Document

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

(AMENDMENT NO. )

Filed by the Registrant ☑

Filed by a Party other than the Registrant ☐

Check the appropriate box:

☐ Preliminary Proxy Statement

☐ Definitive Proxy Statement

☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☐ Definitive Additional Materials

☑ Soliciting Material Pursuant to §240.14a-12

PS BUSINESS PARKS, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

☑ No fee required.

☐ Fee paid previously with preliminary materials.

☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

On May 2, 2022 PS Business Parks, Inc. issued supplemental information regarding its performance for the first quarter of 2022.


			Table of Contents


Section			Page
Corporate Data:
Additional Information			3
Investor Company Summary			4
Company Overview			5
Financial and Portfolio Highlights and Capitalization Data			6
Consolidated Financial Results:
Consolidated Balance Sheets			7
Consolidated Statements of Operations			8
Non-GAAP FFO, Core FFO and Funds Available for Distribution (FAD) Reconciliations			10
Net Operating Income (NOI) and Cash NOI			13
Same Park Cash NOI by Region and Type			14
Capitalization Summary			15
Analysis of Capital Expenditures			16
Portfolio Data:
Portfolio Summary			17
Portfolio Overview by Markets and Product Type			18
Quarter-to-Date Production Statistics			20
Lease Expirations by Type			21
Industry Concentration and Top Ten Customers			22
Properties under Development			23
Appendices and Definitions:
Appendix A - Balance Sheet Variance explanations			24
Appendix B - P&L Flux			25
Appendix C - Cost of Operations			26
Appendix D - Lease Expirations by Market			27



Definitions and Non-GAAP Disclosures			29

First Quarter 2022 Supplemental Financial Reporting Package 2


			Additional Information

Additional Information and Where to Find It

In connection with the proposed transaction, the Company will file relevant materials with the U.S. Securities and Exchange Commission (the “SEC”), including the Company’s proxy statement on Schedule 14A (the “Proxy Statement”). This document is not a substitute for the Proxy Statement or any other document that the Company may file with the SEC or send to its stockholders in connection with the proposed transactions. BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain the documents (when available) free of charge at the SEC’s website, http://www.sec.gov. In addition, the documents (when available) may be obtained free of charge by accessing the Investor Relations section of the Company’s website at https://ir.psbusinessparks.com or by contacting the Company’s Investor Relations by email at info@psbusinessparks.com.

Participants in the Solicitation

The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the holders of Company common stock in respect of the proposed transaction. Information about the directors and executive officers of the Company is set forth in the proxy statement for the Company’s 2022 annual meeting of stockholders, which was filed with the SEC on March 25, 2022, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the SEC on February 22, 2022 and in other documents filed by the Company with the SEC. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement and other relevant materials to be filed with the SEC in respect of the proposed transaction when they become available. Investors should read the Proxy Statement carefully when it becomes available before making any voting or investment decisions.

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, including but not limited to: (i) the duration and severity of the COVID-19 pandemic and its impact on our business and our customers; (ii) changes in general economic and business conditions, including as a result of the economic fallout of the COVID-19 pandemic; (iii) potential regulatory actions to close our facilities or limit our ability to evict delinquent customers; (iv) decreases in rental rates or increases in vacancy rates/failure to renew or replace expiring leases; (v) tenant defaults; (vi) the effect of the recent credit and financial market conditions; (vii) our failure to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”); (viii) the economic health of our customers; (ix) the health of our officers and directors; (x) increases in operating costs; (xi) casualties to our properties not covered by insurance; (xii) the availability and cost of capital; (xiii) increases in interest rates and its effect on our stock price; (xiv) security breaches, including ransomware, or a failure of our networks, systems or technology which could adversely impact our operations or our business, customer and employee relationships or result in fraudulent payments; (xv) the impact of inflation; and (xvi) other factors discussed 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.

First Quarter 2022 Supplemental Financial Reporting Package 3


			Investor Company Summary


Executive Management Team

Stephen W. Wilson						President and Chief Executive Officer
Maria R. Hawthorne						Interim Chief Operating Officer
Adeel Khan						Chief Financial Officer and Corporate Secretary
Trenton Groves						SVP, Chief Accounting Officer
Board of Directors

Ronald L. Havner, Jr.						Chairman of the Board
Stephen W. Wilson						Director, President and Chief Executive Officer
Maria R. Hawthorne						Director, Interim Chief Operating Officer
Jennifer Holden Dunbar						Director
M. Christian Mitchell						Director
Irene H. Oh						Director
Kristy M. Pipes						Director
Gary E. Pruitt						Director
Robert S. Rollo						Director
Joseph D. Russell, Jr.						Director
Peter Schultz						Director


Investor Relations Information
Adeel Khan
T: 818.244.8080, Ext. 8975
akhan@psbusinessparks.com


Equity Research Coverage
FIRM	ANALYST	PHONE	EMAIL
Citi	Manny Korchman	212-816-1382	emmanuel.korchman@citi.com
Green Street Advisors	Vince Tibone	949-640-8780	vtibone@greenstreetadvisors.com
JP Morgan	Anthony Paolone	212-622-6682	anthony.paolone@jpmorgan.com
KeyBanc	Craig Mailman	917-368-2316	cmailman@key.com
Wells Fargo	Blaine Heck	443-263-6529	blaine.heck@wellsfargo.com

PS Business Parks, Inc. is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding PS Business Parks, Inc.'s performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of PS Business Parks, Inc. or its management. PS Business Parks, Inc. does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.

First Quarter 2022 Supplemental Financial Reporting Package 4


			Company Overview As Of March 31, 2022


Company Overview
Total # of Properties						96

Total Square Feet						27,010,000



Total Occupancy (Period End)						95.5%

Same Park Occupancy (Period End)						95.9%

Same Park YTD GAAP NOI growth						7.7%

Same Park YTD Cash NOI growth						8.6%

(S&P/Moody's) (2) (3)						BBB+, BBB-/Baa2 (under review)

Net Debt to Total Combined Market Capitalization						n/a

Net Debt and Preferred Equity to Total Combined Market Capitalization						11.4%

Net Debt to Adjusted EBITDAre						2.8x

Multifamily
Average rent per unit						$2,123

Weighted average occupancy						95.0%

Period end occupancy						96.9%

Percent leased						97.0%

Economic Occupancy						89.9%

(2) S&P downgraded PSB to 'BBB+' and subsequently downgraded PSB's preferred stock to 'BBB-'. S&P placed all their ratings on PSB, including our 'BBB+' issuer credit rating, on CreditWatch with negative implications. The CreditWatch placement reflects that S&P could lower their ratings upon closing of the transaction, based on the pro forma capital structure and their view of the acquirer's aggressive financial policy. S&P no longer view PSB as being moderately strategic to Public Storage. Public Storage, which holds approximately 41% common equity interest in PSB, has agreed to Blackstone's acquisition bid. S&P previously considered PSB to be moderately strategic to Public Storage and, as such, S&P believed that Public Storage would provide support to PSB under a stress scenario. As a result, S&P applied a one-notch improvement to their standalone rating on PSB. The transaction changes S&P's view, such that they no longer expect Public Storage to support PSB under a hypothetical stress scenario. As a result, S&P downgraded PSB by one notch to 'BBB+'. S&P also lowered their ratings on PSB's preferred stock by one notch to 'BBB-', two notches below its issuer credit rating, in line with S&P's criteria.

(3) Moody’s Investors Service (“Moody’s”) has placed on review for downgrade the ratings of PS Business Parks, Inc. (PSB), including its Baa2 preferred stock rating and the (P)Baa1 senior unsecured shelf rating of its main operating subsidiary, PS Business Parks, L.P. The review for downgrade follows the announcement that the REIT, which owns a portfolio primarily comprised of multi-tenant industrial and flex properties, has entered into a definitive agreement by which affiliates of Blackstone Real Estate will acquire all of PSB’s outstanding shares in a transaction valued at about $7.6 billion. The review for downgrade reflects the likelihood that PSB’s credit profile will deteriorate under Blackstone’s ownership, with the potential for meaningfully higher leverage and secured debt levels that could result in a multi-notch downgrade of the REIT’s ratings, including crossing over to non-investment grade territory, upon transaction close.

First Quarter 2022 Supplemental Financial Reporting Package 5


			Financial and Portfolio Highlights and Capitalization Data (unaudited, in thousands except share and per share data and portfolio statistics)


	Three Months Ended
	March 31, 2022			December 31, 2021			September 31, 2021			June 30, 2021			March 31, 2021
Financial Results:
Rental income	$	112,840		$	110,844		$	110,448		$	109,364		$	108,047
Net income	$	101,145		$	357,009		$	78,463		$	70,050		$	47,507
Net Operating Income (NOI) (1)	$	78,726		$	78,106		$	77,357		$	77,515		$	74,829
Cash NOI (1)	$	78,105		$	77,641		$	77,332		$	77,813		$	73,978
Core FFO (1)	$	63,823		$	63,485		$	60,328		$	61,816		$	58,419
Core FFO per common stock - diluted (1)	$	1.82		$	1.81		$	1.72		$	1.77		$	1.67
EBITDAre	$	67,601		$	74,224		$	72,599		$	73,503		$	70,624
Dividend declared per share of common stock	$	1.05		$	1.05		$	1.05		$	1.05		$	1.05
Portfolio Statistics:
Total square footage at period end (2)	27,010,000			27,010,000			26,869,000			26,151,000			26,151,000
Weighted average occupancy	95.5		%	95.5		%	94.7		%	93.8		%	93.2		%
Period end Occupancy	95.5		%	95.9		%	95.5		%	94.5		%	93.6		%
Rent Change - GAAP	23.4		%	16.4		%	15.4		%	10.7		%	16.4		%
Rent Change - Cash	10.7		%	6.1		%	5.0		%	3.1		%	6.4		%
Same Park Performance:
Same Park weighted average occupancy	96.0		%	95.8		%	94.9		%	94.0		%	93.3		%
Same Park income per occupied square foot	$16.84			$16.60			$16.62			$16.40			$16.10
Same Park GAAP NOI growth (1) (3)	7.7		%	8.9		%	10.0		%	11.4		%	0.7		%
Same Park Cash NOI growth (1) (3)	8.6		%	8.1		%	12.7		%	16.2		%	0.5		%
Capitalization:
Total shares and units issued and outstanding at period end (4)	34,932,798			34,895,162			34,851,508			34,846,819			34,822,294
Total equity market capitalization	$	5,871,505		$	6,426,642		$	5,462,625		$	5,160,177		$	5,382,830
Series W, X, Y and Z Preferred Stock (5)	$	755,000		$	755,000		$	944,750		$	944,750		$	944,750
Total consolidated debt	$	20,000		$	32,000		$	—		$	—		$	—
Unrestricted cash (6)	$	(20,000)		$	(27,074)		n/a			n/a			n/a
Total combined market capitalization (net debt plus equity)	$	6,626,505		$	7,186,568		$	6,407,375		$	6,104,927		$	6,327,580
Ratios:
Net debt & preferred equity to total combined market capitalization	11.4		%	10.6		%	14.1		%	13.8		%	14.0		%
Net debt to total combined market capitalization (6)	0.0		%	0.1		%	n/a			n/a			n/a
Ratio of EBITDAre to fixed charges and preferred distributions (7)	6.9x			6.9x			5.9x			6.0x			5.8x
Net debt and preferred equity to EBITDAre (8)	2.8x			2.6x			3.1x			2.8x			3.1x

(1)For definition/discussion of non-GAAP financial measures and reconciliations to their nearest GAAP equivalents, see the definitions section & reconciliation section beginning on page 29 and page 10 of this report, respectively.

(2)Excludes assets sold.

(3)Represents the quarter over quarter percentage change in NOI and Cash NOI for the Same Park Portfolio.

(4)Total shares and units issued and outstanding at period end is comprised of common stock and common operating partnership units.

(5)Series W Preferred Stock redeemed in November 2021.

(6)Unrestricted cash balance is $104.2 million as of March 31, 2022 Cash used for net debt calculation is $20.0 million or the current outstanding debt balance.

(7)For each period shown, ratio of total fixed charges to EBITDAre is calculated using the respective quarter’s annualized fixed charges divided by the respective quarter’s annualized EBITDAre.

(8)For each period shown, ratio of debt and preferred equity to EBITDAre is calculated using total net debt and preferred equity reported during the quarter divided by the respective quarter’s annualized EBITDAre.

First Quarter 2022 Supplemental Financial Reporting Package 6


			Consolidated Balance Sheets (unaudited, in thousands)


	March 31, 2022		December 31, 2021

ASSETS

Cash and cash equivalents	$	104,204	$	27,074	(a)

Real estate facilities, at cost
Land	865,214		867,345
Buildings and improvements	2,244,104		2,239,137
	3,109,318		3,106,482
Accumulated depreciation	(1,197,811)		(1,178,397)
	1,911,507		1,928,085		(b)
Properties held for sale, net	—		33,609
Land and building held for development, net	97,212		78,990
	2,008,719		2,040,684
Rent receivable	2,988		1,621
Deferred rent receivable	37,484		37,581		(c)
Other assets	13,176		16,262
Total assets	$	2,166,571	$	2,123,222	(d)

LIABILITIES AND EQUITY

Accrued and other liabilities	$	95,509	$	97,151	(e)
Credit facility	20,000		32,000
Total liabilities	115,509		129,151

Equity
PS Business Parks, Inc.’s stockholders’ equity
Preferred stock	755,000		755,000
Common stock	276		275
Paid-in capital	754,387		752,444		(f)
Accumulated earnings	270,243		226,737		(g)
Total PS Business Parks, Inc.’s stockholders’ equity	1,779,906		1,734,456
Noncontrolling interests	271,156		259,615
Total equity	2,051,062		1,994,071
Total liabilities and equity	$	2,166,571	$	2,123,222

See Appendix A for additional detail related to the tickmarks shown in the table above.

First Quarter 2022 Supplemental Financial Reporting Package 7


			Consolidated Statements of Operations, Quarterly Results (unaudited and in thousands, except per share amounts)


	Three Months Ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021

Rental income	$	112,840	$	110,844	$	110,448	$	109,364	$	108,047

Expenses:
Cost of operations	34,114		32,738		33,091		31,849		33,218
Depreciation and amortization	23,132		24,130		23,857		22,514		22,985
General and administrative (1)	11,324		4,728		5,148		4,799		4,382
Total operating expenses	68,570		61,596		62,096		59,162		60,585


Interest and other income	246		946		411		923		256
Interest and other expense (2)	(330)		(3,943)		(224)		(268)		(211)
Gain on sale of real estate facilities	56,959		310,758		29,924		19,193		—
Net income	101,145		357,009		78,463		70,050		47,507
Allocation to noncontrolling interests	(19,049)		(70,915)		(13,850)		(12,094)		(7,411)
Net income allocable to PS Business Parks, Inc.	82,096		286,094		64,613		57,956		40,096
Allocation to preferred stockholders	(9,580)		(10,485)		(12,046)		(12,047)		(12,046)


Preferred securities redemption charge	—		(6,434)		—		—		—
Allocation to restricted stock unit holders	(523)		(1,785)		(350)		(314)		(164)
Net income allocable to common stockholders	$	71,993	$	267,390	$	52,217	$	45,595	$	27,886

Net income per share of common stock
Basic	$	2.61	$	9.70	$	1.90	$	1.66	$	1.01
Diluted	$	2.60	$	9.66	$	1.89	$	1.65	$	1.01

Weighted average common stock outstanding
Basic	27,607		27,565		27,543		27,531		27,495
Diluted	27,691		27,671		27,635		27,632		27,594

(1)General and administrative expense in Q1 22 includes the impact of a one-time cash payment of $6.7 million for RSUs to the former CEO less a $0.6 million reversal of stock compensation expense.

(2)Other expense includes $3.6 million related to state tax provision for the Three Months Ended December 31, 2021.

First Quarter 2022 Supplemental Financial Reporting Package 8


			Consolidated Statements of Operations and EBITDAre, Quarterly Results (unaudited and in thousands, except per share amounts)


	Three Months Ended March 31,
	2022		2021

Rental income	$	112,840	$	108,047	(a)

Expenses
Cost of operations	34,114		33,218		(b)
Depreciation and amortization	23,132		22,985
General and administrative	11,324		4,382		(c)
Total operating expenses	68,570		60,585


Interest and other income	246		256		(d)
Interest and other expense	(330)		(211)		(e)
Gain on sale of real estate facilities	56,959		—
Net income	101,145		47,507
Allocation to noncontrolling interests	(19,049)		(7,411)
Net income allocable to PS Business Parks, Inc.	82,096		40,096
Allocation to preferred stockholders	(9,580)		(12,046)



Allocation to restricted stock unit holders	(523)		(164)
Net income allocable to common stockholders	$	71,993	$	27,886

Net income per share of common stock
Basic	$	2.61	$	1.01
Diluted	$	2.60	$	1.01

Weighted average common stock outstanding
Basic	27,607		27,495
Diluted	27,691		27,594

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre) (1)
	Three Months Ended March 31,
	2022		2021			$ Change
Net income	$	101,145	$	47,507		$	53,638
Net interest (income) expense	283		132			151
Depreciation and amortization	23,132		22,985			147
Gain on sale of real estate facilities and development rights	(56,959)		—			(56,959)

EBITDAre	$	67,601	$	70,624		$	(3,023)

See Appendix B for additional detail related to the tickmarks shown in the table above.

(1) Refer to Page 29, Definitions and Non-GAAP Disclosures, for the definitions of EBITDAre.

First Quarter 2022 Supplemental Financial Reporting Package 9


			Non-GAAP FFO, Core FFO and FAD Reconciliations (unaudited and in thousands, except per share amounts)


	Three Months Ended
	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021

Net income allocable to common stockholders	$	71,993		$	267,390		$	52,217		$	45,595		$	27,886
Adjustments
Gain on sale of real estate facilities	(56,959)			(310,758)			(29,924)			(19,193)			—
Depreciation and amortization	23,132			24,130			23,857			22,514			22,985
Net income allocable to noncontrolling interests	19,049			70,915			13,850			12,094			7,411
Net income allocable to restricted stock unit holders	523			1,785			350			314			164
FFO allocated to joint venture partner	(23)			(11)			(22)			(18)			(27)
FFO allocable to diluted common stock and units (1)	57,715			53,451			60,328			61,306			58,419
CEO cash payment for RSUs net of reversal of stock compensation	6,108			—			—			—			—
Preferred securities redemption charge	—			6,434			—			—			—
Income tax expense	—			3,600			—			—			—
Maryland reincorporation costs	—			—			—			510			—

Core FFO allocable to diluted common stock and units (1)	$	63,823		$	63,485		$	60,328		$	61,816		$	58,419


FAD
FFO allocable to diluted common stock and units (1)	$	57,715		$	53,451		$	60,328		$	61,306		$	58,419
Adjustments:
Recurring capital improvements	(2,010)			(3,233)			(3,837)			(3,701)			(565)
Tenant improvements	(3,027)			(3,462)			(3,876)			(3,918)			(2,422)
Capitalized lease commissions	(1,304)			(3,274)			(1,995)			(1,439)			(1,784)
Total recurring capital expenditures for assets sold or held for sale	(8)			(117)			(471)			(394)			(634)
Total multifamily capital expenditures	—			(6)			—			(7)			—
Cash paid for taxes in lieu of stock upon vesting of restricted stock units	(931)			(260)			(478)			(5)			(3,197)
Preferred securities redemption charge	—			6,434			—			—			—
Non-cash rental income (2)	(1,157)			(857)			(453)			(183)			(1,307)
Non-cash stock compensation expense	940			2,073			2,341			2,301			1,780
FAD allocable to diluted common stock and units (1)	$	50,218		$	50,749		$	51,559		$	53,960		$	50,290

Non-recurring property renovations (1)	(1,511)			(1,686)			(176)			(432)			(411)
Investment in multifamily development	(12,455)			(12,903)			(13,516)			(7,539)			(9,485)
Investment in industrial development	(3,796)			(1,223)			(165)			(93)			(1,123)

Total non-recurring capital expenditures	$	(17,762)		$	(15,812)		$	(13,857)		$	(8,064)		$	(11,019)
Free cash available after non-recurring capital expenditures	$	32,456		$	34,937		$	37,702		$	45,896		$	39,271





Total Distributions	$	(36,892)		$	(36,833)		$	(36,793)		$	(36,813)		$	(36,724)
Retained cash (1)	$	(4,436)		$	(1,896)		$	909		$	9,083		$	2,547

Weighted average outstanding
Common stock	27,607			27,565			27,543			27,531			27,495
Operating partnership units	7,305			7,305			7,305			7,305			7,305
Restricted stock units	45			46			33			32			47
Common stock equivalents	84			106			92			101			99
Total diluted common stock and units	35,041			35,022			34,973			34,969			34,946

FFO per share	$	1.65		$	1.53		$	1.72		$	1.75		$	1.67
Core FFO per share	$	1.82		$	1.81		$	1.72		$	1.77		$	1.67
FAD distribution payout ratio (3) (4)	73.5		%	72.6		%	71.4		%	68.2		%	73.0		%

First Quarter 2022 Supplemental Financial Reporting Package 10


			Non-GAAP FFO, Core FFO and FAD Reconciliations (cont'd) (unaudited and in thousands, except per share amounts)


	Three Months Ended March 31,
	2022		2021

Net income allocable to common stockholders	$	71,993	$	27,886
Adjustments
Gain on sale of real estate facilities	(56,959)		—
Depreciation and amortization	23,132		22,985
Net income allocable to noncontrolling interests	19,049		7,411
Net income allocable to restricted stock unit holders	523		164
FFO allocated to joint venture partner	(23)		(27)
FFO allocable to diluted common stock and units (1)	57,715		58,419
CEO cash payment for RSUs net of reversal of stock compensation	6,108		—




Core FFO allocable to diluted common stock and units (1)	$	63,823	$	58,419

FAD
FFO allocable to diluted common stock and units (1)	$	57,715	$	58,419
Adjustments:
Recurring capital improvements	(2,010)		(565)
Tenant improvements	(3,027)		(2,422)
Capitalized lease commissions	(1,304)		(1,784)
Total recurring capital expenditures for assets sold or held for sale	(8)		(634)

Cash paid for taxes in lieu of stock upon vesting of restricted stock units	(931)		(3,197)

Non-cash rental income (2)	(1,157)		(1,307)
Non-cash stock compensation expense	940		1,780
FAD allocable to diluted common stock and units (1)	$	50,218	$	50,290
Non-recurring capital expenditures
Non-recurring property renovations (1)	(1,511)		(411)
Investment in multifamily development	(12,455)		(9,485)
Investment in industrial development	(3,796)		(1,123)

Total non-recurring capital expenditures	$	(17,762)	$	(11,019)
Free cash available after non-recurring capital expenditures	$	32,456	$	39,271
Distributions
Distributions to common stockholders	$	(29,010)	$	(28,872)
Distributions to noncontrolling interests - common units	(7,671)		(7,671)
Distributions to restricted stock unit holders	(188)		(164)
Distributions to noncontrolling interests - joint venture	(23)		(17)
Total Distributions	(36,892)		(36,724)
Retained cash (1)	(4,436)		2,547

First Quarter 2022 Supplemental Financial Reporting Package 11


			Non-GAAP FFO, Core FFO and FAD Reconciliations (cont'd) (unaudited and in thousands, except per share amounts)



	Three Months Ended March 31,
	2022			2021
Weighted average outstanding
Common stock	27,607			27,495
Operating partnership units	7,305			7,305
Restricted stock units	45			47
Common stock equivalents	84			99
Total diluted common stock and units	35,041			34,946

FFO per share	$	1.65		$	1.67
Core FFO per share	$	1.82		$	1.67
FAD distribution payout ratio (3) (4)	73.5		%	73.0		%


(1)			Refer to page 29, 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.
(4)			For the three months ended December 31, 2021, the FAD distribution ratio excludes of $4.60 special dividend distributions to common stockholders, noncontrolling interest, and restricted stock unit holders.

First Quarter 2022 Supplemental Financial Reporting Package 12


			NOI and Cash NOI (unaudited, in thousands)


	NET OPERATING INCOME						CASH NET OPERATING INCOME (2)
	Three Months Ended March 31,					Three Months Ended March 31,
	2022		2021		% Change		2022		2021		% Change
Rental income
Same Park (1) (3) (4) (5)	$	105,014	$	98,012	7.1%		$	104,096	$	96,638	7.7%
Non-Same Park (1)	3,348		1,246		168.7%		3,074		1,270		142.0%
Multifamily	2,369		2,327		1.8%		2,369		2,327		1.8%
Assets sold or held for sale	2,109		6,462		(67.4)%		2,144		6,505		(67.0)%
Total rental income	112,840		108,047		4.4%		111,683		106,740		4.6%
Cost of operations (1) (6)
Same Park (1)	30,900		29,175		5.9%		30,404		28,754		5.7%
Non-Same Park (1)	1,060		422		151.2%		1,035		417		148.2%
Multifamily	1,224		1,067		14.7%		1,224		1,067		14.7%
Assets sold or held for sale	930		2,554		(63.6)%		915		2,524		(63.7)%
Total cost of operations	34,114		33,218		2.7%		33,578		32,762		2.5%
Net operating income
Same Park (1)	74,114		68,837		7.7%		73,692		67,884		8.6%
Non-Same Park (1)	2,288		824		177.7%		2,039		853		139.0%
Multifamily	1,145		1,260		(9.1)%		1,145		1,260		(9.1)%
Assets sold or held for sale	1,179		3,908		(69.8)%		1,229		3,981		(69.1)%
Total net operating income	$	78,726	$	74,829	5.2%		$	78,105	$	73,978	5.6%

(1)Refer to page 29, Definition and Non-GAAP Disclosures, for the definitions of Same Park, Non-Same Park, and Cash Rental Income. See Appendix C for Same Park Cost of Operations table.

(2)Cash NOI excludes $0.5 million stock based compensation for the three months ended March 31, 2022 and 2021, respectively.

(3)Same Park rental income and Cash Rental Income include lease buyout income of $0.2 million and $0.4 million for the three months ended March 31, 2022 and 2021, respectively.

(4)Same Park rental income is presented net of (a) accounts receivable write-offs (recoveries) of $0.1 million and $0.0 million for the three months ended March 31, 2022 and 2021, respectively, and (b) deferred rent receivable write-offs of $0.0 million and $0.1 million for the three months ended March 31, 2022 and 2021, respectively.

(5)Same Park Cash Rental Income is presented net of (a) accounts receivable write-offs (recoveries) of $0.1 million and $0.0 million for the three months ended March 31, 2022 and 2021, respectively, and (b) rent deferrals and abatements $0.0 million and $0.3 million for the three months ended March 31, 2022 and 2021, respectively.

(6)Refer to Appendix B for a reconciliation of Cash Rental Income to rental income and Cost of Operations to Cost of Operations under Cash NOI as reported on our GAAP statements of income.

First Quarter 2022 Supplemental Financial Reporting Package 13


			Same Park Cash NOI by Region and Type (1) (in thousands)


	Three Months Ended
	March 31, 2022												March 31, 2021												Period Change by Product Type			Total
	Industrial			Flex			Office			Total			Industrial			Flex			Office			Total			Industrial	Flex	Office	% Change
























Cash NOI (1)
Northern California	$	20,195		$	2,156		$	1,540		$	23,891		$	17,448		$	1,982		$	1,863		$	21,293		15.7%	8.8%	(17.3)%	12.2%
Southern California	9,220			2,404			119			11,743			7,750			2,372			117			10,239			19.0%	1.3%	1.7%	14.7%
Dallas	2,277			1,377			n/a			3,654			1,963			1,160			n/a			3,123			16.0%	18.7%	n/a	17.0%
Austin	1,494			3,835			n/a			5,329			1,406			4,012			n/a			5,418			6.3%	(4.4)%	n/a	(1.6)%
Northern Virginia	3,771			3,562			5,199			12,532			3,416			3,631			5,398			12,445			10.4%	(1.9)%	(3.7)%	0.7%
South Florida	9,197			444			8			9,649			8,233			347			22			8,602			11.7%	28.0%	(63.6)%	12.2%
Seattle	2,436			1,283			74			3,793			2,219			1,344			65			3,628			9.8%	(4.5)%	13.8%	4.5%
Suburban Maryland	830			n/a			2,271			3,101			788			n/a			2,348			3,136			5.3%	n/a	(3.3)%	(1.1)%


Total	$	49,420		$	15,061		$	9,211		$	73,692		$	43,223		$	14,848		$	9,813		$	67,884		14.3%	1.4%	(6.1)%	8.6%
Percentage by Product Type	67.1		%	20.4		%	12.5		%	100.0		%	63.7		%	21.9		%	14.4		%	100.0		%

(1)Refer to page 29, Definitions and Non-GAAP Disclosures, for the definitions of Same Park and Cash NOI.

First Quarter 2022 Supplemental Financial Reporting Package 14


			Capitalization Summary (unaudited and in thousands, except share and per share data)


	As of March 31, 2022				As of December 31, 2021
	Total		% Total Market Capitalization	Wtd Avg Rate	Total		% Total Market Capitalization	Wtd Avg Rate
Common Stock:
Common stock, $0.01 par value, 100,000,000 shares authorized, 27,627,443 and 27,589,807 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	$	4,643,621	70.1%		$	5,081,215	70.7%
Common operating partnership units (7,305,355 units outstanding as of March 31, 2022 and December 31, 2021, respectively) (1)	1,227,884		18.5%		1,345,427		18.7%
Total common equity and operating partnership units (1)	$	5,871,505	88.6%		$	6,426,642	89.4%


Preferred Equity:
5.250% Series X preferred stock (9,200,000 depository shares outstanding) callable 9/21/22	230,000		3.5%		230,000		3.2%
5.200% Series Y preferred stock (8,000,000 depository shares outstanding) callable 12/7/22	200,000		3.0%		200,000		2.8%
4.875% Series Z preferred stock (13,000,000 depository shares outstanding) callable 11/4/24	325,000		4.9%		325,000		4.5%

Total preferred equity	$	755,000	11.4%	5.08%	$	755,000	10.5%	5.08%








Unsecured Debt:



Credit facility borrowing ($400.0 million at LIBOR + 0.70%)	$	20,000	0.3%	0.82%	32,000		0.4%	0.80%

Unrestricted cash (2)	(20,000)		(0.3)%		(27,074)		(0.4)%
Net debt	$	—	0.0%		$4,926		0.1%


Total net debt and preferred equity	$	755,000	11.4%	4.97%	$759,926		10.6%	4.90%




Total implied market capitalization	$	6,626,505	100.0%		$7,186,568		100.0%



Interest expense and related expenses (annualized) (3) (4)	$	1,144			$	1,000
Preferred distributions (annualized) (5)	38,320				41,940
Total fixed charges and preferred distributions (annualized)	$	39,464			$	42,940







Ratio of EBITDAre to fixed charges and preferred distributions (6)	6.9x				6.9x
Ratio of net debt and preferred equity to EBITDAre (7)	2.8x				2.6x

(1)Total common equity is calculated as the total number of common stock and operating partnership units outstanding multiplied by the Company’s closing share price at the end of each respective period. Closing share prices on

March 31, 2022 and December 31, 2021 were $168.08 and $184.17, respectively.

(2)Unrestricted cash balance is $104.2 million as of March 31, 2022. Cash used for net debt calculation is $20 million matching the debt balance as of March 31, 2022.

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

(4)We annualized Interest expense and related charges for the three months ended March 31, 2022, in the amount of $286,000.

(5)We annualized preferred distributions for the three months ended March 31, 2022, in the amount of $9.6 million.

(6)For each period shown, ratio of total fixed charges to EBITDAre is calculated using the respective quarter’s annualized fixed charges divided by the respective quarter’s annualized EBITDAre.

(7)For each period shown, ratio of debt and preferred equity to EBITDAre is calculated using total net debt and preferred equity reported during the quarter divided by the respective quarter’s annualized EBITDAre.

First Quarter 2022 Supplemental Financial Reporting Package 15


			Analysis of Capital Expenditures (unaudited and in thousands, except per square foot data)


	Three Months Ended March 31,
	2022		2021
Commercial Recurring Capital Expenditures (1)
Same Park
Capital improvements	$	1,979	$	559
Tenant improvements	2,328		2,373
Lease commissions	1,065		1,755
Total Same Park Recurring Capital Expenditures	$	5,372	$	4,687
Same Park Recurring Capital Expenditures as a percentage of Cash NOI	7.3%		6.9%


Non-Same Park
Capital improvements	31		6
Tenant improvements	699		49
Lease commissions	239		29
Total Non-Same Park Recurring Capital Expenditures	969		84
Non-Same Park Recurring Capital Expenditures as a percentage of Cash NOI	47.5%		9.8%


Total Recurring Capital Expenditures	6,341		4,771
Total Recurring Capital Expenditures as a percentage of Cash NOI	8.4%		6.9%


Assets sold or held for sale Recurring Capital Expenditures	8		634
Total commercial Recurring Capital Expenditures	6,349		5,405
Total Commercial Recurring Capital Expenditures as a percentage of Cash NOI	8.2%		7.4%


Non-recurring Property Renovations (1)	1,511		411
Total capital expenditures (excluding multifamily)	7,860		5,816

Total capital expenditures	$	7,860	$	5,816

Development costs (2)	$	16,251	$	10,608

(1)Refer to page 29, Definitions and Non-GAAP Disclosures, for the definitions of Recurring Capital Expenditures and Non-recurring Property Renovations.

(2)Development costs for the three months ended March 31, 2022 comprises Brentford ($9.6M), 212 Industrial Park ($3.3M), and Boca ($1.2M). See Developments page. We also have additional entitlement related costs for certain projects which comprise Colma Creek ($1.7M), Charlton ($0.3M), Overlake <($0.1M), and The Mile <($0.1M).

First Quarter 2022 Supplemental Financial Reporting Package 16


			Portfolio Summary (unaudited)


PROPERTY INFORMATION
	Three Months Ended March 31,
	2022			2021			% Change
Total Portfolio (1)
Total square footage at period end	27,010,000			26,151,000			3.3	%
Weighted average occupancy	95.5		%	93.2		%	2.3	%
Period end occupancy	95.5		%	93.6		%	1.9	%
Cash rental income per occupied square foot (2) (3)	$	16.61		$	16.11		3.1	%
Industrial	$	14.66		$	13.84		5.9	%
Flex	$	20.21		$	19.87		1.7	%
Office	$	24.88		$	25.05		(0.7)	%







Same Park Portfolio (2)
Total square footage at period end	25,749,000			25,749,000			—
Weighted average occupancy	96.0		%	93.3		%	2.7	%
Period end occupancy	95.9		%	93.8		%	2.1	%
Cash rental income per occupied square foot (2) (4)	$	16.84		$	16.10		4.6	%
Industrial	$	14.87		$	13.79		7.8	%
Flex	$	20.21		$	19.87		1.7	%
Office	$	24.88		$	25.05		(0.7)	%







Non-Same Park Portfolio (2)
Total square footage at period end	1,261,000			402,000			213.7	%
Weighted average occupancy	86.4		%	86.7		%	(0.3)	%
Period end occupancy	86.3		%	77.8		%	8.5	%
Cash rental income per occupied square foot (2) (5)	$	11.25		$	16.83		(33.2)	%
Industrial	$	11.25		$	16.83		(33.2)	%









Multifamily Portfolio
Number of units	395			395			—
Weighted average occupancy	95.0		%	94.2		%	0.8	%
Period end occupancy	96.9		%	93.6		%	3.3	%
Average rent per unit (6)	$	2,123		$	2,021		5.0	%

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

(2)Refer to page 29, Definitions and Non-GAAP Disclosures, for the definitions of Revenue per Occupied Square Foot, Same Park and Non-Same Park.

(3)Included in the calculation of Total Park revenue per occupied square foot is (a) lease buyout income of $0.3 million and $0.4 million for the three months ended March 31, 2022 and 2021, respectively, (b) accounts receivable write-offs (recoveries) of $0.1 million and $0.0 million for the three months ended March 31, 2022 and 2021, respectively, and (c) deferred rent receivable write-offs of $0.0 million and $0.1 million for the three months ended March 31, 2022 and 2021, respectively.

(4)Included in the calculation of Same Park revenue per occupied square foot is (a) lease buyout income of $0.2 million and $0.4 million for the three months ended March 31, 2022 and 2021, respectively, (b) accounts receivable write-offs (recoveries) of $0.1 million and $0.0 million for the three months ended March 31, 2022 and 2021, and (c) deferred rent receivable write-offs of $0.0 million and $0.1 million for the three months ended March 31, 2022 and 2021, respectively.

(5)Included in the calculation of Non-Same Park revenue per occupied square foot is (a) lease buyout income of $0.0 for both of the three months ended March 31, 2022 and 2021, (b) accounts receivable write-offs of $0.0 million and $0.0 for the three months ended March 31, 2022 and 2021, respectively, and (c) deferred rent receivable write-offs of $0.0 million for both of the three months ended March 31, 2022 and 2021.

(6)Average rent per unit is defined as the total potential monthly rental revenue (actual rent for occupied apartment units plus market rent for vacant apartment units) divided by the total number of rentable apartment units.

First Quarter 2022 Supplemental Financial Reporting Package 17


			Total Portfolio Overview by Markets and Product Type (unaudited, in thousands)


Square Footage of Properties by Product Type as of March 31, 2022
Markets	Industrial		Flex		Office		Total		% of Total
Northern California	6,391		593		340		7,324		27.1	%
Southern California	2,989		582		31		3,602		13.3	%
Dallas	2,242		793		n/a		3,035		11.3	%
Austin	755		1,208		n/a		1,963		7.3	%
Northern Virginia	1,810		1,242		1,726		4,778		17.7	%
South Florida	3,728		126		12		3,866		14.3	%
Seattle	1,052		270		28		1,350		5.0	%
Suburban Maryland	341		n/a		751		1,092		4.0	%
Total	19,308		4,814		2,888		27,010		100.0	%
Percentage by Product Type	71.5	%	17.8	%	10.7	%	100.0	%



















Weighted Average Occupancy Rates by Product Type for the Three Months Ended March 31, 2022
Markets	Industrial	Flex	Office	Total
Northern California	99.2%	95.1%	71.1%	97.6%
Southern California	98.3%	95.0%	93.0%	97.8%
Dallas	94.9%	92.5%	n/a	94.3%
Austin	99.8%	90.7%	n/a	94.2%
Northern Virginia	91.2%	95.8%	87.2%	91.0%
South Florida	98.0%	97.0%	100.0%	98.0%
Seattle	97.5%	90.6%	65.0%	95.4%
Suburban Maryland	100.0%	n/a	88.6%	92.1%
Percentage by Product Type	97.5%	93.5%	85.6%	95.5%

First Quarter 2022 Supplemental Financial Reporting Package 18


			Same Park Overview by Markets and Product Type (unaudited, in thousands)


Square Footage of Same Park Properties by Product Type as of March 31, 2022
Markets	Industrial		Flex		Office		Total		% of Total
Northern California	6,391		593		340		7,324		28.5	%
Southern California	2,916		582		31		3,529		13.7	%
Dallas	1,300		793		n/a		2,093		8.1	%
Austin	755		1,208		n/a		1,963		7.6	%
Northern Virginia	1,564		1,242		1,726		4,532		17.6	%
South Florida	3,728		126		12		3,866		15.0	%
Seattle	1,052		270		28		1,350		5.3	%
Suburban Maryland	341		n/a		751		1,092		4.2	%
Total	18,047		4,814		2,888		25,749		100.0	%
Percentage by Product Type	70.1	%	18.7	%	11.2	%	100.0	%



















Same Park Weighted Average Occupancy Rates by Product Type for the Three Months Ended March 31, 2022
Markets	Industrial	Flex	Office	Total
Northern California	99.2%	95.1%	71.1%	97.6%
Southern California	98.4%	95.0%	93.0%	97.8%
Dallas	93.1%	92.5%	n/a	92.9%
Austin	99.8%	90.7%	n/a	94.2%
Northern Virginia	99.1%	95.8%	87.2%	93.7%
South Florida	98.0%	97.0%	100.0%	98.0%
Seattle	97.5%	90.6%	65.0%	95.4%
Suburban Maryland	100.0%	n/a	88.6%	92.1%
Percentage by Product Type	98.3%	93.5%	85.6%	96.0%

First Quarter 2022 Supplemental Financial Reporting Package 19


			Q1 2022 Production Statistics (unaudited)


	Total Portfolio Activity (1)
Industrial	Leasing Volume	Customer Retention	Transaction Costs per Executed Foot		Transaction Costs as a % of Rents (2)	Cash Rental Rate Change (2)	GAAP Rent Change (2)
Northern California	226,000	81.0%	$	2.01	3.7%	14.5%	29.6%
Southern California	247,000	81.3%	1.94		4.3%	12.1%	23.4%
Dallas	158,000	52.3%	3.20		9.4%	14.0%	21.1%
Austin	28,000	0.0%	3.19		7.3%	19.9%	47.7%
Northern Virginia	192,000	97.4%	4.54		7.6%	6.7%	17.9%
South Florida	299,000	66.2%	1.36		2.7%	25.1%