GLENDALE, Calif. -- (Business Wire)
PS Business Parks, Inc. (NYSE:PSB) reported operating results for the
fourth quarter ended December 31, 2014.
Funds from operations (“FFO”) were $41.6 million, or $1.21 per share, as
adjusted, for the three months ended December 31, 2014, a decrease of
$257,000 from the three months ended December 31, 2013 of $41.9 million,
or $1.26 per share, as adjusted. FFO was $170.0 million, or $4.94 per
share, as adjusted, for the year ended December 31, 2014, an increase of
$10.6 million from the year ended December 31, 2013 of $159.4 million,
or $4.95 per share, as adjusted. The three month and annual changes in
FFO were primarily the result of an increase in net operating income
(“NOI”) from the Same Park and Non-Same Park portfolios partially offset
by a decrease in NOI resulting from asset dispositions. During the three
months ended December 31, 2014, the Company reported $887,000 of
non-cash expense relating to adjustments made to outstanding stock
options as a result of the special cash dividend paid in December, 2014
as well as an adjustment to the shares to be granted to directors upon
retirement.
In order to provide meaningful period-to-period comparisons of FFO
derived from the Company’s ongoing business operations, the following
table reconciles reported FFO to adjusted FFO, which excludes certain
items for the three months and years ended December 31, 2014 and 2013:
|
|
|
| For the Three Months |
|
| |
|
| For The Years |
|
| |
| | | Ended December 31, | | | | | | Ended December 31, | | | |
| | | 2014 |
|
| 2013 | | | Change | | | 2014 |
|
| 2013 | | | Change |
FFO per share, as reported
| | |
$
|
1.14
| | |
$
|
1.54
| | | |
(26.0
|
%)
| | |
$
|
4.72
| | |
$
|
5.15
| | | |
(8.3
|
%)
|
LTEIP amortization
| | | |
0.06
| | | |
(0.20
|
)
| | | | | | |
0.21
| | | |
(0.12
|
)
| | | |
Lease buyout payments
| | | |
—
| | | |
(0.07
|
)
| | | | | | |
—
| | | |
(0.07
|
)
| | | |
Acquisition transaction costs
| | | |
0.01
| | | |
0.02
| | | | | | | |
0.01
| | | |
0.03
| | | | |
Gain on sale of ownership interest in STOR-Re
| | |
|
—
| | |
|
(0.03
|
)
| | | | | |
|
—
| | |
|
(0.04
|
)
| | | |
FFO per share, as adjusted
| | |
$
|
1.21
| | |
$
|
1.26
|
| | |
(4.0
|
%)
| | |
$
|
4.94
| | |
$
|
4.95
|
| | |
(0.2
|
%)
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
|
Noted in the table above are the following adjustments to reconcile
adjusted FFO to reported FFO. In March, 2014, the Company put in place a
new Long-Term Equity Incentive Plan (“LTEIP”) and recorded $2.3 million
and $7.4 million of amortization for the three months and year ended
December 31, 2014 compared to a reversal of LTEIP amortization of $6.9
million and $3.9 million for the three months and year ended December
31, 2013 related to the termination of the previous LTEIP. During the
three months ended December 31, 2013, the Company received a net lease
buyout payment of $2.3 million in connection with the termination of a
75,000 square foot lease in Beaverton, Oregon. During the three months
ended December 31, 2013, the Company also sold its ownership interest in
STOR-Re Mutual Insurance Company (“STOR-Re”), an insurance captive
primarily owned by Public Storage, resulting in a gain of $1.1 million.
Acquisition transaction costs were $226,000 and $350,000 for the three
months and year ended December 31, 2014 compared to $701,000 and
$854,000 for the three months and year ended December 31, 2013.
Same Park rental income increased $2.1 million, or 2.6%, from $81.7
million for the three months ended December 31, 2013 to $83.8 million
for the three months ended December 31, 2014. Same Park rental income
increased $8.4 million, or 2.6% from $325.0 million for the year ended
December 31, 2013 to $333.4 million for the year ended December 31,
2014. The three months and full year increases were primarily a result
of an increase in occupancy. Non-Same Park rental income increased
$3.2 million and $16.0 million for the three months and year ended
December 31, 2014 compared to the same periods in 2013 due to a
combination of an increase in occupancy and the acquisition of
additional parks during the latter half of 2013 and 2014.
Same Park operating expenses were flat for the three months ended
December 31, 2014 compared to the same period in 2013, while the full
year increased $3.6 million, or 3.5%, from $103.3 million for the year
ended December 31, 2013 to $106.9 million for the year ended December
31, 2014 primarily as a result of a $1.6 million increase in snow
removal costs due to the severe winter in Virginia and Maryland.
Additionally, utilities increased $1.5 million, or 7.2%, for the full
year due to rate increases in Maryland and California.
Net income allocable to common shareholders increased $64.4 million, or
364.5%, from $17.7 million, or $0.68 per share, for the three months
ended December 31, 2013 to $82.1 million, or $3.04 per share, for the
three months ended December 31, 2014. Net income allocable to common
shareholders increased $69.3 million, or 158.0%, from $43.9 million, or
$1.77 per share, for the year ended December 31, 2013 to $113.2 million,
or $4.19 per share, for the year ended December 31, 2014. These
increases were due to the gain on sale of real estate facilities of
$92.4 million combined with an increase in NOI, offset by an increase in
general and administrative expenses resulting primarily from non-cash
stock compensation charges.
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 owned
or acquired prior to January 1, 2012 (excluding 125,000 square feet of
assets held for sale as of December 31, 2014). Operating properties that
the Company acquired subsequent to January 1, 2012 are referred to as
“Non-Same Park.” For the years ended December 31, 2014 and 2013, the
Same Park facilities constitute 25.0 million rentable square feet,
representing 87.4% of the 28.6 million square feet in the Company’s
portfolio as of December 31, 2014.
The following table presents the operating results of the Company’s
properties for the three months and years ended December 31, 2014 and
2013 in addition to other income and expense items affecting income from
continuing operations (unaudited, in thousands, except per square foot
amounts):
|
|
|
| For the Three Months |
|
| |
|
| For The Years |
|
| |
| | | Ended December 31, | | | | | | Ended December 31, | | | |
| | | 2014 |
|
| 2013 | | | Change | | | 2014 |
|
| 2013 | | | Change |
Rental income:
| | | | | | | | | | | | | | | | | | | | | | |
Same Park (25.0 million rentable square feet)
| | |
$
|
83,784
| | | |
$
|
81,690
| | | |
2.6
|
%
| | |
$
|
333,363
| | | |
$
|
324,983
| | | |
2.6
|
%
|
Non-Same Park (3.4 million rentable square feet)
| | |
|
6,426
|
| | |
|
3,223
|
| | |
99.4
|
%
| | |
|
23,500
|
| | |
|
7,511
|
| | |
212.9
|
%
|
Total rental income
| | |
|
90,210
|
| | |
|
84,913
|
| | |
6.2
|
%
| | |
|
356,863
|
| | |
|
332,494
|
| | |
7.3
|
%
|
Cost of operations:
| | | | | | | | | | | | | | | | | | | | | | |
Same Park
| | | |
25,323
| | | | |
25,239
| | | |
0.3
|
%
| | | |
106,904
| | | | |
103,307
| | | |
3.5
|
%
|
Non-Same Park
| | |
|
2,717
|
| | |
|
1,437
|
| | |
89.1
|
%
| | |
|
10,086
|
| | |
|
3,345
|
| | |
201.5
|
%
|
Total cost of operations
| | |
|
28,040
|
| | |
|
26,676
|
| | |
5.1
|
%
| | |
|
116,990
|
| | |
|
106,652
|
| | |
9.7
|
%
|
Net operating income (1):
| | | | | | | | | | | | | | | | | | | | | | |
Same Park
| | | |
58,461
| | | | |
56,451
| | | |
3.6
|
%
| | | |
226,459
| | | | |
221,676
| | | |
2.2
|
%
|
Non-Same Park
| | |
|
3,709
|
| | |
|
1,786
|
| | |
107.7
|
%
| | |
|
13,414
|
| | |
|
4,166
|
| | |
222.0
|
%
|
Total net operating income
| | |
|
62,170
|
| | |
|
58,237
|
| | |
6.8
|
%
| | |
|
239,873
|
| | |
|
225,842
|
| | |
6.2
|
%
|
Other:
| | | | | | | | | | | | | | | | | | | | | | |
Net operating income from assets held for sale or sold (2) | | | |
653
| | | | |
6,177
| | | |
(89.4
|
%)
| | | |
11,634
| | | | |
17,332
| | | |
(32.9
|
%)
|
LTEIP amortization:
| | | | | | | | | | | | | | | | | | | | | | |
Cost of operations
| | | |
(792
|
)
| | | |
2,184
| | | |
(136.3
|
%)
| | | |
(2,623
|
)
| | | |
1,241
| | | |
(311.4
|
%)
|
General and administrative
| | | |
(1,505
|
)
| | | |
4,695
| | | |
(132.1
|
%)
| | | |
(4,802
|
)
| | | |
2,652
| | | |
(281.1
|
%)
|
Facility management fees
| | | |
165
| | | | |
162
| | | |
1.9
|
%
| | | |
660
| | | | |
639
| | | |
3.3
|
%
|
Other income and expense
| | | |
(3,277
|
)
| | | |
(2,290
|
)
| | |
43.1
|
%
| | | |
(13,221
|
)
| | | |
(14,681
|
)
| | |
(9.9
|
%)
|
Depreciation and amortization
| | | |
(26,810
|
)
| | | |
(28,730
|
)
| | |
(6.7
|
%)
| | | |
(110,357
|
)
| | | |
(108,917
|
)
| | |
1.3
|
%
|
General and administrative
| | | |
(3,206
|
)
| | | |
(2,603
|
)
| | |
23.2
|
%
| | | |
(8,837
|
)
| | | |
(7,964
|
)
| | |
11.0
|
%
|
Gain on sale of real estate facilities
| | |
|
92,373
|
| | |
|
—
|
| | |
100.0
|
%
| | |
|
92,373
|
| | |
|
—
|
| | |
100.0
|
%
|
Income from continuing operations
| | |
$
|
119,771
|
| | |
$
|
37,832
|
| | |
216.6
|
%
| | |
$
|
204,700
|
| | |
$
|
116,144
|
| | |
76.2
|
%
|
Same Park gross margin (3) | | | |
69.8
|
%
| | | |
69.1
|
%
| | |
1.0
|
%
| | | |
67.9
|
%
| | | |
68.2
|
%
| | |
(0.4
|
%)
|
Same Park weighted average occupancy
| | | |
93.4
|
%
| | | |
91.8
|
%
| | |
1.7
|
%
| | | |
92.9
|
%
| | | |
91.2
|
%
| | |
1.9
|
%
|
Non-Same Park weighted average occupancy
| | | |
79.8
|
%
| | | |
72.8
|
%
| | |
9.6
|
%
| | | |
77.7
|
%
| | | |
66.5
|
%
| | |
16.8
|
%
|
Same Park annualized realized rent per square foot (4) | | |
$
|
14.34
| | | |
$
|
14.22
| | | |
0.8
|
%
| | |
$
|
14.34
| | | |
$
|
14.23
| | | |
0.8
|
%
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
(1) |
|
|
NOI is an important measurement in the commercial real estate
industry for determining the value of the real estate generating the
NOI. The Company’s calculation of NOI may not be comparable to those
of other companies and should not be used as an alternative to
measures of performance in accordance with generally accepted
accounting principles (“GAAP”).
|
(2) | | |
The Company sold two business parks located in Beaverton, Oregon,
on October 1, 2014 and three business parks located in Phoenix,
Arizona, on November 21, 2014. Combined with assets held for sale,
these assets generated rental income of $1.1 million and $19.4
million for the three months and year ended December 31, 2014,
respectively, compared to $8.5 million and $26.8 million for the
three months and year ended December 31, 2013. Cost of operations
for the sold assets was $458,000 and $7.8 million for the three
months and year ended December 31, 2014, respectively, compared to
$2.3 million and $9.4 million for the three months and year ended
December 31, 2013.
|
(3) | | |
Computed by dividing Same Park NOI by Same Park rental income.
|
(4) | | |
Represents the annualized Same Park rental income earned per
occupied square foot.
|
Property Dispositions
Subsequent to December 31, 2014, the Company completed the sale of
Milwaukie Business Park located in Milwaukie, Oregon, for net proceeds
of $10.6 million. The park consists of six multi-tenant flex buildings
aggregating 102,000 square feet. Occupancy at the date of sale was 94.2%.
On November 21, 2014, the Company completed the sale of three business
parks, comprising 656,000 square feet in Phoenix, Arizona, for a net
sale price of $52.2 million, resulting in a net gain of $29.6 million.
On October 1, 2014, the Company completed the sale of two business
parks, comprising 1.2 million square feet and 11.5 acres of land located
in Beaverton, Oregon, for a net sale price of $159.9 million, resulting
in a net gain of $62.8 million.
As a result of the net taxable gains generated by these sales, on
December 30, 2014, the Company paid a one-time special cash dividend of
$2.75 per common share along with the fourth quarter 2014 regular
dividend of $0.50 per common share.
Property Acquisitions
On December 30, 2014, the Company acquired a 119,000 square foot
multi-tenant flex park consisting of eight buildings located in San
Jose, California, for a purchase price of $16.0 million. The occupancy
was 96.7% at the time of acquisition.
On November 3, 2014, the Company acquired a 246,000 square foot
multi-tenant industrial building in Austin, Texas, for a purchase price
of $10.6 million. The occupancy was 53.3% at the time of the acquisition.
Financial Condition
The following are key financial ratios with respect to the Company’s
leverage as of and for the three months ended December 31, 2014:
Ratio of FFO to fixed charges (1) |
|
|
|
15.8x
|
Ratio of FFO to fixed charges and preferred distributions (1) | | | |
3.1x
|
Debt and preferred equity to total market capitalization (based on
common stock price of $79.54 at December 31, 2014)
| | | |
31.4%
|
Available balance under the $250.0 million unsecured credit facility
at December 31, 2014
| | | |
$250.0 million
|
|
|
| |
(1) | | |
Fixed charges include interest expense and capitalized interest of
$3.6 million.
|
Distributions Declared
On February 17, 2015, the Board of Directors declared a quarterly
dividend of $0.50 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
March 31, 2015 to shareholders of record on March 16, 2015.
|
|
|
| |
|
|
| |
Series | | | | Dividend Rate | | | | Dividend Declared |
Series R
| | | |
6.875%
| | | |
$0.429688
|
Series S
| | | |
6.450%
| | | |
$0.403125
|
Series T
| | | |
6.000%
| | | |
$0.375000
|
Series U
| | | |
5.750%
| | | |
$0.359375
|
Series V
| | | |
5.700%
| | | |
$0.356250
|
| | | | | | | |
|
Company Information
PS Business Parks, Inc., a member of the S&P SmallCap 600, is a
self-advised and self-managed real estate investment trust (“REIT”) that
acquires, develops, owns and operates commercial properties, primarily
multi-tenant flex, office and industrial space. The Company defines
“flex” space as buildings that are configured with a combination of
office and warehouse space and can be designed to fit a number of uses
(including office, assembly, showroom, laboratory, light manufacturing
and warehouse space). As of December 31, 2014, the Company wholly owned
28.6 million rentable square feet with approximately 5,000 customers
concentrated primarily 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 fourth quarter operating results, is available
on the Internet. The Company’s website is www.psbusinessparks.com.
A conference call is scheduled for Wednesday, February 18, 2015, at
10:00 a.m. (PST) to discuss the fourth quarter results. The toll free
number is (888) 299-3246; the conference ID is 75341669. 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 February 25, 2015 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)
|
|
|
|
| December 31, |
|
| December 31, |
| | | 2014 | | | 2013 |
| | | (Unaudited) | | | | |
ASSETS | | | | | | | | |
| | | | | | | |
|
Cash and cash equivalents
| | |
$
|
152,467
| | | |
$
|
31,481
| |
| | | | | | | |
|
Real estate facilities, at cost:
| | | | | | | | |
Land
| | | |
802,949
| | | | |
781,541
| |
Buildings and improvements
| | |
|
2,219,397
|
| | |
|
2,152,178
|
|
| | | |
3,022,346
| | | | |
2,933,719
| |
Accumulated depreciation
| | |
|
(1,014,633
|
)
| | |
|
(918,202
|
)
|
| | | |
2,007,713
| | | | |
2,015,517
| |
Properties held for disposition, net
| | | |
3,289
| | | | |
124,883
| |
Land and building held for development
| | |
|
24,442
|
| | |
|
22,253
|
|
| | | |
2,035,444
| | | | |
2,162,653
| |
Rent receivable
| | | |
2,838
| | | | |
5,248
| |
Deferred rent receivable
| | | |
26,050
| | | | |
25,903
| |
Other assets
| | |
|
10,315
|
| | |
|
13,274
|
|
| | | | | | | |
|
Total assets
| | |
$
|
2,227,114
|
| | |
$
|
2,238,559
|
|
| | | | | | | |
|
LIABILITIES AND EQUITY | | | | | | | | |
| | | | | | | |
|
Accrued and other liabilities
| | |
$
|
68,905
| | | |
$
|
73,919
| |
Mortgage note payable
| | |
|
250,000
|
| | |
|
250,000
|
|
Total liabilities
| | | |
318,905
| | | | |
323,919
| |
| | | | | | | |
|
Commitments and contingencies
| | | | | | | | |
| | | | | | | |
|
Equity:
| | | | | | | | |
PS Business Parks, Inc.’s shareholders’ equity:
| | | | | | | | |
Preferred stock, $0.01 par value, 50,000,000 shares authorized,
39,800 shares issued and outstanding at December 31, 2014 and
December 31, 2013
| | | |
995,000
| | | | |
995,000
| |
Common stock, $0.01 par value, 100,000,000 shares authorized,
26,919,161 and 26,849,822 shares issued and outstanding at
December 31, 2014 and December 31, 2013, respectively
| | | |
268
| | | | |
267
| |
Paid-in capital
| | | |
709,008
| | | | |
699,314
| |
Cumulative net income
| | | |
1,244,946
| | | | |
1,070,975
| |
Cumulative distributions
| | |
|
(1,235,941
|
)
| | |
|
(1,047,615
|
)
|
Total PS Business Parks, Inc.’s shareholders’ equity
| | | |
1,713,281
| | | | |
1,717,941
| |
| | | | | | | |
|
Noncontrolling interests:
| | | | | | | | |
Common units
| | |
|
194,928
|
| | |
|
196,699
|
|
Total noncontrolling interests
| | |
|
194,928
|
| | |
|
196,699
|
|
Total equity
| | |
|
1,908,209
|
| | |
|
1,914,640
|
|
| | | | | | | |
|
Total liabilities and equity
| | |
$
|
2,227,114
|
| | |
$
|
2,238,559
|
|
| | | | | | | | | |
|
|
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, |
| | | 2014 |
|
| 2013 | | | 2014 |
|
| 2013 |
Revenues:
| | | | | | | | | | | | | | | | |
Rental income
| | |
$
|
91,321
| | | |
$
|
93,424
| | | |
$
|
376,255
| | | |
$
|
359,246
| |
Facility management fees
| | |
|
165
|
| | |
|
162
|
| | |
|
660
|
| | |
|
639
|
|
Total operating revenues
| | |
|
91,486
|
| | |
|
93,586
|
| | |
|
376,915
|
| | |
|
359,885
|
|
Expenses:
| | | | | | | | | | | | | | | | |
Cost of operations
| | | |
29,290
| | | | |
26,826
| | | | |
127,371
| | | | |
114,831
| |
Depreciation and amortization
| | | |
26,810
| | | | |
28,730
| | | | |
110,357
| | | | |
108,917
| |
General and administrative
| | |
|
4,711
|
| | |
|
(2,092
|
)
| | |
|
13,639
|
| | |
|
5,312
|
|
Total operating expenses
| | |
|
60,811
|
| | |
|
53,464
|
| | |
|
251,367
|
| | |
|
229,060
|
|
Other income and (expense):
| | | | | | | | | | | | | | | | |
Interest and other income
| | | |
125
| | | | |
1,310
| | | | |
372
| | | | |
1,485
| |
Interest and other expense
| | |
|
(3,402
|
)
| | |
|
(3,600
|
)
| | |
|
(13,593
|
)
| | |
|
(16,166
|
)
|
Total other income and (expense)
| | |
|
(3,277
|
)
| | |
|
(2,290
|
)
| | |
|
(13,221
|
)
| | |
|
(14,681
|
)
|
| | | | | | | | | | | | | | | |
|
Gain on sale of real estate facilities
| | | |
92,373
| | | | |
—
| | | | |
92,373
| | | | |
—
| |
| | |
|
| | |
|
| | |
|
| | |
|
|
Income from continuing operations
| | |
|
119,771
|
| | |
|
37,832
|
| | |
|
204,700
|
| | |
|
116,144
|
|
| | |
|
| | |
|
| | |
|
| | |
|
|
Net income
| | |
$
|
119,771
|
| | |
$
|
37,832
|
| | |
$
|
204,700
|
| | |
$
|
116,144
|
|
| | | | | | | | | | | | | | | |
|
Net income allocation:
| | | | | | | | | | | | | | | | |
Net income allocable to noncontrolling interests:
| | | | | | | | | | | | | | | | |
Noncontrolling interests — common units
| | |
$
|
22,288
|
| | |
$
|
4,994
|
| | |
$
|
30,729
|
| | |
$
|
12,952
|
|
Total net income allocable to noncontrolling interests
| | |
|
22,288
|
| | |
|
4,994
|
| | |
|
30,729
|
| | |
|
12,952
|
|
Net income allocable to PS Business Parks, Inc.:
| | | | | | | | | | | | | | | | |
Preferred shareholders
| | | |
15,122
| | | | |
15,122
| | | | |
60,488
| | | | |
59,216
| |
Restricted stock unit holders
| | | |
230
| | | | |
34
| | | | |
329
| | | | |
125
| |
Common shareholders
| | |
|
82,131
|
| | |
|
17,682
|
| | |
|
113,154
|
| | |
|
43,851
|
|
Total net income allocable to PS Business Parks, Inc.
| | |
|
97,483
|
| | |
|
32,838
|
| | |
|
173,971
|
| | |
|
103,192
|
|
| | |
$
|
119,771
|
| | |
$
|
37,832
|
| | |
$
|
204,700
|
| | |
$
|
116,144
|
|
| | | | | | | | | | | | | | | |
|
Net income per common share:
| | | | | | | | | | | | | | | | |
Basic
| | |
$
|
3.05
| | | |
$
|
0.68
| | | |
$
|
4.21
| | | |
$
|
1.77
| |
Diluted
| | |
$
|
3.04
| | | |
$
|
0.68
| | | |
$
|
4.19
| | | |
$
|
1.77
| |
| | | | | | | | | | | | | | | |
|
Weighted average common shares outstanding:
| | | | | | | | | | | | | | | | |
Basic
| | |
|
26,919
|
| | |
|
25,864
|
| | |
|
26,899
|
| | |
|
24,732
|
|
Diluted
| | |
|
27,012
|
| | |
|
25,961
|
| | |
|
27,000
|
| | |
|
24,833
|
|
| | | | | | | | | | | | | | | | | | | |
|
|
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 Years |
| | | Ended December 31, | | | Ended December 31, |
| | | 2014 |
|
| 2013 | | | 2014 |
|
| 2013 |
Computation of Diluted Funds From
Operations (1): | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
|
Net income allocable to common shareholders
| | |
$
|
82,131
| | | |
$
|
17,682
| | | |
$
|
113,154
| | | |
$
|
43,851
| |
Adjustments:
| | | | | | | | | | | | | | | | |
Gain on sale of real estate facilities
| | | |
(92,373
|
)
| | | |
—
| | | | |
(92,373
|
)
| | | |
—
| |
Depreciation and amortization
| | | |
26,810
| | | | |
28,730
| | | | |
110,357
| | | | |
108,917
| |
Net income allocable to noncontrolling interests — common units
| | | |
22,288
| | | | |
4,994
| | | | |
30,729
| | | | |
12,952
| |
Net income allocable to restricted stock unit holders
| | |
|
230
|
| | |
|
34
|
| | |
|
329
|
| | |
|
125
|
|
FFO allocable to common and dilutive shares
| | |
$
|
39,086
|
| | |
$
|
51,440
|
| | |
$
|
162,196
|
| | |
$
|
165,845
|
|
| | | | | | | | | | | | | | | |
|
Weighted average common shares outstanding
| | | |
26,919
| | | | |
25,864
| | | | |
26,899
| | | | |
24,732
| |
Weighted average common OP units outstanding
| | | |
7,305
| | | | |
7,305
| | | | |
7,305
| | | | |
7,305
| |
Weighted average restricted stock units outstanding
| | | |
83
| | | | |
55
| | | | |
69
| | | | |
51
| |
Weighted average common share equivalents outstanding
| | |
|
93
|
| | |
|
97
|
| | |
|
101
|
| | |
|
101
|
|
Total common and dilutive shares
| | |
|
34,400
|
| | |
|
33,321
|
| | |
|
34,374
|
| | |
|
32,189
|
|
| | | | | | | | | | | | | | | |
|
Net income per common share — diluted
| | |
$
|
3.04
| | | |
$
|
0.68
| | | |
$
|
4.19
| | | |
$
|
1.77
| |
Depreciation and amortization (2) | | | |
0.78
| | | | |
0.86
| | | | |
3.21
| | | | |
3.38
| |
Gain on sale of real estate facilities (2) | | |
|
(2.68
|
)
| | |
|
—
|
| | |
|
(2.68
|
)
| | |
|
—
|
|
FFO per common and dilutive share, as reported (2) | | |
$
|
1.14
|
| | |
$
|
1.54
|
| | |
$
|
4.72
|
| | |
$
|
5.15
|
|
| | | | | | | | | | | | | | | |
|
Computation of Funds Available for
Distribution ("FAD") (3): | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
|
FFO allocable to common and dilutive shares
| | |
$
|
39,086
| | | |
$
|
51,440
| | | |
$
|
162,196
| | | |
$
|
165,845
| |
| | | | | | | | | | | | | | | |
|
Adjustments:
| | | | | | | | | | | | | | | | |
Recurring capital improvements
| | | |
(1,172
|
)
| | | |
(1,889
|
)
| | | |
(8,664
|
)
| | | |
(10,084
|
)
|
Tenant improvements
| | | |
(8,090
|
)
| | | |
(7,467
|
)
| | | |
(27,824
|
)
| | | |
(29,224
|
)
|
Lease commissions
| | | |
(2,403
|
)
| | | |
(3,744
|
)
| | | |
(10,684
|
)
| | | |
(9,849
|
)
|
Straight-line rent
| | | |
(759
|
)
| | | |
(238
|
)
| | | |
(3,003
|
)
| | | |
(1,457
|
)
|
Non-cash stock compensation expense
| | | |
1,166
| | | | |
332
| | | | |
2,154
| | | | |
1,361
| |
Long-term equity incentive amortization
| | | |
2,297
| | | | |
(6,879
|
)
| | | |
7,425
| | | | |
(3,893
|
)
|
In-place lease adjustment
| | | |
(229
|
)
| | | |
(30
|
)
| | | |
(901
|
)
| | | |
118
| |
Tenant improvement reimbursements, net of lease incentives
| | | |
(385
|
)
| | | |
(419
|
)
| | | |
(1,580
|
)
| | | |
(1,414
|
)
|
Capitalized interest
| | |
|
(247
|
)
| | |
|
(359
|
)
| | | |
(944
|
)
| | |
|
(359
|
)
|
FAD
| | |
$
|
29,264
|
| | |
$
|
30,747
|
| | |
$
|
118,175
|
| | |
$
|
111,044
|
|
| | | | | | | | | | | | | | | |
|
Distributions to common and dilutive shares
| | |
$
|
17,149
|
| | |
$
|
15,062
|
| | |
$
|
68,557
|
| | |
$
|
56,953
|
|
| | | | | | | | | | | | | | | |
|
Distribution payout ratio
| | |
|
58.6
|
%
| | |
|
49.0
|
%
| | |
|
58.0
|
%
| | |
|
51.3
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
(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 GAAP, before depreciation,
amortization, gains or losses on asset dispositions, net income
allocable to noncontrolling interests — common units, net income
allocable to restricted stock unit holders, impairment charges and
nonrecurring items. FFO should be analyzed in conjunction with net
income. However, FFO should not be viewed as a substitute for net
income as a measure of operating performance or liquidity as it does
not reflect depreciation and amortization costs or the level of
capital expenditure and leasing costs necessary to maintain the
operating performance of the Company’s properties, which are
significant economic costs and could materially impact the Company’s
results from 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.
|
(2) | | |
Per share amounts are computed using additional dilutive shares
related to noncontrolling interests and restricted stock units.
|
(3) | | |
FAD is computed by adjusting consolidated FFO for recurring capital
improvements, which the Company defines as those costs incurred to
maintain the assets’ value, tenant improvements, lease commissions,
straight-line rent, stock compensation expense, in-place lease
adjustment, amortization of lease incentives and tenant improvement
reimbursements, capitalized interest and the effect of
redemption/repurchase of preferred equity. Like FFO, the Company
considers FAD to be a useful measure for investors to evaluate the
operations and cash flows of a REIT. FAD does not represent net
income or cash flow from operations as defined by GAAP.
|
Contacts:
PS Business Parks, Inc.
Edward A. Stokx
818-244-8080, Ext. 1649
Source: PS Business Parks, Inc.
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