PS Business Parks, Inc. Reports Results for the Third Quarter Ended September 30, 2009

• Press Release
• Source: PS Business Parks, Inc.
• On 5:00 pm EST, Monday November 2, 2009

GLENDALE, Calif.--(BUSINESS WIRE)--PS Business Parks, Inc. (NYSE:PSB - News) reported operating results for the third quarter ended September 30, 2009.

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Symbol	Price	Change
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Net income allocable to common shareholders for the three months ended September 30, 2009 was $8.8 million, or $0.39 per diluted share, on revenues of $67.7 million compared to $5.3 million, or $0.26 per diluted share, on revenues of $71.6 million for the same period in 2008. Net income allocable to common shareholders for the nine months ended September 30, 2009 was $50.5 million, or $2.37 per diluted share, on revenues of $205.8 million compared to $13.6 million, or $0.66 per diluted share, on revenues of $212.6 million for the same period in 2008.

Revenues for the three months ended September 30, 2009 decreased $3.9 million, or 5.5%, over the same period in 2008. Net income allocable to common shareholders for the three months ended September 30, 2009 increased $3.4 million over the same period in 2008 primarily as a result of a decrease in depreciation expense of $4.9 million and a decrease in preferred equity distributions of $2.0 million partially offset by a decrease in net operating income of $2.9 million due to a decrease in occupancy.

Revenues for the nine months ended September 30, 2009 decreased $6.8 million, or 3.2%, over the same period in 2008. Net income allocable to common shareholders for the nine months ended September 30, 2009 increased $36.9 million over the same period in 2008 primarily as a result of a net gain of $35.6 million on the repurchase of preferred equity, a $1.5 million gain on the sale of a parcel of land in Oregon, a decrease in depreciation expense of $11.6 million and a decrease in preferred equity distributions of $5.6 million partially offset by an increase in net income allocable to noncontrolling interests — common units of $12.5 million and a decrease in net operating income of $5.6 million due to a decrease in occupancy.

Supplemental Measures

Funds from operations (“FFO”) allocable to common and dilutive shares for the three months ended September 30, 2009 and 2008 were $31.5 million, or $1.04 per common and dilutive share, and $32.0 million, or $1.14 per common and dilutive share, respectively. The decrease in FFO for the three months ended September 30, 2009 over the same period in 2008 was primarily due to a decrease in net operating income combined with the issuance of 3,833,333 shares of common stock during the third quarter of 2009 partially offset by a decrease in preferred equity distributions resulting from the repurchase of preferred equity. FFO allocable to common and dilutive shares for the nine months ended September 30, 2009 was $130.4 million, or $4.53 per common and dilutive share, compared to $94.0 million, or $3.35 per common and dilutive share, for the same period in 2008. The increase in FFO for the nine months ended September 30, 2009 over the same period in 2008 was primarily due to a net gain of $35.6 million on the repurchase of preferred equity combined with a decrease in preferred equity distributions and a decrease in general and administrative expense partially offset by a decrease in net operating income and the issuance of common stock as noted above. Excluding the $35.6 million net gain, FFO allocable to common and dilutive shares would have been $94.7 million, or $3.30 per common and dilutive share, for the nine months ended September 30, 2009.

Property Operations

In order to evaluate the performance of the Company’s overall portfolio over two comparable periods, management analyzes the operating performance of a consistent group of properties owned and operated throughout both periods (herein referred to as “Same Park”). As the Company has had no acquisitions or dispositions since January 1, 2008, for the three and nine months ended September 30, 2009 and 2008, the Same Park portfolio constitutes 19.6 million rentable square feet, which includes 100.0% of the assets of the Company.

The Company’s property operations account for substantially all of the net operating income earned by the Company. The following table presents the operating results of the Company’s properties for the three and nine months ended September 30, 2009 and 2008 in addition to other income and expense items affecting net income (unaudited, in thousands, except per square foot amounts):

Financial Condition

The following are key financial ratios with respect to the Company’s leverage at and for the three months ended September 30, 2009:

Common Stock Offering

On August 14, 2009, the Company closed the sale of 3,450,000 shares of common stock in a public offering and concurrently sold 383,333 shares of common stock to Public Storage. The aggregate net proceeds were $171.2 million.

Distributions Declared

The Board of Directors declared a quarterly dividend of $0.44 per common share on November 2, 2009. 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 December 31, 2009 to shareholders of record on December 16, 2009.

Company Information

PS Business Parks, Inc., a member of the S&P SmallCap 600, is a self-advised and self-managed equity real estate investment trust (“REIT”) that acquires, develops, owns and operates commercial properties, primarily flex, multi-tenant 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 September 30, 2009, PSB wholly owned 19.6 million rentable square feet with approximately 3,780 customers located in eight states, concentrated in California (5.8 million sq. ft.), Florida (3.6 million sq. ft.), Virginia (3.0 million sq. ft.), Texas (2.9 million sq. ft.), Maryland (1.8 million sq. ft.), Oregon (1.3 million sq. ft.), Arizona (0.7 million sq. ft.) and Washington (0.5 million sq. ft.).

Forward-Looking Statements

When used within this press release, the words “may,” “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” “intends” and similar expressions are intended to identify “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results and performance of the Company to be materially different from those expressed or implied in the forward-looking statements. Such factors include the impact of competition from new and existing commercial facilities which could impact rents and occupancy levels at the 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 third quarter operating results, is available on the Internet. The Company’s website is www.psbusinessparks.com.

A conference call is scheduled for Tuesday, November 3, 2009, at 10:00 a.m. (PST) to discuss the third quarter results. The toll free number is (888) 299-3246; the conference ID is 35345374. 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 November 10, 2009 at (800) 642-1687. A replay of the conference call will also be available on the Company’s website.

Additional financial data attached.

PS Business Parks, Inc.
Edward A. Stokx
(818) 244-8080, Ext. 1649