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PS Business Parks, Inc. (PSB - Analyst Report), a real estate investment trust (REIT) that owns and operates commercial real estate properties across the U.S., has recently augmented its Texas portfolio with the acquisition of three multi-tenant flex buildings spanning 226,000 square feet. The properties were purchased from an unnamed seller for $14.9 million.

The acquired properties are presently 86.1% leased, with an average leased space of 21,600 square feet. The buildings are strategically located adjacent to the parks that are already owned by the company. With the current purchase, PS Business Parks would have 1.7 million square feet of multi-tenant flex space in its kitty in Austin, spread across nine separate business parks.

PS Business Parks owns low-rise suburban multi-tenant offices, business parks and industrial and flex assets. Located mostly in high population markets, flex properties are a combination of warehouse and office space and can be easily configured to suit a variety of uses.

The warehouse component of the flex space is primarily used for purposes such as light manufacturing and assembly, storage and warehousing, showroom, laboratory, distribution and research and development activities. The office component of the flex space is complementary to the warehouse component and enables businesses to accommodate management and production staff in the same facility.

Over the years, PS Business Parks has focused on investing and owning real estate in diversified markets, thereby tapping multiple industry concentrations and minimizing the risks associated with the economic down cycles. In addition, the company seeks to maximize its cash flow by controlling capital expenditures associated with re-leasing space by acquiring and owning properties, which can be easily reconfigured to suit a variety of uses for a wide range of tenants.

The wholly-owned portfolio of the company as of December 19, 2012, included 28.3 million rentable square feet of industrial and flex space. The portfolio is well spread out in eight states and is currently leased to approximately 4,600 customers.

We maintain our Neutral recommendation for PS Business Parks, which presently has Zacks #3 Rank that translates into a short-term Hold rating. We also have a Neutral recommendation and Zacks #3 Rank for First Industrial Realty Trust Inc. (FR - Snapshot Report), a competitor of PS Business Parks.

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