Business Services Industry

PS Business Parks, Inc. Reports Results for the First Quarter Ended March 31, 2009

Business Wire, May 04, 2009

GLENDALE, Calif. -- PS Business Parks, Inc. (NYSE:PSB) reported operating results for the first quarter ended March 31, 2009.

Net income allocable to common shareholders for the three months ended March 31, 2009 was $33.0 million, or $1.60 per diluted share, on revenues of $69.9 million compared to $3.7 million, or $0.18 per diluted share, on revenues of $70.3 million for the same period in 2008.

Revenues for the three months ended March 31, 2009 decreased $382,000 or 0.5% over the same period in 2008. Net income allocable to common shareholders for the three months ended March 31, 2009 increased $29.2 million over the same period in 2008 primarily as a result of a net gain of $35.6 million on the repurchase of preferred equity combined with a decrease in depreciation expense of $3.1 million and a decrease in preferred equity distributions of $1.6 million partially offset by an increase in net income allocable to noncontrolling interests - common units of $10.4 million.

Supplemental Measures

Funds from operations (“FFO”) allocable to common shareholders and unit holders for the three months ended March 31, 2009 and 2008 were $67.1 million, or $2.41 per diluted share, and $30.5 million, or $1.09 per diluted share, respectively. The increase in FFO for the three months ended March 31, 2009 over the same period in 2008 was primarily due to a net gain of $35.6 million on the repurchase of preferred equity combined with a decrease in preferred equity distributions of $1.6 million. Excluding the $35.6 million net gain, FFO allocable to common shareholders and unit holders would have been $31.5 million, or $1.13 per diluted share, for the three months ended March 31, 2009.

Property Operations

In order to evaluate the performance of the Company’s overall portfolio over two comparable periods, management analyzes the operating performance of a consistent group of properties owned and operated throughout both periods (herein referred to as “Same Park”). For the three months ended March 31, 2009 and 2008, the Same Park portfolio constitutes 19.6 million rentable square feet, which includes 100.0% of the assets of the Company.

The Company’s property operations account for substantially all of the net operating income earned by the Company. The following table presents the operating results of the Company’s properties for the three months ended March 31, 2009 and 2008 in addition to other income and expense items affecting net income (unaudited, in thousands, except per square foot amounts):

[Table Omitted]

Financial Condition

The following are key financial ratios with respect to the Company’s leverage at and for the three months ended March 31, 2009:

[Table Omitted]

Preferred Equity Repurchase

During the three months ended March 31, 2009, the Company paid $50.2 million to repurchase 3,208,174 depositary shares, each representing 1/1,000 of a share of various series of Cumulative Preferred Stock and $12.3 million to repurchase 853,300 units of various series of Cumulative Redeemable Preferred Units for a weighted average purchase price of $15.40 per share/unit. In accordance with Emerging Issues Task Force (“EITF”) Topic D-42, the purchase price discount of $35.6 million, equaling the aggregate liquidation value of $101.5 million over the aggregate purchase price of $62.5 million, is added to net income allocable to common shareholders, net of the original issuance costs of $3.4 million.

Distributions Declared

The Board of Directors declared a quarterly dividend of $0.44 per common share on May 4, 2009. Distributions were also declared on the various series of depositary shares, each representing 1/1,000 of a share of preferred stock listed below. Distributions are payable June 30, 2009 to shareholders of record on June 15, 2009.

[Table Omitted]