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PS Business Parks (PSB) Beats on Q4 FFO, Hikes Dividend
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PS Business Parks Inc.’s fourth-quarter 2016 funds from operations (FFO), as adjusted, of $1.39 per share beat the Zacks Consensus Estimate by a penny and improved 6.1% from $1.31 in the prior-year quarter. We expect this better-than-expected performance to lead to stock movement.
Results reflect a rise in net operating income (NOI). Moreover, the company declared a 13.3% increase in quarterly dividend.
Total operating revenues came in at around $97.7 million, reflecting 3.2% growth from the prior-year period. The figure also surpassed the Zacks Consensus Estimate of $95.9 million.
For full-year 2016, the company reported FFO, as adjusted, per share of $5.44, 12.6% higher than the year-ago figure of $4.83. Further, operating revenues amounted to $387.4 million, up 3.7% from a year ago.
Quarter in Detail
Same Park rental income climbed 3.1% year over year, mainly attributable to improving occupancy and rental rates; while Same Park operating expenses increased 4.8%. As a result, Same Park NOI rose 2.4% year over year. On the other hand, non-Same Park NOI jumped 7.4% year over year led by an increase in occupancy related to 2014 acquisitions.
Annualized Same Park realized rent per square foot rose 2.5% year over year to $14.75. Same Park weighted average occupancy in the quarter was 94.7%, up 60 basis points (bps) year over year; while Non-Same Park weighted average occupancy decreased to 76.9% from 97.1% a year ago.
Liquidity
PS Business Parks exited fourth-quarter 2016 with cash and cash equivalents of $128.6 million, lower than the prior-year end tally of $188.9 million. The company had full availability under its $250-million unsecured credit facility at the end of the fourth quarter.
Dividend Update
Concurrent with its fourth-quarter earnings release, the company announced a regular quarterly dividend of 85 cents per share, reflecting an increase of 13.3% from the prior payout. The increased dividend is payable on Mar 30, 2017 to shareholders of record on Mar 15.
Conclusion
We are encouraged by the better-than-expected performance of PS Business Parks. The company has a diversified portfolio and its ample liquidity augurs well for long-term growth. Further, healthy fundamentals in the multi-tenant flex, office and industrial asset categories are expected to drive growth, while portfolio repositioning strategies can help the company emerge stronger. However, pricing pressure in certain markets, intense competition from developers, owners and operators, and hike in interest rate remain the key concerns.
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
Further, shares of PS Business Parks outperformed the Zacks categorized REIT and Equity Trust – Other industry over the past six months. Over this time frame, PS Business Parks shares logged in a return of 5.7% against the industry’s 5.7% decline.
Key Picks
Investors interested in the REIT industry may consider stocks like The GEO Group, Inc. (GEO - Free Report) , Mack-Cali Realty Corporation and Cousins Properties Incorporated (CUZ - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy).
The GEO Group’s 2017 estimates climbed 3.8% to $2.99 per share, over the past 60 days.
Mack-Cali, currently, has a long-term growth rate of 5.8%.
Moreover, Cousins Properties’ 2017 estimates increased 1.7% to 60 cents per share, over the past 30 days.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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PS Business Parks (PSB) Beats on Q4 FFO, Hikes Dividend
PS Business Parks Inc.’s fourth-quarter 2016 funds from operations (FFO), as adjusted, of $1.39 per share beat the Zacks Consensus Estimate by a penny and improved 6.1% from $1.31 in the prior-year quarter. We expect this better-than-expected performance to lead to stock movement.
Results reflect a rise in net operating income (NOI). Moreover, the company declared a 13.3% increase in quarterly dividend.
Total operating revenues came in at around $97.7 million, reflecting 3.2% growth from the prior-year period. The figure also surpassed the Zacks Consensus Estimate of $95.9 million.
For full-year 2016, the company reported FFO, as adjusted, per share of $5.44, 12.6% higher than the year-ago figure of $4.83. Further, operating revenues amounted to $387.4 million, up 3.7% from a year ago.
Quarter in Detail
Same Park rental income climbed 3.1% year over year, mainly attributable to improving occupancy and rental rates; while Same Park operating expenses increased 4.8%. As a result, Same Park NOI rose 2.4% year over year. On the other hand, non-Same Park NOI jumped 7.4% year over year led by an increase in occupancy related to 2014 acquisitions.
Annualized Same Park realized rent per square foot rose 2.5% year over year to $14.75. Same Park weighted average occupancy in the quarter was 94.7%, up 60 basis points (bps) year over year; while Non-Same Park weighted average occupancy decreased to 76.9% from 97.1% a year ago.
Liquidity
PS Business Parks exited fourth-quarter 2016 with cash and cash equivalents of $128.6 million, lower than the prior-year end tally of $188.9 million. The company had full availability under its $250-million unsecured credit facility at the end of the fourth quarter.
Dividend Update
Concurrent with its fourth-quarter earnings release, the company announced a regular quarterly dividend of 85 cents per share, reflecting an increase of 13.3% from the prior payout. The increased dividend is payable on Mar 30, 2017 to shareholders of record on Mar 15.
Conclusion
We are encouraged by the better-than-expected performance of PS Business Parks. The company has a diversified portfolio and its ample liquidity augurs well for long-term growth. Further, healthy fundamentals in the multi-tenant flex, office and industrial asset categories are expected to drive growth, while portfolio repositioning strategies can help the company emerge stronger. However, pricing pressure in certain markets, intense competition from developers, owners and operators, and hike in interest rate remain the key concerns.
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 and EPS Surprise | PS Business Parks, Inc. Quote
Further, shares of PS Business Parks outperformed the Zacks categorized REIT and Equity Trust – Other industry over the past six months. Over this time frame, PS Business Parks shares logged in a return of 5.7% against the industry’s 5.7% decline.
Key Picks
Investors interested in the REIT industry may consider stocks like The GEO Group, Inc. (GEO - Free Report) , Mack-Cali Realty Corporation and Cousins Properties Incorporated (CUZ - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy).
The GEO Group’s 2017 estimates climbed 3.8% to $2.99 per share, over the past 60 days.
Mack-Cali, currently, has a long-term growth rate of 5.8%.
Moreover, Cousins Properties’ 2017 estimates increased 1.7% to 60 cents per share, over the past 30 days.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>