Shares of PS Business Parks Inc. (PSB) hit a new 52-week high, touching $86.95 toward the end of the trading session on Mar 5, 2014, as it gained momentum following strong fourth-quarter 2013 results.
The closing price of this real estate investment trust (:REIT) on Mar 5 was $86.85, representing a solid year-to-date return of 14.1%. The trading volume for the session was 83,150 shares.
Despite the strong price appreciation, this Zacks Rank #3 (Hold) stock has plenty of upside left, given the improving market environment, company fundamentals and dividend hike.
PS Business Parks came up with impressive results in the fourth quarter. The company’s adjusted FFO (fund from operations) per share came in at $1.26. Including non-recurring items, PS Business Parks reported fourth-quarter 2013 FFO of $1.54 per share, which came well ahead of the Zacks Consensus Estimate of $1.20. Results also improved from the prior-year quarter.
An uptick in net operating income in Same Park as well as Non-Same Park facilities drove the year-over-year increase. Further, the investments through acquisitions poised the company well for growth going forward.
Concurrent with its earnings release, the board of directors of PS Business Parks declared a quarterly dividend of 50 cents per share on common stock that represents a 13.6% increase from its prior pay. The dividend will be paid on Mar 31 to shareholders of record as of Mar 14.
This REIT’s portfolio in diversified markets enables it to tap opportunities and neutralize the operating risks associated with the economic down cycles. Moreover, PS Business Parks has adequate liquidity to fund the proposed investments.
As of Dec 31, 2013, the company had cash and cash equivalents of $31.5 million, compared to $12.9 million as of Dec 31, 2012. The company had full capacity available under the $250 million unsecured credit facility. Further, the dividend hike boosts investors’ confidence in the stock.
Stocks Warrant a Look
Investors interested in the REIT industry may consider stocks like Cousins Properties Incorporated (CUZ), Liberty Property Trust (LPT) and Public Storage (PSA). All these stocks carry a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation, amortization and other non-cash expenses to net income.