UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


S	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended March 31, 2021
	or
£	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from to

Commission File Number 1-10709

PS BUSINESS PARKS, INC.

(Exact name of registrant as specified in its charter)

California	95-4300881
(State or Other Jurisdiction	(I.R.S. Employer
of Incorporation)	Identification Number)

701 Western Avenue, Glendale, California 91201-2349

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (818) 244-8080

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Ticker Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share	PSB	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.200% Cum Pref Stock, Series W, $0.01 par value	PSBPrW	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.250% Cum Pref Stock, Series X, $0.01 par value	PSBPrX	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.200% Cum Pref Stock, Series Y, $0.01 par value	PSBPrY	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.875% Cum Pref Stock, Series Z, $0.01 par value	PSBPrZ	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes S No £

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes S No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £ No S

As of April 26, 2021, the number of shares of the registrant’s common stock, $0.01 par value per share, outstanding was 27,529,007.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PS BUSINESS PARKS, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)



	March 31,		December 31,
	2021		2020
	(Unaudited)
ASSETS

Cash and cash equivalents	$	69,492	$	69,083

Real estate facilities, at cost
Land		865,081		864,092
Buildings and improvements		2,196,781		2,186,621
		3,061,862		3,050,713
Accumulated depreciation		(1,199,381)		(1,181,402)
		1,862,481		1,869,311
Properties held for sale, net		25,698		26,273
Land and building held for development, net		42,870		40,397
		1,931,049		1,935,981
Rent receivable		2,686		1,519
Deferred rent receivable		37,996		36,788
Other assets		14,716		14,334
Total assets	$	2,055,939	$	2,057,705

LIABILITIES AND EQUITY

Accrued and other liabilities	$	82,925	$	82,065
Total liabilities		82,925		82,065
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) March 31, 2021
and December 31, 2020		944,750		944,750
Common stock, $0.01 par value, 100,000,000 shares authorized,
27,516,939 and 27,488,547 shares issued and outstanding at
March 31, 2021 and December 31, 2020, respectively		274		274
Paid-in capital		736,336		738,022
Accumulated earnings		72,809		73,631
Total PS Business Parks, Inc.’s shareholders’ equity		1,754,169		1,756,677
Noncontrolling interests		218,845		218,963
Total equity		1,973,014		1,975,640
Total liabilities and equity	$	2,055,939	$	2,057,705

PS BUSINESS PARKS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)



	For the Three Months
	Ended March 31,
	2021		2020

Rental income	$	108,047	$	106,216

Expenses
Cost of operations		33,218		31,263
Depreciation and amortization		22,985		26,619
General and administrative		4,382		3,323
Total operating expenses		60,585		61,205

Interest and other income		256		557
Interest and other expense		(211)		(161)
Gain on sale of real estate facility		—		19,621
Net income		47,507		65,028
Allocation to noncontrolling interests		(7,411)		(11,092)
Net income allocable to PS Business Parks, Inc.		40,096		53,936
Allocation to preferred shareholders		(12,046)		(12,046)
Allocation to restricted stock unit holders		(164)		(275)
Net income allocable to common shareholders	$	27,886	$	41,615

Net income per common share
Basic	$	1.01	$	1.52
Diluted	$	1.01	$	1.51

Weighted average common shares outstanding
Basic		27,495		27,448
Diluted		27,594		27,550

PS BUSINESS PARKS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Amounts in thousands, except share data)

(Unaudited)



											Total PS
											Business Parks,
For the three months ended	Preferred Stock			Common Stock			Paid-in		Accumulated		Inc.’s Shareholders’		Noncontrolling		Total
March 31, 2021	Shares	Amount		Shares	Amount		Capital		Earnings		Equity		Interests		Equity
Balances at December 31, 2020	37,790	$	944,750	27,488,547	$	274	$	738,022	$	73,631	$	1,756,677	$	218,963	$	1,975,640
Issuance of common stock in
connection with stock-based
compensation	—		—	28,392		—		—		—		—		—		—
Stock compensation, net	—		—	—		—		1,616		—		1,616		—		1,616
Cash paid for taxes in lieu of
shares upon vesting of
restricted stock units	—		—	—		—		(3,197)		—		(3,197)		—		(3,197)
Capital contribution to joint venture	—		—	—		—		—		—		—		159		159
Issuance costs	—		—	—		—		(105)		—		(105)		—		(105)
Net income	—		—	—		—		—		40,096		40,096		7,411		47,507
Distributions
Preferred stock (Note 9)	—		—	—		—		—		(12,046)		(12,046)		—		(12,046)
Common stock ($1.05 per share)	—		—	—		—		—		(28,872)		(28,872)		—		(28,872)
Noncontrolling interests—
Common units	—		—	—		—		—		—		—		(7,671)		(7,671)
Joint venture	—		—	—		—		—		—		—		(17)		(17)
Balances at March 31, 2021	37,790	$	944,750	27,516,939	$	274	$	736,336	$	72,809	$	1,754,169	$	218,845	$	1,973,014

For the three months ended
March 31, 2020
Balances at December 31, 2019	37,790	$	944,750	27,440,953	$	274	$	736,986	$	63,666	$	1,745,676	$	216,135	$	1,961,811
Issuance of common stock in
connection with stock-based
compensation	—		—	36,350		—		—		—		—		—		—
Stock compensation, net	—		—	—		—		760		—		760		—		760
Cash paid for taxes in lieu of
shares upon vesting of
restricted stock units	—		—	—		—		(3,655)		—		(3,655)		—		(3,655)
Net income	—		—	—		—		—		53,936		53,936		11,092		65,028
Distributions
Preferred stock (Note 9)	—		—	—		—		—		(12,046)		(12,046)		—		(12,046)
Common stock ($1.05 per share)	—		—	—		—		—



	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets as of March 31, 2021 (unaudited) and December 31, 2020	3
Consolidated statements of income (unaudited) for the three months ended March 31, 2021 and 2020	4
Consolidated statements of equity (unaudited) for the three months ended March 31, 2021 and 2020	5
Consolidated statements of cash flows (unaudited) for the three months ended March 31, 2021 and 2020	6
Notes to consolidated financial statements (unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3. Quantitative and Qualitative Disclosures About Market Risk	38
Item 4. Controls and Procedures	38
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	38
Item 1A. Risk Factors	38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 6. Exhibits	40