PS Business Parks, Inc. PSB reported fourth-quarter 2021 core funds from operations (FFO) per share of $1.81, up 9% year over year. Results reflect higher net operating income (NOI). However, the figure marginally lagged the Zacks Consensus Estimate of $1.82.

Total rental income came in at $110.84 million, narrowly beating the Zacks Consensus Estimate of $110.82 million. The figure increased 5.5% from the year-ago period. PS Business witnessed growth in cash rental income, partly offset by a rise in the adjusted cost of operations.

PSB noted that as of Feb 18, it had collected 99.9% of billed revenues during 2021. Further, as of Dec 31, 2021, the company had open rent relief requests from less than 1% of its customers.

In 2021, the company’s core FFO of $6.97 per share was up 6.1% from a year ago and beat the consensus estimate of $6.88. Total rental income grew 5.6% to $438.7 million.

Quarter in Detail

During the fourth quarter, PS Business Parks executed leases on 1.8 million square feet, in line with the prior-year quarter. The cash rental rate growth was 6.1%, while net effective rent growth was 16.4%.

The average lease term of all the leases executed during the quarter was 3.6 years, with associated average transaction costs (tenant improvements and leasing commissions) of $3.15 per square foot. This compares with the average lease term and transaction costs on leases executed of 3.3 years and $2.90 per square foot, respectively, in the prior-year period.

The same-park rental income increased 7.3% year over year to $100.4 million, while the same-park NOI grew 8.6% to $72.2 million. The same-park cash rental income increased 5.8%, while cash NOI grew 6.5% year over year. The same-park revenue per occupied-square-foot climbed 3.8% to $16.74. In addition, the weighted average occupancy of 95.7% increased 3% year over year in the fourth quarter.

During the quarter, the company sold Lusk, a 371,000 square foot industrial-flex business park located in San Diego, CA, for net sale proceeds of $311.1 million. Also, PSB sold Ammendale, a 53,000 square foot industrial building located in Beltsville, MD, for net sale proceeds of $4.5 million. Further, Royal Tech 10, a 70,000 square foot industrial-flex building located in Irving, TX, was sold for net sale proceeds of $8.8 million.

Moreover, during the fourth quarter, PS Business Parks acquired Jupiter Business Park, a 141,000 square foot industrial business park located in Plano, TX, for a total purchase price of $25.6 million, inclusive of capitalized transaction cost.