PS Business Parks (PSB) Q2 FFO Beats: Shares Down Less Than 1%
Zacks Investment Research | Jul 27, 2016 04:03AM ET
PS Business Parks Inc.’s (NYSE:PSB) second-quarter 2016 adjusted funds from operations (“FFO”) per share came at $1.36, beating the Zacks Consensus Estimate by 4 cents and improving 13.3% from $1.20 in the prior-year quarter. We expect this outperformance to lead to stock movement.
Results reflected a rise in net operating income (NOI) together with lower preferred distributions as well as reduced interest expense.
Total operating revenues came in at around $96.2 million, reflecting a 3.4% growth from the prior-year period.
Quarter in Detail
Same Park rental income climbed 4.1% year over year, mainly attributable to improving occupancy and rental rates; while Same Park operating expenses inched up 0.5%. As a result, Same Park NOI rose 5.7% year over year. On the other hand, non-Same Park NOI jumped 72.5% year over year led by an increase in occupancy.
Annualized Same Park realized rent per square foot rose 3.1% year over year to $14.80. Same Park weighted average occupancy in the quarter was 93.6%, up 90 basis points (bps) year over year; while Non-Same Park weighted average occupancy grew to 95.0% from 70.8% a year ago.
Liquidity
PS Business Parks exited second-quarter 2016 with cash and cash equivalents of $3.7 million, lower than the prior-year end tally of $188.9 million. The company had $196.0 million available under its $250-million unsecured credit facility at second-quarter end.
Dividend Update
Concurrent with its second-quarter earnings release, the company announced a regular quarterly dividend of 75 cents per share, payable on Sep 29 to shareholders of record on Sep 14.
Conclusion
PS Business Parks is poised for growth in the long term with presence in diversified markets and portfolio-repositioning strategies. However, pricing pressure in certain markets, asset dispositions, intense competition from developers, owners and operators, and any rise in interest rate remain key concerns.
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