFO allocable to diluted shares and units, divided by aggregate diluted shares and units. The GAAP measure most directly comparable to FFO and FFO per share are net income and earnings per share, respectively.

Net Operating Income (“NOI”) – 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 (described below). 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 results 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. The GAAP measure most directly comparable to NOI is net income.

Non-Recurring Property Renovations – Non-recurring property renovations represents renovations that substantially enhance the value of a property, including capitalized costs associated with repositioning acquired assets.

Non-Same Park – Non-Same Park includes assets acquired on or subsequent to January 1, 2019.

Recurring Capital Expenditures – Recurring capital expenditures are capitalized costs necessary to continue to operate the property at its current economic value. Capital improvements in excess of $2,000 with a useful life greater than 24 months are capitalized. Lease transaction costs (i.e. tenant improvements and leasing commissions) of $1,000 or more for leases with terms greater than 12 months are capitalized. All leasing costs, including first generation tenant improvements and leasing commissions, are included in recurring capital expenditures.

Retained Cash – Retained cash represents free cash available after fixed charges less non-recurring property renovations and funds used for development and redevelopment.

Same Park – Same Park includes assets acquired prior to January 1, 2019.

Transaction Costs as a Percentage of Rents – Transaction costs as a percentage of rents are computed by taking the total transaction costs divided by the total rents (including estimated expense recoveries) over the term of the lease.