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Analysis of Operating Results and Financial Condition For the Period Ended March 31, 2004
ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION FOR THE PERIOD AND YEAR ENDED MARCH 31, 2004 INDEX
Page
Fact Sheet ................................................................................................................................
1
Sources and Uses of Funds......................................................................................................
2
Funds from Operations (FFO) .................................................................................................
3-4
Gross Margins .........................................................................................................................
5
Capital Structure......................................................................................................................
6
Consolidated Balance Sheets...................................................................................................
7
Consolidated Income Statements ............................................................................................
8
Capital Expenditure Analysis ..................................................................................................
9
Rentable Square Footage by Region .......................................................................................
10
Portfolio Analyses ................................................................................................................... 11 - 22
PS BUSINESS PARKS, INC. FIRST QUARTER FACT SHEET (in thousands, except per share amounts)
OPERATING DATA Three Months Ended 03/31/03
03/31/04 Total revenues Net income allocable to common shareholders Net income per common share - basic and diluted: Continuing operations Discontinued operations
$ $
55,357 4,158
$ $
$ $ $
0.19 0.19
$ $ $
49,607 5,803
0.40 (0.13) 0.27
Difference 11.6% (28.3%)
(52.5%) (100.0%) (29.6%)
Weighted average common shares outstanding - Basic
21,613
21,374
1.1%
Weighted average common shares outstanding - Diluted
21,778 7,305 29,083
21,520 7,305 28,825
1.2% 0.0% 0.9%
Weighted average common OP units outstanding Total pro forma fully-converted shares
FUNDS FROM OPERATIONS Three Months Ended 03/31/03
03/31/04 FFO allocable to common shareholders before adjustments Application of EITF Topic D-42 Impairment provision FFO allocable to common shareholders
$
$
25,580 $ (2,133) 23,447 $
FFO per common share and units - before adjustments FFO per common share and units - as reported
$ $
0.88 0.81
26,284 (5,907) 20,377
$ $
0.91 0.71
Difference (2.7%) (100.0%) 100.0% 15.1% (3.3%) 14.1%
PROPERTY INFORMATION
03/31/04
Three Months Ended 03/31/03
Difference
Total Portfolio Net rentable square footage at period end (1) Weighted average occupancy Annualized realized rent per sq. ft. (2) REVPAR (3)
$ $
18,326 88.2% 13.53 $ 11.93 $
14,542 92.5% 14.76 13.65
26.0% (4.6%) (8.3%) (12.6%)
$ $
14,161 90.4% 14.58 $ 13.18 $
14,161 92.6% 14.67 13.58
0.0% (2.4%) (0.6%) (2.9%)
Same Park Facilities Net rentable square footage Weighted average occupancy Annualized realized rent per sq. ft. (2) REVPAR (3)
(1) Includes square footage for properties held for disposition of 43,000 square feet. (2) Represents the actual revenues earned per occupied square foot. (3) Represents the actual revenues earned per total square foot. BALANCE SHEET DATA 03/31/04 Total assets Minority interest - preferred Minority interest - common Perpetual preferred stock Common shareholders' equity Total common shares outstanding at period end Book value per common share
$ $ $ $ $
1,348,726 205,000 168,535 288,350 503,143 21,806 23.07
$
12/31/03 $ $ $ $ $ $
1,358,861 217,750 169,888 168,673 502,155 21,566 23.28
Difference (0.7%) (5.9%) (0.8%) 71.0% 0.2% 1.1% (0.9%)
MARKET VALUE INFORMATION 03/31/04 Market value of common stock and common OP units
$
1,349,299
Total debt Total preferred stock and preferred OP units Total market capitalization
$
Stock price
$ 1
12/31/03 $
Difference
1,191,213
13.3%
80,540
264,694
(69.6%)
558,923
386,423
44.6%
1,988,762
$
1,842,330
7.9%
46.35
$
41.26
12.3%
PS BUSINESS PARKS, INC.
Sources and Uses of Funds (in thousands) Three Months Ended March 31, 2004 Sources of Funds: Funds from operations before EITF Topic D-42 Issuance of preferred stock, net Exercise of stock options Borrowings on line of credit
$
Total Sources of Funds
25,580 166,841 6,149 11,000 209,570
Uses of Funds: Acquired property rennovations Recurring capital expenditures Common dividends and OP distributions Principal payments on mortgage notes payable Redemption of preferred stock Repayments on line of credit Repayment of borrowings from an affiliate Repayment of unsecured note payable Preferred stock shelf registration Change in working capital
(1,007) (5,119) (8,397) (154) (45,000) (100,000) (50,000) (71) (517)
Total Uses of Funds
(210,265)
Net decrease in cash balance
(695)
Beginning cash balance
5,809
Ending cash balance
$
2
5,114
PS BUSINESS PARKS, INC. ANALYSIS OF FUNDS FROM OPERATIONS (in thousands except per share amounts)
Three Months Ended 03/31/04 03/31/03
Increase (Decrease)
% Change
Funds from operations (FFO): Net income allocable to common shareholders Adjustments: Equity income from gain on sale of joint venture properties Depreciation and amortization Minority interest in income - common units FFO allocable to common shareholders/unitholders
$
4,158
$
17,884 1,405 23,447
Weighted average common shares outstanding Weighted average common OP units outstanding Weighted average dilutive stock options Total pro forma fully-converted shares Fully diluted FFO per common share/OP unit
$
$
21,613 7,305 165 29,083
5,803
$
(1,645)
(28.3%)
(1,076) 13,685 1,965 20,377 $
1,076 4,199 (560) 3,070
(100.0%) 30.7% (28.5%) 15.1%
21,374 7,305 146 28,825
239 19 258
1.1% 0.0% 13.0% 0.9%
$
0.81
$
0.71
$
0.10
14.1%
Total funds from operations Adjustments: Maintenance capital expenditures Tenant improvements Lease commissions Straight line rent adjustment Stock compensation expense In-place rents adjustment Impairment charge on properties held for sale Redemption amount over carrying amount related to preferred equity called for redemption
$
23,447
$
20,377
$
3,070
15.1%
FAD
$
20,170
$
21,336
FAD per common share/OP unit
$
0.69
$
0.74
FAD
$
Distributions to common shareholders Distributions to common OP unitholders Non-recurring capital expenditures Cash available for debt repayments and reinvestments
$
20,170 $ (6,278) (2,119) (1,007) 10,766 $
Funds available for distribution (FAD):
(880) (2,826) (1,413) (652) 322 39 -
(573) (2,885) (1,029) (635) 174 5,907
(307) 59 (384) (17) 148 39 (5,907)
53.6% (2.0%) 37.3% 2.7% 85.1% 100% (100.0%)
2,133
-
2,133
100.0%
$
(1,166)
(5.5%)
$
(0.05)
(6.8%)
21,336 $ (6,198) (2,119) (1,161) 11,858 $
(1,166) (80) 154 (1,092)
(5.5%) 1.3% 0.0% (13.3%) (9.2%)
Cash available for debt repayments and reinvestments:
3
Diluted FFO* Per Common Share/OP Unit $0.95 $0.90 $0.85
$0.89
$0.90 $0.87 $0.85
$0.86
$0.80 $0.75 $0.70 $0.65 $0.60 Q103
Q203
Q303
Q403
Q104
* Excludes adjustments for straight-line rent, ETIF Topic D-42 and impairment charges.
4
Gross Operating Margin Percentage * (Same Park) 75.0% 74.0% 73.4%
73.0% 72.0%
72.4%
72.2%
71.0%
71.3% 70.6%
70.0% Q103
Q203
Q303
Q403
Q104
* Gross margin is computed by dividing property net operating income by rental income (excluding straight-line rent adjustment).
5
PS BUSINESS PARKS, INC. CAPITAL STRUCTURE Principal Maturity Dates Debt at March 31, 2004 consists of the following (in thousands): Long-Term Debt: 7.050% mortgage note, secured by one commercial property, due May 2006 8.190% mortgage note, secured by one commercial property, due March 2007 7.290% mortgage note, secured by one commercial property, due February 2009 Total mortgage notes payable (1) (6)
Total
$
Total Long-Term Debt (3) Short-Term Debt: $100 million unsecured line of credit (4) Total Short-Term Debt Total debt (5) (6)
2004
7,878 5,771 5,891 19,540
$
2005
183 $ 193 101 477 $
$
19,540
1%
61,000 61,000
3%
80,540
4%
52,823 12,750 80,000 65,850 53,000 50,000 20,000 172,500 40,000 12,000 558,923
28%
639,463
32%
2006
260 $ 276 144 680 $
7,435 $ 300 155 7,890 $
Equity at March 31, 2004 consists of the following: 9.250% Series A preferred stock (2,112,900 depositary shares outstanding) callable 4/30/04 (9) 8.875% Series B preferred operating partnership units (510,000 units outstanding) callable 4/23/04 (9) 8.750% Series C preferred operating partnership units (3,200,000 units outstanding) callable 9/3/04 9.500% Series D preferred stock (2,634,000 depositary shares outstanding) callable 5/10/06 9.250% Series E preferred operating partnership units (2,120,000 units outstanding) callable 9/21/06 8.750% Series F preferred stock (2,000,000 units outstanding) callable 1/28/07 7.95% Series G preferred operating partnership units (800,000 units outstanding) callable 10/30/07 7.000% Series H preferred stock (6,900,000 units outstanding) callable 1/30/09 8.875% Series X preferred operating partnership units (1,600,000 units outstanding) callable 9/23/04 8.875% Series Y preferred operating partnership units (480,000 units outstanding) callable 7/12/05 Total preferred equity (2) Total debt and preferred equity (6) Common stock (21,805,736 shares outstanding) Common operating partnership units (7,305,355 units outstanding) Total common equity (8) Total market capitalization
$
1,010,696 (7) 338,603 (7) 1,349,299
68%
1,988,762
100%
(1)
The weighted average interest rate and maturity for mortgage debt was 7.46% and 3.2 years, respectively
(2)
The weighted average distribution rate on preferred equity was 8.38%.
(3)
The weighted average interest rate on long-term debt was 7.46%.
(4)
The weighted average interest rate on short-term debt was 1.89%. In July 2002 the Company entered into an interest rate swap transaction which resulted in a fixed LIBOR rate of 3.01% for its $50 million term loan. In February 2004 the Company repaid the term loan in full with proceeds from its line of credit. The interest rate swap contract, which expires July 2004, will be designated to the LIBOR-based borrowings on the line of credit.
(5)
The weighted average interest rate on total debt was 3.24%.
(6)
The total weighted average interest/distribution rate on all debt/preferred equity was 7.73%. Giving effect to the issuance of Series I preferred stock and the redemptions of Series A preferred stock and Series B preferred operating partnership units the total weighted average interest/distribution rate on all debt/preferred equity was 7.49%.
(7)
Value based on March 31, 2004 closing stock price of $46.35.
(8)
Excludes 184,000 shares related to stock options for the three months ended March 31, 2004 computed using the Treasury Stock method. These stock options are treated as common stock equivalents for purposes of calculating weighted average common shares outstanding used in computing net income and FFO per common share.
(9)
During the first quarter of 2004, the Company called for redemption its Series A preferred stock and Series B preferred operating partnership units. As a result, the Company classifed the aggregrate redemption amount of $65,572,500 as a liability at March 31, 2004. 6
2007
- $ 5,002 167 5,169 $
2008
Thereafter
-
$
179 179 $
5,145 5,145
PS BUSINESS PARKS, INC. CONSOLIDATED BALANCE SHEETS (in thousands)
03/31/04
Increase (Decrease)
12/31/03
% Change
(a) See sources and uses of funds on page 2
ASSETS Cash and cash equivalents
$
Real estate facilities, at cost: Land Buildings and equipment
$
395,596 1,165,276 1,560,872 (249,871) 1,311,001 1,370 11,496 1,323,867
Accumulated depreciation Properties held for disposition, net Land held for development
Rent receivable Deferred rent receivables Intangible assets, net Other assets Total assets
5,114
$
3,661 14,278 1,806 1,348,726
$
37,585
5,809
$
387,101 1,129,938 1,517,039 (225,599) 1,291,440 34,649 10,196 1,336,285 (d)
$
1,885 12,929 76 1,877 1,358,861
(e) $
35,701
(d)
(695) (a)
-12.0%
8,495 35,338 43,833 (b) (24,272) 19,561 (33,279) (c) 1,300 (12,418)
2.2% 3.1% 2.9% 10.8% 1.5% -96.0% 12.8% -0.9%
$
1,776 1,349 (76) (71) (10,135)
$
1,884
94.2% 10.4% -100.0% -3.8% -0.7%
(b) Change in real estate facilities, at cost is due to the following: Property reclassified to held for disposition Property acquisition (includes capitalized acquisition costs) Property renovations Maintenance capital expenditures Tenant improvements Lease commissions
$
37,804 121 789 880 2,826 1,413 43,833
$ (c) Change in properties held for disposition, net is due to the following: Austin, Texas property classified as held for disposition Less: Accumulated Depreciation Beaverton, Oregon properties reclassified to continuing operations
(d) Rent receivable consists of the following: U.S. Government Other
$
1,885 (515) (34,649) (33,279)
$ $ 03/31/04 1,666 1,995 $ 3,661
$
12/31/03 1,175 710 $ 1,885
$
LIABILITIES AND SHAREHOLDERS' EQUITY Accrued and other liabilities Preferred stock and preferred operarting partnership units called for redemption Line of credit Mortgage notes payable Notes payable to affiliate Unsecured term loan Total liabilities
65,573 61,000 19,540 183,698
(f)
95,000 19,694 100,000 50,000 300,395
65,573 (34,000) (154) (100,000) (50,000) (116,697)
5.3% 100.0% -35.8% -0.8% -100.0% -100.0% -38.8%
(e) Accrued and other liabilities at March 31, 2004 consists of: Deferred rental revenue Accounts payable Property taxes Security deposits Accrued interest Reserves for acquisition costs Unrealized loss on interest rate swap Other
$
7,271 1,462 4,779 14,155 259 4,778 323 4,558 37,585
$ Minority interest: Preferred units Common units
205,000 168,535
Shareholders' equity: Preferred stock Common stock Paid-in capital Cumulative net income Comprehensive gain (loss) Cumulative distributions Total shareholders' equity Total liabilities and shareholders' equity
(g)
217,750 169,888
288,350 (h) 218 423,672 (i) 293,369 (323) (213,793) 791,493 $
1,348,726
(12,750) (1,353)
168,673 216 420,778 281,386 (535) (199,690) 670,828 $
1,358,861
-5.9% -0.8%
119,677 2 2,894 11,983 212 (j) (14,103) (k) 120,665 $
71.0% 0.9% 0.7% 4.3% -39.6% 7.1% 18.0%
(10,135)
(f)
Series A preferred stock and Series B preferred operating partnership units called for redemption in March 2004. Redemption completed in April 2004.
(g) Change in minority interest - preferred units: Beginning balance - 12/31/03 Series B called for redemption
$ $
(h) Change in preferred stock: Beginning balance - 12/31/03 Series A called for redemption Issuance of Series H
-0.7%
$
$ (i)
(j)
Change in paid-in capital: Beginning paid-in capital Issuance of preferred stock Redemption of preferred stock (application of EITF Topic D-42) Exercise of stock options Stock option amortization Preferred stock shelf registration fees Change in minority interest, common, due to repurchase of shares Ending paid in capital
$
$
Change in unrealized loss is due to the following: Decrease in liability related to interest rate SWAP $
(k) Change in cumulative distributions: Distributions to preferred shareholders Distributions to common shareholders
$ $
7
217,750 (12,750) 205,000
168,673 (52,823) 172,500 288,350
420,778 (5,659) 1,866 6,147 114 (71) 497 423,672
212 212
(7,825) (6,278) (14,103)
PS BUSINESS PARKS, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED (in thousands, except per share amounts)
03/31/04 Revenues: Rental income Facility management fees primarily from affiliate Interest and other income
$
55,175 155 27 55,357
Increase (Decrease)
03/31/03
$
49,150 185 272 49,607
$
6,025 (a) (30) (245) (b) 5,750
% Change
12.3% (16.2%) (90.1%) 11.6%
(a)
Rental income has increased due to the following Same Park facilities Acquisitions Straight-line rent adjustment
$ $
Expenses: Cost of operations Depreciation and amortization General and administrative Interest expense Income before discontinued operations and minority interest
16,672 17,884 1,091 (d) 1,266 (e) 36,913
13,519 13,685 1,054 (d) 1,002 (e) 29,260
18,444
20,347
3,153 (c) 4,199 37 264 7,653
23.3% 30.7% 3.5% 26.3% 26.2%
(b)
Decrease relates to decreased interest earned on overnight investment and decreased busines services revenue.
(c)
Cost of operations have increased due to the following Same Park facilities Acquisitions
$ (1,903)
Discontinued operations: Income from discontinued operations Impairment charge on properties held for sale Equity in income of discontinued joint ventur Net income/(loss) from discontinued operations
21 (f) 21
270 (5,907) 1,796 (3,841)
(249) 5,907 (1,796) 3,862 1,959
Income before minority interes
18,465
16,506
Minority interest in income - preferred units Minority interest in income - common unit
(5,077) (1,405)
(4,810) (1,965)
$
11,983
$
9,731
(267) (g) 560 $
2,252
(92.2%) 100.0% (100.0%) (100.5%)
Net income per common share - basic Continuing operations Discontinued operations
Net income per common share - diluted Continuing operations Discontinued operations
Weighted average common shares outstanding Basic Diluted
$ $
7,825 4,158 11,983
$
3,928 5,803 9,731
$ $ $
0.19 0.19
$ $ $
0.40 (0.13) 0.27
$ $ $
0.19 0.19
21,613 21,778
$
$ $ $
0.40 (0.13) 0.27
21,374 21,520
$ $
$ $
$ $
3,897 (h) (1,645) 2,252
(0.21) 0.13 (0.08)
(0.21) 0.13 (0.08)
239 (i) 258
General and administrative expenses for the three months ended Salaries Bonuses Stock option and stock compensation expense Professional fees Investor services Internal acquisition costs Business services Other
11.9% 5.6% (28.5%)
March 31, 2004 392 183 143 78 50 127 2 116 $ 1,091
$
March 31, 2003 371 180 103 101 59 136 33 71 $ 1,054
$
23.1% (e)
Net income allocation Allocable to preferred shareholders Allocable to common shareholders
319 2,834 3,153
(9.4%) (d)
Net income
$
(1,391) 7,399 17 6,025
99.2% (28.3%) 23.1%
Mortgage notes payable Line of credit interest Interest rate swap Facilities fees & other charges Affiliated loan (PSI) Term loan interest (Fleet)
(52.5%) (100.0%) (29.6%)
8
March 31, 2004 366 262 239 63 147 189 $ 1,266
$
March 31, 2003 383 63 556 $ 1,002
$
(f)
Net operating income from discontinued operations (Mopac 6) for the three months ended(1) March 31, 2004 March 31, 2003 Rental revenue $ 45 $ 396 Operating expenses (24) (126) Operating income from discontinued property $ 21 $ 270 (1) 2004 includes activity for Mopac 6, 2003 includes activity for Mopac 6 and Lakewood (sold in Q103)
(g)
Increase relates to redemption amount over carrying amount for Series B preferred OP units calle for redemption in Q104.
(h)
Increase relates to Series H preferred stock issued Q104 and redemption amount over carrying amoun for Series A preferred stock called for redemption in Q104
(i)
Net increase relates to stock option exercises
(52.5%) (100.0%) (29.6%)
1.1% 1.2%
Interest expense for the three months ended
PS BUSINESS PARKS, INC. Analysis of Capital Expenditures (in thousands)
Recurring capital expenditures (1)
Three Months Ended March 31, 2004 Costs
Cost per Weighted Average Square Foot
Maintenance capital expenditures (2)
$880
$0.05
Tenant improvements (3)
2,826
0.15
Leasing commissions (4)
1,413
0.08
$5,119
$0.28
Total recurring capital expenditures Non-recurring capital expenditures
-
Development costs Property renovations
$789
Acquisition costs
121
Total non-recurring capital expenditures
$910
(1)
The company defines "recurring capital expenditures" as those capitalized costs necessary to continue to operate the property at its current economic value. Costs in excess of $1,000 for tenant improvements and $5,000 for maintenance capital expenditures with a useful life greater than 24 months for tenant improvements and 30 months for maintenance capital expenditures are capitalized. It excludes deferred maintenance and leasing costs committed to by previous owners for acquired properties, renovations that substantially enhance the value of a property and first generation leasing costs on development properties. Lease-up costs on acquired properties are included in recurring capital expenditures. Repairs and maintenance were $3.4 million or approximately $0.19 per weighted average square foot for the three months ended March 31, 2004 compared to $3.2 million or $0.23 per square foot during the three months ended March 31, 2003.
(2)
Maintenance capital expenditures generally range from $0.25 to $0.50 per weighted average square foot annually. Major costs include roofing, HVAC replacement, parking lot replacement and other major repairs that extend the life of the respective component of the building.
(3)
Tenant improvement costs generally range from $0.40 to $1.00 per weighted average square foot annually. Tenant improvements less than $1,000 or for leases of two years or less are expensed and included in cost of operations ($284,000 for the three months ended March 31, 2004 as compared to $113,000 for the three months ended March 31, 2003).
(4)
Lease commissions generally range from $0.15 to $0.40 per weighted average square foot annually.
9
Rentable Square Footage by Region
June 30, 2003 (14,784 square feet, in thousands)
September 30, 2003 (14,784 square feet, in thousands) S. California (24%)
570
S. California (24%)
2,001
3,556
N. California (10%)
570
N. California (10%)
2,001
S. Texas (8%)
S. Texas (8%)
3,556
N. Texas (11%)
N. Texas (11%)
Virginia (18%)
Virginia (18%)
1,646
Maryland (11%)
Maryland (11%)
1,646
Oregon (14%)
Oregon (14%)
2,621
Arizona (4%)
Arizona (4%)
1,495
1,495 2,621
1,205 1,690
March 31, 2004 (18,326 square feet, in thousands)
December 31, 2003 (18,326 square feet, in thousands) N. California (8%)
3,663
S. California (20%) N. California (8%) S. Texas (7%) N. Texas (9%) Virginia (14%)
679
S. California (20%)
679 3,352
1,205 1,690
3,663
3,352
S. Texas (7%) N. Texas (9%) Virginia (14%) Maryland (9%) Oregon (11%)
1,497
1,497
Florida (18%)
1,969
Arizona (4%)
1,969
1,205
1,205 1,646
1,646
1,690
1,690 2,625
2,625
10
Maryland (9%) Oregon (11%) Florida (18%) Arizona (4%)
PS BUSINESS PARKS, INC. TOTAL PORTFOLIO OVERVIEW (in thousands) Rentable Square Footage of Properties as of March 31, 2004 Primary Markets Miami Northern Virginia Portland Maryland Dallas Los Angeles County Northern California Orange County Austin Phoenix San Diego County Houston
Industrial
Office
2,617 231 712 407 3,967
12 406 346 720 31 430 704 131 2,780
Flex 723 2,219 1,623 926 1,459 770 660 911 831 679 535 243 11,579
Total 3,352 2,625 1,969 1,646 1,690 1,513 1,497 1,615 831 679 535 374 18,326
% 18.3% 14.3% 10.7% 9.0% 9.2% 8.3% 8.2% 8.8% 4.5% 3.7% 2.9% 2.1% 100.0%
Average Occupancy Rates by Product Type for the Quarter Ending March 31, 2004 Primary Markets Miami Northern Virginia Portland Maryland Dallas Los Angeles County Northern California Orange County Austin Phoenix San Diego County Houston
Industrial
Office
80.8% 96.8% 99.8% 100.0% 87.1%
100.0% 92.2% 61.3% 93.3% 99.7% 93.4% 76.6% 80.1% 84.4%
Flex 85.9% 96.9% 82.1% 80.7% 82.4% 95.3% 94.3% 93.8% 86.3% 94.3% 96.5% 92.9% 89.5%
Total 82.0% 96.2% 78.4% 86.2% 84.4% 97.5% 95.6% 86.3% 86.3% 94.3% 96.5% 88.4% 88.2%
Weighted Average Occupancy Rates by Portfolio Type for the Quarter Ending March 31, 2004 Primary Markets Miami Northern Virginia Portland Maryland Dallas Los Angeles County Northern California Orange County Austin Phoenix San Diego County Houston
Large Tenant
Small Tenant
81.4% 95.8% 77.5% 85.9% 84.1% 99.8% 95.9% 83.8% 85.7% 99.0% 80.1% 86.5%
85.9% 97.8% 91.7% 100.0% 86.3% 95.5% 95.0% 94.0% 89.2% 93.7% 96.5% 92.9% 93.6%
Total 82.0% 96.2% 78.4% 86.2% 84.4% 97.5% 95.6% 86.3% 86.3% 94.3% 96.5% 88.4% 88.2%
Note: The Company's "large tenant" portfolio consists of properties with average leases greater than or equal to 5,000 square feet while the "small tenant" portfolio consists of properties with average leases less than 5,000 square feet.
11
PS BUSINESS PARKS, INC. SAME PARK PORTFOLIO OVERVIEW (in thousands) Rentable Square Footage of Properties as of March 31, 2004 Primary Markets Northern Virginia Portland Maryland Dallas Los Angeles County Northern California Orange County Austin Phoenix San Diego County Houston
Industrial
Office
231 712 407 1,350
406 346 721 31 430 161 131 2,226
Flex 2,215 1,623 926 1,345 770 660 911 788 569 535 243 10,585
Total 2,621 1,969 1,647 1,576 1,513 1,497 1,072 788 569 535 374 14,161
% 18.5% 13.9% 11.6% 11.1% 10.7% 10.6% 7.6% 5.6% 4.0% 3.8% 2.6% 100.0%
Average Occupancy Rates by Product Type for the Quarter Ending March 31, 2004 Primary Markets Northern Virginia Portland Maryland Dallas Los Angeles County Northern California Orange County Austin Phoenix San Diego County Houston
Industrial
Office
96.8% 99.8% 100.0% 99.3%
92.2% 61.3% 93.3% 99.7% 93.4% 100.0% 80.1% 87.9%
Flex 96.9% 82.1% 80.7% 82.0% 95.3% 94.3% 93.8% 86.3% 96.5% 96.5% 92.9% 89.8%
Total 96.2% 78.4% 86.2% 84.2% 97.5% 95.6% 94.8% 86.3% 96.5% 96.5% 88.4% 90.4%
Weighted Average Occupancy Rates by Portfolio Type for the Quarter Ending March 31, 2004 Primary Markets Northern Virginia Portland Maryland Dallas Los Angeles County Northern California Orange County Austin Phoenix San Diego County Houston
Large Tenant Small Tenant 95.8% 77.5% 85.9% 83.8% 99.8% 95.9% 95.2% 85.7% 99.0% 80.1% 88.8%
97.8% 91.7% 100.0% 86.3% 95.5% 95.0% 94.0% 89.2% 96.1% 96.5% 92.9% 94.7%
Total 96.2% 78.4% 86.2% 84.2% 97.5% 95.6% 94.8% 86.3% 96.5% 96.5% 88.4% 90.4%
Note: The Company's "large tenant" portfolio consists of properties with average leases greater than or equal to 5,000 square feet while the "small tenant" portfolio consists of properties with average leases less than 5,000 square feet.
12
Change in Same Park Revenue* 9.0% 7.0% 5.0% 3.0% 1.0%
8.9% 6.2% 5.1% 4.3% 2.5% 1.9% 0.4%
-1.0%
0.9%
0.8%
0.4%
-0.8%
-3.0%
-1.6% -2.9%
-5.0% Q101 Q201 Q301 Q401 Q102 Q202 Q302 Q402 Q103 Q203 Q303 Q403 Q104 * Chart reflects change between current and prior comparative periods.
13
Change in Same Park NOI before Straight Line Rent* 12.0% 10.0%
9.5% 8.5%
8.0% 6.0%
5.1% 4.3%
4.0% 2.0%
2.0%
1.7% 0.7%
0.0% -0.7%
-2.0%
-0.5%
-0.3%
-0.4%
-3.1%
-4.0%
-4.9%
-6.0% Q101
Q201
Q301
Q401
Q102
Q202
Q302
Q402
Q103
Q203
*Chart reflects change between current and prior comparative periods.
14
Q303
Q403
Q104
Same Park Occupancy
97.0% 96.2%
96.0%
95.5% 95.0%
95.0%
94.9%
95.1%
94.7%
93.9%
94.0%
93.5% 92.7%
93.0%
92.4%
92.5%
92.5%
92.0% 91.0% 90.4%
90.0% Q101
Q201
Q301
Q401
Q102
Q202
Q302
15
Q402
Q103
Q203
Q303
Q403
Q104
Total Portfolio Occupancy 97.0% 96.2%
96.0%
95.7% 95.2%
95.0%
94.8% 94.6% 94.3%
94.0%
93.5%
93.2%
93.0%
92.6% 92.2% 92.0%
92.0%
91.8%
91.0% 90.0% 89.0%
88.2%
88.0% Q101
Q201
Q301
Q401
Q102
Q202
16
Q302
Q402
Q103
Q203
Q303
Q403
Q104
PS BUSINESS PARKS, INC. PORTFOLIO ANALYSIS (in thousands) Industry Concentration as of March 31, 2004 % of Total Rents 12.2% 11.3% 10.3% 9.5% 8.7% 7.3% 5.6% 5.1% 4.6% 4.1% 78.7%
Computer Hardware, software and related service Business services Government Warehouse / Logistics Contractors Financial services Retail Electronics Home funishings Communications
Top Ten Customers by Total Annual Revenues as of March 31, 2004 Tenant
Square Footage
U.S. Government Citigroup Intel IBM Hughes Network Systems ** County of Santa Clara Pycon, Inc. Symantec Corporation Inc Axcelis Technologies Welch Allyn Protocol, Inc
Total Annual Revenues
%
557 262 233 217 106 97 134 81 89 95
$
12,104 4,197 3,918 3,462 2,713 2,675 2,404 1,576 1,569 1,472
5.5% 1.9% 1.8% 1.6% 1.2% 1.2% 1.1% 0.7% 0.7% 0.7%
1,871
$
36,090
16.4%
** Electronics subsidiary of Hughes Aircraft
17
PS BUSINESS PARKS, INC. PORTFOLIO ANALYSIS AS OF March 31, 2004 (in thousands) Lease Expirations - Flex Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 1,844 2,656 1,890 1,221 973 1,877 10,461
Annual Rents $
$
21,087 31,681 24,287 16,526 14,797 23,809 132,187
% 16.0% 24.0% 18.4% 12.5% 11.2% 17.9% 100.0%
% of Company Annual rents 10.1% 15.1% 11.6% 7.9% 7.1% 11.2% 63.0%
Lease Expirations - Office Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 213 741 463 257 327 439 2,440
Annual Rents $
$
4,337 15,798 10,046 5,749 7,817 11,091 54,838
% 7.9% 28.8% 18.3% 10.5% 14.3% 20.2% 100.0%
% of Company Annual rents 2.1% 7.5% 4.8% 2.7% 3.7% 5.2% 26.0%
Lease Expirations - Industrial Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 706 1,051 815 417 110 410 3,509
Annual Rents $
$
4,376 7,147 5,487 2,626 764 2,283 22,683
% 19.3% 31.5% 24.2% 11.6% 3.4% 10.0% 100.0%
% of Company Annual rents 2.1% 3.4% 2.6% 1.3% 0.4% 1.2% 11.0%
Lease Expirations - Total Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 2,763 4,448 3,168 1,895 1,410 2,726 16,410
Annual Rents $
$
18
29,800 54,626 39,820 24,901 23,378 37,183 209,708
% 14.2% 26.0% 19.0% 11.9% 11.1% 17.8% 100.0%
% of Company Annual rents 14.2% 26.0% 19.0% 11.9% 11.1% 17.8% 100.0%
PS BUSINESS PARKS, INC. PORTFOLIO ANALYSIS AS OF March 31, 2004 (in thousands) Southern California Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 714 1,032 804 306 215 365 3,436
Annual Rents $
%
8,784 15,018 9,775 4,960 3,871 5,313 47,721
$
18.4% 31.5% 20.5% 10.4% 8.1% 11.1% 100.0%
% of Company Annual rents 4.2% 7.2% 4.7% 2.4% 1.8% 2.5% 22.8%
Northern California Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 220 280 261 396 200 72 1,429
Annual Rents $
%
2,539 3,144 3,159 4,745 4,641 853 19,081
$
13.3% 16.5% 16.6% 24.9% 24.3% 4.4% 100.0%
% of Company Annual rents 1.2% 1.5% 1.5% 2.3% 2.2% 0.4% 9.1%
Southern Texas Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 273 390 126 65 59 108 1,021
Annual Rents $
% 2,648 3,486 1,346 643 567 903 9,593
$
27.6% 36.3% 14.0% 6.7% 5.9% 9.5% 100.0%
% of Company Annual rents 1.4% 1.7% 0.6% 0.3% 0.3% 0.4% 4.7%
Northern Texas Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 256 276 224 125 122 476 1,479
Annual Rents $
$
19
1,982 2,777 2,824 957 1,309 3,358 13,207
% 15.0% 21.0% 21.4% 7.2% 9.9% 25.5% 100.0%
% of Company Annual rents 0.9% 1.3% 1.3% 0.5% 0.6% 1.6% 6.2%
PS BUSINESS PARKS, INC. PORTFOLIO ANALYSIS AS OF March 31, 2004 (in thousands) Florida Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 643 960 632 260 130 186 2,811
Annual Rents $
4,482 7,278 4,784 1,951 935 1,353 20,783
$
% 21.6% 35.0% 23.0% 9.4% 4.5% 6.5% 100.0%
% of Company Annual rents 2.1% 3.5% 2.3% 0.9% 0.4% 0.6% 9.8%
Northern Virginia Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 253 423 474 278 351 783 2,562
Annual Rents $
$
4,127 5,842 8,023 4,183 6,430 13,046 41,651
% 9.9% 14.0% 19.3% 10.1% 15.4% 31.3% 100.0%
% of Company Annual rents 2.0% 2.8% 3.8% 2.0% 3.1% 6.2% 19.9%
Maryland Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 44 371 222 203 161 448 1,449
Annual Rents $
$
992 8,037 3,767 4,027 3,288 7,360 27,471
% 3.6% 29.3% 13.7% 14.7% 12.0% 26.7% 100.0%
% of Company Annual rents 0.5% 3.8% 1.8% 1.9% 1.6% 3.5% 13.1%
Oregon Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 189 548 345 145 147 219 1,593
Annual Rents $
$
20
2,423 7,345 5,417 2,299 2,087 4,207 23,778
% 10.2% 30.9% 22.8% 9.7% 8.8% 17.6% 100.0%
% of Company Annual rents 1.2% 3.5% 2.6% 1.1% 1.0% 2.0% 11.4%
PS BUSINESS PARKS, INC. PORTFOLIO ANALYSIS AS OF March 31, 2004 (in thousands) Arizona Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 171 168 80 117 25 69 630
Annual Rents $
% 1,823 1,699 725 1,136 250 790 6,423
$
28.4% 26.5% 11.3% 17.7% 3.9% 12.2% 100.0%
% of Company Annual rents 0.9% 0.8% 0.3% 0.5% 0.1% 0.4% 3.0%
Total Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 2,763 4,448 3,168 1,895 1,410 2,726 16,410
Annual Rents $ $ $ $ $ $ $
21
29,800 54,626 39,820 24,901 23,378 37,183 209,708
% 14.2% 26.0% 19.0% 11.9% 11.1% 17.8% 100.0%
% of Company Annual rents 14.2% 26.0% 19.0% 11.9% 11.1% 17.8% 100.0%
PS BUSINESS PARKS, INC. PORTFOLIO ANALYSIS AS OF March 31, 2004 (in thousands) Lease Expirations - Large Tenant Portfolio Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 1,731 3,232 2,340 1,430 1,168 2,310 12,211
Annual Rents $
17,914 40,354 29,830 19,030 20,244 31,923 159,295
$
% 11.2% 25.3% 18.7% 11.9% 12.7% 20.2% 100.0%
% of Company Annual rents 8.5% 19.2% 14.2% 9.1% 9.7% 15.3% 76.0%
Lease Expirations - Small Tenant Portfolio Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 1,032 1,216 828 465 242 416 4,199
Annual Rents $
$
11,886 14,272 9,990 5,871 3,134 5,260 50,413
% 23.6% 28.3% 19.8% 11.6% 6.2% 10.5% 100.0%
% of Company Annual rents 5.7% 6.8% 4.8% 2.8% 1.5% 2.4% 24.0%
Lease Expirations - Total Year of Lease Expiration 2004 2005 2006 2007 2008 Thereafter
Rentable Square Footage 2,763 4,448 3,168 1,895 1,410 2,726 16,410
Annual Rents $
$
22
29,800 54,626 39,820 24,901 23,378 37,183 209,708
% 14.2% 26.0% 19.0% 11.9% 11.1% 17.8% 100.0%
% of Company Annual rents 14.2% 26.0% 19.0% 11.9% 11.1% 17.8% 100.0%
