A month has gone by since the last earnings report for PS Business Parks (PSB). Shares have added about 2.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is PS Business Parks due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

PS Business Parks Q4 FFO Beats Estimates

PS Business Parks reported fourth-quarter 2020 core FFO per share of $1.66, surpassing the Zacks Consensus Estimate of $1.64. Moreover, the reported figure increased from the $1.65 reported in the year-ago quarter.

Rental income came in at $105.1 million, beating the Zacks Consensus Estimate of $101.1 million. However, the figure edged down 1% from the year-ago quarter’s $106.2 million.

Results highlight increased cash rental income from the occupied portion of its same-park portfolio, though lower weighted average occupancy in the quarter played spoilsport.

Moreover, the company reported decent rent collections for the fourth quarter, collecting about 98% of total rent, comprising 98%, 98% and 99% collection for industrial, flex and office assets, respectively.

In addition, 2% of the quarter’s total rent remained outstanding. Also, during the same period, the company granted $0.2 million of deferred rent and less than $0.1 million of rent abatement. Further, as of Feb 19, 2021, the company had open rent relief requests from roughly 1% of customers.

Quarter in Detail

During the fourth quarter, PS Business Parks executed leases on 1.9 million square feet, compared with the prior-year quarter’s 2.1 million. Weighted average cash rental rate growth on leases executed during the reported quarter was 5.3%, while average net effective rent growth was 14.9% 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 $2.92 per square foot. This compares to average lease term and transaction costs on leases executed in the prior-year period of 4.8 years and $4.08 per square foot, respectively.

Same-park rental income edged down 0.9% year over year to $96.6 million, while same-park NOI slid 3% to $68 million. However, same-park revenue per occupied-square-foot inched up 1.7% year on year to $16.37.

Same-park cash NOI declined 0.5% year on year to $69.2 million, reflecting lower weighted average occupancy in the fourth quarter, which declined to 92% from 94.4% in the year-ago period. This was mostly negated by increased cash rental income from the occupied part of its same-park portfolio with cash rental income per occupied square foot increasing 3.6% year on year to $16.57.