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Why Should You Buy PS Business Parks (PSB) Stock Right Now?

The rate hike and a cautious approach might have deterred you from making investments in the REIT industry. But make sure not to ignore the chances of scooping up big gains from this special hybrid asset class that also benefits from the favorable dynamics of the individual asset categories.

In fact, one such REIT stock which has been displaying strength is PS Business Parks Inc. PSB. This Zacks Rank #2 (Buy) stock has risen 14.3% in the past three months compared with 3.7% growth recorded by the Zacks categorized REIT and Equity Trust – Other industry.

This Glendale, CA-based REIT is into ownership, acquisition, development and operation of commercial real estate properties, especially multi-tenant flex, office and industrial assets. The healthy fundamentals in these asset categories are anticipated to drive growth, while portfolio repositioning strategies are likely to help the company emerge stronger.

In June, the company declared the opening of Highgate at The Mile, a 395-unit, luxury apartment community in Tysons, VA. This move comes as part of the company’s efforts to enhance its portfolio in the vibrant Tysons market.

In fact, PS Business Parks continues to depict robust fundamentals and improving prospects, letting us further explore why it is a solid choice now.

Backed by better-than-expected growth in revenues and higher net operating income, the company delivered a surprise of 7.8% in terms of funds from operations (FFO) per share in first-quarter 2017. Also, over the last three–five years, PS Business Parks witnessed nearly 13.5% growth in FFO per share against 2.9% of that of the industry.

Further, the company’s projected sales growth of 3.8% for 2017 is ahead of the industry’s expected growth rate of 2.9%, signaling brighter days ahead. Also, FFO per share is estimated to grow at the rate of 11.8% for 2017, which is way above the industry average of 1.6%.

Moreover, PS Business Parks’ Return on Equity (ROE) is 15.85% compared with the industry average of 12.8%. This indicates that the company reinvests more efficiently compared to the industry.

Also, the debt-to-equity ratio for PS Business Parks is 0.11 compared with the industry average of 0.82. This highlights greater financial stability for the company and lesser risks for shareholders.



Other Key Picks

Other top-ranked stocks in the real estate space include Liberty Property Trust LPT, Prologis, Inc. PLD and Whitestone REIT WSR. All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Liberty Property Trust has a long-term FFO per share growth rate of 6%.

Prologis’s FFO per share estimates for second-quarter 2017 moved up 2.6% to 78 cents, over the past 30 days.

Whitestone REIT’s FFO per share estimates for 2017 moved up 4.0% to $1.05, over the past 60 days.

Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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ProLogis, Inc. (PLD): Free Stock Analysis Report
 
PS Business Parks, Inc. (PSB): Free Stock Analysis Report
 
Whitestone REIT (WSR): Free Stock Analysis Report
 
Liberty Property Trust (LPT): Free Stock Analysis Report
 
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