PS BUSINESS PARKS, INC./MD - FORM 8-K - EX-99.2

Attached files

file	filename
EX-99.1 - EX-99.1 - PS BUSINESS PARKS, INC./MD	d20128dex991.htm
EX-3.2 - EX-3.2 - PS BUSINESS PARKS, INC./MD	d20128dex32.htm
8-K - FORM 8-K - PS BUSINESS PARKS, INC./MD	d20128d8k.htm

Exhibit 99.2

LOGO

SUPPLEMENTAL INFORMATION

SECOND QUARTER 2020

LOGO

701 WESTERN AVENUE | GLENDALE, CA 91201 | 818.244.8080 | PSBUSINESSPARKS.COM

LOGO

ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION FOR

THE THREE AND SIX MONTHS ENDED JUNE 30, 2020


		Page

Consolidated Balance Sheets		3

Consolidated Statements of Income		5

Portfolio Summary		7

Second Quarter Fact Sheet		8

Same Park Cash NOI by Region and Type		9

Analysis of Capital Expenditures		11

Funds from Operations (FFO), Core FFO and Funds Available for Distribution (FAD)		12

Capital Structure and Financial Condition		14

Portfolio Operating Analysis and Statistics		15

Lease Expirations		22

Second Quarter- and Year-to-Date Production Statistics		26

Definitions and Non-GAAP Disclosures		27

Forward-Looking Statements

When used within this supplemental information package, 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 duration and severity of the COVID-19 pandemic and its impact on our business and our customers; 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 and business conditions, including as a result of the economic fallout of the COVID-19 pandemic; rental rates and occupancy levels at the Company’s facilities; and changes in these conditions as a result of the COVID-19 pandemic, 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.

LOGO


	June 30, 2020		December 31, 2019
ASSETS

Cash and cash equivalents	$	98,841	$	62,786	(a)

Real estate facilities, at cost
Land		855,542		844,419
Buildings and improvements		2,220,562		2,203,308

		3,076,104		3,047,727
Accumulated depreciation		(1,201,821)		(1,158,489)

		1,874,283		1,889,238	(b)
Properties held for sale, net ⁽¹⁾		3,716		15,264
Land and building held for development, net		29,899		28,110

		1,907,898		1,932,612

Rent receivable		2,779		1,392	(c)
Deferred rent receivable ⁽²⁾		36,204		32,993
Other assets		10,758		16,660	(d)

Total assets	$	2,056,480	$	2,046,443


LIABILITIES AND EQUITY

Accrued and other liabilities	$	84,185	$	84,632	(e)

Total liabilities		84,185		84,632

Equity
PS Business Parks, Inc.’s shareholders’ equity:
Preferred stock		944,750		944,750
Common stock		274		274
Paid-in capital		735,129		736,986	(f)
Accumulated earnings		73,524		63,666	(g)

Total PS Business Parks, Inc.’s shareholders’ equity		1,753,677		1,745,676
Noncontrolling interests		218,618		216,135

Total equity		1,972,295		1,961,811

Total liabilities and equity	$	2,056,480	$	2,046,443

See following page for additional detail related to the tickmarks shown in the table above.

⁽¹⁾

Properties held for sale, net as of June 30, 2020 represents two industrial buildings totaling 40,000 square feet located in Redmond, Washington, which are subject to an eminent domain process. Properties held for sale, net as of December 31, 2019 represents the same two industrial buildings mentioned above along with a one single-tenant building totaling 113,000 square feet located in Montgomery County, Maryland, sold on January 7, 2020 for a gross sales price of $30.0 million.

⁽²⁾	As of June 30, 2020, included in deferred rent receivable are uncollected rent deferrals of $3.5 million.

LOGO


(a)	Change in cash and cash equivalents
	Beginning cash balance at December 31, 2019					$	62,786
	Net cash provided by operating activities						142,321
	Net cash used in investing activities						(5,190)
	Net cash used in financing activities						(101,076)

	Ending cash balance at June 30, 2020					$	98,841


(b)	Change in real estate facilities, at cost
	Beginning balance at December 31, 2019					$	1,889,238
	Acquisition of real estate						13,276
	Recurring capital improvements						4,788
	Tenant improvements, gross						7,865
	Capitalized lease commissions						3,336
	Nonrecurring capital improvements						213
	Depreciation and amortization of real estate facilities						(44,463)
	Transfer to properties held for sale						30

	Ending balance at June 30, 2020					$	1,874,283


						Increase
(c)	Change in rent receivable	June 30, 2020		December 31, 2019		(Decrease)
	Non-government customers	$	2,137	$	597	$	1,540
	U.S. Government customers		642		795		(153)

		$	2,779	$	1,392	$	1,387


						Increase
(d)	Change in other assets	June 30, 2020		December 31, 2019		(Decrease)
	Lease intangible assets, net	$	7,792	$	9,973	$	(2,181)
	Prepaid property taxes and insurance		701		2,572		(1,871)
	Other		2,265		4,115		(1,850)

		$	10,758	$	16,660	$	(5,902)


						Increase
(e)	Change in accrued and other liabilities	June 30, 2020		December 31, 2019		(Decrease)
	Customer security deposits	$	38,022	$	39,118	$	(1,096)
	Accrued property taxes		15,303		11,521		3,782
	Customer prepaid rent		13,390		14,519		(1,129)
	Lease intangible liabilities, net		6,731		8,541		(1,810)
	Other		10,739		10,933		(194)

		$	84,185	$	84,632	$	(447)


(f)	Change in paid-in capital
	Beginning paid-in capital at December 31, 2019					$	736,986
	Exercise of stock options						259
	Stock compensation expense, net						1,544
	Cash paid for taxes in lieu of shares upon vesting of restricted stock units						(3,660)

	Ending paid-in capital at June 30, 2020					$	735,129


(g)	Change in accumulated earnings
	Beginning accumulated earnings at December 31, 2019					$	63,666
	Net income						91,624
	Distributions to preferred shareholders						(24,093)
	Distributions to common shareholders						(57,673)

	Ending accumulated earnings at June 30, 2020					$	73,524

LOGO


	For The Three Months				For the Six Months Ended
	Ended June 30,				Ended June 30,
	2020		2019		2020		2019
Rental income	$	100,559	$	107,782	$	206,775	$	215,607	(a)

Expenses:
Cost of operations		30,131		31,460		61,394		65,053	(b)
Depreciation and amortization		22,963		24,768		49,582		49,643
General and administrative		3,004		2,827		6,327		6,060	(c)

Total operating expenses		56,098		59,055		117,303		120,756


Interest and other income		225		764		782		1,382	(d)
Interest and other expense		(203)		(118)		(364)		(285)	(e)
Gain on sale of real estate facility		-		-		19,621		-

Net income		44,483		49,373		109,511		95,948
Allocation to noncontrolling interests		(6,795)		(7,623)		(17,887)		(14,650)

Net income allocable to PS Business Parks, Inc.		37,688		41,750		91,624		81,298
Allocation to preferred shareholders		(12,047)		(12,959)		(24,093)		(25,918)
Allocation to restricted stock unit holders		(119)		(212)		(394)		(480)

Net income allocable to common shareholders	$	25,522	$	28,579	$	67,137	$	54,900


Net income per common share
Basic	$	0.93	$	1.04	$	2.44	$	2.00
Diluted	$	0.93	$	1.04	$	2.44	$	2.00

Weighted average common shares outstanding
Basic		27,479		27,426		27,464		27,400
Diluted		27,560		27,532		27,557		27,505

LOGO


		For The Three Months Ended				Increase		For the Six Months Ended				Increase
(a)	Rental income:	June 30, 2020		June 30, 2019		(Decrease)		June 30, 2020		June 30, 2019		(Decrease)
	Same Park ^{(1) (2)}	$	90,140	$	94,269	$	(4,129)	$	187,074	$	188,255	$	(1,181)
	Same Park non-cash rental income ^{(1) (3)}		2,517		525		1,992		3,318		1,143		2,175
	Non-Same Park ^{(1) (2)}		4,970		3,194		1,776		10,327		5,511		4,816
	Non-Same Park non-cash rental income ⁽¹⁾ ⁽³⁾		228		235		(7)		489		399		90
	Multifamily		2,488		2,475		13		5,048		4,973		75
	Rental income from assets sold
	and held for sale ⁽⁴⁾		216		7,084		(6,868)		519		15,326		(14,807)

		$	100,559	$	107,782	$	(7,223)	$	206,775	$	215,607	$	(8,832)


		For The Three Months Ended				Increase		For the Six Months Ended				Increase
(b)	Cost of operations:	June 30, 2020		June 30, 2019		(Decrease)		June 30, 2020		June 30, 2019		(Decrease)
	Same Park ⁽¹⁾	$	26,997	$	26,683	$	314	$	55,131	$	54,826	$	305
	Same Park non-cash expense ⁽¹⁾⁽⁵⁾		248		264		(16)		503		540		(37)
	Non-Same Park ⁽¹⁾		1,821		1,024		797		3,603		2,167		1,436
	Non-Same Park non-cash expense ⁽¹⁾⁽⁵⁾		18		13		5		37		26		11
	Multifamily		1,002		1,002		-		2,018		2,073		(55)
	Expenses from assets sold and held for sale ⁽⁴⁾		45		2,474		(2,429)		102		5,421		(5,319)

		$	30,131	$	31,460	$	(1,329)	$	61,394	$	65,053	$	(3,659)


		For The Three Months Ended				Increase		For the Six Months Ended				Increase
(c)	General and administrative expenses:	June 30, 2020		June 30, 2019		(Decrease)		June 30, 2020		June 30, 2019		(Decrease)
	Compensation expense	$	1,424	$	1,278	$	146	$	3,177	$	2,961	$	216
	Stock compensation expense		665		623		42		1,333		1,288		45
	Professional fees and other		915		926		(11)		1,817		1,811		6

		$	3,004	$	2,827	$	177	$	6,327	$	6,060	$	267


		For The Three Months Ended				Increase		For the Six Months Ended				Increase
(d)	Interest and other income:	June 30, 2020		June 30, 2019		(Decrease)		June 30, 2020		June 30, 2019		(Decrease)
	Management fee income	$	63	$	72	$	(9)	$	133	$	150	$	(17)
	Interest income		42		316		(274)		345		642		(297)
	Other income		120		376		(256)		304		590		(286)

		$	225	$	764	$	(539)	$	782	$	1,382	$	(600)


		For The Three Months Ended				Increase		For the Six Months Ended				Increase
(e)	Interest and other expense:	June 30, 2020		June 30, 2019		(Decrease)		June 30, 2020		June 30, 2019		(Decrease)
	Interest expense	$	-	$	-	$	-	$	-	$	-	$	-
	Credit facilities fees & other charges		(203)		(118)		(85)		(364)		(285)		(79)

		$	(203)	$	(118)	$	(85)	$	(364)	$	(285)	$	(79)

⁽¹⁾	Refer to page 27, Definitions and Non-GAAP Disclosures, for the definitions of Same Park and Non-Same Park.

⁽²⁾

Same Park rental income is presented net of (a) accounts receivable write-offs of $1.1 million and $342,000 for the three months ended June 30, 2020 and 2019, respectively, and $1.1 million and $522,000 for the six months ended June 30, 2020 and 2019, respectively, and (b) rent deferrals and abatements of $4.5 million and $0 for the three and six months ended June 30, 2020 and 2019, respectively. Non-Same Park rental income is presented net of (a) accounts receivable write-offs of $96,000 and $1,000 for the three months ended June 30, 2020 and 2019, respectively, and $96,000 and $14,000 for the six months ended June 30, 2020 and 2019, respectively, and (b) rent deferrals and abatements of $126,000 and $0 for the three and six months ended June 30, 2020 and 2019, respectively.

⁽³⁾

Non-cash rental income represents amortization of deferred rent receivable, amortization of above and below market rents, net, and amortization of lease incentives and tenant improvement reimbursements. Same Park non-cash rental income is presented net of deferred rent receivable write-offs of $2.3 million and $149,000 for the three months ended June 30, 2020 and 2019, respectively, and $2.3 million and $235,000 for the six months ended June 30, 2020 and 2019, respectively. Non-Same Park non-cash rental income is presented net of deferred rent receivable write-offs of $114,000 and $0 for the three and six months ended June 30, 2020 and 2019, respectively.

⁽⁴⁾

Amounts for the three months ended June 30, 2020 include results related to two industrial buildings totaling 40,000 square feet reclassified to properties held for sale, net during the quarter ended June 30, 2020; amounts for the six months ended June 30, 2020 include the two industrial buildings totaling 40,000 square feet and a 113,000 square foot office building sold during January, 2020; amounts for the three and six months ended June 30, 2019 reflect the operating results of the two industrial buildings totaling 40,000 square feet, the 113,000 square foot office building sold during in 2020, and 1.3 million square feet of assets sold in October, 2019.

⁽⁵⁾	Non-cash expense represents stock compensation expense attributable to employees whose compensation expense is recorded in costs of operations.

LOGO


PROPERTY INFORMATION ⁽¹⁾

	For The Three Months Ended June 30,						For the Six Months Ended June 30,
	2020		2019		% Change		2020		2019		% Change
Total Portfolio⁽²⁾
Total rentable square footage at period end		27,482,000		26,787,000		2.6%		27,482,000		26,787,000		2.6%
Weighted average occupancy		91.7%		93.7%		(2.1%)		92.3%		93.9%		(1.7%)
Period end occupancy		91.8%		94.0%		(2.3%)		91.8%		94.0%		(2.3%)
Revenue per occupied sq. ft.^{(3) (4)}	$	15.54	$	15.65		(0.7%)	$	15.87	$	15.55		2.1%
RevPAF^{(3) (4)}	$	14.24	$	14.67		(2.9%)	$	14.64	$	14.60		0.3%

Same Park Portfolio ⁽³⁾
Total rentable square footage at period end		25,656,000		25,656,000		-		25,656,000		25,656,000		-
Weighted average occupancy		92.4%		94.2%		(1.9%)		92.6%		94.5%		(2.0%)
Period end occupancy		93.0%		94.5%		(1.6%)		93.0%		94.5%		(1.6%)
Revenue per occupied sq. ft.^{(3) (4)}	$	15.64	$	15.68		(0.3%)	$	16.02	$	15.63		2.5%
RevPAF^{(3) (4)}	$	14.45	$	14.78		(2.2%)	$	14.84	$	14.76		0.5%

Non-Same Park Portfolio ⁽³⁾
Total rentable square footage at period end		1,826,000		1,131,000		61.5%		1,826,000		1,131,000		61.5%
Weighted average occupancy		81.6%		82.0%		(0.5%)		87.4%		80.4%		8.7%
Period end occupancy		75.0%		83.3%		(10.0%)		75.0%		83.3%		(10.0%)
Revenue per occupied sq. ft.^{(3) (4)}	$	13.94	$	14.98		(6.9%)		13.57		13.53		0.3%
RevPAF^{(3) (4)}	$	11.38	$	12.28		(7.3%)		11.86		10.87		9.1%

Multifamily Portfolio
Number of units		395		395		-		395		395		-
Weighted average occupancy		91.7%		95.4%		(3.8%)		93.3%		95.2%		(2.0%)
Period end occupancy		90.6%		94.2%		(3.8%)		90.6%		94.2%		(3.8%)

⁽¹⁾	Excludes assets sold or held for sale for the periods shown.

⁽²⁾	Operating metrics from our multifamily asset are excluded from total portfolio operating metrics.

⁽³⁾	Refer to page 27, Definitions and Non-GAAP Disclosures, for the definitions of Revenue per Occupied Square Foot, RevPAF, Same Park and Non-Same Park.

⁽⁴⁾

Included in the calculation of Total Park revenue per occupied square foot and RevPAF is (a) lease buyout income of $296,000 and $780,000 for the three months ended June 30, 2020 and 2019, respectively, and $555,000 and $957,000 for the six months ended June 30, 2020 and 2019, respectively, (b) accounts receivable write-offs of $1.2 million and $343,000 for the three months ended June 30, 2020 and 2019, respectively, and $1.2 million and $536,000 for the six months ended June 30, 2020 and 2019, respectively, and (c) deferred rent receivable write offs of $2.4 million and $149,000 for the three months ended June 30, 2020 and 2019, respectively, and $2.4 million and $235,000 for the six months ended June 30, 2020 and 2019, respectively. Included in the calculation of Same Park revenue per occupied square foot and RevPAF is (a) lease buyout income of $257,000 and $780,000 for the three months ended June 30, 2020 and 2019, respectively, and $516,000 and $957,000 for the six months ended June 30, 2020 and 2019, respectively, (b) accounts receivable write-offs of $1.1 million and $342,000 for the three months ended June 30, 2020 and 2019, respectively, and $1.1 million and $522,000 for the six months ended June 30, 2020 and 2019, respectively, and (c) deferred rent receivable write offs of $2.3 million and $149,000 for the three months ended June 30, 2020 and 2019, respectively, and $2.3 million and $235,000 for the six months ended June 30, 2020 and 2019, respectively. Included in the calculation of Non-Same Park revenue per occupied square foot and RevPAF is (a) lease buyout income of $39,000 and $0 for the three and six months ended June 30, 2020 and 2019, respectively, (b) accounts receivable write-offs of $96,000 and $1,000 for the three months ended June 30, 2020 and 2019, respectively, and $96,000 and $14,000 for the six months ended June 30, 2020 and 2019, respectively, and (c) deferred rent receivable write offs of $114,000 and $0 for the three and six months ended June 30, 2020 and 2019, respectively.

LOGO

NET OPERATING INCOME


	For The Three Months Ended June 30,						For the Six Months Ended June 30,
	2020		2019		% Change		2020		2019		% Change
Rental income
Same Park ^{(1) (2) (3)}	$	92,657	$	94,794		(2.3%)	$	190,392	$	189,398		0.5%
Non-Same Park ⁽¹⁾		5,198		3,429		51.6%		10,816		5,910		83.0%
Multifamily		2,488		2,475		0.5%		5,048		4,973		1.5%
Assets sold or held for sale		216		7,084		(97.0%)		519		15,326		(96.6%)

Total rental income		100,559		107,782		(6.7%)		206,775		215,607		(4.1%)

Adjusted cost of operations ^{(1) (5)}
Same Park ^(1) (6)		26,997		26,683		1.2%		55,131		54,826		0.6%
Non-Same Park ⁽¹⁾		1,821		1,024		77.8%		3,603		2,167		66.3%
Multifamily		1,002		1,002		0.0%		2,018		2,073		(2.7%)
Assets sold or held for sale		45		2,456		(98.2%)		102		5,386		(98.1%)

Total		29,865		31,165		(4.2%)		60,854		64,452		(5.6%)

Net operating income
Same Park ⁽¹⁾		65,660		68,111		(3.6%)		135,261		134,572		0.5%
Non-Same Park ⁽¹⁾		3,377		2,405		40.4%		7,213		3,743		92.7%
Multifamily		1,486		1,473		0.9%		3,030		2,900		4.5%
Assets sold or held for sale ⁽⁷⁾		171		4,628		(96.3%)		417		9,940		(95.8%)

Total net operating income	$	70,694	$	76,617		(7.7%)	$	145,921	$	151,155		(3.5%)


CASH NET OPERATING INCOME

	For The Three Months Ended June 30,						For the Six Months Ended June 30,
	2020		2019		% Change		2020		2019		% Change
Cash rental income ^{(1) (5)}
Same Park ^{(1) (2) (4)}	$	90,140	$	94,269		(4.4%)	$	187,074	$	188,255		(0.6%)
Non-Same Park ⁽¹⁾		4,970		3,194		55.6%		10,327		5,511		87.4%
Multifamily		2,487		2,474		0.5%		5,046		4,971		1.5%
Assets sold or held for sale		216		6,914		(96.9%)		519		14,923		(96.5%)

Total cash rental income		97,813		106,851		(8.5%)		202,966		213,660		(5.0%)

Adjusted cost of operations ^{(1) (5)}
Same Park ^(1) (6)		26,997		26,683		1.2%		55,131		54,826		0.6%
Non-Same Park ⁽¹⁾		1,821		1,024		77.8%		3,603		2,167		66.3%
Multifamily		1,002		1,002		0.0%		2,018		2,073		(2.7%)
Assets sold or held for sale		45		2,456		(98.2%)		102		5,386		(98.1%)

Total adjusted cost of operations		29,865		31,165		(4.2%)		60,854		64,452		(5.6%)

Cash net operating income
Same Park ⁽¹⁾		63,143		67,586		(6.6%)		131,943		133,429		(1.1%)
Non-Same Park ⁽¹⁾		3,149		2,170		45.1%		6,724		3,344		101.1%
Multifamily		1,485		1,472		0.9%		3,028		2,898		4.5%
Assets sold or held for sale ⁽⁷⁾		171		4,458		(96.2%)		417		9,537		(95.6%)

Total cash net operating income	$	67,948	$	75,686		(10.2%)	$	142,112	$	149,208		(4.8%)


EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre) ⁽¹⁾

	For The Three Months Ended June 30,						For the Six Months Ended June 30,
	2020		2019		% Change		2020		2019		% Change
Net income	$	44,483	$	49,373		(9.9%)	$	109,511	$	95,948		14.1%
Net interest (income) expense		94		(180)		152.2%		(72)		(370)		(80.5%)
Depreciation and amortization		22,963		24,768		(7.3%)		49,582		49,643		(0.1%)
Gain on sale of real estate facilities and development rights		-		-		-		(19,621)		-		100.0%

EBITDAre	$	67,540	$	73,961		(8.7%)	$	139,400	$	145,221		(4.0%)

⁽¹⁾	Refer to page 27, Definition and Non-GAAP Disclosures, for the definitions of Same Park, Non-Same Park, Cash Rental Income, Adjusted Cost of Operations, and EBITDAre.

⁽²⁾	Same Park rental income and cash rental income include lease buyout income of $257,000 and $780,000 for the three months ended June 30, 2020 and 2019, respectively, and $516,000 and $957,000 for the six months ended June 30, 2020 and 2019, respectively.

⁽³⁾

⁽⁴⁾

Same Park cash rental income is presented net of (a) accounts receivable write-offs of $1.1 million and $342,000 for the three months ended June 30, 2020 and 2019, respectively, and $1.1 million and $522,000 for the six months ended June 30, 2020 and 2019, respectively, and (b) rent deferrals and abatements of $4.5 million and $0 for the three and six months ended June 30, 2020 and 2019, respectively.

⁽⁵⁾	Refer to page 6 for a reconciliation of cash rental income to rental income and adjusted cost of operations to cost of operations as reported on our GAAP statements of income.

⁽⁶⁾	The table below details Same Park adjusted cost of operations:


	For The Three Months Ended June 30,							For the Six Months Ended June 30,
	2020		2019		% Change			2020		2019		% Change
Cost of operations
Property taxes	$	10,825	$	10,057		7.6	%	$	21,599	$	20,192		7.0	%
Utilities		4,123		4,463		(7.6	%)		9,236		9,362		(1.3	%)
Repairs and maintenance		5,683		6,045		(6.0	%)		11,080		11,551		(4.1	%)
Snow removal		-		34		(100.0	%)		78		1,033		(92.4	%)
Payroll and other expenses		6,366		6,084		4.6	%		13,138		12,688		3.5	%

Total cost of operations	$	26,997	$	26,683		1.2	%	$	55,131	$	54,826		0.6	%

⁽⁷⁾

NOI from assets held for sale was $171,000 and $177,000 for the three months ended June 30, 2020 and 2019, respectively, and $364,000 and $352,000 for the six months ended June 30, 2020 and 2019, respectively. Cash NOI from assets held for sale was $171,000 and $175,000 for the three months ended June 30, 2020 and 2019, respectively, and $364,000 and $349,000 for the six months ended June 30, 2020 and 2019, respectively. The remainder of the three and six months NOI balances relate to assets that sold during 2019 and 2020.

LOGO


	For the Three Months Ended
	June 30, 2020								June 30, 2019								Total % Change
	Industrial		Flex		Office		Total		Industrial		Flex		Office		Total		Total % Change
Cash rental income ^{(1) (2)}
Northern California	$	20,304	$	2,097	$	3,053	$	25,454	$	21,281	$	2,428	$	2,966	$	26,675		(4.6%)
Southern California		7,711		4,346		201		12,258		8,693		4,648		185		13,526		(9.4%)
Dallas		2,694		5,253		—		7,947		3,146		5,442		—		8,588		(7.5%)
Austin		1,801		5,941		—		7,742		2,120		5,589		—		7,709		0.4%
Northern Virginia		1,749		5,855		9,387		16,991		1,751		6,202		10,237		18,190		(6.6%)
South Florida		9,779		445		25		10,249		10,167		470		26		10,663		(3.9%)
Seattle		2,816		1,616		161		4,593		2,486		1,528		182		4,196		9.5%
Suburban Maryland		983		—		3,923		4,906		1,105		—		3,617		4,722		3.9%

Total		47,837		25,553		16,750		90,140		50,749		26,307		17,213		94,269		(4.4%)

Adjusted cost of operations ⁽¹⁾
Northern California		4,599		690		763		6,052		4,377		631		778		5,786		4.6%
Southern California		2,098		1,169		82		3,349		2,210		1,204		77		3,491		(4.1%)
Dallas		978		2,218		—		3,196		950		1,976		—		2,926		9.2%
Austin		736		2,227		—		2,963		722		2,164		—		2,886		2.7%
Northern Virginia		505		1,830		3,412		5,747		462		1,701		3,741		5,904		(2.7%)
South Florida		2,819		124		17		2,960		2,819		146		37		3,002		(1.4%)
Seattle		741		381		49		1,171		584		389		50		1,023		14.5%
Suburban Maryland		318		—		1,241		1,559		319		—		1,346		1,665		(6.4%)

Total		12,794		8,639		5,564		26,997		12,443		8,211		6,029		26,683		1.2%

Cash NOI ⁽¹⁾
Northern California		15,705		1,407		2,290		19,402		16,904		1,797		2,188		20,889		(7.1%)
Southern California		5,613		3,177		119		8,909		6,483		3,444		108		10,035		(11.2%)
Dallas		1,716		3,035		—		4,751		2,196		3,466		—		5,662		(16.1%)
Austin		1,065		3,714		—		4,779		1,398		3,425		—		4,823		(0.9%)
Northern Virginia		1,244		4,025		5,975		11,244		1,289		4,501		6,496		12,286		(8.5%)
South Florida		6,960		321		8		7,289		7,348		324		(11)		7,661		(4.9%)
Seattle		2,075		1,235		112		3,422		1,902		1,139		132		3,173		7.8%
Suburban Maryland		665		—		2,682		3,347		786		—		2,271		3,057		9.5%

Total	$	35,043	$	16,914	$	11,186	$	63,143	$	38,306	$	18,096	$	11,184	$	67,586		(6.6%)

⁽¹⁾	Refer to page 27, Definitions and Non-GAAP Disclosures, for the definitions of Same Park, Cash Rental Income, Adjusted Cost of Operations, and Cash NOI.

⁽²⁾

Included in the calculation of Cash rental income is (a) lease buyout income of $257,000 and $780,000 for the three months ended June 30, 2020 and 2019, respectively, (b) accounts receivable write-offs of $1.1 million and $342,000 for the three months ended June 30, 2020 and 2019, respectively. Cash rental income does not include deferred or abated rental income, which totaled $4.5 million and $0 for the three months ended June 30, 2020 and 2019, respectively.

LOGO


	For the Six Months Ended
	June 30, 2020								June 30, 2019								Total % Change
	Industrial		Flex		Office		Total		Industrial		Flex		Office		Total		Total % Change
Cash rental income ^{(1) (2)}
Northern California	$	41,344	$	4,676	$	6,180	$	52,200	$	41,833	$	4,895	$	5,958	$	52,686		(0.9%)
Southern California		16,714		9,244		388		26,346		17,484		9,286		368		27,138		(2.9%)
Dallas		5,862		10,683		—		16,545		6,196		10,572		—		16,768		(1.3%)
Austin		3,985		12,041		—		16,026		4,181		10,997		—		15,178		5.6%
Northern Virginia		3,687		11,923		19,359		34,969		3,544		12,528		20,819		36,891		(5.2%)
South Florida		20,387		947		57		21,391		20,610		926		26		21,562		(0.8%)
Seattle		5,820		3,351		347		9,518		4,935		3,130		363		8,428		12.9%
Suburban Maryland		2,025		—		8,054		10,079		2,299		—		7,305		9,604		4.9%

Total		99,824		52,865		34,385		187,074		101,082		52,334		34,839		188,255		(0.6%)

Adjusted cost of operations ⁽¹⁾
Northern California		9,336		1,338		1,544		12,218		8,972		1,310		1,548		11,830		3.3%
Southern California		4,397		2,522		155		7,074		4,437		2,455		145		7,037		0.5%
Dallas		1,989		4,252		—		6,241		1,897		3,941		—		5,838		6.9%
Austin		1,481		4,441		—		5,922		1,440		4,170		—		5,610		5.6%
Northern Virginia		1,035		3,652		7,277		11,964		1,079		3,727		8,180		12,986		(7.9%)
South Florida		5,663		258		31		5,952		5,530		296		59		5,885		1.1%
Seattle		1,544		801		103		2,448		1,169		756		99		2,024		20.9%
Suburban Maryland		669		—		2,643		3,312		700		—		2,916		3,616		(8.4%)

Total		26,114		17,264		11,753		55,131		25,224		16,655		12,947		54,826		0.6%

Cash NOI ⁽¹⁾
Northern California		32,008		3,338		4,636		39,982		32,861		3,585		4,410		40,856		(2.1%)
Southern California		12,317		6,722		233		19,272		13,047		6,831		223		20,101		(4.1%)
Dallas		3,873		6,431		—		10,304		4,299		6,631		—		10,930		(5.7%)
Austin		2,504		7,600		—		10,104		2,741		6,827		—		9,568		5.6%
Northern Virginia		2,652		8,271		12,082		23,005		2,465		8,801		12,639		23,905		(3.8%)
South Florida		14,724		689		26		15,439		15,080		630		(33)		15,677		(1.5%)
Seattle		4,276		2,550		244		7,070		3,766		2,374		264		6,404		10.4%
Suburban Maryland		1,356		—		5,411		6,767		1,599		—		4,389		5,988		13.0%

Total	$	73,710	$	35,601	$	22,632	$	131,943	$	75,858	$	35,679	$	21,892	$	133,429		(1.1%)

⁽¹⁾	Refer to page 27, Definitions and Non-GAAP Disclosures, for the definitions of Same Park, Cash Rental Income, Adjusted Cost of Operations, and Cash NOI.

⁽²⁾

Included in the calculation of Cash rental income is (a) lease buyout income of $516,000 and $957,000 for the six months ended June 30, 2020 and 2019, respectively, (b) accounts receivable write-offs of $1.1 million and $522,000 for the six months ended June 30, 2020 and 2019, respectively. Cash rental income does not include deferred or abated rental income, which totaled $4.5 million and $0 for the six months ended June 30, 2020 and 2019, respectively.

LOGO


	For the Six Months Ended June 30,
					Cost per Weighted Average Square Foot
	2020		2019		2020		2019
Commercial recurring capital expenditures ⁽¹⁾
Same Park
Capital improvements	$	4,732	$	3,358	$	0.18	$	0.13
Tenant improvements		7,487		7,369		0.29		0.29
Lease commissions		3,303		2,973		0.13		0.12

Total Same Park recurring capital expenditures		15,522		13,700	$	0.60	$	0.54

Non-Same Park
Capital improvements		56		54	$	0.03	$	0.05
Tenant improvements		198		1,092		0.11		1.01
Lease commissions		33		171		0.02		0.16

Total Non-Same Park recurring capital expenditures		287		1,317	$	0.16	$	1.22

Total recurring capital expenditures		15,809		15,017	$	0.57	$	0.57
Assets sold or held for sale recurring capital expenditures		16		531

Total commercial recurring capital expenditures		15,825		15,548
Non-recurring property renovations ⁽¹⁾		213		1,955

Multifamily capital expenditures		—		—

Total capital expenditures	$	16,038	$	17,503

Same Park recurring capital expenditures as a percentage of NOI		11.5%		10.2%

⁽¹⁾	Refer to page 27, Definitions and Non-GAAP Disclosures, for the definitions of Recurring Capital Expenditures and Non-recurring Property Renovations.

LOGO


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net income allocable to common shareholders	$	25,522	$	28,579	$	67,137	$	54,900
Adjustments
Gain on sale of real estate facility		-		-		(19,621)		-
Depreciation and amortization		22,963		24,768		49,582		49,643
Net income allocable to noncontrolling interests		6,795		7,623		17,887		14,650
Net income allocable to restricted stock unit holders		119		212		394		480
FFO allocated to joint venture partner		(38)		(37)		(81)		(66)

FFO allocable to diluted common shares and units ⁽¹⁾		55,361		61,145		115,298		119,607

Core FFO allocable to diluted common shares and units ⁽¹⁾		55,361		61,145		115,298		119,607
Adjustments
Recurring capital improvements		(3,565)		(2,342)		(4,788)		(3,412)
Tenant improvements		(4,155)		(4,937)		(7,685)		(8,461)
Capitalized lease commissions		(1,254)		(1,305)		(3,336)		(3,144)
Total recurring capital expenditures for assets sold or held for sale		-		(277)		(16)		(531)
Amortization of deferred rent receivable		(2,513)		(652)		(3,281)		(1,309)
In-place lease adjustment		(71)		4		(137)		25
Tenant improvement reimbursement amortization, net of lease incentive amortization		(162)		(284)		(392)		(663)
Stock compensation expense		931		918		1,873		1,889
Cash paid for taxes in lieu of shares upon vesting of restricted stock units		(5)		(6)		(3,660)		(5,500)

FAD allocable to diluted common shares and units ⁽¹⁾		44,567		52,264		93,876		98,501
Distributions to common shareholders		(28,856)		(28,801)		(57,673)		(57,538)
Distributions to noncontrolling interests - common units		(7,670)		(7,670)		(15,341)		(15,341)
Distributions to restricted stock unit holders		(147)		(212)		(329)		(480)
Distributions to noncontrolling interests - joint venture		(25)		(45)		(63)		(45)

Free cash available after fixed charges		7,869		15,536		20,470		25,097
Non-recurring property renovations ⁽¹⁾		(120)		(1,091)		(213)		(1,955)
Investment in multifamily redevelopment		(1,248)		(568)		(2,123)		(993)
Investment in industrial development		(2,435)		-		(2,872)		-

Retained cash ⁽¹⁾	$	4,066	$	13,877	$	15,262	$	22,149


Weighted average outstanding
Common shares		27,479		27,426		27,464		27,400
Operating partnership units		7,305		7,305		7,305		7,305
Restricted stock units		43		109		65		132
Common share equivalents		81		106		93		105

Total diluted common shares and units		34,908		34,946		34,927		34,942


FFO per share	$	1.59	$	1.75	$	3.30	$	3.42
Core FFO per share	$	1.59	$	1.75	$	3.30	$	3.42
FAD distribution payout ratio ⁽²⁾		82.3%		70.3%		78.2%		74.5%

⁽¹⁾	Refer to page 27, Definitions and Non-GAAP Disclosures, for the definition of FFO, Core FFO, FAD, Non-Recurring Property Renovations and Retained Cash.

⁽²⁾	FAD distribution payout ratio is equal to total distributions to common shareholders, unit holders, restricted stock unit holders and our joint venture partner divided by FAD during the same reporting period.

LOGO


	As of June 30, 2020						As of December 31, 2019
			% of Total						% of Total
			Market		WTD Average				Market		WTD Average
	Total		Capitalization		Rate		Total		Capitalization		Rate

Unsecured Debt:
$250.0 million unsecured credit facility (LIBOR + 0.825%)	$	-		-		-	$	-		-		-

Total unsecured debt		-		-		-		-		-		-


Preferred Equity:
5.200% Series W preferred stock (7,590,000 depositary shares outstanding) callable 10/20/21		189,750		3.4%				189,750		2.8%
5.250% Series X preferred stock (9,200,000 depositary shares outstanding) callable 9/21/22		230,000		4.1%				230,000		3.5%
5.200% Series Y preferred stock (8,000,000 depositary shares outstanding) callable 12/7/22		200,000		3.6%				200,000		3.0%
4.875% Series Z preferred stock (13,000,000 depositary shares outstanding) callable 11/4/24		325,000		5.9%				325,000		4.9%

Total preferred equity		944,750		17.0%		5.10%		944,750		14.2%		5.10%



Total debt and preferred equity		944,750		17.0%		5.10%		944,750		14.2%		5.10%

Common stock (27,481,486 and 27,440,953 shares outstanding as of June 30, 2020 and December 31, 2019, respectively) ⁽¹⁾		3,638,549		65.6%				4,524,190		67.8%
Common operating partnership units (7,305,355 units outstanding as of June 30, 2020 and December 31,2019)⁽¹⁾		967,229		17.4%				1,204,434		18.0%

Total common equity ⁽¹⁾		4,605,778		83.0%				5,728,624		85.8%


Total market capitalization	$	5,550,528		100.0%			$	6,673,374		100.0%


	For the six months ended June 30, 2020						For the year ended December 31, 2019
Interest expense and related expenses ⁽²⁾	$	273					$	611
Preferred distributions		24,093						54,346

Total fixed charges and preferred distributions	$	24,366					$	54,957


Ratio of EBITDAre to fixed charges and preferred distributions		5.7x						5.3x
Ratio of FFO to fixed charges and preferred distributions ⁽³⁾		5.7x						5.3x
Ratio of Debt and Preferred Equity to EBITDAre ⁽⁴⁾		3.4x						3.3x

⁽¹⁾	Total common equity is calculated as the total number of common stock and operating partnership units outstanding multiplied by the Company’s closing share price at the end of each reporting period. Closing share prices on June 30, 2020 and December 31, 2019 were $132.40 and $164.87, respectively.

⁽²⁾	Interest expense and related expenses includes facility fees associated with our unsecured credit facility.

⁽³⁾	Ratio of FFO to fixed charges and preferred distributions is calculated by dividing FFO excluding fixed charges and preferred distributions by fixed charges and preferred distributions.

⁽⁴⁾	Ratio of debt and preferred equity to EBITDAre is calculated as total debt and preferred equity divided by EBITDAre. Ratio of debt and preferred equity to EBITDAre as of June 30, 2020 is calculated using annualized EBITDAre for the six months ended June 30, 2020.

LOGO


Industry Concentration as of June 30, 2020 ^{(1) (2)}

					Percentage of
					Total Rental Income
Business services						19.2%
Warehouse, distribution, transportation and logistics						12.2%
Computer hardware, software and related services						11.5%
Retail, food, and automotive						9.2%
Health services						8.0%
Engineering and construction						7.8%
Government						6.3%
Insurance and financial services						3.2%
Electronics						3.1%
Home furnishings						2.6%
Communications						1.9%
Aerospace/defense products and services						1.6%
Educational services						1.0%
Other						12.4%

Total						100.0%


Top 10 Customers by Total Annual Rental Income as of June 30, 2020 ⁽¹⁾

	Square Footage		Annualized		Percentage of Total
Customer	Square Footage		Rental Income ⁽³⁾		Annualized Rental Income

US Government		521,000	$	13,594		3.3%
Luminex Corporation		199,000		4,364		1.1%
KZ Kitchen Cabinet & Stone		222,000		3,160		0.8%
ECS Federal, LLC		133,000		2,975		0.7%
Amazon Inc.		213,000		2,751		0.7%
Lockheed Martin Corporation		124,000		2,586		0.6%
CentralColo, LLC		96,000		2,342		0.6%
Applied Materials, Inc.		162,000		2,342		0.6%
Carbel, LLC		236,000		2,223		0.5%
Costco		180,000		1,948		0.5%

Total		2,086,000	$	38,285		9.4%


Tenant Composition as of June 30, 2020 ⁽¹⁾

					Average Tenant Size
			Number		(in square feet)
			of Tenants		Average square footage
Large Tenant Portfolio ⁽⁴⁾				1,370		12,747
Small Tenant Portfolio ⁽⁵⁾				3,627		2,153

Total Portfolio				4,997		5,057

⁽¹⁾	Excludes assets held for sale as of June 30, 2020.

⁽²⁾	Industry concentration is categorized based on customers’ Standard Industrial Classification Code.

⁽³⁾	For leases expiring within one year, annualized rental income includes only the income to be received under the existing lease from July 1, 2020 through the respective date of expiration.

⁽⁴⁾	Large tenant portfolio consists of properties with average leases greater than or equal to 5,000 square feet.

⁽⁵⁾	Small tenant portfolio consists of properties with average leases less than 5,000 square feet.

LOGO


Annualized Revenue per Occupied Square Foot ^{(1) (2)}
	For the Three Months						For the Six Months Ended
	Ended June 30,						Ended June 30,
Region	2020		2019		% Change		2020		2019		% Change

Northern California	$	16.12	$	15.44		4.4%	$	16.24	$	15.17		7.1	%
Southern California	$	16.21	$	17.43		(7.0%)	$	17.27	$	17.38		(0.6	%)
Dallas	$	12.58	$	12.96		(2.9%)	$	12.95	$	12.72		1.8	%
Austin	$	17.67	$	17.38		1.7%	$	17.71	$	17.26		2.6	%
Northern Virginia	$	19.15	$	19.69		(2.7%)	$	19.67	$	20.12		(2.2	%)
South Florida	$	11.53	$	11.74		(1.8%)	$	11.91	$	11.72		1.6	%
Seattle	$	14.12	$	13.04		8.3%	$	14.37	$	12.98		10.7	%
Suburban Maryland	$	18.63	$	18.99		(1.9%)	$	19.16	$	19.40		(1.2	%)
Total	$	15.64	$	15.68		(0.3%)	$	16.02	$	15.63		2.5	%


Annualized Revenue per Available Foot (RevPAF) ^{(1) (2)}
	For the Three Months						For the Six Months Ended
	Ended June 30,						Ended June 30,
Region	2020		2019		% Change		2020		2019		% Change

Northern California	$	14.66	$	14.79		(0.9%)	$	14.80	$	14.59		1.4%
Southern California	$	15.45	$	16.50		(6.4%)	$	16.40	$	16.54		(0.8%)
Dallas	$	11.29	$	12.03		(6.2%)	$	11.66	$	11.78		(1.0%)
Austin	$	16.61	$	15.87		4.7%	$	16.78	$	15.70		6.9%
Northern Virginia	$	17.77	$	18.65		(4.7%)	$	18.19	$	18.96		(4.1%)
South Florida	$	10.66	$	11.10		(4.0%)	$	11.10	$	11.18		(0.7%)
Seattle	$	13.75	$	12.38		11.1%	$	14.11	$	12.39		13.9%
Suburban Maryland	$	16.70	$	16.88		(1.1%)	$	17.34	$	17.26		0.5%
Total	$	14.45	$	14.78		(2.2%)	$	14.84	$	14.76		0.5%


Annualized Revenue per Occupied Square Foot ^{(1) (2)}
	For the Three Months						For the Six Months Ended
	Ended June 30,						Ended June 30,

Product Type	2020		2019		% Change		2020		2019		% Change

Industrial	$	13.09	$	13.06		0.2%	$	13.43	$	12.91		4.0%
Flex	$	18.53	$	18.54		(0.1%)	$	18.92	$	18.57		1.9%
Office	$	23.46	$	24.20		(3.1%)	$	24.01	$	24.66		(2.6%)
Total	$	15.64	$	15.68		(0.3%)	$	16.02	$	15.63		2.5%


Annualized Revenue per Available Foot (RevPAF) ^{(1) (2)}
	For the Three Months						For the Six Months Ended
	Ended June 30,						Ended June 30,
Product Type	2020		2019		% Change		2020		2019		% Change

Industrial	$	12.12	$	12.43		(2.5%)	$	12.47	$	12.36		0.9%
Flex	$	16.99	$	17.14		(0.9%)	$	17.48	$	17.13		2.0%
Office	$	21.66	$	22.48		(3.6%)	$	22.12	$	22.77		(2.9%)
Total	$	14.45	$	14.78		(2.2%)	$	14.84	$	14.76		0.5%

⁽¹⁾	Refer to page 27, Definitions and Non-GAAP Disclosures, for the definitions of Same Park, Revenue per Occupied Square Foot and Revenue per Available Square Foot.

⁽²⁾

Included in the calculation of revenue per occupied square foot and RevPAF is (a) lease buyout income of $257,000 and $780,000 for the three months ended June 30, 2020 and 2019, respectively, and $516,000 and $957,000 for the six months ended June 30, 2020 and 2019, respectively, (b) accounts receivable write-offs of $1.1 million and $342,000 for the three months ended June 30, 2020 and 2019, respectively, and $1.1 million and $522,000 for the six months ended June 30, 2020 and 2019, respectively, and (c) deferred rent receivable write-offs of $2.3 million and $149,000 for the three months ended June 30, 2020 and 2019, respectively, and $2.3 million and $235,000 for the six months ended June 30, 2020 and 2019, respectively.

LOGO

⁽¹⁾	Excludes assets held for sale as of June 30, 2020.

LOGO


Rentable Square Footage of Same Park Properties by Product Type as of June 30, 2020 ⁽¹⁾


Markets	Industrial		Flex		Office		Total		% of Total

Northern Virginia		507		1,440		1,970		3,917		15.3%
South Florida		3,728		126		12		3,866		15.1%
Silicon Valley		3,094		367		-		3,461		13.5%
East Bay		3,297		53		-		3,350		13.1%
Dallas		1,300		1,587		-		2,887		11.2%
Austin		755		1,208		-		1,963		7.6%
Los Angeles County		1,256		317		31		1,604		6.2%
Seattle		1,052		270		28		1,350		5.3%
Suburban Maryland		394		-		751		1,145		4.5%
Orange County		810		101		-		911		3.5%
San Diego County		233		535		-		768		3.0%
Mid-Peninsula		-		94		340		434		1.7%

Total		16,426		6,098		3,132		25,656		100.0%

Percentage by Product Type		64.0%		23.8%		12.2%		100.0%

Same Park Weighted Average Occupancy Rates by Product Type for the Three Months Ended June 30, 2020 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				94.5%		94.0%		91.4%		92.8%
South Florida				92.7%		85.0%		100.0%		92.4%
Silicon Valley				96.5%		83.6%		-		95.1%
East Bay				86.4%		93.0%		-		86.5%
Dallas				92.5%		87.4%		-		89.7%
Austin				94.0%		93.9%		-		93.9%
Los Angeles County				96.1%		97.3%		99.2%		96.4%
Seattle				97.9%		96.3%		86.8%		97.4%
Suburban Maryland				82.0%		-		93.3%		89.4%
Orange County				93.2%		91.9%		-		93.1%
San Diego County				96.4%		95.6%		-		95.8%
Mid-Peninsula				-		86.4%		93.8%		92.2%
Total				92.6%		91.7%		92.2%		92.4%

Same Park Weighted Average Occupancy Rates by Product Type for the Six Months Ended June 30, 2020 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				93.9%		94.3%		90.7%		92.5%
South Florida				93.4%		86.5%		100.0%		93.2%
Silicon Valley				96.4%		90.6%		-		95.8%
East Bay				86.1%		93.4%		-		86.2%
Dallas				92.5%		88.0%		-		90.0%
Austin				96.1%		93.9%		-		94.7%
Los Angeles County				95.0%		97.2%		99.1%		95.5%
Seattle				98.7%		96.8%		92.6%		98.2%
Suburban Maryland				83.4%		-		93.9%		90.3%
Orange County				93.4%		91.9%		-		93.2%
San Diego County				96.8%		95.7%		-		96.0%
Mid-Peninsula				-		86.2%		94.2%		92.5%
Total				92.8%		92.4%		92.0%		92.6%

⁽¹⁾	Excludes assets held for sale as of June 30, 2020.

LOGO


Rentable Square Footage of Same Park Properties by Size as of June 30, 2020 ^{(1) (2)}

Markets	Large Tenant			Small Tenant			Total

Northern Virginia		2,479			1,438			3,917
South Florida		3,107			759			3,866
Silicon Valley		2,835			626			3,461
East Bay		3,052			298			3,350
Dallas		1,758			1,129			2,887
Austin		1,718			245			1,963
Los Angeles County		712			892			1,604
Seattle		951			399			1,350
Suburban Maryland		537			608			1,145
Orange County		513			398			911
San Diego County		-			768			768
Mid-Peninsula		-			434			434

Total		17,662			7,994			25,656

Percentage by Product Type		68.8	%		31.2	%		100.0	%

Same Park Weighted Average Occupancy Rates by Size for the Three Months Ended June 30, 2020 ^{(1) (2)}

Markets	Large Tenant			Small Tenant			Total

Northern Virginia		91.9	%		94.3	%		92.8	%
South Florida		92.2	%		93.4	%		92.4	%
Silicon Valley		95.6	%		93.3	%		95.1	%
East Bay		85.3	%		98.8	%		86.5	%
Dallas		91.9	%		86.3	%		89.7	%
Austin		94.5	%		89.9	%		93.9	%
Los Angeles County		99.7	%		93.7	%		96.4	%
Seattle		97.9	%		96.2	%		97.4	%
Suburban Maryland		89.6	%		89.2	%		89.4	%
Orange County		92.6	%		93.8	%		93.1	%
San Diego County		-			95.8	%		95.8	%
Mid-Peninsula		-			92.2	%		92.2	%
Total		92.2	%		92.7	%		92.4	%

Same Park Weighted Average Occupancy Rates by Size for the Six Months Ended June 30, 2020 ^{(1) (2)}

Markets	Large Tenant			Small Tenant			Total

Northern Virginia		91.4	%		94.2	%		92.5	%
South Florida		93.3	%		93.0	%		93.2	%
Silicon Valley		96.3	%		93.4	%		95.8	%
East Bay		85.0	%		98.9	%		86.2	%
Dallas		92.2	%		86.5	%		90.0	%
Austin		95.5	%		89.2	%		94.7	%
Los Angeles County		97.3	%		94.1	%		95.5	%
Seattle		98.7	%		96.9	%		98.2	%
Suburban Maryland		90.4	%		90.1	%		90.3	%
Orange County		92.7	%		93.9	%		93.2	%
San Diego County		-			96.0	%		96.0	%
Mid-Peninsula		-			92.5	%		92.5	%
Total		92.5	%		92.8	%		92.6	%

⁽¹⁾	Excludes assets held for sale as of June 30, 2020.

⁽²⁾	The Company’s “large tenant” portfolio consists of properties with average leases greater than or equal to 5,000 square feet while the “small tenant” portfolio consists of properties with average leases less than 5,000 square feet.

LOGO


Rentable Square Footage of Properties by Product Type as of June 30, 2020 ⁽¹⁾

Markets	Industrial		Flex		Office		Total		% of Total

Northern Virginia		1,564		1,440		1,970		4,974		18.1%
South Florida		3,728		126		12		3,866		14.1%
Silicon Valley		3,094		446		-		3,540		12.9%
East Bay		3,297		53		-		3,350		12.2%
Dallas		1,300		1,587		-		2,887		10.5%
Los Angeles County		1,946		317		31		2,294		8.3%
Austin		755		1,208		-		1,963		7.1%
Seattle		1,052		270		28		1,350		4.9%
Suburban Maryland		394		-		751		1,145		4.2%
Orange County		810		101		-		911		3.3%
San Diego County		233		535		-		768		2.8%
Mid-Peninsula		-		94		340		434		1.6%

Total		18,173		6,177		3,132		27,482		100.0%

Percentage by Product Type		66.1%		22.5%		11.4%		100.0%

Weighted Average Occupancy Rates by Product Type for the Three Months Ended June 30, 2020 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				90.9%		94.0%		91.4%		92.0%
South Florida				92.7%		85.0%		100.0%		92.4%
Silicon Valley				96.5%		84.3%		-		95.0%
East Bay				86.4%		93.0%		-		86.5%
Dallas				92.5%		87.4%		-		89.7%
Los Angeles County				86.6%		97.3%		99.2%		88.3%
Austin				94.0%		93.9%		-		93.9%
Seattle				97.9%		96.3%		86.8%		97.4%
Suburban Maryland				82.0%		-		93.3%		89.4%
Orange County				93.2%		91.9%		-		93.1%
San Diego County				96.4%		95.6%		-		95.8%
Mid-Peninsula				-		86.4%		93.8%		92.2%
Total				91.6%		91.7%		92.2%		91.7%

Weighted Average Occupancy Rates by Product Type for the Six Months Ended June 30, 2020 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				90.8%		94.3%		90.7%		91.8%
South Florida				93.4%		86.5%		100.0%		93.2%
Silicon Valley				96.4%		90.5%		-		95.6%
East Bay				86.1%		93.4%		-		86.2%
Dallas				92.5%		88.0%		-		90.0%
Los Angeles County				91.2%		97.2%		99.1%		92.2%
Austin				96.1%		93.9%		-		94.7%
Seattle				98.7%		96.8%		92.6%		98.2%
Suburban Maryland				83.4%		-		93.9%		90.3%
Orange County				93.4%		91.9%		-		93.2%
San Diego County				96.8%		95.7%		-		96.0%
Mid-Peninsula				-		86.2%		94.2%		92.5%
Total				92.3%		92.4%		92.0%		92.3%

⁽¹⁾	Excludes assets held for sale as of June 30, 2020.

LOGO


Rentable Square Footage of Properties by Size as of June 30, 2020 ^{(1) (2)}

Markets	Large			Small			Total


Northern Virginia		3,399			1,575			4,974
South Florida		3,107			759			3,866
Silicon Valley		2,835			705			3,540
East Bay		3,052			298			3,350
Dallas		1,758			1,129			2,887
Los Angeles County		1,255			1,039			2,294
Austin		1,718			245			1,963
Seattle		951			399			1,350
Suburban Maryland		537			608			1,145
Orange County		513			398			911
San Diego County		-			768			768
Mid-Peninsula		-			434			434

Total		19,125			8,357			27,482

Percentage by Product Type		69.6	%		30.4	%		100.0	%

Weighted Average Occupancy Rates by Size for the Three Months Ended June 30, 2020 ^{(1) (2)}

Markets	Large Tenant			Small Tenant			Total


Northern Virginia		90.9	%		94.3	%		92.0	%
South Florida		92.2	%		93.4	%		92.4	%
Silicon Valley		95.6	%		92.7	%		95.0	%
East Bay		85.3	%		98.8	%		86.5	%
Dallas		91.9	%		86.3	%		89.7	%
Los Angeles County		83.4	%		94.2	%		88.3	%
Austin		94.5	%		89.9	%		93.9	%
Seattle		97.9	%		96.2	%		97.4	%
Suburban Maryland		89.6	%		89.2	%		89.4	%
Orange County		92.6	%		93.8	%		93.1	%
San Diego County		-			95.8	%		95.8	%
Mid-Peninsula		-			92.2	%		92.2	%
Total		91.2	%		92.7	%		91.7	%

Weighted Average Occupancy Rates by Size for the Six Months Ended June 30, 2020 ^{(1) (2)}

Markets	Large Tenant			Small Tenant			Total


Northern Virginia		90.7	%		94.2	%		91.8	%
South Florida		93.3	%		93.0	%		93.2	%
Silicon Valley		96.3	%		93.0	%		95.6	%
East Bay		85.0	%		98.9	%		86.2	%
Dallas		92.2	%		86.5	%		90.0	%
Los Angeles County		90.2	%		94.5	%		92.2	%
Austin		95.5	%		89.2	%		94.7	%
Seattle		98.7	%		96.9	%		98.2	%
Suburban Maryland		90.4	%		90.1	%		90.3	%
Orange County		92.7	%		93.9	%		93.2	%
San Diego County		-			96.0	%		96.0	%
Mid-Peninsula		-			92.5	%		92.5	%
Total		92.0	%		92.9	%		92.3	%

⁽¹⁾	Excludes assets held for sale as of June 30, 2020.

⁽²⁾	The Company’s “large tenant” portfolio consists of properties with average leases greater than or equal to 5,000 square feet while the “small tenant” portfolio consists of properties with average leases less than 5,000 square feet.

LOGO


Lease Expirations - Total Portfolio ⁽¹⁾
			Annualized				% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		% Total		Rental Income

2020		2,819	$	49,347		11.2%		11.2%
2021		5,445		92,981		21.2%		21.2%
2022		5,265		93,722		21.3%		21.3%
2023		4,049		66,253		15.0%		15.0%
2024		2,832		50,297		11.4%		11.4%
Thereafter		4,895		87,796		19.9%		19.9%

Total		25,305	$	440,396		100.0%		100.0%


Lease Expirations - Industrial ⁽¹⁾

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		Industrial		Rental Income

2020		1,797	$	24,828		10.2%		5.6%
2021		3,355		48,345		19.8%		11.0%
2022		3,312		48,885		20.0%		11.1%
2023		2,906		40,725		16.7%		9.2%
2024		1,904		28,917		11.9%		6.6%
Thereafter		3,415		52,187		21.4%		11.8%

Total		16,689	$	243,887		100.0%		55.3%


Lease Expirations - Flex
			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		Flex		Rental Income

2020		638	$	12,566		10.6%		2.9%
2021		1,473		29,179		24.8%		6.7%
2022		1,352		28,144		23.9%		6.4%
2023		629		12,451		10.6%		2.8%
2024		590		12,464		10.6%		2.8%
Thereafter		1,017		22,963		19.5%		5.2%

Total		5,699	$	117,767		100.0%		26.8%


Lease Expirations - Office
			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		Office		Rental Income

2020		384	$	11,953		15.2%		2.7%
2021		617		15,457		19.6%		3.5%
2022		601		16,693		21.2%		3.8%
2023		514		13,077		16.6%		3.0%
2024		338		8,916		11.3%		2.0%
Thereafter		463		12,646		16.1%		2.9%

Total		2,917	$	78,742		100.0%		17.9%

⁽¹⁾	Excludes assets held for sale as of June 30, 2020.

⁽²⁾	Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

LOGO


Lease Expirations - Northern California

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		No. CA		Rental Income
2020		683	$	15,253		12.5%		3.5%
2021		1,192		22,115		18.0%		5.0%
2022		1,135		20,021		16.3%		4.5%
2023		1,024		17,983		14.7%		4.1%
2024		838		14,606		11.9%		3.3%
Thereafter		1,960		32,644		26.6%		7.4%

Total		6,832	$	122,622		100.0%		27.8%


Lease Expirations - Southern California

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		So. CA		Rental Income
2020		526	$	9,453		14.2%		2.1%
2021		897		17,279		26.1%		3.9%
2022		1,068		19,646		29.6%		4.4%
2023		386		7,485		11.3%		1.7%
2024		311		6,616		10.0%		1.5%
Thereafter		312		5,836		8.8%		1.3%

Total		3,500	$	66,315		100.0%		14.9%


Lease Expirations - Dallas

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		Dallas		Rental Income
2020		348	$	5,336		14.8%		1.2%
2021		756		9,983		27.7%		2.3%
2022		350		4,334		12.1%		1.0%
2023		467		5,527		15.4%		1.3%
2024		226		3,683		10.2%		0.9%
Thereafter		443		7,135		19.8%		1.6%

Total		2,590	$	35,998		100.0%		8.3%


Lease Expirations - Austin

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		Austin		Rental Income
2020		66	$	1,326		3.8%		0.3%
2021		385		6,889		19.6%		1.6%
2022		398		7,281		20.7%		1.7%
2023		225		4,067		11.5%		0.9%
2024		209		4,403		12.5%		1.0%
Thereafter		558		11,245		31.9%		2.6%

Total		1,841	$	35,211		100.0%		8.1%

⁽¹⁾	Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

LOGO


Lease Expirations - Northern Virginia

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		No. VA		Rental Income
2020		492	$	8,213		8.9%		1.9%
2021		979		18,104		19.6%		4.1%
2022		1,197		25,554		27.7%		5.8%
2023		561		11,410		12.3%		2.6%
2024		498		10,195		11.0%		2.3%
Thereafter		912		18,983		20.5%		4.3%

Total		4,639	$	92,459		100.0%		21.0%


Lease Expirations - South Florida

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		So. FL		Rental Income
2020		403	$	3,964		8.9%		0.9%
2021		824		10,410		23.5%		2.4%
2022		767		10,093		22.8%		2.3%
2023		753		9,428		21.2%		2.1%
2024		515		6,567		14.8%		1.5%
Thereafter		301		3,891		8.8%		0.9%

Total		3,563	$	44,353		100.0%		10.1%


Lease Expirations - Suburban Maryland

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		Sub. MD		Rental Income
2020		114	$	3,336		14.5%		0.8%
2021		207		3,773		16.4%		0.9%
2022		145		2,923		12.7%		0.7%
2023		251		5,477		23.8%		1.2%
2024		106		2,379		10.3%		0.5%
Thereafter		218		5,122		22.3%		1.1%

Total		1,041	$	23,010		100.0%		5.2%


Lease Expirations - Seattle ⁽²⁾

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽¹⁾		Seattle		Rental Income
2020		187	$	2,466		12.1%		0.5%
2021		205		4,428		21.7%		1.0%
2022		205		3,870		18.9%		0.9%
2023		382		4,876		23.9%		1.1%
2024		129		1,848		9.0%		0.4%
Thereafter		191		2,940		14.4%		0.7%

Total		1,299	$	20,428		100.0%		4.6%

⁽¹⁾	Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

⁽²⁾	Excludes assets held for sale as of June 30, 2020.

LOGO


Lease Expirations - Large Tenant Portfolio ⁽¹⁾

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		Large Tenant		Rental Income
2020		1,577	$	25,134		9.0%		5.7%
2021		3,070		45,439		16.4%		10.4%
2022		3,356		54,642		19.7%		12.4%
2023		2,902		42,362		15.2%		9.6%
2024		2,303		37,947		13.7%		8.6%
Thereafter		4,268		72,257		26.0%		16.4%

Total		17,476	$	277,781		100.0%		63.1%


Lease Expirations - Small Tenant Portfolio ^(3) (4)

			Annualized		% of		% of Total Annualized
Year of Lease Expiration	Leased Square Footage		Rental Income ⁽²⁾		Small Tenant		Rental Income
2020		1,242	$	24,213		14.9%		5.5%
2021		2,375		47,542		29.2%		10.8%
2022		1,909		39,080		24.0%		8.9%
2023		1,147		23,891		14.7%		5.4%
2024		529		12,350		7.6%		2.8%
Thereafter		627		15,539		9.6%		3.5%

Total		7,829	$	162,615		100.0%		36.9%

⁽¹⁾	Large tenant portfolio consists of properties with average leases greater than or equal to 5,000 square feet.

⁽²⁾	Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

⁽³⁾	Small tenant portfolio consists of properties with average leases less than 5,000 square feet.

⁽⁴⁾	Excludes assets held for sale as of June 30, 2020.

LOGO


	Total Portfolio Activity ^{(1) (2)}
	Wtd. Avg.				Leasing				Customer				Transaction Costs				Transaction Costs				Cash Rental Rate
	Occupancy				Volume				Retention				per Executed Foot				as a % of Rents ⁽³⁾				Change ⁽³⁾⁽⁴⁾
	QTD		YTD		QTD		YTD		QTD		YTD		QTD		YTD		QTD		YTD		QTD		YTD

Northern Virginia		92.0%		91.8%		238,000		636,000		72.5%		75.7%	$	3.68	$	4.97		10.0%		10.1%		-5.1%		-0.9%

South Florida		92.4%		93.2%		370,000		549,000		56.2%		54.1%	$	0.74	$	1.00		2.9%		3.5%		-2.2%		1.0%

Silicon Valley		95.0%		95.6%		218,000		463,000		81.8%		76.4%	$	2.28	$	2.92		4.9%		4.0%		9.9%		14.0%

East Bay		86.5%		86.2%		302,000		401,000		87.8%		85.8%	$	2.95	$	2.55		8.0%		5.6%		22.5%		21.5%

Dallas		89.7%		90.0%		177,000		374,000		55.6%		56.2%	$	2.47	$	3.09		10.0%		11.6%		2.3%		3.0%

Suburban Maryland		89.4%		90.3%		36,000		84,000		52.3%		57.9%	$	4.87	$	7.59		8.8%		11.3%		-3.2%		0.9%

Austin		93.9%		94.7%		85,000		174,000		64.5%		63.3%	$	3.75	$	3.59		17.3%		10.8%		-4.7%		0.6%

Los Angeles		88.3%		92.2%		123,000		325,000		21.8%		36.3%	$	1.14	$	2.42		5.1%		7.4%		3.9%		10.6%

Seattle		97.4%		98.2%		54,000		316,000		56.0%		82.4%	$	0.65	$	0.78		1.7%		2.4%		4.5%		23.2%

Orange County		93.1%		93.2%		77,000		161,000		56.4%		56.9%	$	3.74	$	2.52		5.4%		4.6%		-7.4%		0.5%

San Diego		95.8%		96.0%		79,000		152,000		71.2%		68.1%	$	1.50	$	1.71		5.9%		5.7%		-5.1%		-0.7%

Mid-Peninsula		92.2%		92.5%		17,000		46,000		74.9%		81.2%	$	-	$	0.24		-		0.5%		1.2%		3.8%
Company Totals by Market		91.7%		92.3%		1,776,000		3,681,000		54.8%		62.9%	$	2.28	$	2.77		6.7%		6.5%		2.5%		6.3%

Industrial		91.6%		92.3%		1,179,000		2,451,000		49.9%		59.5%	$	1.77	$	1.86		5.6%		4.6%		4.4%		10.1%

Flex		91.7%		92.4%		477,000		907,000		67.9%		71.7%	$	2.32	$	3.79		7.2%		9.1%		1.2%		2.0%

Office		92.2%		92.0%		120,000		323,000		58.2%		64.5%	$	7.08	$	6.88		10.8%		10.8%		-6.0%		-0.3%
Company Totals by Type		91.7%		92.3%		1,776,000		3,681,000		54.8%		62.9%	$	2.28	$	2.77		6.7%		6.5%		2.5%		6.3%

⁽¹⁾	Excludes assets held for sale as of June 30, 2020.

⁽²⁾	Average lease term for leases executed during the quarter- and year-to-date periods ended June 30, 2020 was 3.2 years and 3.5 years, respectively.

⁽³⁾	Refer to page 27, Definitions and Non-GAAP Disclosures, for the definitions of Transaction Costs as a percentage of Rents, Cash Rental Rate Change, and Average Net Effective Rent Growth.

⁽⁴⁾	Average Net Effective Rent Growth for leases executed during the quarter- and year-to-date periods ended June 30, 2020 was 8.5% and 15.7%, respectively.

LOGO

Provided within this supplemental information package are measures not defined in accordance with U.S. generally accepted accounting principles (“GAAP”). We believe our presentation of these non-GAAP measures assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. These non-GAAP measures discussed below are not substitutes of other measures of financial performance presented in accordance with GAAP. In addition, other real estate investment trusts (“REITs”) may compute these measures differently, so comparisons among REITs may not be helpful.

Adjusted Cost of Operations – Adjusted cost of operations represents cost of operations, excluding non-cash stock compensation expense for employees whose compensation expense is recorded in cost of operations, which can vary significantly period to period based upon the performance of the company. The GAAP measure most directly comparable to adjusted cost of operations is cost of operations.

Average Net Effective Rent Growth – Average net effective rent growth represents the percentage change in net effective rent between the original leases and the current leases. Net effective rent represents average annual rental payments, on a straight-line basis for the term of each lease excluding operating expense reimbursements.

Cash NOI – We utilize cash NOI to evaluate the cash flow performance of our business parks. Cash NOI represents NOI adjusted to exclude non-cash items included in rental income and in cost of operations. The non-cash rental income includes amortization of deferred rent receivable, amortization of above and below market rents, net, and amortization of lease incentives and tenant improvement reimbursements. The non-cash expense is equal to stock compensation expense for employees whose compensation expense is recorded in cost of operations. We believe that cash NOI assists investors in analyzing cash flow performance of our business parks. The GAAP measure most directly comparable to cash NOI is net income.

Cash Rental Income – Cash rental income represents rental income, excluding non-cash rental income, specifically amortization of deferred rent receivable, amortization of above and below market rents, net, amortization of lease incentives and tenant improvement reimbursements.

Cash Rental Rate Change – Cash rental rate change percentages are computed by taking the percentage difference between outgoing rents (including estimated expense recoveries) and incoming rents (including estimated expense recoveries) for leases executed during the period. Leases executed on spaces vacant for more than the preceding twelve months have been excluded.

Core FFO and Core FFO per share – Core FFO represents FFO excluding the net impact of (i) income allocated to preferred shareholders to the extent redemption value exceeds the related carrying value and (ii) other nonrecurring income or expense items as appropriate. Core FFO per share represents Core FFO allocable to diluted shares and units divided by the weighted average diluted shares and units. We believe our presentation of Core FFO and Core FFO per share assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. The GAAP measures most directly comparable to Core FFO and Core FFO per share are net income and earnings per share, respectively.

Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”) – EBITDAre is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and is often utilized to evaluate the performance of real estate companies. EBITDAre is calculated as GAAP net income before interest, depreciation and amortization and adjusted to exclude gains or losses from sales of depreciable real estate assets and impairment charges on real estate assets. We believe our presentation of EBITDAre assists investors and analysts in evaluating the operating performance of our business activities, including the impact of general and administrative expenses, and without the impact from gains or losses from sales of depreciable real estate assets. The GAAP measure most directly comparable EBITDAre is net income.

Free Cash Available after Fixed Charges – Free cash available after fixed charges represents FAD less dividends and distributions.

Funds Available for Distribution (“FAD”) – FAD is a non-GAAP measure that represents Core FFO adjusted to (a) deduct recurring capital improvements that maintains the condition of our real estate, tenant improvements and lease commissions and (b) remove certain non-cash rental income or expenses such as amortization of deferred rent receivable and non-cash stock compensation expense. We believe our presentation of FAD assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. FAD is not a substitute for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because they exclude investing and financing activities presented on our statements of cash flows. The GAAP measure most directly comparable to FAD is operating cash flow from our statements of cash flows.

Funds from Operations (“FFO”) and FFO per share – FFO and FFO per share are non-GAAP measures defined by NAREIT and are considered helpful measures of REIT performance by REITs and many REIT analysts. FFO represents GAAP net income before real estate depreciation and amortization expense, gains or losses on sales of operating properties and land and impairment charges on real estate assets, which are excluded because it does not accurately reflect changes in the value of our business parks. FFO per share represents FFO allocable to diluted shares and units, divided by aggregate diluted shares and units. The GAAP measure most directly comparable to FFO and FFO per share are net income and earnings per share, respectively.

LOGO

Net Operating Income (“NOI”) – We utilize NOI, a non-GAAP financial measure, to evaluate the operating performance of our business parks. We define NOI as rental income less adjusted cost of operations (described below). We believe NOI assists investors in analyzing the performance and value of our business parks by excluding (i) corporate overhead (i.e. general and administrative expenses) because it does not relate to the results of our business parks, (ii) depreciation and amortization expense because it does not accurately reflect changes in the fair value of our business parks and (iii) stock compensation expense because this expense item can vary significantly from period to period and thus impact comparability across periods. The GAAP measure most directly comparable to NOI is net income.

Non-Recurring Property Renovations – Non-recurring property renovations represents renovations that substantially enhance the value of a property, including capitalized costs associated with repositioning acquired assets.

Non-Same Park – Non-Same Park includes assets acquired on or subsequent to January 1, 2018.

Recurring Capital Expenditures – Recurring capital expenditures are capitalized costs necessary to continue to operate the property at its current economic value. Capital improvements in excess of $2,000 with a useful life greater than 24 months are capitalized. Lease transaction costs (i.e. tenant improvements and leasing commissions) of $1,000 or more for leases with terms greater than 12 months are capitalized. All leasing costs, including first generation tenant improvements and leasing commissions, are included in recurring capital expenditures.

Retained Cash – Retained cash represents free cash available after fixed charges less non-recurring property renovations and funds used for development and redevelopment.

Revenue per Available Square Foot (RevPAF) – RevPAF is computed by dividing rental income for the period by weighted average available square feet for the same period. RevPAF for the three and six month periods is annualized.

Revenue per Occupied Square Foot – Revenue per occupied square foot is computed by dividing rental income for the period by weighted average occupied square feet for the same period. Revenue per occupied square foot for the three and six month periods is annualized.

Same Park – Same Park includes assets acquired prior to January 1, 2018.

Transaction Costs as a Percentage of Rents – Transaction costs as a percentage of rents are computed by taking the total transaction costs divided by the total rents (including estimated expense recoveries) over the term of the lease.

PS BUSINESS PARKS, INC./MD - FORM 8-K - EX-99.2 - August 4, 2020

Attached files

PS BUSINESS PARKS, INC./MD Reports