PS Business Parks Buys Industrial Parks, Sheds 1 Office Asset

Zacks Equity Research

PS Business Parks, Inc. PSB recently announced the completion of buyout of two industrial/flex business parks and an office building sale transaction. All three transactions qualify as 1031 exchanges for tax purposes.

The company acquired San Tomas Business Center located in Santa Clara, CA, on Dec 20, 2019. It shelled out $16.6 million for the purchase. The park encloses nine buildings, spanning 79,400 square feet of space, with suites ranging from 200-3,500 square feet.

The property is situated at the center of the Silicon Valley, with easy access to Highway 101. This has likely attracted tenant interest at the property, enabling it to be 96% occupied at the time of the deal’s closure. Further, the purchase complements and strengthens the company’s existing Silicon Valley footprint that spans 3.5 million square feet of space.

Later on Jan 10, this year, the company acquired another five-building-park — La Mirada Commerce Center — for $13.7 million. This park covers 73,400 square feet and has suites ranging from 1,200-3,000 square feet.

The property is situated in La Mirada, CA, in the mid-counties industrial market near Interstate 5. This strategic location has enabled the property to be fully occupied at closing. The buyout will fortify the company’s presence in Southern California that aggregates 1.7 million square feet.

In addition, exiting the Metro Park North market in Rockville, MD, the company sold Metro Park IV on Jan 7. The single-tenant office building spans 113,000 square feet of space and was sold for $30 million. Notably, the property was excluded from the sale of the broader portfolio of the sub-urban Maryland office properties last October.

Specifically, in early October, PS Business Parks completed the sale of three business parks in Maryland, for a gross price of $148.8 million. The parks — Metro Park North, Meadow Business Park and WesTech Business Park— in Montgomery County consist of 28 buildings aggregating around 1.3 million square feet. 

Notably, such asset-repositioning efforts are likely to enhance the company’s overall portfolio quality. While the acquisitions of these parks are anticipated to help the company emerge stronger amid improving industrial market fundamentals in the United States, the sale of non-strategic properties will result in a better portfolio mix in the days ahead.

Over the past year, shares of this Zacks Rank #3 (Hold) company have gained 23.3%, outperforming the industry’s growth of 18.7%.


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