PS Business Parks, Inc. PSB reported second-quarter 2021 core funds from operations (FFO) per share of $1.77, surpassing the Zacks Consensus Estimate of $1.72. The reported figure also increased 11.3% year on year. Results reflect better-than-expected top-line growth.

Rental income came in at $109.4 million, beating the Zacks Consensus Estimate of $107.6 million.The figure also increased 8.8% from the year-ago period.

During the second quarter, the company granted $0.1 million of rent deferral and $0.1 million of rent abatement. Moreover, as of Jun 30, 2021, the company collected $4.3 million of rent deferral repayment, denoting 99.2% of the amounts slated to be repaid through June 2021. The company also noted that as of Aug 2, it had collected 99.4% of billed revenues during the six-month period ended Jun 30, 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 second quarter, PS Business Parks executed leases on 1.9 million square feet compared with the prior-year quarter’s 1.8 million square feet. The weighted average cash rental rate growth on leases executed during the reported quarter was 3.1%, while average net effective rent growth was 10.6% for the same period.

Average lease term of the leases executed during the quarter was 3.3 years, with associated average transaction costs (tenant improvements and leasing commissions) of $2.77 per square foot. This compares to average lease term and transaction costs on leases executed of 3.2 years and $2.30 per square foot, respectively, in the prior-year period.

Same-park rental income increased 7.9% year over year to $101.5 million, while same-park NOI grew 9.4% to $73.2 million. Same-park revenue per occupied-square-foot climbed 7.1% year on year to $16.63. In addition, weighted average occupancy in the second quarter of 92.9% inched up 0.8% year on year.

During the quarter, the company sold a 198,000-square-foot office oriented flex business park in Chantilly, VA, for net proceeds of $32.6 million.

Liquidity

PS Business Parks exited second-quarter 2021 with cash and cash equivalents of nearly $116 million, up from the $69.1 million reported at the end of 2020.

Dividend Update

On Jul 27, the company’s board of directors announced a quarterly dividend of $1.05 per common share. This dividend will be paid on Sep 30, to shareholders of record as of Sep 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.

We now look forward to the earnings releases of other REITs, including Regency Centers Corporation REG, Lamar Advertising Company LAMR and Iron Mountain Incorporated IRM, which are slated to release results on Aug 5.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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