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PS Business Parks Inc Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 25, 2011 05:27PM
PS Business Parks Inc (PSB) filed Annual Report for the period ended 2010-12-31. Ps Business Parks Inc. has a market cap of $1.47 billion; its shares were traded at around $59.72 with a P/E ratio of 15.3 and P/S ratio of 5.5. The dividend yield of Ps Business Parks Inc. stocks is 3%. Ps Business Parks Inc. had an annual average earning growth of 5.8% over the past 10 years. GuruFocus rated Ps Business Parks Inc. the business predictability rank of 3-star.Hedge Fund Gurus that owns PSB: Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns PSB: Chuck Royce of Royce& Associates.
Highlight of Business Operations:
In 2006, the Company acquired six business parks comprising 1.2 million square feet for an aggregate cost of $180.3 million in Silver Spring, Maryland, Signal Hill, California, Chantilly, Virginia and Palm Beach County, Florida. Additionally, the Company sold a 30,500 square foot building located in Beaverton, Oregon, for $4.4 million resulting in a gain of $1.5 million and 32,400 square feet in Miami for a combined $3.7 million, resulting in a gain of $865,000.
Pursuant to a cost sharing and administrative services agreement, the Company shares costs with PS and affiliated entities for certain administrative services. These services include investor relations, legal, corporate tax, information systems and office services. Under this agreement, costs are allocated to the Company in accordance with its proportionate share of these costs. These allocated costs totaled $543,000, $372,000 and $390,000 for the years ended December 31, 2010, 2009 and 2008, respectively.
The Company continues to manage commercial properties owned by PS and its affiliates, which are generally adjacent to mini-warehouses, for a fee of 5% of the gross revenues of such properties in addition to reimbursement of direct costs. The property management contract with PS is for a seven-year term with the agreement automatically extending for an additional one-year period upon each one-year anniversary of its commencement (unless cancelled by either party). Either party can give notice of its intent to cancel the agreement upon expiration of its current term. Management fee revenue derived from these management contracts with PS and its affiliates totaled $672,000, $698,000 and $728,000 for the years ended December 31, 2010, 2009 and 2008, respectively.
In December, 2006, PS began providing property management services for the mini storage component of two assets owned by the Company. These mini storage facilities, located in Palm Beach County, Florida, operate under the Public Storage name. Either the Company or PS can cancel the property management contract upon 60 days notice. Management fee expenses under the contract were $48,000, $50,000 and $45,000 for the years ended December 31, 2010, 2009 and 2008, respectively.
Debt Financing: The Company has used debt financing to a limited degree. The primary source of debt that the Company relies upon to provide short term capital is its $100.0 million unsecured line of credit (the Credit Facility) with Wells Fargo. The Company had $93.0 million outstanding on the Credit Facility at an interest rate of 2.11% at December 31, 2010. Subsequent to December 31, 2010, the Company used funds borrowed from PS (as discussed below) to pay down the Credit Facility in full. The Company had no balance outstanding on its Credit Facility at December 31, 2009.
On July 28, 2010, the Company extended the term of its Credit Facility with Wells Fargo Bank to August 1, 2012. The Credit Facility has a borrowing limit of $100.0 million. Interest on outstanding borrowings is payable monthly. The rate of interest charged on borrowings is equal to a rate ranging from the London Interbank Offered Rate (LIBOR) plus 1.60% to LIBOR plus 2.60% depending on the Companys credit ratings and coverage ratios, as defined. Currently, the Companys rate under the Credit Facility is LIBOR plus 1.80%. In addition, the Company is required to pay an annual commitment fee ranging from 0.15% to 0.40% of the borrowing limit (currently 0.20%). The Company had $93.0 million outstanding on the Credit Facility at an interest rate of 2.11% at December 31, 2010. Subsequent to December 31, 2010, the Company used funds borrowed from PS to pay down the Credit Facility in full and as such, the available balance is $100.0 million. The Company had n
Stocks Discussed: PSB,