PS Business Parks Inc. (PSB) closed the divestiture of two business parks – Creekside Corporate Park and Cornell Oaks Corporate Center – in Beaverton, OR. Following this announcement, shares of this real estate investment trust (REIT) gained 3 and 30 cents on the regular trading session on Oct 2 and Oct 3, respectively.
PS Business Parks reaped around $159.9 million in proceeds, after transaction costs, from these divestitures. In particular, the sold parks comprised 18 buildings, which stretched about 1.2 million square feet and had occupancy of 89.6% (as of sale date).
As a matter of fact, PS Business Park currently has one remaining business park in Oregon which the company is planning to sell. With the conclusion of this Portland-based asset divestiture, the company will exit the Oregon market.
We view the transaction as strategic fit for PS Business Parks as it is in line with the company’s ongoing portfolio repositioning activity. The company aims at divesting non-strategic assets and uses the dry powder for investment in strategic ones. Notably, PS Business Parks is capitalizing on opportunities present in existing as well as new high growth markets through accretive acquisitions. While this is a strategic fit for the company’s long-term growth, the near-term dilutive effect of such moves is unavoidable.
PS Business Parks currently carries a Zacks Rank #3 (Hold). Investors interested in REITs may consider better-ranked stocks like Cousins Properties Incorporated (CUZ), Chambers Street Properties (CSG) and Chatham Lodging Trust (CLDT). All these stocks carry a Zacks Rank #2 (Buy).
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