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PS Business Parks (PSB) Q4 FFO Misses Estimate, Revenues Up


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PS Business Parks, Inc. PSB reported fourth-quarter 2017 core funds from operations (FFO) of $1.52 per share, missing the Zacks Consensus Estimate by a penny. However, the figure came in 9.4% higher than $1.39 recorded in the prior-year quarter.

The rise on a year-over-year basis stemmed from higher net operating income (NOI), reduced general and administrative expenses and savings from lower preferred distributions.

Rental income came in around $101.8 million, marking 4.3% growth from the year-ago figure. Additionally, the figure outpaced the Zacks Consensus Estimate of $101.7 million.

For full-year 2017, the company reported core FFO of $6.13 per share, 12.7% higher than the year-ago figure of $5.44. Further, rental income amounted to $402.2 million, up 4% from a year ago.

Quarter in Detail

Same Park rental income was up 5% year over year, while Same Park operating expenses flared 6.9%. As a result, Same Park NOI climbed 4.2% year over year, mainly on the back of improving rental rates.

Annualized Same Park realized rent per-square-foot rose 4.8% year over year to $15.16. Same Park weighted average occupancy in the quarter was 95.1%, up 30 basis points (bps) year over year.

Liquidity

PS Business Parks exited fourth-quarter 2017 with cash and cash equivalents of $114.9 million, lower than the prior-year end tally of $128.6 million.

Dividend Update

On Feb 19, the company announced a regular quarterly dividend of 85 cents per share, same as the previous payout. The dividend is payable on Mar 29, to shareholders of record as of Mar 14, 2018.

Conclusion

PS Business Parks' leasing performance is adversely affected by the unfavorable leasing environment in certain markets. Further, stiff competition from other office and industrial asset owners in the market hampers its ability to attract and retain tenant at higher rents. Moreover, any hike in interest rates will hurt its financial performance and dent its ability to pay dividends.

Nonetheless, healthy fundamentals in the multi-tenant flex, office and industrial asset categories are anticipated to stoke growth in the long run.

PS Business Parks, Inc. Price, Consensus and EPS Surprise

PS Business Parks, Inc. Price, Consensus and EPS Surprise | PS Business Parks, Inc. Quote

PS Business Parks currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

We are now looking forward to the earnings releases of Lamar Advertising Company LAMR , EPR Properties EPR and Outfront Media, Inc. OUT , all of which are expected to report in the upcoming days.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) - a widely used metric to gauge the performance of REITs.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: LAMR , EPR , PSB , OUT



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