Exhibit 99.2

 

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SUPPLEMENTAL INFORMATION 

 

FIRST QUARTER 2021

  

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701 WESTERN AVENUE | GLENDALE, CA 91201 | 818.244.8080 | PSBUSINESSPARKS.COM


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ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION FOR

THE THREE MONTHS ENDED MARCH 31, 2021

 

     Page  

Consolidated Balance Sheets

     3  

Consolidated Statements of Income

     5  

Portfolio Summary

     7  

First Quarter Fact Sheet

     8  

Same Park Cash NOI by Region and Type

     9  

Analysis of Capital Expenditures

     10  

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

     11  

Capital Structure and Financial Condition

     13  

Portfolio Operating Analysis and Statistics

     14  

Lease Expirations

     18  

First Quarter 2021 Production Statistics

     21  

Definitions and Non-GAAP Disclosures

     22  

Forward-Looking Statements

When used within this supplemental information package, the words “may,” “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” “intends,” and similar expressions are intended to identify “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results and performance of the Company to be materially different from those expressed or implied in the forward-looking statements. Such factors include the duration and severity of the COVID-19 pandemic and its impact on our business and our customers; the impact of competition from new and existing commercial facilities which could impact rents and occupancy levels at the Company’s facilities; the Company’s ability to evaluate, finance, and integrate acquired and developed properties into the Company’s existing operations; the Company’s ability to effectively compete in the markets that it does business in; the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing REITs; the impact of general economic and business conditions, including as a result of the economic fallout of the COVID-19 pandemic; rental rates and occupancy levels at the Company’s facilities; and changes in these conditions as a result of the COVID-19 pandemic, the availability of permanent capital at attractive rates, the outlook and actions of rating agencies and risks detailed from time to time in the Company’s SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K, and annual reports on Form 10-K.

 

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         March 31, 2021              December 31, 2020            

ASSETS

       
                     

Cash and cash equivalents

   $ 69,492    $ 69,083     (a)  
                     

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     (b)  

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     (c)  

Deferred rent receivable

     37,996      36,788  

Other assets

     14,716      14,334     (d)  
  

 

 

    

 

 

   

Total assets

   $ 2,055,939    $ 2,057,705  
  

 

 

    

 

 

   
       

LIABILITIES AND EQUITY

       
       

Accrued and other liabilities

   $ 82,925    $ 82,065     (e)  
  

 

 

    

 

 

   

Total liabilities

     82,925      82,065  
                     

Equity

       

PS Business Parks, Inc.’s shareholders’ equity:

       

Preferred stock

     944,750      944,750  

Common stock

     274      274  

Paid-in capital

     736,336      738,022     (f)  

Accumulated earnings

     72,809      73,631     (g)  
  

 

 

    

 

 

   

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  
  

 

 

    

 

 

   

 

 

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

 

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(a)

  

Change in cash and cash equivalents

        
  

Beginning cash balance at December 31, 2020

         $ 69,083
  

Net cash provided by operating activities

           68,824
  

Net cash used in investing activities

           (16,424)  
  

Net cash used in financing activities

           (51,991)  
           

 

 

 
  

Ending cash balance at March 31, 2021

         $ 69,492
           

 

 

 
           

(b)

  

Change in real estate facilities, at cost

        
  

Beginning balance at December 31, 2020

         $ 1,869,311
  

Recurring capital improvements

           648
  

Tenant improvements, gross

           2,925
  

Capitalized lease commissions

           1,848
  

Nonrecurring capital improvements

           411
  

Depreciation and amortization of real estate facilities

           (22,289)  
  

Transfer from land and building held for development, net

           9,052
  

Transfer to properties held for sale, net

           575
           

 

 

 
  

Ending balance at March 31, 2021

         $ 1,862,481
           

 

 

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

Non-government customers (1)

   $ 1,818    $ 646    $ 1,172
  

U.S. Government customers

     868      873      (5)  
     

 

 

    

 

 

    

 

 

 
      $ 2,686    $ 1,519    $ 1,167
     

 

 

    

 

 

    

 

 

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

Lease intangible assets, net

   $ 8,043    $ 9,058    $ (1,015
  

Prepaid property taxes and insurance

     4,450      3,121      1,329
  

Other

     2,223      2,155      68
     

 

 

    

 

 

    

 

 

 
      $ 14,716    $ 14,334    $ 382
     

 

 

    

 

 

    

 

 

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

Customer security deposits

   $ 39,304    $ 38,457    $ 847
  

Accrued property taxes

     10,748      12,513      (1,765)  
  

Customer prepaid rent

     13,236      12,518      718
  

Lease intangible liabilities, net

     6,046      6,392      (346)  
  

Other

     13,591      12,185      1,406
     

 

 

    

 

 

    

 

 

 
      $ 82,925    $ 82,065    $ 860
     

 

 

    

 

 

    

 

 

 
                           

(f)

  

Change in paid-in capital

        
  

Beginning paid-in capital at December 31, 2020

         $ 738,022
  

SEC offering registration costs

           (105)  
  

Stock compensation expense, net

           1,616
  

Cash paid for taxes in lieu of shares upon vesting of restricted stock units

           (3,197)  
           

 

 

 
  

Ending paid-in capital at March 31, 2021

         $ 736,336
           

 

 

 
           

(g)

  

Change in accumulated earnings

        
  

Beginning accumulated earnings at December 31, 2020

         $ 73,631
  

Net income

           40,096
  

Distributions to preferred shareholders

           (12,046)  
  

Distributions to common shareholders

           (28,872)  
           

 

 

 
  

Ending accumulated earnings at March 31, 2021

         $ 72,809
           

 

 

 

 

 

(1)

Included in the balance at March 31, 2021 is $1.2 million of prior year expense recovery billings billed in the month of March 2021.

 

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       For the Three Months        
     Ended March 31,      
     2021      2020      
                   

Rental income

   $ 108,047     $ 106,216    (a)
                   

Expenses:

       

Cost of operations

     33,218       31,263    (b)

Depreciation and amortization

     22,985       26,619   

General and administrative

     4,382       3,323    (c)
  

 

 

    

 

 

   

Total operating expenses

     60,585       61,205   
  

 

 

    

 

 

   
                   

Interest and other income

     256       557    (d)

Interest and other expense

     (211)        (161)     (e)

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   

 

 

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

 

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        For The Three Months Ended     Increase  
(a)   Rental income:     March 31, 2021         March 31, 2020           (Decrease)      
 

Same Park (1) (2)

  $ 99,558    $ 98,377    $ 1,181 
 

Same Park non-cash rental income (1) (3)

    437      753      (316)  
 

Non-Same Park (1) (2)

    2,899      2,278      621 
 

Non-Same Park non-cash rental income (1) (3)

    870      143      727 
 

Multifamily

    2,327      2,560      (233)  
 

Rental income from assets sold or held for sale (4)

    1,956      2,105      (149)  
   

 

 

   

 

 

   

 

 

 
    $ 108,047    $ 106,216    $ 1,831 
   

 

 

   

 

 

   

 

 

 
        For The Three Months Ended     Increase  
(b)   Cost of operations:   March 31, 2021     March 31, 2020     (Decrease)  
 

Same Park (1)

  $ 29,684    $ 28,380    $ 1,304 
 

Same Park non-cash expense (1) (5)

    435      263      172 
 

Non-Same Park (1)

    1,153      829      324 
 

Non-Same Park non-cash expense (1) (5)

    13         
 

Multifamily

    1,067      1,016      51 
 

Operating expenses from assets sold or held for sale (4)

    866      769      97 
   

 

 

   

 

 

   

 

 

 
    $ 33,218    $ 31,263    $ 1,955 
        For The Three Months Ended     Increase  
(c)   General and administrative expenses:   March 31, 2021     March 31, 2020     (Decrease)  
 

Compensation expense

  $ 1,643    $ 1,753    $ (110)  
 

Stock compensation expense

    1,324      668      656 
 

Professional fees and other

    1,415      902      513 
    $ 4,382    $ 3,323    $ 1,059 
        For The Three Months Ended     Increase  
(d)   Interest and other income:   March 31, 2021     March 31, 2020     (Decrease)  
 

Management fee income

  $ 68    $ 70    $ (2)  
 

Interest income

        303      (299)  
 

Other income

    184      184      -  
    $ 256    $ 557    $ (301)  
   

 

 

   

 

 

   

 

 

 
        For The Three Months Ended     Increase  
(e)   Interest and other expense:   March 31, 2021     March 31, 2020     (Decrease)  
 

Interest expense

  $ -     $ -     $ -  
 

Credit facilities fees & other charges

    (211)       (161)       (50)  
    $ (211)     $ (161)     $ (50)  
   

 

 

   

 

 

   

 

 

 

 

 

(1)

Refer to page 22, Definitions and Non-GAAP Disclosures, for the definitions of Same Park and Non-Same Park.

(2)

Same Park rental income is presented net of (a) accounts receivable write-offs of $0.0 and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and (b) rent deferrals and abatements of $0.3 million and $0.0 for the three months ended March 31, 2021 and 2020, respectively. Non-Same Park rental income is presented net of (a) accounts receivable write-offs of $0.0 for both the three months ended March 31, 2021 and 2020, and (b) rent deferrals and abatements of $0 for both of the three months ended March 31, 2021 and 2020.

(3)

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. Same Park non-cash rental income is presented net of deferred rent receivable write-offs of $0.1 million for both of the three months ended March 31, 2021 and 2020. Non-Same Park non-cash rental income is presented net of deferred rent receivable write-offs of $0.0 for both of the three months ended March 31, 2021 and 2020.

(4)

Amounts shown for the three months ended March 31, 2021 include operating results attributable to assets held for sale comprising 442,000 square feet. Amounts shown for the three months ended March 31, 2020 include operating results attributable to assets held for sale comprising 442,000 square feet and assets sold in 2020 comprising 153,000 square feet.

(5)

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

 

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PROPERTY INFORMATION  
       For The Three Months Ended March 31,           
     2021      2020      % Change  

Total Portfolio (1)

        

Total rentable square footage at period end

     27,369,000        27,040,000        1.2%  

Weighted average occupancy

     92.4%        92.9%        (0.5%)  

Period end occupancy

     92.8%        92.6%        0.2%  

Cash rental income per occupied square foot (2) (3)

        

Industrial

   $ 13.84      $ 13.48        2.7%  

Flex

   $ 19.83      $ 19.36        2.4%  

Office

   $ 25.05      $ 25.26        (0.8%)  

Total cash rental income per occupied square foot

   $ 16.23      $ 16.02        1.3%  

Cash rental income per available foot (2) (3)

        

Industrial

   $ 13.02      $ 12.54        3.8%  

Flex

   $ 17.85      $ 18.03        (1.0%)  

Office

   $ 21.77      $ 23.20        (6.2%)  

Total cash rental income per available foot

   $ 15.00      $ 14.89        0.7%  
        

Same Park Portfolio (2)

        

Total rentable square footage at period end

     26,271,000        26,271,000        -  

Weighted average occupancy

     92.4%        92.8%        (0.4%)  

Period end occupancy

     92.9%        92.4%        0.5%  

Cash rental income per occupied square foot (2) (4)

        

Industrial

   $ 13.99      $ 13.57        3.1%  

Flex

   $ 19.79      $ 19.34        2.3%  

Office

   $ 25.05      $ 25.26        (0.8%)  

Total cash rental income per occupied square foot

   $ 16.40      $ 16.15        1.5%  

Cash rental income per available foot (2) (4)

        

Industrial

   $ 13.17      $ 12.60        4.5%  

Flex

   $ 17.81      $ 18.01        (1.1%)  

Office

   $ 21.77      $ 23.20        (6.2%)  

Total cash rental income per available foot

   $ 15.16      $ 14.98        1.2%  
                      

Non-Same Park Portfolio (2)

        

Total rentable square footage at period end

     1,098,000        769,000        42.8%  

Weighted average occupancy

     92.6%        98.5%        (6.0%)  

Period end occupancy

     91.5%        98.8%        (7.4%)  

Cash rental income per occupied square foot (2) (5)

        

Industrial

   $ 11.13      $ 11.13        0.0%  

Flex

   $ 22.41      $ 21.32        5.1%  

Office

   $ -      $ -        -  

Total cash rental income per occupied square foot

   $ 11.98      $ 12.12        (1.2%)  

Cash rental income per available foot (2) (5)

        

Industrial

   $ 10.31      $ 11.05        (6.7%)  

Flex

   $ 20.71      $ 19.70        5.1%  

Office

   $ -      $ -        -  

Total cash rental income per available foot

   $ 11.10      $ 11.94        (7.0%)  
        

Multifamily Portfolio

        

Number of units

     395        395        -  

Weighted average occupancy

     94.2%        94.9%        (0.8%)  

Period end occupancy

     93.6%        94.1%        (0.5%)  

 

 

 

(1)

Excludes multifamily assets, assets held for sale comprising 442,000 square feet and assets sold in 2020 comprising 153,000 square feet for the periods shown.

(2)

Refer to page 22, Definitions and Non-GAAP Disclosures, for the definitions of Cash Rental Income per Available Foot, Cash Rental Income per Occupied Square Foot, Same Park, and Non-Same Park.

(3)

Included in the calculation of Total Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.4 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively, (b) accounts receivable write-offs of $0.0 and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and (c) rent deferrals and abatements of $0.3 million and $0.0 for the three months ended March 31, 2021 and 2020, respectively.

(4)

Included in the calculation of Same Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.4 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively, (b) accounts receivable write-offs of $0.0 and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and (c) rent deferrals and abatements of $0.3 million and $0.0 for the three months ended March 31, 2021 and 2020, respectively.

(5)

Included in the calculation of Non-Same Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.0 for both the three months ended March 31, 2021 and 2020, (b) accounts receivable write-offs of $0.0 for both of the three months ended March 31, 2021 and 2020, and (c) rent deferrals and abatements of $0.0 for both of the three months ended March 31, 2021 and 2020.

 

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NET OPERATING INCOME

 

 

       For The Three Months Ended March 31,           
     2021      2020      % Change  

Rental income

        

Same Park (1) (2) (3)

   $ 99,995      $ 99,130        0.9%  

Non-Same Park (1)

     3,769        2,421        55.7%  

Multifamily

     2,327        2,560        (9.1%)  

Assets sold or held for sale

     1,956        2,105        (7.1%)  
  

 

 

    

 

 

    

Total rental income

     108,047        106,216        1.7%  
  

 

 

    

 

 

    

Adjusted cost of operations (1) (5)

        

Same Park (1) (6)

     29,684        28,380        4.6%  

Non-Same Park (1)

     1,153        829        39.1%  

Multifamily

     1,067        1,016        5.0%  

Assets sold or held for sale

     858        764        12.3%  
  

 

 

    

 

 

    

Total

     32,762        30,989        5.7%  
  

 

 

    

 

 

    

Net operating income

        

Same Park (1)

     70,311        70,750        (0.6%)  

Non-Same Park (1)

     2,616        1,592        64.3%  

Multifamily

     1,260        1,544        (18.4%)  

Assets sold or held for sale

     1,098        1,341        (18.1%)  
  

 

 

    

 

 

    

Total net operating income

   $ 75,285      $ 75,227        0.1%  
  

 

 

    

 

 

    
CASH NET OPERATING INCOME

 

     For The Three Months Ended March 31,         
     2021      2020      % Change  

Cash rental income (1) (5)

        

Same Park (1) (2) (4)

   $ 99,558      $ 98,377        1.2%  

Non-Same Park (1)

     2,899        2,278        27.3%  

Multifamily

     2,327        2,559        (9.1%)  

Assets sold or held for sale

     1,956        1,938        0.9%  
  

 

 

    

 

 

    

Total cash rental income

     106,740        105,152        1.5%  
  

 

 

    

 

 

    

Adjusted cost of operations (1) (5)

        

Same Park (1) (6)

     29,684        28,380        4.6%  

Non-Same Park (1)

     1,153        829        39.1%  

Multifamily

     1,067        1,016        5.0%  

Assets sold or held for sale

     858        764        12.3%  
  

 

 

    

 

 

    

Total adjusted cost of operations

     32,762        30,989        5.7%  
  

 

 

    

 

 

    

Cash net operating income

        

Same Park (1)

     69,874        69,997        (0.2%)  

Non-Same Park (1)

     1,746        1,449        20.5%  

Multifamily

     1,260        1,543        (18.3%)  

Assets sold or held for sale

     1,098        1,174        (6.5%)  
  

 

 

    

 

 

    

Total cash net operating income

   $ 73,978      $ 74,163        (0.2%)  
  

 

 

    

 

 

    
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre) (1)

 

     For The Three Months Ended March 31,         
     2021      2020      % Change  

Net income

   $ 47,507       $ 65,028         (26.9%)  

Net interest (income) expense

     132         (166)        179.5%  

Depreciation and amortization

     22,985         26,619         (13.7%)  

Gain on sale of real estate facilities and development rights

            (19,621)        (100.0%)  
  

 

 

    

 

 

    

EBITDAre

   $ 70,624       $ 71,860         (1.7%)  
  

 

 

    

 

 

    

 

 

(1)

Refer to page 22, Definition and Non-GAAP Disclosures, for the definitions of Same Park, Non-Same Park, Cash Rental Income, Adjusted Cost of Operations, and EBITDAre.

(2)

Same Park rental income and cash rental income include lease buyout income of $0.4 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively.

(3)

Same Park rental income is presented net of (a) accounts receivable write-offs of $0.0 and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and (b) deferred rent receivable write-offs of $0.1 million for both of the three months ended March 31, 2021 and 2020.

(4)

Same Park cash rental income is presented net of (a) accounts receivable write-offs of $0.0 and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and (b) rent deferrals and abatements of $0.3 million and $0.0 for the three months ended March 31, 2021 and 2020, respectively.

(5)

Refer to page 6 for a reconciliation of cash rental income to rental income and adjusted cost of operations to cost of operations as reported on our GAAP statements of income.

(6)

The table below details Same Park Adjusted Cost of Operations:

 

       For The Three Months Ended March 31,           
     2021      2020      % Change  

Cost of operations

        

Property taxes

   $ 11,424      $ 11,056        3.3

Utilities

     4,637        4,972        (6.7 %) 

Repairs and maintenance

     5,468        5,364        1.9

Compensation

     4,280        4,270        0.2

Snow removal

     1,019        71        1,335.2

Property insurance

     1,178        879        34.0

Other expenses

     1,678        1,768        (5.1 %) 
  

 

 

    

 

 

    

Total cost of operations

   $ 29,684      $ 28,380        4.6
  

 

 

    

 

 

    

 

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     For the Three Months Ended  
     March 31, 2021      March 31, 2020      Total
% Change
 
       Industrial            Flex              Office              Total             Industrial            Flex              Office              Total       

Cash rental income (1)

                          

Northern California

   $ 22,376       $ 2,401       $ 2,605       $ 27,382       $ 21,039       $ 2,579       $ 3,127       $ 26,745         2.4%  

Southern California

     9,430         4,941         192         14,563         9,002         4,898         187         14,087         3.4%  

Dallas

     3,066         4,824                7,890         3,168         5,430                8,598         (8.2%)  

Austin

     2,205         6,428                8,633         2,184         6,100                8,284         4.2%  

Northern Virginia

     5,063         5,431         8,990         19,484         5,017         5,317         9,089         19,423         0.3%  

South Florida

     11,257         487         42         11,786         10,608         502         32         11,142         5.8%  

Seattle

     3,031         1,754         135         4,920         3,004         1,735         186         4,925         (0.1%)  

Suburban Maryland

     1,148                3,752         4,900         1,042                4,131         5,173         (5.3%)  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

     57,576         26,266         15,716         99,558         55,064         26,561         16,752         98,377         1.2%  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Adjusted cost of operations (1)

                          

Northern California

     4,928         674         742         6,344         4,737         648         781         6,166         2.9%  

Southern California

     2,317         1,300         75         3,692         2,299         1,353         73         3,725         (0.9%)  

Dallas

     1,103         2,006                3,109         1,011         2,034                3,045         2.1%  

Austin

     799         2,416                3,215         745         2,214                2,959         8.7%  

Northern Virginia

     1,647         1,800         3,592         7,039         1,483         1,506         3,474         6,463         8.9%  

South Florida

     3,024         140         20         3,184         2,844         134         14         2,992         6.4%  

Seattle

     812         410         70         1,292         803         420         54         1,277         1.2%  

Suburban Maryland

     405         —         1,404         1,809         351         —         1,402         1,753         3.2%  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

     15,035         8,746         5,903         29,684         14,273         8,309         5,798         28,380         4.6%  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Cash NOI (1)

                          

Northern California

     17,448         1,727         1,863         21,038         16,302         1,931         2,346         20,579         2.2%  

Southern California

     7,113         3,641         117         10,871         6,703         3,545         114         10,362         4.9%  

Dallas

     1,963         2,818                4,781         2,157         3,396                5,553         (13.9%)  

Austin

     1,406         4,012                5,418         1,439         3,886                5,325         1.7%  

Northern Virginia

     3,416         3,631         5,398         12,445         3,534         3,811         5,615         12,960         (4.0%)  

South Florida

     8,233         347         22         8,602         7,764         368         18         8,150         5.5%  

Seattle

     2,219         1,344         65         3,628         2,201         1,315         132         3,648         (0.5%)  

Suburban Maryland

     743                2,348         3,091         691                2,729         3,420         (9.6%)  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

   $ 42,541       $ 17,520       $ 9,813       $ 69,874       $ 40,791       $ 18,252       $ 10,954       $ 69,997         (0.2%)  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(1)

Refer to page 22, Definitions and Non-GAAP Disclosures, for the definitions of Same Park, Cash Rental Income, Adjusted Cost of Operations, and Cash NOI.

 

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                                          For the Three Months Ended March 31,                             
     2021      2020  

Commercial recurring capital expenditures (1)

     

Same Park

     

Capital improvements

   $ 640      $ 1,162  

Tenant improvements

     2,764        3,402  

Lease commissions

     1,791        1,822  
  

 

 

    

 

 

 

Total Same Park recurring capital expenditures

     5,195        6,386  

Non-Same Park

     

Capital improvements

     6        3  

Tenant improvements

     92        3  

Lease commissions

     49        7  
  

 

 

    

 

 

 

Total Non-Same Park recurring capital expenditures

     147        13  
  

 

 

    

 

 

 

Total recurring capital expenditures

     5,342        6,399  

Assets sold or held for sale recurring capital expenditures

     63        452  
  

 

 

    

 

 

 

Total commercial recurring capital expenditures

     5,405        6,851  

Non-recurring property renovations (1)

     411        93  

Multifamily capital expenditures

     —           
  

 

 

    

 

 

 

Total capital expenditures

   $ 5,816      $ 6,944  
  

 

 

    

 

 

 

Same Park recurring capital expenditures as a percentage of NOI

     7.4%        9.0%  

 

 

 

(1)

Refer to page 22, Definitions and Non-GAAP Disclosures, for the definitions of Recurring Capital Expenditures and Non-recurring Property Renovations.

 

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       For the Three Months Ended
     March 31,
     2021    2020

Net income allocable to common shareholders

   $  27,886     $  41,615 

Adjustments

     

Gain on sale of real estate facility

            (19,621)  

Depreciation and amortization

     22,985       26,619 

Net income allocable to noncontrolling interests

     7,411       11,092 

Net income allocable to restricted stock unit holders

     164       275 

FFO allocated to joint venture partner

     (27)        (43)  
  

 

 

 

  

 

 

 

FFO allocable to diluted common shares and units (1)

     58,419       59,937 

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

     58,419       59,937 

Adjustments

     

Recurring capital improvements

     (646)        (1,165)  

Tenant improvements

     (2,856)        (3,405)  

Capitalized lease commissions

     (1,840)        (1,829)  

Total recurring capital expenditures for assets sold or held for sale

     (63)        (452)  

Non-cash rental income (2)

     (1,307)        (1,064)  

Non-cash stock compensation expense

     1,780       942 

Cash paid for taxes in lieu of shares upon vesting of restricted stock units

     (3,197)        (3,655)  
  

 

 

 

  

 

 

 

FAD allocable to diluted common shares and units (1)

     50,290       49,309 

Distributions to common shareholders

     (28,872)        (28,817)  

Distributions to noncontrolling interests - common units

     (7,671)        (7,671)  

Distributions to restricted stock unit holders

     (164)        (182)  

Distributions to noncontrolling interests - joint venture

     (17)        (38)  
  

 

 

 

  

 

 

 

Free cash available after fixed charges

     13,566       12,601 

Non-recurring property renovations (1)

     (411)        (93)  

Investment in multifamily development

     (9,485)        (875)  

Investment in industrial development

     (1,123)        (437)  
  

 

 

 

  

 

 

 

Retained cash (1)

   $ 2,547     $ 11,196 
  

 

 

 

  

 

 

 

Weighted average outstanding

     

Common shares

     27,495       27,448 

Operating partnership units

     7,305       7,305 

Restricted stock units

     47       77 

Common share equivalents

     99       102 
  

 

 

 

  

 

 

 

Total diluted common shares and units

     34,946       34,932 
  

 

 

 

  

 

 

 

FFO per share

   $ 1.67     $ 1.72 

Core FFO per share

   $ 1.67     $ 1.72 

FAD distribution payout ratio (3)

     73.0%        74.4%  

 

 

 

(1)

Refer to page 22, 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 reimbursement, and lease incentive intangible.

 

(3)

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

 

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

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 

Unsecured Debt:

           

Credit facility borrowing ($250.0 million at LIBOR + 0.825%)

   $       -       -        $       -       -  

Unrestricted cash

     (69,492 )              (69,083 )      
  

 

 

          

 

 

     

Net debt

   $ (69,492 )       -       -        $ (69,083 )       -       -  
  

 

 

          

 

 

     

Preferred Equity:

               

5.200% Series W preferred stock (7,590,000 depositary shares outstanding) callable 10/20/21

   $ 189,750        3.0        $ 189,750        3.5  

5.250% Series X preferred stock (9,200,000 depositary shares outstanding) callable 9/21/22

     230,000        3.7          230,000        4.2  

5.200% Series Y preferred stock (8,000,000 depositary shares outstanding) callable 12/7/22

     200,000        3.2          200,000        3.6  

4.875% Series Z preferred stock (13,000,000 depositary shares outstanding) callable 11/4/24

     325,000        5.2          325,000        5.9  
  

 

 

          

 

 

     

Total preferred equity

   $ 944,750        15.1     5.10      $ 944,750        17.2     5.10
  

 

 

          

 

 

     
               
  

 

 

          

 

 

     

Total net debt and preferred equity

   $ 875,258        14.0     5.10      $ 875,667        15.9     5.10
  

 

 

          

 

 

     

Common stock (27,516,939 and 27,488,547 shares outstanding as of March 31, 2021 and December 31, 2020, respectively) (1)

   $   4,253,568        68.0        $   3,652,403        66.4  

Common operating partnership units (7,305,355 units outstanding as of March 31, 2021 and December 31, 2020) (1)

     1,129,262        18.0          970,663        17.7  
  

 

 

          

 

 

     

Total common equity and operating partnership
units (1)

   $ 5,382,830        86.0        $ 4,623,066        84.1  
  

 

 

          

 

 

     

Total implied market capitalization

   $ 6,258,088        100.0        $ 5,498,733        100.0  
  

 

 

          

 

 

     
     For the three months ended March 31, 2021            For the year ended December 31, 2020  

Interest expense and related expenses (2)

   $ 136             $ 548       

Preferred distributions

     12,046               48,186       

Total fixed charges and preferred distributions

   $ 12,182             $ 48,734       

Ratio of EBITDAre to fixed charges and preferred distributions

     5.8x              5.7x      

Ratio of FFO to total fixed charges and preferred distributions (3)

     5.8x              5.7x      

Ratio of net debt and preferred equity to EBITDAre (4)

     3.1x              3.2x      

 

 

(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 shown. Closing share prices on March 31, 2021 and December 31, 2020 were $154.58 and $132.87, respectively.

(2)

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

(3)

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

(4)

Ratio of net debt and preferred equity to EBITDAre is calculated as total net debt and preferred equity divided by EBITDAre. Ratio of net debt and preferred equity to EBITDAre as of March 31, 2021 is calculated using annualized EBITDAre for the three months ended March 31, 2021.

 

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Industry Concentration as of March 31, 2021 (1) (2)

 

        
                   Percentage of  
                         Total Rental Income        

Business services

           20.8%  

Logistics

           13.1%  

Technology

           10.5%  

Retail, food, and automotive

           9.1%  

Construction and engineering

           8.4%  

Health services

           7.2%  

Government

           6.3%  

Electronics

           3.1%  

Insurance and financial services

           2.6%  

Home furnishings

           2.5%  

Aerospace/defense

           1.8%  

Communications

           1.8%  

Education

           1.0%  

Other

           11.8%  
        

 

 

 

Total

           100.0%  
        

 

 

 
        
Top 10 Customers by Total Annual Rental Income as of March 31, 2021 (2)

 

        

Customer

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

US Government

     605,000       $ 14,554         3.4%  

Amazon Inc.

     543,000       6,670         1.6%  

KZ Kitchen Cabinet & Stone

     370,000         5,353         1.3%  

Luminex Corporation

     198,000       4,490       1.1%  

ECS Federal, LLC

     134,000         2,898         0.7%  

Lockheed Martin Corporation

     124,000       2,687         0.6%  

Carbel, LLC

     236,000         2,470         0.6%  

CentralColo, LLC

     96,000       2,417       0.6%  

Applied Materials, Inc.

     162,000         2,416         0.6%  

Quanta Computer Inc.

     179,000       1,941       0.4%  
  

 

 

    

 

 

    

 

 

 

Total

         2,647,000       $ 45,896         10.9%  
  

 

 

    

 

 

    

 

 

 

 

 

 

(1)

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

(2)

Excludes assets held for sale as of March 31, 2021.

(3)

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

 

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Rentable Square Footage of Same Park Properties by Product Type as of March 31, 2021 (1)

 

Markets                             

       Industrial          Flex          Office        Total      % of Total  
              

Northern Virginia

     1,564      1,242      1,726      4,532      17.1%  

South Florida

     3,728      126      12      3,866      14.7%  

Silicon Valley

     3,094      367      -        3,461      13.2%  

East Bay

     3,297      53      -        3,350      12.8%  

Dallas

     1,300      1,587      -        2,887      11.0%  

Austin

     755      1,208      -        1,963      7.5%  

Los Angeles County

     1,256      317      31      1,604      6.1%  

Seattle

     1,052      270      28      1,350      5.1%  

Suburban Maryland

     394      -        751      1,145      4.4%  

Orange County

     810      101      -        911      3.5%  

San Diego County

     233      535      -        768      2.9%  

Mid-Peninsula

     -        94      340      434      1.7%  
  

 

 

    

 

 

    

 

 

 

  

 

 

 

  

 

 

 

Total

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

 

 

    

 

 

    

 

 

 

  

 

 

 

  

 

 

 

Percentage by Product Type

     66.5%        22.5%        11.0%        100.0%     
              
Same Park Weighted Average Occupancy Rates by Product Type for the Three Months Ended March 31, 2021 (1)  
              

Markets

              Industrial          Flex        Office        Total
              

Northern Virginia

        93.8%        96.2%        86.6%        91.7%  

South Florida

        95.9%        83.1%        100.0%        95.5%  

Silicon Valley

        95.9%        87.7%        -        95.0%  

East Bay

        92.5%        94.5%        -        92.5%  

Dallas

        87.4%        79.8%        -        83.3%  

Austin

        95.5%        94.8%        -        95.1%  

Los Angeles County

        98.5%        93.6%        95.1%        97.5%  

Seattle

        93.5%        95.4%        64.7%        93.3%  

Suburban Maryland

        86.0%        -        89.5%        88.3%  

Orange County

        93.4%        96.7%        -        93.7%  

San Diego County

        98.4%        92.4%        -        94.2%  

Mid-Peninsula

        -        84.0%        82.1%        82.5%  

Total

        94.2%        90.0%        86.8%        92.4%  

 

 

(1)

Excludes assets held for sale as of March 31, 2021.

 

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Rentable Square Footage of Properties by Product Type as of March 31, 2021 (1)
            

Markets

       Industrial        Flex        Office           Total           % of Total    
            

Northern Virginia

     1,810      1,242      1,726        4,778        17.5%    

South Florida

     3,728      126      12     3,866     14.1%  

Silicon Valley

     3,094      446      -       3,540     12.9%  

East Bay

     3,297      53      -       3,350     12.2%  

Dallas

     1,383      1,587      -       2,970     10.9%  

Los Angeles County

     1,946      317      31     2,294     8.4%  

Austin

     755      1,208      -       1,963     7.2%  

Seattle

     1,052      270      28     1,350     4.9%  

Suburban Maryland

     394      -        751     1,145     4.2%  

Orange County

     810      101      -       911     3.3%  

San Diego County

     233      535      -       768     2.8%  

Mid-Peninsula

     -        94      340     434     1.6%  
  

 

 

 

  

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

Total

     18,502      5,979      2,888     27,369     100.0%  
  

 

 

 

  

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

Percentage by Product Type

     67.6%        21.8%        10.6%       100.0%    
            
Weighted Average Occupancy Rates by Product Type for the Three Months Ended March 31, 2021 (1)

 

        

 

Markets

            Industrial        Flex       Office               Total        
            

Northern Virginia

        93.5%        96.2%       86.6%       91.7%  

South Florida

        95.9%        83.1%       100.0%       95.5%  

Silicon Valley

        95.9%        88.4%       -       94.9%  

East Bay

        92.5%        94.5%       -       92.5%  

Dallas

        85.9%        79.8%       -       82.6%  

Los Angeles County

        97.6%        93.6%       95.1%       97.0%  

Austin

        95.5%        94.8%       -       95.1%  

Seattle

        93.5%        95.4%       64.7%       93.3%  

Suburban Maryland

        86.0%        -       89.5%       88.3%  

Orange County

        93.4%        96.7%       -       93.7%  

San Diego County

        98.4%        92.4%       -       94.2%  

Mid-Peninsula

        -        84.0%       82.1%       82.5%  

Total

        94.1%        90.0%       86.8%       92.4%  

 

 

(1)

Excludes assets held for sale as of March 31, 2021.

 

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(1)

Excludes assets sold or held for sale as of March 31, 2021.

 

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Lease Expirations - Total Portfolio (1)  
            Annualized               % of Total Annualized    

Year of Lease Expiration

       Leased Square Footage          Rental Income (2)      % Total      Rental Income  
           

                2021

     3,972     $ 69,987       15.6%        15.6%  

                2022

     6,018       105,557       23.5%        23.5%  

                2023

     5,271       89,545       19.9%        19.9%  

                2024

     3,795       67,189       15.0%        15.0%  

                2025

     2,873       49,723       11.1%        11.1%  

            Thereafter

     3,725       67,057       14.9%        14.9%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     25,654     $                             449,058                   100.0%        100.0%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Industrial  
            Annualized      % of      % of Total Annualized  

Year of Lease Expiration

   Leased Square Footage      Rental Income (2)      Industrial      Rental Income  
           

                2021

     2,479     $ 36,321       13.6%        8.1%  

                2022

     3,900       56,895       21.3%        12.7%  

                2023

     3,724       54,620       20.5%        12.2%  

                2024

     2,649       41,218       15.4%        9.2%  

                2025

     1,955       28,307       10.6%        6.3%  

            Thereafter

     3,019       49,747       18.6%        11.1%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     17,726     $ 267,108       100.0%        59.6%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Flex (1)  
            Annualized      % of      % of Total Annualized  

Year of Lease Expiration

   Leased Square Footage      Rental Income (2)      Flex      Rental Income  
           

                2021

     1,028     $ 20,718       18.3%        4.6%  

                2022

     1,482       30,889       27.3%        6.9%  

                2023

     985       19,997       17.7%        4.4%  

                2024

     795       16,677       14.8%        3.7%  

                2025

     706       15,857       14.0%        3.5%  

            Thereafter

     431       8,912       7.9%        2.0%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     5,427     $ 113,050       100.0%        25.1%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Office (1)  
            Annualized      % of      % of Total Annualized  

Year of Lease Expiration

   Leased Square Footage      Rental Income (2)      Office      Rental Income  
           

                2021

     465     $ 12,948       18.8%        2.9%  

                2022

     636       17,773       25.8%        3.9%  

                2023

     562       14,928       21.6%        3.3%  

                2024

     351       9,294       13.5%        2.1%  

                2025

     212       5,559       8.1%        1.3%  

            Thereafter

     275       8,398       12.2%        1.8%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     2,501     $ 68,900       100.0%        15.3%  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

 

(1)

Excludes assets held for sale as of March 31, 2021.

(2)

Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

 

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    Lease Expirations - Northern California  
            Annualized      % of        % of Total Annualized    

Year of Lease Expiration

       Leased Square Footage          Rental Income (1)      No. CA      Rental Income  
           

                2021

     963     $ 19,852       15.6%        4.4%  

                2022

     1,197       21,657       17.0%        4.8%  

                2023

     1,261       23,116       18.2%        5.1%  

                2024

     987       17,411       13.7%        3.9%  

                2025

     755       11,124       8.8%        2.5%  

            Thereafter

     1,856       33,965       26.7%        7.5%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     7,019     $                                 127,125                   100.0%        28.2%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Southern California  
            Annualized      % of      % of Total Annualized  

Year of Lease Expiration

   Leased Square Footage      Rental Income (1)      So. CA      Rental Income  
           

                2021

     618     $ 12,044       16.6%        2.7%  

                2022

     1,189       21,918       30.2%        4.9%  

                2023

     779       15,050       20.7%        3.4%  

                2024

     477       9,951       13.7%        2.2%  

                2025

     288       5,228       7.2%        1.2%  

            Thereafter

     503       8,429       11.6%        1.9%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     3,854     $ 72,620       100.0%        16.3%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Dallas  
            Annualized      % of      % of Total Annualized  

Year of Lease Expiration

   Leased Square Footage      Rental Income (1)      Dallas      Rental Income  
           

                2021

     470     $ 6,571       19.6%        1.5%  

                2022

     542       6,179       18.4%        1.4%  

                2023

     665       8,601       25.6%        1.9%  

                2024

     300       4,698       14.0%        1.1%  

                2025

     247       4,979       14.8%        1.1%  

            Thereafter

     230       2,555       7.6%        0.6%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     2,454     $ 33,583       100.0%        7.6%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Austin  
            Annualized      % of      % of Total Annualized  

Year of Lease Expiration

   Leased Square Footage      Rental Income (1)      Austin      Rental Income  
           

                2021

     323     $ 6,091       16.4%        1.4%  

                2022

     413       7,759       20.9%        1.7%  

                2023

     248       4,910       13.2%        1.1%  

                2024

     298       6,429       17.3%        1.4%  

                2025

     397       8,409       22.7%        1.9%  

            Thereafter

     204       3,475       9.5%        0.7%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     1,883     $ 37,073       100.0%        8.2%  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

 

 

(1)

Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

 

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Lease Expirations - Northern Virginia (1)  
            Annualized      % of        % of Total Annualized    

Year of Lease Expiration

       Leased Square Footage          Rental Income (2)      No. VA      Rental Income  
           

                2021

     615     $ 11,193       12.7%        2.5%  

                2022

     1,284       27,221       31.0%        6.1%  

                2023

     648       13,054       14.8%        2.9%  

                2024

     705       13,757       15.7%        3.1%  

                2025

     586       11,039       12.6%        2.5%  

            Thereafter

     575       11,561       13.2%        2.6%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     4,413     $                             87,825                   100.0%        19.7%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - South Florida  
            Annualized      % of      % of Total Annualized  

Year of Lease Expiration

   Leased Square Footage      Rental Income (2)      So. FL      Rental Income  
           

                2021

     622     $ 7,273       15.1%        1.6%  

                2022

     974       12,701       26.4%        2.8%  

                2023

     974       12,530       26.0%        2.8%  

                2024

     710       9,354       19.4%        2.1%  

                2025

     328       4,189       8.7%        0.9%  

            Thereafter

     131       2,089       4.4%        0.5%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     3,739     $ 48,136       100.0%        10.7%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Suburban Maryland  
            Annualized      % of      % of Total Annualized  

Year of Lease Expiration

   Leased Square Footage      Rental Income (2)      Sub. MD      Rental Income  
           

                2021

     174     $ 3,201       14.8%        0.7%  

                2022

     168       3,385       15.6%        0.7%  

                2023

     272       5,950       27.5%        1.3%  

                2024

     122       2,697       12.5%        0.6%  

                2025

     122       2,288       10.6%        0.5%  

            Thereafter

     163       4,107       19.0%        0.9%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     1,021     $ 21,628       100.0%        4.7%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Seattle  
            Annualized      % of      % of Total Annualized  

Year of Lease Expiration

   Leased Square Footage      Rental Income (2)      Seattle      Rental Income  
           

                2021

     187     $ 3,762       17.8%        0.8%  

                2022

     251       4,737       22.5%        1.1%  

                2023

     424       6,334       30.1%        1.4%  

                2024

     196       2,892       13.7%        0.6%  

                2025

     150       2,467       11.7%        0.5%  

            Thereafter

     63       876       4.2%        0.2%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     1,271     $ 21,068       100.0%        4.6%  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

 

 

(1) 

Excludes assets held for sale as of March 31, 2021.

(2)

Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

 

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     Total Portfolio Activity (1) (2)  
     Wtd. Avg.      Leasing      Customer    Transaction Costs      Transaction Costs      Cash Rental Rate    Net Effective Rent
Industrial    Occupancy      Volume      Retention    per Executed Foot      as a % of Rents (3)      Change (3)    Change (3)

Northern Virginia

     93.5%        145,000      88.6%      $ 3.75      7.0%        5.3%        8.0%  

South Florida

     95.9%        283,000      75.1%        1.35      4.1%        8.4%        24.7%  

Silicon Valley

     95.9%        209,000      88.0%        2.25      3.3%        24.1%        51.3%  

East Bay

     92.5%        204,000      73.5%        1.33      3.3%        6.3%        16.4%  

Dallas

     85.9%        216,000      94.0%        2.97      18.6%        2.8%        6.8%  

Suburban Maryland

     86.0%        42,000      89.6%        2.92      5.5%        -0.6%        8.0%  

Austin

     95.5%        26,000      0.0%        5.87      19.0%        16.7%        38.0%  

Los Angeles

     97.6%        150,000      88.1%        1.43      3.8%        7.6%        13.9%  

Seattle

     93.5%        74,000      92.1%        2.43      6.9%        17.9%        34.7%  

Orange County

     93.4%        82,000      56.1%        3.92      8.8%        5.2%        11.6%  

San Diego

     98.4%        25,000      79.0%        0.62      2.2%        1.3%        4.5%  

Industrial Totals by Market

     94.1%        1,456,000      82.8%      $ 2.28      5.6%        9.5%        21.2%  

Flex (1)

                    

Northern Virginia

     96.2%        87,000      70.4%      $ 6.13      19.6%        -2.0%        5.8%  

South Florida

     83.1%        14,000      90.0%        0.39      1.2%        7.5%        19.5%  

Silicon Valley

     88.4%        37,000      73.9%        2.00      6.5%        -6.6%        -4.1%  

East Bay

     94.5%        4,000      37.3%        0.46      0.8%        -5.3%        0.0%  

Dallas

     79.8%        108,000      93.5%        2.50      8.4%        -3.9%        -5.2%  

Austin

     94.8%        27,000      35.4%        5.35      12.3%        4.8%        14.0%  

Los Angeles

     93.6%        38,000      89.2%        2.31      4.9%        -1.0%        4.8%  

Seattle

     95.4%        27,000      69.4%        0.95      2.4%        5.3%        13.3%  

Orange County

     96.7%        3,000      35.3%        —          0.0%        5.1%        8.9%  

San Diego

     92.4%        54,000      59.2%        1.99      6.6%        1.5%        4.6%  

Mid-Peninsula

     84.0%        7,000      35.3%        0.71      2.8%        -8.7%        -11.0%  

Flex Totals by Market

     90.0%        406,000      72.1%      $ 3.09      9.1%        -1.0%        2.7%  

Office (1)

                    

Northern Virginia

     86.6%        68,000      51.6%      $ 6.91      16.7%        -8.6%        -2.1%  

South Florida

     100.0%        —          0.0%        —          0.0%        0.0%        0.0%  

Suburban Maryland

     89.5%        18,000      86.4%        1.54      3.1%        -2.6%        6.1%  

Los Angeles

     95.1%        3,000      32.3%        4.08      9.5%        3.3%        9.6%  

Seattle

     64.7%        —          0.0%        —          0.0%        0.0%        0.0%  

Mid-Peninsula

     82.1%        14,000      80.4%        0.79      1.4%        -2.8%        0.8%  

Office Totals by Market

     86.8%        103,000      58.5%      $ 5.09      11.3%        -5.8%        0.2%  

Company Totals by Type

     92.4%        1,965,000      78.2%      $             2.59      6.6%        5.7%        14.8%  

 

 

(1)

Excludes assets held for sale as of March 31, 2021.

(2)

Average lease term for leases executed during the three months ended March 31, 2021 was 3.2 years.

(3)

Refer to page 22, Definitions and Non-GAAP Disclosures, for the definitions of Transaction Costs as a Percentage of Rents, Cash Rental Rate Change, and Average Net Effective Rent Growth.

 

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Provided within this supplemental information package are measures not defined in accordance with U.S. generally accepted accounting principles (“GAAP”). We believe our presentation of these non-GAAP measures assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. These non-GAAP measures discussed below are not substitutes of other measures of financial performance presented in accordance with GAAP. In addition, other real estate investment trusts (“REITs”) may compute these measures differently, so comparisons among REITs may not be helpful.

Adjusted Cost of Operations – Adjusted cost of operations represents cost of operations, excluding non-cash stock compensation expense for employees whose compensation expense is recorded in cost of operations, which can vary significantly period to period based upon the performance of the Company. The GAAP measure most directly comparable to adjusted cost of operations is cost of operations.

Assets sold or held for sale – Assets sold or held for sale represents 113,000 square feet of assets sold in January 2020 and 40,000 square feet of assets sold in September 2020 and includes 442,000 square feet of assets held for sale. The assets held for sale represent a 244,000 square foot office business park located in Herndon, Virginia, and a 198,000 square foot office oriented flex business park located in Chantilly, Virginia.

Average Net Effective Rent Growth – Average net effective rent growth represents the weighted average percentage change in net effective rents for leases executed during a period compared against the prior leases for the same units. Net effective rent represents average rental payments for the term of a lease on a straight-line basis, excluding operating expense reimbursements

Cash NOI – We utilize cash NOI to evaluate the cash flow performance of our business parks. Cash NOI represents NOI adjusted to exclude non-cash items included in rental income and in cost of operations. The non-cash rental income includes amortization of deferred rent receivable (net of write-offs), in-place lease intangible, tenant improvement reimbursement, and lease incentive intangible. The non-cash expense is equal to stock compensation expense for employees whose compensation expense is recorded in cost of operations. We believe that cash NOI assists investors in analyzing cash flow performance of our business parks. The GAAP measure most directly comparable to cash NOI is net income.

Cash Rental Income – Cash rental income represents rental income, excluding non-cash rental income, specifically amortization of deferred rent receivable (net of write-offs), in-place lease intangible, tenant improvement reimbursement, and lease incentive intangible.

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

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

Cash Rental Rate Change – Cash rental rate change percentages are computed by taking the percentage difference between outgoing rents (including estimated expense recoveries) and incoming rents (including estimated expense recoveries) for leases executed during the period. Leases executed on spaces vacant for more than the preceding twelve months have been excluded.

Core FFO and Core FFO per share – Core FFO represents FFO excluding the net impact of (i) income allocated to preferred shareholders to the extent redemption value exceeds the related carrying value and (ii) other nonrecurring income or expense items as appropriate. Core FFO per share represents Core FFO allocable to diluted shares and units divided by the weighted average diluted shares and units. We believe our presentation of Core FFO and Core FFO per share assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. The GAAP measures most directly comparable to Core FFO and Core FFO per share are net income and earnings per share, respectively.

Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”) – EBITDAre is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and is often utilized to evaluate the performance of real estate companies. EBITDAre is calculated as GAAP net income before interest, depreciation and amortization and adjusted to exclude gains or losses from sales of depreciable real estate assets and impairment charges on real estate assets. We believe our presentation of EBITDAre assists investors and analysts in evaluating the operating performance of our business activities, including the impact of general and administrative expenses, and without the impact from gains or losses from sales of depreciable real estate assets. The GAAP measure most directly comparable EBITDAre is net income.

Free Cash Available after Fixed Charges – Free cash available after fixed charges represents FAD less dividends and distributions.

 

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Funds Available for Distribution (“FAD”) – FAD is a non-GAAP measure that represents Core FFO adjusted to (a) deduct recurring capital improvements that maintains the condition of our real estate, tenant improvements and lease commissions and (b) remove certain non-cash rental income or expenses such as amortization of deferred rent receivable and non-cash stock compensation expense. We believe our presentation of FAD assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. FAD is not a substitute for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because they exclude investing and financing activities presented on our statements of cash flows. The GAAP measure most directly comparable to FAD is operating cash flow from our statements of cash flows.

Funds from Operations (“FFO”) and FFO per share – FFO and FFO per share are non-GAAP measures defined by NAREIT and are considered helpful measures of REIT performance by REITs and many REIT analysts. FFO represents GAAP net income before real estate depreciation and amortization expense, gains or losses on sales of operating properties and land and impairment charges on real estate assets, which are excluded because it does not accurately reflect changes in the value of our business parks. FFO per share represents FFO allocable to diluted shares and units, divided by aggregate diluted shares and units. The GAAP measure most directly comparable to FFO and FFO per share are net income and earnings per share, respectively.

Net Operating Income (“NOI”) – We utilize NOI, a non-GAAP financial measure, to evaluate the operating performance of our business parks. We define NOI as rental income less adjusted cost of operations (described below). We believe NOI assists investors in analyzing the performance and value of our business parks by excluding (i) corporate overhead (i.e. general and administrative expenses) because it does not relate to the results of our business parks, (ii) depreciation and amortization expense because it does not accurately reflect changes in the fair value of our business parks and (iii) stock compensation expense because this expense item can vary significantly from period to period and thus impact comparability across periods. The GAAP measure most directly comparable to NOI is net income.

Non-Recurring Property RenovationsNon-recurring property renovations represents renovations that substantially enhance the value of a property, including capitalized costs associated with repositioning acquired assets.

Non-Same ParkNon-Same Park includes assets acquired on or subsequent to January 1, 2019.

Recurring Capital Expenditures – Recurring capital expenditures are capitalized costs necessary to continue to operate the property at its current economic value. Capital improvements in excess of $2,000 with a useful life greater than 24 months are capitalized. Lease transaction costs (i.e. tenant improvements and leasing commissions) of $1,000 or more for leases with terms greater than 12 months are capitalized. All leasing costs, including first generation tenant improvements and leasing commissions, are included in recurring capital expenditures.

Retained Cash – Retained cash represents free cash available after fixed charges less non-recurring property renovations and funds used for development and redevelopment.

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

Transaction Costs as a Percentage of Rents – Transaction costs as a percentage of rents are computed by taking the total transaction costs divided by the total rents (including estimated expense recoveries) over the term of the lease.

 

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