PS Business Parks Inc. (PSB), a real estate investment trust (REIT) that acquires, develops, owns, and operates commercial properties, reported a decline in third quarter 2009 FFO (fund from operations) to $31.5 million or $1.04 per share from $32.0 million or $1.14 per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
The decrease in FFO was primarily due to a decrease in net operating income, which declined 5.9% year-over-year from $48.9 million to $46.0 million. Rental income during the quarter was $67.5 million versus $71.5 million in the year-ago quarter – a decrease of 5.5%. Overall portfolio occupancy at quarter end was 89.5% compared to 93.7% in the year-ago period. Average realized rent per square foot during the quarter decreased marginally to $15.44 from $15.60 in the third quarter of 2008.
During the quarter, PSB sold approximately 3.5 million common shares in a public offering, along with 0.4 million common shares to Public Storage (PSA), which has about 46% ownership in the company. Approximately $171.2 million of net proceeds were raised from the equity sale.
At quarter end, PSB had cash and cash equivalents of $203.2 million and about $100 million available under its line of credit. Debt to market cap was 31.6% at quarter end, with ratio of FFO to fixed charges and preferred distributions at 3.3x. During the quarter, PSB declared a dividend of 44 cents per share.
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