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PS Business Parks (PSB) Q1 FFO & Revenues Beat Estimates

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PS Business Parks, Inc. reported first-quarter 2018 funds from operations (FFO) of $1.59 per share, beating the Zacks Consensus Estimate of $1.50. The figure also came in 4.6% higher than $1.52 recorded in the prior-year quarter.

Results highlight a rise in Same-Park net operating income (NOI) that was backed by growth in rental rates.

Rental income came in around $103.8 million, marking 3.7% growth from the year-ago figure. Additionally, the figure outpaced the Zacks Consensus Estimate of $100.6 million.

Quarter in Detail

Same-Park rental income was up 2.4% year over year, while Same-Park NOI edged up 0.7% year over year, mainly driven by improving rental rates.

Same-Park annualized rental income per occupied-square-foot rose 2.3% to $15.40, while weighted average square-foot occupancy was 94.6%, flat year over year.

Liquidity

PS Business Parks exited first-quarter 2018 with cash and cash equivalents of $39.2 million, down from $114.9 million at the end of the prior quarter.

Portfolio Update

During the first quarter, the company sold Corporate Pointe Business Park in Orange County, CA — consisting of five multi-tenant office buildings and aggregating 161,000 square feet of space — for net proceeds of $41.7 million. Following the end of the quarter, the company accomplished the sale of Orange County Business Center, which comprises five multi-tenant office buildings, spanning 437,000 square feet of space, for $73.3 million.

The company plans selling additional 107,000 rentable square feet of office product in Orange County, CA, as well as 194,000 square feet of flex product in Dallas, TX, in 2018.

Dividend Update

On Apr 24, the company announced a regular quarterly dividend of 85 cents per share, same as the previous payout. The dividend is payable on Jun 28, to shareholders of record as of Jun 13, 2018.

Conclusion

We are encouraged with the better-than-expected performance of PS Business Parks in the first quarter. Notably, healthy fundamentals in the multi-tenant flex, office and industrial asset categories are anticipated to stoke growth, over the long run. Nonetheless, stiff competition from other office and industrial asset owners in the market hampers its ability to attract and retain tenants at higher rents. Rate hike adds to its woes.

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


We now look forward to the earnings releases of other REITs like Taubman Centers, Inc. , Kimco Realty Corporation (KIM - Free Report) and Digital Realty Trust, Inc. (DLR - Free Report) , which are scheduled to report quarterly numbers on Apr 26.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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