PS Business Parks, Inc. (NYSE:PSB) reported operating results for the three and six months ended June 30, 2019.
Operating Results for the Three Months Ended June 30, 2019
Net income allocable to common shareholders was $28.6 million, or $1.04 per diluted common share, for the three months ended June 30, 2019, a decrease of $41.6 million, or 59.3%, from $70.2 million, or $2.56 per diluted common share, for the same period in 2018. The decrease was mainly due to the gain on sale of real estate facilities sold during the second quarter of 2018 that did not recur in the second quarter of 2019, partially offset by an increase in net operating income (“NOI”) with respect to our real estate facilities. The increase in NOI includes a $3.4 million, or 5.2%, increase attributable to our Same Park facilities driven by an increase in rental rates, combined with increased NOI from our Non-Same Park and multifamily assets, partially offset by reduced NOI generated from facilities sold in 2018 as well as assets held for sale as of June 30, 2019.
Operating Results for the Six Months Ended June 30, 2019
Net income allocable to common shareholders was $54.9 million, or $2.00 per diluted common share, for the six months ended June 30, 2019, a decrease of $61.4 million, or 52.8%, from $116.3 million, or $4.24 per diluted common share, for the same period in 2018. The decrease was mainly due to the gain on sale of real estate facilities sold during the first half of 2018 that did not recur in 2019, partially offset by an increase in NOI with respect to our real estate facilities. The increase in NOI includes a $6.2 million, or 4.8%, increase attributable to our Same Park facilities driven by an increase in rental rates, combined with increased NOI from our Non-Same Park and multifamily assets, partially offset by reduced NOI generated from facilities sold in 2018.
Funds from Operations (“FFO”), Core FFO and Funds Available for Distribution (“FAD”)
FFO increased 10.4% during the three months ended June 30, 2019 compared to the same period in 2018, increasing to $1.75 per share from $1.59 per share in the prior period. FFO increased 7.8% during the six months ended June 30, 2019 compared to the same period in 2018, increasing to $3.42 per share from $3.18 per share in the prior period. FFO is a non-GAAP (generally accepted accounting principles) measure defined by the National Association of Real Estate Investment Trusts and generally represents GAAP net income before real estate depreciation and amortization expense, gains or losses on sales of operating properties and land and impairment charges on real estate assets.
Core FFO per share was exactly equal to FFO per share for the three and six months ended June 30, 2019 and 2018. Core FFO is also a non-GAAP measure that represents FFO excluding the impact of (i) charges related to the redemption of preferred stock and (ii) nonrecurring income or expense items, neither of which were incurred by the Company during the three and six month periods ended June 30, 2019 and 2018.
FAD was $52.3 million for the three months ended June 30, 2019 as compared to $46.8 million for the same period in 2018, an increase of 11.6%. FAD was $98.5 million for the six months ended June 30, 2019 as compared to $90.8 million for the same period in 2018, an increase of 8.5%. FAD is a non-GAAP measure that represents Core FFO adjusted to (i) deduct recurring capital improvements and capitalized tenant improvements and lease commissions and (ii) eliminate certain non-cash income or expenses such as straight-line rent and stock compensation expense.
FFO, Core FFO and FAD are not substitutes for GAAP net income. Other real estate investment trusts (“REITs”) may compute these measures differently; and, in the case of Core FFO and FAD, other REITs may not use the same methodology which could inhibit comparability. We believe our presentations of FFO, Core FFO and FAD assist investors and analysts in analyzing and comparing our operating and financial performance between reporting periods.
Property Operations–Same Park Portfolio
We believe that evaluation of our Same Park portfolio, defined as all properties owned and operated as of June 30, 2019 that were acquired prior to January 1, 2017, provides an informative view of how the Company’s portfolio has performed over comparable periods. As of June 30, 2019, our Same Park facilities constitute 25.8 million rentable square feet, or 91.2% of the 28.3 million rentable square feet in the Company’s total portfolio, and excludes our 95.0% interest in our 395-unit multifamily property. Approximately 1.3 million square feet of flex and office business parks located in Rockville and Silver Spring, Maryland have been classified as held for sale as of June 30, 2019. As such, these parks have been removed from Same Park results for the three and six months ended June 30, 2019 and 2018.
The following table presents the unaudited operating results of the Company’s Same Park facilities for the three and six months ended June 30, 2019 and 2018 (in thousands, except per square foot amounts):
For the Three Months | For The Six Months | ||||||||||||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||||||
Rental income (1) | $ | 95,945 | $ | 91,942 | 4.4 | % | $ | 191,638 | $ | 183,620 | 4.4 | % | |||||||||||||
Adjusted cost of operations (2) | |||||||||||||||||||||||||
Property taxes | 10,129 | 9,764 | 3.7 | % | 20,337 | 19,512 | 4.2 | % | |||||||||||||||||
Utilities | 4,524 | 4,637 | (2.4 | %) | 9,516 | 9,572 | (0.6 | %) | |||||||||||||||||
Repairs and maintenance | 6,138 | 5,695 | 7.8 | % | 11,725 | 11,127 | 5.4 | % | |||||||||||||||||
Snow removal | 36 | 42 | (14.3 | %) | 1,049 | 655 | 60.2 | % | |||||||||||||||||
Other expenses | 6,120 | 6,228 | (1.7 | %) | 12,762 | 12,722 | 0.3 | % | |||||||||||||||||
Total | 26,947 | 26,366 | 2.2 | % | 55,389 | 53,588 | 3.4 | % | |||||||||||||||||
NOI (2) (3) | $ | 68,998 | $ | 65,576 | 5.2 | % | $ | 136,249 | $ | 130,032 | 4.8 | % | |||||||||||||
Selected Statistical Data | |||||||||||||||||||||||||
NOI margin (4) | 71.9 | % | 71.3 | % | 0.8 | % | 71.1 | % | 70.8 | % | 0.4 | % | |||||||||||||
Weighted average square foot occupancy | 94.3 | % | 94.5 | % | (0.2 | %) | 94.5 | % | 94.5 | % | 0.0 | % | |||||||||||||
Annualized revenue per occupied | |||||||||||||||||||||||||
square foot (5) | $ | 15.77 | $ | 15.08 | 4.6 | % | $ | 15.71 | $ | 15.06 | 4.3 | % | |||||||||||||
Revenue per available foot (RevPAF) (6) | $ | 14.87 | $ | 14.25 | 4.4 | % | $ | 14.85 | $ | 14.23 | 4.4 | % | |||||||||||||
| (1) | Same Park rental income includes lease buyout income of $780,000 and $122,000 for the three months ended June 30, 2019 and 2018, respectively, and $957,000 and $250,000 for the six months ended June 30, 2019 and 2018, respectively. |
| (2) | Adjusted cost of operations, as presented above, excludes stock compensation expense for employees whose compensation expense is recorded in cost of operations, which can vary significantly period to period based upon the performance of the Company. Beginning January 1, 2019, the Company has recorded our divisional vice presidents’ compensation costs within general and administrative expense as we determined that the nature of these individuals’ responsibilities is more consistent with corporate oversight as opposed to direct property operations. As a result of this change, we have reclassified divisional vice presidents’ compensation costs totaling $289,000 and $655,000 for the three and six months ended June 30, 2018, respectively, from adjusted cost of operations into general and administrative expenses in order to conform to the current period presentation. Non-cash compensation expense for our divisional vice presidents, which totaled $149,000 and $302,000 for the three and six months ended June 30, 2018, respectively, had previously been excluded from adjusted cost of operations. |
| (3) | We utilize NOI, a non-GAAP financial measure, to evaluate the operating performance of our business parks. We define NOI as rental income less adjusted cost of operations. We believe NOI assists investors in analyzing the performance and value of our business parks by excluding (i) corporate overhead (i.e., general and administrative expenses) because it does not relate to the direct operating performance of our business parks, (ii) depreciation and amortization expense because it does not accurately reflect changes in the fair value of our business parks and (iii) stock compensation expense because this expense item can vary significantly from period to period and thus impact comparability across periods. |
| (4) | NOI margin is computed by dividing NOI by rental income. |
| (5) | Revenue per occupied square foot is computed by dividing rental income during the period by weighted average occupied square feet during the same period. For the three and six month periods ending June 30, 2019 and 2018, rental income amounts have been annualized. |
| (6) | Revenue per available foot is computed by dividing rental income during the period by weighted average available square feet during the same period. For the three and six month periods ending June 30, 2019 and 2018, rental income amounts have been annualized. |
The following table summarizes unaudited selected quarterly financial data with respect to the Same Park facilities (in thousands, except per square foot amounts):
For the Three Months Ended | |||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||||||
Rental income | |||||||||||||||||||
2019 | $ | 95,693 | $ | 95,945 | $ | — | $ | — | |||||||||||
2018 | $ | 91,678 | $ | 91,942 | $ | 92,356 | $ | 92,459 | |||||||||||
Adjusted cost of operations (1) | |||||||||||||||||||
2019 | $ | 28,442 | $ | 26,947 | $ | — | $ | — | |||||||||||
2018 | $ | 27,222 | $ | 26,366 | $ | 26,252 | $ | 25,495 | |||||||||||
NOI (1) | |||||||||||||||||||
2019 | $ | 67,251 | $ | 68,998 | $ | — | $ | — | |||||||||||
2018 | $ | 64,456 | $ | 65,576 | $ | 66,104 | $ | 66,964 | |||||||||||
Weighted average square foot occupancy | |||||||||||||||||||
2019 | 94.7 | % | 94.3 | % | — | — | |||||||||||||
2018 | 94.5 | % | 94.5 | % | 95.1 | % | 95.4 | % | |||||||||||
Annualized revenue per occupied square foot | |||||||||||||||||||
2019 | $ | 15.66 | $ | 15.77 | $ | — | $ | — | |||||||||||
2018 | $ | 15.04 | $ | 15.08 | $ | 15.05 | $ | 15.01 | |||||||||||
RevPAF | |||||||||||||||||||
2019 | $ | 14.83 | $ | 14.87 | $ | — | $ | — | |||||||||||
2018 | $ | 14.21 | $ | 14.25 | $ | 14.31 | $ | 14.33 | |||||||||||
| (1) | Beginning January 1, 2019, the Company has recorded our divisional vice presidents’ compensation costs within general and administrative expense as we determined that the nature of these individuals’ responsibilities is more consistent with corporate oversight as opposed to direct property operations. To conform to current period presentation, we have reclassified divisional vice presidents’ compensation costs totaling $366,000, $289,000, $281,000 and $281,000 for each of the three months ended March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018, respectively, from adjusted cost of operations into general and administrative expenses. Non-cash compensation expense for our divisional vice presidents had previously been excluded from adjusted cost of operations. |
Distributions Declared
On July 23, 2019, the Board of Directors declared a quarterly dividend of $1.05 per common share. Distributions were also declared on the various series of depositary shares, each representing 1/1,000 of a share of preferred stock. Distributions will be payable on September 27, 2019 to shareholders of record on September 12, 2019.
Company Information
PS Business Parks, Inc., a member of the S&P MidCap 400, is a REIT that acquires, develops, owns and operates commercial properties, primarily multi-tenant industrial, flex and office space. As of June 30, 2019, the Company wholly owned 28.3 million rentable square feet with approximately 5,100 commercial customers in six states and held a 95.0% interest in a 395-unit apartment complex.
Forward-Looking Statements
When used within this press release, the words “may,” “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” “intends” and similar expressions are intended to identify “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results and performance of the Company to be materially different from those expressed or implied in the forward-looking statements. Such factors include the impact of competition from new and existing commercial facilities which could impact rents and occupancy levels at the Company’s facilities; the Company’s ability to evaluate, finance and integrate acquired and developed properties into the Company’s existing operations; the Company’s ability to effectively compete in the markets that it does business in; the impact of the regulatory environment as well as national, state and local laws and regulations including, without limitation, those governing REITs; the impact of general economic conditions upon rental rates and occupancy levels at the Company’s facilities; the availability of permanent capital at attractive rates, the outlook and actions of rating agencies and risks detailed from time to time in the Company’s SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.
Additional information about PS Business Parks, Inc., including more financial analysis of the second quarter operating results, is available on the Company’s website at psbusinessparks.com.
A conference call is scheduled for Wednesday, July 24, 2019, at 9:00 a.m. PDT (12:00 p.m. EDT) to discuss second quarter results. The toll free number is (866) 342-8591; the conference ID is PSBQ219. The call will also be available via a live webcast on the Company’s website. A replay of the conference call will be available through August 7, 2019 at (800) 839-0866, as well as via webcast on the Company’s website.
Additional financial data attached.
PS BUSINESS PARKS, INC.
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June 30, | December 31, | ||||||||
2019 | 2018 | ||||||||
(Unaudited) | |||||||||
ASSETS | |||||||||
Cash and cash equivalents | $ | 42,046 | $ | 37,379 | |||||
Real estate facilities, at cost | |||||||||
Land | 772,399 | 762,731 | |||||||
Buildings and improvements | 2,171,281 | 2,157,407 | |||||||
2,943,680 | 2,920,138 | ||||||||
Accumulated depreciation | (1,135,107 | ) | (1,097,748 | ) | |||||
1,808,573 | 1,822,390 | ||||||||
Properties held for sale, net | 124,680 | 128,093 | |||||||
Land and building held for development | 31,841 | 30,848 | |||||||
1,965,094 | 1,981,331 | ||||||||
Rent receivable, net | 2,308 | 1,403 | |||||||
Deferred rent receivable, net | 34,572 | 33,308 | |||||||
Other assets | 13,524 | 15,173 | |||||||
Total assets | $ | 2,057,544 | $ | 2,068,594 | |||||
LIABILITIES AND EQUITY | |||||||||
Accrued and other liabilities | $ | 80,367 | $ | 85,141 | |||||
Total liabilities | 80,367 | 85,141 | |||||||
Commitments and contingencies | |||||||||
Equity | |||||||||
PS Business Parks, Inc.’s shareholders’ equity | |||||||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, | |||||||||
38,390 shares issued and outstanding at | |||||||||
June 30, 2019 and December 31, 2018 | 959,750 | 959,750 | |||||||
Common stock, $0.01 par value, 100,000,000 shares authorized, | |||||||||
27,429,756 and 27,362,101 shares issued and outstanding at | |||||||||
June 30, 2019 and December 31, 2018, respectively | 274 | 274 | |||||||
Paid-in capital | 733,777 | 736,131 | |||||||
Accumulated earnings | 67,049 | 69,207 | |||||||
Total PS Business Parks, Inc.’s shareholders’ equity | 1,760,850 | 1,765,362 | |||||||
Noncontrolling interests | 216,327 | 218,091 | |||||||
Total equity | 1,977,177 | 1,983,453 | |||||||
Total liabilities and equity | $ | 2,057,544 | $ | 2,068,594 | |||||
PS BUSINESS PARKS, INC.
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For The Three Months | For The Six Months | ||||||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||
Rental income | $ | 107,782 | $ | 101,824 | $ | 215,607 | $ | 205,583 | |||||||||||
Expenses | |||||||||||||||||||
Cost of operations(1) | 31,460 | 30,796 | 65,053 | 63,252 | |||||||||||||||
Depreciation and amortization | 24,768 | 24,416 | 49,643 | 48,298 | |||||||||||||||
General and administrative (1) | 2,827 | 2,828 | 6,060 | 5,678 | |||||||||||||||
Total operating expenses | 59,055 | 58,040 | 120,756 | 117,228 | |||||||||||||||
Interest and other income | 764 | 294 | 1,382 | 578 | |||||||||||||||
Interest and other expense | (118 | ) | (167 | ) | (285 | ) | (332 | ) | |||||||||||
Gain on sale of real estate facilities | — | 58,448 | — | 85,283 | |||||||||||||||
Net income | 49,373 | 102,359 | 95,948 | 173,884 | |||||||||||||||
Allocation to noncontrolling interests | (7,623 | ) | (18,400 | ) | (14,650 | ) | (30,300 | ) | |||||||||||
Net income allocable to PS Business Parks, Inc. | 41,750 | 83,959 | 81,298 | 143,584 | |||||||||||||||
Allocation to preferred shareholders | (12,959 | ) | (12,959 | ) | (25,918 | ) | (25,962 | ) | |||||||||||
Allocation to restricted stock unit holders | (212 | ) | (779 | ) | (480 | ) | (1,353 | ) | |||||||||||
Net income allocable to common shareholders | $ | 28,579 | $ | 70,221 | $ | 54,900 | $ | 116,269 | |||||||||||
Net income per common share | |||||||||||||||||||
Basic | $ | 1.04 | $ | 2.57 | $ | 2.00 | $ | 4.26 | |||||||||||
Diluted | $ | 1.04 | $ | 2.56 | $ | 2.00 | $ | 4.24 | |||||||||||
Weighted average common shares outstanding | |||||||||||||||||||
Basic | 27,426 | 27,322 | 27,400 | 27,294 | |||||||||||||||
Diluted | 27,532 | 27,423 | 27,505 | 27,395 | |||||||||||||||
| (1) | We have reclassified our divisional vice presidents’ compensation costs totaling $460,000 for the three months ended June 30, 2018, consisting of $305,000 of compensation costs and $155,000 of stock compensation expense, and $1.0 million for the six months ended June 30, 2018, consisting of $690,000 of compensation costs and $314,000 of stock compensation expense, from cost of operations into general and administrative expenses on our consolidated statements of income in the three and six months ended June 30, 2018 in order to conform to the current period presentation. |
PS BUSINESS PARKS, INC.
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For The Three Months | For The Six Months | ||||||||||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
Net income allocable to common shareholders | $ | 28,579 | $ | 70,221 | $ | 54,900 | $ | 116,269 | |||||||||||||||
Adjustments | |||||||||||||||||||||||
Gain on sale of real estate facilities | — | (58,448 | ) | — | (85,283 | ) | |||||||||||||||||
Depreciation and amortization expense | 24,768 | 24,416 | 49,643 | 48,298 | |||||||||||||||||||
Net income allocated to noncontrolling interests | 7,623 | 18,400 | 14,650 | 30,300 | |||||||||||||||||||
Net income allocated to restricted stock unit holders | 212 | 779 | 480 | 1,353 | |||||||||||||||||||
FFO (income) loss allocated to joint venture partner | (37 | ) | (2 | ) | (66 | ) | 11 | ||||||||||||||||
FFO allocable to common and dilutive shares (1) | $ | 61,145 | $ | 55,366 | $ | 119,607 | $ | 110,948 | |||||||||||||||
Core FFO allocable to common and dilutive shares (1) | $ | 61,145 | $ | 55,366 | $ | 119,607 | $ | 110,948 | |||||||||||||||
Adjustments | |||||||||||||||||||||||
Recurring capital improvements | (2,428 | ) | (2,329 | ) | (3,608 | ) | (3,460 | ) | |||||||||||||||
Tenant improvements | (5,016 | ) | (3,817 | ) | (8,567 | ) | (7,757 | ) | |||||||||||||||
Lease commissions | (1,417 | ) | (1,834 | ) | (3,373 | ) | (3,773 | ) | |||||||||||||||
Straight-line rent | (652 | ) | (609 | ) | (1,309 | ) | (1,344 | ) | |||||||||||||||
In-place lease adjustment | 4 | 16 | 25 | 23 | |||||||||||||||||||
Tenant improvement reimbursement amortization, | |||||||||||||||||||||||
net of lease incentive amortization | (284 | ) | (619 | ) | (663 | ) | (1,134 | ) | |||||||||||||||
Non-cash stock compensation expense | 918 | 671 | 1,889 | 1,781 | |||||||||||||||||||
Cash paid for taxes in lieu of shares upon vesting of | |||||||||||||||||||||||
restricted stock units | (6 | ) | — | (5,500 | ) | (4,529 | ) | ||||||||||||||||
FAD allocable to common and dilutive shares (2) | $ | 52,264 | $ | 46,845 | $ | 98,501 | $ | 90,755 | |||||||||||||||
Distributions to common shareholders, noncontrolling interests and | |||||||||||||||||||||||
restricted stock unit holders | $ | 36,728 | $ | 29,675 | $ | 73,404 | $ | 59,351 | |||||||||||||||
Distribution payout ratio | 70.3 | % | 63.3 | % | 74.5 | % | 65.4 | % | |||||||||||||||
Reconciliation of Earnings per Share to FFO per Share | |||||||||||||||||||||||
Net income per common share—diluted | $ | 1.04 | $ | 2.56 | $ | 2.00 | $ | 4.24 | |||||||||||||||
Gain on sale of real estate facilities | — | (1.67 | ) | — | (2.44 | ) | |||||||||||||||||
Depreciation and amortization expense | 0.71 | 0.70 | 1.42 | 1.38 | |||||||||||||||||||
FFO per share (1) | $ | 1.75 | $ | 1.59 | $ | 3.42 | $ | 3.18 | |||||||||||||||
Weighted average outstanding: | |||||||||||||||||||||||
Common shares | 27,426 | 27,322 | 27,400 | 27,294 | |||||||||||||||||||
Operating partnership units | 7,305 | 7,305 | 7,305 | 7,305 | |||||||||||||||||||
Restricted stock units | 109 | 156 | 132 | 189 | |||||||||||||||||||
Common share equivalents | 106 | 101 | 105 | 101 | |||||||||||||||||||
Total common and dilutive shares | 34,946 | 34,884 | 34,942 | 34,889 | |||||||||||||||||||
| (1) | FFO and Core FFO are defined above. For the three and six months ended June 30, 2019 and 2018, Core FFO was exactly equal to FFO as the Company did not incur any preferred share redemption charges or nonrecurring income or expenses in either period. |
| (2) | FAD is defined above. |
PS BUSINESS PARKS, INC.
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For The Three Months | For The Six Months | ||||||||||||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||||||
Rental income | |||||||||||||||||||||||||
Same Park (1) | $ | 95,945 | $ | 91,942 | 4.4 | % | $ | 191,638 | $ | 183,620 | 4.4 | % | |||||||||||||
Non-Same Park | 3,429 | 627 | 446.9 | % | 5,910 | 627 | 842.6 | % | |||||||||||||||||
Multifamily | 2,475 | 1,738 | 42.4 | % | 4,973 | 3,162 | 57.3 | % | |||||||||||||||||
Assets sold or held for sale (2) | 5,933 | 7,517 | (21.1 | %) | 13,086 | 18,174 | (28.0 | %) | |||||||||||||||||
Total rental income | 107,782 | 101,824 | 5.9 | % | 215,607 | 205,583 | 4.9 | % | |||||||||||||||||
Cost of operations (3) | |||||||||||||||||||||||||
Same Park | 26,947 | 26,366 | 2.2 | % | 55,389 | 53,588 | 3.4 | % | |||||||||||||||||
Non-Same Park | 1,024 | 224 | 357.1 | % | 2,167 | 224 | 867.4 | % | |||||||||||||||||
Multifamily | 1,002 | 973 | 3.0 | % | 2,073 | 1,970 | 5.2 | % | |||||||||||||||||
Assets sold or held for sale (2) | 2,192 | 2,899 | (24.4 | %) | 4,823 | 6,763 | (28.7 | %) | |||||||||||||||||
Stock compensation expense (4) | 295 | 334 | (11.7 | %) | 601 | 707 | (15.0 | %) | |||||||||||||||||
Total cost of operations | 31,460 | 30,796 | 2.2 | % | 65,053 | 63,252 | 2.8 | % | |||||||||||||||||
Net operating income (3) | |||||||||||||||||||||||||
Same Park | 68,998 | 65,576 | 5.2 | % | 136,249 | 130,032 | 4.8 | % | |||||||||||||||||
Non-Same Park | 2,405 | 403 | 496.8 | % | 3,743 | 403 | 828.8 | % | |||||||||||||||||
Multifamily | 1,473 | 765 | 92.5 | % | 2,900 | 1,192 | 143.3 | % | |||||||||||||||||
Assets sold or held for sale (2) (5) | 3,741 | 4,618 | (19.0 | %) | 8,263 | 11,411 | (27.6 | %) | |||||||||||||||||
Stock compensation expense (4) | (295 | ) | (334 | ) | (11.7 | %) | (601 | ) | (707 | ) | (15.0 | %) | |||||||||||||
Depreciation and amortization expense | (24,768 | ) | (24,416 | ) | 1.4 | % | (49,643 | ) | (48,298 | ) | 2.8 | % | |||||||||||||
General and administrative expense (3) | (2,827 | ) | (2,828 | ) | (0.0 | %) | (6,060 | ) | (5,678 | ) | 6.7 | % | |||||||||||||
Interest and other income | 764 | 294 | 159.9 | % | 1,382 | 578 | 139.1 | % | |||||||||||||||||
Interest and other expense | (118 | ) | (167 | ) | (29.3 | %) | (285 | ) | (332 | ) | (14.2 | %) | |||||||||||||
Gain on sale of real estate facilities | — | 58,448 | (100.0 | %) | — | 85,283 | (100.0 | %) | |||||||||||||||||
Net income | $ | 49,373 | $ | 102,359 | (51.8 | %) | $ | 95,948 | $ | 173,884 | (44.8 | %) | |||||||||||||
| (1) | Same Park rental income includes lease buyout income of $780,000 and $122,000 for the three months ended June 30, 2019 and 2018, respectively, and $957,000 and $250,000 for the six months ended June 30, 2019 and 2018, respectively. |
| (2) | Amounts for the three and six months ended June 30, 2019 reflect the operating results related to 1.3 million square feet of flex and office assets held for sale as of June 30, 2019; amounts shown for the three and six months ended June 30, 2018 reflect the operating results related to 1.3 million square feet of flex and office assets held for sale as of June 30, 2019 as well as operating results related to 899,000 square feet of assets sold in 2018. |
| (3) | We have reclassified our divisional vice presidents’ compensation costs totaling $460,000 and $1.0 million for the three and six months ended June 30, 2018, respectively, from cost of operations into general and administrative expenses on our consolidated statements of income in the three and six months ended June 30, 2018 in order to conform to the current period presentation. Of this amount, $155,000 and $314,000 of stock compensation expense for the three and six months, respectively, have previously been excluded from NOI. |
| (4) | Stock compensation expense, as shown here, represents stock compensation expense for employees whose compensation expense is recorded in cost of operations. Note that stock compensation expense attributable to our executive management team (including divisional vice presidents) and other corporate employees is recorded within general and administrative expense. |
| (5) | NOI from assets held for sale was $3.7 million and $4.2 million for the three months ended June 30, 2019 and 2018, respectively, and $8.3 million and $8.5 million for the six months ended June 30, 2019 and 2018, respectively. The three and six months 2018 remaining NOI balances relate to assets sold during 2018. |
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