PS Business Parks Inc. (PSB), a real estate investment trust (REIT), has recently acquired a multi-tenant office building in Tysons Corner, Virginia, for $27.1 million. The property is adjacent to 735,000 square feet Westpark Business Campus acquired in December 2010, which comprises 7 separate six-story buildings across 39.2 contiguous acres.
Post-acquisition, the building will be integrated into the Westpark Business Campus to realize economies of scale.
The six-storeyed acquired property spanning 140,000 square feet is currently 68% leased with 9 tenants. PS Business Parks funded the acquisition by utilizing cash in hand and availability in its credit facility. With the acquisition, PS Business Parks’ Tysons Corner portfolio swelled to 10 office buildings totaling 1.1 million square feet of space, accommodating a wide array of user types and sizes.
PS Business Parks owns, acquires, develops, and operates commercial real estate properties across 8 states in the U.S. Its property portfolio includes low-rise suburban multi-tenant offices, business parks, and industrial and flex assets. Located mostly in high-population markets, flex properties are a combination of warehouse and office space and can be easily configured to suit a variety of uses.
The warehouse component of the flex space is primarily used for purposes such as light manufacturing and assembly, storage and warehousing, showroom, laboratory, distribution and research and development activities. The office component of the flex space is complementary to the warehouse component and enables businesses to accommodate management and production staff in the same facility.
Since going public in 1998, PS Business Parks' portfolio has grown from 5 million square feet to 21.9 million square feet of wholly-owned properties as of June 1, 2011.
Over the years, the company has focused on investing and owning real estate in diversified markets, thereby tapping multiple industry concentrations and minimizing the risks associated with the economic down cycles. In addition, the ability of the company's properties to accommodate a wide variety of uses with minimal reconfiguration has enabled it to keep its capital cost relatively low.
We maintain our Neutral recommendation on PS Business Parks, which presently has a Zacks #3 Rank that translates into a short-term Hold recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months. We also have a ‘Neutral’ recommendation and a Zacks #4 Rank (short-term Sell) for First Industrial Realty Trust Inc. (FR), a competitor of PS Business Parks.
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