PS Business Parks Inc.
) second-quarter 2014 adjusted FFO per share of $1.26 was 3.3%
ahead of both the Zacks Consensus Estimate as well as the year-ago
quarter figure of $1.22. Upbeat results were backed by growth in
rental income from both Same Park and Non-Same Park portfolios.
Despite the FFO beat, shares of PS Business Parks were down nearly
1% during yesterday's regular trading session, reflecting broader
Including non-recurring items, PS Business Parks reported
second-quarter 2014 FFO of $1.19 per share, unchanged year over
Quarter in Detail
Aided by growth in rental income, total revenue in the reported
quarter rose 6.9% year over year to around $94.2 million, exceeding
the Zacks Consensus Estimate of $92 million.
Rental income moved up 6.9% year over year to $94.0 million,
primarily driven by an increase in rental revenues from Same Park
and Non-Same Park portfolios. While the company experienced an
occupancy rise in the Same-Park portfolio, acquisition of
additional parks in the second half of 2013 as well as increasing
occupancy levels helped raise the rental income in the Non
Annualized Same Park realized rent per square foot edged up 0.6%
year over year to $14.19. Same Park weighted average occupancy in
the quarter was 92.5%, up 160 basis points (bps) year over year,
while Non-Same Park weighted average occupancy climbed
significantly year over year to 77.9% from 61.9%.
Total cost of operations grew 7.7% year over year to $30.7 million,
reflecting a rise across both Same-Park and Non-Same Park
portfolio. Consequently, total portfolio NOI increased 6.5% year
over year to $63.3 million. In particular, Same Park NOI was up
2.9% year over year to $60.4 million, while Non-Same Park NOI
increased substantially to $2.9 million from $0.7 million in the
PS Business Parks exited second-quarter 2014 with cash and cash
equivalents of $62.5 million, up from $31.5 million as of Dec 31,
2013. The company had full capacity available under its $250
million unsecured credit facility. Debt and preferred equity to
market cap was 30.4%, while ratio of FFO to fixed charges and
preferred distributions was 3.2x.
On Jul 28, 2014, the board of directors of PS Business Parks
declared a quarterly dividend of 50 cents per share on its common
stock. The dividend is payable on Sep 30, 2014 to shareholders of
record on Sep 15.
Other Stocks in Focus
PS Business Parks currently carries a Zacks Rank #5 (Strong Sell).
However, investors interested in the REIT industry may consider
stocks like HCP Inc. (
), Vornado Realty Trust (
) and Ventas, Inc. (
). All these stocks have a Zacks Rank #2 (Buy).
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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