Business Wire | Feb 22, 2021 04:39PM EST

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

Feb. 22, 2021

GLENDALE, Calif.--(BUSINESS WIRE)--Feb. 22, 2021--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

Baserental $ 73,091 $ 74,597 $ (1,506 ) $ 292,729 $ 289,361 $ 3,368 income

Expenserecovery 22,590 21,879 711 90,225 88,523 1,702 income

Leasebuyout 393 232 161 1,199 1,373 (174 )income

Rentreceivable (91 ) (190 ) 99 (1,461 ) (1,033 ) (428 )write-off

Abatements (97 ) - (97 ) (1,300 ) - (1,300 )

Deferrals,net of 1,683 - 1,683 (2,356 ) - (2,356 )repayments

Fee income 208 332 (124 ) 911 1,271 (360 )

CashRental 97,777 96,850 927 379,947 379,495 452 Income

Non-CashRental (1,204 ) 565 (1,769 ) 3,417 2,455 962 Income ^(1)

Totalrental $ 96,573 $ 97,415 $ (842 ) $ 383,364 $ 381,950 $ 1,414income

(1)

Non-cash rental income includes amortization of deferred rent receivable (net of write-offs), in-place lease intangible, tenant improvement reimbursement, and lease incentive intangible. Same Park Non-Cash Rental Income is presented net of deferred rent receivable write-offs of $0.4 million and $0.1 million for the three months ended December 31, 2020 and 2019, respectively, and $3.0 million and $0.5 million for the years ended December 31, 2020 and 2019, respectively.

Additional detail on Same Park NOI and Same Park Cash NOI for the three months and year ended December 31, 2020 is provided in the Property Operations-Same Park Portfolio section below.

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

FFO for the three months and year ended December 31, 2020 was $1.66 per share and $6.51 per share, respectively, representing increases of 23.9% and 0.6% from the same periods in 2019, respectively. FFO is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts and generally represents GAAP net income before (i) real estate depreciation and amortization expense, (ii) gains or losses on sales of operating properties, and (iii) land and impairment charges on real estate assets.

Core FFO, which the Company defines as FFO excluding the impact of (i) charges related to the redemption of preferred stock and (ii) other nonrecurring income or expense items as appropriate, was $1.66 and $6.57 per share for the three months and year ended December 31, 2020, respectively, representing an increase of 0.3% and a decrease of 3.2% from the same periods in 2019. There were no differences between FFO and Core FFO for the three months ended December 31, 2020. For the year ended December 31, 2020, the Company excluded in its presentation of Core FFO accelerated amortization of $1.7 million of stock compensation expense as a result of the retirement of its President and Chief Executive Officer, Maria Hawthorne, and non-capitalizable demolition costs of $0.3 million related to its multifamily development in Tysons, Virginia, due to the nonrecurring nature of these expenses. For the three months and year ended December 31, 2019, the Company excluded from its presentation of Core FFO a non-cash charge of $11.0 million related to the redemption of preferred stock (Series U and V) incurred during the quarter ended December 31, 2019. Additional information on these items is included on the Company's annual report on Form 10?K.

FAD for the three months and year ended December 31, 2020 was $48.0 million and $190.1 million, respectively, representing an increase of 6.7% and a decrease of 2.4%, respectively, from the same periods in 2019. The three month increase in FAD is primarily attributable to lower preferred distributions and recurring capital expenditures in the three months ended December 31, 2020 versus 2019, partially offset by lower interest income. The decrease in FAD for the year ended December 31, 2020 is attributable to lower Same Park Cash NOI driven by rent deferrals (net of amounts repaid) and abatements incurred in 2020, as well as lower Cash NOI from assets sold, partially offset by lower preferred distributions and recurring capital expenditures. FAD is a non-GAAP measure that represents Core FFO adjusted to (i) deduct recurring capital improvements and capitalized tenant improvements and lease commissions and (ii) remove certain non-cash income or expenses, such as amortization of deferred rent receivable and stock compensation expense.

FFO, Core FFO, and FAD are not substitutes for GAAP net income. Other real estate investment trusts ("REITs") may compute FFO, Core FFO, and FAD differently, which could inhibit comparability. The Company believes its presentations of FFO, Core FFO, and FAD assist investors and analysts in analyzing and comparing the operating and financial performance between reporting periods.

Lease Production

During the three months and year ended December 31, 2020, the Company executed leases on 1.9 million and 7.5 million square feet, respectively, compared to 2.1 million and 7.4 million for the three months and year ended December 31, 2019, respectively. The Company also reported that in December 2020 it entered into a five-year lease agreement for a 138,000 square foot suite at its Wiegman Distribution property in Hayward, California, with cash rental rate growth of 41.1% over the outgoing rent. With this lease, coupled with a lease agreement the Company executed in the second quarter of 2020 for a 180,000 square foot suite, the Company has backfilled 70% of the 460,000 square foot building the Company received back in January 2020 after a long-term tenant vacated the property at the end of its lease term.

Weighted average cash rental rate growth on leases executed during the three months and year ended December 31, 2020 was 5.3% and 5.8%, respectively, while average net effective rent1 growth was 14.9% and 16.0% for the same periods, respectively. Average lease term of the leases executed during the three months ended December 31, 2020 was 3.3 years, with associated average transaction costs (tenant improvements and leasing commissions) of $2.92 per square foot. For comparative purposes, average lease term and transaction costs on leases executed in the same period of 2019 were 4.8 years and $4.08 per square foot, respectively.

Non-cash rental income includes amortization of deferred rent receivable (net of write-offs), in-place lease intangible, tenant improvement^ reimbursement, and lease incentive intangible. Same Park Non-Cash Rental(1) Income is presented net of deferred rent receivable write-offs of $0.4 million and $0.1 million for the three months ended December 31, 2020 and 2019, respectively, and $3.0 million and $0.5 million for the years ended December 31, 2020 and 2019, respectively.

Additional detail on Same Park NOI and Same Park Cash NOI for the three months and year ended December 31, 2020 is provided in the Property Operations-Same Park Portfolio section below.

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

FFO for the three months and year ended December 31, 2020 was $1.66 per share and $6.51 per share, respectively, representing increases of 23.9% and 0.6% from the same periods in 2019, respectively. FFO is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts and generally represents GAAP net income before (i) real estate depreciation and amortization expense, (ii) gains or losses on sales of operating properties, and (iii) land and impairment charges on real estate assets.

Core FFO, which the Company defines as FFO excluding the impact of (i) charges related to the redemption of preferred stock and (ii) other nonrecurring income or expense items as appropriate, was $1.66 and $6.57 per share for the three months and year ended December 31, 2020, respectively, representing an increase of 0.3% and a decrease of 3.2% from the same periods in 2019. There were no differences between FFO and Core FFO for the three months ended December 31, 2020. For the year ended December 31, 2020, the Company excluded in its presentation of Core FFO accelerated amortization of $1.7 million of stock compensation expense as a result of the retirement of its President and Chief Executive Officer, Maria Hawthorne, and non-capitalizable demolition costs of $0.3 million related to its multifamily development in Tysons, Virginia, due to the nonrecurring nature of these expenses. For the three months and year ended December 31, 2019, the Company excluded from its presentation of Core FFO a non-cash charge of $11.0 million related to the redemption of preferred stock (Series U and V) incurred during the quarter ended December 31, 2019. Additional information on these items is included on the Company's annual report on Form 10?K.

FAD for the three months and year ended December 31, 2020 was $48.0 million and $190.1 million, respectively, representing an increase of 6.7% and a decrease of 2.4%, respectively, from the same periods in 2019. The three month increase in FAD is primarily attributable to lower preferred distributions and recurring capital expenditures in the three months ended December 31, 2020 versus 2019, partially offset by lower interest income. The decrease in FAD for the year ended December 31, 2020 is attributable to lower Same Park Cash NOI driven by rent deferrals (net of amounts repaid) and abatements incurred in 2020, as well as lower Cash NOI from assets sold, partially offset by lower preferred distributions and recurring capital expenditures. FAD is a non-GAAP measure that represents Core FFO adjusted to (i) deduct recurring capital improvements and capitalized tenant improvements and lease commissions and (ii) remove certain non-cash income or expenses, such as amortization of deferred rent receivable and stock compensation expense.

FFO, Core FFO, and FAD are not substitutes for GAAP net income. Other real estate investment trusts ("REITs") may compute FFO, Core FFO, and FAD differently, which could inhibit comparability. The Company believes its presentations of FFO, Core FFO, and FAD assist investors and analysts in analyzing and comparing the operating and financial performance between reporting periods.

Lease Production

During the three months and year ended December 31, 2020, the Company executed leases on 1.9 million and 7.5 million square feet, respectively, compared to 2.1 million and 7.4 million for the three months and year ended December 31, 2019, respectively. The Company also reported that in December 2020 it entered into a five-year lease agreement for a 138,000 square foot suite at its Wiegman Distribution property in Hayward, California, with cash rental rate growth of 41.1% over the outgoing rent. With this lease, coupled with a lease agreement the Company executed in the second quarter of 2020 for a 180,000 square foot suite, the Company has backfilled 70% of the 460,000 square foot building the Company received back in January 2020 after a long-term tenant vacated the property at the end of its lease term.

Weighted average cash rental rate growth on leases executed during the three months and year ended December 31, 2020 was 5.3% and 5.8%, respectively, while average net effective rent1 growth was 14.9% and 16.0% for the same periods, respectively. Average lease term of the leases executed during the three months ended December 31, 2020 was 3.3 years, with associated average transaction costs (tenant improvements and leasing commissions) of $2.92 per square foot. For comparative purposes, average lease term and transaction costs on leases executed in the same period of 2019 were 4.8 years and $4.08 per square foot, respectively.

^ Net effective rent represents average rental payments for the term of a(1) lease on a straight-line basis in accordance with GAAP, excluding operating expense reimbursements.

Property Operations-Same Park Portfolio

The Company believes that evaluation of the Same Park portfolio, defined as all properties owned and operated as of December 31, 2020 that were acquired prior to January 1, 2018, provides an informative view of how the Company's portfolio has performed over comparable periods. As of December 31, 2020, the Same Park portfolio consisted of 25.7 million rentable square feet, or 92.8% of the Company's 27.7 million total rentable square feet, excluding the Company's 95.0% interest in a 395-unit multifamily property.

The following table presents the unaudited operating results of the Company's Same Park facilities for the three months and years ended December 31, 2020 and 2019 (in thousands, except per square foot amounts):





For the Three Months For The Years

Ended December 31, Ended December 31,

2020 2019 Change 2020 2019 Change

Rental income

Cash Rental $ 97,777 $ 96,850 1.0 % $ 379,947 $ 379,495 0.1 %Income ^(1)

Non-CashRental (1,204 ) 565 (313.1 %) 3,417 2,455 39.2 %Income ^(2)

Totalrental 96,573 97,415 (0.9 %) 383,364 381,950 0.4 %income



AdjustedCost of Operations^(3)

Property 9,950 9,601 3.6 % 42,360 40,016 5.9 %taxes

Utilities 4,729 4,883 (3.2 %) 18,835 19,493 (3.4 %)

Repairs and 7,219 6,094 18.5 % 24,495 23,489 4.3 %maintenance

Payroll 3,951 4,127 (4.3 %) 15,981 15,197 5.2 %

Snow 195 13 1400.0 % 274 1,046 (73.8 %)removal

Property 1,073 1,025 4.7 % 4,082 3,371 21.1 %insurance

Other 1,418 1,538 (7.8 %) 6,542 6,947 (5.8 %)expenses

TotalAdjusted 28,535 27,281 4.6 % 112,569 109,559 2.7 %Cost ofOperations

NOI ^(4) $ 68,038 $ 70,134 (3.0 %) $ 270,795 $ 272,391 (0.6 %)



Cash NOI ^ $ 69,242 $ 69,569 (0.5 %) $ 267,378 $ 269,936 (0.9 %)(5)



SelectedStatistical Data

Rentablesquare 25,656 25,656 - 25,656 25,656 - footage atperiod end

NOI margin 70.5 % 72.0 % (2.1 %) 70.6 % 71.3 % (1.0 %)^(6)

Cash NOI 70.8 % 71.8 % (1.4 %) 70.4 % 71.1 % (1.0 %)margin ^(7)

Weightedaverage 92.0 % 94.4 % (2.5 %) 92.4 % 94.5 % (2.2 %)square footoccupancy

Revenue peroccupied $ 16.37 $ 16.09 1.7 % $ 16.17 $ 15.75 2.7 %square foot^(8)

Revenue peravailablefoot $ 15.06 $ 15.19 (0.9 %) $ 14.94 $ 14.89 0.3 %(RevPAF) ^(9)

Cash RentalIncome per occupied

square foot $ 16.57 $ 15.99 3.6 % $ 16.03 $ 15.65 2.4 %^(10)

Cash RentalIncome per $ 15.24 $ 15.10 0.9 % $ 14.81 $ 14.79 0.1 %availablefoot ^(11)

(1)

Cash Rental Income represents rental income excluding Non-Cash Rental Income (defined below).

(2)

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.

(3)

Adjusted Cost of Operations, as presented above, excludes 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.

(4)

The Company utilizes NOI, a non-GAAP financial measure, to evaluate the operating performance of its business parks. The Company defines NOI as rental income less Adjusted Cost of Operations. The Company believes NOI assists investors in analyzing the performance of its real estate by excluding (i) corporate overhead (i.e., general and administrative expense) because it does not relate to the direct operating performance of the real estate, (ii) depreciation and amortization expense because it does not accurately reflect changes in the fair value of the real estate, and (iii) stock compensation expense because this expense item can vary significantly from period to period and thus impact comparability across periods.

(5)

The Company utilizes Cash NOI to evaluate the cash flow performance of its business parks, and believes investors utilize this metric for the same purpose. The Company defines Cash NOI as Cash Rental Income less Adjusted Cost of Operations.

(6)

NOI margin is computed by dividing NOI by rental income.

(7)

Cash NOI margin is computed by dividing Cash NOI by Cash Rental Income.

(8)

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 month period shown is annualized.

(9)

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

(10)

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 month period shown is annualized.

(11)

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 month period shown is annualized.

The following table summarizes unaudited selected quarterly financial data with respect to the Same Park facilities (in thousands, except per square foot amounts):

^(1) Cash Rental Income represents rental income excluding Non-Cash Rental Income (defined below).

Non-Cash Rental Income represents amortization of deferred rent^(2) receivable, amortization of above and below market rents, net, and amortization of lease incentives and tenant improvement reimbursements.

Adjusted Cost of Operations, as presented above, excludes stock^(3) 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 Company utilizes NOI, a non-GAAP financial measure, to evaluate the operating performance of its business parks. The Company defines NOI as rental income less Adjusted Cost of Operations. The Company believes NOI assists investors in analyzing the performance of its real estate by excluding (i) corporate overhead (i.e., general and administrative^(4) expense) because it does not relate to the direct operating performance of the real estate, (ii) depreciation and amortization expense because it does not accurately reflect changes in the fair value of the real estate, and (iii) stock compensation expense because this expense item can vary significantly from period to period and thus impact comparability across periods.

The Company utilizes Cash NOI to evaluate the cash flow performance of^(5) its business parks, and believes investors utilize this metric for the same purpose. The Company defines Cash NOI as Cash Rental Income less Adjusted Cost of Operations.

^(6) NOI margin is computed by dividing NOI by rental income.

^(7) Cash NOI margin is computed by dividing Cash NOI by Cash Rental Income.

Revenue per occupied square foot is computed by dividing rental income^(8) for the period by weighted average occupied square feet for the same period. Revenue per occupied square foot for the three month period shown is annualized.

Revenue per Available Square Foot (RevPAF) is computed by dividing rental^(9) income for the period by weighted average available square feet for the same period. RevPAF for the three month period shown is annualized.

Cash Rental Income per occupied square foot is computed by dividing Cash^ Rental Income for the period by weighted average occupied square feet for(10) the same period. Cash rental income per occupied square foot for the three month period shown is annualized.

Cash Rental Income per Available Square Foot is computed by dividing Cash^ Rental Income for the period by weighted average available square feet(11) for the same period. Cash rental income per available square foot for the three month period shown is annualized.

The following table summarizes unaudited selected quarterly financial data with respect to the Same Park facilities (in thousands, except per square foot amounts):





For the Three Months Ended

March 31 June 30 September December Full Year 30 31

Rental income^ (1)

2020 $ 97,735 $ 92,657 $ 96,399 $ 96,573 $ 383,364

2019 $ 94,604 $ 94,794 $ 95,137 $ 97,415 $ 381,950



Adjusted Costof Operations ^ (2)

2020 $ 28,134 $ 26,997 $ 28,903 $ 28,535 $ 112,569

2019 $ 28,143 $ 26,683 $ 27,452 $ 27,281 $ 109,559



NOI ^(3)

2020 $ 69,601 $ 65,660 $ 67,496 $ 68,038 $ 270,795

2019 $ 66,461 $ 68,111 $ 67,685 $ 70,134 $ 272,391



Weighted average square foot occupancy

2020 92.9 % 92.4 % 92.3 % 92.0 % 92.4 %

2019 94.7 % 94.2 % 94.7 % 94.4 % 94.5 %



Revenue per occupied square foot ^(4)

2020 $ 16.40 $ 15.64 $ 16.29 $ 16.37 $ 16.17

2019 $ 15.57 $ 15.68 $ 15.66 $ 16.09 $ 15.75



RevPAF ^(5)

2020 $ 15.24 $ 14.45 $ 15.03 $ 15.06 $ 14.94

2019 $ 14.75 $ 14.78 $ 14.83 $ 15.19 $ 14.89

(1)

Included in the calculation of Same Park rental income are (a) lease buyout income of $0.2 million, $0.8 million, $0.2 million, $0.2 million, $0.3 million, $0.3 million, $0.3 million, and $0.4 million for the three months ended March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020, and December 31, 2020, respectively, (b) accounts receivable write-offs of $0.2 million, $0.3 million, $0.3 million, $0.2 million, $0.1 million, $1.1 million, $0.2 million, and $0.1 million for the three months ended March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020, and December 31, 2020, respectively, and (c) deferred rent receivable write-offs of $0.1 million, $0.1 million, $0.1 million, $0.1 million, $0, $2.3 million, $0.3 million, and $0.4 million for the three months ended March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020, and December 31, 2020, respectively.

(2)

Adjusted Cost of Operations excludes 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.

(3)

The Company utilizes NOI, a non-GAAP financial measure, to evaluate the operating performance of its business parks. The Company defines NOI as rental income less Adjusted Cost of Operations. The Company believes NOI assists investors in analyzing the performance of its real estate by excluding (i) corporate overhead (i.e., general and administrative expense) because it does not relate to the direct operating performance of the real estate, (ii) depreciation and amortization expense because it does not accurately reflect changes in the fair value of the real estate, and (iii) stock compensation expense because this expense item can vary significantly from period to period and thus impact comparability across periods.

(4)

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 month periods shown is annualized.

(5)

RevPAF is computed by dividing rental income for the period by weighted average available square feet for the same period. RevPAF for the three month periods shown is annualized.

COVID-19 Pandemic/Rent Collections Update

The COVID-19 pandemic has had and is expected to continue to have a significant impact on the Company's operations and capital plans; however, the effect to the Company's financial and operating performance in the fourth quarter was less pronounced than the prior two quarters. During the three months ended December 31, 2020, the Company granted $0.2 million of deferred rent and less than $0.1 million of rent abatement. For the year ended December 31, 2020, the Company granted rent relief to 393 customers (approximately 11.0% of total customers based on rental income) including $5.7 million of rent deferral and $1.3 million of rent abatement. As of February 19, 2021, the Company collected $3.7 million, or 97.1%, of the scheduled repayments of COVID-19 related rent deferrals billed through February 1, 2021.

During the three months ended December 31, 2020, the Company wrote-off $0.2 million of accounts receivable, which is in-line with the $0.2 million written-off during the three months ended December 31, 2019. Also, during the three months ended December 31, 2020, the Company wrote-off deferred rent receivables of $0.4 million, which is slightly higher than the $0.1 million written-off during the three months ended December 31, 2019. For the year ended December 31, 2020, the Company wrote-off accounts receivable of $1.6 million, representing 41bps of Cash Rental Income, compared to $1.1 million, or 27bps of Cash Rental Income in 2019.

The table below represents percentages of billed revenue that the Company has collected, deferred, and abated/written-off, by product type, for the respective periods presented (percentages shown are all as of December 31, 2020). Notably, rent collection percentages in the fourth quarter were in-line with pre-COVID levels and new deferral and abatement activity during the quarter was insignificant.

Included in the calculation of Same Park rental income are (a) lease buyout income of $0.2 million, $0.8 million, $0.2 million, $0.2 million, $0.3 million, $0.3 million, $0.3 million, and $0.4 million for the three months ended March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020, and December 31, 2020, respectively, (b) accounts receivable write-offs of $0.2^ million, $0.3 million, $0.3 million, $0.2 million, $0.1 million, $1.1(1) million, $0.2 million, and $0.1 million for the three months ended March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020, and December 31, 2020, respectively, and (c) deferred rent receivable write-offs of $0.1 million, $0.1 million, $0.1 million, $0.1 million, $0, $2.3 million, $0.3 million, and $0.4 million for the three months ended March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020, and December 31, 2020, respectively.

Adjusted Cost of Operations excludes stock compensation expense for^ employees whose compensation expense is recorded in cost of operations,(2) which can vary significantly period to period based upon the performance of the Company.

The Company utilizes NOI, a non-GAAP financial measure, to evaluate the operating performance of its business parks. The Company defines NOI as rental income less Adjusted Cost of Operations. The Company believes NOI assists investors in analyzing the performance of its real estate by^ excluding (i) corporate overhead (i.e., general and administrative(3) expense) because it does not relate to the direct operating performance of the real estate, (ii) depreciation and amortization expense because it does not accurately reflect changes in the fair value of the real estate, and (iii) stock compensation expense because this expense item can vary significantly from period to period and thus impact comparability across periods.

Revenue per occupied square foot is computed by dividing rental income for^ the period by weighted average occupied square feet for the same period.(4) Revenue per occupied square foot for the three month periods shown is annualized.

^ RevPAF is computed by dividing rental income for the period by weighted(5) average available square feet for the same period. RevPAF for the three month periods shown is annualized.

COVID-19 Pandemic/Rent Collections Update

The COVID-19 pandemic has had and is expected to continue to have a significant impact on the Company's operations and capital plans; however, the effect to the Company's financial and operating performance in the fourth quarter was less pronounced than the prior two quarters. During the three months ended December 31, 2020, the Company granted $0.2 million of deferred rent and less than $0.1 million of rent abatement. For the year ended December 31, 2020, the Company granted rent relief to 393 customers (approximately 11.0% of total customers based on rental income) including $5.7 million of rent deferral and $1.3 million of rent abatement. As of February 19, 2021, the Company collected $3.7 million, or 97.1%, of the scheduled repayments of COVID-19 related rent deferrals billed through February 1, 2021.

During the three months ended December 31, 2020, the Company wrote-off $0.2 million of accounts receivable, which is in-line with the $0.2 million written-off during the three months ended December 31, 2019. Also, during the three months ended December 31, 2020, the Company wrote-off deferred rent receivables of $0.4 million, which is slightly higher than the $0.1 million written-off during the three months ended December 31, 2019. For the year ended December 31, 2020, the Company wrote-off accounts receivable of $1.6 million, representing 41bps of Cash Rental Income, compared to $1.1 million, or 27bps of Cash Rental Income in 2019.

The table below represents percentages of billed revenue that the Company has collected, deferred, and abated/written-off, by product type, for the respective periods presented (percentages shown are all as of December 31, 2020). Notably, rent collection percentages in the fourth quarter were in-line with pre-COVID levels and new deferral and abatement activity during the quarter was insignificant.





Percentage of Rent

Collected Outstanding Deferred Abated/Written-off

Q4 2020

Industrial 98% 2% 0% 0%

Flex 98% 2% 0% 0%

Office 99% 1% 0% 0%

Total 98% 2% 0% 0%



FY 2020

Industrial 97% 0% 2% 1%

Flex 98% 1% 1% 0%

Office 99% 0% 1% 0%

Total 97% 1% 1% 1%

As of February 19, 2021, the Company had open rent relief requests from approximately 1% of customers. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Overview, Impact of COVID-19 Pandemic" in its December 31, 2020 Form 10-K for more information.

Acquisition, Dispositions, and Development Update

As previously announced in our third quarter 2020 earnings release, the Company acquired Pickett Industrial Park, a 246,000 square foot infill multi-tenant industrial park located in Alexandria, Virginia, for a total purchase price of $46.3 million on October 28, 2020.

The Company has completed the development of its 83,000 square foot multi-tenant industrial property at its Freeport Business Park adjacent to Dallas/Fort Worth International Airport in Dallas, Texas, for a total development cost of $8.1 million (excluding land value). Separately, the Company reported that construction of Brentford at The Mile is progressing on schedule and in-line with the previous development cost estimate of $110 to $115 million, excluding land value.

Distributions Declared

On February 17, 2021, the Company's Board of Directors declared a quarterly dividend of $1.05 per common share. Distributions were also declared on the various series of depositary shares, each representing 1/1,000 of a share of preferred stock. Distributions for both common shares and preferred stock will be payable on March 31, 2021 to shareholders of record on March 16, 2021.

Company Information

PS Business Parks, Inc., a member of the S&P MidCap 400, is a REIT that acquires, develops, owns, and operates commercial properties, primarily multi-tenant industrial, flex, and office space. As of December 31, 2020, the Company wholly owned 27.7 million rentable square feet with approximately 5,000 commercial customers in six states. The Company also held a 95.0% interest in a 395-unit apartment complex and a 98.2% interest in an entity developing a 411-unit multifamily apartment complex.

Forward-Looking Statements

When used within this press release, the words "may," "believes," "anticipates," "plans," "expects," "seeks," "estimates," "intends," and similar expressions are intended to identify "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results and performance of the Company to be materially different from those expressed or implied in the forward-looking statements. Such factors include the 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.

Additional information about PS Business Parks, Inc., including more financial analysis of the fourth quarter operating results, is available on the Company's website at psbusinessparks.com.

A conference call is scheduled for Tuesday, February 23, 2021, at 10:00 a.m. PST (1:00 p.m. EST) to discuss fourth quarter results. The Company will also be discussing its response to the COVID-19 pandemic and the effects it has had on its customers and the operation of its properties. The toll free number is (877) 876-9176; the conference ID is PSBQ420. The call will also be available via a live webcast on the Company's website. A replay of the conference call will be available through March 9, 2021 at (800) 839?9302, as well as via webcast on the Company's website.

Additional financial data attached.



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

December 31,

2020 2019

(Unaudited)

ASSETS



Cash and cash equivalents $ 69,083 $ 62,786



Real estate facilities, at cost

Land 874,680 844,419

Buildings and improvements 2,247,389 2,203,308

3,122,069 3,047,727

Accumulated depreciation (1,229,102 ) (1,158,489 )

1,892,967 1,889,238

Properties held for sale, net ^(1) - 15,264

Land and building held for development, net 43,014 28,110

1,935,981 1,932,612

Rent receivable 1,519 1,392

Deferred rent receivable ^(2) 36,788 32,993

Other assets 14,334 16,660

Total assets $ 2,057,705 $ 2,046,443



LIABILITIES AND EQUITY



Accrued and other liabilities $ 82,065 $ 84,632

Total liabilities 82,065 84,632

Commitments and contingencies

Equity

PS Business Parks, Inc.'s shareholders' equity

Preferred stock, $0.01 par value, 50,000,000 shares authorized,

37,790 shares issued and outstanding at ($944,750 aggregate

liquidation preference) December 31, 2020 and 944,750 944,750 2019

Common stock, $0.01 par value, 100,000,000 shares authorized,

27,488,547 and 27,440,953 shares issued and outstanding at

December 31, 2020 and 2019, respectively 274 274

Paid-in capital 738,022 736,986

Accumulated earnings 73,631 63,666

Total PS Business Parks, Inc.'s shareholders' 1,756,677 1,745,676 equity

Noncontrolling interests 218,963 216,135

Total equity 1,975,640 1,961,811

Total liabilities and equity $ 2,057,705 $ 2,046,443

(1)

Properties held for sale, net as of December 31, 2019 represents two industrial buildings totaling 40,000 square feet located in Redmond, Washington, which were subject to an eminent domain process and sold on September 16, 2020 for a gross sales price of $11.4 million, and one single-tenant building totaling 113,000 square feet located in Montgomery County, Maryland, which sold on January 7, 2020 for a gross sales price of $30.0 million.

(2)

Increase in deferred rent receivable is primarily attributable to rent deferral arrangements that the Company entered into with certain customers as a result of the COVID-19 pandemic.

Properties held for sale, net as of December 31, 2019 represents two industrial buildings totaling 40,000 square feet located in Redmond,^ Washington, which were subject to an eminent domain process and sold on(1) September 16, 2020 for a gross sales price of $11.4 million, and one single-tenant building totaling 113,000 square feet located in Montgomery County, Maryland, which sold on January 7, 2020 for a gross sales price of $30.0 million.

^ Increase in deferred rent receivable is primarily attributable to rent(2) deferral arrangements that the Company entered into with certain customers as a result of the COVID-19 pandemic.

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

For The Three Months

For The Years

Ended December 31,

Ended December 31,

2020

2019

2020

2019

Rental income

$

105,088

$

106,175

$

415,623

$

429,846

Expenses

Cost of operations

32,023

30,822

125,513

128,343

Depreciation and amortization

23,668

28,386

96,314

104,249

General and administrative

3,152

3,650

14,526

13,761

Total operating expenses

58,843

62,858

236,353

246,353

Interest and other income

222

1,726

1,234

4,492

Interest and other expense

(172

)

(173

)

(1,072

)

(657

)

Gain on sale of real estate facilities

-

16,644

27,273

16,644

Net income

46,295

61,514

206,705

203,972

Allocation to noncontrolling interests

(7,147

)

(7,336

)

(33,158

)

(29,006

)

Net income allocable to PS Business Parks, Inc.

39,148

54,178

173,547

174,966

Allocation to preferred shareholders based upon

Distributions

(12,047

)

(15,469

)

(48,186

)

(54,346

)

Charge related to the redemption of preferred securities

-

(11,007

)

-

(11,007

)

Allocation to restricted stock unit holders

(173

)

(211

)

(716

)

(910

)

Net income allocable to common shareholders

$

26,928

$

27,491

$

124,645

$

108,703

Net income per common share

Basic

$

0.98

$

1.00

$

4.54

$

3.96

Diluted

$

0.98

$

1.00

$

4.52

$

3.95

Weighted average common shares outstanding

Basic

27,488

27,439

27,475

27,418

Diluted27,572

27,551

27,563

27,526



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



For The Three Months For The Years

Ended December 31, Ended December 31,

2020 2019 2020 2019



Rental income $ 105,088 $ 106,175 $ 415,623 $ 429,846



Expenses

Cost of operations 32,023 30,822 125,513 128,343

Depreciation and 23,668 28,386 96,314 104,249 amortization

General and 3,152 3,650 14,526 13,761 administrative

Total operating expenses 58,843 62,858 236,353 246,353



Interest and other income 222 1,726 1,234 4,492

Interest and other (172 ) (173 ) (1,072 ) (657 )expense

Gain on sale of real - 16,644 27,273 16,644 estate facilities

Net income 46,295 61,514 206,705 203,972

Allocation to (7,147 ) (7,336 ) (33,158 ) (29,006 )noncontrolling interests

Net income allocable to 39,148 54,178 173,547 174,966 PS Business Parks, Inc.

Allocation to preferred shareholders based upon

Distributions (12,047 ) (15,469 ) (48,186 ) (54,346 )

Charge related to theredemption of preferred - (11,007 ) - (11,007 )securities

Allocation to restricted (173 ) (211 ) (716 ) (910 )stock unit holders

Net income allocable to $ 26,928 $ 27,491 $ 124,645 $ 108,703 common shareholders



Net income per common share

Basic $ 0.98 $ 1.00 $ 4.54 $ 3.96

Diluted $ 0.98 $ 1.00 $ 4.52 $ 3.95



Weighted average common shares outstanding

Basic 27,488 27,439 27,475 27,418

Diluted 27,572 27,551 27,563 27,526

PS BUSINESS PARKS, INC. Computation of Funds from Operations ("FFO"), Core FFO, and Funds Available for Distribution ("FAD") (In thousands, except per share amounts) (Unaudited)

For the Three Months

For The Years

Ended December 31,

Ended December 31,

2020

2019

2020

2019

Net income allocable to common shareholders

$

26,928

$

27,491

$

124,645

$

108,703

Adjustments

Gain on sale of real estate facilities

-

(16,644

)

(27,273

)

(16,644

)

Depreciation and amortization expense

23,668

28,386

96,314

104,249

Net income allocated to noncontrolling interests

7,147

7,336

33,158

29,006

Net income allocated to restricted stock unit holders

173

211

716

910

FFO allocated to joint venture partner

(16

)

(44

)

(118

)

(149

)

FFO allocable to diluted common shares and units (1)

57,900

46,736

227,442

226,075

Non-capitalizable demolition costs

-

-

335

-

Acceleration of stock compensation expense

due to President and Chief Executive Officer retirement

-

-

1,687

-

Charge related to the redemption of preferred securities

-

11,007

-

11,007

Core FFO allocable to diluted common shares and units (1)

57,900

57,743

229,464

237,082

Adjustments

Recurring capital improvements

(3,108

)

(4,908

)

(9,521

)

(11,244

)

Tenant improvements

(4,909

)

(5,462

)

(15,948

)

(17,360

)

Lease commissions

(3,653

)

(2,240

)

(8,878

)

(8,267

)

Non-cash rental income (2)

627

(867

)

(4,713

)

(3,936

)

Non-cash stock compensation expense (3)

1,257

965

3,961

4,956

Cash paid for taxes in lieu of shares upon vesting of

restricted stock units

(114

)

(230

)

(4,216

)

(6,350

)

FAD allocable to diluted common shares and units (1)

$

48,000

$

45,001

$

190,149

$

194,881

Distributions to common shares, noncontrolling interests, and

restricted stock unit holders

$

36,750

$

36,749

$

146,873

$

146,881

Distribution payout ratio

76.6

%

81.7

%

77.2

%

75.4%

Reconciliation of Earnings per Share to FFO per Share

Net income per common share-diluted

$

0.98

$

1.00

$

4.52

$

3.95

Gain on sale of real estate facilities

-

(0.47

)

(0.77

)

(0.47

)

Depreciation and amortization expense

0.68

0.81

2.76

2.99

FFO per share (1)

$

1.66

$

1.34

$

6.51

$

6.47

Non-capitalizable demolition costs

-

-

0.01

-

Acceleration of stock compensation expense

due to President and Chief Executive Officer retirement

-

-

0.05

-

Charge related to the redemption of preferred securities

-

0.31

-

0.31

Core FFO per share (1)

$

1.66

$

1.65

$

6.57

$

6.78

Weighted average outstanding:

Common shares

27,488

27,439

27,475

27,418

Operating partnership units

7,305

7,305

7,305

7,305

Restricted stock units

57

111

51

124

Common share equivalents

84

112

88

108

Total diluted common shares and units

34,934

34,967

34,919

34,955



PS BUSINESS PARKS, INC.Computation of Funds from Operations ("FFO"), Core FFO, and Funds Available forDistribution ("FAD")(In thousands, except per share amounts)(Unaudited)



For the Three Months For The Years

Ended December 31, Ended December 31,

2020 2019 2020 2019

Net income allocable to $ 26,928 $ 27,491 $ 124,645 $ 108,703 common shareholders

Adjustments

Gain on sale of real - (16,644 ) (27,273 ) (16,644 )estate facilities

Depreciation and 23,668 28,386 96,314 104,249 amortization expense

Net income allocated to 7,147 7,336 33,158 29,006 noncontrolling interests

Net income allocated torestricted stock unit 173 211 716 910 holders

FFO allocated to joint (16 ) (44 ) (118 ) (149 )venture partner

FFO allocable to dilutedcommon shares and units ^ 57,900 46,736 227,442 226,075 (1)

Non-capitalizable - - 335 - demolition costs

Acceleration of stock compensation expense

due to President and ChiefExecutive Officer - - 1,687 - retirement

Charge related to theredemption of preferred - 11,007 - 11,007 securities

Core FFO allocable todiluted common shares and 57,900 57,743 229,464 237,082 units ^(1)

Adjustments

Recurring capital (3,108 ) (4,908 ) (9,521 ) (11,244 )improvements

Tenant improvements (4,909 ) (5,462 ) (15,948 ) (17,360 )

Lease commissions (3,653 ) (2,240 ) (8,878 ) (8,267 )

Non-cash rental income ^ 627 (867 ) (4,713 ) (3,936 )(2)

Non-cash stock 1,257 965 3,961 4,956 compensation expense ^(3)

Cash paid for taxes inlieu of shares upon vesting of

restricted stock units (114 ) (230 ) (4,216 ) (6,350 )

FAD allocable to dilutedcommon shares and units ^ $ 48,000 $ 45,001 $ 190,149 $ 194,881 (1)



Distributions to commonshares, noncontrolling interests, and

restricted stock unit $ 36,750 $ 36,749 $ 146,873 $ 146,881 holders

Distribution payout ratio 76.6 % 81.7 % 77.2 % 75.4%





Reconciliation of Earnings per Share to FFO per Share

Net income per common $ 0.98 $ 1.00 $ 4.52 $ 3.95 share-diluted

Gain on sale of real - (0.47 ) (0.77 ) (0.47 )estate facilities

Depreciation and 0.68 0.81 2.76 2.99 amortization expense

FFO per share ^(1) $ 1.66 $ 1.34 $ 6.51 $ 6.47

Non-capitalizable - - 0.01 - demolition costs

Acceleration of stock compensation expense

due to President and ChiefExecutive Officer - - 0.05 - retirement

Charge related to theredemption of preferred - 0.31 - 0.31 securities

Core FFO per share ^(1) $ 1.66 $ 1.65 $ 6.57 $ 6.78



Weighted average outstanding:

Common shares 27,488 27,439 27,475 27,418

Operating partnership 7,305 7,305 7,305 7,305 units

Restricted stock units 57 111 51 124

Common share equivalents 84 112 88 108

Total diluted common 34,934 34,967 34,919 34,955 shares and units

(1)

FFO, Core FFO, and FAD are defined above.

(2)

Non-cash rental income includes amortization of deferred rent receivable, in-place lease intangible, tenant improvement reimbursement, and lease incentive intangible.

(3)

Amounts shown are net of accelerated stock compensation expense related to the President and Chief Executive Officer retirement, which is also excluded from the computation of Core FFO.

^ FFO, Core FFO, and FAD are defined above.(1)

^ Non-cash rental income includes amortization of deferred rent receivable,(2) in-place lease intangible, tenant improvement reimbursement, and lease incentive intangible.

Amounts shown are net of accelerated stock compensation expense related to^ the President and Chief Executive Officer retirement, which is also(3) excluded from the computation of Core FFO.



PS BUSINESS PARKS, INC. Reconciliation of Selected Non-GAAP Measures to Analogous GAAP Measures (Unaudited, in thousands)

For the Three Months

For The Years

Ended December 31,

Ended December 31,

2020

2019

Change

2020

2019

Change

Rental income

Same Park

$

96,573

$

97,415

(0.9

%)

$

383,364

$

381,950

0.4

%

Non-Same Park

6,300

4,768

32.1

%

22,109

14,276

54.9

%

Multifamily

2,215

2,583

(14.2

%)

9,464

10,075

(6.1

%)

Assets sold (1)

-

1,409

(100.0

%)

686

23,545

(97.1

%)

Total rental income

105,088

106,175

(1.0

%)

415,623

429,846

(3.3

%)

Cost of operations

Adjusted cost of operations (2)

Same Park

28,535

27,281

4.6

%

112,569

109,559

2.7

%

Non-Same Park

1,881

1,595

17.9

%

7,327

4,899

49.6

%

Multifamily

1,180

1,019

15.8

%

4,264

4,137

3.1

%

Assets sold (1)

-

703

(100.0

%)

143

8,614

(98.3

%)

Stock compensation expense (3)

427

224

90.6

%

1,210

1,134

6.7

%

Total cost of operations

32,023

30,822

3.9

%

125,513

128,343

(2.2

%)

Net operating income (4)

Same Park

68,038

70,134

(3.0

%)

270,795

272,391

(0.6

%)

Non-Same Park

4,419

3,173

39.3

%

14,782

9,377

57.6

%

Multifamily

1,035

1,564

(33.8

%)

5,200

5,938

(12.4

%)

Assets sold (1)

-

706

(100.0

%)

543

14,931

(96.4

%)

Stock compensation expense (3)

(427

)

(224

)

90.6

%

(1,210

)

(1,134

)

6.7

%

Depreciation and amortization expense

(23,668

)

(28,386

)

(16.6

%)

(96,314

)

(104,249

)

(7.6

%)

General and administrative expense

(3,152

)

(3,650

)

(13.6

%)

(14,526

)

(13,761

)

5.6

%

Interest and other income

222

1,726

(87.1

%)

1,234

4,492

(72.5

%)

Interest and other expense

(172

)

(173

)

(0.6

%)

(1,072

)

(657

)

63.2

%

Gain on sale of real estate facilities

-

16,644

(100.0

%)

27,273

16,644

63.9

%

Net income

$

46,295

$

61,514

(24.7

%)

$

206,705

$

203,972

1.3

%



PS BUSINESS PARKS, INC.Reconciliation of Selected Non-GAAP Measures to Analogous GAAP Measures(Unaudited, in thousands)



For the Three Months For The Years

Ended December 31, Ended December 31,

2020 2019 Change 2020 2019 Change

Rental income

Same Park $ 96,573 $ 97,415 (0.9 %) $ 383,364 $ 381,950 0.4 %

Non-Same Park 6,300 4,768 32.1 % 22,109 14,276 54.9 %

Multifamily 2,215 2,583 (14.2 %) 9,464 10,075 (6.1 %)

Assets sold ^ - 1,409 (100.0 %) 686 23,545 (97.1 %)(1)

Total rental 105,088 106,175 (1.0 %) 415,623 429,846 (3.3 %)income



Cost of operations

Adjusted costof operations ^(2)

Same Park 28,535 27,281 4.6 % 112,569 109,559 2.7 %

Non-Same Park 1,881 1,595 17.9 % 7,327 4,899 49.6 %

Multifamily 1,180 1,019 15.8 % 4,264 4,137 3.1 %

Assets sold ^ - 703 (100.0 %) 143 8,614 (98.3 %)(1)

Stockcompensation 427 224 90.6 % 1,210 1,134 6.7 %expense ^(3)

Total cost of 32,023 30,822 3.9 % 125,513 128,343 (2.2 %)operations



Net operating income ^(4)

Same Park 68,038 70,134 (3.0 %) 270,795 272,391 (0.6 %)

Non-Same Park 4,419 3,173 39.3 % 14,782 9,377 57.6 %

Multifamily 1,035 1,564 (33.8 %) 5,200 5,938 (12.4 %)

Assets sold ^ - 706 (100.0 %) 543 14,931 (96.4 %)(1)

Stockcompensation (427 ) (224 ) 90.6 % (1,210 ) (1,134 ) 6.7 %expense ^(3)

Depreciationand (23,668 ) (28,386 ) (16.6 %) (96,314 ) (104,249 ) (7.6 %)amortizationexpense

General andadministrative (3,152 ) (3,650 ) (13.6 %) (14,526 ) (13,761 ) 5.6 %expense

Interest and 222 1,726 (87.1 %) 1,234 4,492 (72.5 %)other income

Interest and (172 ) (173 ) (0.6 %) (1,072 ) (657 ) 63.2 %other expense

Gain on saleof real estate - 16,644 (100.0 %) 27,273 16,644 63.9 %facilities

Net income $ 46,295 $ 61,514 (24.7 %) $ 206,705 $ 203,972 1.3 %

(1)Amounts for the year ended December 31, 2020 include operating results attributable to two industrial buildings totaling 40,000 square feet sold in September 2020 and a 113,000 square foot office building sold in January 2020; amounts for the three months and year ended December 31, 2019 reflect the operating results of the two industrial buildings totaling 40,000 square feet sold in September 2020, the 113,000 square foot office building sold in January 2020, and 1.3 million square feet of assets sold in October 2019.

(2)

Adjusted Cost of Operations excludes the impact of stock compensation expense.

(3)Stock compensation expense, as shown here, represents stock compensation expense for employees whose compensation expense is recorded in cost of operations. Note that stock compensation expense attributable to the executive management team (including divisional vice presidents) and other corporate employees is recorded within general and administrative expense.

(4)NOI represents rental income less Adjusted Cost of Operations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210222005906/en/

CONTACT: Jeff Hedges (818) 244-8080, Ext. 1649