UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K/A
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008.
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from          to
 Commission File Number 1-10709
 PS BUSINESS PARKS, INC.
 (Exact name of registrant as specified in its charter)
 California
    
    95-4300881(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 701 Western Avenue, Glendale, California 91201-2397  (Address of principal executive
offices) (Zip Code)
 818-244-8080  (Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value per share
    
    New York Stock ExchangeDepositary Shares Each Representing 1/1,000 of a Share of
7.000% Cumulative Preferred Stock, Series H, $0.01 par value per share
    
    New York Stock ExchangeDepositary Shares Each Representing 1/1,000 of a Share of
6.875% Cumulative Preferred Stock, Series I, $0.01 par value per share
    
    New York Stock ExchangeDepositary Shares Each Representing 1/1,000 of a Share of
7.950% Cumulative Preferred Stock, Series K, $0.01 par value per share
    
    New York Stock ExchangeDepositary Shares Each Representing 1/1,000 of a Share of
7.600% Cumulative Preferred Stock, Series L, $0.01 par value per share
    
    New York Stock ExchangeDepositary Shares Each Representing 1/1,000 of a Share of
7.200% Cumulative Preferred Stock, Series M, $0.01 par value per share
    
    New York Stock ExchangeDepositary Shares Each Representing 1/1,000 of a Share of
7.375% Cumulative Preferred Stock, Series O, $0.01 par value per share
    
    New York Stock ExchangeDepositary Shares Each Representing 1/1,000 of a Share of
6.700% Cumulative Preferred Stock, Series P, $0.01 par value per share
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
None  (Title of class)
 o þ
 o o
 o þ
 þ o
 þ
  Large accelerated filer þ
    
    Accelerated filer oNon-accelerated filer   o
     (Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



EXPLANATORY NOTE
   2




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##### 



ITEM 6. SELECTED FINANCIAL DATA
  For the Years Ended December 31,2008
    
    2007
    
    2006
    
    2005
    
    2004(In thousands, except per share data)Revenues:Rental income
    
    $
    283,503
    
    
    $
    270,775
    
    
    $
    242,214
    
    
    $
    219,604
    
    
    $
    210,937Facility management fees
    
    
    728
    
    
    
    724
    
    
    
    625
    
    
    
    579
    
    
    
    624Total operating revenues
    
    
    284,231
    
    
    
    271,499
    
    
    
    242,839
    
    
    
    220,183
    
    
    
    211,561Expenses:Cost of operations
    
    
    88,442
    
    
    
    84,360
    
    
    
    74,671
    
    
    
    65,712
    
    
    
    62,994Depreciation and amortization
    
    
    99,848
    
    
    
    98,521
    
    
    
    86,216
    
    
    
    76,178
    
    
    
    69,942General and administrative
    
    
    8,099
    
    
    
    7,917
    
    
    
    7,046
    
    
    
    5,843
    
    
    
    4,628Total operating expenses
    
    
    196,389
    
    
    
    190,798
    
    
    
    167,933
    
    
    
    147,733
    
    
    
    137,564Other income and expenses:Interest and other income
    
    
    1,457
    
    
    
    5,104
    
    
    
    6,874
    
    
    
    4,888
    
    
    
    406Interest expense
    
    
    (3,952
    )
    
    
    (4,130
    )
    
    
    (2,575
    )
    
    
    (1,330
    )
    
    
    (3,054
    )Total other income and expenses
    
    
    (2,495
    )
    
    
    974
    
    
    
    4,299
    
    
    
    3,558
    
    
    
    (2,648
    )Asset impairment due to casualty loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72
    
    
    
    Income from continuing operations
    
    
    85,347
    
    
    
    81,675
    
    
    
    79,205
    
    
    
    75,936
    
    
    
    71,349Discontinued operations:Income (loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (125
    )
    
    
    2,769
    
    
    
    5,337Gain on disposition of real estate
    
    
    
    
    
    
    
    
    
    
    2,328
    
    
    
    18,109
    
    
    
    15,462Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    2,203
    
    
    
    20,878
    
    
    
    20,799Net income
    
    $
    85,347
    
    
    $
    81,675
    
    
    $
    81,408
    
    
    $
    96,814
    
    
    $
    92,148Net income allocation:Common shareholders
    
    $
    23,179
    
    
    $
    17,537
    
    
    $
    16,513
    
    
    $
    32,242
    
    
    $
    29,104Preferred shareholders
    
    
    46,630
    
    
    
    50,937
    
    
    
    47,933
    
    
    
    43,011
    
    
    
    33,020Noncontrolling interests  common units
    
    
    8,296
    
    
    
    6,155
    
    
    
    5,673
    
    
    
    10,869
    
    
    
    9,760Noncontrolling interests  preferred units
    
    
    7,007
    
    
    
    6,854
    
    
    
    11,155
    
    
    
    10,651
    
    
    
    20,245Restricted stock unit holders
    
    
    235
    
    
    
    192
    
    
    
    134
    
    
    
    41
    
    
    
    19$
    85,347
    
    
    $
    81,675
    
    
    $
    81,408
    
    
    $
    96,814
    
    
    $
    92,148
 3




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##### 



For the Years Ended December 31,2008
    
    2007
    
    2006
    
    2005
    
    2004(In thousands, except per share data)Per Common Share:Cash Distribution
    
    $
    1.76
    
    
    $
    1.61
    
    
    $
    1.16
    
    
    $
    1.16
    
    
    $
    1.16Net income  basic
    
    $
    1.13
    
    
    $
    0.82
    
    
    $
    0.77
    
    
    $
    1.48
    
    
    $
    1.34Net income  diluted
    
    $
    1.12
    
    
    $
    0.81
    
    
    $
    0.77
    
    
    $
    1.47
    
    
    $
    1.33Weighted average common
shares  basic
    
    
    20,443
    
    
    
    21,313
    
    
    
    21,335
    
    
    
    21,826
    
    
    
    21,767Weighted average common
shares  diluted
    
    
    20,618
    
    
    
    21,573
    
    
    
    21,584
    
    
    
    21,970
    
    
    
    21,911Balance Sheet Data:Total assets
    
    $
    1,469,323
    
    
    $
    1,516,583
    
    
    $
    1,463,599
    
    
    $
    1,463,794
    
    
    $
    1,366,768Total debt
    
    $
    59,308
    
    
    $
    60,725
    
    
    $
    67,048
    
    
    $
    25,893
    
    
    $
    11,367Preferred stock called for redemption
    
    $
    
    
    
    $
    
    
    
    $
    50,000
    
    
    $
    
    
    
    $
    Equity:PS Business Parks, Inc.s shareholders
equity:Preferred stock
    
    $
    706,250
    
    
    $
    716,250
    
    
    $
    572,500
    
    
    $
    593,350
    
    
    $
    510,850Common stock
    
    $
    414,564
    
    
    $
    439,330
    
    
    $
    482,703
    
    
    $
    500,108
    
    
    $
    506,114Noncontrolling interests:Preferred units
    
    $
    94,750
    
    
    $
    94,750
    
    
    $
    82,750
    
    
    $
    135,750
    
    
    $
    127,750Common units
    
    $
    148,023
    
    
    $
    154,470
    
    
    $
    165,469
    
    
    $
    169,451
    
    
    $
    169,295Other Data:Net cash provided by operating activities
    
    $
    189,337
    
    
    $
    184,094
    
    
    $
    166,134
    
    
    $
    148,828
    
    
    $
    152,166Net cash (used in) provided by investing
activities
    
    $
    (35,192
    )
    
    $
    (180,188
    )
    
    $
    (169,986
    )
    
    $
    24,389
    
    
    $
    (26,108
    )Net cash used in financing activities
    
    $
    (134,171
    )
    
    $
    (35,882
    )
    
    $
    (129,694
    )
    
    $
    (13,058
    )
    
    $
    (91,971
    )Funds from operations (1)
    
    $
    131,323
    
    
    $
    122,213
    
    
    $
    106,101
    
    
    $
    102,422
    
    
    $
    97,195Square footage owned at end of period
    
    
    19,556
    
    
    
    19,556
    
    
    
    18,687
    
    
    
    17,555
    
    
    
    17,988
 
 (1)
    
    Funds from operations (FFO) is computed in accordance with the White Paper on FFO approved
by the Board of Governors of NAREIT. The White Paper defines FFO as net income, computed in
accordance with GAAP, before depreciation, amortization, gains or losses on asset dispositions
and nonrecurring items. FFO should be analyzed in conjunction with net income. However, FFO
should not be viewed as a substitute for net income as a measure of operating performance or
liquidity as it does not reflect depreciation and amortization costs or the level of capital
expenditure and leasing costs necessary to maintain the operating performance of the Companys
properties, which are significant economic costs and could materially impact the Companys
results of operations. Other REITs may use different methods for calculating FFO and,
accordingly, the Companys FFO may not be comparable to that of other real estate companies.
See Item 7, Managements Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources  Funds from Operations, for a reconciliation
of FFO and net income allocable to common shareholders and for information on why the Company
presents FFO. ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Forward-Looking Statements:
 4




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##### 



Overview
    Critical Accounting Policies and Estimates:
  Revenue Recognition:
 Property Acquisitions:
   5




---



##### 



Allowance for Doubtful Accounts:
   Impairment of Long-Lived Assets:
 Depreciation:
 6




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##### 



Accruals of Operating Expenses:
 Accruals for Contingencies:
 Effect of Economic Conditions on the Companys Operations:
  Company Performance and Effect of Economic Conditions on Primary Markets:
   7




---



##### 



8




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##### 



Growth of the Companys Operations and Acquisitions and Dispositions of Properties:
    9




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##### 



Scheduled Lease Expirations:
 Impact of Inflation:
 Concentration of Portfolio by Region: (in thousands)
 10




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##### 



WeightedSquare
    
    Percent of
    
    Rental
    
    
    Percent of
    
    Cost of
    
    
    Percent of
    
    
    
    
    
    Percent ofRegion
    
    Footage
    
    Total
    
    Income
    
    
    Total
    
    Operations
    
    
    Total
    
    NOI
    
    TotalSouthern California
    
    
    3,988
    
    
    
    20.4
    %
    
    $
    65,317
    
    
    
    23.0
    %
    
    $
    17,866
    
    
    
    20.2
    %
    
    $
    47,451
    
    
    
    24.3
    %Northern California
    
    
    1,818
    
    
    
    9.3
    %
    
    
    23,939
    
    
    
    8.4
    %
    
    
    6,862
    
    
    
    7.8
    %
    
    
    17,077
    
    
    
    8.8
    %Southern Texas
    
    
    1,161
    
    
    
    5.9
    %
    
    
    12,616
    
    
    
    4.5
    %
    
    
    5,495
    
    
    
    6.2
    %
    
    
    7,121
    
    
    
    3.7
    %Northern Texas
    
    
    1,689
    
    
    
    8.6
    %
    
    
    16,964
    
    
    
    6.0
    %
    
    
    6,011
    
    
    
    6.8
    %
    
    
    10,953
    
    
    
    5.6
    %South Florida
    
    
    3,596
    
    
    
    18.4
    %
    
    
    32,555
    
    
    
    11.5
    %
    
    
    10,316
    
    
    
    11.7
    %
    
    
    22,239
    
    
    
    11.4
    %Virginia
    
    
    3,020
    
    
    
    15.4
    %
    
    
    59,192
    
    
    
    20.9
    %
    
    
    17,250
    
    
    
    19.5
    %
    
    
    41,942
    
    
    
    21.5
    %Maryland
    
    
    1,770
    
    
    
    9.1
    %
    
    
    37,977
    
    
    
    13.4
    %
    
    
    11,992
    
    
    
    13.6
    %
    
    
    25,985
    
    
    
    13.3
    %Oregon
    
    
    1,314
    
    
    
    6.7
    %
    
    
    18,466
    
    
    
    6.5
    %
    
    
    7,019
    
    
    
    7.9
    %
    
    
    11,447
    
    
    
    5.9
    %Arizona
    
    
    679
    
    
    
    3.5
    %
    
    
    7,006
    
    
    
    2.5
    %
    
    
    3,013
    
    
    
    3.4
    %
    
    
    3,993
    
    
    
    2.0
    %Washington
    
    
    521
    
    
    
    2.7
    %
    
    
    9,471
    
    
    
    3.3
    %
    
    
    2,618
    
    
    
    2.9
    %
    
    
    6,853
    
    
    
    3.5
    %Total before depreciation
and amortization
    
    
    19,556
    
    
    
    100.0
    %
    
    
    283,503
    
    
    
    100.0
    %
    
    
    88,442
    
    
    
    100.0
    %
    
    
    195,061
    
    
    
    100.0
    %Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,848
    
    
    
    
    
    
    
    (99,848
    )Total based on GAAP
    
    
    
    
    
    
    
    
    
    $
    283,503
    
    
    
    
    
    
    $
    188,290
    
    
    
    
    
    
    $
    95,213
 Concentration of Credit Risk by Industry:
 % of TotalAnnualizedIndustry
    
    Rental IncomeBusiness services
    
    
    13.2
    %Health services
    
    
    10.3
    %Computer hardware, software and related services
    
    
    9.3
    %Warehouse, distribution, transportation and logistics
    
    
    8.7
    %Government
    
    
    8.4
    %Insurance and financial services
    
    
    7.8
    %Engineering and construction
    
    
    7.7
    %Retail, food and automotive
    
    
    6.3
    %Communications
    
    
    5.7
    %Home furnishing
    
    
    3.8
    %Electronics
    
    
    3.5
    %Educational services
    
    
    3.0
    %Aerospace/defense products and services
    
    
    2.3
    %Total
    
    
    90.0
    %
 in thousands
 % of TotalAnnualized
    
    AnnualizedTenants
    

Square Footage
    
    Rental Income (1)
    
    Rental IncomeU.S. Government
    
    
    486
    
    
    
    $    12,684
    
    
    
    4.4
    %Kaiser Permanente
    
    
    186
    
    
    
    4,302
    
    
    
    1.5
    %Wells Fargo Bank
    
    
    102
    
    
    
    1,749
    
    
    
    0.6
    %AARP
    
    
    102
    
    
    
    1,676
    
    
    
    0.6
    %Northrop Grumman
    
    
    57
    
    
    
    1,649
    
    
    
    0.6
    %Raytheon
    
    
    82
    
    
    
    1,495
    
    
    
    0.5
    %American Intercontinental University
    
    
    75
    
    
    
    1,405
    
    
    
    0.5
    %Verizon
    
    
    72
    
    
    
    1,350
    
    
    
    0.5
    %Intel Corporation
    
    
    94
    
    
    
    1,348
    
    
    
    0.5
    %Montgomery County Public School
    
    
    47
    
    
    
    1,329
    
    
    
    0.5
    %Total
    
    
    1,303
    
    
    
    $    28,987
    
    
    
    10.2
    %
 
 (1) For leases expiring prior to December 31, 2009, annualized rental income represents
income to be received under existing leases from December 31, 2008 through the date of
expiration. 11




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##### 



Comparison of 2008 to 2007
 Results of Operations:
 (in thousands, except per
square foot data)
 For the Years Ended December 31,2008
    
    2007
    
    ChangeRental income:Same Park (18.7 million rentable square feet) (1)
    
    $
    268,248
    
    
    $
    260,632
    
    
    
    2.9
    %Non-Same Park (870,000 rentable square feet) (2)
    
    
    15,255
    
    
    
    10,143
    
    
    
    50.4
    %Total rental income
    
    
    283,503
    
    
    
    270,775
    
    
    
    4.7
    %Cost of operations:Same Park
    
    
    83,721
    
    
    
    80,779
    
    
    
    3.6
    %Non-Same Park
    
    
    4,721
    
    
    
    3,581
    
    
    
    31.8
    %Total cost of operations
    
    
    88,442
    
    
    
    84,360
    
    
    
    4.8
    %Net operating income (3):Same Park
    
    
    184,527
    
    
    
    179,853
    
    
    
    2.6
    %Non-Same Park
    
    
    10,534
    
    
    
    6,562
    
    
    
    60.5
    %Total net operating income
    
    
    195,061
    
    
    
    186,415
    
    
    
    4.6
    %Other income and expenses:Facility management fees
    
    
    728
    
    
    
    724
    
    
    
    0.6
    %Interest and other income
    
    
    1,457
    
    
    
    5,104
    
    
    
    (71.5
    %)Interest expense
    
    
    (3,952
    )
    
    
    (4,130
    )
    
    
    (4.3
    %)Depreciation and amortization
    
    
    (99,848
    )
    
    
    (98,521
    )
    
    
    1.3
    %General and administrative
    
    
    (8,099
    )
    
    
    (7,917
    )
    
    
    2.3
    %Income from continuing operations
    
    $
    85,347
    
    
    $
    81,675
    
    
    
    4.5
    %Same Park gross margin (4)
    
    
    68.8
    %
    
    
    69.0
    %
    
    
    (0.3
    %)Same Park weighted average for the period:Occupancy
    
    
    93.7
    %
    
    
    93.7
    %
    
    
    Realized rent per square foot (5)
    
    $
    15.32
    
    
    $
    14.89
    
    
    
    2.9
    %
 
 (1)
    
    See below for a definition of Same Park.(2)
    
    See below for a definition of Non-Same Park.(3)
    
    Net operating income (NOI) is an important measurement in the commercial real estate
industry for determining the value of the real estate generating the NOI. See Concentration
of Portfolio by Region above for more information on NOI. The Companys calculation of NOI
may not be comparable to those of other companies and should not be used as an alternative to
measures of performance in accordance with GAAP.(4)
    
    Same Park gross margin is computed by dividing Same Park NOI by Same Park rental income.(5)
    
    Same Park realized rent per square foot represents the Same Park rental income earned per
occupied square foot. 12




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##### 



Supplemental Property Data and Trends:
  (in thousands)
 Cost of
    
    Cost ofRental Income
    
    Rental Income
    
    
    
    
    
    Operations
    
    Operations
    
    
    
    
    
    NOI
    
    NOIDecember 31,
    
    December 31,
    
    Increase
    
    December 31,
    
    December 31,
    
    Increase
    
    December 31,
    
    December 31,
    
    IncreaseRegion
    
    2008
    
    2007
    
    (Decrease)
    
    2008
    
    2007
    
    (Decrease)
    
    2008
    
    2007
    
    (Decrease)Southern California
    
    $
    65,317
    
    
    $
    64,474
    
    
    
    1.3
    %
    
    $
    17,866
    
    
    $
    17,483
    
    
    
    2.2
    %
    
    $
    47,451
    
    
    $
    46,991
    
    
    
    1.0
    %Northern California
    
    
    20,890
    
    
    
    20,221
    
    
    
    3.3
    %
    
    
    5,728
    
    
    
    5,673
    
    
    
    1.0
    %
    
    
    15,162
    
    
    
    14,548
    
    
    
    4.2
    %Southern Texas
    
    
    12,616
    
    
    
    11,848
    
    
    
    6.5
    %
    
    
    5,495
    
    
    
    5,153
    
    
    
    6.6
    %
    
    
    7,121
    
    
    
    6,695
    
    
    
    6.4
    %Northern Texas
    
    
    16,964
    
    
    
    15,162
    
    
    
    11.9
    %
    
    
    6,011
    
    
    
    5,764
    
    
    
    4.3
    %
    
    
    10,953
    
    
    
    9,398
    
    
    
    16.5
    %South Florida
    
    
    32,555
    
    
    
    31,514
    
    
    
    3.3
    %
    
    
    10,316
    
    
    
    10,060
    
    
    
    2.5
    %
    
    
    22,239
    
    
    
    21,454
    
    
    
    3.7
    %Virginia
    
    
    56,108
    
    
    
    52,957
    
    
    
    6.0
    %
    
    
    16,169
    
    
    
    15,226
    
    
    
    6.2
    %
    
    
    39,939
    
    
    
    37,731
    
    
    
    5.9
    %Maryland
    
    
    37,977
    
    
    
    38,873
    
    
    
    (2.3
    %)
    
    
    11,992
    
    
    
    11,746
    
    
    
    2.1
    %
    
    
    25,985
    
    
    
    27,127
    
    
    
    (4.2
    %)Oregon
    
    
    18,466
    
    
    
    18,278
    
    
    
    1.0
    %
    
    
    7,019
    
    
    
    6,659
    
    
    
    5.4
    %
    
    
    11,447
    
    
    
    11,619
    
    
    
    (1.5
    %)Arizona
    
    
    7,006
    
    
    
    6,976
    
    
    
    0.4
    %
    
    
    3,013
    
    
    
    2,904
    
    
    
    3.8
    %
    
    
    3,993
    
    
    
    4,072
    
    
    
    (1.9
    %)Washington
    
    
    349
    
    
    
    329
    
    
    
    6.1
    %
    
    
    112
    
    
    
    111
    
    
    
    0.9
    %
    
    
    237
    
    
    
    218
    
    
    
    8.7
    %Total Same Park
    
    
    268,248
    
    
    
    260,632
    
    
    
    2.9
    %
    
    
    83,721
    
    
    
    80,779
    
    
    
    3.6
    %
    
    
    184,527
    
    
    
    179,853
    
    
    
    2.6
    %Non-Same Park
    
    
    15,255
    
    
    
    10,143
    
    
    
    50.4
    %
    
    
    4,721
    
    
    
    3,581
    
    
    
    31.8
    %
    
    
    10,534
    
    
    
    6,562
    
    
    
    60.5
    %Total before
depreciation and
amortization
    
    
    283,503
    
    
    
    270,775
    
    
    
    4.7
    %
    
    
    88,442
    
    
    
    84,360
    
    
    
    4.8
    %
    
    
    195,061
    
    
    
    186,415
    
    
    
    4.6
    %Depreciation and
amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,848
    
    
    
    98,521
    
    
    
    1.3
    %
    
    
    (99,848
    )
    
    
    (98,521
    )
    
    
    1.3
    %Total based on GAAP
    
    $
    283,503
    
    
    $
    270,775
    
    
    
    4.7
    %
    
    $
    188,290
    
    
    $
    182,881
    
    
    
    3.0
    %
    
    $
    95,213
    
    
    $
    87,894
    
    
    
    8.3
    %
 Revenues:
 Facility Management Operations:
 Cost of Operations:
 Depreciation and Amortization Expense:
 13




---



##### 



General and Administrative Expense:
 Interest and Other Income:
 Interest Expense:
 Net Income Allocable to Noncontrolling Interests:
 Comparison of 2007 to 2006
 Results of Operations:
 (in thousands, except per
square foot data)
 14




---



##### 



For the Years Ended December 31,2007
    
    2006
    
    ChangeRental income:Same Park (17.5 million rentable square feet) (1)
    
    $
    238,783
    
    
    $
    230,965
    
    
    
    3.4
    %Non-Same Park (2.1 million rentable square feet) (2)
    
    
    31,992
    
    
    
    11,249
    
    
    
    184.4
    %Total rental income
    
    
    270,775
    
    
    
    242,214
    
    
    
    11.8
    %Cost of operations:Same Park
    
    
    72,995
    
    
    
    70,707
    
    
    
    3.2
    %Non-Same Park
    
    
    11,365
    
    
    
    3,964
    
    
    
    186.7
    %Total cost of operations
    
    
    84,360
    
    
    
    74,671
    
    
    
    13.0
    %Net operating income (3):Same Park
    
    
    165,788
    
    
    
    160,258
    
    
    
    3.5
    %Non-Same Park
    
    
    20,627
    
    
    
    7,285
    
    
    
    183.1
    %Total net operating income
    
    
    186,415
    
    
    
    167,543
    
    
    
    11.3
    %Other income and expenses:Facility management fees
    
    
    724
    
    
    
    625
    
    
    
    15.8
    %Interest and other income
    
    
    5,104
    
    
    
    6,874
    
    
    
    (25.7
    %)Interest expense
    
    
    (4,130
    )
    
    
    (2,575
    )
    
    
    60.4
    %Depreciation and amortization
    
    
    (98,521
    )
    
    
    (86,216
    )
    
    
    14.3
    %General and administrative
    
    
    (7,917
    )
    
    
    (7,046
    )
    
    
    12.4
    %Income from continuing operations
    
    $
    81,675
    
    
    $
    79,205
    
    
    
    3.1
    %Same Park gross margin (4)
    
    
    69.4%
    
    
    
    69.4%
    
    
    
    Same Park weighted average for the period:Occupancy
    
    
    93.8%
    
    
    
    93.4%
    
    
    
    0.4
    %Realized rent per square foot (5)
    
    $
    14.55
    
    
    $
    14.14
    
    
    
    2.9
    %
 
 (1)
    
    See below for a definition of Same Park.(2)
    
    See below for a definition of Non-Same Park.(3)
    
    Net operating income (NOI) is an important measurement in the commercial real estate
industry for determining the value of the real estate generating the NOI. See Concentration
of Portfolio by Region above for more information on NOI. The Companys calculation of NOI
may not be comparable to those of other companies and should not be used as an alternative to
measures of performance in accordance with GAAP.(4)
    
    Same Park gross margin is computed by dividing Same Park NOI by Same Park rental income.(5)
    
    Same Park realized rent per square foot represents the Same Park rental income earned per
occupied square foot. Supplemental Property Data and Trends:
  15




---



##### 



(in thousands)
 Cost of
    
    Cost ofRental Income
    
    Rental Income
    
    
    
    
    
    Operations
    
    Operations
    
    
    
    
    
    NOI
    
    NOIDecember 31,
    
    December 31,
    
    Increase
    
    December 31,
    
    December 31,
    
    Increase
    
    December 31,
    
    December 31,
    
    IncreaseRegion
    
    2007
    
    2006
    
    (Decrease)
    
    2007
    
    2006
    
    (Decrease)
    
    2007
    
    2006
    
    (Decrease)Southern California
    
    $
    63,570
    
    
    $
    60,803
    
    
    
    4.6
    %
    
    $
    17,115
    
    
    $
    17,362
    
    
    
    (1.4
    %)
    
    $
    46,455
    
    
    $
    43,441
    
    
    
    6.9
    %Northern California
    
    
    19,589
    
    
    
    18,854
    
    
    
    3.9
    %
    
    
    5,380
    
    
    
    5,006
    
    
    
    7.5
    %
    
    
    14,209
    
    
    
    13,848
    
    
    
    2.6
    %Southern Texas
    
    
    11,849
    
    
    
    10,472
    
    
    
    13.1
    %
    
    
    5,156
    
    
    
    4,668
    
    
    
    10.5
    %
    
    
    6,693
    
    
    
    5,804
    
    
    
    15.3
    %Northern Texas
    
    
    15,162
    
    
    
    14,736
    
    
    
    2.9
    %
    
    
    5,765
    
    
    
    5,811
    
    
    
    (0.8
    %)
    
    
    9,397
    
    
    
    8,925
    
    
    
    5.3
    %South Florida
    
    
    25,899
    
    
    
    24,316
    
    
    
    6.5
    %
    
    
    7,869
    
    
    
    8,041
    
    
    
    (2.1
    %)
    
    
    18,030
    
    
    
    16,275
    
    
    
    10.8
    %Virginia
    
    
    51,219
    
    
    
    50,055
    
    
    
    2.3
    %
    
    
    14,779
    
    
    
    14,056
    
    
    
    5.1
    %
    
    
    36,440
    
    
    
    35,999
    
    
    
    1.2
    %Maryland
    
    
    25,909
    
    
    
    25,868
    
    
    
    0.2
    %
    
    
    7,251
    
    
    
    6,616
    
    
    
    9.6
    %
    
    
    18,658
    
    
    
    19,252
    
    
    
    (3.1
    %)Oregon
    
    
    18,281
    
    
    
    18,596
    
    
    
    (1.7
    %)
    
    
    6,663
    
    
    
    6,288
    
    
    
    6.0
    %
    
    
    11,618
    
    
    
    12,308
    
    
    
    (5.6
    %)Arizona
    
    
    6,976
    
    
    
    7,001
    
    
    
    (0.4
    %)
    
    
    2,907
    
    
    
    2,746
    
    
    
    5.9
    %
    
    
    4,069
    
    
    
    4,255
    
    
    
    (4.4
    %)Washington
    
    
    329
    
    
    
    264
    
    
    
    24.6
    %
    
    
    110
    
    
    
    113
    
    
    
    (2.7
    %)
    
    
    219
    
    
    
    151
    
    
    
    45.0
    %Total Same Park
    
    
    238,783
    
    
    
    230,965
    
    
    
    3.4
    %
    
    
    72,995
    
    
    
    70,707
    
    
    
    3.2
    %
    
    
    165,788
    
    
    
    160,258
    
    
    
    3.5
    %Non-Same Park
    
    
    31,992
    
    
    
    11,249
    
    
    
    184.4
    %
    
    
    11,365
    
    
    
    3,964
    
    
    
    186.7
    %
    
    
    20,627
    
    
    
    7,285
    
    
    
    183.1
    %Total before
depreciation and
amortization
    
    
    270,775
    
    
    
    242,214
    
    
    
    11.8
    %
    
    
    84,360
    
    
    
    74,671
    
    
    
    13.0
    %
    
    
    186,415
    
    
    
    167,543
    
    
    
    11.3
    %Depreciation and
amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98,521
    
    
    
    86,216
    
    
    
    14.3
    %
    
    
    (98,521
    )
    
    
    (86,216
    )
    
    
    14.3
    %Total based on GAAP
    
    $
    270,775
    
    
    $
    242,214
    
    
    
    11.8
    %
    
    $
    182,881
    
    
    $
    160,887
    
    
    
    13.7
    %
    
    $
    87,894
    
    
    $
    81,327
    
    
    
    8.1
    %
 Revenues:
 Facility Management Operations:
 Cost of Operations:
 Depreciation and Amortization Expense:
 General and Administrative Expense:
 Interest and Other Income:
 Interest Expense:
 16




---



##### 



Gain on Disposition of Real Estate:
 Net Income Allocable to Noncontrolling Interests:
 Liquidity and Capital Resources
       17




---



##### 



Non-GAAP Supplemental Disclosure Measure: Funds from Operations:
   18




---



##### 



in thousands
 For the Years Ended December 31,2008
    
    2007
    
    2006
    
    2005
    
    2004Net income allocable to common
shareholders
    
    $
    23,179
    
    
    $
    17,537
    
    
    $
    16,513
    
    
    $
    32,242
    
    
    $
    29,104Gain on disposition of real estate
    
    
    
    
    
    
    
    
    
    
    (2,328
    )
    
    
    (18,109
    )
    
    
    (15,462
    )Depreciation and amortization
    
    
    99,848
    
    
    
    98,521
    
    
    
    86,243
    
    
    
    77,420
    
    
    
    73,793Net income allocable to
noncontrolling interests 
common units
    
    
    8,296
    
    
    
    6,155
    
    
    
    5,673
    
    
    
    10,869
    
    
    
    9,760Consolidated FFO allocable to
common shareholders and
noncontrolling interests  common
units
    
    
    131,323
    
    
    
    122,213
    
    
    
    106,101
    
    
    
    102,422
    
    
    
    97,195FFO allocated to noncontrolling
interests  common units
    
    
    (34,407
    )
    
    
    (31,531
    )
    
    
    (26,950
    )
    
    
    (25,810
    )
    
    
    (24,396
    )FFO allocated to common
shareholders
    
    $
    96,916
    
    
    $
    90,682
    
    
    $
    79,151
    
    
    $
    76,612
    
    
    $
    72,799
  Capital Expenditures: in thousands
 For the Years Ended December 31,2008
    
    
    2007
    
    
    2006Recurring capital expenditures
    
    $
    33,262
    
    
    $
    37,362
    
    
    $
    34,096Property renovations and other capital expenditures
    
    
    1,930
    
    
    
    5,239
    
    
    
    5,131Total capital expenditures
    
    $
    35,192
    
    
    $
    42,601
    
    
    $
    39,227
 Stock Repurchase:
 Preferred Stock Repurchase:
 19




---



##### 



Redemption of Preferred Equity:
 Distributions:
 Related Party Transactions:
  Off-Balance Sheet Arrangements:
 Contractual Obligations: (in thousands)
 Payments Due by PeriodContractual Obligations
    
    Total
    
    Less than 1 year
    
    1  3 years
    
    3  5 years
    
    More than 5 yearsMortgage notes payable
(principal and
interest)
    
    
    $    70,386
    
    
    
    $    9,469
    
    
    
    $ 26,478
    
    
    
    $ 34,439
    
    
    
    $        Total
    
    
    $    70,386
    
    
    
    $    9,469
    
    
    
    $ 26,478
    
    
    
    $ 34,439
    
    
    
    $        
  20




---



##### 



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  ITEM 9A. CONTROLS AND PROCEDURES
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
 Internal Control-Integrated
Framework Internal Control-Integrated Framework
  Changes in Internal Control Over Financial Reporting
  21




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal ControlIntegrated Framework
       
 22




---



##### 



PART IV
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
           23




---



##### 



PS BUSINESS PARKS, INC.
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
(Item 15(a)(1) and Item 15(a)(2))
 PageReport of Independent Registered Public Accounting Firm
    
    
    25Consolidated balance sheets as of December 31, 2008 and 2007
    
    
    26Consolidated statements of income for the years ended December 31, 2008, 2007 and 2006
    
    
    27Consolidated statements of equity for the years ended December 31, 2008, 2007 and 2006
    
    
    28Consolidated statements of cash flows for the years ended December 31, 2008, 2007 and 2006
    
    
    29Notes to consolidated financial statements
    
    
    31Schedule:III  Real estate and accumulated depreciation
    
    
    46
   24




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Internal Control  Integrated
Framework
  Los Angeles, CaliforniaFebruary 24,   2009,   except for Note 2

Summary of significant accounting
policies 
 Noncontrolling interests,
Net income
 allocation and Net income
per common share,
 and Note 7
Noncontrolling interests, as to
which
the date is June 16, 2009
 25




---



##### 



PS BUSINESS PARKS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2008
    
    2007(In thousands, exceptshare data)ASSETSCash and cash equivalents
    
    $
    55,015
    
    
    $
    35,041Real estate facilities, at cost:Land
    
    
    494,849
    
    
    
    494,849Buildings and equipment
    
    
    1,517,484
    
    
    
    1,484,0492,012,333
    
    
    
    1,978,898Accumulated depreciation
    
    
    (637,948
    )
    
    
    (539,857
    )1,374,385
    
    
    
    1,439,041Land held for development
    
    
    7,869
    
    
    
    7,8691,382,254
    
    
    
    1,446,910Rent receivable
    
    
    2,055
    
    
    
    2,240Deferred rent receivable
    
    
    21,633
    
    
    
    21,927Other assets
    
    
    8,366
    
    
    
    10,465Total assets
    
    $
    1,469,323
    
    
    $
    1,516,583LIABILITIES AND EQUITYAccrued and other liabilities
    
    $
    46,428
    
    
    $
    51,058Mortgage notes payable
    
    
    59,308
    
    
    
    60,725Total liabilities
    
    
    105,736
    
    
    
    111,783Commitments and contingenciesEquity:PS Business Parks, Inc.s shareholders equity:Preferred stock, $0.01 par value, 50,000,000 shares authorized,
28,250 and 28,650 shares issued and outstanding at
December 31, 2008 and 2007, respectively
    
    
    706,250
    
    
    
    716,250Common stock, $0.01 par value, 100,000,000 shares authorized,
20,459,916 and 20,777,219 shares issued and outstanding at
December 31, 2008 and 2007, respectively
    
    
    204
    
    
    
    207Paid-in capital
    
    
    363,587
    
    
    
    371,267Cumulative net income
    
    
    622,113
    
    
    
    552,069Cumulative distributions
    
    
    (571,340
    )
    
    
    (484,213
    )Total PS Business Parks, Inc.s shareholders equity
    
    
    1,120,814
    
    
    
    1,155,580Noncontrolling interests:Preferred units
    
    
    94,750
    
    
    
    94,750Common units
    
    
    148,023
    
    
    
    154,470Total noncontrolling interests
    
    
    242,773
    
    
    
    249,220Total equity
    
    
    1,363,587
    
    
    
    1,404,800Total liabilities and equity
    
    $
    1,469,323
    
    
    $
    1,516,583
  26




---



##### 



PS BUSINESS PARKS, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
 For the Years Ended December 31,2008
    
    2007
    
    2006(In thousands, exceptper share data)Revenues:Rental income
    
    $
    283,503
    
    
    $
    270,775
    
    
    $
    242,214Facility management fees
    
    
    728
    
    
    
    724
    
    
    
    625Total operating revenues
    
    
    284,231
    
    
    
    271,499
    
    
    
    242,839Expenses:Cost of operations
    
    
    88,442
    
    
    
    84,360
    
    
    
    74,671Depreciation and amortization
    
    
    99,848
    
    
    
    98,521
    
    
    
    86,216General and administrative
    
    
    8,099
    
    
    
    7,917
    
    
    
    7,046Total operating expenses
    
    
    196,389
    
    
    
    190,798
    
    
    
    167,933Other income and expenses:Interest and other income
    
    
    1,457
    
    
    
    5,104
    
    
    
    6,874Interest expense
    
    
    (3,952
    )
    
    
    (4,130
    )
    
    
    (2,575
    )Total other income and expenses
    
    
    (2,495
    )
    
    
    974
    
    
    
    4,299Income from continuing operations
    
    
    85,347
    
    
    
    81,675
    
    
    
    79,205Discontinued operations:Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (125
    )Gain on disposition of real estate
    
    
    
    
    
    
    
    
    
    
    2,328Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    2,203Net income
    
    $
    85,347
    
    
    $
    81,675
    
    
    $
    81,408Net income allocation:Common shareholders
    
    $
    23,179
    
    
    $
    17,537
    
    
    $
    16,513Preferred shareholders
    
    
    46,630
    
    
    
    50,937
    
    
    
    47,933Noncontrolling interests  common units
    
    
    8,296
    
    
    
    6,155
    
    
    
    5,673Noncontrolling interests  preferred units
    
    
    7,007
    
    
    
    6,854
    
    
    
    11,155Restricted stock unit holders
    
    
    235
    
    
    
    192
    
    
    
    134$
    85,347
    
    
    $
    81,675
    
    
    $
    81,408Net income per common share  basic:Continuing operations
    
    $
    1.13
    
    
    $
    0.82
    
    
    $
    0.70Discontinued operations
    
    $
    
    
    
    $
    
    
    
    $
    0.08Net income
    
    $
    1.13
    
    
    $
    0.82
    
    
    $
    0.77Net income per common share  diluted:Continuing operations
    
    $
    1.12
    
    
    $
    0.81
    
    
    $
    0.69Discontinued operations
    
    $
    
    
    
    $
    
    
    
    $
    0.08Net income
    
    $
    1.12
    
    
    $
    0.81
    
    
    $
    0.77Weighted average common shares outstanding:Basic
    
    
    20,443
    
    
    
    21,313
    
    
    
    21,335Diluted
    
    
    20,618
    
    
    
    21,573
    
    
    
    21,584
  27




---



##### 



PS BUSINESS PARKS, INC.
 
 CONSOLIDATED STATEMENTS OF EQUITY
 Total PSBusiness Parks,Preferred Stock
    
    
    Common Stock
    
    Paid-in
    
    Cumulative
    
    
    Cumulative
    
    Inc.s Shareholders
    
    Noncontrolling
    
    TotalShares
    
    
    Amount
    
    
    Shares
    
    Amount
    
    Capital
    
    Net Income
    
    
    Distributions
    
    Equity
    
    Interests
    
    EquityBalances at December 31, 2005
    
    
    23,734
    
    
    $
    593,350
    
    
    
    21,560,593
    
    
    $
    215
    
    
    $
    407,380
    
    
    $
    418,823
    
    
    $
    (326,310
    )
    
    $
    1,093,458
    
    
    $
    305,201
    
    
    $
    1,398,659Issuance of preferred stock, net of
issuance costs
    
    
    3,800
    
    
    
    95,000
    
    
    
    
    
    
    
    
    
    
    
    (2,798
    )
    
    
    
    
    
    
    
    
    
    
    92,202
    
    
    
    
    
    
    
    92,202Redemption of preferred stock
    
    
    (2,634
    )
    
    
    (65,850
    )
    
    
    
    
    
    
    
    
    
    
    1,658
    
    
    
    
    
    
    
    (1,658
    )
    
    
    (65,850
    )
    
    
    
    
    
    
    (65,850
    )Preferred stock called for redemption
    
    
    (2,000
    )
    
    
    (50,000
    )
    
    
    
    
    
    
    
    
    
    
    1,722
    
    
    
    
    
    
    
    (1,722
    )
    
    
    (50,000
    )
    
    
    
    
    
    
    (50,000
    )Redemption of preferred units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,000
    )
    
    
    (53,000
    )Repurchase of common stock
    
    
    
    
    
    
    
    
    
    
    (309,100
    )
    
    
    (3
    )
    
    
    (16,114
    )
    
    
    
    
    
    
    
    
    
    
    (16,117
    )
    
    
    
    
    
    
    (16,117
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    37,900
    
    
    
    1
    
    
    
    1,366
    
    
    
    
    
    
    
    
    
    
    
    1,367
    
    
    
    
    
    
    
    1,367Stock compensation
    
    
    
    
    
    
    
    
    
    
    21,612
    
    
    
    
    
    
    
    2,287
    
    
    
    
    
    
    
    
    
    
    
    2,287
    
    
    
    
    
    
    
    2,287Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,580
    
    
    
    
    
    
    
    64,580
    
    
    
    16,828
    
    
    
    81,408Distributions:Preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44,553
    )
    
    
    (44,553
    )
    
    
    
    
    
    
    (44,553
    )Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,718
    )
    
    
    (24,718
    )
    
    
    
    
    
    
    (24,718
    )Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,263
    )
    
    
    (18,263
    )Adjustment to noncontrolling
interests in underlying operating
partnership
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,547
    
    
    
    
    
    
    
    
    
    
    
    2,547
    
    
    
    (2,547
    )
    
    
    Balances at December 31, 2006
    
    
    22,900
    
    
    
    572,500
    
    
    
    21,311,005
    
    
    
    213
    
    
    
    398,048
    
    
    
    483,403
    
    
    
    (398,961
    )
    
    
    1,055,203
    
    
    
    248,219
    
    
    
    1,303,422Issuance of preferred stock, net of
issuance costs
    
    
    5,750
    
    
    
    143,750
    
    
    
    
    
    
    
    
    
    
    
    (4,183
    )
    
    
    
    
    
    
    
    
    
    
    139,567
    
    
    
    
    
    
    
    139,567Issuance of preferred units, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,665
    
    
    
    11,665Repurchase of common stock
    
    
    
    
    
    
    
    
    
    
    (601,042
    )
    
    
    (6
    )
    
    
    (31,847
    )
    
    
    
    
    
    
    
    
    
    
    (31,853
    )
    
    
    
    
    
    
    (31,853
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    43,384
    
    
    
    
    
    
    
    1,468
    
    
    
    
    
    
    
    
    
    
    
    1,468
    
    
    
    
    
    
    
    1,468Stock compensation
    
    
    
    
    
    
    
    
    
    
    23,872
    
    
    
    
    
    
    
    2,811
    
    
    
    
    
    
    
    
    
    
    
    2,811
    
    
    
    
    
    
    
    2,811Shelf registration
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88
    )
    
    
    
    
    
    
    
    
    
    
    (88
    )
    
    
    
    
    
    
    (88
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,666
    
    
    
    
    
    
    
    68,666
    
    
    
    13,009
    
    
    
    81,675Distributions:Preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,937
    )
    
    
    (50,937
    )
    
    
    
    
    
    
    (50,937
    )Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,315
    )
    
    
    (34,315
    )
    
    
    
    
    
    
    (34,315
    )Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,615
    )
    
    
    (18,615
    )Adjustment to noncontrolling
interests in underlying operating
partnership
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,058
    
    
    
    
    
    
    
    
    
    
    
    5,058
    
    
    
    (5,058
    )
    
    
    Balances at December 31, 2007
    
    
    28,650
    
    
    
    716,250
    
    
    
    20,777,219
    
    
    
    207
    
    
    
    371,267
    
    
    
    552,069
    
    
    
    (484,213
    )
    
    
    1,155,580
    
    
    
    249,220
    
    
    
    1,404,800Repurchase of preferred stock, net
of issuance costs
    
    
    (400
    )
    
    
    (10,000
    )
    
    
    
    
    
    
    
    
    
    
    4,810
    
    
    
    
    
    
    
    (291
    )
    
    
    (5,481
    )
    
    
    
    
    
    
    (5,481
    )Repurchase of common stock
    
    
    
    
    
    
    
    
    
    
    (370,042
    )
    
    
    (3
    )
    
    
    (18,321
    )
    
    
    
    
    
    
    
    
    
    
    (18,324
    )
    
    
    
    
    
    
    (18,324
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    30,234
    
    
    
    
    
    
    
    792
    
    
    
    
    
    
    
    
    
    
    
    792
    
    
    
    
    
    
    
    792Stock compensation
    
    
    
    
    
    
    
    
    
    
    22,505
    
    
    
    
    
    
    
    3,152
    
    
    
    
    
    
    
    
    
    
    
    3,152
    
    
    
    
    
    
    
    3,152Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,044
    
    
    
    
    
    
    
    70,044
    
    
    
    15,303
    
    
    
    85,347Distributions:Preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,858
    )
    
    
    (50,858
    )
    
    
    
    
    
    
    (50,858
    )Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,978
    )
    
    
    (35,978
    )
    
    
    
    
    
    
    (35,978
    )Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,863
    )
    
    
    (19,863
    )Adjustment to noncontrolling
interests in underlying operating
partnership
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,887
    
    
    
    
    
    
    
    
    
    
    
    1,887
    
    
    
    (1,887
    )
    
    
    Balances at December 31, 2008
    
    
    28,250
    
    
    $
    706,250
    
    
    
    20,459,916
    
    
    $
    204
    
    
    $
    363,587
    
    
    $
    622,113
    
    
    $
    (571,340
    )
    
    $
    1,120,814
    
    
    $
    242,773
    
    
    $
    1,363,587
  28




---



##### 



PS BUSINESS PARKS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Years Ended December 31,2008
    
    2007
    
    2006(In thousands)Cash flows from operating activities:Net income
    
    $
    85,347
    
    
    $
    81,675
    
    
    $
    81,408Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization expense
    
    
    99,848
    
    
    
    98,521
    
    
    
    86,243In-place lease adjustment
    
    
    (194
    )
    
    
    (102
    )
    
    
    232Lease incentives net of tenant improvement reimbursements
    
    
    (379
    )
    
    
    (33
    )
    
    
    440Amortization of mortgage premium
    
    
    (260
    )
    
    
    (247
    )
    
    
    (76
    )Gain on disposition of properties
    
    
    
    
    
    
    
    
    
    
    (2,328
    )Stock compensation expense
    
    
    4,061
    
    
    
    3,724
    
    
    
    2,845Decrease (increase) in receivables and other assets
    
    
    1,759
    
    
    
    (1,015
    )
    
    
    (3,741
    )Increase (decrease) in accrued and other liabilities
    
    
    (845
    )
    
    
    1,571
    
    
    
    1,111Total adjustments
    
    
    103,990
    
    
    
    102,419
    
    
    
    84,726Net cash provided by operating activities
    
    
    189,337
    
    
    
    184,094
    
    
    
    166,134Cash flows from investing activities:Capital improvements to real estate facilities
    
    
    (35,192
    )
    
    
    (42,601
    )
    
    
    (39,227
    )Acquisition of real estate facilities
    
    
    
    
    
    
    (138,936
    )
    
    
    (138,973
    )Insurance proceeds from casualty loss
    
    
    
    
    
    
    1,349
    
    
    
    500Proceeds from disposition of real estate
    
    
    
    
    
    
    
    
    
    
    7,714Net cash used in investing activities
    
    
    (35,192
    )
    
    
    (180,188
    )
    
    
    (169,986
    )Cash flows from financing activities:Principal payments on mortgage notes payable
    
    
    (1,157
    )
    
    
    (1,126
    )
    
    
    (762
    )Repayment of mortgage note payable
    
    
    
    
    
    
    (4,950
    )
    
    
    Net proceeds from the issuance of preferred stock
    
    
    
    
    
    
    139,567
    
    
    
    92,448Net proceeds from the issuance of preferred units
    
    
    
    
    
    
    11,665
    
    
    
    Exercise of stock options
    
    
    792
    
    
    
    1,468
    
    
    
    1,367Shelf registration costs
    
    
    
    
    
    
    (88
    )
    
    
    Repurchase of common stock
    
    
    (21,626
    )
    
    
    (28,551
    )
    
    
    (16,117
    )Repurchase of preferred stock
    
    
    (5,481
    )
    
    
    
    
    
    
    Redemption of preferred units
    
    
    
    
    
    
    
    
    
    
    (53,000
    )Redemption of preferred stock
    
    
    
    
    
    
    (50,000
    )
    
    
    (65,850
    )Distributions paid to common shareholders
    
    
    (35,978
    )
    
    
    (34,315
    )
    
    
    (24,718
    )Distributions paid to preferred shareholders
    
    
    (50,858
    )
    
    
    (50,937
    )
    
    
    (44,799
    )Distributions paid to noncontrolling interests  common units
    
    
    (12,856
    )
    
    
    (11,761
    )
    
    
    (8,474
    )Distributions paid to noncontrolling interests  preferred units
    
    
    (7,007
    )
    
    
    (6,854
    )
    
    
    (9,789
    )Net cash used in financing activities
    
    
    (134,171
    )
    
    
    (35,882
    )
    
    
    (129,694
    )Net increase (decrease) in cash and cash equivalents
    
    
    19,974
    
    
    
    (31,976
    )
    
    
    (133,546
    )Cash and cash equivalents at the beginning of the period
    
    
    35,041
    
    
    
    67,017
    
    
    
    200,563Cash and cash equivalents at the end of the period
    
    $
    55,015
    
    
    $
    35,041
    
    
    $
    67,017Supplemental disclosures:Interest paid
    
    $
    4,050
    
    
    $
    4,145
    
    
    $
    2,575
  29




---



##### 



PS BUSINESS PARKS, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Years Ended December 31,2008
    
    2007
    
    2006(In thousands)Supplemental schedule of non-cash investing and
financing activities:Adjustment to noncontrolling interests in underlying
operating partnership:Noncontrolling interests  common units
    
    $
    (1,887
    )
    
    $
    (5,393
    )
    
    $
    (1,181
    )Paid-in capital
    
    $
    1,887
    
    
    $
    5,393
    
    
    $
    1,181Gain on repurchase of preferred stock:Preferred stock
    
    $
    (4,519
    )
    
    $
    
    
    
    $
    Paid-in capital
    
    $
    4,519
    
    
    $
    
    
    
    $
    Effect of Emerging Issues Task Force (EITF) Topic D-42Cumulative distributions
    
    $
    (291
    )
    
    $
    
    
    
    $
    (3,380
    )Noncontrolling interest  common units
    
    $
    
    
    
    $
    
    
    
    $
    (1,366
    )Paid-in capital
    
    $
    291
    
    
    $
    
    
    
    $
    4,746Mortgage note payable assumed in property acquisition:Real estate facilities
    
    $
    
    
    
    $
    
    
    
    $
    (41,993
    )Mortgage notes payable
    
    $
    
    
    
    $
    
    
    
    $
    41,993Accrued stock repurchase:Paid-in capital
    
    $
    
    
    
    $
    (3,302
    )
    
    $
    Accrued and other liabilities
    
    $
    
    
    
    $
    3,302
    
    
    $
    Preferred stock called for redemption:Preferred stock
    
    $
    
    
    
    $
    
    
    
    $
    (50,000
    )Preferred stock called for redemption
    
    $
    
    
    
    $
    
    
    
    $
    50,000
  30




---



##### 



PS BUSINESS PARKS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2008
 1. Organization and description of business
 Organization
  Description of business
   2. Summary of significant accounting policies
 Basis of presentation
  Noncontrolling Interests
  Use of estimates
  31




---



##### 



Allowance for doubtful accounts
  Financial instruments
    Real estate facilities
  Properties held for disposition
  Intangible assets/liabilities
  32




---



##### 



Evaluation of asset impairment
  Asset impairment due to casualty loss
    Stock-based compensation
  33




---



##### 



Revenue and expense recognition
   Gains from sales of real estate
  General and administrative expense
  Income taxes
   Accounting for preferred equity issuance costs
  34




---



##### 



Net income allocation
 (in thousands)
 2008

    
    2007

    
    2006Common shareholders:Income from continuing operations
    
    $
    23,179
    
    
    $
    17,537
    
    
    $
    14,870Discontinued operations
    
    
    
    
    
    
    
    
    
    
    1,643Total net income allocable to common shareholders
    
    
    23,179
    
    
    
    17,537
    
    
    
    16,513Preferred shareholders:Distributions to preferred shareholders
    
    
    50,858
    
    
    
    50,937
    
    
    
    44,553Gain on repurchase of preferred stock, net of issuance
costs
    
    
    (4,228
    )
    
    
    
    
    
    
    Redemptions of preferred stock
    
    
    
    
    
    
    
    
    
    
    3,380Total net income allocable to preferred shareholders
    
    
    46,630
    
    
    
    50,937
    
    
    
    47,933Noncontrolling interests  common units:Income from continuing operations
    
    
    8,296
    
    
    
    6,155
    
    
    
    5,113Discontinued operations
    
    
    
    
    
    
    
    
    
    
    560Total net income allocable to noncontrolling interests
 common units
    
    
    8,296
    
    
    
    6,155
    
    
    
    5,673Noncontrolling interests  preferred units:Distributions to preferred units holders
    
    
    7,007
    
    
    
    6,854
    
    
    
    9,789Redemption of preferred operating partnership units
    
    
    
    
    
    
    
    
    
    
    1,366Total net income allocable to noncontrolling interests
 preferred units
    
    
    7,007
    
    
    
    6,854
    
    
    
    11,155Total net income allocable to noncontrolling interests
    
    
    15,303
    
    
    
    13,009
    
    
    
    16,828Restricted stock unit holders
    
    
    235
    
    
    
    192
    
    
    
    134$
    85,347
    
    
    $
    81,675
    
    
    $
    81,408
 Net income per common share
 (in thousands, except per share amounts)
 2008
    
    2007
    
    2006Net income allocable to common shareholders
    
    
    $   23,179
    
    
    
    $  17,537
    
    
    
    $  16,513Weighted average common shares outstanding:Basic weighted average common shares outstanding
    
    
    20,443
    
    
    
    21,313
    
    
    
    21,335Net effect of dilutive stock compensation 
based on treasury stock method using average
market price
    
    
    175
    
    
    
    260
    
    
    
    249Diluted weighted average common shares outstanding
    
    
    20,618
    
    
    
    21,573
    
    
    
    21,584Net income per common share  Basic
    
    
    $       1.13
    
    
    
    $      0.82
    
    
    
    $      0.77Net income per common share  Diluted
    
    
    $       1.12
    
    
    
    $      0.81
    
    
    
    $      0.77
  35




---



##### 



Segment reporting
  3. Real estate facilities
 (in thousands)
 Buildings and
    
    
    AccumulatedLand

    
    Equipment

    
    Depreciation

    
    TotalBalances at December 31, 2005
    
    $
    383,308
    
    
    $
    1,189,815
    
    
    $
    (355,228
    )
    
    $
    1,217,895Acquisition of real estate
    
    
    56,469
    
    
    
    124,774
    
    
    
    
    
    
    
    181,243Disposition of real estate
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    27Asset impairment due to
casualty loss
    
    
    
    
    
    
    (374
    )
    
    
    108
    
    
    
    (266
    )Capital improvements, net
    
    
    
    
    
    
    39,227
    
    
    
    
    
    
    
    39,227Depreciation expense
    
    
    
    
    
    
    
    
    
    
    (86,243
    )
    
    
    (86,243
    )Balances at December 31, 2006
    
    
    439,777
    
    
    
    1,353,442
    
    
    
    (441,336
    )
    
    
    1,351,883Acquisition of real estate
    
    
    53,930
    
    
    
    88,006
    
    
    
    
    
    
    
    141,936Capital improvements, net
    
    
    
    
    
    
    42,601
    
    
    
    
    
    
    
    42,601Depreciation expense
    
    
    
    
    
    
    
    
    
    
    (98,521
    )
    
    
    (98,521
    )Transfer from land held for
development
    
    
    1,142
    
    
    
    
    
    
    
    
    
    
    
    1,142Balances at December 31, 2007
    
    
    494,849
    
    
    
    1,484,049
    
    
    
    (539,857
    )
    
    
    1,439,041Capital improvements, net
    
    
    
    
    
    
    35,192
    
    
    
    
    
    
    
    35,192Disposals
    
    
    
    
    
    
    (1,757
    )
    
    
    1,757
    
    
    
    Depreciation expense
    
    
    
    
    
    
    
    
    
    
    (99,848
    )
    
    
    (99,848
    )Balances at December 31, 2008
    
    $
    494,849
    
    
    $
    1,517,484
    
    
    $
    (637,948
    )
    
    $
    1,374,385
    36




---



##### 



(in thousands)
 2007

    
    2006Land
    
    $
    53,930
    
    
    $
    56,469Buildings
    
    
    88,006
    
    
    
    124,774In-place leases
    
    
    (1,357
    )
    
    
    433Total purchase price
    
    
    140,579
    
    
    
    181,676Mortgages assumed
    
    
    
    
    
    
    (41,993
    )Net operating assets and liabilities acquired
    
    
    (1,643
    )
    
    
    (710
    )Total cash paid
    
    $
    138,936
    
    
    $
    138,973
      4. Leasing activity
 (in thousands)
 2009
    
    $
    204,3382010
    
    
    158,8772011
    
    
    113,1542012
    
    
    76,8452013
    
    
    45,725Thereafter
    
    
    72,336Total
    
    $
    671,275
  37




---



##### 



5. Bank loans
   6. Mortgage notes payable
 (in thousands)
 December 31,
    
    December 31,2008
    
    20077.29% mortgage note, secured by one
commercial property with a net book value
of $6.2 million, principal and interest
payable monthly, repaid February, 2009
    
    
    $     5,144
    
    
    
    $     5,3235.73% mortgage note, secured by one
commercial property with a net book value
of $29.7 million, principal and interest
payable monthly, due March, 2013
    
    
    14,247
    
    
    
    14,5106.15% mortgage note, secured by one
commercial property with a net book value
of $29.8 million, principal and interest
payable monthly, due November, 2031
(1)
    
    
    16,912
    
    
    
    17,3485.52% mortgage note, secured by one
commercial property with a net book value
of $16.1 million, principal and interest
payable monthly, due May, 2013
    
    
    10,053
    
    
    
    10,2745.68% mortgage note, secured by one
commercial property with a net book value
of $17.9 million, principal and interest
payable monthly, due May, 2013
    
    
    10,065
    
    
    
    10,2815.61% mortgage note, secured by one
commercial property with a net book value
of $5.8 million, principal and interest
payable monthly, due January, 2011
(2)
    
    
    2,887
    
    
    
    2,989Total
    
    
    $   59,308
    
    
    
    $   60,725
 (1)
    
    The mortgage note has a stated principal balance of $16.3 million and a stated interest
rate of 7.20%. Based on the fair market value at the time of assumption, a mortgage premium
was computed based on an effective interest rate of 6.15%. The unamortized premiums were
$635,000 and $834,000 as of December 31, 2008 and 2007, respectively. This mortgage is
repayable without penalty beginning November, 2011.
 38




---



##### 



(2)
    
    The mortgage note has a stated principal balance of $2.8 million and a stated interest
rate of 7.61%. Based on the fair market value at the time of assumption, a mortgage premium
was computed based on an effective interest rate of 5.61%. The unamortized premiums were
$136,000 and $198,000 as of December 31, 2008 and 2007, respectively.
 (in thousands)
 2009
    
    $
    6,4222010
    
    
    1,3762011
    
    
    19,4262012
    
    
    8562013
    
    
    31,228Total
    
    $
    59,308
 7. Noncontrolling interests
  Common partnership units
     39




---



##### 



Preferred partnership units
 (in thousands)
 December 31, 2008
    
    December 31, 2007Earliest Potential
    
    Dividend
    
    Units
    
    
    
    
    
    UnitsSeries
    

Issuance Date
    
    Redemption Date
    
    Rate
    
    Outstanding
    
    Amount
    
    Outstanding
    
    AmountSeries G
    
    October, 2002
    
    October, 2007
    
    
    7.950
    %
    
    
    800
    
    
    $
    20,000
    
    
    
    800
    
    
    $
    20,000Series J
    
    May & June, 2004
    
    May, 2009
    
    
    7.500
    %
    
    
    1,710
    
    
    
    42,750
    
    
    
    1,710
    
    
    
    42,750Series N
    
    December, 2005
    
    December, 2010
    
    
    7.125
    %
    
    
    800
    
    
    
    20,000
    
    
    
    800
    
    
    
    20,000Series Q
    
    March, 2007
    
    March, 2012
    
    
    6.550
    %
    
    
    480
    
    
    
    12,000
    
    
    
    480
    
    
    
    12,000Total
    
    
    
    
    
    
    
    
    
    
    3,790
    
    
    $
    94,750
    
    
    
    3,790
    
    
    $
    94,750
   8. Related party transactions
       40




---



##### 



9. Shareholders equity
 Preferred stock
 (in thousands, except share data)
 December 31, 2008
    
    December 31, 2007Earliest Potential
    
    Dividend
    
    Shares
    
    
    
    
    
    SharesSeries
    
    Issuance Date
    
    Redemption Date
    
    Rate
    
    Outstanding
    
    Amount
    
    Outstanding
    
    AmountSeries H
    
    January & October, 2004
    
    January, 2009
    
    
    7.000
    %
    
    
    8,200
    
    
    $
    205,000
    
    
    
    8,200
    
    
    $
    205,000Series I
    
    April, 2004
    
    April, 2009
    
    
    6.875
    %
    
    
    3,000
    
    
    
    75,000
    
    
    
    3,000
    
    
    
    75,000Series K
    
    June, 2004
    
    June, 2009
    
    
    7.950
    %
    
    
    2,300
    
    
    
    57,500
    
    
    
    2,300
    
    
    
    57,500Series L
    
    August, 2004
    
    August, 2009
    
    
    7.600
    %
    
    
    2,300
    
    
    
    57,500
    
    
    
    2,300
    
    
    
    57,500Series M
    
    May, 2005
    
    May, 2010
    
    
    7.200
    %
    
    
    3,300
    
    
    
    82,500
    
    
    
    3,300
    
    
    
    82,500Series O
    
    June & August, 2006
    
    June, 2011
    
    
    7.375
    %
    
    
    3,800
    
    
    
    95,000
    
    
    
    3,800
    
    
    
    95,000Series P
    
    January, 2007
    
    January, 2012
    
    
    6.700
    %
    
    
    5,350
    
    
    
    133,750
    
    
    
    5,750
    
    
    
    143,750Total
    
    
    
    
    
    
    
    
    
    
    28,250
    
    
    $
    706,250
    
    
    
    28,650
    
    
    $
    716,250
       41




---



##### 



Common stock
   Equity Stock
  10. Stock-based compensation
    42




---



##### 



Weighted
    
    AggregateWeighted
    
    Average
    
    IntrinsicNumber of
    
    Average

    
    Remaining
    
    ValueOptions:
    
    Options
    
    Exercise Price

    
    Contract Life
    
    (in thousands)Outstanding at December 31, 2005
    
    
    599,871
    
    
    
    $
    36.25Granted
    
    
    32,000
    
    
    
    $
    56.73Exercised
    
    
    (37,900
    )
    
    
    $
    36.07Forfeited
    
    
    (5,000
    )
    
    
    $
    44.20Outstanding at December 31, 2006
    
    
    588,971
    
    
    
    $
    35.89Granted
    
    
    32,000
    
    
    
    $
    68.90Exercised
    
    
    (43,384
    )
    
    
    $
    33.84Forfeited
    
    
    (5,000
    )
    
    
    $
    39.18Outstanding at December 31, 2007
    
    
    572,587
    
    
    
    $
    37.86Granted
    
    
    14,000
    
    
    
    $
    57.79Exercised
    
    
    (30,234
    )
    
    
    $
    26.19Forfeited
    
    
    
    
    
    
    $
    Outstanding at December 31, 2008
    
    
    556,353
    
    
    
    $
    39.00
    
    
    4.66 Years
    
    $
    4,525Exercisable at December 31, 2008
    
    
    451,153
    
    
    
    $
    35.56
    
    
    4.03 Years
    
    $
    4,445WeightedNumber of

    

    Average GrantRestricted Stock Units:
    
    Units

    
    Date Fair ValueNonvested at December 31, 2005
    
    
    128,000
    
    
    
    $
    39.27Granted
    
    
    133,950
    
    
    
    $
    55.12Vested
    
    
    (24,000
    )
    
    
    $
    36.06Forfeited
    
    
    (10,750
    )
    
    
    $
    40.91Nonvested at December 31, 2006
    
    
    227,200
    
    
    
    $
    48.88Granted
    
    
    47,300
    
    
    
    $
    67.88Vested
    
    
    (29,723
    )
    
    
    $
    40.62Forfeited
    
    
    (16,550
    )
    
    
    $
    48.69Nonvested at December 31, 2007
    
    
    228,227
    
    
    
    $
    53.91Granted
    
    
    40,700
    
    
    
    $
    52.66Vested
    
    
    (35,499
    )
    
    
    $
    46.57Forfeited
    
    
    (3,740
    )
    
    
    $
    54.14Nonvested at December 31, 2008
    
    
    229,688
    
    
    
    $
    54.81
    43




---



##### 



11. Supplementary quarterly financial data (unaudited)
 Three Months EndedMarch 31,
    
    June 30,
    
    September 30,
    
    December 31,2007
    
    
    2007
    
    2007
    
    2007(In thousands, except per share data)Revenues
    
    $
    65,307
    
    
    $
    67,457
    
    
    $
    68,707
    
    
    $
    70,028Cost of operations
    
    $
    20,439
    
    
    $
    21,022
    
    
    $
    21,204
    
    
    $
    21,695Net income allocable
to common
shareholders
    
    $
    5,893
    
    
    $
    3,727
    
    
    $
    4,213
    
    
    $
    3,704Net income per share:Basic
    
    $
    0.28
    
    
    $
    0.17
    
    
    $
    0.20
    
    
    $
    0.17Diluted
    
    $
    0.28
    
    
    $
    0.17
    
    
    $
    0.20
    
    
    $
    0.17Three Months EndedMarch 31,
    
    June 30,
    
    September 30,
    
    December 31,2008
    
    
    2008
    
    2008
    
    2008(In thousands, except per share data)Revenues
    
    $
    70,306
    
    
    $
    70,623
    
    
    $
    71,642
    
    
    $
    71,660Cost of operations
    
    $
    22,490
    
    
    $
    21,939
    
    
    $
    22,591
    
    
    $
    21,422Net income allocable
to common
shareholders
    
    $
    3,749
    
    
    $
    4,561
    
    
    $
    5,336
    
    
    $
    9,533Net income per share:Basic
    
    $
    0.18
    
    
    $
    0.22
    
    
    $
    0.26
    
    
    $
    0.47Diluted
    
    $
    0.18
    
    
    $
    0.22
    
    
    $
    0.26
    
    
    $
    0.47
 12. Commitments and contingencies
  44




---



##### 



13. 401(K) Plan
  14. Recent accounting pronouncements
     45




---



##### 



PS BUSINESS PARKS, INC.
 SCHEDULE
III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2008
(DOLLARS IN THOUSANDS)
 CostCapitalizedSubsequentto

    
    Gross Amount at Which Carried atInitial Cost to Company

    
    Acquisition

    
    December 31, 2008Buildings

    
    Buildings

    
    
    
    
    
    Buildings
    
    
    
    
    
    
    
    
    
    
    
    
    Depreciableand

    
    and

    
    
    
    
    
    and
    
    
    
    
    
    
    Accumulated

    
    
    
    LivesDescription
    
    Location
    
    Encumbrances
    
    
    Land
    
    
    Improvements

    
    Improvements

    
    Land
    
    
    Improvements
    
    
    Total
    
    
    Depreciation

    
    Year(s) Acquired
    
    (Years)Corporate/Metro Park Phoenix
    
    Phoenix, AZ
    
    
    $              
    
    
    $
    5,130
    
    
    $
    17,514
    
    
    $
    2,192
    
    
    $
    5,130
    
    
    $
    19,706
    
    
    $
    24,836
    
    
    $
    7,892
    
    
    1999/2003
    
    5-30Mesa
    
    Mesa, AZ
    
    
    
    
    
    
    675
    
    
    
    1,692
    
    
    
    2,758
    
    
    
    675
    
    
    
    4,450
    
    
    
    5,125
    
    
    
    1,915
    
    
    1997
    
    5-30Tempe/McKellips
    
    Tempe, AZ
    
    
    
    
    
    
    195
    
    
    
    522
    
    
    
    640
    
    
    
    195
    
    
    
    1,162
    
    
    
    1,357
    
    
    
    599
    
    
    1997
    
    5-30University
    
    Tempe, AZ
    
    
    
    
    
    
    2,805
    
    
    
    7,107
    
    
    
    5,625
    
    
    
    2,805
    
    
    
    12,732
    
    
    
    15,537
    
    
    
    6,958
    
    
    1997
    
    5-30Parkway Commerce
    
    Hayward, CA
    
    
    
    
    
    
    4,398
    
    
    
    10,433
    
    
    
    3,837
    
    
    
    4,398
    
    
    
    14,270
    
    
    
    18,668
    
    
    
    5,846
    
    
    1997
    
    5-30Monterey/Calle
    
    Monterey, CA
    
    
    
    
    
    
    288
    
    
    
    706
    
    
    
    258
    
    
    
    288
    
    
    
    964
    
    
    
    1,252
    
    
    
    456
    
    
    1997
    
    5-30Northpointe Business Center
    
    Sacramento, CA
    
    
    
    
    
    
    3,031
    
    
    
    13,826
    
    
    
    4,871
    
    
    
    3,031
    
    
    
    18,697
    
    
    
    21,728
    
    
    
    9,155
    
    
    1999
    
    5-30Sacramento/Northgate
    
    Sacramento, CA
    
    
    
    
    
    
    1,710
    
    
    
    4,567
    
    
    
    2,760
    
    
    
    1,710
    
    
    
    7,327
    
    
    
    9,037
    
    
    
    3,680
    
    
    1997
    
    5-30Las Plumas
    
    San Jose, CA
    
    
    
    
    
    
    4,379
    
    
    
    12,889
    
    
    
    4,580
    
    
    
    4,379
    
    
    
    17,469
    
    
    
    21,848
    
    
    
    9,586
    
    
    1998
    
    5-30Oakland Road
    
    San Jose, CA
    
    
    
    
    
    
    3,458
    
    
    
    8,765
    
    
    
    2,602
    
    
    
    3,458
    
    
    
    11,367
    
    
    
    14,825
    
    
    
    4,974
    
    
    1997
    
    5-30Rogers Ave
    
    San Jose, CA
    
    
    
    
    
    
    3,540
    
    
    
    4,896
    
    
    
    421
    
    
    
    3,540
    
    
    
    5,317
    
    
    
    8,857
    
    
    
    831
    
    
    2006
    
    5-30San Ramon/Norris Canyon
    
    San Ramon, CA
    
    
    
    
    
    
    1,486
    
    
    
    3,642
    
    
    
    936
    
    
    
    1,486
    
    
    
    4,578
    
    
    
    6,064
    
    
    
    1,989
    
    
    1997
    
    5-30Commerce Park
    
    Santa Clara, CA
    
    
    
    
    
    
    17,218
    
    
    
    21,914
    
    
    
    3,036
    
    
    
    17,218
    
    
    
    24,950
    
    
    
    42,168
    
    
    
    8,199
    
    
    2007
    
    5-30Santa Clara Tech Park
    
    Santa Clara, CA
    
    
    
    
    
    
    7,673
    
    
    
    15,645
    
    
    
    735
    
    
    
    7,673
    
    
    
    16,380
    
    
    
    24,053
    
    
    
    6,753
    
    
    2000
    
    5-30Airport Blvd.
    
    So. San Francisco, CA
    
    
    
    
    
    
    899
    
    
    
    2,387
    
    
    
    520
    
    
    
    899
    
    
    
    2,907
    
    
    
    3,806
    
    
    
    1,182
    
    
    1997
    
    5-30So. San Francisco/Produce
    
    So. San Francisco, CA
    
    
    
    
    
    
    776
    
    
    
    1,886
    
    
    
    363
    
    
    
    776
    
    
    
    2,249
    
    
    
    3,025
    
    
    
    859
    
    
    1997
    
    5-30Buena Park Industrial Center
    
    Buena Park, CA
    
    
    
    
    
    
    3,245
    
    
    
    7,703
    
    
    
    1,684
    
    
    
    3,245
    
    
    
    9,387
    
    
    
    12,632
    
    
    
    4,061
    
    
    1997
    
    5-30Carson
    
    Carson, CA
    
    
    
    
    
    
    990
    
    
    
    2,496
    
    
    
    1,080
    
    
    
    990
    
    
    
    3,576
    
    
    
    4,566
    
    
    
    1,719
    
    
    1997
    
    5-30Cerritos Business Center
    
    Cerritos, CA
    
    
    
    
    
    
    4,218
    
    
    
    10,273
    
    
    
    3,009
    
    
    
    4,218
    
    
    
    13,282
    
    
    
    17,500
    
    
    
    5,818
    
    
    1997
    
    5-30Cerritos/Edwards
    
    Cerritos, CA
    
    
    
    
    
    
    450
    
    
    
    1,217
    
    
    
    841
    
    
    
    450
    
    
    
    2,058
    
    
    
    2,508
    
    
    
    857
    
    
    1997
    
    5-30Culver City
    
    Culver City, CA
    
    
    
    
    
    
    3,252
    
    
    
    8,157
    
    
    
    5,838
    
    
    
    3,252
    
    
    
    13,995
    
    
    
    17,247
    
    
    
    6,221
    
    
    1997
    
    5-30Corporate Pointe
    
    Irvine, CA
    
    
    
    
    
    
    6,876
    
    
    
    18,519
    
    
    
    5,167
    
    
    
    6,876
    
    
    
    23,686
    
    
    
    30,562
    
    
    
    10,241
    
    
    2000
    
    5-30Laguna Hills Commerce Center
    
    Laguna Hills, CA
    
    
    
    
    
    
    16,261
    
    
    
    39,559
    
    
    
    3,348
    
    
    
    16,261
    
    
    
    42,907
    
    
    
    59,168
    
    
    
    16,932
    
    
    1997
    
    5-30Plaza Del Lago
    
    Laguna Hills, CA
    
    
    
    
    
    
    2,037
    
    
    
    5,051
    
    
    
    3,416
    
    
    
    2,037
    
    
    
    8,467
    
    
    
    10,504
    
    
    
    4,500
    
    
    1997
    
    5-30Canada
    
    Lake Forest, CA
    
    
    
    
    
    
    5,508
    
    
    
    13,785
    
    
    
    4,058
    
    
    
    5,508
    
    
    
    17,843
    
    
    
    23,351
    
    
    
    7,754
    
    
    1997
    
    5-30Monterey Park
    
    Monterey Park, CA
    
    
    
    
    
    
    3,078
    
    
    
    7,862
    
    
    
    1,054
    
    
    
    3,078
    
    
    
    8,916
    
    
    
    11,994
    
    
    
    3,875
    
    
    1997
    
    5-30Orange County Business Center
    
    Orange County, CA
    
    
    
    
    
    
    9,405
    
    
    
    35,746
    
    
    
    15,111
    
    
    
    9,405
    
    
    
    50,857
    
    
    
    60,262
    
    
    
    31,938
    
    
    2003
    
    5-30Orangewood
    
    Orange County, CA
    
    
    
    
    
    
    2,637
    
    
    
    12,291
    
    
    
    2,694
    
    
    
    2,637
    
    
    
    14,985
    
    
    
    17,622
    
    
    
    5,293
    
    
    2003
    
    5-30Kearney Mesa
    
    San Diego, CA
    
    
    
    
    
    
    2,894
    
    
    
    7,089
    
    
    
    2,160
    
    
    
    2,894
    
    
    
    9,249
    
    
    
    12,143
    
    
    
    3,885
    
    
    1997
    
    5-30Lusk
    
    San Diego, CA
    
    
    
    
    
    
    5,711
    
    
    
    14,049
    
    
    
    4,664
    
    
    
    5,711
    
    
    
    18,713
    
    
    
    24,424
    
    
    
    8,251
    
    
    1997
    
    5-30Rose Canyon Business Park
    
    San Diego, CA
    
    
    14,247
    
    
    
    15,129
    
    
    
    20,054
    
    
    
    1,147
    
    
    
    15,129
    
    
    
    21,201
    
    
    
    36,330
    
    
    
    6,679
    
    
    2005
    
    5-30Signal Hill
    
    Signal Hill, CA
    
    
    
    
    
    
    6,693
    
    
    
    12,699
    
    
    
    1,716
    
    
    
    6,693
    
    
    
    14,415
    
    
    
    21,108
    
    
    
    4,997
    
    
    1997/2006
    
    5-30Studio City/Ventura
    
    Studio City, CA
    
    
    
    
    
    
    621
    
    
    
    1,530
    
    
    
    298
    
    
    
    621
    
    
    
    1,828
    
    
    
    2,449
    
    
    
    798
    
    
    1997
    
    5-30Torrance
    
    Torrance, CA
    
    
    
    
    
    
    2,318
    
    
    
    6,069
    
    
    
    1,809
    
    
    
    2,318
    
    
    
    7,878
    
    
    
    10,196
    
    
    
    3,649
    
    
    1997
    
    5-30Boca Commerce
    
    Boca Raton, FL
    
    
    10,053
    
    
    
    7,795
    
    
    
    9,258
    
    
    
    363
    
    
    
    7,795
    
    
    
    9,621
    
    
    
    17,416
    
    
    
    1,360
    
    
    2006
    
    5-30MICC
    
    Miami, FL
    
    
    
    
    
    
    88,134
    
    
    
    97,804
    
    
    
    26,379
    
    
    
    88,134
    
    
    
    124,183
    
    
    
    212,317
    
    
    
    49,466
    
    
    2003
    
    5-30Wellington
    
    Wellington, FL
    
    
    12,952
    
    
    
    10,845
    
    
    
    18,560
    
    
    
    684
    
    
    
    10,845
    
    
    
    19,244
    
    
    
    30,089
    
    
    
    2,797
    
    
    2006
    
    5-30Ammendale
    
    Beltsville, MD
    
    
    
    
    
    
    4,278
    
    
    
    18,380
    
    
    
    7,048
    
    
    
    4,278
    
    
    
    25,428
    
    
    
    29,706
    
    
    
    13,814
    
    
    1998
    
    5-30Gaithersburg/Christopher
    
    Gaithersburg, MD
    
    
    
    
    
    
    475
    
    
    
    1,203
    
    
    
    421
    
    
    
    475
    
    
    
    1,624
    
    
    
    2,099
    
    
    
    744
    
    
    1997
    
    5-30
 46




---



##### 



CostCapitalizedSubsequentto

    
    Gross Amount at Which Carried atInitial Cost to Company

    
    Acquisition

    
    December 31, 2008Buildings

    
    Buildings

    
    
    
    
    
    Buildings
    
    
    
    
    
    
    
    
    
    
    
    
    Depreciableand

    
    and

    
    
    
    
    
    and
    
    
    
    
    
    
    Accumulated

    
    
    
    LivesDescription
    
    Location
    
    Encumbrances
    
    
    Land
    
    
    Improvements

    
    Improvements

    
    Land
    
    
    Improvements
    
    
    Total
    
    
    Depreciation

    
    Year(s) Acquired
    
    (Years)Metro Park
    
    Rockville, MD
    
    
    
    
    
    
    33,995
    
    
    
    94,463
    
    
    
    24,879
    
    
    
    33,995
    
    
    
    119,342
    
    
    
    153,337
    
    
    
    50,603
    
    
    2001
    
    5-30Westech Business Park
    
    Silver Spring, MD
    
    
    16,912
    
    
    
    25,261
    
    
    
    74,572
    
    
    
    5,965
    
    
    
    25,261
    
    
    
    80,537
    
    
    
    105,798
    
    
    
    16,699
    
    
    2006
    
    5-30Cornell Oaks
    
    Beaverton, OR
    
    
    
    
    
    
    20,616
    
    
    
    63,235
    
    
    
    10,943
    
    
    
    20,616
    
    
    
    74,178
    
    
    
    94,794
    
    
    
    31,747
    
    
    2001
    
    5-30Creekside
    
    Beaverton, OR
    
    
    
    
    
    
    15,007
    
    
    
    47,125
    
    
    
    16,313
    
    
    
    15,007
    
    
    
    63,438
    
    
    
    78,445
    
    
    
    33,042
    
    
    1998/2000
    
    5-30Milwaukie
    
    Milwaukie, OR
    
    
    
    
    
    
    1,125
    
    
    
    2,857
    
    
    
    1,409
    
    
    
    1,125
    
    
    
    4,266
    
    
    
    5,391
    
    
    
    1,880
    
    
    1997
    
    5-30Empire Commerce
    
    Dallas, TX
    
    
    
    
    
    
    304
    
    
    
    1,545
    
    
    
    674
    
    
    
    304
    
    
    
    2,219
    
    
    
    2,523
    
    
    
    1,060
    
    
    1998
    
    5-30Northgate
    
    Dallas, TX
    
    
    
    
    
    
    1,274
    
    
    
    5,505
    
    
    
    2,253
    
    
    
    1,274
    
    
    
    7,758
    
    
    
    9,032
    
    
    
    3,775
    
    
    1998
    
    5-30Westwood Business Park
    
    Farmers Branch, TX
    
    
    
    
    
    
    941
    
    
    
    6,884
    
    
    
    1,395
    
    
    
    941
    
    
    
    8,279
    
    
    
    9,220
    
    
    
    2,947
    
    
    2003
    
    5-30Eastgate
    
    Garland, TX
    
    
    
    
    
    
    480
    
    
    
    1,203
    
    
    
    516
    
    
    
    480
    
    
    
    1,719
    
    
    
    2,199
    
    
    
    765
    
    
    1997
    
    5-30NFTZ
    
    Irving, TX
    
    
    
    
    
    
    1,517
    
    
    
    6,499
    
    
    
    1,698
    
    
    
    1,517
    
    
    
    8,197
    
    
    
    9,714
    
    
    
    4,333
    
    
    1998
    
    5-30Royal Tech
    
    Irving, TX
    
    
    
    
    
    
    13,707
    
    
    
    51,560
    
    
    
    17,548
    
    
    
    13,707
    
    
    
    69,108
    
    
    
    82,815
    
    
    
    30,218
    
    
    1998/1999/2000
    
    5-30La Prada
    
    Mesquite, TX
    
    
    
    
    
    
    495
    
    
    
    1,235
    
    
    
    541
    
    
    
    495
    
    
    
    1,776
    
    
    
    2,271
    
    
    
    781
    
    
    1997
    
    5-30The Summit
    
    Plano, TX
    
    
    
    
    
    
    1,536
    
    
    
    6,654
    
    
    
    3,612
    
    
    
    1,536
    
    
    
    10,266
    
    
    
    11,802
    
    
    
    4,820
    
    
    1998
    
    5-30Richardson/Business Parkway
    
    Richardson, TX
    
    
    
    
    
    
    799
    
    
    
    3,568
    
    
    
    2,096
    
    
    
    799
    
    
    
    5,664
    
    
    
    6,463
    
    
    
    2,873
    
    
    1998
    
    5-30Ben White
    
    Austin, TX
    
    
    
    
    
    
    1,550
    
    
    
    7,015
    
    
    
    789
    
    
    
    1,550
    
    
    
    7,804
    
    
    
    9,354
    
    
    
    3,640
    
    
    1998
    
    5-30Lamar Business Park
    
    Austin, TX
    
    
    
    
    
    
    2,528
    
    
    
    6,596
    
    
    
    3,690
    
    
    
    2,528
    
    
    
    10,286
    
    
    
    12,814
    
    
    
    5,991
    
    
    1997
    
    5-30McKalla
    
    Austin, TX
    
    
    
    
    
    
    1,411
    
    
    
    6,384
    
    
    
    1,444
    
    
    
    1,411
    
    
    
    7,828
    
    
    
    9,239
    
    
    
    4,000
    
    
    1998
    
    5-30McNeil
    
    Austin, TX
    
    
    
    
    
    
    437
    
    
    
    2,013
    
    
    
    957
    
    
    
    437
    
    
    
    2,970
    
    
    
    3,407
    
    
    
    1,709
    
    
    1999
    
    5-30Rutland
    
    Austin, TX
    
    
    
    
    
    
    2,022
    
    
    
    9,397
    
    
    
    2,859
    
    
    
    2,022
    
    
    
    12,256
    
    
    
    14,278
    
    
    
    5,046
    
    
    1998/1999
    
    5-30Waterford
    
    Austin, TX
    
    
    
    
    
    
    2,108
    
    
    
    9,649
    
    
    
    2,282
    
    
    
    2,108
    
    
    
    11,931
    
    
    
    14,039
    
    
    
    5,555
    
    
    1999
    
    5-30Houston/Timberway
    
    Houston, TX
    
    
    
    
    
    
    1,140
    
    
    
    3,003
    
    
    
    4,469
    
    
    
    1,140
    
    
    
    7,472
    
    
    
    8,612
    
    
    
    3,977
    
    
    1997
    
    5-30Westchase Corporate Park
    
    Houston, TX
    
    
    
    
    
    
    2,173
    
    
    
    7,338
    
    
    
    1,514
    
    
    
    2,173
    
    
    
    8,852
    
    
    
    11,025
    
    
    
    3,654
    
    
    1999
    
    5-30Quail Valley
    
    Missouri City, TX
    
    
    
    
    
    
    360
    
    
    
    918
    
    
    
    719
    
    
    
    360
    
    
    
    1,637
    
    
    
    1,997
    
    
    
    823
    
    
    1997
    
    5-30Alban Road
    
    Springfield, VA
    
    
    
    
    
    
    1,935
    
    
    
    4,736
    
    
    
    3,845
    
    
    
    1,935
    
    
    
    8,581
    
    
    
    10,516
    
    
    
    4,256
    
    
    1997
    
    5-30Beaumont
    
    Chantilly, VA
    
    
    
    
    
    
    4,736
    
    
    
    11,051
    
    
    
    1,520
    
    
    
    4,736
    
    
    
    12,571
    
    
    
    17,307
    
    
    
    3,212
    
    
    2006
    
    5-30Bren Mar
    
    Alexandria, VA
    
    
    
    
    
    
    2,197
    
    
    
    5,380
    
    
    
    2,677
    
    
    
    2,197
    
    
    
    8,057
    
    
    
    10,254
    
    
    
    3,779
    
    
    1997
    
    5-30Dulles South/Sullyfield
    
    Chantilly, VA
    
    
    
    
    
    
    1,373
    
    
    
    6,810
    
    
    
    1,727
    
    
    
    1,373
    
    
    
    8,537
    
    
    
    9,910
    
    
    
    3,975
    
    
    1999
    
    5-30Eisenhower
    
    Alexandria, VA
    
    
    
    
    
    
    1,440
    
    
    
    3,635
    
    
    
    2,011
    
    
    
    1,440
    
    
    
    5,646
    
    
    
    7,086
    
    
    
    2,813
    
    
    1997
    
    5-30Fair Oaks Business Park
    
    Fairfax, VA
    
    
    
    
    
    
    13,598
    
    
    
    36,232
    
    
    
    4,296
    
    
    
    13,598
    
    
    
    40,528
    
    
    
    54,126
    
    
    
    10,457
    
    
    2004/2007
    
    5-30Gunston
    
    Lorton, VA
    
    
    
    
    
    
    4,146
    
    
    
    17,872
    
    
    
    3,347
    
    
    
    4,146
    
    
    
    21,219
    
    
    
    25,365
    
    
    
    9,789
    
    
    1998
    
    5-30I-95
    
    Springfield, VA
    
    
    
    
    
    
    3,535
    
    
    
    15,672
    
    
    
    8,897
    
    
    
    3,535
    
    
    
    24,569
    
    
    
    28,104
    
    
    
    14,950
    
    
    2000
    
    5-30Lafayette
    
    Chantilly, VA
    
    
    
    
    
    
    1,680
    
    
    
    13,398
    
    
    
    2,886
    
    
    
    1,680
    
    
    
    16,284
    
    
    
    17,964
    
    
    
    8,429
    
    
    1999/2000
    
    5-30Monroe
    
    Herndon, VA
    
    
    
    
    
    
    6,737
    
    
    
    18,911
    
    
    
    7,938
    
    
    
    6,737
    
    
    
    26,849
    
    
    
    33,586
    
    
    
    13,007
    
    
    1997/1999
    
    5-30Northpointe
    
    Sterling, VA
    
    
    
    
    
    
    2,767
    
    
    
    8,778
    
    
    
    3,569
    
    
    
    2,767
    
    
    
    12,347
    
    
    
    15,114
    
    
    
    6,891
    
    
    1997/1998
    
    5-30Park East
    
    Chantilly, VA
    
    
    5,144
    
    
    
    3,851
    
    
    
    18,029
    
    
    
    3,987
    
    
    
    3,851
    
    
    
    22,016
    
    
    
    25,867
    
    
    
    9,581
    
    
    1999
    
    5-30Prosperity Business Campus
    
    Fairfax, VA
    
    
    
    
    
    
    23,147
    
    
    
    67,575
    
    
    
    15,441
    
    
    
    23,147
    
    
    
    83,016
    
    
    
    106,163
    
    
    
    35,653
    
    
    2001
    
    5-30Shaw Road
    
    Sterling, VA
    
    
    
    
    
    
    2,969
    
    
    
    10,008
    
    
    
    3,495
    
    
    
    2,969
    
    
    
    13,503
    
    
    
    16,472
    
    
    
    7,520
    
    
    1998
    
    5-30Woodbridge
    
    Woodbridge, VA
    
    
    
    
    
    
    1,350
    
    
    
    3,398
    
    
    
    1,249
    
    
    
    1,350
    
    
    
    4,647
    
    
    
    5,997
    
    
    
    2,248
    
    
    1997
    
    5-30Overlake
    
    Redmond, WA
    
    
    
    
    
    
    27,761
    
    
    
    49,353
    
    
    
    2,758
    
    
    
    27,761
    
    
    
    52,111
    
    
    
    79,872
    
    
    
    14,328
    
    
    2007
    
    5-30Renton
    
    Renton, WA
    
    
    
    
    
    
    330
    
    
    
    889
    
    
    
    463
    
    
    
    330
    
    
    
    1,352
    
    
    
    1,682
    
    
    
    599
    
    
    1997
    
    5-30$       59,308
    
    
    $
    494,849
    
    
    
    $   1,208,690
    
    
    
    $  308,794
    
    
    $
    494,849
    
    
    $
    1,517,484
    
    
    $
    2,012,333
    
    
    
    $  637,948
 47




---



##### 



SIGNATURES
  Dated: June 17, 2009PS Business Parks, Inc.By:
    
    /s/ Joseph D. Russell, Jr.Joseph D. Russell, Jr.
President and Chief Executive Officer
 48




---



##### 



PS BUSINESS PARKS, INC.
 EXHIBIT INDEX
(Items 15(a)(3) and 15(b))
 3.1
    
    
    Restated Articles of Incorporation. Filed with Registrants
Registration Statement on Form S-3 (No. 333-78627) and
incorporated herein by reference.3.2
    
    
    Certificate of Determination of Preferences of 8.75% Series C
Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Quarterly Report on Form 10-Q
for the quarter ended September 30, 1999 (SEC File No.
001-10709) and incorporated herein by reference.3.3
    
    
    Certificate of Determination of Preferences of 8.875% Series
X Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Quarterly Report on Form 10-Q
for the quarter ended September 30, 1999 (SEC File No.
001-10709) and incorporated herein by reference.3.4
    
    
    Amendment to Certificate of Determination of Preferences of
8.875% Series X Cumulative Redeemable Preferred Stock of PS
Business Parks, Inc. Filed with Registrants Quarterly Report
on Form 10-Q for the quarter ended September 30, 1999 (SEC
File No. 001-10709) and incorporated herein by reference.3.5
    
    
    Certificate of Determination of Preferences of 8.875% Series
Y Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000 (SEC File No. 001-10709)
and incorporated herein by reference.3.6
    
    
    Certificate of Determination of Preferences of 9.50% Series D
Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Current Report on Form 8-K dated
May 7, 2001 (SEC File No. 001-10709) and incorporated herein
by reference.3.7
    
    
    Amendment to Certificate of Determination of Preferences of
9.50% Series D Cumulative Redeemable Preferred Stock of PS
Business Parks, Inc. Filed with Registrants Quarterly Report
on Form 10-Q for the quarter ended September 30, 2001 (SEC
File No. 001-10709) and incorporated herein by reference.3.8
    
    
    Certificate of Determination of Preferences of 91/4% Series E
Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001 (SEC File No.
001-10709) and incorporated herein by reference.3.9
    
    
    Certificate of Determination of Preferences of 8.75% Series F
Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Current Report on Form 8-K dated
January 18, 2002 (SEC File No. 001-10709) and incorporated
herein by reference.3.10
    
    
    Certificate of Determination of Preferences of 7.95% Series G
Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Annual Report on Form 10-K for
the year ended December 31, 2003 and incorporated herein by
reference.3.11
    
    
    Certificate of Determination of Preferences of 7.00% Series H
Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. filed with Registrants Current Report on Form 8-K dated
January 16, 2004 and incorporated herein by reference.3.12
    
    
    Certificate of Determination of Preferences of 6.875% Series
I Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Current Report on Form 8-K dated
March 31, 2004 and incorporated herein by reference.3.13
    
    
    Certificate of Determination of Preferences of 7.50% Series J
Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Quarterly Report on Form 10-Q
for the quarter ended June 30, 2004 and incorporated herein
by reference.3.14
    
    
    Certificate of Determination of Preferences of 7.950% Series
K Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Current Report on Form 8-K dated
June 24, 2004 and incorporated herein by reference.
 49




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##### 



3.15
    
    
    Certificate of Determination of Preferences of 7.60% Series L
Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Current Report on Form 8-K dated
August 23, 2004 and incorporated herein by reference.3.16
    
    
    Certificate of Correction of Certificate of Determination of
Preferences for the 7.00% Cumulative Preferred Stock, Series
H of PS Business Parks, Inc. Filed with Registrants Current
Report on Form 8-K dated October 18, 2004 and incorporated
herein by reference.3.17
    
    
    Amendment to Certificate of Determination of Preferences for
the 7.00% Cumulative Preferred Stock, Series H of PS Business
Parks, Inc. Filed with Registrants Current Report on Form
8-K dated October 18, 2004 and incorporated herein by
reference.3.18
    
    
    Certificate of Determination of Preferences of 7.20%
Cumulative Preferred Stock, Series M of PS Business Parks,
Inc. Filed with Registrants Current Report on Form 8-K dated
April 29, 2005 and incorporated herein by reference.3.19
    
    

Certificate
of Determination of Preferences of 71/8% Series N
Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Current Report on Form 8-K dated
December 16, 2005 and incorporated herein by reference.3.20
    
    
    Certificate of Determination of Preferences of 7.375% Series
O Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Current Report on Form 8-K
dated May 18, 2006 and incorporated herein by reference.3.21
    
    
    Certificate of Correction of Certificate of Determination of
Preferences of 7.375% Cumulative Preferred Stock, Series O of
PS Business Parks, Inc. Filed with Registrants Current
Report on Form 8-K dated August 10, 2006 and incorporated
herein by reference.3.22
    
    
    Amendment to Certificate of Determination of Preferences of
7.375% Series O Cumulative Redeemable Preferred Stock of PS
Business Parks, Inc. Filed with Registrants Current Report
on Form 8-K dated August 10, 2006 and incorporated herein by
reference.3.23
    
    
    Certificate of Determination of Preferences of 6.70% Series P
Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Current Report on Form 8-K dated
January 9, 2007 and incorporated herein by reference.3.24
    
    
    Certificate of Determination of Preferences of 6.55% Series Q
Cumulative Redeemable Preferred Stock of PS Business Parks,
Inc. Filed with Registrants Current Report on Form 8-K dated
March 16, 2007 and incorporated herein by reference.3.25
    
    
    Restated Bylaws. Filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended June 30, 2008 and
incorporated herein by reference4.1
    
    
    Deposit Agreement Relating to 7.00% Cumulative Preferred
Stock, Series H of PS Business Parks, Inc., dated as of
January 15, 2004. Filed with Registrants Current Report on
Form 8-K dated January 15, 2004 and incorporated herein by
reference.4.2
    
    
    Specimen Stock Certificate for Registrants 7.00% Cumulative
Preferred Stock, Series H. Filed with Registrants Current
Report on Form 8-K dated January 15, 2004 and incorporated
herein by reference.4.3
    
    
    Deposit Agreement Relating to 6.875% Cumulative Preferred
Stock, Series I of PS Business Parks, Inc., dated as of March
31, 2004. Filed with Registrants Current Report on Form 8-K
dated March 31, 2004 and incorporated herein by reference.4.4
    
    
    Specimen Stock Certificate for Registrants 6.875% Cumulative
Preferred Stock, Series I. Filed with Registrants Current
Report on Form 8-K dated March 31, 2004 and incorporated
herein by reference.4.5
    
    
    Deposit Agreement Relating to 7.95% Cumulative Preferred
Stock, Series K of PS Business Parks, Inc., dated as of June
24, 2004. Filed with Registrants Current Report on Form 8-K
dated June 24, 2004 and incorporated herein by reference.
 50




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##### 



4.6
    
    
    Specimen Stock Certificate for Registrants 7.95% Cumulative
Preferred Stock, Series K. Filed with Registrants Current
Report on Form 8-K dated June 24, 2004 and incorporated
herein by reference.4.7
    
    
    Deposit Agreement Relating to 7.60% Cumulative Preferred
Stock, Series L of PS Business Parks, Inc., dated as of
August 23, 2004. Filed with Registrants Current Report on
Form 8-K dated August 23, 2004 and incorporated herein by
reference.4.8
    
    
    Specimen Stock Certificate for Registrants 7.60% Cumulative
Preferred Stock, Series L. Filed with Registrants Current
Report on Form 8-K dated August 23, 2004 and incorporated
herein by reference.4.9
    
    
    Deposit Agreement Relating to 7.20% Cumulative Preferred
Stock, Series M of PS Business Parks, Inc., dated as of April
27, 2005. Filed with Registrants Current Report on Form 8-K
dated April 27, 2005 and incorporated herein by reference.4.10
    
    
    Specimen Stock Certificate for Registrants 7.20% Cumulative
Preferred Stock, Series M. Filed with Registrants Current
Report on Form 8-K dated April 27, 2005 and incorporated
herein by reference.4.11
    
    
    Deposit Agreement Relating to 7.375% Cumulative Preferred
Stock, Series O of PS Business Parks, Inc., dated as of May
18, 2006. Filed with Registrants Current Report on Form 8-K
dated May 18, 2006 and incorporated herein by reference.4.12
    
    
    Specimen Stock Certificate for Registrants 7.375% Cumulative
Preferred Stock, Series O. Filed with Registrants Current
Report on Form 8-K dated May 18, 2006 and incorporated herein
by reference.4.13
    
    
    Deposit Agreement Relating to 6.70% Cumulative Preferred
Stock, Series P of PS Business Parks, Inc., dated as of
January 9, 2007. Filed with Registrants Current Report on
Form 8-K dated January 9, 2007 and incorporated herein by
reference.4.14
    
    
    Specimen Stock Certificate for Registrants 6.70% Cumulative
Preferred Stock, Series P. Filed with Registrants Current
Report on Form 8-K dated January 9, 2007 and incorporated
herein by reference.10.1
    
    
    Amended Management Agreement between Storage Equities, Inc.
and Public Storage Commercial Properties Group, Inc. dated as
of February 21, 1995. Filed with PSs Annual Report on Form
10-K for the year ended December 31, 1994 (SEC File No.
001-08389) and incorporated herein by reference.10.2
    
    
    Agreement of Limited Partnership of PS Business Parks, L.P.
Filed with Registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998 (SEC File No. 001-10709) and
incorporated herein by reference.10.3
    *
    
    Offer Letter/ Employment Agreement between Registrant and
Joseph D. Russell, Jr., dated as of September 6, 2002. Filed
with Registrants Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003 and incorporated herein by
reference.10.4
    
    
    Form of Indemnity Agreement. Filed with Registrants
Quarterly Report on Form 10-Q for the quarter ended March 31,
1998 (SEC File No. 001-10709) and incorporated herein by
reference.10.5
    *
    
    Form of Indemnification Agreement for Executive Officers.
Filed with Registrants Annual Report on Form 10-K for the
year ended December 31, 2004 and incorporated herein by
reference.10.6
    
    
    Cost Sharing and Administrative Services Agreement dated as
of November 16, 1995 by and among PSCC, Inc. and the owners
listed therein. Filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998 (SEC File No.
001-10709) and incorporated herein by reference.
 51




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##### 



10.7
    
    
    Amendment to Cost Sharing and Administrative Services Agreement dated as of January 2, 1997 by and among PSCC, Inc.
and the owners listed therein. Filed with Registrants
Quarterly Report on Form 10-Q for the quarter ended March 31,
1998 (SEC File No. 001-10709) and incorporated herein by
reference.10.8
    
    
    Accounts Payable and Payroll Disbursement Services Agreement
dated as of January 2, 1997 by and between PSCC, Inc. and AOPP
LP. Filed with Registrants Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998 (SEC File No. 001-10709) and
incorporated herein by reference.10.9
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 8.875% Series B Cumulative Redeemable
Preferred Units, dated as of April 23, 1999. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999 (SEC File No. 001-10709) and incorporated
herein by reference.10.10
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 9.25% Series A Cumulative Redeemable
Preferred Units, dated as of April 30, 1999. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999 (SEC File No. 001-10709) and incorporated
herein by reference.10.11
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 8.75% Series C Cumulative Redeemable
Preferred Units, dated as of September 3, 1999. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999 (SEC File No. 001-10709) and
incorporated herein by reference.10.12
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 8.875% Series X Cumulative Redeemable
Preferred Units, dated as of September 7, 1999. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999 (SEC File No. 001-10709) and
incorporated herein by reference.10.13
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to Additional 8.875% Series X Cumulative
Redeemable Preferred Units, dated as of September 23, 1999.
Filed with Registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999 (SEC File No. 001-10709) and
incorporated herein by reference.10.14
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 8.875% Series Y Cumulative Redeemable
Preferred Units, dated as of July 12, 2000. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000 (SEC File No. 001-10709) and incorporated
herein by reference.10.15
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 9.50% Series D Cumulative Redeemable
Preferred Units, dated as of May 10, 2001. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001 (SEC File No. 001-10709) and incorporated
herein by reference.10.16
    
    
    Amendment No. 1 to Amendment to Agreement of Limited
Partnership of PS Business Parks, L.P. Relating to 9.50%
Series D Cumulative Redeemable Preferred Units, dated as of
June 18, 2001. Filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended September 30, 2001 (SEC File
No. 001-10709) and incorporated herein by reference.10.17
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 91/4% Series E Cumulative Redeemable
Preferred Units, dated as of September 21, 2001. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001 (SEC File No. 001-10709) and
incorporated herein by reference.10.18
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 8.75% Series F Cumulative Redeemable
Preferred Units, dated as of January 18, 2002. Filed with
Registrants Annual Report on Form 10-K for the year ended
December 31, 2001 (SEC File No. 001-10709) and incorporated
herein by reference.10.19
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 7.95% Series G Cumulative Redeemable
Preferred Units, dated as of October 30, 2002. Filed with
Registrants Annual Report on Form 10-K for the year ended
December 31, 2003 and incorporated herein by reference.
 52




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##### 



10.20
    
    
    Amendment to Agreement of Limited Partnership of PS Business Parks, L.P. Relating to 7.00% Series H Cumulative Redeemable
Preferred Units, dated as of January 16, 2004. Filed with
Registrants Annual Report on Form 10-K for the year ended
December 31, 2003 and incorporated herein by reference.10.21
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 6.875% Series I Cumulative Redeemable
Preferred Units, dated as of April 21, 2004. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended September 30, 2004 and incorporated herein by
reference.10.22
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 7.50% Series J Cumulative Redeemable
Preferred Units, dated as of May 27, 2004. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended June 30, 2004 and incorporated herein by reference.10.23
    
    
    Amendment No. 1 to Amendment to Agreement of Limited
Partnership of PS Business Parks, L.P. Relating to 7.50%
Series J Cumulative Redeemable Preferred Units, dated as of
June 17, 2004. Filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended June 30, 2004 and
incorporated herein by reference.10.24
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 7.95% Series K Cumulative Redeemable
Preferred Units, dated as of June 30, 2004, filed with
Registrants Annual Report on Form 10-K for the year ended
December 31, 2004 and incorporated herein by reference.10.25
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 7.60% Series L Cumulative Redeemable
Preferred Units, dated as of August 31, 2004. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended September 30, 2004 and incorporated herein by
reference.10.26
    
    
    Amendment No. 1 to Amendment to Agreement of Limited
Partnership of PS Business Parks, L.P. Relating to 7.00%
Series H Cumulative Redeemable Preferred Units, dated as of
October 25, 2004. Filed with Registrants Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004 and
incorporated herein by reference.10.27
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 7.20% Series M Cumulative Redeemable
Preferred Units, dated as of May 2, 2005. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended March 31, 2005 and incorporated herein by reference.10.28
    
    
    Amendment No. 1 to Amendment to Agreement of Limited
Partnership Relating to 7.20% Series M Cumulative Redeemable
Preferred Units, dated as of May 9, 2005. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended June 30, 2005 and incorporated herein by reference.10.29
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 71/8% Series N Cumulative Redeemable
Preferred Units, dated as of December 12, 2005. Filed with
Registrants Current Report on Form 8-K dated December 16,
2005 and incorporated herein by reference.10.30
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 7.375% Series O Cumulative Redeemable
Preferred Units, dated as of June 16, 2006. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter
ended June 30, 2006 and incorporated herein by reference.10.31
    
    
    Amendment No. 1 to Amendment to Agreement of Limited
Partnership of PS Business Parks, L.P. Relating to 7.375%
Series O Cumulative Redeemable Preferred Units, dated as of
August 16, 2006. Filed with Registrants Annual Report on
Form 10-K for the year ended December 31, 2006 and
incorporated herein by reference.
 53




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##### 



10.32
    
    
    Amendment to Agreement of Limited Partnership of PS Business Parks, L.P. Relating to 6.70% Series P Cumulative Redeemable
Preferred Units, dated as of January 9, 2007. Filed with
Registrants Annual Report on Form 10-K for the year ended
December 31, 2006 and incorporated herein by reference.10.33
    
    
    Amendment to Agreement of Limited Partnership of PS Business
Parks, L.P. Relating to 6.55% Series Q Cumulative Redeemable
Preferred Units, dated as of March 12, 2007. Filed with
Registrants Current Report on Form 8-K dated March 16, 2007
and incorporated herein by reference.10.34
    
    
    Registration Rights Agreement by and between PS Business
Parks, Inc. and GSEP 2002 Realty Corp., dated as of October
30, 2002, relating to 7.95% Series G Cumulative Redeemable
Preferred Units. Filed with Registrants Annual Report on
Form 10-K for the year ended December 31, 2005 and
incorporated herein by reference.10.35
    
    
    Amended and Restated Registration Rights Agreement by and
between PS Business Parks, Inc. and GSEP 2004 Realty Corp.,
dated as of June 17, 2004, relating to 7.50% Series J
Cumulative Redeemable Preferred Units. Filed with
Registrants Annual Report on Form 10-K for the year ended
December 31, 2005 and incorporated herein by reference.10.36
    
    
    Registration Rights Agreement by and between PS Business
Parks, Inc. and GSEP 2005 Realty Corp., dated as of December
12, 2005. Filed with Registrants Current Report on Form 8-K
dated December 16, 2005 and incorporated herein by reference.10.37
    
    
    Registration Rights Agreement by and between PS Business
Parks, Inc. and GSEP 2006 Realty Corp., dated as of March 12,
2007. Filed with Registrants Current Report on Form 8-K
dated March 16, 2007 and incorporated herein by reference.10.38
    
    
    Amended and Restated Revolving Credit Agreement dated as of
October 29, 2002 among PS Business Parks, L.P., Wells Fargo
Bank, National Association, as Agent, and the Lenders named
therein. Filed with Registrants Annual Report on Form 10-K
for the year ended December 31, 2002 (SEC File No. 001-10709)
and incorporated herein by reference.10.39
    
    
    Modification Agreement, dated as of December 29, 2003. Filed
with the Registrants Annual Report on Form 10-K for the year
ended December 31, 2003 and incorporated herein by reference.
This exhibit modifies the Amended and Restated Revolving
Credit Agreement dated as of October 29, 2002 and filed with
the Registrants Annual Report on Form 10-K for the year
ended December 31, 2002 (SEC File No. 001-10709) and
incorporated herein by reference.10.40
    
    
    Modification Agreement, dated as of January 23, 2004. Filed
with the Registrants Annual Report on Form 10-K for the year
ended December 31, 2003 and incorporated herein by reference.
This exhibit modifies the Modification Agreement dated as of
December 29, 2003 and filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 2003 and
incorporated herein by reference.10.41
    
    
    Third Modification Agreement, dated as of August 5, 2005.
Filed with the Registrants Current Report on Form 8-K dated
August 5, 2005 and incorporated herein by reference. This
exhibit modifies the Modification Agreement dated as of
January 23, 2004 and filed with the Registrants Annual
Report on Form 10-K for the year ended December 31, 2003 and
incorporated herein by reference.10.42
    
    
    Fourth Modification Agreement dated as of July 30, 2008 to
Amended and Restated Revolving Credit Agreement dated October
29, 2002. Filed with Registrants Current Report of Form 8-K
dated August 5, 2008 and incorporated herein by reference.10.43
    
    
    Letter Agreement, dated as of December 29, 2003, between
Public Storage, Inc. and PS Business Parks, L.P. Filed with
the Registrants Current Report on Form 8-K dated January 14,
2004 and incorporated herein by reference.10.44
    *
    
    Registrants 1997 Stock Option and Incentive Plan. Filed with
Registrants Registration Statement on Form S-8 (No.
333-48313) and incorporated herein by reference.
 54




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##### 



10.45
    *
    
    Registrants 2003 Stock Option and Incentive Plan. Filed with Registrants
Registration Statement on Form S-8 (No. 333-104604) and incorporated herein by
reference.10.46
    *
    
    Retirement Plan for Non-Employee Directors. Filed with Registrants
Registration Statement on Form S-8 (No. 333-129463) and incorporated herein by
reference.10.47
    *
    
    Form of PS Business Parks, Inc. Restricted Stock Unit Agreement. Filed with
Registrants Quarterly Report on Form 10-Q for the quarter ended September 30,
2004 and incorporated herein by reference.10.48
    *
    
    Form of PS Business Parks, Inc. 2003 Stock Option and Incentive Plan
Non-Qualified Stock Option Agreement. Filed with Registrants Quarterly Report
on Form 10-Q for the quarter ended September 30, 2004 and incorporated herein
by reference.10.49
    *
    
    Form of PS Business Parks, Inc. 2003 Stock Option and Incentive Plan Stock
Option Agreement. Filed with Registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004 and incorporated herein by reference.12
    
    
    Statement re: Computation of Ratio of Earnings to Fixed Charges. Filed herewith.21
    
    
    List of Subsidiaries. Filed with Registrants Annual Report on Form 10-K for
the year ended December 31, 2008 and incorporated herein by reference.23
    
    
    Consent of Independent Registered Public Accounting Firm. Filed herewith.31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. Filed herewith.31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. Filed herewith.32.1
    
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
 
 *
    
    Management contract or compensatory plan or arrangement 55