PSB - Earnings call transcript Q4 2021 | PS Business Parks, Inc.

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Operator

Good afternoon and welcome to the PS Business Parks, Fourth Quarter and Full-Year 2021, Earnings Results Conference Call and Webcast. At this time, all participants have been placed in a listen-only mode. And the floor will be open for your questions following the presentation. [Operator Instructions] It is now my pleasure to turn the floor over to Adeel Khan, PSB's Chief Financial Officer. Sir, you may begin.

Adeel Khan

joining Conference PS Call. for quarter Parks, you Earnings XXXX thank us Business for fourth We

in section In Private in yesterday On your we of package questions after Act to today's Securities market Investor addition the and statements XXXX. closed, Litigation posted press call management's contain a Reform answers at forward-looking our the website on release remarks distributed the www.psbusinessparks.com. Relations to supplemental defined as

may to statements results cause matters that are and Forward-looking discussed actual subject differ risks those address from to uncertainties that today.

risk For about PS we information obligation review statements more to assumes future. our Parks and these to filings. factors, SEC the encourage forward-looking any in other you update no XX-K Business

measures. In this addition, certain financial financial presented information on non-GAAP call represents

and explanations Hawthorne, Officer, is call Executive Interim Adeel supplemental Khan. reconciliations, measures Officer, GAAP Interim financial non-GAAP Steve release Park of Operating Chief such by useful present to Maria Today's and are Wilson, Chief together Officer, PS with Business package earnings Financial investors. why hosted conference Our Chief

make then for open questions. the will some and your prepared line We remarks,

turn will Steve. I Now call over the to

Stephen Wilson

you, to and Parks, Business quarter Earnings Thank Call. PS XXXX, fourth welcome

will Business our follow balance then of will operational our positioning, results I'll PS we PSB with recovery. continue details And our I Before behalf will on of of the general begin a and momentum from a more on discuss And XXXX. forward the summary in activity. Mack results. and we absence. the quarter XXXX, with Maria Board entire Directors, his the management outlook, cover sheet. begin, and then will fourth operating wish speedy team team into XXXX, full-year and Parks financial for Adeel

and our Let $X.XX. a We results per generated to fourth X% million XX.X increased core me share activity. in to increase FFO FFO by X.X% core start and with quarter

our Same by increase year. basis. grew basis XXX achieved Park a in point NOI cash GAAP portfolio, a from X.X% We and XX.X% X.X% Park on occupancy representing on Same prior Our basis,

the We fourth are pleased during square million X.X volume was feet. Quarter, to report our leasing

a spreads Our leasing and cash a GAAP basis, were X.X% XX.X% on basis. on

the for and GAAP of November shares We one-time property respectively. all cash Our We Series rent and the $X.XX way quarter preferred W fourth for special quarter million. redeemed assets XX.X% holders. and paid per one in and industrial stock led of XX.X% dividend unit to share a during the acquired growth $XX.X common with

million. quarter sold Our full-year the was $XXX.X during properties XXXX investment three million. $XXX We volume fourth for

was industrial Parks $XXX of of the portfolio and uniqueness dynamics industrial Business demand of benefit continues from comprised Our XX.X% full-year million. PS markets. the volume supply our is and disposition flex in space, to

same year. Our Cash last of Same continues average growth industrial occupancy And of to an NOI portfolio pump quarter. Park the full-year flourish for to compared XX.X% XX.X% with

Moving to production.

the quarter. For we and transaction assets XX.X%, X.X and X.X% square foot XX.X%, Cash A cash the rent X.X% respectively. industrial with per leased rent costs feet. for was respectively. decrease square our $X.XX XX%. the year, way million led of was growth Leasing and growth of Again, sequential GAAP GAAP

rent our to Turning collections.

repaid, amount repayments XXXX, XXst, additional representing of An be $XXX,XXX during is XX.X% XXXX. collected through of rent scheduled million company December As of rent in the December is which XXXX. to of of year. deferral the company the The revenue $XXX,XXX XX.X% build $X.X the of repaid to deferral collected repayments, be scheduled

of platform strategy sight to this The the returns key designed continue, in investment for growth the rent in landlords focused not, have better-than creation remain remain our rate we in out proven pandemic. our be to prime, Supply, expected not, favor. will market a rental through Rental dynamics rate continued core markets, estate, growth. strategy value midst is overall create Parks on Business PS of and to beyond demand, in infill, industrial of While and we tenants have collections, real lose key we

turning XXX,XXX Texas, our occupied particularly $XX.X is Now, activity. foot to acquired park continues in we a and square high growth all and Park, investment park Plano, for meet in industrial million. multi-tenant The On XXXX, rent currently expectations our Jupiter Business November XX.X% on to aspects, XXst, renewals.

a X.X%. of forecasting approximately are We yield stabilized

from $XXX special announced in The dividend at Park gain Lusk On industrial San the cap Lusk the net the gross Business property Diego Park. X.X% price the preferred series Business proceeds, sales sales front, represents XXXX Business Jupiter for times the or price and were greater flex rate square our property. than foot payment of we of in estimated Port million. XXX,XXX This a remainder sale, XX sale for exchanged redemption America W was for Park end used and NOI the the of and on

for close XX,XXX property our Bellville, and In property Dallas marketing foot $X.X addition, we in are Tech should a Park we this $X.X that we previously square We've this for in quarter. foot million. anticipate a sold announced in Maryland Flex XX,XXX square sale project Royal for million Dallas,

in Particularly that our multi-Tenant external leasing our value that parks We market meet for are industrial thresholds. best-in-class allow add us through actively the growth acquisitions operating platform. to through

XX%. in pleased occupied development Freeport are foot yield with Moving to our industrial a XX,XXX announce of development stabilized is projects, to Dallas, XXX% our we now square

Seattle, Boca late on multi-family The XXX unit development in Tysons, at Mile, We our with Brentford on quarter Virginia, Construction are Florida, XXXX. in Raton of in development in the units schedule. Our deliver and XXX anticipated plan fourth to development is in of XXXX. track completions first

to portfolio to continue property a critical will and non-core with towards the stream, similar we income Tech with Royal of eye dispositions. an on high CapEx the disposing beyond, Ammendale office and evaluate the mix eye improving our and XXXX For

South prime a number capitalize the We and rezone opportunities creation. identified have opportunities. value now such or seek sell pursue to and internally to pursue. re-entitlement In higher are of the multi-family and use, others addition, densities Francisco capabilities create examples. these ultimately may we can portfolio, will in-house lead and The which have to be The to strategies We and San execute outsized nimble to within highest on at best the to re-entitlement value Mile

Lastly, the example. prime

engaged turn We I During Mack's look running. absence, the as team into XXXX. the executing now strategy will is fully call over forward to hit and has move Maria. the the we ground to

Maria Hawthorne

Thank with names. you, Steve. I'm happy to here so familiar many be today

low As you the absorption, of to of limited will Operating and record operations It's the can and demand. our driving to XXXX tell type, our from say leasing was and be If markets occupancy, XXXX rates. performing new positive vacancies low as robust upward fundamentals machine extremely of there result, unemployment, product continue that net year are construction Steve's well. growing include comments, all rental seeing is all are year safe a pricing industrial user pressure. teams

expansion retention turn XXX individual fourth the sequential basis job the rent year California, production let's in absorption. California XXX,XXX with for increased XXX general points growth for despite The points quarter. assets, our of expansion. a Seattle, a industrial great and growth cash growth Now be metrics and Northern XX.X%. California in Park Cash square of In for to fourth our delivered XX.X% markets. feet and in had XX.X%. in the constraint. industrial Same The industrial was great to XX.X% basis market the assets quarter, outstanding good XX.X%. Seattle with average QX leasing A to rent average assets, to sequential increased and record continues occupancy occupancy led regulatory industrial story In us

XX.X%. occupancy Fourth California was Same deals of Southern on executed. XXX,XXX retention Park quarter XX% saw average square feet

delivered engine XXX,XXX the With Texas, at had economic all moving XX%. feet, we Leasing square retention and virtually success metrics. forward in production in our

Our industrial increase. rent assets average occupancy XXX was Same for Park the to assets fourth XX.X% a for XX.X%. industrial quarter, points basis growth increased sequential Cash the

markets market. DFW benefiting high from As demand. rates The dynamics. often trade uncertainty set XXX% From to our retenant leased industrial and we are with and Steve due able Airport for occupied to may strong customer with to trade mentioned, but existing development quickly lose through South point a various customer we issues, Florida new adjacent the that a is is rental the time-to-time,

cash assets average quarter, XX%. occupancy XX was increased industrial sequential points assets for to growth all the increase fourth rent Our a and XX.X% basis for

to Park Washington XXX the points for Same sequential average assets increase. occupancy area, the a basis XX.X% quarter, our fourth increased For Metro industrial

the of battling are PSBs we know, office only year We that that our back in in here is you it portfolio hoped As XXXX. bulk And at is head people had to this of office headwinds. the market. the would beginning the

foot. on Despite on XX% occupied is for hold growth office of that users. team I square and optimistic feet of office the small I'm continue build-out only with a costs tenant in and once many with This to variants maintain that was proud proves office XX% transaction the rent that am we per X.X% leasing our market able again an XXXX. that spaces outperform this, XXX, to XXX just However, $X GAAP the occupancy at market. look have COVID generic of put finishes as square

orient remainder X% office. product. XX% XX% explorations of For and year, our is all flex, industrial the only the is of

Our turn Adeel. the industrial over goal and is will by the tailwinds pushing to take call advantage maintaining of rates. to now I rental high occupancy

Adeel Khan

Thank you, Maria. operating with our Beginning results.

XXXX. million share XX, the per was three stockholders share. for or fully per net This in income fully same $XXX.X $X.XX XXXX, the December million diluted allocable diluted months $XX.X common or to For ended quarter approximately to compares $X.XX

a months year-over-year. which core XX, share XXXX. for December prior months year-over-year. million same December For Park of three XXXX, XXXX, to months bringing Same in fully the year. million cash Park a million FAD million FAD available December X% XX.X% compared the diluted quarter by as ended Same a a an X.X% the $XXX.X ended NOI XX, compared for per-share for million, $XX.X Funds FFO On increase was three distribution same the X.X%. On to was $XX.X was FFO $XX.X the increase per $X.XX ended in XXXX, $XX.X the or core million for increase basis, a for representing three representing quarter was from to NOI increased XXXX basis, $XX.X XX the

continues the NOI capital FAD growth, to of expenditures, registered XX.X% which well-managed In addition cash at Same from our NOI. previously recurring benefit portfolio to Park mentioned

plus PS sources maintaining and Parks. to with for sheet and believe Turning a liquidity now Business very good of a capital low ample dividend with equity March of $X.X competitive array to on activities, leverage balance our XXXX, we diverse a prepared balance advantage strong EBITDA November, XXth, XXXX, the sheet regard facility. the financing we'll of that and as This of X.X of million our paid In serous cash February in net to an our share will on $XXX be XXXX, times. per a our all credit end concludes $XXX of to line and approximately to Operator? had liquidity on million the ordinary W With XX, preferred stockholders shares. dividend, our debt At on XXXX. record the that, million declared position first we open preferred remain ratio Board forth available redeemed quarter, We for in XX, we quarter questions. of March $XX of remarks the to continue

Operator

And [Operator Please the open JPMorgan. our now from first floor with And question go questions. Paolone you. Instructions] Thank is ahead. Anthony for comes

Anthony Paolone

address can regard, to you. on those you on timeline some any in still and potentially hold or seat Thank first CIO consider same that's also any of process. whether I I types that moves in update just Mark front. plans are you with that of and was a wondering And if know had the

Stephen Wilson

release thoughts Steve. already that should are than his element. is our have Mark Well, Other publicly this foremost, no time we've and This and we family what most that additional disclosed, we for first change, update Hi. important with the and publicly status. that's will and

your of question. part second The

I we'll returns. his needs until think that leave team. to hire He Mark own

that I doing. on doesn't slowdown think we're the or a we'll But for work while. So put stop that it pause

Anthony Paolone

talk Okay. near-term? investment about just at like, you amounts the And types then you in might of pipeline things looks dollar same put what the question, or any the around it, can looking be

Stephen Wilson

with. of much on, things a lot going -- mix a out but to competitive We're we we're There's a remains there is quality. opportunities underwriting of right of now. there. number think that mixed seen, be would How I we aggressive execute and be to There be quite product are

Anthony Paolone

just Then maybe question, Maria. for Okay. last

as what's give You talked like to level the last pushing mix year this given comparison perhaps XXXX, you with where occupancy in look to any given market? Can rate mark-to-markets in what sense just the the and year, might is. us about happened

Maria Hawthorne

XX% we'd an Tony, at coast for much maintain more XX% the it's on our could activity. XXX,XXX year. we all. Florida, the the be I of But that all of now Bay There's get intense because office think at a I really a hope growth to it's or looking any overall, the good, to the depending have, is build-out. XX% west so and right that would about is are Seattle, markets we little explorations on we have looking whether about feet. industrial. LA the least office markets area, on variable average really occupancy big this that rent at is we're good and news that, is on just that But have we One not so in coming up don't square Flex

industrial we're looking looking both looking already XX% growth. deals, one spaces that's one, that have instance, at. on one expiring the we looking of growth. and and we've we're -leased rent growth in And between at are two And about XX% I -- but one, then XX,XXX the or pre think that Those we're at rent we're for feet. again, at XX% Dallas

Anthony Paolone

Okay. And spreads cash just are clarify, to those numbers?

Maria Hawthorne

Cash.

Anthony Paolone

Thank you.

Operator

Craig take next question We will our from Mailman.

Unidentified Analyst

-- there. for Good is Ardie out morning on Craig. afternoon This good

Just a quick sources one uses. and on capital

So it the of in have you looks like Texas. disposition pro forma guys

thoughts year, acquirers given redeploy You that any here. expect Through the pipeline today to guys net you at are you should in some guys and looking be we capital can just there?

Adeel Khan

answered doing in have portfolio over continue Almost way as been the the decline year. we I to last that the question. tune we

right. point that's number think I and So earlier priority to X, Steve’s there,

find As redeploy. proceeds, so is sources portfolio as that we and can we to fine disposition to get first get exchange order tune business any we money our to the

laser that's So focus. our

what So we're are in said Steve of we terms point, and our some from disciplined our that's in of of on disposition that example last we certainly is the not in capital. best that, terms ability of capability. very just the in And markets. of stuff a quite supporting execute perspective. that to having do we're we And this proceeds. question, in But great we're with looking the operating markets. strategy And to part distracted just an of there's know different that's terms obviously, bit And what that

Our go just want. to ready is any way balance equipped we sheet which and

best We balance class. sheet have in the

we just we've their and got is team to for team at looking shareholders. to continue single need in to the accretive that the thing So every great sure laser-focused perspective be we to and do a that just here make

Unidentified Analyst

the preferred if you. profitable one, Got the Series And why? it. quick Thank one Series more this year, I could. and X [Indiscernible]

Adeel Khan

That's get And as Yes. great we'll a with all think it foremost and I first question. starts right that answer we closer, right? priority. data, So the

But bit of at more certainly, as a for but will guide the that, terms us that for our past, we certainly [Indiscernible], don't get we a messaging have execute opportunity guide quarter-by-quarter if really us, find side said but having end we'll further. you However, cancel And we've that perspective reason we little well, see. seen if don't the in they we'll set some an but table, then that's looking we're at, can't we in closer, the lot certainly really on breakdown. from quality and our

foremost The is increase, to first priority grow the to just and company.

Unidentified Analyst

Thank you.

Operator

Emmanuel next Citi. the from ask question. Please take with your We'll question Korchman

Emmanuel Korchman

us one just Hey, like maybe be the actively needs help you or stuff aggressive everyone. but [Indiscernible] versus reconcile trying CIO so be to acquisitions, in like are a what sounded sounded this or holding underway thinking you Steve, But made couple decision some decision. a how is seat permanent just on about Mark's that you've on more you, hire then without as to already Mark that's for I'm might of a to comments is

Stephen Wilson

has depth. some Well, the team management

source affect strategic. of Officer for be the the going been in And We things all we've a now right in the obviously doesn't [Indiscernible] would he's it months. at actively market Investment more deals. But Chief real three maybe and estate, have on looking what's

I it it a his just the affects the Adeel, doesn't about So Officer on our think when myself, how Maria, we're impact basis. business how we're Chief anything, I important going and Mac hire doesn't involved, business. own don't viewing for so but comes, it's daily it to Investment change think time very and we're

Emmanuel Korchman

And then Maria, for you. one

occupancy Just retention, and relationship way longer like about or actively between as changing track you the rate things, are that think rental are and that? you the depending those growth you all

Maria Hawthorne

deals larger question, deals last -- regards this. That's the And XX-year we [Indiscernible] to get from Manny. tenants years. a the good We by on that status deals average seen with five our executed plus more in can do sophisticated on you as

Our bread little beyond butter. them projections usually. guys because just they don't are and years It's three five hard and have XX-year get to

to of XX% be every at rent even you're them and the years. Does the apple if rental rate guys. little us and the the last two have To getting that on some shorter-terms guys, makes bites not two XX% little of you you're [Indiscernible] increasing But have three allow So those when sense? seven years. growth increases renewing

Emmanuel Korchman

No, does. it

So changing it years actively -- no. wondering sounds if is the things, ago. I answer like it thinking just about but were the you was sounds [Indiscernible] answer like

Maria Hawthorne

No, you can't can. love be get with to just increases. automatic XX-year That do our great X deals would but you and that. I would

Adeel Khan

here, look what us retention how that's but more know we the we -- at don't want focus that, to think earlier what just Maria's [Indiscernible] rent antidote on this growth, we saying the Maria to rent look looking we I at to goes think pushing we're because and comments I'll business. one trying numbers put we're internal is here. lower is our and guidance to our XXXX chose when And that's provide I at purely here, add push then to the I

the And not because aligns focus. key to seen So news the that you've all the this guys you peers, on so was call is well that Maria that's from really industrial with saying. obviously what

that bit because if shift willing want are to make opportunity to retention pay of it's create all certainly to to sure And design. bites by set get the just at and they apple new a we're again who there's point, the get Because tenants higher. trying we So are. lower, an if her little there, more we demand, as that

we will a the well as through you the hopefully numbers bit that in little as year. of So see flow go

Emmanuel Korchman

everyone. you, Thank

Operator

at turn Wilson There are to will no time. further I over Steve this closing the back call for any questions remarks.

Stephen Wilson

look you we day. great to everyone morning thank your talk months. in to for Have you Thank of a Well, you. a and this time forward couple again

Operator

conclude this day. your And a Please wonderful and does conference this today's you. disconnect Thank at time call. line have

PS Business Parks (PSBXP) 23 Feb 222021 Q4 Earnings call transcript