PS Business Parks, Inc. (NYSE:PSB) announced today that it has closed on the previously announced sale of its Lusk Business Park, located in the Sorrento Mesa submarket of San Diego, California, to an affiliate of Longfellow Real Estate Partners (the “Buyer”) for a gross purchase price of $315.4 million (the “Lusk Sale”). The Company noted that net proceeds from the Lusk Sale, after payment of transaction costs, were $311.1 million.
“We are pleased to announce the completion of the Lusk Business Park sale,” said Mac Chandler, the Company’s President and Chief Executive Officer. “We would like to thank Longfellow Real Estate Partners for being a terrific counterparty, and we wish them well with their planned development of the property. We’d also like to thank our brokerage team at JLL for their role in facilitating a smooth and orderly transaction with exceptional sale metrics.”
The Company re-affirmed that it anticipates approximately $50.5 million of the net sale proceeds will qualify as a Section 1031 exchange for its recently acquired Port America Industrial Park in Dallas, Texas. If the Company is unable to find suitable Section 1031 exchange opportunities for the remainder of the net sale proceeds from the Lusk Sale by year end, it expects to declare and pay, by year end, a one-time special dividend sourced by a portion of the disposition proceeds. The actual amount of any special dividend will be determined by the Company based on its estimate of 2021 REIT taxable income. Based on its preliminary estimate of 2021 REIT taxable income, the Company currently expects the special dividend would be between $166.0 million and $183.5 million, or $4.75 to $5.25 per common share and unit. The remainder of the net sale proceeds will be available to the Company for use for the redemption of its Series W preferred shares which yield a preferred coupon rate of 5.2% which the Company recently announced it will redeem in full on November 3, 2021.
PS Business Parks, Inc., a S&P MidCap 400 company, is a REIT that acquires, develops, owns, and operates commercial properties, predominantly multi-tenant industrial, industrial-flex, and low-rise suburban office. Located primarily in major coastal markets, PS Business Parks’ 96 properties serve approximately 4,900 tenants in 28 million square feet. The portfolio also includes 800 residential units (inclusive of units in-process).