The offering is for three million shares, with the underwriters' option to buy up to an additional 450,000 shares. In addition to the offering, Public Storage Inc., for which PS Business Parks manages approximately 1.4 million rentable square feet, has agreed separately to buy 333,333 shares for net proceeds of approximately $15.5 million. If the underwriters exercise the over-allotment option in full, an additional 50,000 shares will be sold to Public Storage, for total net proceeds of $17.8 million.
The company plans to use the proceeds of its stock offering for general corporate purposes, including possible future acquisitions. President and CEO, Joseph D. Russell noted in the company's recent earnings conference call that one of the three main elements of the REIT's strategy in navigating the recession is to "track the investment market because this economic crisis will likely reward those with capital structures and operational models that can deflect many of the onerous consequences of this environment."
The other two elements of the strategy that Russell outlined include staying close to its customers and continuing to maintain its strong balance sheet. Russell explained that PS Business Parks is prioritizing small users because, "They are, in many cases, the only source of leasing opportunities in many markets." Regarding the company's balance sheet, he pointed out that preserving low leverage has enabled the company to retain cash. "We are not burdened by having to deleverage our balance sheet," Russell said.
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