EX-99.2 12 d359091dex992.htm EX-99.2 EX-99.2

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  
  

 

 

    

 

 

    

 

 

  
     3,052,300       (932,424 )      2,119,876  

Accumulated depreciation

      (1,182,746 )      420,096   (1)      (762,650 ) 
  

 

 

    

 

 

    

 

 

  
     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  
  

 

 

    

 

 

    

 

 

  
     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  
  

 

 

    

 

 

    

 

 

  

Total assets

    $ 2,206,057     $ (532,419 )    $ 1,673,638  
  

 

 

    

 

 

    

 

 

  
LIABILITIES AND EQUITY                   

Accrued and other liabilities

    $ 92,047     $ (16,451 ) (1)    $ 75,596  

Credit facility

      —         —         —    
  

 

 

    

 

 

    

 

 

  

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  
  

 

 

    

 

 

    

 

 

  

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  
  

 

 

    

 

 

    

 

 

  

Total equity

      2,114,010       (515,968 )      1,598,042  
  

 

 

    

 

 

    

 

 

  

Total liabilities and equity

    $ 2,206,057     $ (532,419 )    $ 1,673,638  
  

 

 

    

 

 

    

 

 

  

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  
  

 

 

    

 

 

    

 

 

  

Total operating expenses

      135,048       (33,178 )      101,870  
  

 

 

    

 

 

    

 

 

  

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  
  

 

 

    

 

 

    

 

 

  

Net income

      208,665       (23,477 )      185,188  

Allocation to noncontrolling interests

      (39,437 )      39,429   (2)      (8 ) 
  

 

 

    

 

 

    

 

 

  

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 ) 
  

 

 

    

 

 

    

 

 

  

Net income allocable to common stockholders

    $ 149,070     $ 15,952     $ 165,022  
  

 

 

    

 

 

    

 

 

  

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  
  

 

 

    

 

 

    

 

 

  

Total operating expenses

      243,439       (67,140 )      176,299  
  

 

 

    

 

 

    

 

 

  

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  
  

 

 

    

 

 

    

 

 

  

Net income

      553,029       (45,352 )      507,677  

Allocation to noncontrolling interests

      (104,270 )      104,290   (2)      20  
  

 

 

    

 

 

    

 

 

  

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 ) 
  

 

 

    

 

 

    

 

 

  

Net income allocable to common stockholders

    $ 393,088     $ 58,938     $ 452,026  
  

 

 

    

 

 

    

 

 

  

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.