GLENDALE, Calif. -- (Business Wire)
PS Business Parks, Inc. (NYSE:PSB) reported operating results for the
quarter ended June 30, 2017.
Net income allocable to common shareholders was $24.7 million, or $0.90
per share, for the three months ended June 30, 2017, an increase of
$9.0 million, or 57.3%, from $15.7 million, or $0.58 per share, for the
three months ended June 30, 2016. Net income allocable to common
shareholders was $51.1 million, or $1.87 per share, for the six months
ended June 30, 2017, an increase of $20.8 million, or 68.8%, from $30.3
million, or $1.12 per share, for the six months ended June 30, 2016. The
increases were due to an increase in net operating income (“NOI”), the
gain on sale of real estate in Dallas, Texas, the gain on sale of
development rights in Silver Spring, Maryland, and reduced interest
expense resulting from the repayment of a $250.0 million mortgage note.
Funds from operations (“FFO”) were $54.1 million, or $1.55 per share,
for the three months ended June 30, 2017, an increase of $8.8 million,
or $0.25 per share, from the three months ended June 30, 2016 of $45.3
million, or $1.30 per share. FFO was $107.1 million, or $3.07 per share,
for the six months ended June 30, 2017, an increase of $18.1 million, or
$0.51 per share, from the six months ended June 30, 2016 of $89.0
million, or $2.56 per share. The increases were due to an increase in
NOI, reduced interest expense, savings from lower preferred
distributions and a one-time net non-cash stock compensation charge of
$2.0 million during the second quarter of 2016 related to a change in
senior management.
In order to provide meaningful period-to-period comparisons of FFO
derived from the Company’s ongoing business operations, the Company
excluded the net non-cash stock compensation charge of $2.0 million, as
noted above, for the three and six months ended June 30, 2016 to compute
FFO, as adjusted.
FFO, as adjusted, was $54.1 million, or $1.55 per share, for the three
months ended June 30, 2017, an increase of $6.8 million, or $0.19 per
share, from the three months ended June 30, 2016 of $47.3 million, or
$1.36 per share. FFO, as adjusted, was $107.1 million, or $3.07 per
share, for the six months ended June 30, 2017, an increase of $16.1
million, or $0.45 per share, from the six months ended June 30, 2016 of
$91.0 million, or $2.62 per share. These changes were due to an increase
in NOI, reduced interest expense and savings from lower preferred
distributions.
The following table reconciles FFO per share, as reported, to FFO per
share, as adjusted, for the three and six months ended June 30, 2017 and
2016:
|
| | |
| | |
|
| |
|
| | |
| | |
| |
| | For the Three Months | | | | | | For the Six Months | | |
| | Ended June 30, | | | | | | Ended June 30, | | |
| | 2017 | | 2016 | | | Change | | | 2017 | | 2016 | | Change |
FFO per share, as reported
| |
$
|
1.55
| |
$
|
1.30
| | |
19.2
|
%
| | |
$
|
3.07
| |
$
|
2.56
| |
19.9
|
%
|
Long-Term Equity Incentive Plan ("LTEIP") modification due to a
change in senior management
| |
|
—
| |
|
0.06
| | | | | |
|
—
| |
|
0.06
| |
|
|
FFO per share, as adjusted
| |
$
|
1.55
| |
$
|
1.36
| | |
14.0
|
%
| | |
$
|
3.07
| |
$
|
2.62
| |
17.2
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
Same Park NOI increased $3.5 million, or 5.2%, for the three months
ended June 30, 2017 and $9.2 million, or 7.0%, for the six months ended
June 30, 2017 compared to the same periods in 2016. The increase in Same
Park NOI was driven by improving rental rates and occupancy as adjusted
rental income (as defined below) increased $4.3 million, or 4.5%, from
$95.2 million for the three months ended June 30, 2016 to $99.4 million
for the three months ended June 30, 2017. Adjusted rental income
increased $9.0 million, or 4.8%, from $190.1 million for the six months
ended June 30, 2016 to $199.1 million for the six months ended June 30,
2017.
All per share amounts noted above are presented on a diluted basis.
Property Operations
To evaluate the performance of the Company’s portfolio over comparable
periods, management analyzes the operating performance of properties
owned and operated throughout both periods (herein referred to as “Same
Park”). The Same Park portfolio includes all operating properties
acquired prior to January 1, 2015. Operating properties acquired
subsequently are referred to as “Non-Same Park.” For the three and six
months ended June 30, 2017 and 2016, the Same Park facilities constitute
27.8 million rentable square feet, representing 99.3% of the
28.0 million square feet in the Company’s total portfolio as of June 30,
2017.
The following table presents the operating results of the Company’s
properties for the three and six months ended June 30, 2017 and 2016 in
addition to other income and expense items affecting net income
(unaudited, in thousands, except per square foot amounts):
|
|
| | |
|
| | |
|
| |
|
| | |
|
| | |
|
| |
| | | For the Three Months | | | | | | For the Six Months | | | |
| | | Ended June 30, | | | | | | Ended June 30, | | | |
| | | 2017 |
| | | 2016 |
| | | Change | | | 2017 |
| | | 2016 |
| | | Change |
Adjusted rental income:
| | | | | | | | | | | | | | | | | | | | | | |
Same Park (27.8 million rentable square feet)
| | |
$
|
99,443
| | | |
$
|
95,152
| | | |
4.5
|
%
| | |
$
|
199,097
| | | |
$
|
190,060
| | | |
4.8
|
%
|
Non-Same Park (226,000 rentable square feet)
| | |
|
314
|
| | |
|
—
|
| | |
100.0
|
%
| | |
|
605
|
| | |
|
—
|
| | |
100.0
|
%
|
Total adjusted rental income (1) | | |
|
99,757
|
| | |
|
95,152
|
| | |
4.8
|
%
| | |
|
199,702
|
| | |
|
190,060
|
| | |
5.1
|
%
|
Adjusted cost of operations:
| | | | | | | | | | | | | | | | | | | | | | |
Same Park
| | | |
29,544
| | | | |
28,723
| | | |
2.9
|
%
| | | |
59,383
| | | | |
59,500
| | | |
(0.2
|
%)
|
Non-Same Park
| | |
|
270
|
| | |
|
—
|
| | |
100.0
|
%
| | |
|
624
|
| | |
|
—
|
| | |
100.0
|
%
|
Total adjusted cost of operations (2) | | |
|
29,814
|
| | |
|
28,723
|
| | |
3.8
|
%
| | |
|
60,007
|
| | |
|
59,500
|
| | |
0.9
|
%
|
Net operating income (3):
| | | | | | | | | | | | | | | | | | | | | | |
Same Park
| | | |
69,899
| | | | |
66,429
| | | |
5.2
|
%
| | | |
139,714
| | | | |
130,560
| | | |
7.0
|
%
|
Non-Same Park
| | |
|
44
|
| | |
|
—
|
| | |
100.0
|
%
| | |
|
(19
|
)
| | |
|
—
|
| | |
(100.0
|
%)
|
Total net operating income
| | |
|
69,943
|
| | |
|
66,429
|
| | |
5.3
|
%
| | |
|
139,695
|
| | |
|
130,560
|
| | |
7.0
|
%
|
Other:
| | | | | | | | | | | | | | | | | | | | | | |
NOI from assets sold or held for development (1)(2) | | | |
14
| | | | |
699
| | | |
(98.0
|
%)
| | | |
86
| | | | |
1,383
| | | |
(93.8
|
%)
|
LTEIP amortization:
| | | | | | | | | | | | | | | | | | | | | | |
Cost of operations
| | | |
(407
|
)
| | | |
(791
|
)
| | |
(48.5
|
%)
| | | |
(1,203
|
)
| | | |
(1,655
|
)
| | |
(27.3
|
%)
|
General and administrative
| | | |
(711
|
)
| | | |
(3,293
|
)
| | |
(78.4
|
%)
| | | |
(1,684
|
)
| | | |
(4,897
|
)
| | |
(65.6
|
%)
|
Facility management fees
| | | |
124
| | | | |
131
| | | |
(5.3
|
%)
| | | |
252
| | | | |
259
| | | |
(2.7
|
%)
|
Other income and expense
| | | |
(255
|
)
| | | |
(1,954
|
)
| | |
(86.9
|
%)
| | | |
(334
|
)
| | | |
(4,877
|
)
| | |
(93.2
|
%)
|
Depreciation and amortization
| | | |
(23,628
|
)
| | | |
(25,214
|
)
| | |
(6.3
|
%)
| | | |
(46,706
|
)
| | | |
(50,255
|
)
| | |
(7.1
|
%)
|
Adjusted general and administrative (4) | | | |
(1,732
|
)
| | | |
(2,084
|
)
| | |
(16.9
|
%)
| | | |
(3,590
|
)
| | | |
(4,115
|
)
| | |
(12.8
|
%)
|
Equity in loss of unconsolidated joint venture
| | | |
(382
|
)
| | | |
—
| | | |
(100.0
|
%)
| | | |
(382
|
)
| | | |
—
| | | |
(100.0
|
%)
|
Gain on sale of real estate facility
| | | |
1,209
| | | | |
—
| | | |
100.0
|
%
| | | |
1,209
| | | | |
—
| | | |
100.0
|
%
|
Gain on sale of development rights
| | |
|
—
|
| | |
|
—
|
| | |
—
| | | |
|
3,865
|
| | |
|
—
|
| | |
100.0
|
%
|
Net income
| | |
$
|
44,175
|
| | |
$
|
33,923
|
| | |
30.2
|
%
| | |
$
|
91,208
|
| | |
$
|
66,403
|
| | |
37.4
|
%
|
Same Park gross margin (5) | | | |
70.3
|
%
| | | |
69.8
|
%
| | |
0.7
|
%
| | | |
70.2
|
%
| | | |
68.7
|
%
| | |
2.2
|
%
|
Same Park weighted average occupancy
| | | |
93.7
|
%
| | | |
93.5
|
%
| | |
0.2
|
%
| | | |
94.1
|
%
| | | |
93.8
|
%
| | |
0.3
|
%
|
Non-Same Park weighted average occupancy
| | | |
20.6
|
%
| | | |
0.0
|
%
| | |
100.0
|
%
| | | |
19.6
|
%
| | | |
0.0
|
%
| | |
100.0
|
%
|
Same Park annualized realized rental income per square foot (6) | | |
$
|
15.27
| | | |
$
|
14.63
| | | |
4.4
|
%
| | |
$
|
15.22
| | | |
$
|
14.58
| | | |
4.4
|
%
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
(1) |
|
|
Adjusted rental income excludes rental income from assets sold or
held for development of $43,000 and $159,000 for the three and six
months ended June 30, 2017, respectively, and $935,000 and $1.9
million for the three and six months ended June 30, 2016,
respectively.
|
(2) | | |
Adjusted cost of operations excludes LTEIP amortization of
$407,000 and $1.2 million for the three and six months ended June
30, 2017, respectively, and $791,000 and $1.7 million for the
three and six months ended June 30, 2016, respectively. Adjusted
cost of operations also excludes cost of operations from assets
sold or held for development of $29,000 and $73,000 for the three
and six months ended June 30, 2017, respectively, and $236,000 and
$489,000 for the three and six months ended June 30, 2016,
respectively.
|
(3) | | |
NOI, a non-GAAP measure, is often used by investors to determine the
performance and value of commercial real estate. Management believes
that Same Park NOI, also a non-GAAP measure, provides investors a
useful measure for comparing the performance of the Company’s
commercial real estate portfolio across reporting periods. The
Company’s calculation of NOI and Same Park 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.
|
(4) | | |
Adjusted general and administrative expenses exclude LTEIP
amortization of $711,000 and $1.7 million for the three and six
months ended June 30, 2017, respectively, and $3.3 million and $4.9
million for the three and six months ended June 30, 2016,
respectively.
|
(5) | | |
Computed by dividing Same Park NOI by Same Park adjusted rental
income.
|
(6) | | |
Represents the annualized Same Park adjusted rental income earned
per occupied square foot.
|
| | |
|
Multi-Family Development
Highgate at the Mile, the Company’s multi-family development in Tysons,
Virginia, commenced its principle operations during the second quarter
of 2017. The 435,000 square foot project will include 395 residential
units and approximately 2,100 square feet of retail space. As of June
30, 2017, 233 of the 395 units have been completed with the balance of
units expected to be completed by the end of the fourth quarter of 2017.
As of June 30, 2017, 39 units, or 9.9%, have been leased. During the
three and six months ended June 30, 2017, the Company recorded an equity
loss in the unconsolidated joint venture of $382,000, comprised of a net
operating loss of $278,000 and depreciation expense of $104,000. As of
July 24, 2017, Highgate’s multi-family residential units were 19.0%
leased and 14.2% occupied.
Property Disposition
On May 1, 2017, the Company disposed of Empire Commerce, a two-building
single-story office park comprising 44,000 square feet, located in
Dallas, Texas, for net proceeds of $2.1 million, which resulted in a net
gain of $1.2 million.
Financial Condition
The following are key financial ratios with respect to the Company’s
leverage as of and for the three months ended June 30, 2017:
|
|
|
|
|
| |
Ratio of Earnings to fixed charges (1) | | | | | |
88.2x
|
| | | | | |
|
Ratio of FFO to fixed charges (1) | | | | | |
132.9x
|
| | | | | |
|
Ratio of Earnings to combined fixed charges and preferred
distributions (1) | | | | | |
3.4x
|
| | | | | |
|
Ratio of FFO to combined fixed charges and preferred distributions (1) | | | | | |
5.1x
|
| | | | | |
|
Debt and preferred equity to total market capitalization (based on
common stock price of $132.39 at June 30, 2017)
| | | | | |
17.7
|
%
|
| | | | | |
|
Available balance under the $250.0 million unsecured credit facility
at June 30, 2017
| | | | | |
$149.0 million
|
| | | | | |
|
(1) |
|
|
Fixed charges include interest expense and capitalized interest
totaling $504,000.
|
| | |
|
Distributions Declared
On July 25, 2017, 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 listed below. Distributions are payable on
September 28, 2017 to shareholders of record on September 13, 2017.
|
|
|
|
|
| |
|
|
|
|
| |
Series | | | | | | Dividend Rate | | | | | | Dividend Declared |
Series T
| | | | | |
6.000%
| | | | | |
$0.375000
|
Series U
| | | | | |
5.750%
| | | | | |
$0.359375
|
Series V
| | | | | |
5.700%
| | | | | |
$0.356250
|
Series W
| | | | | |
5.200%
| | | | | |
$0.325000
|
| | | | | | | | | | | |
|
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 June 30, 2017, the Company wholly owned
28.0 million rentable square feet with approximately 4,900 customers in
six states.
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 second quarter operating results, is available
on the Company’s website at psbusinessparks.com.
A conference call is scheduled for Wednesday, July 26, 2017, at 8:00
a.m. PDT (11:00 a.m. EDT) to discuss the second quarter results. The
toll free number is (888) 299-3246; the conference ID is 45198402. 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 August 2, 2017
at (855) 859-2056. A replay of the conference call will also be
available on the Company’s website.
Additional financial data attached.
|
PS BUSINESS PARKS, INC. CONSOLIDATED BALANCE SHEETS (In
thousands, except share data)
|
|
|
|
|
|
| | |
|
| | |
| | | | | | June 30, | | | December 31, |
| | | | | | 2017 |
| | | 2016 |
|
| | | | | | (Unaudited) | | | | |
ASSETS | | | | | | | | | | | |
| | | | | | | | | | |
|
Cash and cash equivalents
| | | | | |
$
|
5,408
| | | |
$
|
128,629
| |
| | | | | | | | | | |
|
Real estate facilities, at cost:
| | | | | | | | | | | |
Land
| | | | | | |
789,227
| | | | |
789,227
| |
Buildings and improvements
| | | | | |
|
2,241,558
|
| | |
|
2,224,522
|
|
| | | | | | |
3,030,785
| | | | |
3,013,749
| |
Accumulated depreciation
| | | | | |
|
(1,198,020
|
)
| | |
|
(1,158,054
|
)
|
| | | | | | |
1,832,765
| | | | |
1,855,695
| |
Properties held for disposition, net
| | | | | | |
—
| | | | |
909
| |
Land and building held for development
| | | | | |
|
28,616
|
| | |
|
27,028
|
|
| | | | | | |
1,861,381
| | | | |
1,883,632
| |
Investment in and advances to unconsolidated joint venture
| | | | | | |
91,259
| | | | |
67,190
| |
Rent receivable, net
| | | | | | |
2,014
| | | | |
1,945
| |
Deferred rent receivable, net
| | | | | | |
31,385
| | | | |
29,770
| |
Other assets
| | | | | |
|
6,611
|
| | |
|
8,205
|
|
Total assets
| | | | | |
$
|
1,998,058
|
| | |
$
|
2,119,371
|
|
| | | | | | | | | | |
|
LIABILITIES AND EQUITY | | | | | | | | | | | |
| | | | | | | | | | |
|
Accrued and other liabilities
| | | | | |
$
|
77,643
| | | |
$
|
78,657
| |
Preferred stock called for redemption
| | | | | | |
—
| | | | |
230,000
| |
Credit facility
| | | | | |
|
101,000
|
| | |
|
—
|
|
Total liabilities
| | | | | | |
178,643
| | | | |
308,657
| |
| | | | | | | | | | |
|
Commitments and contingencies
| | | | | | | | | | | |
| | | | | | | | | | |
|
Equity:
| | | | | | | | | | | |
PS Business Parks, Inc.’s shareholders’ equity:
| | | | | | | | | | | |
Preferred stock, $0.01 par value, 50,000,000 shares authorized,
35,190 shares issued and outstanding at June 30, 2017 and December
31, 2016
| | | | | | |
879,750
| | | | |
879,750
| |
Common stock, $0.01 par value, 100,000,000 shares authorized,
27,214,021 and 27,138,138 shares issued and outstanding at June 30,
2017 and December 31, 2016, respectively
| | | | | | |
272
| | | | |
271
| |
Paid-in capital
| | | | | | |
735,591
| | | | |
733,671
| |
Cumulative net income
| | | | | | |
1,580,105
| | | | |
1,502,643
| |
Cumulative distributions
| | | | | |
|
(1,575,165
|
)
| | |
|
(1,503,076
|
)
|
Total PS Business Parks, Inc.’s shareholders’ equity
| | | | | | |
1,620,553
| | | | |
1,613,259
| |
Noncontrolling interests:
| | | | | | | | | | | |
Common units
| | | | | |
|
198,862
|
| | |
|
197,455
|
|
Total noncontrolling interests
| | | | | |
|
198,862
|
| | |
|
197,455
|
|
Total equity
| | | | | |
|
1,819,415
|
| | |
|
1,810,714
|
|
Total liabilities and equity
| | | | | |
$
|
1,998,058
|
| | |
$
|
2,119,371
|
|
| | | | | | | | | | | | |
|
|
PS BUSINESS PARKS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited,
in thousands, except per share amounts)
|
|
|
|
| | |
|
| | |
|
| | |
|
| | |
| | | | For the Three Months | | | For the Six Months |
| | | | Ended June 30, | | | Ended June 30, |
| | | | 2017 |
| | | 2016 |
| | | 2017 |
| | | 2016 |
|
Revenues:
| | | | | | | | | | | | | | | | | |
Rental income
| | | |
$
|
99,800
| | | |
$
|
96,087
| | | |
$
|
199,861
| | | |
$
|
191,932
| |
Facility management fees
| | | |
|
124
|
| | |
|
131
|
| | |
|
252
|
| | |
|
259
|
|
Total operating revenues
| | | |
|
99,924
|
| | |
|
96,218
|
| | |
|
200,113
|
| | |
|
192,191
|
|
Expenses:
| | | | | | | | | | | | | | | | | |
Cost of operations
| | | | |
30,250
| | | | |
29,750
| | | | |
61,283
| | | | |
61,644
| |
Depreciation and amortization
| | | | |
23,628
| | | | |
25,214
| | | | |
46,706
| | | | |
50,255
| |
General and administrative
| | | |
|
2,443
|
| | |
|
5,377
|
| | |
|
5,274
|
| | |
|
9,012
|
|
Total operating expenses
| | | |
|
56,321
|
| | |
|
60,341
|
| | |
|
113,263
|
| | |
|
120,911
|
|
Other income and (expense):
| | | | | | | | | | | | | | | | | |
Interest and other income
| | | | |
30
| | | | |
208
| | | | |
135
| | | | |
475
| |
Interest and other expense
| | | |
|
(285
|
)
| | |
|
(2,162
|
)
| | |
|
(469
|
)
| | |
|
(5,352
|
)
|
Total other income and (expense)
| | | |
|
(255
|
)
| | |
|
(1,954
|
)
| | |
|
(334
|
)
| | |
|
(4,877
|
)
|
| | | | | | | | | | | | | | | | |
|
Equity in loss of unconsolidated joint venture
| | | | |
(382
|
)
| | | |
—
| | | | |
(382
|
)
| | | |
—
| |
Gain on sale of real estate facility
| | | | |
1,209
| | | | |
—
| | | | |
1,209
| | | | |
—
| |
Gain on sale of development rights
| | | | |
—
| | | | |
—
| | | | |
3,865
| | | | |
—
| |
| | | |
|
| | |
|
| | |
|
| | |
|
|
Net income
| | | |
$
|
44,175
|
| | |
$
|
33,923
|
| | |
$
|
91,208
|
| | |
$
|
66,403
|
|
| | | | | | | | | | | | | | | | |
|
Net income allocation:
| | | | | | | | | | | | | | | | | |
Net income allocable to noncontrolling interests:
| | | | | | | | | | | | | | | | | |
Noncontrolling interests—common units
| | | |
$
|
6,645
|
| | |
$
|
4,243
|
| | |
$
|
13,746
|
| | |
$
|
8,179
|
|
Total net income allocable to noncontrolling interests
| | | |
|
6,645
|
| | |
|
4,243
|
| | |
|
13,746
|
| | |
|
8,179
|
|
Net income allocable to PS Business Parks, Inc.:
| | | | | | | | | | | | | | | | | |
Preferred shareholders
| | | | |
12,591
| | | | |
13,832
| | | | |
25,882
| | | | |
27,665
| |
Restricted stock unit holders
| | | | |
197
| | | | |
117
| | | | |
445
| | | | |
259
| |
Common shareholders
| | | |
|
24,742
|
| | |
|
15,731
|
| | |
|
51,135
|
| | |
|
30,300
|
|
Total net income allocable to PS Business Parks, Inc.
| | | |
|
37,530
|
| | |
|
29,680
|
| | |
|
77,462
|
| | |
|
58,224
|
|
| | | |
$
|
44,175
|
| | |
$
|
33,923
|
| | |
$
|
91,208
|
| | |
$
|
66,403
|
|
| | | | | | | | | | | | | | | | |
|
Net income per common share:
| | | | | | | | | | | | | | | | | |
Basic
| | | |
$
|
0.91
| | | |
$
|
0.58
| | | |
$
|
1.88
| | | |
$
|
1.12
| |
Diluted
| | | |
$
|
0.90
| | | |
$
|
0.58
| | | |
$
|
1.87
| | | |
$
|
1.12
| |
| | | | | | | | | | | | | | | | |
|
Weighted average common shares outstanding:
| | | | | | | | | | | | | | | | | |
Basic
| | | |
|
27,200
|
| | |
|
27,082
|
| | |
|
27,174
|
| | |
|
27,063
|
|
Diluted
| | | |
|
27,412
|
| | |
|
27,172
|
| | |
|
27,384
|
| | |
|
27,149
|
|
| | | | | | | | | | | | | | | | | | | | |
|
|
PS BUSINESS PARKS, INC. Computation of Diluted Funds from
Operations and Funds Available for Distribution (Unaudited,
in thousands, except per share amounts)
|
|
|
|
| For the Three Months |
|
| For the Six Months |
| | | Ended June 30, | | | Ended June 30, |
| | |
| 2017 |
|
|
|
| 2016 |
| | |
| 2017 |
|
|
|
| 2016 |
|
Computation of Diluted Funds From
Operations (1): | | | | | | | | | | | | |
| | | | | | | | | | | |
|
Net income allocable to common shareholders
| | |
$
|
24,742
| | | |
$
|
15,731
| | | |
$
|
51,135
| | | |
$
|
30,300
| |
Adjustments:
| | | | | | | | | | | | |
Gain on sale of real estate facility
| | | |
(1,209
|
)
| | | |
—
| | | | |
(1,209
|
)
| | | |
—
| |
Gain on sale of development rights
| | | |
—
| | | | |
—
| | | | |
(3,865
|
)
| | | |
—
| |
Depreciation and amortization
| | | |
23,628
| | | | |
25,214
| | | | |
46,706
| | | | |
50,255
| |
Depreciation from unconsolidated joint venture
| | | |
104
| | | | |
—
| | | | |
104
| | | | |
—
| |
Net income allocable to noncontrolling interests—common units
| | | |
6,645
| | | | |
4,243
| | | | |
13,746
| | | | |
8,179
| |
Net income allocable to restricted stock unit holders
| | |
|
197
|
| | |
|
117
|
| | |
|
445
|
| | |
|
259
|
|
FFO allocable to common and dilutive shareholders
| | |
$
|
54,107
|
| | |
$
|
45,305
|
| | |
$
|
107,062
|
| | |
$
|
88,993
|
|
| | | | | | | | | | | |
|
Weighted average common shares outstanding
| | | |
27,200
| | | | |
27,082
| | | | |
27,174
| | | | |
27,063
| |
Weighted average common OP units outstanding
| | | |
7,305
| | | | |
7,305
| | | | |
7,305
| | | | |
7,305
| |
Weighted average restricted stock units outstanding
| | | |
179
| | | | |
245
| | | | |
196
| | | | |
253
| |
Weighted average common share equivalents outstanding
| | |
|
212
|
| | |
|
90
|
| | |
|
210
|
| | |
|
86
|
|
Total common and dilutive shares
| | |
|
34,896
|
| | |
|
34,722
|
| | |
|
34,885
|
| | |
|
34,707
|
|
| | | | | | | | | | | |
|
Net income per common share—diluted
| | |
$
|
0.90
| | | |
$
|
0.58
| | | |
$
|
1.87
| | | |
$
|
1.12
| |
Depreciation and amortization, including amounts from investment
in unconsolidated joint venture (2) | | | |
0.68
| | | | |
0.72
| | | | |
1.34
| | | | |
1.44
| |
Gain on sale of real estate facility
| | | |
(0.03
|
)
| | | |
—
| | | | |
(0.03
|
)
| | | |
—
| |
Gain on sale of development rights (2) | | |
|
—
|
| | |
|
—
|
| | |
|
(0.11
|
)
| | |
|
—
|
|
FFO per common and dilutive share (2) | | |
$
|
1.55
|
| | |
$
|
1.30
|
| | |
$
|
3.07
|
| | |
$
|
2.56
|
|
| | | | | | | | | | | |
|
Computation of Funds Available for
Distribution ("FAD") (3): | | | | | | | | | | | | |
| | | | | | | | | | | |
|
FFO allocable to common and dilutive shares
| | |
$
|
54,107
| | | |
$
|
45,305
| | | |
$
|
107,062
| | | |
$
|
88,993
| |
Adjustments:
| | | | | | | | | | | | |
Recurring capital improvements
| | | |
(2,780
|
)
| | | |
(1,525
|
)
| | | |
(3,425
|
)
| | | |
(2,679
|
)
|
Tenant improvements
| | | |
(9,165
|
)
| | | |
(4,531
|
)
| | | |
(15,641
|
)
| | | |
(7,850
|
)
|
Lease commissions
| | | |
(1,607
|
)
| | | |
(1,767
|
)
| | | |
(3,145
|
)
| | | |
(3,588
|
)
|
Straight-line rent
| | | |
(753
|
)
| | | |
(170
|
)
| | | |
(1,634
|
)
| | | |
(1,217
|
)
|
Non-cash stock compensation expense
| | | |
1,563
| | | | |
4,278
| | | | |
3,646
| | | | |
7,083
| |
Cash paid for taxes in lieu of shares upon vesting of restricted
stock units
| | | |
(47
|
)
| | | |
—
| | | | |
(3,403
|
)
| | | |
(1,758
|
)
|
In-place lease adjustment
| | | |
(9
|
)
| | | |
(138
|
)
| | | |
(34
|
)
| | | |
(331
|
)
|
Tenant improvement reimbursements, net of lease incentives
| | | |
(495
|
)
| | | |
(423
|
)
| | | |
(856
|
)
| | | |
(846
|
)
|
Capitalized interest
| | |
|
(227
|
)
| | |
|
(345
|
)
| | |
|
(506
|
)
| | |
|
(739
|
)
|
FAD
| | |
$
|
40,587
|
| | |
$
|
40,684
|
| | |
$
|
82,064
|
| | |
$
|
77,068
|
|
Distributions to common and dilutive shares
| | |
$
|
29,522
|
| | |
$
|
25,914
|
| | |
$
|
59,025
|
| | |
$
|
51,815
|
|
Distribution payout ratio
| | |
|
72.7
|
%
| | |
|
63.7
|
%
| | |
|
71.9
|
%
| | |
|
67.2
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
(1) |
|
|
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 U.S. generally accepted
accounting principles (“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. Management believes that FFO provides a useful measure of the
Company’s operating performance and when compared year over year,
reflects the impact to operations from trends in occupancy rates,
rental rates, operating costs, development activities, general and
administrative expenses and interest costs, providing a perspective
not immediately apparent from net income. FFO is a non-GAAP
financial measure and 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, 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 Company’s properties, which are significant
economic costs and could materially impact the Company’s results of
operations. Other REITs may use different methods for calculating
FFO and, accordingly, the Company’s FFO may not be comparable to
other real estate companies’ FFO.
|
| | |
|
(2) | | |
Per share amounts are computed using additional dilutive shares
related to noncontrolling interests and restricted stock units.
|
| | |
|
(3) | | |
FAD is a non-GAAP financial measure that is computed by adjusting
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, in-place lease adjustment, amortization of
lease incentives and tenant improvement reimbursements, capitalized
interest and the effect of redemption of preferred equity. Like FFO,
management considers FAD to be a useful measure for investors to
evaluate the Company’s operating performance on a cash flow basis.
FAD should not be viewed as a substitute for net income or cash flow
from operations as defined by GAAP.
|
| | |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170725006595/en/
Contacts:
PS Business Parks, Inc.
Edward A. Stokx
818-244-8080, Ext. 1649
Source: PS Business Parks, Inc.
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