[PDF]Analysis of Operating Results and Financial Condition - Rackcdn.comhttps://40b8011386169f55de96-725c435c541f29a53fba967f09ea3d89.ssl.cf5.rackcd...
0 downloads
134 Views
132KB Size
Analysis of Operating Results and Financial Condition December 31, 2008
ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2008 INDEX
Page
Fact Sheet ................................................................................................................................
1
Funds from Operations (FFO) .................................................................................................
2-3
Capital Structure......................................................................................................................
4
Consolidated Balance Sheets...................................................................................................
5-6
Consolidated Income Statements ............................................................................................
7 - 10
Capital Expenditure Analysis ..................................................................................................
11
Portfolio Analysis.................................................................................................................... 12 - 26
PS BUSINESS PARKS, INC. FOURTH QUARTER FACT SHEET (in thousands, except per share amounts)
OPERATING DATA FOR THE THREE MONTHS ENDED 12/31/08 12/31/07 % Change
12/31/08
FOR THE YEARS ENDED 12/31/07 % Change
Total rental income Total cost of operations Net operating income
$
71,482 21,422 50,060
$
2.3% (1.3%) 4.0%
$
283,503 88,442 195,061
$
$
69,846 21,695 48,151
$
$
$
270,775 84,360 186,415
4.7% 4.8% 4.6%
Net income allocable to common shareholders
$
9,593
$
3,758
155.3%
$
23,414
$
17,729
32.1%
Net income per common share: Basic Diluted
$ $
0.47 0.47
$ $
0.18 0.17
161.1% 176.5%
$ $
1.15 1.13
$ $
0.83 0.82
38.6% 37.8%
Weighted average common shares outstanding - basic
20,459
21,257
(3.8%)
20,443
21,313
(4.1%)
Weighted average common shares outstanding - diluted Weighted average common OP units outstanding Total fully-converted diluted shares
20,614 7,305 27,919
21,519 7,305 28,824
(4.2%) (3.1%)
20,664 7,305 27,969
21,634 7,305 28,939
(4.5%) (3.4%)
FUNDS FROM OPERATIONS FOR THE THREE MONTHS ENDED 12/31/08 12/31/07 % Change FFO allocable to common shareholders/unit holders Gain on repurchase of preferred stock, net FFO allocable to common shareholders/unit holders
$
$
$
33,342 4,228 37,570
Diluted FFO per common share and units - before adjustment Diluted FFO per common share and OP units - as reported
$ $
1.19 1.35
12/31/08
4.8% 100.0% 18.1%
$
$
31,808 31,808
$ $
1.10 1.10
8.2% 22.7%
FOR THE YEARS ENDED 12/31/07 % Change $
$
127,330 4,228 131,558
$
122,405 122,405
4.0% 100.0% 7.5%
$ $
4.55 4.70
$ $
4.23 4.23
7.6% 11.1%
PROPERTY INFORMATION FOR THE THREE MONTHS ENDED 12/31/08 12/31/07 % Change
12/31/08
FOR THE YEARS ENDED 12/31/07 % Change
Total Owned Portfolio Total rentable square footage at period end
19,556
Weighted average occupancy
19,556
92.7%
-
94.2%
19,556
(1.6%)
19,556
93.5%
-
93.4%
0.1%
Annualized realized rent per sq. ft. (1)
$
15.77
$
15.17
4.0%
$
15.50
$
14.97
3.5%
REVPAF (2)
$
14.62
$
14.29
2.3%
$
14.49
$
13.98
3.6%
Same Park Portfolio Total rentable square footage at period end
18,685
Weighted average occupancy Annualized realized rent per sq. ft.
18,685
92.7% (1)
REVPAF (2)
-
94.5%
93.7%
-
15.60
$
15.05
3.7%
$
15.32
$
14.89
2.9%
$
14.46
$
14.22
1.7%
$
14.35
$
13.95
2.9%
BALANCE SHEET DATA 12/31/08 $ $ $ $ $ $
1,469,323 94,750 148,023 706,250 414,564 20,460 20.26
12/31/07 $ $ $ $ $ $
% Change
1,516,583 94,750 154,470 716,250 439,330 20,777 21.15
(3.1%) (4.2%) (1.4%) (5.6%) (1.5%) (4.2%)
MARKET VALUE INFORMATION 12/31/08 Market value of common stock and common OP units
18,685
93.7%
$
(1) Represents the annualized revenues earned per occupied square foot. (2) Represents the annualized revenues earned per total square foot.
Total assets Minority interest - preferred units Minority interest - common units Perpetual preferred stock Common shareholders' equity Total common shares outstanding at period end Book value per common share
18,685
(1.9%)
$
Total debt Total preferred equity
1,239,997
12/31/07 $
% Change
1,475,739
(16.0%)
59,308
60,725
(2.3%)
801,000
811,000
(1.2%)
Total market capitalization
$
2,100,305
$
2,347,464
(10.5%)
Stock price at the end of the period
$
44.66
$
52.55
(15.0%)
1
PS BUSINESS PARKS, INC. ANALYSIS OF FUNDS FROM OPERATIONS (in thousands, except per share amounts)
FOR THE THREE MONTHS ENDED 12/31/08 12/31/07
Increase (Decrease)
FOR THE YEARS ENDED 12/31/08 12/31/07
% Change
Increase (Decrease)
% Change
Funds from operations (FFO): Net income allocable to common shareholders Adjustments: Depreciation and amortization Minority interest in income - common units FFO allocable to common shareholders/unit holders
$
9,593
$
24,578 3,399 37,570
Weighted average common shares outstanding Weighted average common OP units outstanding Weighted average common stock equivalents outstanding Total fully-converted diluted shares Diluted FFO per common share/OP unit
$
3,758
$
26,680 1,370 31,808
20,459 7,305 155 27,919
$
5,835
155.3%
$
(2,102) 2,029 5,762
(7.9%) 148.1% 18.1%
(798) (107) (905)
(3.8%)
21,257 7,305 262 28,824
$
23,414
$
99,848 8,296 131,558
$
17,729
$
98,521 6,155 122,405
20,443 7,305 221 27,969
(40.8%) (3.1%)
$
5,685
32.1%
$
1,327 2,141 9,153
1.3% 34.8% 7.5%
21,313 7,305 321 28,939
(870) (100) (970)
(4.1%)
(31.2%) (3.4%)
$
1.35
$
1.10
$
0.25
22.7%
$
4.70
$
4.23
$
0.47
11.1%
Funds from operations Adjustments: Recurring capital improvements Tenant improvements Lease commissions Straight-line rent Stock compensation expense In-place lease adjustment Lease incentives net of tenant improvement reimbursements Gain on repurchase of preferred stock, net
$
37,570
$
31,808
$
5,762
18.1%
$
131,558
$
122,405
$
9,153
7.5%
FAD
$
28,644
$
21,385
$
7,259
33.9%
$
97,850
$
88,159
$
9,691
11.0%
Diluted FAD per common share/OP unit
$
1.03
$
0.74
$
0.29
39.2%
$
3.50
$
3.05
$
0.45
14.8%
$
28,644 $ (9,002) (3,214) 16,428 $
7,259 (349) 7,608
33.9% (3.7%) 86.3%
$
97,850 $ (35,978) (12,856) 49,016 $
88,159 $ (34,315) (11,761) 42,083 $
9,691 1,663 1,095 6,933
11.0% 4.8% 9.3% 16.5%
(16.2%)
(27.6%)
49.9%
52.3%
(2.4%)
(4.6%)
Funds available for distribution (FAD):
(1,344) (2,827) (1,817) 566 1,004 (49) (231) (4,228)
(3,140) (6,073) (2,026) 16 978 (49) (129) -
(1,796) (3,246) (209) 550 26 102 (4,228)
(57.2%) (53.4%) (10.3%) 3437.5% 2.7% 79.1% (100%)
(8,650) (17,698) (6,914) 294 4,061 (194) (379) (4,228)
(13,677) (17,882) (5,803) (473) 3,724 (102) (33) -
(5,027) (184) 1,111 767 337 92 346 (4,228)
(36.8%) (1.0%) 19.1% 162.2% 9.0% 90.2% 1048.5% (100.0%)
Cash available for debt repayments and reinvestments: FAD Distributions to common shareholders Distributions to common OP unit holders Cash available for debt repayments and reinvestments FAD payout ratio
$
42.6%
21,385 $ (9,351) (3,214) 8,820 $ 58.8%
2
$
Reported Diluted FFO Per Common Share/OP Unit $1.25 $1.19
$1.20 $1.14
$1.15 $1.10
$1.10
$1.10
Q4
Q1
$1.12
$1.07
$1.05
$1.02 $1.03
$1.00 $0.95
$0.95
$0.93
$0.92
$0.90
$0.87
$0.85 $0.80 Q1
Q2
Q3
Q4
|_______2006______|
Q1
Q2
Q3
|_______2007______|
Q2
Q3
|_______2008______|
* Q4 '08 excludes the net gain on the repurchase of preferred stock.
3
Q4*
PS BUSINESS PARKS, INC. CAPITAL STRUCTURE (in thousands)
As of December 31, 2008 % of Total Market WTD Average Total Capitalization Rate
As of December 31, 2007 % of Total Market WTD Average Total Capitalization Rate
Mortgage Debt:
7.290% mortgage note, repaid February 2009 5.730% mortgage note, due March 2013 5.520% mortgage note, due May 2013 5.680% mortgage note, due May 2013 6.150% mortgage note, due November 2031 (includes unamortized premium of $635,000 on $16.3 million mortgage note with stated rate of 7.200%) 5.610% mortgage note, due January 2011 (includes unamortized premium of $136,000 on $2.8 million mortgage note with stated rate of 7.610%)
$
5,144 14,247 10,053 10,065 16,912
$
5,323 14,510 10,274 10,281 17,348
2,887
2,989
Total mortgage notes payable (1)
59,308
2.8%
5.94%
60,725
2.6%
5.94%
Total debt
59,308
2.8%
5.94%
60,725
2.6%
5.94%
Preferred Equity
7.950% Series G preferred operating partnership units (800,000 units outstanding) callable 10/30/07 7.000% Series H preferred stock (8,200,000 depositary shares outstanding) callable 1/30/09 6.875% Series I preferred stock (3,000,000 depositary share outstanding) callable 4/21/09 7.500% Series J preferred operating partnership units (1,710,000 units outstanding) callable 5/27/09 7.950% Series K preferred stock (2,300,000 depositary shares outstanding) callable 6/30/09 7.600% Series L preferred stock (2,300,000 depositary shares outstanding) callable 8/31/09 7.200% Series M preferred stock (3,300,000 depositary shares outstanding) callable 5/2/10 7.125% Series N preferred operating partnership units (800,000 units outstanding) callable 12/12/10 7.375% Series O preferred stock (3,800,000 depositary shares outstanding) callable 6/16/11 6.700% Series P preferred stock (5,350,000 depositary shares outstanding) callable 1/17/12 6.550% Series Q preferred operating partnership units (480,000 units outstanding) callable 3/12/12
20,000 205,000 75,000 42,750 57,500 57,500 82,500 20,000 95,000 133,750 12,000
Total preferred equity
801,000
38.1%
7.16%
811,000
34.5%
7.16%
Total debt and preferred equity
860,308
40.9%
7.07%
871,725
37.1%
7.07%
1,091,843 383,896 1,475,739
62.9%
2,347,464
100.0%
Common stock (20,459,916 and 20,777,219 shares outstanding as of December 31, 2008 and December 31, 2007, respectively) Common operating partnership units (7,305,355 units outstanding as of December 31, 2008 and December 31, 2007) Total common equity (2) Total market capitalization
(1)
20,000 205,000 75,000 42,750 57,500 57,500 82,500 20,000 95,000 143,750 12,000
$
913,740 326,257 1,239,997
59.1%
2,100,305
100.0%
$
Principal maturity dates are represented by the following chart: Principal Maturity Dates 2009
Park East III $ Rose Canyon Meadows Palm Beach Meadows Loan Premium Palm Beach Loan Premium $
(2)
Closing stock price was $44.66 and $52.55 as of December 31, 2008 and December 31, 2007, respectively.
4
2010
5,144 241 258 507 208 64 6,422
$
$
277 278 536 218 67 1,376
2011
$
$
293 15,741 3,178 209 5 19,426
2012
$
$
309 547 856
2013
$
$
13,127 18,101 31,228
Total
$
$
5,144 14,247 16,277 22,869 635 136 59,308
PS BUSINESS PARKS, INC. CONSOLIDATED BALANCE SHEETS (in thousands)
12/31/08
12/31/07
Increase (Decrease)
% Change
ASSETS Cash and cash equivalents
$
Real estate facilities, at cost: Land Buildings and equipment Accumulated depreciation Land held for development
Rent receivable Deferred rent receivables Other assets Total assets
$
55,015
$
35,041
$
19,974
(a)
494,849 1,517,484 2,012,333 (637,948) 1,374,385 7,869 1,382,254
494,849 1,484,049 1,978,898 (539,857) 1,439,041 7,869 1,446,910
33,435 33,435 98,091 (64,656) (64,656)
2,055 21,633 8,366 1,469,323
2,240 21,927 10,465 1,516,583
(185) (294) (2,099) (47,260)
(c)
(4,630) (1,417)
(e)
$
$
(b)
(d)
57.0%
2.3% 1.7% 18.2% (4.5%) (4.5%) (8.3%) (1.3%) (20.1%) (3.1%)
LIABILITIES AND SHAREHOLDERS' EQUITY Accrued and other liabilities Mortgage notes payable
$
Total liabilities Minority interests: Preferred units Common units Shareholders' equity: Preferred stock Common stock Paid-in capital Cumulative net income Cumulative distributions Total shareholders' equity Total liabilities and shareholders' equity
$
46,428 59,308
$
51,058 60,725
$
(9.1%) (2.3%)
105,736
111,783
(6,047)
(5.4%)
94,750 148,023
94,750 154,470
(6,447)
(4.2%)
706,250 204 363,587 622,113 (571,340) 1,120,814
716,250 207 371,267 552,069 (484,213) 1,155,580
(10,000) (3) (7,680) 70,044 87,127 (34,766)
(1.4%) (1.4%) (2.1%) 12.7% 18.0% (3.0%)
1,469,323
5
$
1,516,583
$
(47,260)
(f) (g)
(3.1%)
PS BUSINESS PARKS, INC. CONSOLIDATED BALANCE SHEETS VARIANCE DETAIL (in thousands)
(a) Change in cash and cash equivalents: Beginning cash balance Net cash provided by operating activities Net cash used in investing activities Net cash used in financing activities Ending cash balance
$
$
(b) Change in real estate facilities, at cost: Beginning balance Property renovations Recurring capital improvements Tenant improvements Lease commissions Depreciation and amortization Ending balance
$
$
35,041 189,337 (35,192) (134,171) 55,015
1,439,041 1,930 8,650 17,698 6,914 (99,848) 1,374,385
(c) Rent receivable consists of: U.S. Government tenants Other Allowance for bad debt
12/31/08 $ 960 1,395 (300) $ 2,055
12/31/07 $ 1,143 1,397 (300) $ 2,240
Increase (Decrease) $ (183) (2) $ (185)
(d) Other assets consist of: Prepaid insurance Prepaid property taxes Lease incentives, net Mortgage impounds In-place lease adjustment, net Other
12/31/08 $ 1,032 2,502 1,285 691 181 2,675 $ 8,366
12/31/07 $ 1,316 2,615 1,705 1,474 419 2,936 $ 10,465
Increase (Decrease) $ (284) (113) (420) (783) (238) (261) $ (2,099)
(e) Accrued and other liabilities consist of: Prepaid rent Accrued property taxes Security deposits In-place lease adjustment and TI reimbursements, net Reserves for acquisition costs Accrued stock repurchase Other
12/31/08 $ 9,156 5,118 19,506 3,011 1,584 8,053 $ 46,428
12/31/07 $ 9,957 5,197 19,118 3,213 2,001 3,302 8,270 $ 51,058
Increase (Decrease) $ (801) (79) 388 (202) (417) (3,302) (217) $ (4,630)
(f)
Change in paid-in capital: Beginning paid-in capital Repurchase of common stock Gain on repurchase of preferred stock, net Exercise of stock options Restricted stock and stock compensation Adjustment to reflect minority interest to underlying ownership Ending paid in capital
(g) Change in cumulative distributions: Beginning cumulative distributions Distributions to preferred shareholders Distributions to common shareholders Ending cumulative distributions
$
$
$
$
6
371,267 (18,321) 4,810 792 3,151 1,888 363,587
484,213 51,149 35,978 571,340
PS BUSINESS PARKS, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED (in thousands, except per share amounts)
12/31/08 Revenues: Rental income Facility management fees Total operating revenues
$
Expenses: Cost of operations Depreciation and amortization General and administrative Total operating expenses
71,482 178 71,660
$
21,422 24,578 2,018 48,018
Other income and expenses: Interest and other income Interest expense Total other income and expenses
Increase (Decrease)
12/31/07
69,846 182 70,028
$
21,695 26,680 1,979 50,354
443 (981) (538)
963 (1,002) (39)
% Change
1,636 (a) (4) 1,632
2.3% (2.2%) 2.3%
(273) (b) (2,102) 39 (c) (2,336)
(1.3%) (7.9%) 2.0% (4.6%)
(520) (21) (d) 499
(54.0%) (2.1%) 1279.5%
Income before minority interests
23,104
19,635
3,469
17.7%
Minority interests: Minority interest in income - preferred units Minority interest in income - common units Total minority interests
(1,751) (3,399) (5,150)
(1,751) (1,370) (3,121)
2,029 2,029
148.1% 65.0%
Net income
17,954
16,514
1,440
8.7%
Net income allocable to preferred shareholders: Preferred stock distributions Gain on repurchase of preferred stock, net Total net income allocable to preferred shareholders
12,589 (4,228) 8,361
12,756 12,756
(167) (4,228) (4,395)
(1.3%) (100.0%) (34.5%)
Net income allocable to common shareholders
$
9,593
$
3,758
$
5,835
155.3%
Net income per common share: Basic Diluted
$ $
0.47 0.47
$ $
0.18 0.17
$ $
0.29 0.30
161.1% 176.5%
(798) (905)
(3.8%) (4.2%)
Weighted average common shares outstanding: Basic Diluted
20,459 20,614
7
21,257 21,519
PS BUSINESS PARKS, INC. CONSOLIDATED STATEMENT OF INCOME VARIANCE DETAIL FOR THE THREE MONTHS ENDED (in thousands)
(a) Rental income: Same Park Non-Same Park Same Park straight-line rent Non-Same Park straight-line rent
12/31/08 $ 68,223 3,825 (680) 114 $ 71,482
12/31/07 $ 66,560 3,303 (138) 121 $ 69,846
Increase (Decrease) $ 1,663 522 (542) (7) $ 1,636
(b) Cost of operations: Same Park Non-Same Park
12/31/08 $ 20,222 1,200 $ 21,422
12/31/07 $ 20,252 1,443 $ 21,695
Increase (Decrease) $ (30) (243) $ (273)
(c) General and administrative expenses: Cash and non-cash compensation expense Professional fees Other
12/31/08 $ 1,522 180 316 $ 2,018
12/31/07 $ 1,508 171 300 $ 1,979
Increase (Decrease) $ 14 9 16 $ 39
(d) Interest expense: Mortgage notes payable Facilities fees & other charges
12/31/08 $ (893) (88) $ (981)
12/31/07 $ (914) (88) $ (1,002)
Increase (Decrease) $ (21) $ (21)
8
PS BUSINESS PARKS, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED (in thousands, except per share amounts)
12/31/2008 Revenues: Rental income Facility management fees Total operating revenues
$
Expenses: Cost of operations Depreciation and amortization General and administrative Total operating expenses
283,503 728 284,231
Increase (Decrease)
12/31/2007
$
88,442 99,848 8,099 196,389
270,775 724 271,499
$
84,360 98,521 7,917 190,798
% Change
12,728 4 12,732
(a)
4.7% 0.6% 4.7%
4,082 1,327 182 5,591
(b)
4.8% 1.3% 2.3% 2.9%
(c)
Other income and expenses: Interest and other income Interest expense Total other income and expenses
1,457 (3,952) (2,495)
5,104 (4,130) 974
Income before minority interests
85,347
81,675
3,672
4.5%
(7,007) (8,296) (15,303)
(6,854) (6,155) (13,009)
153 2,141 2,294
2.2% 34.8% 17.6%
Net income
70,044
68,666
1,378
2.0%
Net income allocable to preferred shareholders: Preferred stock distributions Gain on repurchase of preferred stock, net Total net income allocable to preferred shareholders
50,858 (4,228) 46,630
50,937 50,937
(79) (4,228) (4,307)
Minority interests: Minority interest in income - preferred units Minority interest in income - common units Total minority interests
(3,647) (178) (d) (3,469)
(71.5%) (4.3%) (356.2%)
(0.2%) (100.0%) (8.5%)
Net income allocable to common shareholders
$
23,414
$
17,729
$
5,685
32.1%
Net income per common share: Basic Diluted
$ $
1.15 1.13
$ $
0.83 0.82
$ $
0.32 0.31
38.6% 37.8%
(870) (e) (970)
(4.1%) (4.5%)
Weighted average common shares outstanding: Basic Diluted
20,443 20,664
9
21,313 21,634
PS BUSINESS PARKS, INC. CONSOLIDATED STATEMENT OF INCOME VARIANCE DETAIL FOR THE YEARS ENDED (in thousands)
(a) Rental income: Same Park Non-Same Park Same Park straight-line rent Non-Same Park straight-line rent
12/31/08 $ 268,899 14,898 (651) 357 $ 283,503
12/31/07 $ 260,441 9,861 191 282 $ 270,775
Increase (Decrease) $ 8,458 5,037 (842) 75 $ 12,728
(b) Cost of operations: Same Park Non-Same Park
12/31/08 $ 83,721 4,721 $ 88,442
12/31/07 $ 80,779 3,581 $ 84,360
Increase (Decrease) $ 2,942 1,140 $ 4,082
(c) General and administrative expenses: Cash and non-cash compensation expense Professional fees Other
12/31/08 $ 6,188 727 1,184 $ 8,099
12/31/07 $ 5,916 727 1,274 $ 7,917
Increase (Decrease) $ 272 (90) $ 182
(d) Interest expense: Mortgage notes payable Facilities fees & other charges
12/31/08 $ (3,598) (354) $ (3,952)
12/31/07 $ (3,776) (354) $ (4,130)
Increase (Decrease) $ (178) $ (178)
(e) Net decrease relates to stock repurchases partially offset by stock option exercises and vesting of restricted stock units.
10
PS BUSINESS PARKS, INC. Analysis of Capital Expenditures (in thousands)
Recurring capital expenditures Capital improvements
(1)
(2)
Tenant improvements Lease commissions Total recurring capital expenditures
Year Ended December 31, 2008
Cost per Weighted
Costs
Average Square Foot $8,650
$0.44
17,698
$0.90
6,914
$0.35
$33,262
$1.70
Non-recurring capital expenditures Property renovations
$1,930
Total non-recurring capital expenditures
$1,930
(1)
The Company defines "recurring capital expenditures" as those capitalized costs necessary to continue to operate the property at its current economic value. Leasing costs in excess of $1,000 and capital improvements in excess of $2,000 with a useful life greater than 24 months 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 expenses were $19.6 million and $19.3 million for the years ended December 31, 2008 and 2007, respectively, representing approximately $1.00 per weighted average square foot in each of the years.
(2)
Major costs include roof, HVAC and parking lot replacement as well as other major repairs that extend the life of the respective components of the building.
11
Same Park Gross Operating Margin Percentage * 71.0% 70.2%
70.1%
70.1%
70.0%
69.6% 69.3% 69.3% 69.1%
68.9%
69.2% 68.8%
69.0%
68.2%
68.0%
68.0%
67.0%
66.0%
65.0% Q1
Q2
Q3
Q4
|_______2006_______|
Q1
Q2
Q3
Q4
|_______2007_______|
Q1
Q2
Q3
Q4
|_______2008_______|
* Gross margin is computed by dividing property net operating income by rental income for Same Park properties owned in each period.
12
Change in Same Park Revenue * 7.0% 5.0%
4.0%
3.5%
4.4%
3.0% 1.0%
5.2%
4.4%
3.9%
2.4%
3.0%
3.5%
3.3%
0.8%
1.7%
-1.0% -3.0% -5.0% Q1
Q2
Q3
Q4
|_________2006_________|
Q1
Q2
Q3
Q4
|_________2007_________|
Q1
Q2
Q3
Q4
|_________2008_________|
* Percentage represents the change over the comparable period in the previous year based on Same Park operating assets as reported in each period. Q1 '06 and Q1 '07 exclude a $1.8 million bankruptcy settlement received in Q1' 06.
13
Change in Same Park NOI * 7.0% 5.2% 6.1%
5.0%
4.3% 3.7% 4.4%
3.0%
3.3%
2.5%
2.7% 2.0%
2.5%
1.0%
-0.2%
-1.0% -0.8%
-3.0% -5.0% -7.0% Q1
Q2
Q3
Q4
|_________2006_________|
Q1
Q2
Q3
Q4
|_________2007_________|
Q1
Q2
Q3
Q4
|_________2008_________|
* Percentage represents the change over the comparable period in the previous year based on Same Park operating assets as reported in each period. Q1 '06 and Q1 '07 exclude a $1.8 million bankruptcy settlement received in Q1 '06.
14
PS BUSINESS PARKS, INC. PORTFOLIO CONCENTRATION SUMMARY (in thousands) Industry Concentration as of December 31, 2008 Industry
% of Total Rental Income
Business Services Health Services Computer Hardware, Software and Related Service Government Warehouse, Distribution, Transportation and Logistics Insurance and Financial Services Engineering and Construction Retail, Food and Automotive Communications Home Furnishings Electronics Educational Services Aerospace/Defense Products and Services Total
13.2% 10.3% 9.3% 8.4% 8.7% 7.8% 7.7% 6.3% 5.7% 3.8% 3.5% 3.0% 2.3% 90.0%
Top 10 Customers by Total Annual Rental Income as of December 31, 2008
Tenant U.S. Government Kaiser Permanente Wells Fargo Bank AARP Northrop Grumman Raytheon American Intercontinental University Verizon Intel Montgomery County Public School Total
Annualized Rental Income (1)
Square Footage 486 186 102 102 57 82 75 72 94 47 1,303
$
$
12,684 4,302 1,749 1,676 1,649 1,495 1,405 1,350 1,348 1,329 28,987
% of Total Annualized Rental Income 4.4% 1.5% 0.6% 0.6% 0.6% 0.5% 0.5% 0.5% 0.5% 0.5% 10.2%
(1) - For leases expiring within one year, annualized rental income represents income to be received under existing leases from December 31, 2008 through date of expiration.
15
Total Owned Rentable Square Footage by Region
S. California (20%)
December 31, 2008 & 2007 19,556 square feet (in thousands)
N. California (9%) S. Texas (6%)
521 679
N. Texas (9%)
3,988
Virginia (15%) Maryland (9%)
3,596
Oregon (7%) South Florida (18%) Arizona (4%) Washington (3%)
1,818
1,314 1,161 1,770 1,689 3,020
16
Total Owned Property Net Operating Income by Region
Three Months Ended December 31, 2008 $50,060 (in thousands)
$1,071
Three Months Ended December 31, 2007 $48,151 (in thousands)
S. California (24%)
S. California (25%)
N. California (9%)
N. California (9%)
S. Texas (4%)
S. Texas (4%)
N. Texas (6%)
N. Texas (6%)
Virginia (22%)
Virginia (21%)
Maryland (13%)
Maryland (14%)
Oregon (5%)
Oregon (5%)
South Florida (12%)
$1,753
Washington (3%)
$5,736
South Florida (11%)
$1,061 $1,182
Arizona (2%)
Arizona (2%) Washington (3%)
$5,418
$11,886
$12,061 $2,524
$2,716
$4,349 $6,669
$6,825
$4,193
$1,888
$1,813 $10,992
$10,279
$3,000
$2,795
17
PS BUSINESS PARKS, INC. TOTAL OWNED PORTFOLIO OVERVIEW (in thousands) Rentable Square Footage of Properties as of December 31, 2008 Primary Markets Miami Northern Virginia Northern California Maryland Dallas Orange County Los Angeles County Portland Austin San Diego County Phoenix Seattle Palm Beach Houston Total Percentage by Product Type
Industrial 2,556 407 231 712 3,906 20.0%
Office 12 1,073 431 883 705 31 188 28 131 3,482 17.8%
Flex 631 1,947 980 887 1,458 911 861 1,126 787 768 679 493 397 243 12,168 62.2%
Total 3,199 3,020 1,818 1,770 1,689 1,616 1,604 1,314 787 768 679 521 397 374 19,556 100.0%
% 16.4% 15.4% 9.3% 9.1% 8.6% 8.3% 8.2% 6.7% 4.0% 3.9% 3.5% 2.7% 2.0% 1.9% 100.0%
Weighted Average Occupancy Rates by Product Type for the Three Months Ended December 31, 2008 Primary Markets Miami Northern Virginia Northern California Maryland Dallas Orange County Los Angeles County Portland Austin San Diego County Phoenix Seattle Palm Beach Houston Total
Industrial 96.6% 93.6% 100.0% 99.9% 97.1%
Office 86.6% 95.7% 88.6% 94.8% 88.1% 91.3% 83.3% 100.0% 100.0% 92.5%
Flex 98.4% 93.9% 91.8% 92.0% 93.2% 91.9% 90.2% 83.0% 89.4% 91.6% 86.4% 93.0% 89.7% 98.4% 91.4%
Total 96.9% 94.6% 91.4% 93.4% 94.1% 90.2% 94.5% 83.0% 89.4% 91.6% 86.4% 93.4% 89.7% 99.0% 92.7%
Weighted Average Occupancy Rates by Portfolio Type for the Three Months Ended December 31, 2008 Primary Markets Miami Northern Virginia Northern California Maryland Dallas Orange County Los Angeles County Portland Austin San Diego County Phoenix Seattle Palm Beach Houston Total
Large Tenant
Small Tenant
96.6% 94.4% 96.3% 94.4% 96.6% 90.5% 99.9% 82.5% 88.5% 94.0%
99.4% 94.9% 86.5% 84.7% 82.6% 90.1% 90.2% 85.8% 91.8% 91.6% 86.4% 93.4% 89.7% 99.0% 90.7%
Total 96.9% 94.6% 91.4% 93.4% 94.1% 90.2% 94.5% 83.0% 89.4% 91.6% 86.4% 93.4% 89.7% 99.0% 92.7%
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.
18
PS BUSINESS PARKS, INC. SAME PARK PORTFOLIO OVERVIEW (in thousands) Rentable Square Footage of Properties as of December 31, 2008 Primary Markets Miami Northern Virginia Maryland Dallas Orange County Los Angeles County Northern California Portland Austin San Diego County Phoenix Palm Beach Houston Seattle Total Percentage by Product Type
Industrial
Office
2,556 231 712 407 3,906 20.9%
12 947 883 705 31 431 188 131 3,328 17.8%
Flex 631 1,946 887 1,458 911 861 729 1,126 787 768 679 397 243 28 11,451 61.3%
Total 3,199 2,893 1,770 1,689 1,616 1,604 1,567 1,314 787 768 679 397 374 28 18,685 100.0%
% 17.1% 15.5% 9.5% 9.0% 8.7% 8.6% 8.4% 7.0% 4.2% 4.1% 3.6% 2.1% 2.0% 0.2% 100.0%
Weighted Average Occupancy Rates by Product Type for the Three Months Ended December 31, 2008 Primary Markets Miami Northern Virginia Maryland Dallas Orange County Los Angeles County Northern California Portland Austin San Diego County Phoenix Palm Beach Houston Seattle Total
Industrial
Office
96.6% 100.0% 99.9% 93.6% 97.1%
86.6% 95.7% 94.8% 88.1% 91.3% 88.6% 83.3% 100.0% 92.3%
Flex 98.4% 93.9% 92.0% 93.2% 91.9% 90.2% 93.7% 83.0% 89.4% 91.6% 86.4% 89.7% 98.4% 80.1% 91.4%
Total 96.9% 94.5% 93.4% 94.1% 90.2% 94.5% 92.3% 83.0% 89.4% 91.6% 86.4% 89.7% 99.0% 80.1% 92.7%
Weighted Average Occupancy Rates by Portfolio Type for the Three Months Ended December 31, 2008 Primary Markets Miami Northern Virginia Maryland Dallas Orange County Los Angeles County Northern California Portland Austin San Diego County Phoenix Palm Beach Houston Seattle Total
Large Tenant
Small Tenant
96.6% 94.3% 94.4% 96.6% 90.5% 99.9% 96.3% 82.5% 88.5% 94.0%
99.4% 94.9% 84.7% 82.6% 90.1% 90.2% 86.6% 85.8% 91.8% 91.6% 86.4% 89.7% 99.0% 80.1% 90.6%
Total 96.9% 94.5% 93.4% 94.1% 90.2% 94.5% 92.3% 83.0% 89.4% 91.6% 86.4% 89.7% 99.0% 80.1% 92.7%
Note: Includes all properties owned since January 1, 2007. 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.
19
Total Owned Portfolio Weighted Average Occupancy * 96.0%
95.0%
94.0%
94.0% 93.5%
93.3% 93.0%
94.2%
94.0% 93.9% 93.2% 93.1%
92.8%
93.7%
93.2% 92.7%
92.0%
91.0%
90.0% Q1
Q2
Q3
Q4
|_________2006_________|
Q1
Q2
Q3
Q4
|_________2007_________|
Q1
Q2
Q3
Q4
|_________2008_________|
* Represents the weighted average occupancy for total owned portfolio held in continuing operations as reported in each period.
20
Same Park Weighted Average Occupancy * 96.0%
95.0%
94.7% 94.1%
94.0%
94.3% 94.0% 93.4%
93.2% 93.0%
93.9% 93.6%
93.7%
93.7%
92.7%
92.7%
92.0%
91.0%
90.0% Q1
Q2
Q3
Q4
|__________2006__________|
Q1
Q2
Q3
Q4
|__________2007__________|
Q1
Q2
Q3
Q4
|__________2008__________|
* Represents the weighted average occupancy for total owned portfolio held in continuing operations as reported in each period.
21
PS BUSINESS PARKS, INC. Owned Portfolio Lease Expirations as of December 31, 2008 (in thousands)
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Lease Expirations - Flex Annualized Leased Square Footage Rental Income 2,996 2,402 1,941 1,328 1,088 1,183 10,938
$
45,492 36,978 32,841 23,468 17,614 25,065 181,458
$
Lease Expirations - Office Annualized Leased Square Footage Rental Income 569 803 569 504 342 406 3,193
$
11,928 19,410 14,408 13,221 8,777 11,720 79,464
$
Lease Expirations - Industrial Annualized Leased Square Footage Rental Income 765 952 795 559 536 215 3,822
$
6,209 7,776 7,005 4,884 4,241 2,067 32,182
$
Lease Expirations - Total Annualized Leased Square Footage Rental Income 4,330 4,157 3,305 2,391 1,966 1,804 17,953
$
63,629 64,164 54,254 41,573 30,632 38,852 293,104
$
22
% 25.1% 20.4% 18.1% 12.9% 9.7% 13.8% 100.0%
% 15.0% 24.4% 18.1% 16.6% 11.1% 14.8% 100.0%
% 19.3% 24.1% 21.8% 15.2% 13.2% 6.4% 100.0%
% 21.7% 21.9% 18.5% 14.2% 10.4% 13.3% 100.0%
% of Total Annualized Rental Income 15.5% 12.6% 11.2% 8.0% 6.0% 8.6% 61.9%
% of Total Annualized Rental Income 4.1% 6.6% 4.9% 4.5% 3.0% 4.0% 27.1%
% of Total Annualized Rental Income 2.1% 2.7% 2.4% 1.7% 1.4% 0.7% 11.0%
% of Total Annualized Rental Income 21.7% 21.9% 18.5% 14.2% 10.4% 13.3% 100.0%
PS BUSINESS PARKS, INC. Owned Portfolio Lease Expirations as of December 31, 2008 (in thousands)
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Leased Square Footage 1,028 1,072 676 325 226 305 3,632
Southern California Annualized Rental Income $
16,921 18,601 11,554 6,798 5,257 7,799 66,930
$
Northern California Annualized Leased Square Footage Rental Income 493 409 267 193 135 173 1,670
Leased Square Footage 370 212 122 129 99 101 1,033
Leased Square Footage 278 294 139 307 354 197 1,569
$
8,183 5,476 3,920 2,450 2,166 2,854 25,049
$
Southern Texas Annualized Rental Income $
4,283 2,395 1,462 1,997 944 1,541 12,622
$
Northern Texas Annualized Rental Income $
2,479 2,850 1,756 4,235 3,178 3,308 17,806
$
23
% 25.3% 27.8% 17.3% 10.2% 7.8% 11.6% 100.0%
% 32.7% 21.9% 15.6% 9.8% 8.6% 11.4% 100.0%
% 33.9% 19.0% 11.6% 15.8% 7.5% 12.2% 100.0%
% 13.9% 16.0% 9.9% 23.8% 17.8% 18.6% 100.0%
% of Total Annualized Rental Income 5.8% 6.3% 4.0% 2.3% 1.8% 2.7% 22.9%
% of Total Annualized Rental Income 2.8% 1.9% 1.3% 0.8% 0.7% 1.0% 8.5%
% of Total Annualized Rental Income 1.5% 0.8% 0.5% 0.7% 0.3% 0.5% 4.3%
% of Total Annualized Rental Income 0.8% 1.0% 0.6% 1.4% 1.1% 1.1% 6.0%
PS BUSINESS PARKS, INC. Owned Portfolio Lease Expirations as of December 31, 2008 (in thousands)
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Leased Square Footage 751 835 716 536 408 168 3,414
Leased Square Footage 568 661 326 459 372 446 2,832
Leased Square Footage 198 321 408 250 128 338 1,643
South Florida Annualized Rental Income $
$
Northern Virginia Annualized Rental Income $
10,498 13,206 6,840 11,154 7,574 11,372 60,644
$
Maryland Annualized Rental Income $
3,542 8,129 10,349 6,607 3,121 8,539 40,287
$
Oregon Annualized Rental Income
Leased Square Footage 242 126 468 50 162 53 1,101
7,595 7,760 7,107 5,461 3,926 1,929 33,778
$
4,124 2,254 8,324 870 2,952 1,044 19,568
$
24
% 22.5% 23.0% 21.0% 16.2% 11.6% 5.7% 100.0%
% 17.3% 21.8% 11.3% 18.4% 12.5% 18.7% 100.0%
% 8.8% 20.2% 25.7% 16.4% 7.7% 21.2% 100.0%
% 21.1% 11.5% 42.5% 4.5% 15.1% 5.3% 100.0%
% of Total Annualized Rental Income 2.6% 2.6% 2.4% 1.9% 1.3% 0.6% 11.4%
% of Total Annualized Rental Income 3.6% 4.5% 2.3% 3.8% 2.6% 3.9% 20.7%
% of Total Annualized Rental Income 1.2% 2.8% 3.5% 2.3% 1.1% 2.9% 13.8%
% of Total Annualized Rental Income 1.4% 0.8% 2.8% 0.3% 1.0% 0.4% 6.7%
PS BUSINESS PARKS, INC. Owned Portfolio Lease Expirations as of December 31, 2008 (in thousands)
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Leased Square Footage 162 88 98 47 52 13 460
Leased Square Footage 240 139 85 95 30 10 599
Washington Annualized Rental Income $
2,940 1,693 1,905 950 1,142 353 8,983
$ Arizona Annualized Rental Income $
Total Annualized Rental Income $
63,629 64,164 54,254 41,573 30,632 38,852 293,104
$
25
32.7% 18.9% 21.2% 10.6% 12.7% 3.9% 100.0%
% 3,064 1,800 1,037 1,051 372 113 7,437
$
Leased Square Footage 4,330 4,157 3,305 2,391 1,966 1,804 17,953
%
41.2% 24.2% 14.0% 14.1% 5.0% 1.5% 100.0%
% 21.7% 21.9% 18.5% 14.2% 10.4% 13.3% 100.0%
% of Total Annualized Rental Income 1.0% 0.6% 0.7% 0.3% 0.4% 0.1% 3.1%
% of Total Annualized Rental Income 1.0% 0.6% 0.4% 0.4% 0.1% 0.1% 2.6%
% of Total Annualized Rental Income 21.7% 21.9% 18.5% 14.2% 10.4% 13.3% 100.0%
PS BUSINESS PARKS, INC. Owned Portfolio Lease Expirations as of December 31, 2008 (in thousands)
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Year of Lease Expiration 2009 2010 2011 2012 2013 Thereafter Total
Lease Expirations - Large Tenant Portfolio Annualized Leased Square Footage Rental Income 2,072 2,253 2,184 1,609 1,505 1,478 11,101
$
27,460 31,608 33,775 26,778 20,687 30,943 171,251
$
Lease Expirations - Small Tenant Portfolio Annualized Leased Square Footage Rental Income 2,258 1,904 1,121 782 461 326 6,852
$
36,169 32,556 20,479 14,795 9,945 7,909 121,853
$
Lease Expirations - Total Annualized Leased Square Footage Rental Income 4,330 4,157 3,305 2,391 1,966 1,804 17,953
$
63,629 64,164 54,254 41,573 30,632 38,852 293,104
$
26
% 16.0% 18.5% 19.7% 15.6% 12.1% 18.1% 100.0%
% 29.7% 26.7% 16.8% 12.1% 8.2% 6.5% 100.0%
% 21.7% 21.9% 18.5% 14.2% 10.4% 13.3% 100.0%
% of Total Annualized Rental Income 9.4% 10.8% 11.5% 9.1% 7.0% 10.6% 58.4%
% of Total Annualized Rental Income 12.3% 11.1% 7.0% 5.1% 3.4% 2.7% 41.6%
% of Total Annualized Rental Income 21.7% 21.9% 18.5% 14.2% 10.4% 13.3% 100.0%
