PS Business Parks, Inc. PSB reported first-quarter 2021 core funds from operations (FFO) per share of $1.67, in line with the Zacks Consensus Estimate. However, the reported figure decreased 2.9% year on year.

Results reflect flat net operating income, and higher general and administrative expense.

Nevertheless, rental income came in at $108 million, beating the Zacks Consensus Estimate of $105 million. However, the figure inched up 1.7% from the year-ago quarter’s $106.2 million.

During the first quarter, the company granted $0.2 million of deferred rent and $0.1 million of rent abatement. Moreover, as of Mar 31, 2021, the company collected $3.9 million, or 98.5%, of the scheduled repayments of COVID-19 related rent deferrals billed through Mar 1, 2021.

The company also noted that as of Apr 26, 2021, it had collected 98.8% of billed revenues during first-quarter 2021. Further, as of the same date, the company had open rent relief requests from roughly 1% of its customers.

Quarter in Detail

During the first quarter, PS Business Parks executed leases on 2.0 million square feet in 569 transactions compared with the prior-year quarter’s 1.9 million square feet in 495 transactions. Weighted average cash rental rate growth on leases executed during the reported quarter was 5.7%, while average net effective rent growth was 14.8% for the same period.

Average lease term of the leases executed during the quarter was 3.2 years, with associated average transaction costs (tenant improvements and leasing commissions) of $2.59 per square foot. This compares to average lease term and transaction costs on leases executed of 3.8 years and $3.08 per square foot, respectively, in the prior-year period.

Same-park rental income inched up 0.9% year over year to $99.99 million, while same-park NOI slid 0.6% to $70.3 million. However, same-park revenue per occupied-square-foot climbed 1.2% year on year to $16.47.

Same-park cash NOI declined 0.2% year on year to $69.9 million, reflecting 1.2% cash rental income growth offset by 4.6% growth in adjusted cost of operations. Also, weighted average occupancy in the first quarter of 92.4% shrunk 40 basis points (bps) year on year.

Liquidity

PS Business Parks exited first-quarter 2021 with cash and cash equivalents of $69.5 million, marginally up from the $69.1 million reported at the end of 2020.

Dividend Update

On Apr 20, the company’s board of directors announced a quarterly dividend of $1.05 per common share. This dividend will be paid on Jun 30, to shareholders of record as of Jun 15,
2021.

PS Business Parks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.