PS Business Parks, Inc. Reports Results for the Quarter and Year Ended December 31, 2020

Rhea-AI Summary

PS Business Parks reported its financial results for the year ended December 31, 2020. The company achieved a net income of $124.6 million, or $4.52 per diluted share, while net operating income (NOI) for the same park portfolio was $270.8 million, a decrease of 0.6% year-over-year. Cash NOI was $267.4 million, reflecting a 0.9% decline. The decline was attributed to lower occupancy rates, which averaged 92.4% in 2020 compared to 94.5% in 2019, compounded by $2.4 million in rent deferrals due to COVID-19.

Positive

• Net income for FY 2020 was $124.6 million, reflecting strong profitability.
• Cash rental income per occupied square foot increased by 2.4%, from $15.65 in 2019 to $16.03 in 2020.

Negative

• Net operating income (NOI) for FY 2020 decreased by 0.6% compared to FY 2019.
• Same Park Cash NOI decreased by 0.9% year-over-year.

PS Business Parks, Inc. (NYSE:PSB) reported operating results for the quarter and year ended December 31, 2020.

Operating Results for the Three Months and Year Ended December 31, 2020

Net income allocable to common shareholders for the three months and year ended December 31, 2020 was $26.9 million, or $0.98 per diluted common share, and $124.6 million, or $4.52 per diluted common share, respectively. Net operating income (“NOI”) attributable to the Company’s Same Park portfolio (defined below) was $68.0 million and $270.8 million for the three months and year ended December 31, 2020, respectively, representing decreases of 3.0% and 0.6% over the same periods in 2019, respectively.

The Company also reports NOI on a cash basis, which excludes non-cash rental income such as amortization of deferred rent receivable and other non-cash items, and also excludes rents that have been deferred or abated during the period. Same Park Cash NOI was $69.2 million and $267.4 million for the three months and year ended December 31, 2020, respectively, representing decreases of 0.5% and 0.9% over the same periods in 2019, respectively. The decrease in Same Park Cash NOI for the three months ended December 31, 2020 was primarily driven by lower weighted average occupancy in the fourth quarter of 2020, which was 92.0% versus 94.4% in the fourth quarter of 2019. The decrease in Same Park Cash NOI for the year ended December 31, 2020 was primarily driven by lower weighted average occupancy, which was 92.4% in 2020 versus 94.5% in 2019, and $2.4 million of rent deferrals, net of repayments and $1.3 million of rent abatement granted to customers as a result of the COVID-19 pandemic. The Company noted that Same Park Cash Rental Income per occupied square foot increased by 2.4% during the year, from $15.65 in 2019 to $16.03 in 2020. Excluding the effect of the aforementioned rent deferrals and rent abatement, Same Park Cash Rental Income per occupied square foot increased 3.4%, from $15.65 in 2019 to $16.18 in 2020.

Further detail on the change in Same Park rental income for the three months and years ended December 31, 2020 and 2019 are provided in the table below (in thousands):

		For The Three Months												For The Years
		Ended December 31,												Ended December 31,
		2020				2019				Change				2020				2019				Change
Rental income
Base rental income		$	73,091			$	74,597			$	(1,506	)		$	292,729			$	289,361			$	3,368
Expense recovery income			22,590				21,879				711				90,225				88,523				1,702
Lease buyout income			393				232				161				1,199				1,373				(174	)
Rent receivable write-off			(91	)			(190	)			99

FAQ

What were the operating results for PSB in Q4 2020?

In Q4 2020, PSB reported a net income of $26.9 million, or $0.98 per diluted common share.

How did PSB's NOI change over the year 2020?

PSB's net operating income (NOI) decreased by 0.6% for the year ended December 31, 2020.

What was PSB's cash NOI for the year ended December 31, 2020?

The Same Park Cash NOI for PSB was $267.4 million for the year ended December 31, 2020.

How did occupancy rates affect PSB's financial performance in 2020?

PSB experienced lower weighted average occupancy rates, averaging 92.4% in 2020 compared to 94.5% in 2019, impacting overall NOI.

What impact did COVID-19 have on PSB's rental income?

PSB reported $2.4 million in rent deferrals and $1.3 million in rent abatement due to the COVID-19 pandemic.