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	d149539dex991.htm
8-K - 8-K - PS BUSINESS PARKS, INC./MD	d149539d8k.htm

Exhibit 99.2

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ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION FOR

THE THREE AND SIX MONTHS ENDED JUNE 30, 2021


		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		19

Quarter- and Year-to-Date Production Statistics		22

Definitions and Non-GAAP Disclosures		24

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; security breaches, including ransomware, or a failure of the Company’s networks, systems or technology, which could adversely impact the Company’s operations or its business, customer and employee relationships or result in fraudulent payments; 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.

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	June 30, 2021			December 31, 2020
ASSETS

Cash and cash equivalents	$	115,965		$	69,083		(a	)

Real estate facilities, at cost
Land		865,081			864,092
Buildings and improvements		2,204,461			2,186,621

		3,069,542			3,050,713
Accumulated depreciation		(1,219,040	)		(1,181,402	)

		1,850,502			1,869,311		(b	)
Properties held for sale, net		12,871			26,273
Land and building held for development, net		52,529			40,397

		1,915,902			1,935,981

Rent receivable		1,903			1,519		(c	)
Deferred rent receivable		37,589			36,788
Other assets		15,165			14,334		(d	)

Total assets	$	2,086,524		$	2,057,705


LIABILITIES AND EQUITY

Accrued and other liabilities	$	88,989		$	82,065		(e	)

Total liabilities		88,989			82,065

Equity
PS Business Parks, Inc.’s stockholders’ equity:
Preferred stock		944,750			944,750
Common stock		275			274
Paid-in capital		739,336			738,022		(f	)
Accumulated earnings		89,800			73,631		(g	)

Total PS Business Parks, Inc.’s stockholders’ equity		1,774,161			1,756,677
Noncontrolling interests		223,374			218,963

Total equity		1,997,535			1,975,640

Total liabilities and equity	$	2,086,524		$	2,057,705

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

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(a)	Change in cash and cash equivalents
	Beginning cash balance at December 31, 2020					$	69,083
	Net cash provided by operating activities						148,107
	Net cash used in investing activities						(1,325	)
	Net cash used in financing activities						(99,900	)

	Ending cash balance at June 30, 2021					$	115,965


(b)	Change in real estate facilities, at cost
	Beginning balance at December 31, 2020					$	1,869,311
	Recurring capital improvements						4,436
	Tenant improvements, gross						7,065
	Capitalized lease commissions						3,404
	Nonrecurring capital improvements						843
	Depreciation and amortization of real estate facilities						(44,136	)
	Transfer from land and building held for development, net						9,052
	Transfer to properties held for sale, net						527

	Ending balance at June 30, 2021					$	1,850,502


							Increase
(c)	Change in rent receivable		June 30, 2021		December 31, 2020		(Decrease)

	Non-government customers	$	1,093	$	646	$	447
	U.S. Government customers		810		873		(63	)

		$	1,903	$	1,519	$	384


							Increase
(d)	Change in other assets		June 30, 2021		December 31, 2020		(Decrease)

	Lease intangible assets, net	$	7,051	$	9,058	$	(2,007	)
	Prepaid property taxes and insurance		5,537		3,121		2,416
	Other		2,577		2,155		422

		$	15,165	$	14,334	$	831


							Increase
(e)	Change in accrued and other liabilities		June 30, 2021		December 31, 2020		(Decrease)

	Customer security deposits	$	39,769	$	38,457	$	1,312
	Accrued property taxes		15,348		12,513		2,835
	Customer prepaid rent		13,047		12,518		529
	Lease intangible liabilities, net		5,618		6,392		(774	)
	Other		15,207		12,185		3,022

		$	88,989	$	82,065	$	6,924


(f)	Change in paid-in capital
	Beginning paid-in capital at December 31, 2020					$	738,022
	Issuance costs						(105	)
	Exercise of stock options						906
	Stock compensation expense, net						3,715
	Cash paid for taxes in lieu of stock upon vesting of restricted stock units						(3,202	)

	Ending paid-in capital at June 30, 2021					$	739,336


(g)	Change in accumulated earnings
	Beginning accumulated earnings at December 31, 2020					$	73,631
	Net income						98,052
	Distributions to preferred stockholders						(24,093	)
	Distributions to common stockholders						(57,790	)

	Ending accumulated earnings at June 30, 2021					$	89,800

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		For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Rental income	$	109,364		$	100,559		$	217,411		$	206,775		(a)

Expenses:
Cost of operations		31,849			30,131			65,067			61,394		(b)
Depreciation and amortization		22,514			22,963			45,499			49,582
General and administrative		4,799			3,004			9,181			6,327		(c)

Total operating expenses		59,162			56,098			119,747			117,303


Interest and other income		923			225			1,179			782		(d)
Interest and other expense		(268	)		(203	)		(479	)		(364	)	(e)
Gain on sale of real estate facility		19,193			—			19,193			19,621

Net income		70,050			44,483			117,557			109,511
Allocation to noncontrolling interests		(12,094	)		(6,795	)		(19,505	)		(17,887	)

Net income allocable to PS Business Parks, Inc.		57,956			37,688			98,052			91,624
Allocation to preferred stockholders		(12,047	)		(12,047	)		(24,093	)		(24,093	)
Allocation to restricted stock unit holders		(314	)		(119	)		(478	)		(394	)

Net income allocable to common stockholders	$	45,595		$	25,522		$	73,481		$	67,137


Net income per share of common stock
Basic	$	1.66		$	0.93		$	2.67		$	2.44
Diluted	$	1.65		$	0.93		$	2.66		$	2.44

Weighted average common stock outstanding
Basic		27,531			27,479			27,513			27,464
Diluted		27,632			27,560			27,611			27,557

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

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		For The Three Months Ended				Increase		For the Six Months Ended				Increase
(a)	Rental income:	June 30, 2021		June 30, 2020		(Decrease)		June 30, 2021		June 30, 2020		(Decrease)
	Same Park ⁽¹⁾ ⁽²⁾	$	101,471	$	91,638	$	9,833	$	201,029	$	190,015	$	11,014
	Same Park non-cash rental income ⁽¹⁾ ⁽³⁾		30		2,440		(2,410)		467		3,193		(2,726)
	Non-Same Park ⁽¹⁾ ⁽²⁾		3,706		1,911		1,795		6,605		4,189		2,416
	Non-Same Park non-cash rental income ⁽¹⁾ ⁽³⁾		220		156		64		1,090		299		791
	Multifamily		2,248		2,488		(240)		4,575		5,048		(473)
	Rental income from assets sold or held for sale ⁽⁴⁾		1,689		1,926		(237)		3,645		4,031		(386)

		$	109,364	$	100,559	$	8,805	$	217,411	$	206,775	$	10,636


		For The Three Months Ended				Increase		For the Six Months Ended				Increase
(b)	Cost of operations:	June 30, 2021		June 30, 2020		(Decrease)		June 30, 2021		June 30, 2020		(Decrease)
	Same Park ⁽¹⁾	$	28,330	$	27,181	$	1,149	$	58,014	$	55,561	$	2,453
	Same Park non-cash expense ⁽¹⁾ ⁽⁵⁾		461		256		205		896		519		377
	Non-Same Park ⁽¹⁾		1,187		878		309		2,340		1,707		633
	Non-Same Park non-cash expense ⁽¹⁾ ⁽⁵⁾		13		6		7		26		12		14
	Multifamily		1,177		1,002		175		2,244		2,018		226
	Operating expenses from assets sold or held for sale ⁽⁴⁾		681		808		(127)		1,547		1,577		(30)

		$	31,849	$	30,131	$	1,718	$	65,067	$	61,394	$	3,673


		For The Three Months Ended				Increase		For the Six Months Ended				Increase
(c)	General and administrative expenses:	June 30, 2021		June 30, 2020		(Decrease)		June 30, 2021		June 30, 2020		(Decrease)
	Compensation expense	$	1,610	$	1,424	$	186	$	3,253	$	3,177	$	76
	Stock compensation expense		1,820		665		1,155		3,144		1,333		1,811
	Professional fees and other		1,369		915		454		2,784		1,817		967

		$	4,799	$	3,004	$	1,795	$	9,181	$	6,327	$	2,854


		For The Three Months Ended				Increase		For the Six Months Ended				Increase
(d)	Interest and other income:	June 30, 2021		June 30, 2020		(Decrease)		June 30, 2021		June 30, 2020		(Decrease)
	Management fee income	$	65	$	63	$	2	$	133	$	133	$	-
	Interest income		4		42		(38)		8		345		(337)
	Other income		854		120		734		1,038		304		734

		$	923	$	225	$	698	$	1,179	$	782	$	397


		For The Three Months Ended				Increase		For the Six Months Ended				Increase
(e)	Interest and other expense:	June 30, 2021		June 30, 2020		(Decrease)		June 30, 2021		June 30, 2020		(Decrease)
	Interest expense	$	-	$	-	$	-	$	-	$	-	$	-
	Credit facilities fees & other charges		(268)		(203)		(65)		(479)		(364)		(115)

		$	(268)	$	(203)	$	(65)	$	(479)	$	(364)	$	(115)

⁽¹⁾	Refer to page 24, 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 $0.0 and $1.1 million for the three months ended June 30, 2021 and 2020, respectively, and $0.0 and $1.2 million for the six months ended June 30, 2021 and 2020, respectively, and (b) rent deferrals and abatements of $0.2 million and $4.5 million for the three months ended June 30, 2021 and 2020, respectively, and $0.5 million and $4.5 million for the six months ended June 30, 2021 and 2020, respectively. Non-Same Park rental income is presented net of (a) accounts receivable write-offs of $0.0 for the three and six months ended June 30, 2021 and 2020, and (b) rent deferrals and abatements of $0.0 for the three and six months ended June 30, 2021 and 2020.

⁽³⁾

Non-cash rental income represents amortization of deferred rent receivable (net of write-offs), in-place intangibles, tenant improvement reimbursements, and lease incentive. Same Park non-cash rental income is presented net of deferred rent receivable write-offs of $0.1 million and $2.4 million for the three months ended June 30, 2021 and 2020, respectively, and $0.2 million and $2.4 million for the six months ended June 30, 2021 and 2020, respectively. Non-Same Park non-cash rental income is presented net of deferred rent receivable write-offs of $0.0 for the three and six months ended June 30, 2021 and 2020.

⁽⁴⁾

Amounts shown for the three and six months ended June 30, 2021 include operating results attributable to assets held for sale comprising 244,000 square feet and an asset sold in June 2021 comprising 198,000 square feet. Amounts shown for the three months ended June 30, 2020 include operating results attributable to assets held for sale comprising 244,000 square feet, the asset sold in June 2021 comprising 198,000 square feet, and an asset sold in September 2020 comprising 40,000 square feet. Amounts shown for the six months ended June 30, 2020 include operating results attributable to assets held for sale comprising 244,000 square feet, the asset sold in June 2021 comprising 198,000 square feet, the asset sold in September 2020 comprising 40,000 square feet, and an asset sold in January 2020 comprising 113,000 square feet.

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

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PROPERTY INFORMATION

	For The Three Months Ended June 30,						For the Six Months Ended June 30,
	2021		2020		% Change		2021		2020		% Change
Total Portfolio⁽¹⁾
Total rentable square footage at period end		27,369,000		27,040,000		1.2%		27,369,000		27,040,000		1.2%
Weighted average occupancy		92.9%		91.6%		1.4%		92.6%		92.3%		0.3%
Period end occupancy		93.5%		91.8%		1.9%		93.5%		91.8%		1.9%
Cash rental income per occupied square foot^(2) (3)
Industrial	$	14.26	$	12.61		13.1%	$	14.05	$	13.04		7.7%
Flex	$	20.30	$	18.36		10.6%	$	20.06	$	18.87		6.3%
Office	$	24.67	$	23.95		3.0%	$	24.86	$	24.60		1.1%
Total cash rental income per occupied square foot	$	16.55	$	15.10		9.6%	$	16.39	$	15.56		5.3%
Cash rental income per available foot^(2) (3)
Industrial	$	13.56	$	11.54		17.5%	$	13.29	$	12.04		10.4%
Flex	$	18.10	$	16.83		7.5%	$	17.97	$	17.43		3.1%
Office	$	21.34	$	22.08		(3.4%)	$	21.55	$	22.64		(4.8%)
Total cash rental income per available foot	$	15.37	$	13.84		11.1%	$	15.19	$	14.37		5.7%

Same Park Portfolio ⁽²⁾
Total rentable square footage at period end		26,271,000		26,271,000		—		26,271,000		26,271,000		—
Weighted average occupancy		92.9%		92.2%		0.8%		92.7%		92.5%		0.2%
Period end occupancy		93.5%		92.8%		0.8%		93.5%		92.8%		0.8%
Cash rental income per occupied square foot^(2) (4)
Industrial	$	14.27	$	12.60		13.3%	$	14.13	$	13.09		7.9%
Flex	$	20.28	$	18.33		10.6%	$	20.03	$	18.84		6.3%
Office	$	24.67	$	23.95		3.0%	$	24.86	$	24.60		1.1%
Total cash rental income per occupied square foot	$	16.63	$	15.13		9.9%	$	16.52	$	15.64		5.6%
Cash rental income per available foot^(2) (4)
Industrial	$	13.59	$	11.64		16.8%	$	13.38	$	12.12		10.4%
Flex	$	18.07	$	16.82		7.4%	$	17.94	$	17.41		3.0%
Office	$	21.34	$	22.08		(3.4%)	$	21.55	$	22.64		(4.8%)
Total cash rental income per available foot	$	15.45	$	13.95		10.8%	$	15.30	$	14.47		5.7%

Non-Same Park Portfolio ⁽²⁾
Total rentable square footage at period end		1,098,000		769,000		42.8%		1,098,000		769,000		42.8%
Weighted average occupancy		92.0%		71.4%		28.9%		92.3%		84.9%		8.7%
Period end occupancy		93.0%		55.2%		68.5%		93.0%		55.2%		68.5%
Cash rental income per occupied square foot^(2) (5)
Industrial	$	14.09	$	12.93		9.0%	$	12.63	$	11.86		6.5%
Flex	$	21.84	$	20.87		4.6%	$	22.27	$	21.10		5.5%
Office	$	—	$	—		—	$	—	$	—		—
Total cash rental income per occupied square foot	$	14.65	$	13.92		5.2%	$	13.34	$	12.87		3.7%
Cash rental income per available foot^(2) (5)
Industrial	$	12.95	$	8.98		44.2%	$	11.66	$	10.01		16.5%
Flex	$	20.46	$	18.23		12.2%	$	20.58	$	18.96		8.5%
Office	$	—	$	—		—	$	—	$	—		—
Total cash rental income per available foot	$	13.49	$	9.93		35.9%	$	12.32	$	10.94		12.6%

Multifamily Portfolio
Number of units		395		395		—		395		395		—
Weighted average occupancy		94.6%		91.7%		3.1%		94.4%		93.3%		1.2%
Period end occupancy		94.9%		90.6%		4.8%		94.9%		90.6%		4.8%

⁽¹⁾	Excludes multifamily assets, assets held for sale comprising 244,000 square feet, an asset sold in June 2021 comprising 198,000 square feet, and assets sold in 2020 comprising 153,000 square feet for the periods shown.

⁽²⁾	Refer to page 24, Definitions and Non-GAAP Disclosures, for the definitions of Cash Rental Income per Available Foot, Cash Rental Income per Occupied Square Foot, Same Park, and Non-Same Park.

⁽³⁾

Included in the calculation of Total Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.3 million for both of the three months ended June 30, 2021 and 2020, and $0.7 million and $0.5 million for the six months ended June 30, 2021 and 2020, respectively, (b) accounts receivable write-offs of $0.0 and $1.1 million for the three months ended June 30, 2021 and 2020, respectively, and $0.0 and $1.2 million for the six months ended June 30, 2021 and 2020, respectively, and (c) rent deferrals and abatements of $0.2 million and $4.5 million for the three months ended June 30, 2021 and 2020, respectively, and $0.5 million and $4.5 million for the six months ended June 30, 2021 and 2020, respectively.

⁽⁴⁾

Included in the calculation of Same Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.3 million for both of the three months ended June 30, 2021 and 2020, and $0.7 million and $0.5 million for the six months ended June 30, 2021 and 2020, respectively, (b) accounts receivable write-offs of $0.0 and $1.1 million for the three months ended June 30, 2021 and 2020, respectively, and $0.0 and $1.2 million for the six months ended June 30, 2021 and 2020, respectively, and (c) rent deferrals and abatements of $0.2 million and $4.5 million for the three months ended June 30, 2021 and 2020, respectively, and $0.5 million and $4.5 million for the six months ended June 30, 2021 and 2020, respectively.

⁽⁵⁾

Included in the calculation of Non-Same Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.0 for both of the three and six months ended June 30, 2021 and 2020, (b) accounts receivable write-offs of $0.0 for both of the three and six months ended June 30, 2021 and 2020, and (c) rent deferrals and abatements of $0.0 for both of the three and six months ended June 30, 2021 and 2020.

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NET OPERATING INCOME

	For The Three Months Ended June 30,						For the Six Months Ended June 30,
	2021		2020		% Change		2021		2020		% Change
Rental income
Same Park ^{(1) (2) (3)}	$	101,501	$	94,078		7.9%	$	201,496	$	193,208		4.3%
Non-Same Park ⁽¹⁾		3,926		2,067		89.9%		7,695		4,488		71.5%
Multifamily		2,248		2,488		(9.6%)		4,575		5,048		(9.4%)
Assets sold or held for sale		1,689		1,926		(12.3%)		3,645		4,031		(9.6%)

Total rental income		109,364		100,559		8.8%		217,411		206,775		5.1%

Adjusted cost of operations ^{(1) (5)}
Same Park ^{(1) (6)}		28,330		27,181		4.2%		58,014		55,561		4.4%
Non-Same Park ⁽¹⁾		1,187		878		35.2%		2,340		1,707		37.1%
Multifamily		1,177		1,002		17.5%		2,244		2,018		11.2%
Assets sold or held for sale		674		804		(16.2%)		1,532		1,568		(2.3%)

Total		31,368		29,865		5.0%		64,130		60,854		5.4%

Net operating income
Same Park ⁽¹⁾		73,171		66,897		9.4%		143,482		137,647		4.2%
Non-Same Park ⁽¹⁾		2,739		1,189		130.4%		5,355		2,781		92.6%
Multifamily		1,071		1,486		(27.9%)		2,331		3,030		(23.1%)
Assets sold or held for sale		1,015		1,122		(9.5%)		2,113		2,463		(14.2%)

Total net operating income	$	77,996	$	70,694		10.3%	$	153,281	$	145,921		5.0%


CASH NET OPERATING INCOME

	For The Three Months Ended June 30,						For the Six Months Ended June 30,
	2021		2020		% Change		2021		2020		% Change
Cash rental income ^{(1) (5)}
Same Park ^{(1) (2) (4)}	$	101,471	$	91,638		10.7%	$	201,029	$	190,015		5.8%
Non-Same Park ⁽¹⁾		3,706		1,911		93.9%		6,605		4,189		57.7%
Multifamily		2,248		2,487		(9.6%)		4,575		5,046		(9.3%)
Assets sold or held for sale		1,756		1,777		(1.2%)		3,712		3,715		(0.1%)

Total cash rental income		109,181		97,813		11.6%		215,921		202,965		6.4%

Adjusted cost of operations ^{(1) (5)}
Same Park ^{(1) (6)}		28,330		27,181		4.2%		58,014		55,561		4.4%
Non-Same Park ⁽¹⁾		1,187		878		35.2%		2,340		1,707		37.1%
Multifamily		1,177		1,002		17.5%		2,244		2,018		11.2%
Assets sold or held for sale		674		804		(16.2%)		1,532		1,568		(2.3%)

Total adjusted cost of operations		31,368		29,865		5.0%		64,130		60,854		5.4%

Cash net operating income
Same Park ⁽¹⁾		73,141		64,457		13.5%		143,015		134,454		6.4%
Non-Same Park ⁽¹⁾		2,519		1,033		143.9%		4,265		2,482		71.8%
Multifamily		1,071		1,485		(27.9%)		2,331		3,028		(23.0%)
Assets sold or held for sale		1,082		973		11.2%		2,180		2,147		1.5%

Total cash net operating income	$	77,813	$	67,948		14.5%	$	151,791	$	142,111		6.8%


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,
	2021		2020		% Change		2021		2020		% Change
Net income	$	70,050	$	44,483		57.5%	$	117,557	$	109,511		7.3%
Net interest (income) expense		132		94		40.4%		264		(72)		466.7%
Depreciation and amortization		22,514		22,963		(2.0%)		45,499		49,582		(8.2%)
Gain on sale of real estate facilities and development rights		(19,193)		—		(100.0%)		(19,193)		(19,621)		(2.2%)

EBITDAre	$	73,503	$	67,540		8.8%	$	144,127	$	139,400		3.4%

⁽¹⁾	Refer to page 24, 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 $0.3 million for both of the three months ended June 30, 2021 and 2020, and $0.7 million and $0.5 million for the six months ended June 30, 2021 and 2020, respectively.

⁽³⁾

⁽⁴⁾

Same Park cash rental income is presented net of (a) accounts receivable write-offs of $0.0 and $1.1 million for the three months ended June 30, 2021 and 2020, respectively, and $0.0 and $1.2 million for the six months ended June 30, 2021 and 2020, respectively, and (b) rent deferrals and abatements of $0.2 million and $4.5 million for the three months ended June 30, 2021 and 2020, respectively, and $0.5 million and $4.5 million for the six months ended June 30, 2021 and 2020, 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,
	2021		2020		% Change		2021		2020		% Change
Cost of operations
Property taxes	$	11,155	$	11,102		0.5%	$	22,579	$	22,158		1.9%
Utilities		4,323		4,027		7.4%		8,960		8,999		(0.4%)
Repairs and maintenance		5,805		5,586		3.9%		11,274		10,950		3.0%
Compensation		4,114		3,886		5.9%		8,394		8,156		2.9%
Snow removal		9		—		100.0%		1,028		71		1,347.9%
Property insurance		1,171		856		36.8%		2,349		1,735		35.4%
Other expenses		1,753		1,724		1.7%		3,430		3,492		(1.8%)

Total cost of operations	$	28,330	$	27,181		4.2%	$	58,014	$	55,561		4.4%

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	For the Three Months Ended
	June 30, 2021								June 30, 2020								Total
	Industrial		Flex		Office		Total		Industrial		Flex		Office		Total		% Change
Cash rental income ⁽¹⁾
Northern California	$	23,469	$	2,433	$	2,691	$	28,593	$	20,304	$	2,097	$	3,053	$	25,454		12.3%
Southern California		9,780		5,214		208		15,202		7,711		4,346		201		12,258		24.0%
Dallas		3,154		4,823		—		7,977		2,694		5,253		—		7,947		0.4%
Austin		2,260		6,392		—		8,652		1,801		5,941		—		7,742		11.8%
Northern Virginia		4,987		5,565		8,543		19,095		4,808		5,105		8,576		18,489		3.3%
South Florida		11,494		485		41		12,020		9,779		445		25		10,249		17.3%
Seattle		3,207		1,738		136		5,081		2,816		1,616		161		4,593		10.6%
Suburban Maryland		1,064		—		3,787		4,851		983		—		3,923		4,906		(1.1%)

Total		59,415		26,650		15,406		101,471		50,896		24,803		15,939		91,638		10.7%

Adjusted cost of operations ⁽¹⁾
Northern California		4,812		680		754		6,246		4,599		690		763		6,052		3.2%
Southern California		2,376		1,209		81		3,666		2,098		1,169		82		3,349		9.5%
Dallas		1,104		2,101		—		3,205		978		2,218		—		3,196		0.3%
Austin		769		2,372		—		3,141		736		2,227		—		2,963		6.0%
Northern Virginia		1,446		1,586		2,946		5,978		1,447		1,462		3,022		5,931		0.8%
South Florida		3,005		151		19		3,175		2,819		124		17		2,960		7.3%
Seattle		801		410		60		1,271		741		381		49		1,171		8.5%
Suburban Maryland		355		—		1,293		1,648		318		—		1,241		1,559		5.7%

Total		14,668		8,509		5,153		28,330		13,736		8,271		5,174		27,181		4.2%

Cash NOI ⁽¹⁾
Northern California		18,657		1,753		1,937		22,347		15,705		1,407		2,290		19,402		15.2%
Southern California		7,404		4,005		127		11,536		5,613		3,177		119		8,909		29.5%
Dallas		2,050		2,722		—		4,772		1,716		3,035		—		4,751		0.4%
Austin		1,491		4,020		—		5,511		1,065		3,714		—		4,779		15.3%
Northern Virginia		3,541		3,979		5,597		13,117		3,361		3,643		5,554		12,558		4.5%
South Florida		8,489		334		22		8,845		6,960		321		8		7,289		21.3%
Seattle		2,406		1,328		76		3,810		2,075		1,235		112		3,422		11.3%
Suburban Maryland		709		—		2,494		3,203		665		—		2,682		3,347		(4.3%)

Total	$	44,747	$	18,141	$	10,253	$	73,141	$	37,160	$	16,532	$	10,765	$	64,457		13.5%

⁽¹⁾	Refer to page 24, Definitions and Non-GAAP Disclosures, for the definitions of Same Park, Cash Rental Income, Adjusted Cost of Operations, and Cash NOI.

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	For the Six Months Ended
	June 30, 2021								June 30, 2020								Total
	Industrial		Flex		Office		Total		Industrial		Flex		Office		Total		% Change
Cash rental income ⁽¹⁾
Northern California	$	45,845	$	4,834	$	5,296	$	55,975	$	41,344	$	4,676	$	6,180	$	52,200		7.2%
Southern California		19,210		10,155		400		29,765		16,714		9,244		388		26,346		13.0%
Dallas		6,220		9,647		—		15,867		5,862		10,683		—		16,545		(4.1%)
Austin		4,465		12,820		—		17,285		3,985		12,041		—		16,026		7.9%
Northern Virginia		10,050		10,996		17,533		38,579		9,823		10,422		17,665		37,910		1.8%
South Florida		22,751		972		83		23,806		20,387		947		57		21,391		11.3%
Seattle		6,238		3,492		271		10,001		5,820		3,351		347		9,518		5.1%
Suburban Maryland		2,212		—		7,539		9,751		2,025		—		8,054		10,079		(3.3%)

Total		116,991		52,916		31,122		201,029		105,960		51,364		32,691		190,015		5.8%

Adjusted cost of operations ⁽¹⁾
Northern California		9,740		1,354		1,496		12,590		9,336		1,338		1,544		12,218		3.0%
Southern California		4,693		2,509		156		7,358		4,397		2,522		155		7,074		4.0%
Dallas		2,207		4,107		—		6,314		1,989		4,252		—		6,241		1.2%
Austin		1,568		4,788		—		6,356		1,481		4,441		—		5,922		7.3%
Northern Virginia		3,093		3,386		6,538		13,017		2,930		2,968		6,496		12,394		5.0%
South Florida		6,029		291		39		6,359		5,663		258		31		5,952		6.8%
Seattle		1,613		820		130		2,563		1,544		801		103		2,448		4.7%
Suburban Maryland		760		—		2,697		3,457		669		—		2,643		3,312		4.4%

Total		29,703		17,255		11,056		58,014		28,009		16,580		10,972		55,561		4.4%

Cash NOI ⁽¹⁾
Northern California		36,105		3,480		3,800		43,385		32,008		3,338		4,636		39,982		8.5%
Southern California		14,517		7,646		244		22,407		12,317		6,722		233		19,272		16.3%
Dallas		4,013		5,540		—		9,553		3,873		6,431		—		10,304		(7.3%)
Austin		2,897		8,032		—		10,929		2,504		7,600		—		10,104		8.2%
Northern Virginia		6,957		7,610		10,995		25,562		6,893		7,454		11,169		25,516		0.2%
South Florida		16,722		681		44		17,447		14,724		689		26		15,439		13.0%
Seattle		4,625		2,672		141		7,438		4,276		2,550		244		7,070		5.2%
Suburban Maryland		1,452		—		4,842		6,294		1,356		—		5,411		6,767		(7.0%)

Total	$	87,288	$	35,661	$	20,066	$	143,015	$	77,951	$	34,784	$	21,719	$	134,454		6.4%

⁽¹⁾	Refer to page 24, Definitions and Non-GAAP Disclosures, for the definitions of Same Park, Cash Rental Income, Adjusted Cost of Operations, and Cash NOI.

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	For the Six Months Ended June 30,
	2021		2020
Commercial recurring capital expenditures ⁽¹⁾
Same Park
Capital improvements	$	4,376	$	4,249
Tenant improvements		6,682		7,380
Lease commissions		3,208		3,027

Total Same Park recurring capital expenditures		14,266		14,656
Non-Same Park recurring capital expenditures		481		26

Total recurring capital expenditures		14,747		14,682
Assets sold or held for sale recurring capital expenditures		110		1,143

Total commercial recurring capital expenditures		14,857		15,825
Non-recurring property renovations ⁽¹⁾		843		213
Multifamily capital expenditures		7		—

Total capital expenditures	$	15,707	$	16,038


Same Park recurring capital expenditures as a percentage of NOI		9.9%		10.6%

⁽¹⁾	Refer to page 24, Definitions and Non-GAAP Disclosures, for the definitions of Recurring Capital Expenditures and Non-recurring Property Renovations.

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	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Net income allocable to common stockholders	$	45,595		$	25,522		$	73,481		$	67,137
Adjustments
Gain on sale of real estate facility		(19,193	)		—			(19,193	)		(19,621	)
Depreciation and amortization		22,514			22,963			45,499			49,582
Net income allocable to noncontrolling interests		12,094			6,795			19,505			17,887
Net income allocable to restricted stock unit holders		314			119			478			394
FFO allocated to joint venture partner		(18	)		(38	)		(45	)		(81	)

FFO allocable to diluted common stock and units ⁽¹⁾		61,306			55,361			119,725			115,298
Maryland reincorporation costs		510			—			510			—

Core FFO allocable to diluted common stock and units ⁽¹⁾		61,816			55,361			120,235			115,298
Adjustments
Recurring capital improvements		(3,761	)		(3,133	)		(4,407	)		(4,298	)
Tenant improvements		(4,100	)		(3,938	)		(6,956	)		(7,343	)
Capitalized lease commissions		(1,544	)		(1,212	)		(3,384	)		(3,041	)
Total recurring capital expenditures for assets sold or held for sale		(47	)		(691	)		(110	)		(1,143	)
Total multifamily capital expenditures		(7	)		—			(7	)		—
Non-cash rental income ⁽²⁾		(183	)		(2,746	)		(1,490	)		(3,810	)
Non-cash stock compensation expense		2,301			931			4,081			1,873
Cash paid for taxes in lieu of stock upon vesting of restricted stock units		(5	)		(5	)		(3,202	)		(3,660	)

FAD allocable to diluted common stock and units ⁽¹⁾		54,470			44,567			104,760			93,876
Distributions to common stockholders		(28,918	)		(28,856	)		(57,790	)		(57,673	)
Distributions to noncontrolling interests - common units		(7,670	)		(7,670	)		(15,341	)		(15,341	)
Distributions to restricted stock unit holders		(202	)		(147	)		(366	)		(329	)
Distributions to noncontrolling interests - joint venture		(23	)		(25	)		(40	)		(63	)

Free cash available after fixed charges		17,657			7,869			31,223			20,470
Non-recurring property renovations ⁽¹⁾		(432	)		(120	)		(843	)		(213	)
Investment in multifamily development		(7,539	)		(1,248	)		(17,024	)		(2,123	)
Investment in industrial development		(93	)		(2,435	)		(1,216	)		(2,872	)

Retained cash ⁽¹⁾	$	9,593		$	4,066		$	12,140		$	15,262


Weighted average outstanding
Common stock		27,531			27,479			27,513			27,464
Operating partnership units		7,305			7,305			7,305			7,305
Restricted stock units		32			43			35			65
Common stock equivalents		101			81			98			93

Total diluted common stock and units		34,969			34,908			34,951			34,927


FFO per share	$	1.75		$	1.59		$	3.43		$	3.30
Core FFO per share	$	1.77		$	1.59		$	3.44		$	3.30
FAD distribution payout ratio ⁽³⁾		67.6%			82.3%			70.2%			78.2%

⁽¹⁾	Refer to page 24, Definitions and Non-GAAP Disclosures, for the definition of FFO, Core FFO, FAD, Non-Recurring Property Renovations and Retained Cash.

⁽²⁾	Non-cash rental income includes amortization of deferred rent receivable (net of write-offs), in-place lease intangible, tenant improvement reimbursements, and lease incentives.

⁽³⁾	FAD distribution payout ratio is equal to total distributions to common stockholders, unit holders, restricted stock unit holders and our joint venture partner divided by FAD during the same reporting period.

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	As of June 30, 2021							As of December 31, 2020
	Total			% of Total Market Capitalization		Wtd Avg Rate		Total			% of Total Market Capitalization		Wtd Avg Rate


Unsecured Debt:
Credit facility borrowing ($250.0 million at LIBOR + 0.825%)	$	-			-		-	$	-			-		-
Unrestricted cash		(115,965	)						(69,083	)

Net debt	$	(115,965	)		-		-	$	(69,083	)		-		-


Preferred Equity:
5.200% Series W preferred stock (7,590,000 depositary shares outstanding) callable 10/20/21	$	189,750			3.2%			$	189,750			3.5%
5.250% Series X preferred stock (9,200,000 depositary shares outstanding) callable 9/21/22		230,000			3.8%				230,000			4.2%
5.200% Series Y preferred stock (8,000,000 depositary shares outstanding) callable 12/7/22		200,000			3.3%				200,000			3.6%
4.875% Series Z preferred stock (13,000,000 depositary shares outstanding) callable 11/4/24		325,000			5.4%				325,000			5.9%

Total preferred equity	$	944,750			15.7%		5.10%	$	944,750			17.2%		5.10%



Total net debt and preferred equity	$	828,785			13.8%		5.10%	$	875,667			15.9%		5.10%


Common stock (27,541,464 and 27,488,547 shares outstanding as of June 30, 2021 and December 31, 2020, respectively) ⁽¹⁾	$	4,078,340			68.1%			$	3,652,403			66.4%
Common operating partnership units (7,305,355 units outstanding as of June 30, 2021 and December 31, 2020)⁽¹⁾		1,081,777			18.1%				970,663			17.7%

Total common equity and operating partnership units ⁽¹⁾	$	5,160,117			86.2%			$	4,623,066			84.1%


Total implied market capitalization	$	5,988,902			100.0%			$	5,498,733			100.0%


	For the Six Months Ended							For the year ended
	June 30, 2021							December 31, 2020
Interest expense and related expenses ⁽²⁾	$	272						$	548
Preferred distributions		24,093							48,186

Total fixed charges and preferred distributions	$	24,365						$	48,734


Ratio of EBITDAre to fixed charges and preferred distributions		5.9x							5.7x
Ratio of FFO to total fixed charges and preferred distributions ⁽³⁾		5.9x							5.7x
Ratio of net debt and preferred equity to EBITDAre ⁽⁴⁾		2.9x							3.2x

⁽¹⁾

Total common equity is calculated as the total number of shares of common stock and operating partnership units outstanding multiplied by the Company’s closing stock price at the end of each respective period shown. Closing stock prices on June 30, 2021 and December 31, 2020 were $148.08 and $132.87, respectively.

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

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

⁽⁴⁾	Ratio of net debt and preferred equity to EBITDAre is calculated as total net debt and preferred equity divided by EBITDAre. Ratio of net debt and preferred equity to EBITDAre as of June 30, 2021 is calculated using annualized EBITDAre for the six months ended June 30, 2021.

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Industry Concentration as of June 30, 2021 ^{(1) (2)}

					Percentage of Total Rental Income
Business services						21.3%
Logistics						13.3%
Technology						10.3%
Retail, food, and automotive						9.1%
Construction and engineering						8.1%
Health services						7.2%
Government						6.3%
Electronics						3.1%
Home furnishings						2.5%
Insurance and financial services						2.4%
Communications						1.8%
Aerospace/defense						1.8%
Education						1.0%
Other						11.8%

Total						100.0%


Top 10 Customers by Total Annual Rental Income as of June 30, 2021 ⁽²⁾

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

US Government		602,000	$	13,637		3.1%
Amazon Inc.		543,000		6,709		1.5%
KZ Kitchen Cabinet & Stone		370,000		5,385		1.2%
Luminex Corporation		199,000		4,508		1.0%
ECS Federal, LLC		133,000		2,895		0.7%
Lockheed Martin Corporation		124,000		2,703		0.6%
CentralColo, LLC		96,000		2,431		0.6%
Applied Materials, Inc.		162,000		2,431		0.6%
Carbel, LLC		236,000		2,270		0.5%
Great Way Trading & Transportation, Inc.		176,000		2,038		0.5%

Total		2,641,000	$	45,007		10.3%

⁽¹⁾	Industry concentration is categorized based on customers’ Standard Industrial Classification Code.

⁽²⁾	Excludes assets held for sale as of June 30, 2021.

⁽³⁾	For leases expiring within one year, annualized rental income includes only the income to be received under the existing lease from July 1, 2021 through the respective date of expiration.

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Rentable Square Footage of Same Park Properties by Product Type as of June 30, 2021 ⁽¹⁾

Markets	Industrial		Flex		Office		Total		% of Total

Northern Virginia		1,564		1,242		1,726		4,532		17.1%
South Florida		3,728		126		12		3,866		14.7%
Silicon Valley		3,094		367		-		3,461		13.2%
East Bay		3,297		53		-		3,350		12.8%
Dallas		1,300		1,587		-		2,887		11.0%
Austin		755		1,208		-		1,963		7.5%
Los Angeles County		1,256		317		31		1,604		6.1%
Seattle		1,052		270		28		1,350		5.1%
Suburban Maryland		394		-		751		1,145		4.4%
Orange County		810		101		-		911		3.5%
San Diego County		233		535		-		768		2.9%
Mid-Peninsula		-		94		340		434		1.7%

Total		17,483		5,900		2,888		26,271		100.0%

Percentage by Product Type		66.5%		22.5%		11.0%		100.0%

Same Park Weighted Average Occupancy Rates by Product Type for the Three Months Ended June 30, 2021 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				93.9%		97.3%		86.8%		92.1%
South Florida				97.4%		81.6%		100.0%		96.9%
Silicon Valley				96.9%		87.7%		-		95.9%
East Bay				93.6%		95.0%		-		93.6%
Dallas				89.7%		76.8%		-		82.6%
Austin				97.5%		93.4%		-		95.0%
Los Angeles County				98.5%		94.8%		93.9%		97.7%
Seattle				94.5%		94.5%		69.3%		94.0%
Suburban Maryland				86.0%		-		88.9%		87.9%
Orange County				94.5%		93.9%		-		94.4%
San Diego County				99.3%		92.6%		-		94.6%
Mid-Peninsula				-		85.9%		78.5%		80.1%
Total				95.3%		89.1%		86.3%		92.9%

Same Park Weighted Average Occupancy Rates by Product Type for the Six Months Ended June 30, 2021 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				93.8%		96.7%		86.7%		91.9%
South Florida				96.7%		82.3%		100.0%		96.2%
Silicon Valley				96.4%		87.7%		-		95.5%
East Bay				93.1%		94.8%		-		93.1%
Dallas				88.6%		78.3%		-		83.0%
Austin				96.5%		94.1%		-		95.0%
Los Angeles County				98.4%		94.2%		94.5%		97.5%
Seattle				94.0%		94.9%		67.0%		93.6%
Suburban Maryland				86.0%		-		89.2%		88.1%
Orange County				93.9%		95.3%		-		94.1%
San Diego County				98.8%		92.5%		-		94.4%
Mid-Peninsula				-		85.0%		80.3%		81.3%
Total				94.7%		89.5%		86.6%		92.7%

⁽¹⁾	Excludes assets held for sale as of June 30, 2021.

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Rentable Square Footage of Properties by Product Type as of June 30, 2021 ⁽¹⁾

Markets	Industrial		Flex		Office		Total		% of Total

Northern Virginia		1,810		1,242		1,726		4,778		17.5%
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		1,383		1,587		-		2,970		10.9%
Los Angeles County		1,946		317		31		2,294		8.4%
Austin		755		1,208		-		1,963		7.2%
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		18,502		5,979		2,888		27,369		100.0%

Percentage by Product Type		67.6%		21.8%		10.6%		100.0%

Weighted Average Occupancy Rates by Product Type for the Three Months Ended June 30, 2021 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				93.7%		97.3%		86.8%		92.1%
South Florida				97.4%		81.6%		100.0%		96.9%
Silicon Valley				96.9%		88.6%		-		95.9%
East Bay				93.6%		95.0%		-		93.6%
Dallas				86.1%		76.8%		-		81.1%
Los Angeles County				98.9%		94.8%		93.9%		98.2%
Austin				97.5%		93.4%		-		95.0%
Seattle				94.5%		94.5%		69.3%		94.0%
Suburban Maryland				86.0%		-		88.9%		87.9%
Orange County				94.5%		93.9%		-		94.4%
San Diego County				99.3%		92.6%		-		94.6%
Mid-Peninsula				-		85.9%		78.5%		80.1%
Total				95.1%		89.2%		86.3%		92.9%

Weighted Average Occupancy Rates by Product Type for the Six Months Ended June 30, 2021 ⁽¹⁾

Markets			Industrial		Flex		Office		Total

Northern Virginia				93.6%		96.7%		86.7%		91.9%
South Florida				96.7%		82.3%		100.0%		96.2%
Silicon Valley				96.4%		88.4%		-		95.4%
East Bay				93.1%		94.8%		-		93.1%
Dallas				86.0%		78.3%		-		81.9%
Los Angeles County				98.2%		94.2%		94.5%		97.6%
Austin				96.5%		94.1%		-		95.0%
Seattle				94.0%		94.9%		67.0%		93.6%
Suburban Maryland				86.0%		-		89.2%		88.1%
Orange County				93.9%		95.3%		-		94.1%
San Diego County				98.8%		92.5%		-		94.4%
Mid-Peninsula				-		85.0%		80.3%		81.3%
Total				94.6%		89.6%		86.6%		92.6%

⁽¹⁾	Excludes assets held for sale as of June 30, 2021.

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⁽¹⁾

Excludes assets sold or held for sale as of June 30, 2021.

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Lease Expirations - Total Portfolio ⁽¹⁾

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

2021		2,454	$	43,790		9.7%		9.7%
2022		5,967		105,739		23.5%		23.5%
2023		5,719		97,076		21.5%		21.5%
2024		4,235		75,245		16.7%		16.7%
2025		3,008		52,237		11.6%		11.6%
Thereafter		4,268		76,922		17.0%		17.0%

Total		25,651	$	451,009		100.0%		100.0%


Lease Expirations - Industrial

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

2021		1,526	$	22,291		8.3%		5.0%
2022		3,830		56,591		21.0%		12.6%
2023		3,984		58,375		21.7%		12.9%
2024		2,939		46,160		17.1%		10.2%
2025		1,989		28,772		10.7%		6.4%
Thereafter		3,458		57,068		21.2%		12.6%

Total		17,726	$	269,257		100.0%		59.7%


Lease Expirations - Flex

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

2021		632	$	13,194		11.7%		2.9%
2022		1,439		29,822		26.5%		6.6%
2023		1,144		23,142		20.6%		5.1%
2024		872		17,989		16.0%		4.0%
2025		801		17,798		15.8%		3.9%
Thereafter		500		10,547		9.4%		2.3%

Total		5,388	$	112,492		100.0%		24.8%


Lease Expirations - Office ⁽¹⁾

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

2021		296	$	8,305		12.0%		1.8%
2022		698		19,326		27.9%		4.3%
2023		591		15,559		22.5%		3.5%
2024		424		11,096		16.0%		2.5%
2025		218		5,667		8.2%		1.3%
Thereafter		310		9,307		13.4%		2.1%

Total		2,537	$	69,260		100.0%		15.5%

⁽¹⁾	Excludes assets held for sale as of June 30, 2021.

⁽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.

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Lease Expirations - Northern California

Year of Lease Expiration	Leased Square Footage		Annualized Rental Income ⁽¹⁾		% of No. CA		% of Total Annualized Rental Income

2021		509	$	11,828		9.3%		2.6%
2022		1,180		21,852		17.2%		4.9%
2023		1,344		24,658		19.5%		5.5%
2024		1,094		19,449		15.4%		4.3%
2025		755		11,125		8.8%		2.5%
Thereafter		2,051		37,810		29.8%		8.4%

Total		6,933	$	126,722		100.0%		28.2%


Lease Expirations - Southern California

Year of Lease Expiration	Leased Square Footage		Annualized Rental Income ⁽¹⁾		% of So. CA		% of Total Annualized Rental Income

2021		356	$	7,181		9.8%		1.6%
2022		1,205		22,207		30.3%		4.9%
2023		890		17,095		23.3%		3.8%
2024		556		11,620		15.8%		2.6%
2025		328		5,860		8.0%		1.3%
Thereafter		531		9,373		12.8%		2.1%

Total		3,866	$	73,336		100.0%		16.3%


Lease Expirations - Dallas

Year of Lease Expiration	Leased Square Footage		Annualized Rental Income ⁽¹⁾		% of Dallas		% of Total Annualized Rental Income

2021		273	$	3,408		10.3%		0.8%
2022		562		6,416		19.4%		1.4%
2023		692		9,032		27.3%		2.0%
2024		376		5,655		17.1%		1.2%
2025		267		5,208		15.8%		1.2%
Thereafter		281		3,328		10.1%		0.7%

Total		2,451	$	33,047		100.0%		7.3%


Lease Expirations - Austin

Year of Lease Expiration	Leased Square Footage		Annualized Rental Income ⁽¹⁾		% of Austin		% of Total Annualized Rental Income

2021		252	$	4,614		12.5%		1.0%
2022		331		7,138		19.4%		1.6%
2023		291		5,444		14.8%		1.2%
2024		308		6,664		18.1%		1.5%
2025		401		8,520		23.2%		1.9%
Thereafter		293		4,426		12.0%		0.9%

Total		1,876	$	36,806		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.

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Lease Expirations - Northern Virginia ⁽¹⁾

Year of Lease Expiration	Leased Square Footage		Annualized Rental Income ⁽²⁾		% of No. VA		% of Total Annualized Rental Income

2021		384	$	7,254		8.2%		1.6%
2022		1,247		26,504		29.8%		5.9%
2023		737		14,437		16.2%		3.2%
2024		760		14,796		16.6%		3.3%
2025		661		12,634		14.2%		2.8%
Thereafter		664		13,375		15.0%		3.0%

Total		4,453	$	89,000		100.0%		19.8%



Lease Expirations - South Florida

Year of Lease Expiration	Leased Square Footage		Annualized Rental Income ⁽²⁾		% of So. FL		% of Total Annualized Rental Income

2021		425	$	4,650		9.4%		1.0%
2022		986		12,852		26.0%		2.9%
2023		1,043		13,619		27.5%		3.0%
2024		792		10,702		21.7%		2.4%
2025		323		4,119		8.3%		0.9%
Thereafter		217		3,507		7.1%		0.8%

Total		3,786	$	49,449		100.0%		11.0%



Lease Expirations - Suburban Maryland

Year of Lease Expiration	Leased Square Footage		Annualized Rental Income ⁽²⁾		% of Sub. MD		% of Total Annualized Rental Income

2021		113	$	1,989		9.2%		0.5%
2022		182		3,694		17.1%		0.8%
2023		291		6,259		29.1%		1.4%
2024		141		3,143		14.6%		0.7%
2025		123		2,304		10.7%		0.5%
Thereafter		165		4,150		19.3%		0.9%

Total		1,015	$	21,539		100.0%		4.8%



Lease Expirations - Seattle

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

2021		142	$	2,866		13.6%		0.6%
2022		274		5,076		24.1%		1.1%
2023		431		6,532		30.9%		1.4%
2024		208		3,216		15.2%		0.7%
2025		150		2,467		11.7%		0.5%
Thereafter		66		953		4.5%		0.2%

Total		1,271	$	21,110		100.0%		4.5%

⁽¹⁾	Excludes assets held for sale as of June 30, 2021.

⁽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.

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	Total Portfolio Activity ^{(1) (2)}
Industrial	Wtd. Avg. Occupancy		Leasing Volume		Customer Retention		Transaction Costs per Executed Foot		Transaction Costs as a % of Rents ⁽³⁾		Cash Rental Rate Change ⁽³⁾		Net Effective Rent Change ⁽³⁾
Northern Virginia		93.7%		85,000		67.6%	$	2.26		7.9%		1.9%		4.2%
South Florida		97.4%		288,000		52.5%		2.30		5.6%		8.8%		19.7%
Silicon Valley		96.9%		191,000		88.6%		2.46		3.6%		11.8%		26.8%
East Bay		93.6%		178,000		77.9%		3.07		8.4%		13.4%		25.0%
Dallas		86.1%		105,000		63.7%		2.71		9.3%		3.0%		9.9%
Suburban Maryland		86.0%		11,000		100.0%		0.80		4.4%		—		1.3%
Austin		97.5%		119,000		100.0%		0.07		0.2%		5.0%		28.5%
Los Angeles County		98.9%		127,000		94.0%		1.16		4.3%		6.8%		9.9%
Seattle		94.5%		25,000		70.2%		1.38		8.8%		12.0%		18.2%
Orange County		94.5%		61,000		54.7%		2.69		5.6%		2.3%		10.0%
San Diego County		99.3%		40,000		86.9%		0.80		3.4%		1.0%		5.0%

Industrial Totals by Market		95.1%		1,230,000		73.8%	$	2.07		5.3%		7.7%		17.9%


Flex
Northern Virginia		97.3%		170,000		100.0%	$	2.92		6.9%		-2.4%		-3.6%
South Florida		81.6%		1,000		0.0%		—		—		9.4%		22.1%
Silicon Valley		88.6%		31,000		75.4%		1.05		3.1%		4.9%		8.6%
East Bay		95.0%		5,000		87.2%		1.17		4.3%		-8.5%		-16.3%
Dallas		76.8%		108,000		55.9%		2.63		8.3%		2.4%		14.0%
Austin		93.4%		35,000		52.0%		6.76		18.5%		-4.6%		-3.0%
Los Angeles County		94.8%		33,000		82.7%		2.01		2.2%		7.9%		24.5%
Seattle		94.5%		14,000		24.6%		5.41		10.4%		7.8%		13.5%
Orange County		93.9%		10,000		65.8%		—		—		1.6%		21.6%
San Diego County		92.6%		50,000		78.5%		2.41		7.4%		-2.6%		1.1%
Mid-Peninsula		85.9%		10,000		100.0%		1.10		5.9%		-15.7%		-21.0%

Flex Totals by Market		89.2%		467,000		73.6%	$	2.85		6.8%		-0.1%		4.6%


Office ⁽¹⁾
Northern Virginia		86.8%		115,000		70.6%	$	10.12		15.4%		-7.1%		-0.1%
South Florida		100.0%		—		—		—		—		—		—
Suburban Maryland		88.9%		54,000		72.0%		1.61		3.6%		-6.0%		3.7%
Los Angeles County		93.9%		4,000		100.0%		0.90		2.3%		2.8%		10.4%
Seattle		69.3%		8,000		0.0%		14.20		29.9%		8.5%		19.7%
Mid-Peninsula		78.5%		24,000		68.7%		1.20		2.4%		-13.6%		-14.6%

Office Totals by Market		86.3%		205,000		70.2%	$	6.82		12.0%		-7.3%		-1.2%



Company Totals by Type		92.9%		1,902,000		73.3%	$	2.77		6.7%		3.1%		10.6%

⁽¹⁾	Excludes assets held for sale as of June 30, 2021.

⁽²⁾	Average lease term for leases executed during the three months ended June 30, 2021 was 3.3 years.

⁽³⁾	Refer to page 24, 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.

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	Total Portfolio Activity ^{(1) (2)}

Industrial	Wtd. Avg. Occupancy	Leasing Volume		Customer Retention	Transaction Costs per Executed Foot		Transaction Costs as a % of Rents ⁽³⁾	Cash Rental Rate Change ⁽³⁾	Net Effective Rent Change ⁽³⁾
Northern Virginia	93.6%		230,000	81.7%	$	3.24	7.3%	4.1%	6.8%
South Florida	96.7%		572,000	60.8%		1.84	4.9%	8.6%	22.0%
Silicon Valley	96.4%		399,000	89.0%		2.34	3.4%	17.6%	38.0%
East Bay	93.1%		382,000	72.3%		2.12	5.5%	9.0%	19.5%
Dallas	86.0%		321,000	83.5%		2.73	13.5%	2.8%	7.6%
Suburban Maryland	86.0%		52,000	91.8%		2.53	5.5%	-0.5%	6.9%
Austin	96.5%		145,000	97.2%		1.06	3.8%	8.0%	30.8%
Los Angeles County	98.2%		275,000	87.9%		1.29	4.0%	7.3%	12.1%
Seattle	94.0%		98,000	82.3%		2.27	7.5%	16.7%	31.0%
Orange County	93.9%		143,000	54.2%		3.24	7.1%	3.8%	10.8%
San Diego County	98.8%		65,000	83.8%		0.74	2.9%	1.1%	4.8%

Industrial Totals by Market	94.6%		2,682,000	77.4%	$	2.16	5.4%	8.7%	19.7%


Flex
Northern Virginia	96.7%		257,000	89.2%	$	4.23	10.9%	-2.3%	-1.2%
South Florida	82.3%		15,000	75.8%		0.37	1.1%	7.6%	19.7%
Silicon Valley	88.4%		68,000	72.1%		1.50	4.6%	-1.0%	2.2%
East Bay	94.8%		9,000	50.6%		0.78	1.9%	-7.2%	-9.4%
Dallas	78.3%		216,000	64.0%		2.95	9.6%	-1.5%	2.1%
Austin	94.1%		62,000	37.8%		6.24	15.9%	-0.8%	3.2%
Los Angeles County	94.2%		72,000	86.1%		2.69	4.0%	3.5%	15.2%
Seattle	94.9%		41,000	47.2%		2.51	5.7%	6.2%	13.4%
Orange County	95.3%		13,000	52.7%		—	—	2.3%	18.6%
San Diego County	92.5%		105,000	66.9%		2.28	7.3%	-0.4%	2.9%
Mid-Peninsula	85.0%		17,000	57.2%		0.94	4.4%	-12.5%	-16.3%

Flex Totals by Market	89.6%		875,000	68.6%	$	3.17	8.3%	-0.5%	3.7%


Office ⁽¹⁾
Northern Virginia	86.7%		183,000	60.6%	$	8.89	15.7%	-7.6%	-0.9%
South Florida	100.0%		—	—		—	—	—	—
Suburban Maryland	89.2%		71,000	74.3%		1.60	3.5%	-5.2%	4.2%
Los Angeles County	94.5%		6,000	60.8%		2.18	5.3%	3.0%	10.1%
Seattle	67.0%		8,000	0.0%		14.20	29.9%	8.5%	19.7%
Mid-Peninsula	80.3%		36,000	67.3%		1.10	2.1%	-10.4%	-9.7%

Office Totals by Market	86.6%		304,000	63.8%	$	6.26	11.8%	-6.9%	-0.8%



Company Totals by Type	92.6%		3,861,000	73.7%	$	2.71	6.7%	4.4%	12.7%

⁽¹⁾	Excludes assets held for sale as of June 30, 2021.

⁽²⁾	Average lease term for leases executed during the six months ended June 30, 2021 was 3.2 years.

⁽³⁾	Refer to page 24, 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.

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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.

Assets sold or held for sale – Assets sold or held for sale represents 113,000 square feet of assets sold in January 2020, 40,000 square feet of assets sold in September 2020, 198,000 square feet of assets sold in June 2021, and includes 244,000 square feet of assets held for sale. The assets held for sale represent a 244,000 square foot office business park located in Herndon, Virginia (subsequently sold in July 2021).

Average Net Effective Rent Growth – Average net effective rent growth represents the weighted average percentage change in net effective rents for leases executed during a period compared against the prior leases for the same units. Net effective rent represents average rental payments for the term of a lease on a straight-line basis, 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 (net of write-offs), in-place lease intangible, tenant improvement reimbursements, and lease incentives. 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 (net of write-offs), in-place lease intangible, tenant improvement reimbursements, and lease incentives.

Cash Rental Income per Available Square Foot – Cash rental income per available square foot is computed by dividing Cash Rental Income for the period by weighted average available square feet for the same period. Cash rental income per available square foot for the three and six month periods is annualized.

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

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 stockholders 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 common stock and units divided by total weighted average diluted common stock 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.

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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 common stock and units divided by total weighted average diluted common stock and units. The GAAP measure most directly comparable to FFO and FFO per share are net income and earnings per share, respectively.

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, 2019.

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.

Same Park – Same Park includes assets acquired prior to January 1, 2019.

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 3, 2021

Attached files

PS BUSINESS PARKS, INC./MD Reports