Exhibit 99.2
Unaudited Pro Forma Consolidated Financial Information
The following pro forma information should be read in conjunction with the Company’s historical consolidated financial statements and the notes thereto as filed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2022.
The following unaudited pro forma consolidated balance sheet as of June 30, 2022, has been prepared to give effect to the Redemption and Distribution as described in Item 2.01, as if they had occurred on June 30, 2022.
The following unaudited pro forma consolidated statements of income for the six months ended June 30, 2022 and for the year ended December 31, 2021, have been prepared to give effect to the Redemption and Distribution as if they had occurred on January 1, 2021.
These unaudited pro forma consolidated financial statements are prepared for informational purposes only, only give effect to the Redemption and Distribution and are not necessarily indicative of future results or of actual results that would have been achieved had the Redemption and Distribution been consummated on January 1, 2021 or June 30, 2022, as the case may be.
PS BUSINESS PARKS, INC
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2022
(Amounts in thousands, except share data)
| PS Business Parks, Inc. Historical | Transaction Accounting Adjustments: Redemption and Distribution | PS Business Parks, Inc. Pro Forma | ||||||||||
| ASSETS | ||||||||||||
Cash and cash equivalents | $ | 173,460 | $ | (3 | ) (1) | $ | 173,457 | |||||
Real estate facilities, at cost | ||||||||||||
Land | 849,942 | (224,476 | ) (1) | 625,466 | ||||||||
Buildings and improvements | 2,202,358 | (707,948 | ) (1) | 1,494,410 | ||||||||
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| 3,052,300 | (932,424 | ) | 2,119,876 | |||||||||
Accumulated depreciation | (1,182,746 | ) | 420,096 | (1) | (762,650 | ) | ||||||
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| 1,869,554 | (512,328 | ) | 1,357,226 | |||||||||
Properties held for sale, net | — | — | — | |||||||||
Land and building held for development, net | 112,952 | (6,953 | ) (1) | 105,999 | ||||||||
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| 1,982,506 | (519,281 | ) | 1,463,225 | |||||||||
Rent receivable | 1,571 | — | (1) | 1,571 | ||||||||
Deferred rent receivable | 37,525 | (10,978 | ) (1) | 26,547 | ||||||||
Other assets | 10,995 | (2,157 | ) (1) | 8,838 | ||||||||
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Total assets | $ | 2,206,057 | $ | (532,419 | ) | $ | 1,673,638 | |||||
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| LIABILITIES AND EQUITY | ||||||||||||
Accrued and other liabilities | $ | 92,047 | $ | (16,451 | ) (1) | $ | 75,596 | |||||
Credit facility | — | — | — | |||||||||
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Total liabilities | 92,047 | (16,451 | ) | 75,596 | ||||||||
Commitments and contingencies | ||||||||||||
Equity | ||||||||||||
PS Business Parks, Inc.’s stockholders’ equity | ||||||||||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, 30,200 shares issued and outstanding at June 30, 2022 | 755,000 | — | 755,000 | |||||||||
Common stock, $0.01 par value, 100,000,000 shares authorized, 27,631,499 shares issued and outstanding at June 30, 2022 | 276 | — | 276 | |||||||||
Paid-in capital | 755,873 | (236,196 | ) (2) | 519,677 | ||||||||
Accumulated earnings | 318,782 | — | 318,782 | |||||||||
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Total PS Business Parks, Inc.’s stockholders’ equity | 1,829,931 | (236,196 | ) | 1,593,735 | ||||||||
Noncontrolling interests | 284,079 | (279,772 | ) (2) | 4,307 | ||||||||
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Total equity | 2,114,010 | (515,968 | ) | 1,598,042 | ||||||||
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Total liabilities and equity | $ | 2,206,057 | $ | (532,419 | ) | $ | 1,673,638 | |||||
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See accompanying notes to the unaudited pro forma financial statements.
PS BUSINESS PARKS, INC
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2022
(Amounts in thousands, except share data)
| PS Business Parks, Inc. Historical | Transaction Accounting Adjustments: Redemption and Distribution | PS Business Parks, Inc. Pro Forma | ||||||||||
Rental income | $ | 223,750 | $ | (56,647 | ) (1) | $ | 167,103 | |||||
Expenses | ||||||||||||
Cost of operations | 66,701 | (18,150 | ) (1) | 48,551 | ||||||||
Depreciation and amortization | 45,931 | (15,028 | ) (1) | 30,903 | ||||||||
General and administrative | 22,416 | — | 22,416 | |||||||||
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Total operating expenses | 135,048 | (33,178 | ) | 101,870 | ||||||||
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Interest and other income | 1,968 | (8 | ) (1) | 1,960 | ||||||||
Interest and other expense | (806 | ) | — | (806 | ) | |||||||
Gain on sale of real estate facilities | 118,801 | — | 118,801 | |||||||||
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Net income | 208,665 | (23,477 | ) | 185,188 | ||||||||
Allocation to noncontrolling interests | (39,437 | ) | 39,429 | (2) | (8 | ) | ||||||
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Net income allocable to PS Business Parks, Inc. | 169,228 | 15,952 | 185,180 | |||||||||
Allocation to preferred stockholders | (19,160 | ) | — | (19,160 | ) | |||||||
Allocation to restricted stock unit holders | (998 | ) | — | (998 | ) | |||||||
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Net income allocable to common stockholders | $ | 149,070 | $ | 15,952 | $ | 165,022 | ||||||
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Net income per share of common stock | ||||||||||||
Basic | $ | 5.40 | $ | 5.98 | ||||||||
Diluted | $ | 5.38 | $ | 5.96 | ||||||||
Weighted average common stock outstanding | ||||||||||||
Basic | 27,618 | 27,618 | ||||||||||
Diluted | 27,707 | 27,707 | ||||||||||
See accompanying notes to the unaudited pro forma financial statements.
PS BUSINESS PARKS, INC
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2021
(Amounts in thousands, except per share data)
| PS Business Parks, Inc. Historical | Transaction Accounting Adjustments: Redemption and Distribution | PS Business Parks, Inc. Pro Forma | ||||||||||
Rental income | $ | 438,703 | $ | (112,174 | ) (1) | $ | 326,529 | |||||
Expenses | ||||||||||||
Cost of operations | 130,896 | (35,136 | ) (1) | 95,760 | ||||||||
Depreciation and amortization | 93,486 | (32,004 | ) (1) | 61,482 | ||||||||
General and administrative | 19,057 | — | 19,057 | |||||||||
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Total operating expenses | 243,439 | (67,140 | ) | 176,299 | ||||||||
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Interest and other income | 2,536 | (318 | ) (1) | 2,218 | ||||||||
Interest and other expense | (4,646 | ) | — | (4,646 | ) | |||||||
Gain on sale of real estate facilities | 359,875 | — | 359,875 | |||||||||
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Net income | 553,029 | (45,352 | ) | 507,677 | ||||||||
Allocation to noncontrolling interests | (104,270 | ) | 104,290 | (2) | 20 | |||||||
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Net income allocable to PS Business Parks, Inc. | 448,759 | 58,938 | 507,697 | |||||||||
Allocation to preferred stockholders based upon | ||||||||||||
Distributions | (46,624 | ) | — | (46,624 | ) | |||||||
Preferred securities redemption charge | (6,434 | ) | — | (6,434 | ) | |||||||
Allocation to restricted stock unit holders | (2,613 | ) | — | (2,613 | ) | |||||||
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Net income allocable to common stockholders | $ | 393,088 | $ | 58,938 | $ | 452,026 | ||||||
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Net income per share of common stock | ||||||||||||
Basic | $ | 14.28 | $ | 16.42 | ||||||||
Diluted | $ | 14.22 | $ | 16.35 | ||||||||
Weighted average common stock outstanding | ||||||||||||
Basic | 27,534 | 27,534 | ||||||||||
Diluted | 27,636 | 27,636 | ||||||||||
See accompanying notes to the unaudited pro forma financial statements.
PS BUSINESS PARKS, INC
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Basis of Presentation |
The Unaudited Pro Forma Financial Statements included herein have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”).
The unaudited pro forma consolidated financial statements of PS Business Parks, Inc. (the “Company”), have been prepared based on the historical consolidated balance sheet of the Company as of June 30, 2022 and the historical consolidated statements of income of the Company for the six months ended June 30, 2022 and for the year ended December 31, 2021.
The Company employs accounting policies that are in accordance with accounting principles generally accepted in the United States of America. In management’s opinion, all material adjustments necessary to reflect fairly the pro forma financial position and pro forma results of operations of the Company have been made.
| 2. | Pro Forma Adjustments |
The accompanying Unaudited Pro Forma Financial Statements have been prepared as if the Redemption and Distribution was completed on June 30, 2022 for balance sheet purposes and January 1, 2021 for statement of income purposes and reflect the following pro forma adjustments:
Adjustments to Unaudited Pro Forma Consolidated Balance Sheet
(1) Represents the elimination of assets and liabilities associated with the Non-Core Portfolio at the historical cost basis presented within the consolidated balance sheet of the Company as of June 30, 2022 filed with the SEC on July 19, 2022.
(2) Represents the change arising from the Redemption and Distribution of the Non-Core Portfolio. Adjustment to non controlling interest represents the redemption of approximately 21% of the outstanding Operating Partnership units pursuant to the Distribution and Contribution Agreement, which represent all the units not held by the Company. Adjustment to additional paid in capital reflects the difference between the value of the Operating Partnership units redeemed and the historical cost basis of the relevant assets and liabilities of the distributed Non-Core portfolio which represents a basis difference that is not reflected in the historical consolidated balance sheet.
Adjustments to Unaudited Pro Forma Consolidated Statements of Income
(1) Represents the elimination of income and expenses associated with the Non-Core Portfolio.
(2) Represents the elimination of allocation to non controlling interests as a result of the redemption of approximately 21% of the outstanding Operating Partnership units pursuant to the Distribution and Contribution Agreement.
