Was PSB's 3Q Miss A Fluke?

Citigroup has published a research report on PS Business Parks

following a slight miss on estimates reported in the company's 3Q. In the report, Citigroup writes "After a few quarters of improving fundamentals, with occupancies ticking up and same-store NOI declines abating, PSB reported a slightly softer 3Q, with FFO missing Citi and consensus estimates by 1c on core and operating metrics a bit disappointing relative to recent strength. Capex also ticked up sequentially, likely a partial result of recent “fixer-upper” acquisitions in addition to tenant concessions. The company does not provide guidance, but results reflect recent management commentary of an unpredictable and soft operating environment. With mid-teens rental rate rollovers and high lease roll (30% through 2011) we should continue to see pressure on occupancy and rents for the next few quarters. Balance sheet metrics remain solid (3.5x fixed charge coverage and 38% Debt/GAV), but acquisitions will likely have to be put on hold until more capital can be raised, with only ~$45m of cash available." Citigroup maintains its Hold rating and $63 price target. PS Business Parks closed yesterday at $59.03.