News Release

PS Business Parks, Inc.
701 Western Avenue
Glendale, CA 91201-2349
www.psbusinessparks.com

		For Release:		Immediately
		Date:		August 3, 2011
		Contact:		Edward A. Stokx
				(818) 244-8080, Ext. 1649

PS Business Parks, Inc. Reports Results for the Second Quarter Ended June 30, 2011

GLENDALE, California — PS Business Parks, Inc. (NYSE:PSB) reported operating results for the second quarter ended June 30, 2011.

Net income allocable to common shareholders for the three months ended June 30, 2011 was $11.4 million, or $0.46 per diluted share, on revenues of $73.2 million compared to $9.2 million, or $0.37 per diluted share, on revenues of $69.6 million for the same period in 2010. Net income allocable to common shareholders for the six months ended June 30, 2011 was $27.9 million, or $1.13 per diluted share, on revenues of $146.9 million compared to $21.0 million, or $0.85 per diluted share, on revenues of $136.4 million for the same period in 2010.

Revenues for the three months ended June 30, 2011 increased $3.6 million, or 5.2%, over the same period in 2010 as a result of an increase from Non-Same Park facilities of $6.3 million partially offset by a decrease from the Same Park portfolio of $2.7 million due to decreases in rental and occupancy rates. Net income allocable to common shareholders for the three months ended June 30, 2011 increased $2.1 million over the same period in 2010 primarily as a result of the impact from the redemptions and repurchases of preferred equity and the increase in net operating income from Non-Same Park facilities, partially offset by an increase in depreciation expense primarily related to 2010 property acquisitions.

Revenues for the six months ended June 30, 2011 increased $10.5 million, or 7.7%, over the same period in 2010 as a result of an increase from Non-Same Park facilities of $15.3 million partially offset by a decrease from the Same Park portfolio of $4.9 million due to decreases in rental and occupancy rates. Net income allocable to common shareholders for the six months ended June 30, 2011 increased $7.0 million over the same period in 2010 primarily as a result of the impact from the redemptions and repurchases of preferred equity and the increase in net operating income from Non-Same Park facilities, partially offset by the gain on the sale of a real estate facility in 2010, with no such gain in 2011, combined with an increase in depreciation expense primarily related to 2010 property acquisitions.

Funds From Operations

Funds from operations (“FFO”) allocable to common and dilutive shares for the three months ended June 30, 2011 and 2010 were $35.8 million, or $1.11 per common and dilutive share, and $30.7 million, or $0.96 per common and dilutive share, respectively. FFO allocable to common and dilutive shares for the six months ended June 30, 2011 and 2010 were $78.2 million, or $2.43 per common and dilutive share, and $59.0 million, or $1.84 per common and dilutive share, respectively. The increase in FFO per common and dilutive share for the three and six months ended June 30, 2011 over the same periods in 2010 was primarily as a result of the impact from the redemptions and repurchases of preferred equity and the increase in net operating income from Non-Same Park facilities.

The following table summarizes the impact of the gain on repurchase of preferred equity below par, non-cash distributions related to the redemptions of preferred equity and acquisition transaction costs on the Company’s FFO per common and dilutive share for the three and six months ended June 30, 2011 and 2010:

		For The Three Months												For The Six Months
		Ended June 30,												Ended June 30,
		2011				2010				Change				2011				2010				Change
FFO per common and dilutive share, before non-cash and other adjustments		$	1.12			$	1.06				5.7	%		$	2.21			$	1.98				11.6	%
Gain on the repurchase of preferred equity			—				—				—				0.23				—				100.0	%
Non-cash distributions related to the redemption of preferred equity			—				(0.08	)			(100.0	%)			—				(0.08	)			(100.0	%)
Acquisition transaction costs			(0.01	)			(0.02	)			(50.0	%)			(0.01	)			(0.06	)			(83.3	%)
FFO per common and dilutive share, as reported		$	1.11			$	0.96				15.6	%		$	2.43			$	1.84				32.1	%

Property Operations

In order to evaluate the performance of the Company’s overall portfolio over comparable periods, management analyzes the operating performance of a consistent group of properties owned and operated throughout both periods (herein referred to as “Same Park”). Operating properties that the Company acquired subsequent to January 1, 2010 are referred to as “Non-Same Park.” For the three and six months ended June 30, 2011 and 2010, the Same Park facilities constitute 19.2 million rentable square feet, which includes all assets in continuing operations that the Company owned from January 1, 2010 through June 30, 2011, representing 88.5% of the total square footage of the Company’s portfolio as of June 30, 2011.

The Company’s property operations account for substantially all of the net operating income earned by the Company. The following table presents the operating results of the Company’s properties for the three and six months ended June 30, 2011 and 2010 in addition to other income and expense items affecting income from continuing operations (unaudited, in thousands, except per square foot amounts):

		For The Three Months												For The Six Months
		Ended June 30,												Ended June 30,
		2011				2010				Change				2011				2010				Change
Rental income:
Same Park (19.2 million rentable square feet) (1)		$	63,328			$	66,028				(4.1	%)		$	127,472			$	132,332				(3.7	%)
Non-Same Park (2.5 million rentable square feet) (2)			9,725				3,404				185.7	%			19,093				3,748				409.4	%
Total rental income			73,053				69,432				5.2	%			146,565				136,080				7.7	%
Cost of operations:
Same Park			20,554				20,309				1.2	%			42,486				42,943				(1.1	%)
Non-Same Park			3,659				1,167				213.5	%			7,435				1,274				483.6	%
Total cost of operations			24,213				21,476				12.7	%			49,921				44,217				12.9	%
Net operating income (3):
Same Park			42,774				45,719				(6.4	%)			84,986				89,389				(4.9	%)
Non-Same Park			6,066				2,237				171.2	%			11,658				2,474				371.2	%
Total net operating income			48,840				47,956				1.8	%			96,644				91,863				5.2	%
Other income and expenses:
Facility management fees			169				163				3.7	%			347				336				3.3	%
Interest and other income			43				91				(52.7	%)			137				200				(31.5	%)
Interest expense			(1,145	)			(856	)			33.8	%			(2,360	)			(1,711	)			37.9	%
Depreciation and amortization			(21,023	)			(18,560	)			13.3	%			(41,777	)			(36,638	)			14.0	%
General and administrative			(1,530	)			(1,613	)			(5.1	%)			(3,100	)			(3,245	)			(4.5	%)
Acquisition transaction costs			(218	)			(787	)			(72.3	%)			(218	)			(1,904	)			(88.6	%)
Income from continuing operations		$	25,136			$	26,394				(4.8	%)		$	49,673			$	48,901				1.6	%
Same Park gross margin (4)			67.5	%			69.2	%			(2.5	%)			66.7	%			67.5	%			(1.2	%)
Same Park weighted average occupancy			90.8	%			91.8	%			(1.1	%)			90.9	%			91.6	%			(0.8	%)
Same Park annualized realized rent per square foot (5)		$	14.49			$	14.95				(3.1	%)		$	14.57			$	15.01				(2.9	%)

Credit Facility

Subsequent to June 30, 2011, the Company modified and extended the terms of its credit facility. Under the terms of the revised agreement, the borrowing limit was increased to $250.0 million and the expiration date was extended to August 1, 2015. Based on the Company’s current credit ratings, the rate of interest charged on borrowings will be at LIBOR plus 1.10% with an annual facility fee of 0.15%. As of June 30, 2011, the Company had $17.5 million outstanding on its credit facility, which was subsequently reduced to $10.0 million. The Company intends to use the credit facility to fund the repayment of the $116.0 million note payable to affiliate, which matures August 9, 2011.

Property Acquisition

On June 1, 2011, the Company acquired a 140,000 square foot multi-tenant office building, known as the Warren Building, located in Tysons Corner, Virginia, for a purchase price of $27.1 million. In connection with the acquisition, the Company incurred and expensed acquisition transaction costs of $218,000 for the three and six months ended June 30, 2011.

Property Held for Disposition

The Company is currently under contract to sell Westchase Corporate Park, a 177,000 square foot flex park consisting of 13 buildings in Houston, Texas, for $9.8 million. The Company anticipates closing on the sale in August, 2011 and has classified the asset as held for disposition.

Financial Condition

The following are key financial ratios with respect to the Company’s leverage at and for the three months ended June 30, 2011:

Ratio of FFO to fixed charges (1)		41.5x
Ratio of FFO to fixed charges and preferred distributions (1)		4.1x
Debt and preferred equity to total market capitalization (based on common stock price of $55.10 at June 30, 2011)		30.8%
Available balance under the $100.0 million unsecured credit facility at June 30, 2011		$82.5 million

Distributions Declared

The Board of Directors declared a quarterly dividend of $0.44 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 listed below. Distributions are payable September 30, 2011 to shareholders of record on September 15, 2011.

Series		Dividend Rate				Dividend Declared
Series H			7.000	%		$	0.437500
Series I			6.875	%		$	0.429688
Series M			7.200	%		$	0.450000
Series O			7.375	%		$	0.460938
Series P			6.700	%		$	0.418750
Series R			6.875	%		$	0.429688

Company Information

PS Business Parks, Inc., a member of the S&P SmallCap 600, is a self-advised and self-managed equity real estate investment trust (“REIT”) that acquires, develops, owns and operates commercial properties, primarily multi-tenant flex, office and industrial space. The Company defines “flex” space as buildings that are configured with a combination of office and warehouse space and can be designed to fit a number of uses (including office, assembly, showroom, laboratory, light manufacturing and warehouse space). As of June 30, 2011, PSB wholly owned 21.9 million rentable square feet with approximately 4,100 customers located in eight states, concentrated in California (5.8 million sq. ft.), Virginia (4.2 million sq. ft.), Florida (3.7 million sq. ft.), Texas (3.4 million sq. ft.), Maryland (2.4 million sq. ft.), Oregon (1.3 million sq. ft.), Arizona (0.7 million sq. ft.) and Washington (0.5 million sq. ft.).

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 Internet. The Company’s website is www.psbusinessparks.com.

A conference call is scheduled for Thursday, August 4, 2011, at 10:00 a.m. (PDT) to discuss the second quarter results. The toll free number is (888) 299-3246; the conference ID is 83556084. 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 11, 2011 at (855) 859-2056. A replay of the conference call will also be available on the Company’s website.

Additional financial data attached.

PS BUSINESS PARKS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

		June 30,				December 31,
		2011				2010
		(Unaudited)
ASSETS
Cash and cash equivalents		$	2,936			$	5,066
Real estate facilities, at cost:
Land			569,125				562,678
Buildings and equipment			1,806,582				1,773,682
			2,375,707				2,336,360
Accumulated depreciation			(809,810	)			(772,407	)
			1,565,897				1,563,953
Properties held for disposition, net			6,686				6,671
Land held for development			6,829				6,829
			1,579,412				1,577,453
Rent receivable			3,214				3,127
Deferred rent receivable			22,660				22,277
Other assets			11,067				13,134
Total assets		$	1,619,289			$	1,621,057
LIABILITIES AND EQUITY
Accrued and other liabilities		$	51,553			$	53,421
Credit facility			17,500				93,000
Note payable to affiliate			116,000				—
Mortgage notes payable			48,184				51,511
Total liabilities			233,237				197,932
Commitments and contingencies
Equity:
PS Business Parks, Inc.’s shareholders’ equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, 23,942 shares issued and outstanding at June 30, 2011 and December 31, 2010			598,546				598,546
Common stock, $0.01 par value, 100,000,000 shares authorized, 24,716,144 and 24,671,177 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively			246				246
Paid-in capital			560,169				557,882
Cumulative net income			833,524				784,616
Cumulative distributions			(790,403	)			(747,762	)
Total PS Business Parks, Inc.’s shareholders’ equity			1,202,082				1,193,528
Noncontrolling interests:
Preferred units			5,583				53,418
Common units			178,387				176,179
Total noncontrolling interests			183,970				229,597
Total equity			1,386,052				1,423,125
Total liabilities and equity		$	1,619,289			$	1,621,057

PS BUSINESS PARKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)

		For The Three Months								For The Six Months
		Ended June 30,								Ended June 30,
		2011				2010				2011				2010
Revenues:
Rental income		$	73,053			$	69,432			$	146,565			$	136,080
Facility management fees			169				163				347				336
Total operating revenues			73,222				69,595				146,912				136,416
Expenses:
Cost of operations			24,213				21,476				49,921				44,217
Depreciation and amortization			21,023				18,560				41,777				36,638
General and administrative			1,748				2,400				3,318				5,149
Total operating expenses			46,984				42,436				95,016				86,004
Other income and expenses:
Interest and other income			43				91				137				200
Interest expense			(1,145	)			(856	)			(2,360	)			(1,711	)
Total other income and expenses			(1,102	)			(765	)			(2,223	)			(1,511	)
Income from continuing operations			25,136				26,394				49,673				48,901
Discontinued operations:
Income from discontinued operations			171				96				307				277
Gain on sale of real estate facility			—				—				—				5,153
Total discontinued operations			171				96				307				5,430
Net income		$	25,307			$	26,490			$	49,980			$	54,331
Net income allocation:
Net income allocable to noncontrolling interests:
Noncontrolling interests — common units		$	3,362			$	2,749			$	8,262			$	6,261
Noncontrolling interests — preferred units			100				1,752				(7,190	)			3,134
Total net income allocable to noncontrolling interests			3,462				4,501				1,072				9,395
Net income allocable to PS Business Parks, Inc.:
Common shareholders			11,374				9,229				27,937				20,974
Preferred shareholders			10,449				12,723				20,899				23,878
Restricted stock unit holders			22				37				72				84
Total net income allocable to PS Business Parks, Inc.			21,845				21,989				48,908				44,936
		$	25,307			$	26,490			$	49,980			$	54,331
Net income per common share — basic:
Continuing operations		$	0.45			$	0.37			$	1.12			$	0.69
Discontinued operations		$	0.01			$	—			$	0.01			$	0.17
Net income		$	0.46			$	0.38			$	1.13			$	0.86
Net income per common share — diluted:
Continuing operations		$	0.45			$	0.37			$	1.12			$	0.68
Discontinued operations		$	0.01			$	—			$	0.01			$	0.17
Net income		$	0.46			$	0.37			$	1.13			$	0.85
Weighted average common shares outstanding:
Basic			24,715				24,524				24,700				24,469
Diluted			24,807				24,669				24,800				24,611

PS BUSINESS PARKS, INC.
Computation of Diluted Funds from Operations (“FFO”) and Funds Available for Distribution (“FAD”)
(Unaudited, in thousands, except per share amounts)

		For The Three Months								For The Six Months
		Ended June 30,								Ended June 30,
		2011				2010				2011				2010
Computation of Diluted Funds From Operations (“FFO”) (1):
Net income allocable to common shareholders		$	11,374			$	9,229			$	27,937			$	20,974
Adjustments:
Gain on sale of real estate facility			—				—				—				(5,153	)
Depreciation and amortization			21,058				18,666				41,917				36,856
Net income allocable to noncontrolling interests — common units			3,362				2,749				8,262				6,261
Net income allocable to restricted stock unit holders			22				37				72				84
FFO allocable to common and dilutive shares		$	35,816			$	30,681			$	78,188			$	59,022
Weighted average common shares outstanding			24,715				24,524				24,700				24,469
Weighted average common OP units outstanding			7,305				7,305				7,305				7,305
Weighted average restricted stock units outstanding			58				94				67				102
Weighted average common share equivalents outstanding			92				145				100				142
Total common and dilutive shares			32,170				32,068				32,172				32,018
FFO per common and dilutive share		$	1.11			$	0.96			$	2.43			$	1.84
Computation of Funds Available for Distribution (“FAD”) (2):
FFO allocable to common and dilutive shares		$	35,816			$	30,681			$	78,188			$	59,022
Adjustments:
Recurring capital improvements			(1,458	)			(1,565	)			(2,314	)			(3,150	)
Tenant improvements			(6,396	)			(3,649	)			(11,148	)			(6,207	)
Lease commissions			(1,405	)			(1,229	)			(2,885	)			(2,063	)
Straight-line rent			(102	)			(391	)			(383	)			(645	)
Stock compensation expense			363				520				822				1,135
In-place lease adjustment			212				136				421				98
Tenant improvement reimbursements, net of lease incentives			(237	)			(101	)			(432	)			(264	)
Non-cash distributions related to the redemption of preferred equity			—				2,436				—				2,436
Gain on repurchase of preferred equity, net of issuance costs			—				—				(7,389	)			—
FAD		$	26,793			$	26,838			$	54,880			$	50,362
Distributions to common and dilutive shares		$	14,111			$	14,070			$	28,225			$	28,078
Distribution payout ratio			52.7	%			52.4	%			51.4	%			55.8	%