GLENDALE, Calif. -- (Business Wire)
PS Business Parks, Inc. (NYSE:PSB) reported operating results for the
quarter and year ended December 31, 2017.
Operating Results for the Three Months Ended
December 31, 2017
Net income allocable to common shareholders was $21.2 million, or $0.77
per diluted common share, for the three months ended December 31, 2017,
an increase of $8.3 million, or 64.5%, from $12.9 million, or $0.47 per
diluted common share, for the same period in 2016. The increase was
mainly due to a reduction in charges related to the redemption of
preferred securities combined with a $2.4 million increase in net
operating income (“NOI”–described below) with respect to our real estate
facilities and reduced preferred distributions. The increase in NOI
includes a $2.7 million increase for our Same Park facilities (described
below) due primarily to higher realized rent per occupied square foot
and increased occupancy, offset partially by reduced NOI with respect to
facilities we sold or are holding for sale or development.
Operating Results for the Year Ended December
31, 2017
Net income allocable to common shareholders was $90.4 million, or $3.30
per diluted common share, for the year ended December 31, 2017, an
increase of $27.6 million, or 43.8%, from $62.9 million, or $2.31 per
diluted common share, for the same period in 2016. The increase was due
to a $12.9 million increase in NOI with respect to our real estate
facilities, gains on the sale of real estate facilities and development
rights, a reduction in preferred distributions and a reduction in
interest expense due to the repayment of debt, partially offset by an
increase in charges related to the redemption of preferred securities.
The increase in NOI includes a $14.5 million increase for our Same-Park
facilities due primarily to higher realized rent per occupied square
foot and increased occupancy, offset partially by reduced NOI with
respect to facilities we sold or are holding for sale or development.
Funds from Operations
Funds from operations (“FFO”) per share was $1.40 for the three months
ended December 31, 2017, as compared to $1.18 for the same period in
2016, an increase of $0.22 per share. FFO is a non-GAAP (generally
accepted accounting principles) measure defined by the National
Association of Real Estate Investment Trusts and generally represents
net income before depreciation, gains and losses from sales and
impairment charges with respect to real estate assets.
FFO per share was $5.83 for the year ended December 31, 2017, an
increase of $0.66 from the year ended December 31, 2016 of $5.17.
We also present “Core FFO per share,” a non-GAAP measure that represents
FFO per share excluding the impact of (i) charges related to the
redemption of preferred securities, (ii) separation settlement payments,
as well as charges or reversals related to stock based compensation, due
to the departure of senior executives and (iii) certain other non-cash
and/or nonrecurring income or expense items. We believe our presentation
of Core FFO assists investors and analysts in evaluating our comparative
operating performance between reporting periods. However, Core FFO per
share is not a substitute for net income per share. Because other REITs
may not compute Core FFO per share in the same manner as we do, may not
use the same terminology or may not present such a measure, Core FFO per
share may not be comparable among REITs.
The following table reconciles FFO per share, as reported, to Core FFO
per share for the three months and years ended December 31, 2017 and
2016:
|
|
| |
| |
| |
| |
| |
| |
| | | For the Three Months | | | | For the Years | | |
| | | Ended December 31, | | | | Ended December 31, | | |
| | |
| 2017 | |
| 2016 | | Change | |
| 2017 |
| |
| 2016 |
| | Change |
FFO per share, as reported
| | |
$
|
1.40
| |
$
|
1.18
| |
18.6
|
%
| |
$
|
5.83
| | |
$
|
5.17
| | |
12.8
|
%
|
Charge related to the redemption of preferred securities
| | | |
0.12
| | |
0.21
| | | | |
0.31
| | | |
0.21
| | | |
Net impact due to the departure of senior executives
| | | |
—
| | |
—
| | | | |
(0.01
|
)
| | |
0.06
| | | |
Lease buyout payment
| | | |
—
| | |
—
| | | | |
—
| | | |
(0.01
|
)
| | |
Acquisition transaction costs
| | |
|
—
| |
|
—
| | | |
|
—
|
| |
|
0.01
|
| | |
Core FFO per share
| | |
$
|
1.52
| |
$
|
1.39
| |
9.4
|
%
| |
$
|
6.13
|
| |
$
|
5.44
|
| |
12.7
|
%
|
| | | | | | | | | | | | | | | | | | | | |
|
Property Operations
To evaluate the ongoing performance of the Company’s portfolio over
comparable periods, management analyzes the operating performance of
properties owned and operated throughout both periods (the “Same Park”
facilities). The Same Park portfolio includes all operating properties
acquired prior to January 1, 2015, except for 705,000 square feet of
office product in Orange County, California, held for sale as of
December 31, 2017. Operating properties acquired subsequently are
referred to as “Non-Same Park.” For the three months and years ended
December 31, 2017 and 2016, the Same Park facilities constitute
27.1 million rentable square feet, representing 96.8% of the
28.0 million square feet in the Company’s total portfolio as of December
31, 2017.
The following table presents the operating results of the Company’s Same
Park facilities for the three months and years ended December 31, 2017
and 2016 (unaudited, in thousands, except per square foot amounts):
|
|
| |
| |
| |
| |
| |
| |
| | | For the Three Months | | | | For the Years | | |
| | | Ended December 31, | | | | Ended December 31, | | |
| | |
| 2017 |
| |
| 2016 |
| | Change | |
| 2017 |
| |
| 2016 |
| | Change |
Adjusted rental income (1) (4) | | |
$
|
97,634
| | |
$
|
92,962
| | |
5.0
|
%
| |
$
|
386,133
| | |
$
|
369,000
| | |
4.6
|
%
|
Adjusted cost of operations (2) (4) | | |
|
29,810
|
| |
|
27,879
|
| |
6.9
|
%
| |
|
115,574
|
| |
|
112,929
|
| |
2.3
|
%
|
Net operating income (3) (4) | | |
$
|
67,824
|
| |
$
|
65,083
|
| |
4.2
|
%
| |
$
|
270,559
|
| |
$
|
256,071
|
| |
5.7
|
%
|
| | | | | | | | | | | | |
|
Selected Statistical Data | | | | | | | | | | | | | |
Gross Margin (5) | | | |
69.5
|
%
| | |
70.0
|
%
| |
(0.7
|
%)
| | |
70.1
|
%
| | |
69.4
|
%
| |
1.0
|
%
|
Weighted average square foot occupancy
| | | |
95.1
|
%
| | |
94.8
|
%
| |
0.3
|
%
| | |
94.4
|
%
| | |
94.2
|
%
| |
0.2
|
%
|
Annualized realized rent per occupied square foot (6) | | |
$
|
15.16
| | |
$
|
14.47
| | |
4.8
|
%
| |
$
|
15.10
| | |
$
|
14.45
| | |
4.5
|
%
|
| | | | | | | | | | | | |
|
(1) |
|
Adjusted rental income excludes material lease buyout payments,
because we believe they are not reflective of ongoing rental income.
|
(2) | |
Adjusted cost of operations excludes Long-Term Equity Incentive Plan
(“LTEIP”) amortization, which can vary significantly period to
period based upon the performance of the whole company, rather than
just property operations.
|
(3) | |
We evaluate the performance of our business parks primarily based on
NOI, a non-GAAP financial measure, because we believe NOI is an
important measure of the value and performance of our real estate.
We believe investors utilize NOI in a similar manner and for similar
reasons. We define NOI as adjusted rental income less adjusted cost
of operations. NOI excludes depreciation and amortization because
management and investors do not consider it important in valuing
real estate or evaluating real estate performance, because
depreciation assumes the value of real estate declines ratably from
its historical cost based upon the passage of time, while we believe
the value of real estate changes based upon cash flow and other
market factors.
|
(4) | |
Our calculation of adjusted rental income, adjusted cost of
operations, and NOI may not be comparable to those of other
companies and should not be used as an alternative to measure
performance calculated in accordance with GAAP. See “Reconciliation
of Selected non-GAAP Measures to Analogous GAAP Measures” below for
reconciliations of each of these measures to their closest analogous
GAAP measure on our income statements.
|
(5) | |
Computed by dividing NOI by adjusted rental income.
|
(6) | |
Represents the annualized adjusted rental income earned per occupied
square foot.
|
| |
|
The following table summarizes selected quarterly financial data with
respect to the Same Park facilities (unaudited, in thousands, except per
square foot amounts):
| |
|
| |
| |
| |
| |
| |
| | | | For the Three Months Ended | | |
| | | | March 31 | | June 30 | | September 30 | | December 31 | | Full Year |
Adjusted rental income | | | | | | | | | | | |
|
2017
| | |
$
|
96,203
| | |
$
|
95,849
| | |
$
|
96,447
| | |
$
|
97,634
| | |
$
|
386,133
| |
|
2016
| | |
$
|
91,634
| | |
$
|
91,938
| | |
$
|
92,466
| | |
$
|
92,962
| | |
$
|
369,000
| |
| | | | | | | | | | | |
|
Adjusted cost of operations | | | | | | | | | | | |
|
2017
| | |
$
|
28,328
| | |
$
|
28,118
| | |
$
|
29,318
| | |
$
|
29,810
| | |
$
|
115,574
| |
|
2016
| | |
$
|
29,496
| | |
$
|
27,210
| | |
$
|
28,344
| | |
$
|
27,879
| | |
$
|
112,929
| |
| | | | | | | | | | | |
|
Snow removal | | | | | | | | | | | |
|
2017
| | |
$
|
378
| | |
$
|
103
| | |
$
|
—
| | |
$
|
63
| | |
$
|
544
| |
|
2016
| | |
$
|
1,810
| | |
$
|
—
| | |
$
|
—
| | |
$
|
—
| | |
$
|
1,810
| |
| | | | | | | | | | | |
|
Utilities | | | | | | | | | | | |
|
2017
| | |
$
|
5,458
| | |
$
|
5,309
| | |
$
|
5,810
| | |
$
|
5,410
| | |
$
|
21,987
| |
|
2016
| | |
$
|
5,855
| | |
$
|
5,007
| | |
$
|
5,884
| | |
$
|
5,332
| | |
$
|
22,078
| |
| | | | | | | | | | | |
|
Weighted average square foot occupancy | | | | | | | | | | |
|
2017
| | | |
94.6
|
%
| | |
93.7
|
%
| | |
94.1
|
%
| | |
95.1
|
%
| |
$
|
94.4
|
%
|
|
2016
| | | |
94.2
|
%
| | |
93.7
|
%
| | |
94.2
|
%
| | |
94.8
|
%
| |
$
|
94.2
|
%
|
| | | | | | | | | | | |
|
Annualized realized rent per occupied square foot | | | | | | | | | | | |
|
2017
| | |
$
|
15.01
| | |
$
|
15.10
| | |
$
|
15.13
| | |
$
|
15.16
| | |
$
|
15.10
| |
|
2016
| | |
$
|
14.36
| | |
$
|
14.48
| | |
$
|
14.49
| | |
$
|
14.47
| | |
$
|
14.45
| |
| | | | | | | | | | | |
|
Multi-Family Development Update
Highgate at the Mile, the Company’s multi-family development in Tysons,
Virginia, began leasing activities during the second quarter of 2017 and
as of December 31, 2017 was 58.5% occupied. The 435,000 square foot
project includes 395 residential units and approximately 2,100 square
feet of retail space. During the three months and year ended December
31, 2017, the Company recorded an equity in loss of the unconsolidated
joint venture of $47,000 and $805,000, respectively, comprised of our
proportionate share of net operating income of $546,000 and $375,000,
respectively, and depreciation expense of $593,000 and $1.2 million,
respectively.
Capital Activities
We have 705,000 rentable square feet of office product in Orange County,
California, held for sale. These assets were removed from the Same Park
portfolio, as they are no longer expected to remain part of our ongoing
business operations. While there can be no assurance of a completed
sale, we expect to complete the sale of these assets during 2018.
On December 7, 2017, we issued $200.0 million of our 5.20% Cumulative
Preferred Stock, Series Y. We received $193.6 million in net proceeds.
On January 3, 2018, we redeemed $130.0 million of our outstanding 6.00%
Cumulative Preferred Stock, Series T called for redemption at par on
December 4, 2017. We recorded a charge totaling $4.1 million during the
three months ended December 31, 2017 as a result of this redemption.
During 2017, we raised $430.0 million in gross proceeds from the
issuance of preferred stock with an average coupon rate of 5.23%, and we
called for redemption a total of $350.0 in preferred stock with a coupon
rate of 6.00%.
Distributions Declared
On February 19, 2018, the Board of Directors declared a quarterly
dividend of $0.85 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 are payable on March 29, 2018 to
shareholders of record on March 14, 2018.
Company Information
PS Business Parks, Inc., a member of the S&P SmallCap 600, is a 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,
2017, the Company wholly owned 28.0 million rentable square feet with
approximately 4,950 customers in six states and 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 fourth quarter operating results, is available
on the Company’s website at psbusinessparks.com.
A conference call is scheduled for Tuesday, February 20, 2018, at 9:00
a.m. PST (12:00 p.m. EST) to discuss the fourth quarter results. The
toll free number is (888) 299-3246; the conference ID is 8266629. 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 March 20, 2018
at (855) 859-2056, as well as via webcast on the Company’s website.
Additional financial data attached.
|
|
| |
|
| |
PS BUSINESS PARKS, INC.
|
CONSOLIDATED BALANCE SHEETS
|
(In thousands, except share data)
|
| | | | | |
|
| | | December 31, | | | December 31, |
| | |
| 2017 |
| | |
| 2016 |
|
| | | (Unaudited) | | | |
ASSETS | | | | | | |
| | | | | |
|
Cash and cash equivalents
| | |
$
|
114,882
| | | |
$
|
128,629
| |
| | | | | |
|
Real estate facilities, at cost (1) | | | | | | |
Land
| | | |
770,310
| | | | |
770,310
| |
Buildings and improvements
| | |
|
2,166,579
|
| | |
|
2,128,828
|
|
| | | |
2,936,889
| | | | |
2,899,138
| |
Accumulated depreciation
| | |
|
(1,168,980
|
)
| | |
|
(1,090,979
|
)
|
| | | |
1,767,909
| | | | |
1,808,159
| |
Properties held for disposition, net (1) | | | |
45,450
| | | | |
48,445
| |
Land and building held for development
| | |
|
29,665
|
| | |
|
27,028
|
|
| | | |
1,843,024
| | | | |
1,883,632
| |
Investment in and advances to unconsolidated joint venture
| | | |
100,898
| | | | |
67,190
| |
Rent receivable, net
| | | |
1,876
| | | | |
1,945
| |
Deferred rent receivable, net
| | | |
32,062
| | | | |
29,770
| |
Other assets
| | |
|
7,417
|
| | |
|
8,205
|
|
Total assets
| | |
$
|
2,100,159
|
| | |
$
|
2,119,371
|
|
| | | | | |
|
LIABILITIES AND EQUITY | | | | | | |
| | | | | |
|
Accrued and other liabilities
| | |
$
|
80,223
| | | |
$
|
78,657
| |
Preferred stock called for redemption
| | |
|
130,000
|
| | |
|
230,000
|
|
Total liabilities
| | | |
210,223
| | | | |
308,657
| |
| | | | | |
|
Commitments and contingencies
| | | | | | |
| | | | | |
|
Equity:
| | | | | | |
PS Business Parks, Inc.’s shareholders’ equity
| | | | | | |
Preferred stock, $0.01 par value, 50,000,000 shares authorized,
38,390 and 35,190 shares issued and outstanding at December 31,
2017 and 2016, respectively
| | | |
959,750
| | | | |
879,750
| |
Common stock, $0.01 par value, 100,000,000 shares authorized,
27,254,607 and 27,138,138 shares issued and outstanding at
December 31, 2017 and 2016, respectively
| | | |
272
| | | | |
271
| |
Paid-in capital
| | | |
735,067
| | | | |
733,671
| |
Accumulated deficit
| | |
|
(1,778
|
)
| | |
|
(433
|
)
|
Total PS Business Parks, Inc.’s shareholders’ equity
| | | |
1,693,311
| | | | |
1,613,259
| |
Noncontrolling interests
| | |
|
196,625
|
| | |
|
197,455
|
|
Total equity
| | |
|
1,889,936
|
| | |
|
1,810,714
|
|
Total liabilities and equity
| | |
$
|
2,100,159
|
| | |
$
|
2,119,371
|
|
| | | | | |
|
(1) |
|
Land, building, and accumulated depreciation for the 705,000
square feet of office space in Orange County, California, has been
reclassified at December 31, 2017 and 2016 to “Properties held for
disposition, net.”
|
| |
|
|
|
| |
| |
|
| |
| |
PS BUSINESS PARKS, INC.
|
CONSOLIDATED STATEMENTS OF INCOME
|
(Unaudited, in thousands, except per share amounts)
|
| | | | | | | | | |
|
| | | For the Three Months | | | For the Years |
| | | Ended December 31, | | | Ended December 31, |
| | |
| 2017 |
| |
| 2016 |
| | |
| 2017 |
| |
| 2016 |
|
| | | | | | | | | |
|
Rental income
| | |
$
|
101,837
| | |
$
|
97,599
| | | |
$
|
402,179
| | |
$
|
386,871
| |
| | | | | | | | | |
|
Expenses
| | | | | | | | | | |
Cost of operations
| | | |
32,378
| | | |
30,668
| | | | |
125,340
| | | |
123,108
| |
Depreciation and amortization
| | | |
23,805
| | | |
24,600
| | | | |
94,270
| | | |
99,486
| |
General and administrative
| | |
|
2,660
|
| |
|
2,880
|
| | |
|
9,679
|
| |
|
14,862
|
|
Total operating expenses
| | |
|
58,843
|
| |
|
58,148
|
| | |
|
229,289
|
| |
|
237,456
|
|
| | | | | | | | | |
|
Operating income
| | | |
42,994
| | | |
39,451
| | | | |
172,890
| | | |
149,415
| |
Interest and other income
| | | |
343
| | | |
293
| | | | |
942
| | | |
1,233
| |
Interest and other expense
| | | |
(313
|
)
| | |
(157
|
)
| | | |
(1,285
|
)
| | |
(5,664
|
)
|
Equity in loss of unconsolidated joint venture
| | | |
(47
|
)
| | |
—
| | | | |
(805
|
)
| | |
—
| |
Gain on sale of real estate facility
| | | |
—
| | | |
—
| | | | |
1,209
| | | |
—
| |
Gain on sale of development rights
| | |
|
2,500
|
| |
|
—
|
| | |
|
6,365
|
| |
|
—
|
|
Net income
| | | |
45,477
| | | |
39,587
| | | | |
179,316
| | | |
144,984
| |
Allocation to noncontrolling interests
| | |
|
(5,669
|
)
| |
|
(3,461
|
)
| | |
|
(24,279
|
)
| |
|
(16,955
|
)
|
Net income allocable to PS Business Parks, Inc.
| | | |
39,808
| | | |
36,126
| | | | |
155,037
| | | |
128,029
| |
Allocation to preferred shareholders
| | | | | | | | | | |
Preferred distributions
| | | |
(14,401
|
)
| | |
(15,778
|
)
| | | |
(52,873
|
)
| | |
(57,276
|
)
|
Charge related to the redemption of preferred securities
| | | |
(4,078
|
)
| | |
(7,312
|
)
| | | |
(10,978
|
)
| | |
(7,312
|
)
|
Allocation to restricted stock unit holders
| | |
|
(179
|
)
| |
|
(182
|
)
| | |
|
(761
|
)
| |
|
(569
|
)
|
Net income allocable to common shareholders
| | |
$
|
21,150
|
| |
$
|
12,854
|
| | |
$
|
90,425
|
| |
$
|
62,872
|
|
| | | | | | | | | |
|
Net income per common share
| | | | | | | | | | |
Basic
| | |
$
|
0.78
| | |
$
|
0.47
| | | |
$
|
3.32
| | |
$
|
2.32
| |
Diluted
| | |
$
|
0.77
| | |
$
|
0.47
| | | |
$
|
3.30
| | |
$
|
2.31
| |
| | | | | | | | | |
|
Weighted average common shares outstanding
| | | | | | | | | | |
Basic
| | |
|
27,255
|
| |
|
27,128
|
| | |
|
27,207
|
| |
|
27,089
|
|
Diluted
| | |
|
27,442
|
| |
|
27,213
|
| | |
|
27,412
|
| |
|
27,179
|
|
| | | | | | | | | |
|
|
|
| |
| |
|
| |
| |
PS BUSINESS PARKS, INC.
|
Computation of Funds from Operations and Funds Available for
Distribution
|
(Unaudited, in thousands, except per share amounts)
|
| | | | | | | | | |
|
| | | For the Three Months | | | For the Years |
| | | Ended December 31, | | | Ended December 31, |
| | |
| 2017 |
| |
| 2016 |
| | |
| 2017 |
| |
| 2016 |
|
Computation of Funds From Operations (1) | | | | | | | | | | |
| | | | | | | | | |
|
Net income allocable to common shareholders
| | |
$
|
21,150
| | |
$
|
12,854
| | | |
$
|
90,425
| | |
$
|
62,872
| |
Adjustments
| | | | | | | | | | |
Gain on sale of real estate facility
| | | |
—
| | | |
—
| | | | |
(1,209
|
)
| | |
—
| |
Gain on sale of development rights
| | | |
(2,500
|
)
| | |
—
| | | | |
(6,365
|
)
| | |
—
| |
Depreciation and amortization
| | | |
23,805
| | | |
24,600
| | | | |
94,270
| | | |
99,486
| |
Depreciation from unconsolidated joint venture
| | | |
593
| | | |
—
| | | | |
1,180
| | | |
—
| |
Net income allocated to noncontrolling interests
| | | |
5,669
| | | |
3,461
| | | | |
24,279
| | | |
16,955
| |
Net income allocated to restricted stock unit holders
| | |
|
179
|
| |
|
182
|
| | |
|
761
|
| |
|
569
|
|
FFO allocable to common and dilutive shares
| | |
$
|
48,896
|
| |
$
|
41,097
|
| | |
$
|
203,341
|
| |
$
|
179,882
|
|
| | | | | | | | | |
|
Weighted average common shares outstanding
| | | |
27,255
| | | |
27,128
| | | | |
27,207
| | | |
27,089
| |
Weighted average common operating partnership units outstanding
| | | |
7,305
| | | |
7,305
| | | | |
7,305
| | | |
7,305
| |
Weighted average restricted stock units outstanding
| | | |
174
| | | |
322
| | | | |
186
| | | |
290
| |
Weighted average common share equivalents outstanding
| | |
|
187
|
| |
|
85
|
| | |
|
205
|
| |
|
90
|
|
Total common and dilutive shares
| | |
|
34,921
|
| |
|
34,840
|
| | |
|
34,903
|
| |
|
34,774
|
|
| | | | | | | | | |
|
Net income per common share—diluted
| | |
$
|
0.77
| | |
$
|
0.47
| | | |
$
|
3.30
| | |
$
|
2.31
| |
Gain on sale of real estate facility
| | | |
—
| | | |
—
| | | | |
(0.03
|
)
| | |
—
| |
Gain on sale of development rights
| | | |
(0.07
|
)
| | |
—
| | | | |
(0.18
|
)
| | |
—
| |
Depreciation and amortization, including amounts from investment
in unconsolidated joint venture
| | |
|
0.70
|
| |
|
0.71
|
| | |
|
2.74
|
| |
|
2.86
|
|
FFO per share (1) | | |
$
|
1.40
|
| |
$
|
1.18
|
| | |
$
|
5.83
|
| |
$
|
5.17
|
|
| | | | | | | | | |
|
Computation of Funds Available for
Distribution ("FAD") (1) | | | | | | | | | | |
| | | | | | | | | |
|
FFO allocable to common and dilutive shares
| | |
$
|
48,896
| | |
$
|
41,097
| | | |
$
|
203,341
| | |
$
|
179,882
| |
Adjustments
| | | | | | | | | | |
Recurring capital improvements
| | | |
(3,395
|
)
| | |
(3,036
|
)
| | | |
(10,069
|
)
| | |
(8,336
|
)
|
Tenant improvements
| | | |
(4,837
|
)
| | |
(2,977
|
)
| | | |
(28,294
|
)
| | |
(16,086
|
)
|
Lease commissions
| | | |
(2,315
|
)
| | |
(1,476
|
)
| | | |
(7,477
|
)
| | |
(6,530
|
)
|
Straight-line rent
| | | |
(392
|
)
| | |
(82
|
)
| | | |
(2,311
|
)
| | |
(1,746
|
)
|
Non-cash stock compensation expense
| | | |
1,529
| | | |
1,979
| | | | |
4,777
| | | |
10,912
| |
Cash paid for taxes in lieu of shares upon vesting of restricted
stock units
| | | |
—
| | | |
—
| | | | |
(3,865
|
)
| | |
(1,940
|
)
|
In-place lease adjustment
| | | |
8
| | | |
(83
|
)
| | | |
(18
|
)
| | |
(520
|
)
|
Tenant improvement reimbursements, net of lease incentives
| | | |
(528
|
)
| | |
(414
|
)
| | | |
(2,182
|
)
| | |
(1,667
|
)
|
Capitalized interest
| | | |
—
| | | |
(31
|
)
| | | |
(506
|
)
| | |
(885
|
)
|
Charge related to the redemption of preferred securities
| | |
|
4,078
|
| |
|
7,312
|
| | |
|
10,978
|
| |
|
7,312
|
|
FAD
| | |
$
|
43,044
|
| |
$
|
42,289
|
| | |
$
|
164,374
|
| |
$
|
160,396
|
|
Distributions to common shares and units
| | |
$
|
29,555
|
| |
$
|
26,014
|
| | |
$
|
118,130
|
| |
$
|
103,770
|
|
Distribution payout ratio
| | |
|
68.7
|
%
| |
|
61.5
|
%
| | |
|
71.9
|
%
| |
|
64.7
|
%
|
| | | | | | | | | |
|
(1) |
|
FFO and FFO per share are non-GAAP measures defined by the National
Association of Real Estate Investment Trusts and, along with the
non-GAAP measure FAD, are considered helpful measures of REIT
performance by REITs and many REIT analysts. FFO represents net
income before real estate depreciation, gains or losses and
impairment charges, which are excluded because they are based upon
historical real estate costs and assume that building values
diminish ratably over time, while we believe that real estate values
fluctuate due to market conditions. FFO per share represents FFO
allocable to common and dilutive shares, divided by aggregate common
and dilutive shares. FAD represents FFO adjusted to (a) deduct
capital expenditures that maintain the real estate values, tenant
improvements, and lease commissions, and (b) eliminate certain
non-cash expenses or income such as straight line rent and non-cash
stock compensation expense. We utilize FAD in evaluating our ongoing
cash flow available for investment, debt repayment, and common
distributions. We believe investors and analysts utilize FAD in a
similar manner. FFO and FFO per share are not a substitute for net
income or earnings per share. FFO and FAD are not substitutes 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. In addition, other REITs
may compute these measures differently, so comparisons among REITs
may not be helpful.
|
| |
|
|
|
| |
| |
| |
| |
| |
| |
PS BUSINESS PARKS, INC.
|
Reconciliation of Selected non-GAAP Measures to Analogous GAAP
Measures
|
(Unaudited, in thousands)
|
| | | | | | | | | | | | |
|
| | | For the Three Months | | | | For the Years | | |
| | | Ended December 31, | | | | Ended December 31, | | |
| | |
| 2017 |
| |
| 2016 |
| | Change | |
| 2017 |
| |
| 2016 |
| | Change |
RENTAL INCOME
| | | | | | | | | | | | | |
Adjusted rental income
| | | | | | | | | | | | | |
Same Park
| | |
$
|
97,634
| | |
$
|
92,962
| | |
5.0
|
%
| |
$
|
386,133
| | |
$
|
369,000
| | |
4.6
|
%
|
Non-Same Park
| | | |
519
| | | |
287
| | |
80.8
|
%
| | |
1,495
| | | |
296
| | |
405.1
|
%
|
Assets sold or held for sale or development (1) | | | |
3,684
| | | |
4,350
| | |
(15.3
|
%)
| | |
14,551
| | | |
17,047
| | |
(14.6
|
%)
|
Lease buyout payment
| | |
|
—
|
| |
|
—
|
| |
0.0
|
%
| |
|
—
|
| |
|
528
|
| |
(100.0
|
%)
|
Total rental income
| | |
|
101,837
|
| |
|
97,599
|
| |
4.3
|
%
| |
|
402,179
|
| |
|
386,871
|
| |
4.0
|
%
|
| | | | | | | | | | | | |
|
COST OF OPERATIONS
| | | | | | | | | | | | | |
Adjusted cost of operations
| | | | | | | | | | | | | |
Same Park
| | | |
29,810
| | | |
27,879
| | |
6.9
|
%
| | |
115,574
| | | |
112,929
| | |
2.3
|
%
|
Non-Same Park
| | | |
455
| | | |
286
| | |
59.1
|
%
| | |
1,373
| | | |
289
| | |
375.1
|
%
|
Assets sold or held for sale or development (1) | | | |
1,549
| | | |
1,812
| | |
(14.5
|
%)
| | |
6,062
| | | |
6,887
| | |
(12.0
|
%)
|
LTEIP amortization
| | |
|
564
|
| |
|
691
|
| |
(18.4
|
%)
| |
|
2,331
|
| |
|
3,003
|
| |
(22.4
|
%)
|
Total cost of operations
| | |
|
32,378
|
| |
|
30,668
|
| |
5.6
|
%
| |
|
125,340
|
| |
|
123,108
|
| |
1.8
|
%
|
| | | | | | | | | | | | |
|
OPERATING INCOME
| | | | | | | | | | | | | |
Net operating income
| | | | | | | | | | | | | |
Same Park
| | | |
67,824
| | | |
65,083
| | |
4.2
|
%
| | |
270,559
| | | |
256,071
| | |
5.7
|
%
|
Non-Same Park
| | | |
64
| | | |
1
| | |
6,300.0
|
%
| | |
122
| | | |
7
| | |
1,642.9
|
%
|
Assets sold or held for sale or development (1) | | | |
2,135
| | | |
2,538
| | |
(15.9
|
%)
| | |
8,489
| | | |
10,160
| | |
(16.4
|
%)
|
Lease buyout payment and LTEIP amortization
| | | |
(564
|
)
| | |
(691
|
)
| |
(18.4
|
%)
| | |
(2,331
|
)
| | |
(2,475
|
)
| |
(5.8
|
%)
|
Depreciation and amortization
| | | |
(23,805
|
)
| | |
(24,600
|
)
| |
(3.2
|
%)
| | |
(94,270
|
)
| | |
(99,486
|
)
| |
(5.2
|
%)
|
General and Administrative
| | |
|
(2,660
|
)
| |
|
(2,880
|
)
| |
(7.6
|
%)
| |
|
(9,679
|
)
| |
|
(14,862
|
)
| |
(34.9
|
%)
|
Operating income
| | |
$
|
42,994
|
| |
$
|
39,451
|
| |
9.0
|
%
| |
$
|
172,890
|
| |
$
|
149,415
|
| |
15.7
|
%
|
| | | | | | | | | | | | |
|
(1) |
|
The operations for “assets sold or held for sale or development”
is primarily comprised of the historical operations of the 705,000
rentable square feet of office product held for sale and are
therefore not expected to remain part of our ongoing operations.
These assets were removed from the Same Park portfolio in the
current quarter’s presentation. For the three months and year
ended December 31, 2016, “assets sold or held for sale or
development” also includes operations from a 123,000 square foot
office building held for development.
|
| |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180220005643/en/
Contacts:
PS Business Parks, Inc.
Maria R. Hawthorne
(818) 244-8080,
Ext. 1370
Source: PS Business Parks, Inc.
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