PS Business Parks, Inc. Reports Results for the Fourth Quarter Ended December 31, 2008

Business Wire, Feb 23, 2009

GLENDALE, Calif. -- PS Business Parks, Inc. (NYSE:PSB) reported operating results for the fourth quarter ended December 31, 2008.

Net income allocable to common shareholders for the three months ended December 31, 2008 was $9.6 million or $0.47 per diluted share on revenues of $71.7 million compared to $3.8 million or $0.17 per diluted share on revenues of $70.0 million for the same period in 2007. Net income allocable to common shareholders for the year ended December 31, 2008 was $23.4 million or $1.13 per diluted share on revenues of $284.2 million compared to $17.7 million or $0.82 per diluted share on revenues of $271.5 million for the same period in 2007.

Revenues for the three months ended December 31, 2008 increased $1.6 million over the same period of 2007 primarily as a result of an increase of $1.1 million from the Company's Same Park portfolio. Net income allocable to common shareholders for the three months ended December 31, 2008 increased $5.8 million over the same period of 2007 primarily as a result of the net gain of $4.2 million on the repurchase of preferred stock combined with an increase in net operating income of $1.9 million partially offset by a decrease in interest and other income of $520,000.

Revenues for the year ended December 31, 2008 increased $12.7 million over the same period of 2007 as a result of an increase of $7.6 million from the Company's Same Park portfolio combined with an increase of $5.1 million from acquired properties. Net income allocable to common shareholders for the year ended December 31, 2008 increased $5.7 million over the same period of 2007 primarily as a result of an increase in net operating income of $8.6 million combined with the net gain of $4.2 million on the repurchase of preferred stock offset by a decrease in interest and other income of $3.6 million and an increase in the allocation of income to minority interests of $2.3 million.

Supplemental Measures

Funds from operations ("FFO") allocable to common shareholders and unit holders for the three months ended December 31, 2008 and 2007 were $37.6 million, or $1.35 per diluted share, and $31.8 million, or $1.10 per diluted share, respectively. FFO allocable to common shareholders and unit holders for the year ended December 31, 2008 was $131.6 million, or $4.70 per diluted share, compared to $122.4 million, or $4.23 per diluted share, for the same period in 2007. The increase in FFO for the three months and year ended December 31, 2008 over the same period of 2007 was primarily due to a net gain of $4.2 million on the repurchase of preferred stock combined with an increase in net operating income partially offset by the decrease in interest income as discussed above. Excluding the $4.2 million net gain, FFO allocable to common shareholders and unit holders would have been $33.3 million, or $1.19 per diluted share, and $127.3 million, or $4.55 per diluted share, for the three months and year ended December 31, 2008, respectively.

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"). Operating properties that the Company acquired subsequent to January 1, 2007 are referred to as "Non-Same Park." For the three months and years ended December 31, 2008 and 2007, the Same Park portfolio constitutes 18.7 million rentable square feet, which includes all assets the Company owned and operated from January 1, 2007 through December 31, 2008 and represents approximately 95.5% of the total square footage of the Company's portfolio as of December 31, 2008.

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 and years ended December 31, 2008 and 2007 in addition to other income and expense items affecting income before minority interests (unaudited, in thousands, except per square foot amounts):

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Financial Condition

The following are key financial ratios with respect to the Company's leverage at and for the three months ended December 31, 2008:

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Preferred Stock Repurchase

During the fourth quarter of 2008, the Company paid $5.5 million to repurchase 400,000 depositary shares, each representing 1/1,000 of a share of the 6.700% Cumulative Preferred Stock, Series P, for an average cost of $13.70 per depositary share. In accordance with Emerging Issues Task Force ("EITF") Topic D-42, the purchase price discount, equaling the liquidation value of $25.00 per depositary share over the purchase price of $13.70 per depositary share, is reflected in the income statement, net of the original issuance costs, and added to net income allocable to common shareholders. After the repurchase, 5,350,000 depositary shares of Preferred Stock, Series P remained outstanding.