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PS Business Parks Inc Reports Operating Results (10-Q)

May 06, 2010 | About:
10qk

10qk

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PS Business Parks Inc (PSB) filed Quarterly Report for the period ended 2010-03-31.

Ps Business Parks Inc has a market cap of $1.43 billion; its shares were traded at around $58.4 with and P/S ratio of 5.3. The dividend yield of Ps Business Parks Inc stocks is 3.1%. 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.PSB is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

The Company owns 4.0 million square feet in Southern California located in Los Angeles, Orange and San Diego Counties. Market vacancies have increased due to the continued weakness in the economy and the resulting job losses combined with the lack of credit availability and its effect on businesses. These factors have also created significantly more competition for tenants, which in turn has placed pressure on occupancy and rental rates. Vacancy rates in Southern California range from 4.9% to 19.5%. The Companys vacancy rate in this region at March 31, 2010 was 8.2%. Although the overall market experienced negative net absorption of 0.1% for the three months ended March 31, 2010, the Companys weighted average occupancy for the region increased from 90.5% for the first three months of 2009 to 92.4% for the first three months of 2010. However, annualized realized rent per square foot decreased 8.9% from $17.28 per square foot for the first three months of 2009 to $15.74 per square foot for the first three months of 2010 as the Company was required to reduce rental rates in an effort to maintain occupancy.

The Company owns 1.8 million square feet in Northern California with concentrations in Sacramento, the East Bay (Hayward and San Ramon) and Silicon Valley (San Jose and Santa Clara). Vacancy rates in these submarkets are 23.2%, 21.0% and 16.2%, respectively. The Companys vacancy rate in its Northern California portfolio at March 31, 2010 was 10.9%. During the first quarter of 2010, demand in these submarkets continued to slow measurably. Renewals and company consolidations continued to be the trend in this market, which negatively impacted both rental and occupancy rates. For the three months ended March 31, 2010, the combined submarkets experienced negative net absorption of 0.4%. The Companys weighted average occupancy in this region decreased from 90.2% for the first three months of 2009 to 88.9% for the first three months of 2010 due in part to two tenant defaults comprising 134,000 square feet. Annualized realized rent per square foot decreased 12.0% from $14.03 per square foot for the first three months of 2009 to $12.35 per square foot for the first three months of 2010.

The Company owns 1.0 million square feet in Southern Texas, specifically in the Austin and Houston markets. Market vacancy rates are 14.4% in the Austin market and 16.3% in the Houston market. The Companys vacancy rate for these combined markets at March 31, 2010 was 14.8%. During the first quarter of 2010, demand remained flat in these markets. The combined markets experienced positive net absorption of 0.2% for the three months ended March 31, 2010 as opposed to the net negative absorption experienced in 2009. The Companys weighted average occupancy in this region decreased from 86.2% for the first three months of 2009 to 85.3% for the first three months of 2010 primarily due to the scheduled expiration of a 28,000 square foot lease in Austin. Annualized realized rent per square foot decreased 5.7% from $11.56 per square foot for the first three months of 2009 to $10.90 per square foot for the first three months of 2010.

The Company owns 1.7 million square feet in Northern Texas, primarily located in the Dallas Metroplex market. The market vacancy rate in Las Colinas, where significant concentrations of the Companys properties are located, is 11.1%. The Companys vacancy rate at March 31, 2010 in this market was 8.5%. During the first quarter of 2010, this market showed signs of slow recovery from the impact of the national recession. Although the market experienced positive net absorption of 0.1% for the three months ended March 31, 2010, the Companys weighted average occupancy for the region decreased from 92.5% for the first three months of 2009 to 91.3% for the first three months of 2010. Despite the decrease in weighted average occupancy, annualized realized rent per square foot increased 1.6% from $10.78 per square foot for the first three months of 2009 to $10.95 per square foot for the first three months of 2010 as rental rates increased modestly on in-place leases partially offset by rental rate reductions on new and renewed leases.

The Company owns 3.6 million square feet in South Florida, which consists of Miami International Commerce Center (MICC) business park located in the Airport West submarket of Miami-Dade County and two multi-tenant flex parks located in Palm Beach County. MICC is located less than one mile from the cargo entrance of the Miami International Airport, which is one of the most active ports in the United States. The effect of the economic recession on the import/export business has had a measurable negative impact on demand in Miami. Market vacancy rates for Miami-Dade County and Palm Beach County are 12.5% and 11.7%, respectively, compared with the Companys vacancy rate for Miami-Dade County and Palm Beach County of 3.6% and 12.3%, respectively, at March 31, 2010. For the three months ended March 31, 2010, the combined markets experienced positive net absorption of 0.1%. The Companys weighted average occupancy decreased from 96.1% for the first three months of 2009 to 95.2% for the first three months of 2010. Annualized realized rent per square foot decreased 3.1% from $9.53 per square foot for the first three months of 2009 to $9.23 per square foot for the first three months of 2010.

The Company owns 1.3 million square feet in the Beaverton submarket of Portland, Oregon. The market vacancy rate in this region is 25.1%. The Companys vacancy rate in the market was 17.8% at March 31, 2010. The economic recession has resulted in higher vacancy rates and increased rent concessions in the market. Although the market experienced negative net absorption of 0.7% for the three months ended March 31, 2010, the Companys weighted average occupancy increased from 81.5% for the first three months of 2009 to 82.0% for the first three months of 2010. Despite the increase in weighted average occupancy, annualized realized rent per square foot decreased 0.9% from $16.43 per square foot for the first three months of 2009 to $16.29 per square foot for the first three months of 2010.

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10qk
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