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Company Update
November, 2018
2
PS Business Parks Executive Leadership Team
Stuart Hutchison – Vice President, Southern CaliforniaStuart has been with the Company for 18 years and has served as VicePresident, Southern California since December, 2016, and prior to thatwas Regional Manager of Operations. Before joining PSB Stuart was withTranswestern and Fujita USA where he served as a Portfolio Manager.
Maria Hawthorne – CEO Maria has served as CEO since July, 2016, and at which time she was alsoelected as a member of our Board. Maria has over 33 years of experiencewith the Company and its affiliates and has held a variety of roles duringthat time, serving most recently as Chief Administrative Officer.
Chris Auth – Vice President, Washington MetroChris has been with the company for 12 years, serving in a variety ofroles. Since 2014 he has led the Washington Metro Division as itsDivisional Vice President. Prior to joining PSB, he worked for CummingProperties, a private owner/developer in the Greater Boston area.
David Vicars – Vice President, SoutheastDavid joined the company in 2004 and has served as Vice President,Southeast (Texas and South Florida). Prior to joining PSB, David spentover 25 years working in a leadership capacity at Compass Management,Leasing/Equitable Real Estate and The Horne Company.
Coby Holley – Vice President, Real EstateCoby joined the Company in 2003 and has served as Vice President, RealEstate since 2014, overseeing the Company’s acquisitions, dispositions anddevelopment. Prior to joining PSB, Coby was a Senior Vice President atCBRE.
Trenton Groves – Senior Vice President & CAOTrenton joined the Company in 2004 and has served as CAO sinceSeptember, 2018. Prior to then he was Vice President, Finance, andCorporate Controller. Before joining PSB Trenton was a manager at bothErnst & Young, LLP and Arthur Andersen, LLP.
Gene Uhlman – Vice President, ConstructionGene has served as Vice President of Construction since 2012 and has 16years of experience with the company. Prior to joining PSB, Gene was aReal Estate Manager for Murdock Development for 14 years.
Dick Scott – Vice President, Northern CaliforniaDick has served as Vice President, Northern California since he joined thecompany in 2012. Prior to joining PSB, Dick served as the ManagingDirector of Grubb & Ellis in Silicon Valley, was Vice President for EquityOffice Properties, and was a Partner in several real estate development LLCs.
John Petersen – Executive Vice President & COOJohn has served as COO since he joined the Company in 2004. Prior tojoining PSB, John was Senior Vice President, for Equity Office Propertiesfrom 2001-2004, and Senior Vice President with Spieker from 1995 to2001.
Jeff Hedges – Executive Vice President & CFOJeff joined the Company as CFO in September, 2018. Prior to joining PSBJeff was Senior Vice President for Invitation Homes from 2015-2018, andprior to that was a Senior Manager at Ernst & Young, LLP from 2006-2015.
3
PS Business Parks Overview
Consistent long term outperformance of the S&P 500 and RMZ since going public in 1998
Same Park and total occupancy of 95.0% and 94.1%, respectively, as of September 30, 2018
Tenured management team focused on disciplined growth and generating quality operational cash flow
Optimized portfolio with a heavy concentration (85%) of light industrial/flex product in gateway markets
Over 28 million square feet of infill real estate and 395 multifamily units
Fortress balance sheet with strong liquidity; A- Corporate Rating from Standard & Poor’s
4
Average Annual Total Shareholder Return
17.9%
12.8% 13.0% 12.8%
9.8%
7.8%
11.1%
9.1%
15.8%
8.5%9.9%
7.2%
0%
4%
8%
12%
16%
20%
5 Year 10 Year 15 Year 20 Year
PSB NAREIT S&P 500
Source: IPREO December 31, 2017
Consistent market outperformance as a result of disciplined investing, best in class operations, and prudent balance sheet management
5
Disciplined Investment Strategy
Scale efficiencies in the markets we operate in
Value add redevelopment opportunities throughout portfolio
Adherence to below replacement cost investing
Functional assets in infill locations – first and last mile
Gateway markets with high barriers to entry and attractive demographics
Business park concentrations; multi-tenant buildings in multi-building parks
6
Industrial/Flex85%
Office14%
Multi-family1%
Optimal Product in Prime Markets
(1) Percentages shown based on square feetDivisional/Regional Office ( ) = Number of business parks in state
Six States Three Product Types (1)
28.5 million square feet, including 96 business parks and 395 multi-family units
See Appendix A for FY 2018 investment summary and Appendix B for multi-family summary
Major land concentrations in gateway markets
Majority of portfolio (85%) comprised of small bay industrial
CA(44)
TX(21) FL
(3)
VA(19)
MD(6)
WA (3)
7
People Focused Operations Model
Sophisticated, data driven leasing and property management practices
Market based leasing decisions
Disciplined approach to capital outlay (i.e. transaction costs)
Operations management team averages 12 years of employment at PSB
Decentralized operating platform staffed by seasoned local market experts
Customer centric focus with proactive outreach
8
Stable and diversified tenant base with limited exposure to any single industry
Diverse Customer Base
As of September 30, 2018
Percentage of Total Rent by Sector
Business services 19.3%
Warehouse, distribution, transportation and logistics
11.5%
Computer hardware, software and related
services 10.5%
Health services 9.9%
Retail, food, and
automotive7.6%
Engineering and construction
7.4%
Government 6.8%
Insurance and financial services3.8%
Electronics 3.1%
Home furnishings 2.6%
Aerospace/defense products and services 2.2%
Communications 1.9%
Educational services 1.0%
Other 12.4%
9
Fortress Balance Sheet
All figures as of September 30, 2018
Low leverage and absence of maturities provides an ability to seize accretive growth opportunities and recession resiliency
Preferred Equity 17.9%Common
Equity 82.1%
Highlights
No pending debt maturities
Low leverage/Strong ratios
Debt & preferred to EBITDA 3.5x
Fixed charge coverage ratio 5.3x
Investment Grade Ratings
S & P A- (Corporate)
BBB (Preferred Equity)
Moody’s Baa2 (Preferred Equity)
$250 million corporate credit facility capacity,
with additional $150 million accordion
$5.4 Billion Market Cap
Preferred equity
Average in-place coupon: 5.4%
10
Occupancy & Rent Trends
92.1% 92.0%
92.9%
93.5%
94.1%94.4%
94.7%
-6.2%
-0.4%0.5%
4.4%5.3% 5.2%
2.9%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
89%
90%
91%
92%
93%
94%
95%
2012 2013 2014 2015 2016 2017 YTD 2018
Ren
t C
hang
e on
Exe
cute
d L
ease
s (C
ash
Bas
is)
Sam
e P
ark
Occ
upan
cy
Occupancy Rent Change
Dedicated in-house leasing teams driving occupancy and rent growth
1
1. Rent growth for Industrial/Flex for the nine months ended September, 30 2018 was 7.7%
11
Same Park NOI
$170.4
$201.7
$226.5
$237.7
$259.2
$270.6
$150
$170
$190
$210
$230
$250
$270
$290
2012 2013 2014 2015 2016 2017
Net
Ope
rati
ng I
ncom
e
Six consecutive years of strong NOI growth, averaging 3.7% annual Same Park NOI growth since 2012
12
Same Park Capital Expenditures as % of NOI
Focused approach on generic, reusable improvements
Portfolio dynamic changing with decreasing commercial office exposure
Office requires constant capital infusion (see Appendix A for summary of Office sales YTD)
20.6%19.4%
17.2%
14.1%
11.6%
14.3%
11.8%
0%
5%
10%
15%
20%
25%
2012 2013 2014 2015 2016 2017 YTD 2018
13
Key Performance Metrics
Long track record of generating consistent, quality operational cash flow
$1.10
$1.17 $1.19 $1.21
$1.19 $1.16
$1.12
$1.23 $1.26
$1.34 $1.31
$1.26
$1.36
$1.43 $1.39
$1.52 $1.55 $1.54 $1.52
$1.59 $1.59 $1.64
$0.50
$0.70
$0.90
$1.10
$1.30
$1.50
$1.70
Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318
FAD Core FFO
14
Environmentally and Socially Responsible
LEED or Energy Star certification on new development and re-development buildings
Reducing utility expenses by managing vacant suites and by replacing older equipment with energy efficient systems.
Installation of reflective “green roofs” as we re-roof or develop new buildings.
Water conservation through installation of smart plumbing devices and planting native-landscape species.
Contracting environmental footprint through paper recycling practices and utilization of trash compactors.
Ongoing conversion to LED lighting at our parks
Diversity in Our Workplace of 153 EmployeesEnergy Efficiency and Environmental Initiatives
Gender and Race
41% non-white with 27% in a supervisory role
Women make up 53% with 38% in a supervisory
role
Affirmative Action Plan Employer
President and CEO is a woman and diverse
Diversity and Independence of Board of Directors
67% Independent
33% Women
44% Under the Age of 60
15
Appendix
16
Appendix A: 2018 Investment Summary
Sales Square Feet
Corporate Pointe Business Park 161,000 $ 41.7 MM
Orange County Business Center 437,000 73.3 MM
Orangewood Office Park 107,000 18.3 MM
Northgate Business Park 194,000 11.8 MM
Total 899,000 $ 145.1 MM
Acquisitions
Northern Virginia Industrial Park and Fullerton Industrial Park 1,057,000 $ 142.4 MM
Net Proceeds
17
Northern Virginia Industrial PortfolioSpringfield, VA
1,056,554 Square Feet64.67 Acres in Fairfax County
Appendix A: NVIP Acquisition (June 2018)
PSB GUNSTON
PSB ALBAN RD
PSB I-95 BP
PSB GUNSTON
18
Appendix A: NVIP Property Overview
Seller: JP Morgan/MRP
1,056,554 SF
Light Industrial
10% Office
19 Buildings
73.9% Occupied
Avg Tenant: 6,755 SF
106 Customers
150 Customers When Stabilized
19
Appendix A: NVIP Site Plan
Buildings 1-15814,074 SF I 75%
52.56 Acres
20
Appendix A: Fullerton Road Site Plan
12.11 Acres
21
Appendix B: Redevelopment Site Tysons,VA
751,000 SF to 3.5 Million SF
Potential Future Development Site
22
Appendix B: Tysons, VA Redevelopment
The Mile
TCC
PSB owns 45 acres: “The Mile”40 acres left to be redeveloped
Under-served residential market
12th largest employment center in US
$7 billion in infrastructure improvements completed
4 newly developed metro stations in Tysons
23
Appendix B: Highgate at the Mile
PSB holds 95% interest in JV with Kettler
Property opened June 1, 2017
395 UnitsAverage unit size 833 square feetMarket rates $2.50 to $2.75 per square feet17% of units are offered as workforce housing
Total project costs $115.9 millionProject costs includes unrealized landappreciation of $6.0 million
91.4% occupancy at September 30, 2018
24
Safe Harbor Disclosure
This document may contain forward-looking statements within the meaning of Section 27A of theSecurities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statementsinclude, but are not limited to, statements related to the Company’s expectations regarding theperformance of its business, its financial results, its liquidity and capital resources and other non-historical statements. You can identify these forward-looking statements by the use of words such as“outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,”“approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negativeversion of these words or other comparable words. Such forward-looking statements are subject tovarious risks and uncertainties, including those described under the section entitled “Risk Factors” in theCompany’s Annual Report on Form 10-K for the year ended December 31, 2017, as such factors may beupdated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s websiteat www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes orresults to differ materially from those indicated in these statements. These factors should not be construedas exhaustive and should be read in conjunction with the other cautionary statements that are included inthis release and in the Company’s filings with the SEC. The Company undertakes no obligation topublicly update or review any forward-looking statement, whether as a result of new information, futuredevelopments or otherwise, except as required by law.