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PS Business Parks (PSB) Q4 FFO Beats Estimates, Stock Up
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Shares of PS Business Parks, Inc. appreciated 3.31% during Tuesday’s trading session, reflecting investors’ positive sentiments as the REIT delivered a better-than-expected performance in the fourth quarter.
The company reported fourth-quarter 2020 core funds from operations (FFO) per share of $1.66, surpassing the Zacks Consensus Estimate of $1.64. Moreover, the reported figure increased from the $1.65 reported in the year-ago quarter.
Rental income came in at $105.1 million, beating the Zacks Consensus Estimate of $101.1 million. However, the figure edged down 1% from the year-ago quarter’s $106.2 million.
Results highlight increased cash rental income from the occupied portion of its same-park portfolio, though lower weighted average occupancy in the quarter played spoilsport.
Moreover, the company reported decent rent collections for the fourth quarter, collecting about 98% of total rent, comprising 98%, 98% and 99% collection for industrial, flex and office assets, respectively.
In addition, 2% of the quarter’s total rent remained outstanding. Also, during the same period, the company granted $0.2 million of deferred rent and less than $0.1 million of rent abatement. Further, as of Feb 19, 2021, the company had open rent relief requests from roughly 1% of customers.
Quarter in Detail
During the fourth quarter, PS Business Parks executed leases on 1.9 million square feet, compared with the prior-year quarter’s 2.1 million. Weighted average cash rental rate growth on leases executed during the reported quarter was 5.3%, while average net effective rent growth was 14.9% for the same period.
Average lease term of the leases executed during the quarter was 3.3 years, with associated average transaction costs (tenant improvements and leasing commissions) of $2.92 per square foot. This compares to average lease term and transaction costs on leases executed in the prior-year period of 4.8 years and $4.08 per square foot, respectively.
Same-park rental income edged down 0.9% year over year to $96.6 million, while same-park NOI slid 3% to $68 million. However, same-park revenue per occupied-square-foot inched up 1.7% year on year to $16.37.
Same-park cash NOI declined 0.5% year on year to $69.2 million, reflecting lower weighted average occupancy in the fourth quarter, which declined to 92% from 94.4% in the year-ago period. This was mostly negated by increased cash rental income from the occupied part of its same-park portfolio with cash rental income per occupied square foot increasing 3.6% year on year to $16.57.
Portfolio Activity
In October 2020, PS Business Parks completed the acquisition of Pickett Industrial Park in Alexandria, VA. The infill multi-tenant industrial park spans across an area of 246,000 square feet and was acquired for $46.3 million. The company also completed the development of its 83,000-square-foot multi-tenant industrial property at the Freeport Business Park neighboring the Dallas/Fort Worth International Airport in Dallas, TX, for a total development cost of $8.1 million, exclusive of land value.
Furthermore, management noted that the construction of Brentford at The Mile is continuing on schedule and in line with the prior development cost estimate of $110-$115 million, exclusive of land value.
Liquidity
PS Business Parks exited 2020 with cash and cash equivalents of $69.1 million, up from the $62.8 million reported at the end of 2019.
Dividend Update
On Feb 17, the company’s board of directors announced a quarterly dividend of $1.05 per common share. This dividend will be paid on Mar 31, to shareholders of record as of Mar 16, 2021.
We now look forward to the earnings releases of other REITs, including American Tower Corporation (AMT - Free Report) , Outfront Media Inc. (OUT - Free Report) and Mack-Cali Realty Corporation , which are slated to release results this week.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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PS Business Parks (PSB) Q4 FFO Beats Estimates, Stock Up
Shares of PS Business Parks, Inc. appreciated 3.31% during Tuesday’s trading session, reflecting investors’ positive sentiments as the REIT delivered a better-than-expected performance in the fourth quarter.
The company reported fourth-quarter 2020 core funds from operations (FFO) per share of $1.66, surpassing the Zacks Consensus Estimate of $1.64. Moreover, the reported figure increased from the $1.65 reported in the year-ago quarter.
Rental income came in at $105.1 million, beating the Zacks Consensus Estimate of $101.1 million. However, the figure edged down 1% from the year-ago quarter’s $106.2 million.
Results highlight increased cash rental income from the occupied portion of its same-park portfolio, though lower weighted average occupancy in the quarter played spoilsport.
Moreover, the company reported decent rent collections for the fourth quarter, collecting about 98% of total rent, comprising 98%, 98% and 99% collection for industrial, flex and office assets, respectively.
In addition, 2% of the quarter’s total rent remained outstanding. Also, during the same period, the company granted $0.2 million of deferred rent and less than $0.1 million of rent abatement. Further, as of Feb 19, 2021, the company had open rent relief requests from roughly 1% of customers.
Quarter in Detail
During the fourth quarter, PS Business Parks executed leases on 1.9 million square feet, compared with the prior-year quarter’s 2.1 million. Weighted average cash rental rate growth on leases executed during the reported quarter was 5.3%, while average net effective rent growth was 14.9% for the same period.
Average lease term of the leases executed during the quarter was 3.3 years, with associated average transaction costs (tenant improvements and leasing commissions) of $2.92 per square foot. This compares to average lease term and transaction costs on leases executed in the prior-year period of 4.8 years and $4.08 per square foot, respectively.
Same-park rental income edged down 0.9% year over year to $96.6 million, while same-park NOI slid 3% to $68 million. However, same-park revenue per occupied-square-foot inched up 1.7% year on year to $16.37.
Same-park cash NOI declined 0.5% year on year to $69.2 million, reflecting lower weighted average occupancy in the fourth quarter, which declined to 92% from 94.4% in the year-ago period. This was mostly negated by increased cash rental income from the occupied part of its same-park portfolio with cash rental income per occupied square foot increasing 3.6% year on year to $16.57.
Portfolio Activity
In October 2020, PS Business Parks completed the acquisition of Pickett Industrial Park in Alexandria, VA. The infill multi-tenant industrial park spans across an area of 246,000 square feet and was acquired for $46.3 million. The company also completed the development of its 83,000-square-foot multi-tenant industrial property at the Freeport Business Park neighboring the Dallas/Fort Worth International Airport in Dallas, TX, for a total development cost of $8.1 million, exclusive of land value.
Furthermore, management noted that the construction of Brentford at The Mile is continuing on schedule and in line with the prior development cost estimate of $110-$115 million, exclusive of land value.
Liquidity
PS Business Parks exited 2020 with cash and cash equivalents of $69.1 million, up from the $62.8 million reported at the end of 2019.
Dividend Update
On Feb 17, the company’s board of directors announced a quarterly dividend of $1.05 per common share. This dividend will be paid on Mar 31, to shareholders of record as of Mar 16, 2021.
PS Business Parks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PS Business Parks, Inc. Price, Consensus and EPS Surprise
PS Business Parks, Inc. price-consensus-eps-surprise-chart | PS Business Parks, Inc. Quote
We now look forward to the earnings releases of other REITs, including American Tower Corporation (AMT - Free Report) , Outfront Media Inc. (OUT - Free Report) and Mack-Cali Realty Corporation , which are slated to release results this week.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>