News Release

PS Business Parks, Inc.
701 Western Avenue
Glendale, CA 91201-2349
www.psbusinessparks.com

		For Release:		Immediately
		Date:		May 2, 2011
		Contact:		Edward A. Stokx
				(818) 244-8080, Ext. 1649

PS Business Parks, Inc. Reports Results for the First Quarter Ended March 31, 2011

GLENDALE, California — PS Business Parks, Inc. (NYSE:PSB) reported operating results for the first quarter ended March 31, 2011.

Net income allocable to common shareholders for the three months ended March 31, 2011 was $16.6 million, or $0.67 per diluted share, on revenues of $74.1 million compared to $11.7 million, or $0.48 per diluted share, on revenues of $67.3 million for the same period in 2010.

Revenues for the three months ended March 31, 2011 increased $6.8 million, or 10.1%, over the same period in 2010 as a result of an increase in revenues from the Non-Same Park facilities of $9.0 million partially offset by a decrease in revenues from the Company’s Same Park portfolio of $2.2 million primarily due to decreases in rental and occupancy rates. Net income allocable to common shareholders for the three months ended March 31, 2011 increased $4.8 million over the same period in 2010 primarily due to the net gain of $7.4 million on the repurchase of preferred units below par during the first quarter of 2011 combined with an increase in net operating income. The increase was partially offset by a $5.2 million gain on the sale of a real estate facility in 2010 combined with an increase in depreciation expense primarily related to 2010 property acquisitions.

Funds From Operations

Funds from operations (“FFO”) allocable to common and dilutive shares for the three months ended March 31, 2011 and 2010 were $42.4 million, or $1.32 per common and dilutive share, and $28.3 million, or $0.89 per common and dilutive share, respectively. The increase in FFO per common and dilutive share for the three months ended March 31, 2011 over the same period in 2010 was primarily due to the net gain of $7.4 million on the repurchase of preferred units below par during the first quarter of 2011 combined with an increase in net operating income and a decrease in preferred equity distributions as a result of the repurchase of preferred units noted above combined with preferred equity redemptions during 2010.

The following table summarizes the impact of the gain on repurchase of preferred equity below par and acquisition transaction costs on the Company’s FFO per common and dilutive share for the three months ended March 31, 2011 and 2010:

		For The Three Months
		Ended March 31,
		2011				2010
FFO per common and dilutive share, before non-cash and other adjustments		$	1.09			$	0.92
Gain on the repurchase of preferred equity			0.23				—
Acquisition transaction costs			—				(0.03	)
FFO per common and dilutive share, as reported		$	1.32			$	0.89

Property Operations

In order to evaluate the performance of the Company’s overall portfolio over comparable periods, management analyzes the operating performance of a consistent group of properties owned and operated throughout both periods (herein referred to as “Same Park”). Operating properties that the Company acquired subsequent to January 1, 2010 are referred to as “Non-Same Park.” For the three months ended March 31, 2011 and 2010, the Same Park facilities constitute 19.4 million rentable square feet, which includes all assets in continuing operations that the Company owned from January 1, 2010 through March 31, 2011, representing 89.1% of the total square footage of the Company’s portfolio as of March 31, 2011.

The Company’s property operations account for substantially all of the net operating income earned by the Company. The following table presents the operating results of the Company’s properties for the three months ended March 31, 2011 and 2010 in addition to other income and expense items affecting income from continuing operations (unaudited, in thousands, except per square foot amounts):

		For The Three Months
		Ended March 31,
		2011				2010				Change
Rental income:
Same Park (19.4 million rentable square feet) (1)		$	64,578			$	66,788				(3.3	%)
Non-Same Park (2.4 million rentable square feet) (2)			9,368				344				2,623.3	%
Total rental income			73,946				67,132				10.2	%
Cost of operations:
Same Park			22,125				22,859				(3.2	%)
Non-Same Park			3,776				107				3,429.0	%
Total cost of operations			25,901				22,966				12.8	%
Net operating income (3):
Same Park			42,453				43,929				(3.4	%)
Non-Same Park			5,592				237				2,259.5	%
Total net operating income			48,045				44,166				8.8	%
Other income and expenses:
Facility management fees			178				173				2.9	%
Interest and other income			94				109				(13.8	%)
Interest expense			(1,215	)			(855	)			42.1	%
Depreciation and amortization			(20,859	)			(18,190	)			14.7	%
General and administrative			(1,570	)			(1,632	)			(3.8	%)
Acquisition transaction costs			—				(1,117	)			(100.0	%)
Income from continuing operations		$	24,673			$	22,654				8.9	%
Same Park gross margin (4)			65.7	%			65.8	%			(0.2	%)
Same Park weighted average occupancy			91.0	%			91.4	%			(0.4	%)
Same Park annualized realized rent per square foot (5)		$	14.61			$	15.05				(2.9	%)

Preferred Units Repurchases

In February, 2011, the Company repurchased the outstanding balance of its 7.50% Series J Cumulative Redeemable Preferred Units and its 6.55% Series Q Cumulative Redeemable Preferred Units at a combined discount of 18.3% to par. The aggregate purchase price of $39.1 million compared to the par value of $47.8 million resulted in a net gain for FFO purposes of $7.4 million, which also includes non-cash distributions of $1.4 million representing original issuance costs.

Related Party Transaction

The Company had $121.0 million outstanding on the note payable to Public Storage (“PS”) at a weighted average interest rate of 1.2% at March 31, 2011. Subsequent to March 31, 2011, the Company repaid $5.0 million on the note payable to PS.

Financial Condition

The following are key financial ratios with respect to the Company’s leverage at and for the three months ended March 31, 2011:

Ratio of FFO to fixed charges (1)			38.5	x
Ratio of FFO to fixed charges and preferred distributions (1)			4.0	x
Debt and preferred equity to total market capitalization (based on common stock price of $57.94 at March 31, 2011)			29.4	%
Available under the unsecured credit facility at March 31, 2011		$100.0 million

Distributions Declared

The Board of Directors declared a quarterly dividend of $0.44 per common share on May 2, 2011. Distributions were also declared on the various series of depositary shares, each representing 1/1,000 of a share of preferred stock listed below. Distributions are payable June 30, 2011 to shareholders of record on June 15, 2011.

Series		Dividend Rate				Dividend Declared
Series H			7.000	%		$	0.437500
Series I			6.875	%		$	0.429688
Series M			7.200	%		$	0.450000
Series O			7.375	%		$	0.460938
Series P			6.700	%		$	0.418750
Series R			6.875	%		$	0.429688

Company Information

PS Business Parks, Inc., a member of the S&P SmallCap 600, is a self-advised and self-managed equity real estate investment trust (“REIT”) that acquires, develops, owns and operates commercial properties, primarily multi-tenant flex, office and industrial space. The Company defines “flex” space as buildings that are configured with a combination of office and warehouse space and can be designed to fit a number of uses (including office, assembly, showroom, laboratory, light manufacturing and warehouse space). As of March 31, 2011, PSB wholly owned 21.8 million rentable square feet with approximately 4,100 customers located in eight states, concentrated in California (5.8 million sq. ft.), Virginia (4.0 million sq. ft.), Florida (3.7 million sq. ft.), Texas (3.4 million sq. ft.), Maryland (2.4 million sq. ft.), Oregon (1.3 million sq. ft.), Arizona (0.7 million sq. ft.) and Washington (0.5 million sq. ft.).

Forward-Looking Statements

When used within this press release, the words “may,” “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” “intends” and similar expressions are intended to identify “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results and performance of the Company to be materially different from those expressed or implied in the forward-looking statements. Such factors include the impact of competition from new and existing commercial facilities which could impact rents and occupancy levels at the Company’s facilities; the Company’s ability to evaluate, finance and integrate acquired and developed properties into the Company’s existing operations; the Company’s ability to effectively compete in the markets that it does business in; the impact of the regulatory environment as well as national, state and local laws and regulations including, without limitation, those governing REITs; the impact of general economic conditions upon rental rates and occupancy levels at the Company’s facilities; the availability of permanent capital at attractive rates, the outlook and actions of Rating Agencies and risks detailed from time to time in the Company’s SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.

Additional information about PS Business Parks, Inc., including more financial analysis of the first quarter operating results, is available on the Internet. The Company’s website is www.psbusinessparks.com.

A conference call is scheduled for Tuesday, May 3, 2011, at 10:00 a.m. (PDT) to discuss the first quarter results. The toll free number is (888) 299-3246; the conference ID is 57525167. The call will also be available via a live webcast on the Company’s website. A replay of the conference call will be available through May 10, 2011 at (800) 642-1687. A replay of the conference call will also be available on the Company’s website.

Additional financial data attached.

PS BUSINESS PARKS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

		March 31,				December 31,
		2011				2010
		(Unaudited)
ASSETS
Cash and cash equivalents		$	4,548			$	5,066
Real estate facilities, at cost:
Land			564,851				564,851
Buildings and equipment			1,788,504				1,782,613
			2,353,355				2,347,464
Accumulated depreciation			(795,547	)			(776,840	)
			1,557,808				1,570,624
Land held for development			6,829				6,829
			1,564,637				1,577,453
Rent receivable			4,536				3,127
Deferred rent receivable			22,558				22,277
Other assets			9,947				13,134
Total assets		$	1,606,226			$	1,621,057
LIABILITIES AND EQUITY
Accrued and other liabilities		$	51,773			$	53,421
Credit facility			—				93,000
Mortgage notes payable			48,512				51,511
Note payable to affiliate			121,000				—
Total liabilities			221,285				197,932
Commitments and contingencies
Equity:
PS Business Parks, Inc.’s shareholders’ equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, 23,942 shares issued and outstanding at March 31, 2011 and December 31, 2010			598,546				598,546
Common stock, $0.01 par value, 100,000,000 shares authorized, 24,714,009 and 24,671,177 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively			246				246
Paid-in capital			559,821				557,882
Cumulative net income			811,678				784,616
Cumulative distributions			(769,079	)			(747,762	)
Total PS Business Parks, Inc.’s shareholders’ equity			1,201,212				1,193,528
Noncontrolling interests:
Preferred units			5,583				53,418
Common units			178,146				176,179
Total noncontrolling interests			183,729				229,597
Total equity			1,384,941				1,423,125
Total liabilities and equity		$	1,606,226			$	1,621,057

PS BUSINESS PARKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)

		For The Three Months
		Ended March 31,
		2011				2010
Revenues:
Rental income		$	73,946			$	67,132
Facility management fees			178				173
Total operating revenues			74,124				67,305
Expenses:
Cost of operations			25,901				22,966
Depreciation and amortization			20,859				18,190
General and administrative			1,570				2,749
Total operating expenses			48,330				43,905
Other income and expenses:
Interest and other income			94				109
Interest expense			(1,215	)			(855	)
Total other income and expenses			(1,121	)			(746	)
Income from continuing operations			24,673				22,654
Discontinued operations:
Income from discontinued operations			—				34
Gain on sale of real estate facility			—				5,153
Total discontinued operations			—				5,187
Net income		$	24,673			$	27,841
Net income allocation:
Net income allocable to noncontrolling interests:
Noncontrolling interests — common units		$	4,901			$	3,513
Noncontrolling interests — preferred units			(7,290	)			1,382
Total net income allocable to noncontrolling interests			(2,389	)			4,895
Net income allocable to PS Business Parks, Inc.:
Common shareholders			16,562				11,740
Preferred shareholders			10,450				11,155
Restricted stock unit holders			50				51
Total net income allocable to PS Business Parks, Inc.			27,062				22,946
		$	24,673			$	27,841
Net income per common share — basic:
Continuing operations		$	0.67			$	0.32
Discontinued operations		$	—			$	0.16
Net income		$	0.67			$	0.48
Net income per common share — diluted:
Continuing operations		$	0.67			$	0.32
Discontinued operations		$	—			$	0.16
Net income		$	0.67			$	0.48
Weighted average common shares outstanding:
Basic			24,685				24,413
Diluted			24,792				24,564

PS BUSINESS PARKS, INC.
Computation of Diluted Funds from Operations (“FFO”) and Funds Available for Distribution (“FAD”)
(Unaudited, in thousands, except per share amounts)

		For The Three Months
		Ended March 31,
		2011				2010
Computation of Diluted Funds From Operations (“FFO”) (1):
Net income allocable to common shareholders		$	16,562			$	11,740
Adjustments:
Gain on sale of real estate facility			—				(5,153	)
Depreciation and amortization			20,859				18,190
Net income allocable to noncontrolling interests — common units			4,901				3,513
Net income allocable to restricted stock unit holders			50				51
FFO allocable to common and dilutive shares		$	42,372			$	28,341
Weighted average common shares outstanding			24,685				24,413
Weighted average common OP units outstanding			7,305				7,305
Weighted average restricted stock units outstanding			72				107
Weighted average common share equivalents outstanding			107				151
Total common and dilutive shares			32,169				31,976
FFO per common and dilutive share		$	1.32			$	0.89
Computation of Funds Available for Distribution (“FAD”) (2):
FFO allocable to common and dilutive shares		$	42,372			$	28,341
Adjustments:
Recurring capital improvements			(856	)			(1,585	)
Tenant improvements			(4,752	)			(2,558	)
Lease commissions			(1,480	)			(834	)
Straight-line rent			(281	)			(254	)
Stock compensation expense			458				615
In-place lease adjustment			209				(38	)
Tenant improvement reimbursements, net of lease incentives			(195	)			(163	)
Gain on repurchase of preferred equity, net of issuance costs			(7,389	)			—
FAD		$	28,086			$	23,524
Distributions to common and dilutive shares		$	14,114			$	14,008
Distribution payout ratio			50.3	%			59.5	%