Real estate investment trust (REIT)
PS Business Parks Inc.'s
) fourth-quarter 2013 adjusted FFO (fund from operations) per
share came in at $1.26, beating the Zacks Consensus Estimate of
$1.20. Also, it came in ahead of the prior-year quarter figure of
An uptick in net operating income (NOI) 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 the quarter.
Including non-recurring items, PS Business Parks reported
fourth-quarter 2013 FFO of $1.54 per share, up from $1.25 per
share in the year-ago quarter. For 2013, it advanced 21.5% year
over year to $5.15 per share.
Total revenue in the reported quarter rose 4.7% year over year to
$93.6 million and exceeded the Zacks Consensus Estimate of $89
For full-year 2013, PS Business Parks reported adjusted FFO per
share of $4.95 on revenues of $359.9 million. Results were higher
than the prior-year operating FFO per share of $4.86 on revenues
of $347.2 million
Behind the Headlines
Rental income upped 4.3% year over year to $91.2 million during
the quarter. This was primarily driven by a significant increase
in rental revenues from Non-Same Park (26.7%).
Annualized Same Park realized rent per square foot rose 0.7% year
over year to $15.29. Same Park weighted average occupancy in the
quarter was 92.0%, up 20 basis points (bps) year over year. Also,
Non-Same Park weighted average occupancy upped 660 bps year over
year to 86.0%.
Total cost of operations grew 1.1% year over year to $29.1
million. This was mainly due to a 22.5% escalation in expenses at
Non-Same Park facilities.
Consequently, total portfolio NOI increased 5.8% year over year
to $62.2 million. In particular, Same Park NOI was up 2.1% year
over year to $51.6 million while Non-Same Park NOI was up 28.6 %
to $10.5 million.
On Dec 20, 2013, PS Business Parks acquired an eight-building
office park - Bayshore Corporate Center in California, covering
340,000 square feet for $60.5 million with occupancy of 81.8%
Further, during the quarter, PS Business Parks bought four
multi-tenant flex parks with a 4-acre land parcel in Dallas,
Texas. The assets, aggregating 804,000 square feet, were acquired
for $40.3 million with occupancy of 75.6%.
As of Dec 31, 2013, PS Business Parks 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. Debt and preferred equity to
market cap was 32.3% at quarter end, while ratio of FFO to fixed
charges and preferred distributions was 3.7x.
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.
PS Business Parks completed the sale of around 1.5 million shares
in a public offering on Nov 7, 2013. Alongside, the company sold
950,000 common shares to Public Storage. Through these
transactions, the company realized aggregate net proceeds of
We are encouraged by the results at PS Business Parks with
healthy year-over-year increase in revenues and adjusted FFO per
share. This REIT's portfolio in diversified markets enables it to
tap opportunities and neutralize the operating risks associated
with the economic down cycles. Also, the recent acquisition
activities augur well for the company. Moreover, PS Business
Parks has adequate liquidity to fund proposed investments.
Further, the dividend hike enhanced investors' confidence in the
However, if job cuts recur, operations in the company's office
portfolio are likely to suffer, thereby undermining its long-term
PS Business Parks currently has a Zacks Rank #2 (Buy).
Sabra Health Care REIT, Inc.
) is a better-ranked REIT with a Zacks Rank #1 (Strong Buy).
Among other REITs,
) reported in line FFO while
) reported a penny ahead of the Zacks Consensus Estimate.
FFO, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income.
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