Upload
others
View
4
Download
0
Embed Size (px)
Citation preview
I industrial I flex I office Ipsbusinessparks.com
COMPANY UPDATE
701 WESTERN AVENUE I GLENDALE, CA 91201 I 818.244.8080
JUNE 2019
2 Company Update
3. Message from our CEO
4. Executive Team
5. Company Overview
7. Investment Strategy
10. Diverse Customer Base
14. Same Park NOI
16. Key Performance Metrics
17. Development Update
FEATURES
19. Social Responsibility
3Company Update
Current operating conditions in nearly all our markets are excellent and Washington D.C. which has lagged in prior quarters is improving. We feel that, on average, we are likely to continue to achieve improved rental rates on new and renewed leases for our 2019 expirations. We remain focused on making multi-tenant industrial park acquisitions in our existing markets.Pricing remains high and our volume will be dependent on the quality and pricing of opportunities. In the month of April we closed on the acquisition
“Market conditions for industrial properties remains among the best we have seen. Our balance sheet is well positioned for growth and investor demand for our type
of real estate is intense.”
I am happy to report that 2019 is off to a great start! In Q1 we reported Same Park Cash NOI growth of 4.9% along with 9.2% rent growth on 1.6 million square feet of executed leases. These metrics combined with Same Park occupancy of 94.5% demonstrates the continued strength of our infill markets combined with our small customer strategy.
A MESSAGE FROM OUR CEOMARIA HAWTHORNE
of Walnut Industrial Park, a park located in Los Angeles very close to some of our most established and successful assets. Walnut has long been a direct competi-tor, and will be great compliment to our existing portfolio with in-place rents approximately 20% less than what we are getting on our comparable proper-ties. As we continue to seek out addi-tional accretive growth opportunities, you should expect to see our dedicat-ed in-house leasing and property man-agement teams continue to maximize value from our portfolio by driving rent-growth, keeping transaction costs low, and optimizing property operations.
Maria has served as CEO since July 2016, and at which time she was also elected as a member of our Board. Maria has over 34 years of experi-ence with the Company and its affiliates and has held a va-riety of roles during that time, serving most recently as Chief Administrative Officer.
Jeff HedgesExecutive Vice President & CFO
Maria HawthornePresident & CEO
John PetersenExecutive Vice President & COO
Trenton GrovesSenior Vice President & CAO
Coby HolleyVice President, Real Estate
Trenton joined the Company in 2004 and has served as CAO since September 2018. Prior to that, he was Vice Presi-dent, Finance, and Corporate Controller. Before joining PSB, Trenton was a manager at both, Ernst & Young, LLP and Arthur Andersen, LLP.
John has served as COO since he joined the Company in 2004. Prior to joining PSB, John was Senior Vice Presi-dent, for Equity Office Proper-ties from 2001 to 2004, and Senior Vice President with Spieker Properties from 1995 to 2001.
Jeff joined the Company as CFO in September 2018. Prior to joining PSB, Jeff was Senior Vice President for Invitation Homes from 2015 to 2018, and prior to that he was a Senior Manager at Ernst & Young, LLP from 2006 to 2015.
Coby joined the Company in 2003 and he has served as Vice President, Real Estate since 2014, overseeing the Company’s acquisitions, dis-positions and development. Prior to joining PSB, Coby was a Senior Vice President at CBRE.
Stuart has been with the Company for 18 years and has served as Vice President, Southern California since De-cember 2016, and prior to that was Regional Manager of Op-erations. Before joining PSB, Stuart was with Transwestern and Fujita USA.
Chris AuthVice President, Washington Metro
Stuart HutchisonVice President, Southern California
David VicarsVice President, Southeast
Rich GuertinVice President, Florida
David joined the Company in 2004 and has served as Vice President, Southeast (Texas and Florida). Prior to joining PSB, David spent over 25 years working in a leadership capac-ity at Compass Management, Leasing/Equitable Real Estate and The Horne Company.
Chris has been with the Com-pany for 13 years, serving in a variety of roles. Since 2014, he has led the Washington Metro Division as its Divisional Vice President. Prior to joining PSB, he worked for Cumming Properties, a private owner/developer in the Greater Boston area.
Rich has been with PSB for 8 years and was recently promoted to Senior Regional Vice Presi-dent. Rich has 30+ years of ex-perience and prior to joining PSB, he worked for Paragon, Inc. and Oakwood Corporate Housing.
Dick ScottVice President, Northern CaliforniaDick has served as Vice Presi-dent, Northern California since he joined the Company in 2012. Prior to joining PSB, Dick served as the Managing Director of Grubb & Ellis in Sili-con Valley, was Vice President for Equity Office Properties, and was a Partner in several real estate development LLCs.
Eddie RuizVice President & Director, FacilitiesEddie has served as Vice Presi-dent, Director of Facilities since he joined the Company in 1999. Prior of joining PSB, Eddie spent over 20 years working as a con-sultant for several architectural and engineering firms.
Gene UhlmanVice President, ConstructionGene has served as VP of Con-struction since 2012 and has 17 years of experience with the Company. Prior to joining PSB, Gene was a Real Estate Manager for Murdock Devel-opment for 14 years.
4 Company Update
EXECUTIVE LEADERSHIP TEAM
5Company Update
PS Business Parks, Inc. (NYSE: PSB), a member of the S&P MidCap 400, is a real estate investment trust (REIT) that acquires, develops, owns and operates commercial properties, primarily multi-tenant indus-trial, flex and office space. The Company wholly owns nearly 29 million rentable square feet (“RSF”) concentrated in 12 submarkets spread across six states and holds a 95% interest in a 395-unit apartment complex.
SAME PARK OCCUPANCY as of March 31, 2019
94.6%
LIGHT INDUSTRIAL / FLEX product in gateway markets
86%
TOTAL OCCUPANCY as of March 31, 2019
94.0%
FORTRESS BALANCE SHEET with strong liquidity and no
debt outstanding
TENURED MANAGEMENT TEAM focused on disciplined growth to
generate quality operational cash flow
29 MILLION SQUARE FEET of infill real estate
395 MULTIFAMILY UNITSin Tysons, VA
A- CORPORATE CREDIT RATING
by Standard & Poor’s
CONSISTENT OUTPERFORMANCE of the S&P 500 and RMZ since going public in 1998
COMPANY OVERVIEW
Based on total RSF as of March 31, 20191
1
6 Company Update
AVERAGE ANNUAL TOTAL SHAREHOLDER RETURNConsistent market outperformance as a result of disciplined investing, best in class operations, and prudent balance sheet management.
12.5% AVERAGE RETURN
OVER THE PAST 20 YEARS
Source: FactSet December 31, 2018
OUTPERFORMINGS&P 500 BY
690 BASIS POINTSOVER THE PAST
20 YEARS
OUTPERFORMING NAREIT BY
25O BASIS POINTSOVER THE PAST
20 YEARS
7Company Update
VALUE-ADD redevelopment opportunities
throughout portfolio
GATEWAY MARKETS with high barriers to entry and
attractive demographics
FIRST & LAST MILE functional assets in
infill locations
BUSINESS PARK FOCUS multi-tenant buildings in
multi-building parks
DISCIPLINED INVESTMENTS adherence to below
replacement cost investing
We have built our finely tuned portfolio over several decades with dis-ciplined long-term investing strategies. We have achieved density and scale in each of our markets which allows our dedicated and experienced in-house teams to lease and manage effectively 100% of our portfolio. Our long track record of market outperformance is the direct result of our best-in-class property management coupled with disciplined investing.
DISCIPLINED INVESTMENT STRATEGY
EFFICIENT PLATFORM operational scale in each
of our markets
8 Company Update
NORTHERN VIRGINIANORTHERN CALIFORNIA±5.0 million square feet of warehouse, flex and office space in Northern Virginia
±2.9 million square feet of warehouse and flex space in the Greater Dallas Area
±7.2 million square feet of warehouse, flex and office space in the Greater Bay Area
SEATTLE±1.4 million square feet of warehouse, flex and office space in the Greater Seattle Area
FLORIDA±3.9 million square feet of warehouse and flex space in Doral, Boca Raton and Wellington
OPTIMAL PRODUCT IN PRIME MARKETS
DALLAS
SOUTHERN CALIFORNIA±3.4 million square feet of warehouse, flex and office space in Signal Hill, Lake Forest and San Diego
MARYLAND±2.6 million sqare feet of office, flex and warehouse space in Maryland
AUSTIN±2.0 million square feet of warehouse and flex space in the Greater Austin Area
9Company Update
Customer centric focus with a proactive approach
CUSTOMER FOCUS
PEOPLE FOCUSEDOPERATIONS MODEL
Operations management team averages 14 years of employment at PSB
EXPERIENCED MANAGEMENT TEAM
Decentralized operating platform staffed by seasoned local market experts, empowered to make maket-based leasing decisions
DECENTRALIZED PLATFORM
Sophisticated, data driven leasing and property management practices, including a disciplined approach to capital outlay (i.e. transaction costs)
INDUSTRY LEADING PRACTICES
10 Company Update
Stable and diversified customer base with limited exposure to any single industry.
DIVERSE CUSTOMER BASE
PSB prides itself on being the premier landlord to small-business America and serving a wide cus-tomer base throughout the country
5,000+CUSTOMERS NATIONWIDE
As of March 31, 2019
HIGHLIGHTS- No pending debt maturities
- $250 million corporate credit facility capacity, with additional
- Low leverage / Strong ratios
Debt & preferred to EBITDA 3.4x
- Investment Grade Ratings
Fixed charge coverage ratio 5.5x
S & P
Moody’s
A- (Corporate)
Baa2 (Preferred Equity)BBB (Preferred Equity)
$150 million accordion
As of March 31, 20191
1
1
11Company Update
FORTRESS BALANCE SHEETLow leverage and absence of large debt maturities provides the ability to seize accretive growth opportunities and recession resiliency.
6.4 BILLION TOTAL MARKET CAP
as of March 31, 2019
Common Equity (85.0%)Preferred Equity (15.0%)
Average in-place coupon: 5.4%
12 Company Update
OCCUPANCY & RENT TRENDSOur dedicated in-house leasing teams consistently drive strong occupancy and rent growth.
MARKET BASED LEASING
DECISIONS DRIVES GROWTH
5.0%AVERAGE ANNUAL
RENT GROWTHBETWEEN 2015 - 2018
94.2% AVG OCCUPANCY
SINCE 2015
1
13Company Update
Our Same Park REVPAF consistently outperforms our industrial peer group as a result of our dedicated in-house leasing teams consistently driving strong occupancy and rent growth.
14.0%REVPAF SAMEPARK GROWTH
SINCE 2014 2.6% AVG ANNUAL SAME
PARK REVPAF GROWTH SINCE 2014
OVER 4YEARS
OF CONSECUTIVESAME PARK
REVPAF GROWTH
1 Q119 rental income has been annualized
REVENUE PER AVAILABLE FOOT (REVPAF)
Note: Same Park REVPAF represents rental income earned per total Same Park weighted average available square foot reported during the period presented
14 Company Update
NET OPERATING INCOME TRENDStrong fundamentals and adherence to disciplined property management have promoted a long pattern of Same Park net operating income (“NOI”) growth.
22.1%NOI GROWTH
SINCE 2014 3.1% AVG ANNUAL SAME PARK NOI GROWTH
SINCE 2012
7 YEARS OF CONSECUTIVE
NOI GROWTH
Note: Amounts shown in the table above reflect the reported Same Park NOI for each respective period
Disclosure: NOI is a measure not defined in accordance with U.S. generally accepted accounting principles (“GAAP”). Refer to our quarterly Supplemental Information Package for the definition and reconciliation of this measure to its closest analogous GAAP measure.
15Company Update
FOCUSED APPROACH ON
GENERIC, REUSABLE IMPROVEMENTS
DYNAMIC PORTFOLIO
CHANGING WITH DECREASING
OFFICE EXPOSURE
CAPITAL EXPENDITURESSame Park recurring capital expenditures have generally trended downward as the result of effective transaction cost containment strategies (i.e. make-ready and leasing costs).
Disclosure: NOI is a measure not defined in accordance with U.S. generally accepted accounting principles (“GAAP”). Refer to our quarterly Supplemental Information Package for the definition and reconciliation of this measure to its closest analogous GAAP measure.
DEDICATED IN-HOUSE TEAMS
MINIMIZE OURTRANSACTION
COSTS
% of
Net O
pera
ting I
ncom
e
Note: Amounts shown in the table above reflect the reported Same Park data for each respective period
16 Company Update
KEY PERFORMANCE METRICSFocus on driving NOI growth and containing capital expenditures has led to expanding Core Funds From Operations (“Core FFO”) and Funds Available for Distribution (“FAD”).
75.5%FAD GROWTH
SINCE 2012 7 YEARS OF CONSECUTIVE CORE FFO AND FAD
GROWTH
50.1% CORE FFO GROWTHSINCE 2012
Disclosure: Core FFO and FAD are non-GAAP measures. Refer to our quarterly Supplemental Information Package for the definitions and reconciliations of these measures to their closest analogous GAAP measures.
17Company Update
As of March 31, 20191
1
1
Average rent per unit was $2,074
DEVELOPMENT UPDATE
- Next phase of development at The Mile- Approximately 400 units- Approval expected in late 2019 with construction commencing as soon as one year thereafter
BEXLEY AT THE MILE - TYSONS, VA
The Mile is our 45 contiguous acre property located in Tysons, Virginia with a 3 million square foot master-plan redevelopment pro-posal currently under Fairfax County review. The property is Metro accessible and located in the top-rated McLean School District.
THE MILE - TYSONS, VA
- Property opened June 1, 2017- PSB holds 95% JV interest- 395 total units, with 17% offered as workforce housing
HIGHGATE AT THE MILE
- Total project costs $115.4 million
Average unit size 867 square feet
94.9% occupancy
Project costs total includes unrealized land appreciation of $6.0 million
19Company Update
SOCIAL RESPONSIBILITYDIVERSITY IN OUR WORKPLACE OF 156 EMPLOYEES
President & CEO is a woman and diverse
63% Independent
25% Women
Affirmative Action Plan Employer
38% Under the age of 60
GENDER & RACE
DIVERSITY & INDEPENDENCE OF BOARD OF DIRECTORS
52% OF EMPLOYEES ARE WOMEN
37% OF WOMEN IN A SUPERVISORY ROLE
41% OF EMPLOYEES ARE NON-WHITE, WITH 27% IN A
SUPERVISORY ROLE