[PDF]Analysis of Operating Results and Financial Condition - Rackcdn.comhttps://40b8011386169f55de96-725c435c541f29a53fba967f09ea3d89.ssl.cf5.rackcd...
0 downloads
216 Views
1MB Size
Analysis of Operating Results and Financial Condition December 31, 2010
N
ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2010 INDEX
Page
Fact Sheet............................................................................................................................
3
Funds from Operations (FFO) .............................................................................................
4 –5
Capital Structure..................................................................................................................
6
Consolidated Balance Sheets ...............................................................................................
7-8
Consolidated Statements of Income .....................................................................................
9 - 12
Capital Expenditure Analysis ..............................................................................................
13
Portfolio Analysis ................................................................................................................ 14 - 28
O
PS BUSINESS PARKS, INC. FOURTH QUARTER FACT SHEET (in thousands, except per share amounts) OPERATING DATA For The Three Months Ended 12/31/10 12/31/09 % Change Total rental income Total cost of operations Net operating income
$
Net income allocable to common shareholders Net income per common share - diluted: Continuing operations Discontinued operations Net income per common share
71,220 22,901 48,319
For The Year Ended 12/31/09 % Change
5.4% 9.5% 3.6%
$
$
67,565 20,905 46,660
$
8,375 $
9,855
(15.0%)
$
38,959
$ $ $
0.34 $ $ 0.34 $
0.40 0.01 0.40
(15.0%) (100.0%) (15.0%)
$ $ $
1.42 0.16 1.58
24,393 24,550
1.0% 0.8%
$
Weighted average common shares outstanding - basic Weighted average common shares outstanding - diluted
$
12/31/10
24,635 24,741
$
278,417 $ 90,534 187,883 $
270,957 85,912 185,045
2.8% 5.4% 1.5%
$
59,413
(34.4%)
$ $ $
2.61 0.08 2.68
(45.6%) 100.0% (41.0%)
21,998 22,128
11.6% 11.6%
24,546 24,687
FUNDS FROM OPERATIONS For The Three Months Ended 12/31/10 12/31/09 % Change FFO allocable to common and dilutive shares - before adjustment Non-cash distributions related to the redemption of preferred equity Acquisition transaction costs Gain on repurchase of preferred equity, net of issuance costs FFO allocable to common and dilutive shares - as reported
$
FFO per common and dilutive share - before adjustment FFO per common and dilutive share - as reported
12/31/10
For The Year Ended 12/31/09 % Change
32,703 32,703
4.8% 100.0% 100.0% (3.1%)
$
$
34,286 $ (1,630) (953) 31,703 $
$
131,748 $ (4,066) (3,262) 124,420 $
$ $
1.07 $ 0.99 $
1.02 1.02
4.9% (2.9%)
$ $
4.11 3.88
24,550 7,305 120 31,975
0.8% (27.5%) 0.5%
Weighted average common shares outstanding - diluted Weighted average common OP units outstanding Weighted average restricted stock units outstanding Total common and dilutive shares
24,741 7,305 87 32,133
$ $
24,687 7,305 96 32,088
127,435 35,639 163,074
3.4% 100.0% 100.0% (100.0%) (23.7%)
4.31 5.52
(4.6%) (29.7%)
22,128 7,305 131 29,564
11.6% (26.7%) 8.5%
PROPERTY INFORMATION For The Three Months Ended 12/31/10 12/31/09 % Change Total Portfolio (1) Total rentable square footage at period end Weighted average occupancy Annualized realized rent per sq. ft. (2) REVPAF (3) Same Park Portfolio (4) Total rentable square footage at period end Weighted average occupancy Annualized realized rent per sq. ft. (2) REVPAF (3) (1) (2) (3) (4)
$ $
21,791 90.2% 14.90 $ 13.44 $
19,425 91.2% 15.26 13.91
12.2% (1.1%) (2.4%) (3.4%)
$ $
19,425 91.5% 14.60 $ 13.36 $
19,425 91.2% 15.26 13.91
0.3% (4.3%) (4.0%)
Amounts exclude discontinued operations. Represents the annualized revenues earned per occupied square foot. Represents the annualized revenues earned per total weighted average square foot. All assets in continuing operations that the Company owned from January 1, 2009 through December 31, 2010. BALANCE SHEET DATA 12/31/10
Total assets Noncontrolling interests - preferred units Noncontrolling interests - common units Perpetual preferred stock Common shareholders' equity Total common shares outstanding at period end Book value per common share
$ 1,621,057 $ $ 53,418 $ $ 176,179 $ $ 598,546 $ $ 594,982 $ 24,671 $ 24.12 $
12/31/09 1,564,822 73,418 176,540 626,046 589,633 24,400 24.17
% Change 3.6% (27.2%) (0.2%) (4.4%) 0.9% 1.1% (0.2%)
MARKET VALUE INFORMATION 12/31/10 Market value of common stock and common OP units
$ 1,781,732 $
Total debt
144,511
Total preferred equity
651,964
Total market capitalization
$ 2,578,207 $
Stock price at the end of the period
$
55.72 $
P
12/31/09
% Change
1,586,828
12.3%
52,887
173.2%
699,464
(6.8%)
2,339,179
10.2%
50.05
11.3%
12/31/10
For The Year Ended 12/31/09 % Change
$ $
21,791 90.8% 14.96 $ 13.58 $
19,425 90.4% 15.43 13.95
12.2% 0.4% (3.0%) (2.7%)
$ $
19,425 91.5% 14.79 $ 13.54 $
19,425 90.4% 15.43 13.95
1.2% (4.1%) (2.9%)
PS BUSINESS PARKS, INC. ANALYSIS OF FUNDS FROM OPERATIONS (in thousands, except per share amounts)
For The Three Months Ended 12/31/10 12/31/09
Increase (Decrease)
For The Year Ended 12/31/10 12/31/09
% Change
Increase (Decrease)
% Change
Funds from operations (FFO): Net income allocable to common shareholders Adjustments: Gain on sale of land and real estate facility Depreciation and amortization Net income allocable to noncontrolling interests - common units Net income allocable to restricted stock unit holders FFO allocable to common and dilutive shares
$
8,375
$
20,812 2,483 33 31,703
Weighted average common shares outstanding Weighted average common OP units outstanding Weighted average restricted stock units outstanding Weighted average common share equivalents outstanding Total common and dilutive shares FFO per common and dilutive share
$
9,855
$
19,850 2,951 47 32,703
24,635 7,305 87 106 32,133
$
(1,480)
(15.0%)
$
962 (468) (14) (1,000)
4.8% (15.9%) (29.8%) (3.1%)
242 (33) (51) 158
1.0% (27.5%) (32.5%) 0.5%
24,393 7,305 120 157 31,975
$
$
38,959
$
(5,153) 78,868 11,594 152 124,420 $ 24,546 7,305 96 141 32,088
59,413
$
(20,454)
(34.4%)
(1,488) 85,094 19,730 325 163,074 $
3,665 (6,226) (8,136) (173) (38,654)
246.3% (7.3%) (41.2%) (53.2%) (23.7%)
2,548 (35) 11 2,524
11.6% (26.7%) 8.5% 8.5%
21,998 7,305 131 130 29,564
$
0.99
$
1.02
$
(0.03)
(2.9%)
$
3.88
$
5.52
$
(1.64)
(29.7%)
Funds from operations Adjustments: Recurring capital improvements Tenant improvements Lease commissions Straight-line rent Stock compensation expense In-place lease adjustment Tenant improvement reimbursements, net of lease incentives Non-cash distributions related to the redemption of preferred equity Gain on repurchase of preferred equity, net of issuance costs
$
31,703
$
32,703
$
(1,000)
(3.1%)
$
124,420
$
163,074
$
(38,654)
(23.7%)
82 415 378 550 (110) (276) 181
3.0% 7.7% 32.1% 154.5% (19.1%) (726.3%) 565.6%
FAD
$
23,462
$
24,272
$
(810)
(3.3%)
$
100,165
$
101,448
FAD per common and dilutive share
$
0.73
$
0.76
$
(0.03)
(3.9%)
$
3.12
$
3.43
$
23,462 $ (10,856) (3,214) (33) 9,359 $
24,272 $ (10,736) (3,214) (47) 10,275 $
(810) 120 (14) (916)
(3.3%) 1.1% (29.8%) (8.9%)
$
60.1%
57.7%
2.4%
4.2%
Funds available for distribution (FAD):
(2,787) (5,823) (1,557) (194) 465 238 (213)
(2,705) (5,408) (1,179) 356 575 (38) (32)
1,630 -
-
1,630 -
100.0% -
(8,536) (16,197) (4,761) (912) 2,117 571 (603)
(6,853) (16,613) (4,879) 37 2,899 (252) (326)
1,683 (416) (118) 949 (782) (823) 277
24.6% (2.5%) (2.4%) 2564.9% (27.0%) (326.6%) 85.0%
4,066 -
(35,639)
4,066 (35,639)
100.0% (100.0%)
$
(1,283)
(1.3%)
$
(0.31)
(9.0%)
100,165 $ (43,254) (12,856) (152) 43,903 $
101,448 $ (39,509) (12,856) (205) 48,878 $
(1,283) 3,745 (53) (4,975)
(1.3%) 9.5% (25.9%) (10.2%)
56.2%
51.8%
4.4%
8.5%
Cash available for debt repayments and reinvestments: FAD Distributions to common shareholders Distributions to common OP unit holders Distributions to restricted stock unit holders Cash available for debt repayments and reinvestments FAD payout ratio
$
Q
$
FFO Per Common and Dilutive Share
$1.25
$1.19
$1.20 $1.14
$1.15
$1.09
$1.13
$1.12
$1.13
$1.10
$1.06
$1.04
$1.05
$1.06
$1.07
$1.02
$1.00 $0.95
$0.92
$0.90 $0.85 $0.80 $0.75 $0.70 Q1
Q2
Q3
Q4⁽¹⁾
|_______2008_______|
Q1⁽¹⁾
Q2
Q4
|_______2009_______|
(1) Excludes
(2) Excludes
Q3
Q1⁽³⁾ Q2⁽²⁾⁽³⁾ Q3⁽³⁾ Q4⁽²⁾⁽³⁾ |_______2010_______|
net gain on repurchase of preferred equity. non-cash distributions related to the redemption/repurchase of preferred equity. (3) Excludes acquisition transaction costs.
R
PS BUSINESS PARKS, INC. CAPITAL STRUCTURE (in thousands)
Total
As of December 31, 2010 % of Total Market WTD Average Capitalization Rate
As of December 31, 2009 % of Total Market WTD Average Capitalization Rate
Total
Mortgage Debt: 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 $209,000 on $15.7 million mortgage note with stated rate of 7.20%) (3) 5.610% mortgage note, repaid January 2011 (includes unamortized premium of $6,000 on $2.7 million mortgage note with stated rate of 7.61%) (4)
$
13,729 9,572 9,594 15,950
$
2,666
Total mortgage notes payable (1)
14,006 9,819 9,836 16,446 2,780
51,511
2.0%
5.81%
52,887
93,000
3.6%
2.11%
-
144,511
5.6%
3.43%
52,887
2.3%
5.81%
Credit Facility: $100.0 million unsecured credit facility (5)
93,000
Total credit facility Total debt
-
-
2.3%
5.81%
Preferred Equity 7.000% Series H preferred stock (6,340,776 depositary shares outstanding as of 12/31/10) callable 1/30/09 6.875% Series I preferred stock (2,745,050 depositary share outstanding as of 12/31/10) callable 4/21/09 7.500% Series J preferred operating partnership units (1,710,000 units outstanding as of 12/31/10) repurchased 2/6/11 7.200% Series M preferred stock (3,182,000 depositary shares outstanding as of 12/31/10) callable 5/2/10 7.125% Series N preferred operating partnership units (223,300 units outstanding as of 12/31/10) callable 12/12/10 7.375% Series O preferred stock (3,384,000 depositary shares outstanding as of 12/31/10) callable 6/16/11 6.700% Series P preferred stock (5,290,000 depositary shares outstanding as of 12/31/10) callable 1/17/12 6.550% Series Q preferred operating partnership units (203,400 units outstanding as of 12/31/10) repurchased 2/14/11 6.875% Series R preferred stock (3,000,000 depositary shares outstanding as of 12/31/10) callable 10/15/15 7.950% Series G preferred operating partnership units (800,000 units redeemed 5/12/2010) 7.950% Series K preferred stock (2,165,000 depositary shares redeemed 6/07/10) 7.600% Series L preferred stock (1,935,000 depositary shares redeemed 11/8/10)
158,520 68,626 42,750 79,550 5,583 84,600 132,250 5,085 75,000 -
Total preferred equity
651,964
25.3%
7.02%
699,464
29.9%
7.17%
Total debt and preferred equity
796,475
30.9%
6.36%
752,351
32.2%
7.07%
1,374,678 407,054 1,781,732
69.1%
2,578,207
100.0%
Common stock (24,671,177 and 24,399,509 shares outstanding as of December 31, 2010 and December 31, 2009, respectively) Common operating partnership units (7,305,355 units outstanding as of December 31, 2010 and December 31, 2009) Total common equity (2) Total market capitalization (1)
158,520 68,626 42,750 79,550 5,583 84,600 132,250 5,085 20,000 54,125 48,375
$
$
1,221,195 365,633 1,586,828
67.8%
2,339,179
100.0%
Principal maturity dates are represented by the following chart: Principal Maturity Dates 2011
Rose Canyon $ Meadows (3) Boca Wellington I (4) Wellington II Meadows Loan Premium Wellington I Loan Premium $ (2) (3) (4) (5)
Closing stock price was $55.72 and $50.05 as of December 31, 2010 and December 31, 2009, respectively. This mortgage is repayable without penalty beginning November, 2011. This mortgage was repaid on January 3, 2011. Outstanding balance repaid in full subsequent to December 31, 2010.
S
2012
293 $ 298 261 2,660 257 209 6 3,984 $
309 $ 318 275 272 1,174 $
2013
13,127 $ 345 9,036 9,065 31,573 $
2014
- $ 371 371 $
2015
Thereafter
- $ 399 399 $
- $ 14,010 14,010 $
Total
13,729 15,741 9,572 2,660 9,594 209 6 51,511
PS BUSINESS PARKS, INC. CONSOLIDATED BALANCE SHEETS (in thousands)
12/31/10
12/31/09
Increase (Decrease)
% Change
ASSETS Cash and cash equivalents
$
Real estate facilities, at cost: Land Buildings and equipment Accumulated depreciation Properties held for disposition, net Land held for development
Rent receivable Deferred rent receivable Other assets Total assets
$
5,066
$
208,229
$ (203,163)
(a)
564,851 1,782,613 2,347,464 (776,840) 1,570,624 6,829 1,577,453
493,709 1,528,044 2,021,753 (707,209) 1,314,544 4,260 6,829 1,325,633
71,142 254,569 325,711 69,631 256,080 (4,260) 251,820
3,127 22,277 13,134 1,621,057
2,313 21,596 7,051 1,564,822
814 681 6,083 56,235
(d)
7,123 93,000 (1,376)
(f)
$
$
(b) (c)
(e)
(97.6%)
14.4% 16.7% 16.1% 9.8% 19.5% (100.0%) 19.0% 35.2% 3.2% 86.3% 3.6%
LIABILITIES AND EQUITY Accrued and other liabilities Credit Facility Mortgage notes payable
$
Total liabilities
$
197,932
Equity: PS Business Parks, Inc.'s shareholders' equity: Preferred stock Common stock Paid-in capital Cumulative net income Cumulative distributions Total PS Business Parks, Inc.'s shareholders' equity Noncontrolling interests: Preferred units Common units Total noncontrolling interests: Total equity Total liabilities and equity
53,421 93,000 51,511
$
T
46,298 52,887
$
99,185
15.4% 100.0% (2.6%)
98,747
99.6%
(4.4%) 1.2% 1.7% 12.2% 13.6% (1.8%)
598,546 246 557,882 784,616 (747,762) 1,193,528
626,046 243 548,393 699,291 (658,294) 1,215,679
(27,500) 3 9,489 85,325 89,468 (22,151)
53,418 176,179 229,597
73,418 176,540 249,958
(20,000) (361) (20,361)
(27.2%) (0.2%) (8.1%)
1,423,125
1,465,637
(42,512)
(2.9%)
1,621,057
$
1,564,822
$
56,235
(g) (h)
3.6%
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 acquisitions Property renovations and developments Recurring capital improvements Tenant improvements Lease commissions Depreciation and amortization Ending balance
$
$
(c) Change in properties held for disposition, net: Beginning balance Disposition of real estate Ending balance
$ $
208,229 177,941 (327,448) (53,656) 5,066
1,314,544 294,570 10,884 8,536 16,197 4,761 (78,868) 1,570,624
4,260 (4,260) -
(d) Rent receivable consists of: Non-government tenants U.S. Government tenants Allowance for bad debt
12/31/10 $ 1,852 1,675 (400) $ 3,127
12/31/09 $ 1,642 1,071 (400) $ 2,313
Increase (Decrease) $ 210 604 $ 814
(e) Other assets consist of: In-place lease adjustment, net Prepaid property taxes Prepaid insurance Mortgage impounds Lease incentives, net Other
12/31/10 $ 5,422 3,107 1,011 823 514 2,257 $ 13,134
12/31/09 $ 94 2,630 861 622 654 2,190 $ 7,051
Increase (Decrease) $ 5,328 477 150 201 (140) 67 $ 6,083
(f)
12/31/10 $ 20,697 4,961 12,778
12/31/09 $ 19,126 4,651 10,578
Increase (Decrease) $ 1,571 310 2,200
4,159 10,826 53,421
3,006 8,937 $ 46,298
1,153 1,889 7,123
Accrued and other liabilities consist of: Security deposits Accrued property taxes Prepaid rent In-place lease adjustment and tenant improvement reimbursements, net Other
$ (g) Change in paid-in capital: Beginning paid-in capital Issuance cost of preferred stock Exercise of stock options Non-cash distributions related to the redemption of preferred equity Stock compensation, net Adjustment to reflect noncontrolling interests to underlying ownership Ending paid in capital (h) Change in cumulative distributions: Beginning cumulative distributions Distributions to preferred shareholders Distributions to common shareholders Ending cumulative distributions
$
$
$
$
$
U
548,393 (2,487) 7,780 4,066 1,031 (901) 557,882
(658,294) (46,214) (43,254) (747,762)
PS BUSINESS PARKS, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts)
For The Three Months Ended 12/31/10 12/31/09 Revenues: Rental income Facility management fees Total operating revenues
$
Expenses: Cost of operations Depreciation and amortization General and administrative Total operating expenses
71,220 171 71,391
$
22,901 20,812 2,671 46,384
Other income and expenses: Interest and other income Interest expense Total other income and expenses
-
% Change
3,655 (a) (5) 3,650
1,996 1,162 1,396 4,554
155 (866) (711)
24,132
Discontinued operations: Income from discontinued operations Total discontinued operations
$
20,905 19,650 1,275 41,830
73 (948) (875)
Income from continuing operations
67,565 176 67,741
Increase (Decrease)
(b)
(82) 82 (c) 164
5.4% (2.8%) 5.4%
9.5% 5.9% 109.5% 10.9%
(52.9%) 9.5% 23.1%
25,200
(1,068)
(4.2%)
190 190
(190) (190)
(100.0%) (100.0%)
Net income
$
24,132
$
25,390
$
(1,258)
(5.0%)
Net income allocation: Net income allocable to noncontrolling interests: Noncontrolling interests - common units Noncontrolling interests - preferred units Total net income allocable to noncontrolling interests
$
2,483 985 3,468
$
2,951 1,382 4,333
$
(468) (397) (865)
(15.9%) (28.7%) (20.0%)
(1,480) 1,101 (14) (393)
(15.0%) 9.9% (29.8%) (1.9%)
Net income allocable to PS Business Parks, Inc.: Common shareholders Preferred shareholders Restricted stock unit holders Total net income allocable to PS Business Parks, Inc.
8,375 12,256 33 20,664
9,855 11,155 47 21,057
$
24,132
$
25,390
$
(1,258)
(5.0%)
Net income per common share - basic: Continuing operations Discontinued operations Net Income
$ $ $
0.34 0.34
$ $ $
0.40 0.01 0.40
$ $ $
(0.06) (0.01) (0.06)
(15.0%) (100.0%) (15.0%)
Net income per common share - diluted: Continuing operations Discontinued operations Net Income
$ $ $
0.34 0.34
$ $ $
0.40 0.01 0.40
$ $ $
(0.06) (0.01) (0.06)
(15.0%) (100.0%) (15.0%)
Weighted average common shares outstanding: Basic Diluted
24,635 24,741
V
24,393 24,550
242 191
1.0% 0.8%
PS BUSINESS PARKS, INC. CONSOLIDATED STATEMENT OF INCOME VARIANCE DETAIL (in thousands)
(a) Rental income: Same Park Non-Same Park Same Park straight-line rent Non-Same Park straight-line rent
For The Three Months Ended 12/31/10 12/31/09 $ 65,033 $ 67,926 5,993 (171) (361) 365 $ 71,220 $ 67,565
Increase (Decrease) $ (2,894) 5,993 190 365 $ 3,654
(b) General and administrative expenses: Cash and non-cash compensation expense Professional fees Acquisition transaction costs Other
For The Three Months Ended 12/31/10 12/31/09 $ 1,192 $ 820 191 190 953 335 265 $ 2,671 $ 1,275
Increase (Decrease) $ 372 1 953 70 $ 1,396
(c) Interest expense: Mortgage notes payable Credit facility Facilities fees & other charges
For The Three Months Ended 12/31/10 12/31/09 $ (758) $ (777) (82) (108) (89) $ (948) $ (866)
Increase (Decrease) $ (19) 82 19 $ 82
NM
PS BUSINESS PARKS, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts)
For The Years Ended 12/31/2010 12/31/2009 Revenues: Rental income Facility management fees Total operating revenues
$
Expenses: Cost of operations Depreciation and amortization General and administrative Total operating expenses
278,417 672 279,089
$
90,534 78,868 9,651 179,053
270,957 698 271,655
Increase (Decrease)
$
85,912 84,504 6,202 176,618
7,460 (a) (26) 7,434
2.8% (3.7%) 2.7%
4,622 (5,636) 3,449 (b) 2,435
5.4% (6.7%) 55.6% 1.4%
(203) (18) (c) 185
(37.9%) (0.5%) 6.1%
Other income and expenses: Interest and other income Interest expense Total other income and expenses
333 (3,534) (3,201)
536 (3,552) (3,016)
Income from continuing operations
96,835
92,021
4,814
34 5,153 5,187
830 1,488 2,318
(796) 3,665 2,869
Discontinued operations: Income from discontinued operations Gain on sale of land and real estate facility Total discontinued operations
% Change
5.2%
(95.9%) 246.3% 123.8%
Net income
$
102,022
$
94,339
$
7,683
Net income allocation: Net income allocable to noncontrolling interests: Noncontrolling interests - common units Noncontrolling interests - preferred units Total net income allocable to noncontrolling interests
$
11,594 5,103 16,697
$
19,730 (2,569) 17,161
$
(8,136) 7,672 (464)
(41.2%) 298.6% (2.7%)
(20,454) 28,774 (173) 8,147
(34.4%) 165.0% (53.2%) 10.6%
Net income allocable to PS Business Parks, Inc.: Common shareholders Preferred shareholders Restricted stock unit holders Total net income allocable to PS Business Parks, Inc.
38,959 46,214 152 85,325
59,413 17,440 325 77,178
8.1%
$
102,022
$
94,339
$
7,683
Net income per common share - basic: Continuing operations Discontinued operations Net Income
$ $ $
1.42 0.16 1.59
$ $ $
2.62 0.08 2.70
$ $ $
(1.20) 0.08 (1.11)
(45.8%) 100.0% (41.1%)
Net income per common share - diluted: Continuing operations Discontinued operations Net Income
$ $ $
1.42 0.16 1.58
$ $ $
2.61 0.08 2.68
$ $ $
(1.19) 0.08 (1.10)
(45.6%) 100.0% (41.0%)
Weighted average common shares outstanding: Basic Diluted
24,546 24,687
NN
21,998 22,128
2,548 2,559
8.1%
11.6% 11.6%
PS BUSINESS PARKS, INC. CONSOLIDATED STATEMENT OF INCOME VARIANCE DETAIL (in thousands)
(a) Rental income: Same Park Non-Same Park Same Park straight-line rent Non-Same Park straight-line rent
For The Years Ended 12/31/10 12/31/09 $ 262,954 $ 271,029 14,551 9 (72) 903 $ 278,417 $ 270,957
Increase (Decrease) $ (8,075) 14,551 81 903 $ 7,460
(b) General and administrative expenses: Cash and non-cash compensation expense Professional fees Acquisition transaction costs Other
For The Years Ended 12/31/10 12/31/09 $ 4,233 $ 4,282 890 793 3,262 1,266 1,127 $ 9,651 $ 6,202
Increase (Decrease) $ (49) 97 3,262 139 $ 3,449
(c) Interest expense: Mortgage notes payable Credit facility Facilities fees & other charges
For The Years Ended 12/31/10 12/31/09 $ (3,060) $ (3,199) (82) (392) (353) $ (3,534) $ (3,552)
Increase (Decrease) $ (139) 82 39 $ (18)
NO
PS BUSINESS PARKS, INC. Analysis of Capital Expenditures (in thousands, except per square foot data)
Recurring capital expenditures Capital improvements
(1)
(2)
Tenant improvements Lease commissions Total recurring capital expenditures
For The Year Ended
Cost per Weighted
December 31, 2010
Average Square Foot $8,536
$0.42
16,197
$0.79
4,761
$0.23
$29,494
$1.44
Non-recurring capital expenditures Property renovations and development
$10,884
Total non-recurring capital expenditures
$10,884
(1)
The Company defines "recurring capital expenditures" as those capitalized costs necessary to continue to operate the property at its current economic value. Capital improvements in excess of $2,000 with a useful life greater than 24 months are capitalized. Lease transaction costs in excess of $1,000 for leases with terms greater than 12 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 expense was $21.2 million or approximately $1.03 per weighted average square foot for the year ended December 31, 2010 compared to $19.0 million or approximately $0.98 per weighted average square foot for the year ended December 31, 2009.
(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.
NP
Same Park Gross Operating Margin Percentage * 72.0% 70.1%
70.0%
69.1%
68.8% 68.3%
68.2%
68.0%
68.0%
69.1% 68.7%
68.1% 67.6%
67.4% 65.8%
66.0%
64.0%
62.0%
60.0% Q1
Q2
Q3
Q4
|________2008________|
Q1
Q2
Q3
Q4
|________2009________|
Q1
Q2
Q3
Q4
|________2010________|
* Gross margin is computed by dividing property net operating income by rental income for Same Park properties in each period.
NQ
Change in Same Park Revenue * 6.0% 4.0%
3.0% 3.5%
3.5%
2.0% 1.7%
0.0%
-0.5% -1.3%
-2.0%
-3.1%
-3.4%
-3.5%
-4.0%
-4.6%
-4.0%
-5.5%
-6.0% Q1
Q2
Q3
Q4
|_________2008_________|
Q1
Q2
Q3
Q4
|__________2009_________|
Q1
Q2
Q3
|__________2010_________|
* Percentage represents the change over the comparable period in the previous year based on Same Park operating assets as reported in each period.
NR
Q4
Change in Same Park NOI * 7.0% 5.0% 3.3%
2.5%
3.0% 2.7% 2.0%
1.0%
-0.4%
-1.0% -1.3%
-3.0%
-4.3% -3.8%
-5.0%
-4.5%
-5.9% -6.2% -5.9%
-7.0% Q1
Q2
Q3
Q4
|_________2008_________|
Q1
Q2
Q3
Q4
|_________2009_________|
Q1
Q2
Q3
|_________2010_________|
* Percentage represents the change over the comparable period in the previous year based on Same Park operating assets as reported in each period.
NS
Q4
PS BUSINESS PARKS, INC. TOTAL PORTFOLIO CONCENTRATION SUMMARY (in thousands) Industry Concentration as of December 31, 2010 % of Total Rental Income
Industry Business Services Health Services Government Computer Hardware, Software and Related Services Warehouse, Distribution, Transportation and Logistics Insurance and Financial Services Retail, Food and Automotive Engineering and Construction Communications Home Furnishings Electronics Aerospace/Defense Products and Services Educational Services Other Total
15.5% 11.2% 11.0% 10.7% 7.3% 6.8% 6.0% 5.9% 4.9% 3.7% 3.3% 3.0% 2.6% 8.1% 100.0%
Top 10 Customers by Total Annual Rental Income as of December 31, 2010
Tenant U.S. Government Lockheed Martin Corporation Kaiser Permanente Luminex Corporation Wells Fargo Bank AARP ATS Corporation Welch Allyn Protocol, Inc. Verizon Investorplace Media, LLC Total
Annualized Rental Income (1)
Square Footage 769 176 200 149 101 102 59 103 80 46 1,785
$
$
19,209 4,773 4,030 2,112 1,766 1,733 1,721 1,598 1,578 1,494 40,014
% of Total Annualized Rental Income 6.7% 1.7% 1.4% 0.7% 0.6% 0.6% 0.6% 0.6% 0.5% 0.5% 13.9%
(1) - For leases expiring within one year, annualized rental income represents income to be received under existing leases from December 31, 2010 through the date of expiration.
NT
Total Owned Rentable Square Footage by Region
December 31, 2010 21,791 square feet (in thousands)
December 31, 2009 19,425 square feet (in thousands)
S. California (18%)
S. California (21%) N. California (8%) N. California (9%) S. Texas (8%) S. Texas (5%) N. Texas (8%) N. Texas (9%) Virginia (18%) Virginia (15%) Maryland (11%) Maryland (9%) Oregon (6%) Oregon (7%) South Florida (17%) South Florida (18%) Arizona (3%)
679
521
Washington (3%)
679
Arizona (4%)
521
Washington (3%)
3,988
3,988
3,671
3,596
1,818 1,818
1,314 1,314 1,734
1,030 2,352 1,770
1,689
1,689 3,020
4,025
NU
Total Property Net Operating Income by Region
Three Months Ended December 31, 2010 $48,319 (in thousands)
$700
$1,423
Three Months Ended December 31, 2009 $46,660 (in thousands) S. California (21%)
S. California (24%)
N. California (7%)
N. California (7%)
S. Texas (5%)
S. Texas (3%)
N. Texas (6%)
N. Texas (6%)
Virginia (22%)
Virginia (22%)
Maryland (18%)
Maryland (15%)
Oregon (6%)
Oregon (6%)
South Florida (11%)
South Florida (12%)
Arizona (1%)
$823 Washington (3%)
$5,175
$1,535
Arizona (2%) Washington (3%)
$5,353 $10,040 $11,095
$3,095
$2,704 $3,189
$3,440 $2,545 $8,678 $7,050 $1,505 $2,739 $2,807 $10,735
$10,348
NV
PS BUSINESS PARKS, INC. TOTAL PORTFOLIO OVERVIEW (in thousands) Rentable Square Footage of Properties as of December 31, 2010 Primary Markets Miami Northern Virginia Maryland Northern California Dallas Orange County Los Angeles County Austin Portland San Diego County Phoenix Seattle Palm Beach Houston Total Percentage by Product Type
Industrial 2,631 407 231 712 3,981 18.3%
Office 12 2,078 1,382 431 705 31 188 28 4,855 22.3%
Flex 631 1,947 970 980 1,458 911 861 1,491 1,126 768 679 493 397 243 12,955 59.5%
Total 3,274 4,025 2,352 1,818 1,689 1,616 1,604 1,491 1,314 768 679 521 397 243 21,791 100.0%
% of Total 15.1% 18.5% 10.8% 8.3% 7.8% 7.4% 7.4% 6.8% 6.0% 3.5% 3.1% 2.4% 1.8% 1.1% 100.0%
Weighted Average Occupancy Rates by Product Type for the Three Months Ended December 31, 2010 Primary Markets Miami Northern Virginia Maryland Northern California Dallas Orange County Los Angeles County Austin Portland San Diego County Phoenix Seattle Palm Beach Houston Total
Industrial 97.5% 100.0% 95.7% 99.1% 97.9%
Office 100.0% 79.3% 85.9% 87.9% 84.0% 98.0% 87.8% 100.0% 83.8%
Flex 94.0% 92.0% 88.5% 87.6% 91.3% 93.5% 88.3% 89.1% 84.6% 92.6% 90.2% 93.6% 89.1% 76.9% 89.9%
Total 96.8% 86.5% 87.0% 90.4% 91.9% 89.4% 93.3% 89.1% 85.0% 92.6% 90.2% 93.9% 89.1% 76.9% 90.2%
Weighted Average Occupancy Rates by Portfolio Type for the Three Months Ended December 31, 2010 Primary Markets Miami Northern Virginia Maryland Northern California Dallas Orange County Los Angeles County Austin Portland San Diego County Phoenix Seattle Palm Beach Houston Total
Large Tenant
Small Tenant
96.6% 88.6% 87.6% 91.9% 92.4% 90.2% 99.1% 88.1% 84.9% 91.2%
99.0% 83.2% 85.1% 88.9% 89.7% 88.6% 88.6% 94.4% 86.0% 92.6% 90.2% 93.9% 89.1% 76.9% 88.7%
Total 96.8% 86.5% 87.0% 90.4% 91.9% 89.4% 93.3% 89.1% 85.0% 92.6% 90.2% 93.9% 89.1% 76.9% 90.2%
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.
OM
PS BUSINESS PARKS, INC. SAME PARK PORTFOLIO OVERVIEW (in thousands) Rentable Square Footage of Properties as of December 31, 2010 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 20.1%
Office 12 1,073 431 883 705 31 188 28 3,351 17.3%
Flex 631 1,947 980 887 1,458 911 861 1,126 787 768 679 493 397 243 12,168 62.6%
Total 3,199 3,020 1,818 1,770 1,689 1,616 1,604 1,314 787 768 679 521 397 243 19,425 100.0%
% of Total 16.5% 15.5% 9.4% 9.1% 8.7% 8.3% 8.2% 6.8% 4.0% 4.0% 3.5% 2.7% 2.0% 1.3% 100.0%
Weighted Average Occupancy Rates by Product Type for the Three Months Ended December 31, 2010 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 98.7% 100.0% 95.7% 99.1% 98.7%
Office 100.0% 89.3% 87.9% 92.1% 84.0% 98.0% 87.8% 100.0% 88.9%
Flex 94.0% 92.0% 87.6% 87.7% 91.3% 93.5% 88.3% 84.6% 89.2% 92.6% 90.2% 93.6% 89.1% 76.9% 89.9%
Total 97.8% 91.0% 90.4% 89.9% 91.9% 89.4% 93.3% 85.0% 89.2% 92.6% 90.2% 93.9% 89.1% 76.9% 91.5%
Weighted Average Occupancy Rates by Portfolio Type for the Three Months Ended December 31, 2010 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
97.6% 90.2% 91.9% 89.6% 92.4% 90.2% 99.1% 84.9% 87.9% 92.2%
99.1% 92.6% 88.9% 92.4% 89.7% 88.6% 88.6% 86.0% 93.0% 92.6% 90.2% 93.9% 89.1% 76.9% 90.4%
Total 97.8% 91.0% 90.4% 89.9% 91.9% 89.4% 93.3% 85.0% 89.2% 92.6% 90.2% 93.9% 89.1% 76.9% 91.5%
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.
ON
Total Owned Portfolio Weighted Average Occupancy * 96.0%
95.0%
94.0%
94.0% 93.5%
93.7%
93.0%
92.7%
92.0%
91.4%
91.2%
91.3%
91.3%
91.0%
90.3% 89.9%
90.0%
90.2%
89.5% 89.0%
88.0% Q1
Q2
Q3
Q4
|__________2008_________|
Q1
Q2
Q3
Q4
|___________2009________|
Q1
Q2
Q3
Q4
|___________2010________|
* Represents the weighted average occupancy for total owned portfolio held in continuing operations as reported in each period.
OO
Same Park Weighted Average Occupancy * 96.0%
95.0% 94.3% 93.9%
94.0%
93.7%
93.0%
92.7%
92.0%
91.7% 91.4%
91.2%
91.4%
91.3%
91.5%
91.0% 89.9%
90.0%
89.5% 89.0%
88.0% Q1
Q2
Q3
Q4
|__________2008__________|
Q1
Q2
Q3
Q4
|__________2009__________|
Q1
Q2
Q3
Q4
|__________2010__________|
* Represents the weighted average occupancy for total owned portfolio held in continuing operations as reported in each period.
OP
PS BUSINESS PARKS, INC. Total Portfolio Lease Expirations as of December 31, 2010 (in thousands)
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Lease Expirations - Flex Annualized Leased Square Footage Rental Income 2,787 3,152 2,160 1,401 950 1,118 11,568
$
38,154 45,417 30,835 21,886 14,932 22,130 173,354
$
Lease Expirations - Office Annualized Leased Square Footage Rental Income 813 921 934 409 253 632 3,962
$
18,667 22,005 24,708 9,691 6,063 18,962 100,096
$
Lease Expirations - Industrial Annualized Leased Square Footage Rental Income 692 814 1,141 610 301 356 3,914
$
5,467 6,773 8,674 4,593 2,492 2,753 30,752
$
Lease Expirations - Total Portfolio Annualized Leased Square Footage Rental Income 4,292 4,887 4,235 2,420 1,504 2,106 19,444
$
62,288 74,195 64,217 36,170 23,487 43,845 304,202
$
OQ
% 22.0% 26.2% 17.8% 12.6% 8.6% 12.8% 100.0%
% 18.6% 22.0% 24.7% 9.7% 6.1% 18.9% 100.0%
% 17.8% 22.0% 28.2% 14.9% 8.1% 9.0% 100.0%
% 20.5% 24.4% 21.1% 11.9% 7.7% 14.4% 100.0%
% of Total Annualized Rental Income 12.5% 15.0% 10.1% 7.2% 4.9% 7.3% 57.0%
% of Total Annualized Rental Income 6.2% 7.2% 8.1% 3.2% 2.0% 6.2% 32.9%
% of Total Annualized Rental Income 1.8% 2.2% 2.9% 1.5% 0.8% 0.9% 10.1%
% of Total Annualized Rental Income 20.5% 24.4% 21.1% 11.9% 7.7% 14.4% 100.0%
PS BUSINESS PARKS, INC. Total Portfolio Lease Expirations as of December 31, 2010 (in thousands)
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Southern California Annualized Leased Square Footage Rental Income 1,151 1,005 704 408 254 108 3,630
$
17,412 16,505 10,772 7,251 4,084 3,279 59,303
Northern California Annualized Leased Square Footage Rental Income 466 538 295 204 68 88 1,659
Leased Square Footage 239 286 317 264 306 105 1,517
Leased Square Footage 177 455 382 329 96 101 1,540
$
6,063 6,122 3,952 2,244 805 1,229 20,415
$
Southern Texas Annualized Rental Income $
2,547 3,184 3,416 3,088 4,430 1,400 18,065
$
Northern Texas Annualized Rental Income $
1,866 5,643 3,332 3,964 1,337 1,013 17,155
$
OR
% 29.4% 27.8% 18.2% 12.2% 6.9% 5.5% 100.0%
% 29.7% 30.0% 19.4% 11.0% 3.9% 6.0% 100.0%
% 14.1% 17.6% 18.9% 17.1% 24.6% 7.7% 100.0%
% 10.9% 32.9% 19.4% 23.1% 7.8% 5.9% 100.0%
% of Total Annualized Rental Income 5.7% 5.4% 3.6% 2.4% 1.3% 1.1% 19.5%
% of Total Annualized Rental Income 2.0% 2.0% 1.3% 0.8% 0.3% 0.4% 6.8%
% of Total Annualized Rental Income 0.8% 1.0% 1.1% 1.0% 1.5% 0.5% 5.9%
% of Total Annualized Rental Income 0.6% 1.9% 1.1% 1.3% 0.4% 0.3% 5.6%
PS BUSINESS PARKS, INC. Total Portfolio Lease Expirations as of December 31, 2010 (in thousands)
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Leased Square Footage 697 861 892 452 202 339 3,443
Leased Square Footage 529 873 757 324 296 599 3,378
Leased Square Footage 405 364 441 216 153 472 2,051
Leased Square Footage 259 178 217 148 57 276 1,135
South Florida Annualized Rental Income $
6,453 8,141 7,737 4,044 1,831 2,713 30,919
$
Northern Virginia Annualized Rental Income $
9,820 18,813 16,158 7,586 5,651 16,170 74,198
$
Maryland Annualized Rental Income $
9,706 9,109 11,942 4,357 3,562 12,617 51,293
$
Oregon Annualized Rental Income $
3,748 2,666 3,628 2,538 877 5,114 18,571
$
OS
% 20.9% 26.3% 25.0% 13.1% 5.9% 8.8% 100.0%
% 13.2% 25.4% 21.8% 10.2% 7.6% 21.8% 100.0%
% 18.9% 17.8% 23.3% 8.5% 6.9% 24.6% 100.0%
% 20.2% 14.4% 19.5% 13.7% 4.7% 27.5% 100.0%
% of Total Annualized Rental Income 2.1% 2.7% 2.5% 1.3% 0.6% 0.9% 10.1%
% of Total Annualized Rental Income 3.3% 6.2% 5.3% 2.5% 1.8% 5.3% 24.4%
% of Total Annualized Rental Income 3.2% 3.0% 3.9% 1.4% 1.2% 4.1% 16.8%
% of Total Annualized Rental Income 1.2% 0.9% 1.2% 0.8% 0.3% 1.7% 6.1%
PS BUSINESS PARKS, INC. Total Portfolio Lease Expirations as of December 31, 2010 (in thousands)
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Leased Square Footage 173 123 113 28 35 18 490
Leased Square Footage 196 204 117 47 37 601
Leased Square Footage 4,292 4,887 4,235 2,420 1,504 2,106 19,444
Washington Annualized Rental Income $
2,918 2,086 2,157 607 554 310 8,632
$
Arizona Annualized Rental Income $
1,755 1,926 1,123 491 356 5,651
$
Total Portfolio Annualized Rental Income $
62,288 74,195 64,217 36,170 23,487 43,845 304,202
$
OT
% 33.8% 24.2% 25.0% 7.0% 6.4% 3.6% 100.0%
% 31.1% 34.0% 19.9% 8.7% 6.3% 100.0%
% 20.5% 24.4% 21.1% 11.9% 7.7% 14.4% 100.0%
% of Total Annualized Rental Income 1.0% 0.7% 0.7% 0.2% 0.2% 0.1% 2.9%
% of Total Annualized Rental Income 0.6% 0.6% 0.4% 0.2% 0.1% 1.9%
% of Total Annualized Rental Income 20.5% 24.4% 21.1% 11.9% 7.7% 14.4% 100.0%
PS BUSINESS PARKS, INC. Total Portfolio Lease Expirations as of December 31, 2010 (in thousands)
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Year of Lease Expiration 2011 2012 2013 2014 2015 Thereafter Total
Lease Expirations - Large Tenant Portfolio Annualized Leased Square Footage Rental Income 1,852 2,630 2,980 1,768 1,039 1,834 12,103
$
25,605 38,361 42,202 23,864 14,928 37,656 182,616
$
Lease Expirations - Small Tenant Portfolio Annualized Leased Square Footage Rental Income 2,440 2,257 1,255 652 465 272 7,341
$
36,683 35,834 22,015 12,306 8,559 6,189 121,586
$
Lease Expirations - Total Portfolio Annualized Leased Square Footage Rental Income 4,292 4,887 4,235 2,420 1,504 2,106 19,444
$
62,288 74,195 64,217 36,170 23,487 43,845 304,202
$
OU
% 14.0% 21.0% 23.1% 13.1% 8.2% 20.6% 100.0%
% 30.2% 29.5% 18.1% 10.1% 7.0% 5.1% 100.0%
% 20.5% 24.4% 21.1% 11.9% 7.7% 14.4% 100.0%
% of Total Annualized Rental Income 8.4% 12.6% 13.9% 7.9% 4.9% 12.4% 60.1%
% of Total Annualized Rental Income 12.1% 11.8% 7.2% 4.0% 2.8% 2.0% 39.9%
% of Total Annualized Rental Income 20.5% 24.4% 21.1% 11.9% 7.7% 14.4% 100.0%
