PS Business Parks Inc.
) announced the equity offering of 1.3 million shares at $79.25
each on Nov 5. The company also granted the underwriters an
option to buy additional shares of up to 0.2 million. The
offering is anticipated to complete on Nov 7, 2013, upon
fulfillment of customary closing conditions.
Shares of the company on Nov 5 closed at $79.25 reflecting
2.7% decrease over the prior day closing. However, the shares
recovered slightly in yesterday's trading (by 0.10%) to
This real estate investment trust (REIT) expects to reap
around $103.0 million (before the underwriting discount and
estimated offering expenses) in gross proceeds from the offering.
) - which possesses a 43% common equity interest in PS Business
Parks - decided to buy 0.95 million shares of PS Business Parks
at $79.25 per share for a total of $75.3 million.
PS Business Parks expects to use the proceeds from both the
transactions - the public offering and sale of shares to Public
Storage - to mainly pay off its outstanding debt of $90 million
under a term loan. The remaining amount will be utilized for
meeting other corporate needs, including commercial assets'
Goldman, Sachs & Co. - a subsidiary of
The Goldman Sachs Group, Inc.
) - supported PS Business Parks as the sole underwriter for the
offering. Although these offerings will result in share dilution
for the company, the payment of debt is encouraging as it will
reduce interest expenses. Also, strategic investments will help
PS Business Parks enhance its portfolio quality.
Last month, PS Business Parks reported its third-quarter 2013
results with adjusted FFO (fund from operations) per share of
$1.21, beating the Zacks Consensus Estimate by a penny and the
year-ago quarter figure by 2 cents.
An uptick in net operating income in Same Park as well as
Non-Same Park facilities aided the results. Yet, rise in
preferred equity distributions acted as the headwind. Notably, at
quarter end, PS Business Parks' cash and cash equivalents stood
at nearly $18.0 million and it had full capacity available under
the $250 million unsecured credit facility.
PS Business Parks currently has a Zacks Rank #3 (Hold).
However, another REIT that is performing well and deserves a look
Cousins Properties Inc.
), which carries a Zacks Rank #2 (Buy).
Note: 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.
COUSIN PROP INC (CUZ): Free Stock Analysis
GOLDMAN SACHS (GS): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
PS BUSINESS PKS (PSB): Free Stock Analysis
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