PS Business Parks, Inc.PSB recently announced the sale of Orangewood Office Park in Orange County, CA. The deal generated $18.3 million in net proceeds after considering transaction costs. The park comprises two buildings, encompassing around 107,000 square feet of space.
Notably, the company had earlier marked 705,000 square feet of office space in Orange County for disposition. In the first half of the year, the company disposed majority of those assets and with the latest 107,000 square feet of asset sale off, the company eventually completed the disposition program. The move comes as part of the company's focus on disposing assets that do not fit in its growth strategies.
In fact, this Glendale, CA-based real estate investment trust that owns, acquires, develops and operates commercial real estate properties, especially multi-tenant industrial, flex and office space, is aimed at portfolio repositioning. It focuses on acquiring well-located, underperforming assets, and redevelop those to enhance occupancy. Such portfolio acquisitions can help the company emerge stronger amid improving industrial market fundamentals in the United States.
Particularly, in June 2018, PS Business Parks announced that it has enhanced its industrial portfolio in Northern Virginia by purchasing Fullerton Industrial Park and Northern Virginia Industrial Park in Springfield, VA. The acquisition of this 1.1-million-square-foot multi-tenant industrial portfolio, which comprises 19 buildings on 65 acres of land, has particularly strengthened PS Business Parks' presence in the Springfield/Newington industrial sub-market.
Recently, the company reported third-quarter 2018 core funds from operations (FFO) of $1.64 per share, beating the Zacks Consensus Estimate of $1.60. The figure also came in 6.5% higher than $1.54 recorded in the prior-year quarter. Results highlight improvement in Same-Park net operating income (NOI), backed by growth in rental rates and occupancy, as well as improved NOI from non-Same-Park and multi-family assets. However, NOI reduction due to asset sold earlier partly offset the positives.
PS Business Parks is expected to benefit from healthy fundamentals in the flex and industrial asset categories, going ahead. The shares of this Zacks Rank #2 (Buy) company have outperformed its industry in the past three months. During this time frame, the stock has rallied 3.6% as against the industry's decline of 4.8%. Furthermore, the trend in estimate revision for current-year FFO per share indicates a favorable outlook for the company.
Other Stocks to Consider
A few similar-ranked stocks from the REIT space are Alexandria Real Estate Equities, Inc. ARE , Cousins Properties Incorporated CUZ and Iron Mountain Incorporated IRM . Each of these stocks carries a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Alexandria Real Estate Equities' Zacks Consensus Estimate for 2018 FFO per share moved up a cent to $6.61 in the last 60 days.
Cousins Properties' current-year FFO per share estimates inched up a cent to 62 cents over the last 30 days.
Iron Mountain's FFO per share estimates for 2018 moved a cent north to $2.14 in 30 days' time.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) - a widely used metric to gauge the performance of REITs.
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