PS BUSINESS PARKS, INC./MD MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

The following discussion and analysis of the results of operations and financial
condition should be read in conjunction with the selected financial data and the
Company's consolidated financial statements and notes thereto included in this
Form 10-K. Our consolidated financial statements have been prepared in
accordance with U.S. generally accepted accounting principles ("GAAP.") The
preparation of these financial statements in conformity with GAAP requires us to
make estimates, judgments, and assumptions that affect the reported amounts of
assets, liabilities, revenues, and expenses. We base these estimates, judgments,
and assumptions on historical experience, current trends, and various other
factors that we believe to be reasonable under the circumstances.

We continually evaluate the estimates, judgments, and assumptions we use to
prepare our consolidated financial statements. Changes in estimates, judgments,
or assumptions could affect our financial position and our results of
operations, which are used by our stockholders, potential investors, industry
analysts, and lenders in their evaluation of our performance.

Critical Accounting Estimates:


Our critical accounting estimates are defined as accounting estimates or
assumptions made in accordance with GAAP, which involve a significant level of
estimation uncertainty or subjectivity and have had or are reasonably likely to
have a material impact on our financial condition or results of operations. Our
significant accounting policies, which utilize these critical accounting
estimates, are described in Note 2 - "Summary of significant accounting
policies" to our consolidated financial statements under Item 15 in this annual
report on Form 10-K. Our critical accounting estimates are described below.

Recognition of real estate acquired: Generally, our acquisitions of real estate
or in-substance real estate are accounted for as asset acquisitions and not
business combinations because substantially all of the fair value is
concentrated in a single identifiable asset or group of similar identifiable
assets (i.e., land, buildings, and related intangible assets). The accounting
model for asset acquisitions requires that the acquisition consideration
(including acquisition costs) be allocated to the individual assets acquired and
liabilities assumed on a relative fair value basis. Any excess (deficit) of the
consideration transferred relative to the sum of the fair value of the assets
acquired and liabilities assumed is allocated to the individual assets and
liabilities based on their relative fair values. We estimate the fair value of
land, buildings, intangible assets, and intangible liabilities for purposes of
allocating purchase price.

Such estimates, which are determined with the assistance of third-party
valuation specialists where appropriate, are based upon many assumptions and
judgments, including, but not limited to:

?market rates of return and capitalization rates on real estate and intangible
assets;

?building and material cost levels;

?estimated market rent levels;

?future revenue growth rates;

?future cash flows from the real estate and the existing customer base, and

?comparisons of the acquired underlying land parcels to recent land
transactions.


In calculating value for acquisitions completed during the year ended December
31, 2021, we used discount rates ranging from 5.5% and 6.0% and a capitalization
rate of 5.0%. Others could come to materially different conclusions as to the
estimated fair values, which could result in different depreciation and
amortization expense, rental income, gains, and losses on sale of real estate
assets, and real estate and intangible assets.

We completed acquisitions of two properties for a total purchase price of $148.9
million during the year ended December 31, 2021. These transactions were
accounted for as asset acquisitions, and the purchase price of each was
allocated based on the relative fair value of the asset acquired and liabilities
assumed. Refer to the "Acquisitions" section of Note 3 - "Real estate
facilities" to our consolidated financial statements under Item 15 in this
annual report on Form 10-K for additional information.


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Impairment of long-lived assets: For each reporting period, we review current
activities and changes in the business conditions of all of our long-lived
assets, including our rental properties, construction in progress, land held for
development, right-of-use assets related to operating leases in which we are the
lessee, and intangibles, to determine the existence of any triggering events or
impairment indicators requiring an impairment analysis. If triggering events or
impairment indicators are identified, we review an estimate of the future
undiscounted cash flows, including, if necessary, a probability-weighted
approach if multiple outcomes are under consideration.

Upon determination that an impairment has occurred, a write-down is recognized
to reduce the carrying amount to its estimated fair value. If an impairment loss
is not required to be recognized, the recognition of depreciation or
amortization is adjusted prospectively, as necessary, to reduce the carrying
amount of the real estate to its estimated disposition value over the remaining
period that the asset is expected to be held and used. We may also adjust
depreciation of properties that are expected to be disposed of or redeveloped
prior to the end of their useful lives.

Impairment of real estate assets classified as held for sale: A property is
classified as held for sale when all of the accounting criteria for a plan of
sale have been met. Upon classification as held for sale, we recognize an
impairment charge, if necessary, to lower the carrying amount of the real estate
asset to its estimated fair value less cost to sell. The determination of fair
value can involve significant judgments and assumptions. We develop key
assumptions based on the following available factors: (i) contractual sales
price, (ii) preliminary non-binding letters of intent, or (iii) other available
comparable market information. If this information is not available, we use
estimated replacement costs or estimated cash flow projections that utilize
estimated discount and capitalization rates. These estimates are subject to
uncertainty and therefore require significant judgment by us. We review all
assets held for sale each reporting period to determine whether the existing
carrying amounts are fully recoverable in comparison to their estimated fair
values less costs to sell. Subsequently, as a result of our quarterly
assessment, we may recognize an incremental impairment charge for any decrease
in the asset's fair value less cost to sell. Conversely, we may recognize a gain
for a subsequent increase in fair value less cost to sell, limited to the
cumulative net loss previously recognized.

The analysis of impairment of our long-lived assets involves identification of
indicators of impairment, projections of future operating cash flows and
estimates of fair values or selling prices, all of which require significant
judgment and subjectivity. Others could come to materially different
conclusions. In addition, we may not have identified all current facts and
circumstances that may affect impairment. Any unidentified impairment loss, or
change in conclusions, could have a material adverse impact on our net income.

The evaluation for impairment and calculation of the carrying amount of a
long-lived asset to be held and used involves consideration of factors and
calculations that are different than the estimate of fair value of assets
classified as held for sale. Because of these two different models, it is
possible for a long-lived asset previously classified as held and used to
require the recognition of an impairment charge upon classification as held for
sale.


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Business Overview


The Company is a fully-integrated, self-advised and self-managed REIT that owns,
operates, acquires, and develops commercial properties, primarily multi-tenant
industrial, industrial-flex and low-rise suburban office space. As of December
31, 2021, the Company owned and operated 27.7 million rentable square feet of
commercial space in six states consisting of 97 parks and 666 buildings. The
Company's properties are primarily located in major coastal markets that have
experienced long-term economic growth. The Company also held a 95.0% interest in
a joint venture entity which owns Highgate at The Mile, a 395-unit multifamily
apartment complex located in Tysons, Virginia, and a 98.2% interest in a joint
venture formed to develop Brentford at The Mile, a planned 411-unit multifamily
apartment complex also located in Tysons, Virginia. Our strong and conservative
capital structure allows us the flexibility to use debt and equity capital
prudently to fund our growth, which allows us to acquire properties we believe
will create long-term value. From time to time we sell properties which no
longer fit the Company's strategic objectives.

Existing Real Estate Facilities: The operating results of our existing real
estate facilities are substantially influenced by demand for rental space within
our properties and our markets, which impacts occupancy, rental rates, and
capital expenditure requirements. We strive to maintain high occupancy levels
while increasing rental rates and minimizing capital expenditures when market
conditions allow, although the Company may decrease rental rates in markets
where conditions require. Management's initiatives and strategies with respect
to our existing real estate facilities, which include incentivizing our
personnel to maximize the return on investment for each lease transaction and
provide a superior level of service to our customers.

Acquisitions of Real Estate Facilities: We seek to grow our portfolio through
acquisitions of facilities generally consistent with the Company's focus on
owning concentrated business parks with easy to configure space and in markets
and product types with favorable long-term return potential.

On November 18, 2021, we acquired a multi-tenant industrial business park
comprising approximately 141,000 rentable square feet in Plano, Texas, for a
total purchase price of $25.6 million, inclusive of capitalized transaction
costs. The park consists of 5 buildings and was 97.3% occupied at acquisition
with suites ranging from 1,400 to 25,000 square feet.

On September 1, 2021, we acquired a multi-tenant industrial business park
comprising approximately 718,000 rentable square feet in Grapevine, Texas, for a
total purchase price of $123.3 million, inclusive of capitalized transaction
costs. The park consists of 15 buildings and was 96.1% occupied at acquisition
with suites ranging from 2,000 to 20,000 square feet.

On October 28, 2020, we acquired a multi-tenant industrial business park
comprising approximately 246,000 rentable square feet in Alexandria, Virginia,
for a total purchase price of $46.6 million, inclusive of capitalized
transaction costs. The park consists of three buildings and was 100.0% occupied
at acquisition with suites ranging from 7,000 to 75,000 square feet.

On January 10, 2020, we acquired a multi-tenant industrial business park
comprising approximately 73,000 rentable square feet in La Mirada, California,
for a total purchase price of $13.5 million, inclusive of capitalized
transaction costs. The park consists of five buildings and was 100.0% occupied
at acquisition with suites ranging from 1,200 to 3,000 square feet.

On December 20, 2019, we acquired a multi-tenant industrial-flex business park
comprising approximately 79,000 rentable square feet in Santa Clara, California,
for a total purchase price of $16.8 million, inclusive of capitalized
transaction costs. The park consists of nine buildings and was 95.6% occupied at
acquisition with suites ranging from 200 to 3,500 square feet.

On September 5, 2019, we acquired a multi-tenant industrial business park
comprising approximately 543,000 rentable square feet in Santa Fe Springs,
California
, for a total purchase price of $104.3 million, inclusive of
capitalized transaction costs. The park consists of ten buildings and was 100.0%
occupied at acquisition with suites ranging from 5,000 to 288,000 square feet.


On April 18, 2019, we acquired a multi-tenant industrial business park
comprising approximately 74,000 rentable square feet in Signal Hill, California,
for a total purchase price of $13.8 million, inclusive of capitalized
transaction costs. The park consists of eight buildings and was 98.4% occupied
at acquisition with suites ranging from 1,200 to 8,000 square feet.

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We continue to seek to acquire additional properties in our existing markets and
generally in close proximity to our existing portfolio; however, there can be no
assurance that we will acquire additional facilities that meet our risk-adjusted
return and underwriting requirements.

Development or Redevelopment of Real Estate Facilities

In certain instances, we may seek to redevelop our existing real estate or
develop new buildings on excess land parcels.


As of December 31, 2021, we were in the process of developing an approximately
83,000 square foot multi-tenant industrial building at our 212 Business Park
located in Kent, Washington. As of December 31, 2021, $2.2 million of the
estimated $15.4 million total development costs had been incurred and was
reflected under land and building held for development, net on our consolidated
balance sheets. This construction project is scheduled to be completed in the
fourth quarter of 2022.

As of December 31, 2021, we were in the process of developing an approximately
17,000 square foot multi-tenant industrial building at our Boca Commerce Park,
located in Boca Raton, Florida. As of December 31, 2021, $1.1 million of the
estimated $4.0 million total development costs had been incurred and was
reflected under land and building held for development, net on our consolidated
balance sheets. This construction project is scheduled to be completed in the
fourth quarter of 2022.

During 2021, we completed the development of an 83,000 square foot shallow-bay
industrial building on an excess land parcel at our Freeport Business Park
located in Irving, Texas for total development costs of $8.1 million. The asset
was placed into service on March 1, 2021 and accordingly was reflected under
real estate facilities, at cost on our consolidated balance sheets at December
31, 2021.

The Mile is an office and multifamily park we own which sits on 44.5 contiguous
acres of land located in Tysons, Virginia. The park consists of 628,000 square
feet of office space and a 395-unit multifamily apartment community we
developed, Highgate at The Mile, which we completed in 2017 through a joint
venture with the JV Partner. In 2019, we successfully rezoned The Mile allowing
us to develop, at our election, up to 3,000 additional multifamily units and
approximately 500,000 square feet of other commercial uses.

In August 2020, the Company entered into a new joint venture with the JV Partner
for the purpose of developing a second multifamily property, Brentford at The
Mile, a planned 411-unit multifamily apartment complex. Under the Brentford
Joint Venture agreement, the Company has a 98.2% controlling interest and is the
managing member with the JV Partner holding the remaining 1.8% limited
partnership interest. We contributed the Brentford Parcel at a value of $18.5
million, for which we received equity contribution credit in the Brentford Joint
Venture. Our cost basis in the Brentford Parcel was $5.1 million as of December
31, 2021.

Construction of Brentford at The Mile commenced in August 2020 and is
anticipated to be completed over a period of 24 to 36 months at an estimated
development cost of $110 million to $115 million, excluding land cost. As of
December 31, 2021, the development cost incurred was $54.8 million, which is
reflected in land and building held for development, net on our consolidated
balance sheets along with our $5.1 million cost basis in the Brentford Parcel.
During the year ended December 31, 2020, the Company also recorded
non-capitalizable demolition costs of $0.3 million in interest and other expense
on our consolidated statements of income.


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While multifamily real estate was not previously a core asset class for us, we
determined that multifamily real estate represents a unique opportunity and the
highest and best use of the Brentford Parcel. Through joint ventures we have
partnered with a local developer and operator of multifamily properties in order
to leverage their development and operational expertise. The scope and timing of
the future phases of development of The Mile are subject to a variety of
uncertainties, including site plan approvals and building permits.

We consolidate both the joint venture that owns Highgate at The Mile and the
joint venture that is developing Brentford at The Mile.

See “Analysis of Net Income – Multifamily” below and Note 3 and 4 to our
consolidated financial statements for more information on Highgate at The Mile
and Brentford at The Mile.


Sale of Real Estate Facilities: We may from time to time sell individual real
estate facilities based on market conditions, fit with our existing portfolio,
evaluation of long-term potential returns of markets or product types, or other
reasons.

On December 30, 2021, we sold a 53,000 square foot industrial building located
in Beltsville, Maryland, for net sale proceeds of $4.5 million, which resulted
in a gain on sale of $3.2 million.

On December 29, 2021, we sold a 70,000 square foot industrial-flex building
located in Irving, Texas, for net sale proceeds of $8.8 million, which resulted
in a gain on sale of $6.3 million.


On October 19, 2021, we sold a 371,000 square foot industrial-flex business park
located in San Diego, California, for net sale proceeds of $311.1 million, which
resulted in a gain on sale of $301.3 million.

On September 17, 2021, we sold a 22,000 square foot industrial-flex building
located in Irving, Texas, for net sale proceeds of $3.4 million, which resulted
in a gain on sale of $2.9 million.

On July 16, 2021, we sold a 244,000 square foot office business park located in
Herndon, Virginia, for net sale proceeds of $40.5 million, which resulted in a
gain on sale of $27.0 million.

On June 17, 2021, we sold a 198,000 square foot office-oriented flex business
park located in Chantilly, Virginia, for net sale proceeds of $32.6 million,
which resulted in a gain on sale of $19.2 million. (Collectively the "2021
Assets Sold").

During 2021, we reclassified above-mentioned assets as properties held for sale,
net, in the consolidated balance sheet as of December 31, 2020.


On September 16, 2020, we sold two industrial buildings totaling 40,000 square
feet located in Redmond, Washington, which were subject to an eminent domain
process for net sale proceeds of $11.4 million, which resulted in a gain on sale
of $7.7 million.

On January 7, 2020, we completed the sale of a single-tenant building totaling
113,000 square feet in Rockville, Maryland, for net sale proceeds of $29.3
million, which resulted in a gain on sale of $19.6 million. (Collectively the
"2020 Assets Sold").

On October 8, 2019, we sold three business parks located in Rockville and Silver
Springs, Maryland: Metro Park North, Meadow Business Park and WesTech Business
Park. The parks, consisting of 28 buildings totaling approximately 1.3 million
rentable square feet sold for net sale proceeds of $144.6 million, which
resulted in a gain on sale of $16.6 million. (Collectively the "2019 Assets
Sold").

We have 702,000 rentable square feet of industrial-flex business park located in
Irving, Texas, held for sale as of December 31, 2021 and expect to complete the
sale of these assets during 2022. The operations of such facilities as well as
the sold facilities mentioned above are presented below under "assets sold or
held for sale."


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Certain Factors that May Impact Future Results


Impact of COVID-19 Pandemic: Starting in March 2020, the COVID-19 pandemic
resulted in cessation, severe curtailment, or impairment of business activities
in most sectors of the economy in all markets we operate in, due to governmental
"stay at home" orders, risk mitigation procedures, and closure of businesses not
considered to be "essential." Since it remains unknown at this time how long the
COVID-19 pandemic will continue, particularly given the impact of existing and
potential future variants, we cannot estimate how long these negative economic
impacts will persist.

Since the onset of the COVID-19 pandemic, the Company has entered into rent
relief agreements consisting of $6.2 million of rent deferrals and $1.6 million
of rent abatements. As of December 31, 2021, the 317 current customers that
received rent relief account for 9.5% of rental income. Also as of December
31, 2021, the Company had collected $5.3 million of rent deferral repayment,
representing 99.8% of the amounts scheduled to be repaid through December 2021.
An additional $0.9 million of rent deferral repayment is scheduled to be repaid
thereafter.

The Company also wrote off accounts receivable, net of recoveries and deferred
rent receivables of $0.1 million and $0.3 million, respectively, for the year
ended December 31, 2021, compared to $1.6 million and $3.1 million,
respectively, for the year ended December 31, 2020. As of February 18, 2022, the
Company had open rent relief requests from approximately less than 1% of
customers.

Our ability to re-lease space as leases expire in a way that minimizes vacancy
periods and maximizes market rental rates will depend upon market conditions in
the specific submarkets in which each of our properties are located. Due to the
uncertainty of the COVID-19 pandemic's impact on the Company's future ability to
grow or maintain existing occupancy levels, possible decreases in rental rates
on new and renewal transactions, and the potential negative effect of additional
rent deferrals, rent abatements, and customer defaults, we believe in some
instances the COVID-19 pandemic may continue to have adverse effects on rental
income for 2022 and possibly beyond.

Impact of Inflation: Inflation has significantly increased recently and a
continued increase in inflation could adversely impact our future results. The
Company continues to seek ways to mitigate its potential impact. A substantial
portion of the Company's leases require customers to pay operating expenses,
including real estate taxes, utilities, and insurance, as well as increases in
common area expenses, which should partially reduce the Company's exposure to
inflation.

Regional Concentration: Our portfolio is concentrated in eight regions, in six
states. We have chosen to concentrate in these regions because we believe they
have characteristics which enable them to be competitive economically, such as
above average population growth, job growth, higher education levels and
personal income. Changes in economic conditions in these regions in the future
could impact our future results.

Industry and Customer Concentrations: We seek to minimize the risk of industry
or customer concentrations. As of December 31, 2021, excluding the assets held
for sale, only three industry concentrations represented more than 10% of our
annualized rental income as depicted in the following table.

                                   Percent of
                                   Annualized
Industry                          Rental Income
Business services                         23.0%
Logistics                                 14.7%
Technology                                10.1%
Retail, food, and automotive               8.6%
Construction and engineering               8.1%
Health services                            6.7%
Government                                 5.2%
Electronics                                2.9%
Home furnishings                           2.4%
Insurance and financial services           2.0%
Aerospace/defense                          1.8%
Communications                             1.6%
Education                                  0.9%
Other                                     12.0%
Total                                    100.0%


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As of December 31, 2021, excluding the assets held for sale, leases from our top
10 customers comprised 10.3% of our annualized rental income with four customers
representing more than 1% as depicted in the following table (in thousands).

                                                                                   Percent of
                                                               Annualized          Annualized
Customers                                Square Footage     Rental Income (1)     Rental Income
U.S. Government                                465,000       $          11,989             2.8%
Amazon Inc.                                    543,000                   7,071             1.6%
KZ Kitchen Cabinet & Stone                     370,000                   5,604             1.3%
Luminex Corporation                            199,000                   4,419             1.0%
ECS Federal, LLC                               143,000                   3,430             0.8%
Lockheed Martin Corporation                    124,000                   2,724             0.6%
Applied Materials, Inc.                        173,000                   2,689             0.6%
CentralColo, LLC                                96,000                   2,495             0.6%
Great Way Trading & Transportation, Inc.       177,000                   2,126             0.5%
Costco-Innovel Solutions LLC                   180,000                   2,013             0.5%
Total                                        2,470,000       $          44,560            10.3%


____________________________

(1)For leases expiring prior to December 31, 2021, annualized rental income
represents income to be received under existing leases from January 1, 2021
through the date of expiration.


Customer credit risk: Historically, we have experienced a low level of
write-offs of uncollectible rents, with less than 0.4% of rental income written
off in any single year from 2011-2019. As of December 31, 2021, our level of
write-offs of uncollectible rents were 0.0%, which were below the 0.4% of rental
income written off as of December 31, 2020.

As of February 18, 2022, we had 25,000 square feet of leased space occupied by
one customer that is protected by Chapter 11 of the U.S. Bankruptcy Code, which
has no remaining lease value as the lease obligation ended during February 2022.
From time to time, customers contact us, requesting early termination of their
lease, reductions in space leased, or rent deferment or rent abatement, which we
are not obligated to grant but will consider and grant under certain
circumstances.

Net Operating Income


We utilize net operating income ("NOI"), a measure that is not defined in
accordance with GAAP, to evaluate the operating performance of our real estate.
We define NOI as rental income less Adjusted Cost of Operations. Adjusted Cost
of Operations, a non-GAAP measure, represents cost of operations, excluding
stock compensation, which can vary significantly period to period based upon the
performance of the Company.

We believe NOI assists investors in analyzing the performance of our real estate
by excluding (i) corporate overhead (i.e., general and administrative expense)
because it does not relate to the direct operating performance of our real
estate, (ii) depreciation and amortization expense because it does not
accurately reflect changes in the fair value of our real estate, and (iii) stock
compensation expense because this expense item can vary significantly from
period to period and thus impact comparability across periods. The Company's
calculation of NOI may not be comparable to those of other companies and should
not be used as an alternative to performance measures calculated in accordance
with GAAP. NOI should not be used as a measure of our liquidity, nor is it
indicative of funds available to fund our cash needs. NOI should not be used as
a substitute for cash flow from operating activities in accordance with GAAP.

We also report NOI on a basis which excludes non-cash rents that have been
deferred or abated during the period, certain non-cash revenue items, including
amortization of deferred rent receivable, in-place lease intangible, tenant
improvement reimbursements, and lease incentives, and also excludes
stock-compensation expense for employees whose compensation expense is recorded
in cost of operations ("Cash NOI"). We utilize Cash NOI to evaluate the cash
flow performance of our properties and believe investors and analysts utilize
this metric for the same purpose. Cash NOI should not be used as a measure of
our liquidity, nor is it indicative of funds available to fund our cash needs.
Cash NOI should not be used as a substitute for cash flow from operating
activities in accordance with GAAP.

See “Analysis of net income” below for reconciliations of each of these measures
to their closest analogous GAAP measure from our consolidated statements of
income.


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Results of Operations

Operating Results for 2021 and 2020


For the year ended December 31, 2021, net income allocable to common
stockholders was $393.1 million or $14.22 per diluted share, compared to $124.6
million or $4.52 per diluted share for the year ended December 31, 2020. The
increase was mainly due to a $332.6 million higher gain on sale of real estate
facilities sold in 2021 than in 2020, an $18.3 million increase in NOI from our
Same Park portfolio (defined below), a $6.7 million increase in NOI from our
Non-Same Park portfolio (defined below), and $1.6 million lower preferred
distributions in 2021 compared to 2020 due to the redemption of preferred stock
in November 2021, partially offset by a decrease of $5.9 million in NOI
generated from assets sold or held for sale, $6.4 million non-cash charge
related to the above mentioned 2021 redemption of preferred stock, and $3.6
million charge for a state income tax provision due to differences between state
and federal tax codes.

Operating Results for 2020 and 2019


For the year ended December 31, 2020, net income allocable to common
stockholders was $124.6 million or $4.52 per diluted share, compared to $108.7
million or $3.95 per diluted share for the year ended December 31, 2019. The
increase was due to an $11.0 million non-cash charge related to the redemption
of preferred stock incurred in 2019 that did not reoccur in 2020, $10.6 million
higher gain on sale of real estate facilities sold in 2020 than in 2019, $6.2
million lower preferred distributions in 2020 compared to 2019, and an increase
of $3.9 million in NOI from our Non-Same Park portfolio, partially offset by a
decrease of $15.1 million in NOI generated from assets sold or held for sale.




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Analysis of Net Income

Our net income is comprised primarily of our real estate operations,
depreciation and amortization expense, general and administrative expense,
interest and other income, interest and other expenses and gain on sale of real
estate facilities.


We segregate our real estate activities into (i) same park operations,
representing all operating properties acquired prior to January 1, 2019,
comprising 25.1 million rentable square feet of our 27.7 million of rentable
square feet at December 31, 2021 (the "Same Park" portfolio), (ii) non-same park
operations, representing those facilities we own that were acquired after
January 1, 2019 (the "Non-Same Park" portfolio), (iii) multifamily operations,
and (iv) assets sold or held for sale comprising 0.7 million square feet of
assets held for sale ("AHFS"), the 2021 Assets Sold totaling 1.0 million square
feet, the 2020 Assets sold totaling 153,000 square feet, and the 2019 Assets
Sold totaling 1.3 million square feet.

The table below sets forth the various components of our net income (in
thousands):

                               For the Years                          For the Years
                            Ended December 31,                      Ended December 31,
                             2021         2020        Variance      2020         2019         Variance
Rental income
Same Park                 $ 392,221    $ 369,448    $  22,773    $ 369,448    $  366,130    $   3,318
Non-Same Park                17,829        9,311        8,518        9,311         2,566        6,745
Multifamily                   9,069        9,464         (395)       9,464        10,075         (611)
Assets sold or held for      19,584       27,400                    27,400  

51,075

sale (1)                                               (7,816)                                (23,675)

Total rental income 438,703 415,623 23,080 415,623

      429,846      (14,223)

Cost of operations
Adjusted Cost of
Operations (2)
Same Park                   111,333      106,860        4,473      106,860       104,152        2,708
Non-Same Park                 5,523        3,661        1,862        3,661           857        2,804
Multifamily                   4,647        4,264          383        4,264         4,137          127
Assets sold or held for       7,636        9,518                     9,518        18,063
sale (1)                                               (1,882)                                 (8,545)
Stock compensation            1,757        1,210                     1,210         1,134
expense (3)                                               547                                      76

Total cost of operations 130,896 125,513 5,383 125,513

     128,343       (2,830)

NOI (4)
Same Park                   280,888      262,588       18,300      262,588       261,978          610
Non-Same Park                12,306        5,650        6,656        5,650         1,709        3,941
Multifamily                   4,422        5,200         (778)       5,200         5,938         (738)
Assets sold or held for
sale (1)                     11,948       17,882       (5,934)      17,882        33,012      (15,130)
Stock compensation
expense (3)                  (1,757)      (1,210)        (547)      (1,210)       (1,134)         (76)
Depreciation and            (93,486)     (96,314)                  (96,314)     (104,249)
amortization expense                                    2,828                                   7,935
General and                 (19,057)     (14,526)                  (14,526) 

(13,761)

administrative expense                                 (4,531)                                   (765)

Interest and other income 2,536 1,234 1,302 1,234

        4,492       (3,258)
Interest and other           (4,646)      (1,072)                   (1,072) 

(657)

expense                                                (3,574)                                   (415)
Gain on sale of real        359,875       27,273                    27,273        16,644
estate facilities                                     332,602                                  10,629
Net income                $ 553,029    $ 206,705    $ 346,324    $ 206,705    $  203,972    $   2,733


____________________________

(1)As of December 31, 2021, the Company had reclassified AHFS totaling 0.7
million square feet to Assets sold or held for sale. Also included in the
respective periods in 2021 are the 2021 Assets Sold totaling 1.0 million square
feet. As of December 31, 2020, Assets sold or held for sale includes the 0.7
million square feet of AHFS, along with the 2021 Assets Sold, and the 2020
Assets sold totaling 153,000 square feet. As of December 31, 2019, Assets sold
or held for sale includes the 0.7 million square feet of AHFS, along with the
2021 Assets Sold, the 2020 Assets sold, and the 2019 Assets Sold totaling 1.3
million square feet.

(2)Adjusted Cost of Operations excludes the impact of stock compensation
expense.

(3)Stock compensation expense, as shown here, represents stock compensation
expense for employees whose compensation expense is recorded in cost of
operations. Note that stock compensation expense attributable to our executive
management team (including divisional vice presidents) and other corporate
employees is recorded within general and administrative expense.

(4)NOI represents rental income less Adjusted Cost of Operations.


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Rental income increased $23.1 million in 2021 compared to 2020 and decreased
$14.2 million in 2020 compared to 2019. The increase in 2021 was due primarily
to higher occupancy, a reduction in rent abatements granted to certain customers
in 2021 compared to 2020, lower write-offs of accounts receivable and deferred
rent receivable in 2021 compared to 2020, combined with rental income from our
Non-Same Park portfolio acquired during the fourth quarter of 2020 and 2021.
These increases were partially offset by a decrease in rental income from assets
sold. The decrease in 2020 was due primarily to reduced rental income from
assets sold, partially offset by an increase in rental income from our Non-Same
Park and Same Park portfolio.

Cost of operations increased $5.4 million in 2021 compared to 2020 and decreased
$2.8 million in 2020 compared to 2019. The increase in 2021 was due primarily to
higher Adjusted Cost of Operations incurred by our Same Park (discussed below)
and Non-Same Park portfolios, partially offset by a decrease in Adjusted Cost of
Operations from assets sold. The decrease in 2020 was due primarily to reduced
operating expenses from assets sold, partially offset by higher Adjusted Cost of
Operations incurred by our Same Park and Non-Same Park portfolios.

Net income increased $346.3 million in 2021 compared to 2020 and increased $2.7
million in 2020 compared to 2019. The increase in 2021 was mainly due to higher
gain on sale of real estate facilities sold in 2021 than 2020 combined with
higher NOI, partially offset by higher general and administrative expense in
2021 than 2020 and higher other expenses in 2021 compared to 2020. The increase
in 2020 was mainly due to higher gain on sale of real estate facilities sold in
2020 than 2019 combined with lower depreciation and amortization expense,
partially offset by lower NOI and lower interest and other income.


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Table of Contents

Same Park Portfolio


We believe that evaluation of the Same Park portfolio provides an informative
view of how the Company's portfolio has performed over comparable periods. We
believe that investors and analysts use Same Park information in a comparable
manner.

The following table summarizes the historical operating results of our Same Park
portfolio and certain statistical information related to leasing activity in
2021, 2020, and 2019 (in thousands, except per square foot data):

                                   For the Years                         For the Years
                                Ended December 31,                    Ended December 31,
                                 2021         2020      % Change       2020         2019      % Change
Rental income
Cash Rental Income (1)        $ 391,125    $ 365,881         6.9%   $ 365,881    $ 363,104         0.8%
Non-Cash Rental Income (2)        1,096        3,567      (69.3%)       3,567        3,026        17.9%
Total rental income             392,221      369,448         6.2%     

369,448 366,130 0.9%


Adjusted Cost of Operations
(3)
Property taxes                   41,958       41,184         1.9%      41,184       38,873         5.9%
Utilities                        18,066       17,170         5.2%      17,170       17,920       (4.2%)
Repairs and maintenance          23,064       22,697         1.6%      22,697       21,711         4.5%
Compensation                     16,082       15,522         3.6%      15,522       14,708         5.5%
Snow removal                      1,021          233       338.2%         233        1,033      (77.4%)
Property insurance                4,778        3,943        21.2%       3,943        3,269        20.6%
Other expenses                    6,364        6,111         4.1%       6,111        6,638       (7.9%)
Total Adjusted Cost of
Operations                      111,333      106,860         4.2%     106,860      104,152         2.6%
NOI (4)                       $ 280,888    $ 262,588         7.0%   $ 262,588    $ 261,978         0.2%

Cash NOI (5)                  $ 279,792    $ 259,021         8.0%   $ 259,021    $ 258,952         0.0%

Selected Statistical Data
Rentable square footage at
period end                       25,053       25,053            -      25,053       25,053            -
NOI margin (6)                     71.6%        71.1%        0.5%        71.1%        71.6%       -0.5%
Cash NOI margin (7)                71.5%        70.8%        0.7%        70.8%        71.3%       -0.5%
Weighted average square foot
occupancy                          94.4%        92.7%        1.7%        92.7%        94.4%       -1.7%
Revenue per Occupied Square
Foot (8)                      $   16.58    $   15.91         4.2%   $   15.91    $   15.48         2.8%
Revenue per Available Foot
(RevPAF) (9)                  $   15.66    $   14.75         6.2%   $   14.75    $   14.62         0.9%
Cash Rental Income per
Occupied
Square Foot (10)              $   16.53    $   15.76         4.9%   $   15.76    $   15.35         2.7%
Cash Rental Income per
Available Foot (11)           $   15.61    $   14.60         6.9%   $   14.60    $   14.49         0.8%

____________________________

(1)Cash Rental Income represents rental income excluding Non-Cash Rental Income
(defined below). See table below for the change in Cash Rental Income


(2)Non-Cash Rental Income represents amortization of deferred rent receivable
(net of write-offs), in-place lease intangible, tenant improvement
reimbursements, and lease incentives. Same Park Non-Cash Rental Income is
presented net of deferred rent receivable write-offs of $0.3 million, $3.0
million, and $0.5 million for the years ended December 31, 2021, 2020, and 2019,
respectively.

(3)Adjusted Cost of Operations, as presented above, excludes stock compensation
expense for employees whose compensation expense is recorded in costs of
operations

(4)NOI represents rental income less Adjusted Cost of Operations.

(5)Cash NOI represents Cash Rental Income less Adjusted Cost of Operations.

(6)NOI margin is computed by dividing NOI by rental income.

(7)Cash NOI margin is computed by dividing Cash NOI by Cash Rental Income.

(8)Revenue per Occupied Square Foot is computed by dividing rental income for
the period by weighted average occupied square feet for the same period.


(9)Revenue per Available Square Foot (RevPAF) is computed by dividing rental
income for the period by weighted average available square feet for the same
period.

(10)Cash Rental Income per Occupied Square Foot is computed by dividing Cash
Rental Income for the period by weighted average occupied square feet for the
same period.

(11)Cash Rental Income per Available Square Foot is computed by dividing Cash
Rental Income for the period by weighted average available square feet for the
same period.
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Table of Contents

Analysis of Same Park Rental Income


Rental income for our Same Park portfolio increased 6.2% in 2021 compared to
2020 and 0.9% in 2020 compared to 2019. The increase in 2021 was due primarily
to higher rental rates charged to customers, as revenue per occupied square foot
increased 4.2%, weighted average occupancy increased 1.7% in 2021, and lower
rent deferrals and rent abatements granted in 2021, combined with lower
write-offs of accounts receivable and deferred rent receivable in 2021. The
increase in 2020 was due primarily to higher rental rates charged to customers,
as revenue per occupied square foot increased 2.8%, partially offset by a 1.7%
decrease in weighted average occupancy in 2020 compared to 2019, rent deferrals
and rent abatements granted in 2020, and higher write-offs of accounts
receivable and deferred rent receivable in 2020.

The following table details Same Park rental income for the years ended December
31, 2021
, 2020 and 2019 (in thousands):

                                For the Years                      For the Years
                              Ended December 31,                 Ended December 31,
                               2021        2020      Change       2020        2019      Change
Rental income (1)
Base rental income          $ 291,169   $ 280,499   $ 10,670   $ 280,499   $ 275,563   $  4,936
Expense recovery income        96,248      88,534      7,714      88,534      85,948      2,586
Lease buyout income             1,856       1,044        812       1,044       1,364       (320)
Rent receivable recovery/
(write-off)                       (12)     (1,515)     1,503      (1,515)     (1,016)      (499)
Abatements                       (312)     (1,285)       973      (1,285)           -    (1,285)
Deferrals                        (292)     (5,253)     4,961      (5,253)           -    (5,253)
Deferral repayments, net        1,773       2,953     (1,180)      2,953            -     2,953
Fee Income                        695         904       (209)        904       1,245       (341)
Non-Cash Rental Income (2)      1,096       3,567     (2,471)      3,567       3,026        541
Total rental income         $ 392,221   $ 369,448   $ 22,773   $ 369,448   $ 366,130   $  3,318

____________________________


(1)For all periods presented, the Company reclassified AHFS totaling 0.7 million
square feet to assets sold or held for sale and were excluded from reported Same
Park operating metrics.

(2)Non-cash rental income includes amortization of deferred rent receivable (net
of write-offs), in-place lease intangible, tenant improvement reimbursements,
and lease incentives.

We expect our future revenue growth will come primarily from contractual rental
increases as well as from potential increases in market rents which would allow
us to increase rent levels when leases are either renewed with existing
customers or re-leased to new customers. The following table sets forth the
expirations of existing leases in our Same Park portfolio over the next ten
years based on lease data at December 31, 2021 (dollars and square feet in
thousands):

                                                                                             Percent of
                                   Rentable
                                    Square         Percent of      Annualized Rental      Annualized Rental
                                   Footage
                   Number of      Subject to      Total Leased       Income Under        Income Represented
Year of Lease                      Expiring
Expiration         Customers        Leases       Square Footage     Expiring Leases      by Expiring Leases
2022                   1,961            5,527             22.8%   $           96,033                    22.2%
2023                   1,314            5,749             23.8%               98,774                    22.8%
2024                     762            4,635             19.1%               83,220                    19.2%
2025                     277            3,220             13.3%               59,538                    13.8%
2026                     204            2,313              9.6%               42,195                     9.8%
2027                      40            1,155              4.8%               20,877                     4.8%
2028                      27              565              2.3%                9,935                     2.3%
2029                      13              337              1.4%                8,032                     1.9%
2030                      14              567              2.3%               10,104                     2.3%
2031                       3               38              0.2%                1,156                     0.3%
Thereafter                 9              108              0.4%                2,746                     0.6%
Total                  4,624           24,214            100.0%   $          432,610                   100.0%

See “Analysis of Same Park Market Trends” below for further analysis of such
data on a by market basis.


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Table of Contents

Analysis of Same Park Adjusted Cost of Operations


Adjusted Cost of Operations for our Same Park portfolio increased 4.2% in 2021
compared to 2020 due primarily to higher utility costs, higher property
insurance, higher snow removal costs, higher property taxes, and higher payroll
costs. Adjusted Costs of Operations increased 2.6% in 2020 compared to 2019 due
primarily to higher property taxes, higher repairs and maintenance, higher
payroll costs, and higher insurance costs, partially offset by lower utility
costs and savings from snow removal costs.

Property taxes increased 1.9% in 2021 compared to 2020 and 5.9% in 2020 compared
to 2019 due to higher assessed values. We expect potential property tax growth
in the future due to higher assessed values.

Utilities are dependent upon energy prices and usage levels. Changes in usage
levels are driven primarily by weather and temperature. Utilities increased 5.2%
in 2021 compared to 2020 and decreased 4.2% in 2020 compared to 2019. The
increase in 2021 were driven by reduced consumption in 2020 resulting from the
"shelter in place order" due to the COVID-19 pandemic during the second and
third quarter of 2020. The decrease in 2020 was due primarily to a rate
reduction related to adopting a renewable energy program during the year as well
as reduced water and electricity usage due to the COVID-19 pandemic. It is
difficult to estimate future utility costs because weather, temperature and
energy prices are volatile and not readily predictable. However, we expect
utility costs in the future to be higher than our results for year ended
December 31, 2021 due to increased traffic and use at our parks as our customers
resume operations.

Repairs and maintenance increased 1.6% in 2021 compared to 2020 and 4.5% in 2020
compared to 2019. The increase in 2021 was primarily due to increased property
services combined with higher landscaping repairs and security costs, as well as
reduced consumption in 2020 resulting from the "shelter in place order" due to
the COVID-19 pandemic during the second and third quarter of 2020. The increase
in 2020 was primarily due to increased property services combined with higher
landscaping repairs and security costs incurred partially offset by a reduction
in general repairs and maintenance projects as a result of the COVID-19
pandemic. However, we expect repairs and maintenance costs in the future to be
higher than our results for the year ended December 31, 2021 as a result of
increased traffic and use at our parks as customers resume normalized
operations.

Payroll expense increased 3.6% in 2021 compared to 2020 and 5.5% in 2020
compared to 2019. Payroll expense includes on site and supervisory personnel
costs incurred in the operation of our properties. The increases in payroll was
primarily due to salary increases and promotions. We expect payroll expenses to
continue to increase in the future.

Snow removal increased 338.2% in 2021 compared to 2020 and decreased 77.4% in
2020 compared to 2019. Snow removal costs are weather dependent and therefore
not predictable.

Property insurance expense increased 21.2% in 2021 compared to 2020 and 20.6% in
2020 compared to 2019 due to a 20% rate increase for the policy period June 1,
2021 to May 31, 2022 due to unfavorable market conditions pervasive throughout
commercial real estate sectors combined with insurance deductibles recorded
during 2021 related to damage from the winter storm in Texas. The increase in
property insurance expense in 2020 compared to 2019 was also primarily due to an
increase in our property insurance premiums for the policy period June 2020 to
May 2021. We expect to experience increases in property insurance expense in the
future as unfavorable market conditions pervasive throughout commercial real
estate sectors persist.

Other expenses increased 4.1% in 2021 compared to 2020 and decreased 7.9% in
2020 compared to 2019. Other expenses are general property expenses incurred in
the operation of our properties. The increase in 2021 was primarily due to
certain office related expenses and professional services. The decrease in 2020
was primarily due to higher than average professional fees related to ordinary
course tenant related matters incurred in 2019, which did not recur in 2020. We
expect other expenses to be comparable to our results for the year ended
December 31, 2021.


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Table of Contents

Same Park Quarterly Trends


The following table sets forth historical quarterly data related to the
operations of our Same Park portfolio for Cash Rental Income, Adjusted Cost of
Operations, weighted average occupancy, Cash Rental Income per Occupied Square
Foot, and Cash Rental Income per Available Square Foot (in thousands, except per
square foot data):

                                          For the Three Months Ended
                            March 31      June 30      September 30    
December 31      Full Year
Cash Rental income (1)
2021                       $   95,010    $  96,948    $      99,161    $    100,006    $  391,125
2020                       $   93,109    $  86,705    $      91,501    $     94,566    $  365,881
2019                       $   89,301    $  90,723    $      90,189    $     92,891    $  363,104

Adjusted Cost of
Operations (1)
2021                       $   28,017    $  26,661    $      28,470    $     28,185    $  111,333
2020                       $   26,669    $  25,439    $      27,637    $     27,115    $  106,860
2019                       $   26,808    $  25,375    $      25,969    $     26,000    $  104,152

Cash NOI (1)
2021                       $   66,993    $  70,287    $      70,691    $     71,821    $  279,792
2020                       $   66,440    $  61,266    $      63,864    $     67,451    $  259,021
2019                       $   62,493    $  65,348    $      64,220    $     66,891    $  258,952

Weighted average square foot occupancy
2021                             93.2%        93.9%            94.8%           95.7%         94.4%
2020                             92.9%        92.4%            92.6%           92.7%         92.7%
2019                             94.4%        94.0%            94.7%           94.5%         94.4%

Cash Rental Income per Occupied Square
Foot (1)
2021                       $    16.28    $   16.49    $       16.70    $      16.67    $    16.53
2020                       $    16.00    $   14.97    $       15.78    $      16.29    $    15.76
2019                       $    15.11    $   15.41    $       15.20    $      15.69    $    15.35

Cash Rental Income per Available
Square Foot (1)
2021                       $    15.17    $   15.48    $       15.83    $      15.97    $    15.61
2020                       $    14.87    $   13.84    $       14.61    $      15.10    $    14.60
2019                       $    14.26    $   14.48    $       14.40    $      14.83    $    14.49


____________________________

(1)Defined in Management’s Discussion and Analysis of Financial Condition and
Results of Operations-Analysis of Net Income-Same Park Portfolio table.
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Table of Contents

Analysis of Same Park Market Trends


The following tables set forth historical data by region related to the
operations of our Same Park portfolio for Cash Rental Income, Adjusted Cost of
Operations, weighted average occupancy, Cash Rental Income per Occupied Square
Foot, and Cash Rental Income per Available Square Foot (in thousands, except per
square foot data):

                                  For the Years                        For the Years
                               Ended December 31,                   Ended December 31,
Region                         2021           2020     Variance      2020          2019     Variance

Geographic Data on Same Park

Cash Rental Income
Northern California (7.2   $   114,970     $ 105,833     8.6%     $   105,833   $ 107,354    (1.4%)
million feet)
Southern California (3.0        53,347        47,802    11.6%          47,802      48,296    (1.0%)
million feet)
Dallas (2.1 million feet)       20,563        19,270     6.7%          19,270      20,215    (4.7%)
Austin (2.0 million feet)       34,414        32,816     4.9%          32,816      30,365     8.1%
Northern Virginia (4.5          78,382        77,017     1.8%          77,017      76,776     0.3%
million feet)
South Florida (3.9 million      49,631        44,119    12.5%          44,119      43,326     1.8%
feet)
Seattle (1.4 million feet)      20,354        19,311     5.4%          19,311      17,268    11.8%
Suburban Maryland (1.0          19,464        19,713    (1.3%)         19,713      19,504     1.1%
million feet)
Total Same Park (25.1                                    6.9%                                 0.8%
million feet)                  391,125       365,881                  365,881     363,104

Adjusted Cost of Operations
Northern California             25,956        25,121     3.3%          25,121      24,313     3.3%
Southern California             13,263        12,870     3.1%          12,870      12,521     2.8%
Dallas                           7,100         7,145    (0.6%)          7,145       6,979     2.4%
Austin                          12,670        12,041     5.2%          12,041      10,843    11.0%
Northern Virginia               26,983        25,382     6.3%          25,382      26,482    (4.2%)
South Florida                   13,476        12,470     8.1%          12,470      11,977     4.1%
Seattle                          5,233         5,051     3.6%           5,051       4,109    22.9%
Suburban Maryland                6,652         6,780    (1.9%)          6,780       6,928    (2.1%)
Total Same Park                111,333       106,860     4.2%         106,860     104,152     2.6%

Cash NOI
Northern California             89,014        80,712    10.3%          80,712      83,041    (2.8%)
Southern California             40,084        34,932    14.7%          34,932      35,775    (2.4%)
Dallas                          13,463        12,125    11.0%          12,125      13,236    (8.4%)
Austin                          21,744        20,775     4.7%          20,775      19,522     6.4%
Northern Virginia               51,399        51,635    (0.5%)         51,635      50,294     2.7%
South Florida                   36,155        31,649    14.2%          31,649      31,349     1.0%
Seattle                         15,121        14,260     6.0%          14,260      13,159     8.4%
Suburban Maryland               12,812        12,933    (0.9%)         12,933      12,576     2.8%
Total Same Park            $   279,792     $ 259,021     8.0%     $   259,021   $ 258,952     0.0%

Weighted average square foot occupancy
Northern California              94.5%         91.3%     3.5%           91.3%       96.1%    (5.0%)
Southern California              96.9%         95.0%     2.0%           95.0%       94.9%     0.1%
Dallas                           90.1%         88.7%     1.6%           88.7%       93.3%    (4.9%)
Austin                           94.5%         94.9%    (0.4%)          94.9%       91.8%     3.4%
Northern Virginia                92.8%         92.3%     0.5%           92.3%       91.9%     0.4%
South Florida                    97.3%         93.5%     4.1%           93.5%       95.4%    (2.0%)
Seattle                          94.7%         95.6%    (0.9%)          95.6%       96.0%    (0.4%)
Suburban Maryland                92.1%         93.4%    (1.4%)          93.4%       92.9%     0.5%
Total Same Park                  94.4%         92.7%     1.8%           92.7%       94.4%    (1.8%)

Cash Rental Income per Occupied Square Foot (1)
Northern California        $     16.80     $   16.00     5.0%     $     16.00   $   15.42     3.8%
Southern California        $     18.92     $   17.29     9.4%     $     17.29   $   17.48    (1.1%)
Dallas                     $     10.89     $   10.37     5.0%     $     10.37   $   10.35     0.2%
Austin                     $     18.54     $   17.61     5.3%     $     17.61   $   16.84     4.6%
Northern Virginia          $     18.64     $   18.41     1.2%     $     18.41   $   18.44    (0.2%)
South Florida              $     13.19     $   12.20     8.1%     $     12.20   $   11.74     3.9%
Seattle                    $     15.91     $   14.96     6.4%     $     14.96   $   13.31    12.4%
Suburban Maryland          $     19.31     $   19.27     0.2%     $     19.27   $   19.18     0.5%
Total Same Park            $     16.53     $   15.76     4.9%     $     15.76   $   15.35     2.7%

Cash Rental Income per Available Square Foot (1)
Northern California        $     15.87     $   14.61     8.6%     $     14.61   $   14.82    (1.4%)
Southern California        $     18.32     $   16.42    11.6%     $     16.42   $   16.60    (1.1%)
Dallas                     $      9.82     $    9.21     6.6%     $      9.21   $    9.65    (4.6%)
Austin                     $     17.53     $   16.72     4.8%     $     16.72   $   15.46     8.2%
Northern Virginia          $     17.30     $   16.99     1.8%     $     16.99   $   16.94     0.3%
South Florida              $     12.84     $   11.41    12.5%     $     11.41   $   11.21     1.8%
Seattle                    $     15.08     $   14.30     5.5%     $     14.30   $   12.79    11.8%
Suburban Maryland          $     17.82     $   18.05    (1.3%)    $     18.05   $   17.86     1.1%
Total Same Park            $     15.61     $   14.60     6.9%     $     14.60   $   14.49     0.8%


____________________________

(1)Defined in Management’s Discussion and Analysis of Financial Condition and
Results of Operations-Analysis of Net Income-Same Park Portfolio table.

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Table of Contents

Supplemental Same Park Data by Product Type


The following supplemental tables provide further detail of our Same Park rental
income, Adjusted Cost of Operations and NOI by region, further segregated by
industrial, flex, and office for each of the three years ended December 31,
2021, 2020, and 2019.

                           For the Year Ended December 31, 2021                  For the Year Ended December 31, 2020                  For the Year 

Ended December 31, 2019

                     Industrial           Flex      Office      Total      Industrial           Flex      Office      Total      Industrial           Flex      Office      Total
                                                                                             In thousands
Cash Rental Income:
Northern California $     94,414        $ 10,040   $ 10,516   $ 114,970   $ 

84,337 $ 9,357 $ 12,139 $ 105,833 $ 85,234 $ 9,917 $ 12,203 $ 107,354
Southern California 39,072 13,423 852 53,347

    34,879          12,108        815      47,802         35,198          12,341        757      48,296
Dallas                    12,568           7,995          -      20,563         11,780           7,490          -      19,270         12,230           7,985          -      20,215
Austin                     9,191          25,223          -      34,414          8,270          24,546          -      32,816          8,288          22,077          -      30,365
Northern Virginia         20,381          22,270     35,731      78,382         19,972          21,327     35,718      77,017         18,124          21,272     37,380      76,776
South Florida             47,351           2,094        186      49,631         42,102           1,880        137      44,119         41,303           1,920        103      43,326
Seattle                   12,723           7,075        556      20,354         11,831           6,873        607      19,311         10,231           6,302        735      17,268
Suburban Maryland          4,357               -     15,107      19,464          4,146               -     15,567      19,713          4,307               -     15,197      19,504
Total                    240,057          88,120     62,948     391,125        217,317          83,581     64,983     365,881        214,915          81,814     66,375     363,104
Adjusted Cost of
Operations:
Northern California       20,074           2,755      3,127      25,956         19,340           2,672      3,109      25,121         18,526           2,602      3,185      24,313
Southern California        9,343           3,575        345      13,263          9,053           3,473        344      12,870          8,869           3,369        283      12,521
Dallas                     4,015           3,085          -       7,100          3,885           3,260          -       7,145          3,702           3,277          -       6,979
Austin                     3,184           9,486          -      12,670          3,022           9,019          -      12,041          2,778           8,065          -      10,843
Northern Virginia          6,190           6,823     13,970      26,983          5,785           6,333     13,264      25,382          6,143           6,191     14,148      26,482
South Florida             12,770             607         99      13,476         11,841             562         67      12,470         11,262             602        113      11,977
Seattle                    3,279           1,701        253       5,233          3,192           1,635        224       5,051          2,417           1,492        200       4,109
Suburban Maryland          1,237               -      5,415       6,652          1,243               -      5,537       6,780          1,229               -      5,699       6,928
Total                     60,092          28,032     23,209     111,333         57,361          26,954     22,545     106,860         54,926          25,598     23,628     104,152
Cash NOI:
Northern California       74,340           7,285      7,389      89,014         64,997           6,685      9,030      80,712         66,708           7,315      9,018      83,041
Southern California       29,729           9,848        507      40,084         25,826           8,635        471      34,932         26,329           8,972        474      35,775
Dallas                     8,553           4,910          -      13,463          7,895           4,230          -      12,125          8,528           4,708          -      13,236
Austin                     6,007          15,737          -      21,744    

5,248 15,527 – 20,775 5,510 14,012 – 19,522
Northern Virginia 14,191 15,447 21,761 51,399

14,187 14,994 22,454 51,635 11,981 15,081 23,232 50,294
South Florida

             34,581           1,487         87      36,155         30,261           1,318         70      31,649         30,041           1,318       (10)      31,349
Seattle                    9,444           5,374        303      15,121          8,639           5,238        383      14,260          7,814           4,810        535      13,159
Suburban Maryland          3,120               -      9,692      12,812          2,903               -     10,030      12,933          3,078               -      9,498      12,576
Total               $    179,965        $ 60,088   $ 39,739   $ 279,792   $    159,956        $ 56,627   $ 42,438   $ 259,021   $    159,989        $ 56,216   $ 42,747   $ 258,952
Percentage by
Product Type               64.3%           21.5%      14.2%      100.0%          61.7%           21.9%      16.4%      100.0%          61.8%           21.7%      16.5%      100.0%



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Our past revenue growth has come from contractual annual rent increases, as well
as re-leasing of space at rates above outgoing rental rates. We believe the
percentage difference between outgoing cash rent inclusive of estimated expense
recoveries and incoming cash rent inclusive of estimated expense recoveries for
leases executed ("Cash Rental Rate Change") is useful in understanding trends in
current market rates relative to our existing lease rates. The following table
summarizes Cash Rental Rate Change and other key statistical information with
respect to the Company's leasing production for its Same Park portfolio for the
year ended December 31, 2021 (square feet in thousands):

                                          For the Year Ended December 31, 2021
                       Square                     Transaction
                       Footage    Customer         Costs per       Cash Rental      Net Effective
Industrial             Leased     Retention      Executed Foot   Rate Change (1)   Rent Change (2)
Northern California     1,532          76.3%   $         3.10              12.1%             27.3%
Southern California       777          79.2%             2.29               6.2%             14.4%
Dallas                    438          80.8%             3.81               4.0%             11.8%
Austin                    294          74.0%             2.67              13.5%             41.0%
Northern Virginia         473          86.4%             4.86               3.7%              9.4%
South Florida             998          59.9%             1.29              11.5%             25.6%
Seattle                   279          74.0%             3.91              11.5%             21.2%
Suburban Maryland         114          68.5%             3.12             (2.1%)              4.9%
Industrial Totals by                                                        9.2%             21.4%
Region                  4,905          74.1%   $         2.86

Flex
Northern California       204          69.4%   $         1.00             (0.2%)              4.3%
Southern California       207          76.5%             2.10               1.0%              8.5%
Dallas                    263          76.8%             3.22               4.8%             15.4%
Austin                    169          34.1%             5.10               1.1%              7.2%
Northern Virginia         508          91.9%             4.46             (2.1%)              3.1%
South Florida              42          74.6%             1.69               8.3%             20.7%
Seattle                    88          47.5%             2.25               6.1%             13.3%
Suburban Maryland            -             -                 -                 -                 -
Flex Totals by                                                              0.8%              7.1%
Region                  1,481          71.0%   $         3.30

Office
Northern California        85          60.6%   $         0.82            (12.0%)           (10.4%)
Southern California        10          57.3%             2.16               3.2%             10.5%
Dallas                       -             -                 -                 -                 -
Austin                       -             -                 -                 -                 -
Northern Virginia         458          69.6%             8.89             (4.1%)              2.4%
South Florida                -             -                 -                 -                 -
Seattle                    12          41.1%             8.08               5.7%             15.5%
Suburban Maryland         147          78.4%             3.11             (5.8%)              2.9%
Office Totals by                                                          (5.6%)              0.7%
Region                    712          69.9%   $         6.63

Company Totals by                                                           4.9%             14.4%
Type                    7,098          72.8%   $         3.33


____________________________


(1)Cash Rental Rate Change is computed by taking the percentage difference
between the incoming initial billed monthly cash rental rates inclusive of
estimated expense recoveries (excluding the impact of certain items such as
concessions or future escalators) on new leases or extensions executed in the
period, and the outgoing monthly cash rental rates inclusive of estimated
expense recoveries last billed on the previous lease for that space. Leases
executed on spaces vacant for more than the preceding twelve months have been
excluded from this measure.

(2)Net effective rent represents average rental payments for the term of a lease
on a straight-line basis in accordance with GAAP and excludes operating expense
reimbursements.

For the year ended December 31, 2021, weighted average occupancy was 94.4%, an
increase from weighted average occupancy of 92.7% for the year ended December
31, 2020. Weighted average cash rental rate growth on leases executed during the
year ended December 31, 2021 was 4.9% while average net effective rent1 growth
was 14.4%. Renewals of leases with existing customers represented 63.3% of our
leasing activity for the year ended December 31, 2021. Average lease term of the
leases executed during the year ended December 31, 2021 was 3.4 years, with
associated average transaction costs (tenant improvements and leasing
commissions) of $3.33 per square foot. For comparative purposes, average lease
term and transaction costs on leases executed in the same period of 2020 were
3.4 years and $2.58 per square foot, respectively.

________________________


1Net effective rent represents average rental payments for the term of a lease
on a straight-line basis in accordance with GAAP, excluding operating expense
reimbursements.

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Non-Same Park Portfolio: The table below reflects the assets comprising our
Non-Same Park portfolio (in thousands):


                                                          Purchase    Square       Occupancy at
Acquired Property      Date Acquired       Location        Price       Feet      December 31, 2021
Jupiter Business       November 2021                     $  25,600      141            97.3%
Park                                    Plano, TX
Port America           September 2021   Grapevine, TX      123,268      718            95.2%
Pickett Industrial     October 2020                         46,582      246            36.6%
Park                                    Alexandria, VA
La Mirada Commerce     January 2020                         13,513       73            98.4%
Center                                  La Mirada, CA
San Tomas Business     December 2019    Santa Clara,        16,787       79            89.4%
Center                                  CA
Hathaway Industrial    September 2019   Santa Fe           104,330      543           100.0%
Park                                    Springs, CA
Walnut Avenue          April 2019       Signal Hill,        13,824       74            98.3%
Business Park                           CA
Total Acquired                                           $ 343,904    1,874            89.0%
Property

                            Date                           Total      Square       Occupancy at
Developed Property       Completed         Location         Cost       Feet      December 31, 2021
Freeport Industrial    March 2021                        $   9,052       83           100.0%
Building                                Irving, TX
Total                                                    $ 352,956    1,957            89.4%


We believe that our management and operating infrastructure typically allows us
to generate higher NOI from newly acquired real estate facilities than was
achieved by previous owners. However, it can take 24 or more months for us to
fully achieve higher NOI, and the ultimate levels of NOI achieved can be
affected by changes in general economic conditions. Due to the uncertainty of
the COVID-19 pandemic's impact on the Company's ability to generate higher NOI
from these newly acquired real estate facilities in the future, there can be no
assurance that we will achieve our expectations with respect to newly acquired
real estate facilities.

Multifamily: As of December 31, 2021, we held a 95.0% controlling interest in a
joint venture that owns Highgate at The Mile, a 395-unit apartment complex in
Tysons, Virginia. The following table summarizes the historical operating
results of Highgate at The Mile and certain statistical information (in
thousands, except per unit data):

                                             For the Years                        For the Years
                                          Ended December 31,                   Ended December 31,
                                          2021            2020     Change       2020         2019       Change
Rental income                          $    9,069       $ 9,464     (4.2%)   $    9,464    $ 10,075      (6.1%)
Cost of operations                          4,647         4,264       9.0%        4,264       4,137        3.1%
NOI                                    $    4,422       $ 5,200    (15.0%)   $    5,200    $  5,938     (12.4%)

Selected Statistical Data
Weighted average square foot occupancy       94.5%         92.9%      1.6%  

92.9% 95.4% (2.5%)

                                                               As of December 31, 2021
Total costs (1)                                                                                      $ 115,426
Physical occupancy                                                                                        95.7%
Average rent per unit (2)                                                                            $   2,078


____________________________


(1)The project cost for Highgate at The Mile includes the underlying land at its
assigned contribution value upon formation of the joint venture of $27.0
million, which includes unrealized land appreciation of $6.0 million that is not
recorded on our balance sheet.

(2)Average rent per unit is defined as the total potential monthly rental
revenue (actual rent for occupied apartment units plus market rent for vacant
apartment units) divided by the total number of rentable apartment units.


The decrease in NOI in 2021 compared to 2020 was primarily due to a decline in
rental rates as result of the COVID-19 pandemic combined with an increase in
cost of operations. The increase in cost of operations was attributed to an
increase in property tax assessments. Due to the uncertainty of the COVID-19
pandemic's impact on the Company's future ability to maintain existing occupancy
levels and rental rates, we may continue to experience NOI levels below those
which were achieved prior to the onset of the COVID-19 pandemic in the future.


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Assets sold or held for sale: These amounts include historical operating results
with respect to properties that were sold or held for sale.

For the year ended December 31, 2021, the operating results include the
following: 0.7 million square feet of AHFS and 1.0 million square feet of 2021
Assets Sold.

For the year ended December 31, 2020, the operating results include the
following: 0.7 million square feet of AHFS, 1.0 million square feet of 2021
Assets Sold, and 153,000 square feet of 2020 Assets Sold.

For the year ended December 31, 2019, the operating results include the
following: 0.7 million square feet of AHFS, 1.0 million square feet of 2021
Assets Sold, 153,000 square feet of 2020 Assets Sold, and 1.3 million square
feet of 2019 Assets Sold.


Depreciation and Amortization Expense: Depreciation and amortization expense
decreased 2.9% in 2021 compared to 2020 and decreased 7.6% in 2020 compared to
2019. The decrease in 2021 over 2020 was primarily due to acceleration of
depreciation expense related to a building reclassified to held for development
in 2020, which is also the primary reason for the decrease in 2020 over 2019.

General and Administrative Expense: General and administrative expense primarily
represents executive and other compensation, including non-cash stock
compensation, audit and tax fees, legal expenses and other costs associated with
being a public company. General and administrative expense increased $4.5
million, or 31.2%, in 2021 compared to 2020 and $0.8 million, or 5.6%, in 2020
compared to 2019.

The increase in 2021 over 2020 was primarily due to increase in compensation
expense mainly due to the addition of the new President and CEO, partially
offset by the departure of the former COO, combined with an increase in stock
compensation expense, as well as an increase in professional fees related to the
reincorporation of PSB from the state of California to the state of Maryland in
the second quarter of 2021, the increase was also attributable to legal fees
related to various corporate service projects and an increase in executive
procurement costs. The increase was partially offset by a reduction in expense
due to accelerated stock compensation expense related to the former CEO
retirement in the prior year. The increase in 2020 over 2019 was primarily due
to higher stock compensation expense due to accelerated stock compensation
expense for the former CEO (mentioned above) and an increase in professional
fees related to various corporate service projects. The increase was partially
offset by a decrease in compensation expense related to our President and CEO's
retirement and stock compensation expense incurred during 2019 tied to a
modification of the Director Retirement Plan which did not recur in 2020.

Sale of Real Estate Facilities


On December 30, 2021, the Company sold a 53,000 square foot industrial building
located in Beltsville, Maryland, for net sale proceeds of $4.5 million, which
resulted in a gain on sale of $3.2 million.

On December 29, 2021, the Company sold a 70,000 square foot industrial-flex
building located in Irving, Texas, for net sale proceeds of $8.8 million, which
resulted in a gain on sale of $6.3 million.

On October 19, 2021, the Company sold a 371,000 square foot industrial-flex
business park located in San Diego, California, for net sale proceeds of $311.1
million
, which resulted in a gain on sale of $301.3 million.


On September 17, 2021, the Company sold a 22,000 square foot industrial-flex
building located in Irving, Texas, for net sale proceeds of $3.4 million, which
resulted in a gain on sale of $2.9 million.

On July 16, 2021, the Company sold a 244,000 square foot office business park
located in Herndon, Virginia, for net sale proceeds of $40.5 million, which
resulted in a gain on sale of $27.0 million.


On June 17, 2021, the Company sold a 198,000 square foot office-oriented flex
business park located in Chantilly, Virginia, for net sale proceeds of $32.6
million, which resulted in a gain on sale of $19.2 million.

On September 16, 2020, the Company sold two industrial buildings totaling 40,000
square feet located in Redmond, Washington, which were subject to an eminent
domain process for net sale proceeds of $11.4 million, which resulted in a gain
on sale of $7.7 million.

On January 7, 2020, the Company sold a 113,000 square foot office building
located at Metro Park North in Rockville, Maryland, for net sale proceeds of
$29.3 million, which resulted in a gain on sale of $19.6 million.

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On October 8, 2019, the Company sold 1.3 million rentable square feet located in
Rockville and Silver Spring, Maryland, for net sale proceeds of $144.6 million,
which resulted in a gain on sale of $16.6 million.

Liquidity and Capital Resources



This section should be read in conjunction with our consolidated statements of
cash flows for the years ended December 31, 2021, 2020, and 2019 and the notes
to our consolidated financial statements, which set forth the major components
of our historical liquidity and capital resources. The discussion below sets
forth the factors which we expect will affect our future liquidity and capital
resources or which may vary substantially from historical levels.

Overview


Our expected material cash requirements for the twelve months ended December 31,
2022 and thereafter consist of (i) contractually obligated expenditures,
including payments of principal and interest; (ii) other essential expenditures,
including property operating expenses, maintenance capital expenditures and
dividends paid in accordance with REIT distribution requirements; and (iii)
opportunistic expenditures, including acquisitions and developments and
repurchases of our securities. We expect to satisfy these short-term and
long-term cash requirements through operating cash flow, disposition proceeds
and opportunistic debt and equity financing.

Sources of Capital


Operating Cash Flow: We believe that our net cash provided by our operating
activities will continue to be sufficient to enable us to meet our ongoing
requirements for debt service, capital expenditures and distributions to our
stockholders for the foreseeable future. In the last five years, we have
retained $40 to $60 million in operating cash flow per year. Retained operating
cash flow represents cash flow provided by operating activities, less
stockholder and unit holder distributions and capital expenditures, excluding
development costs. In addition, as of December 31, 2021, we had $27.1 million in
unrestricted cash.

Proceeds from Dispositions: Refer to "Business Overview-Sale of Real Estate
Facilities" above for a discussion of our dispositions. We expect to continue
sell properties that are no longer consistent with our investment strategy and
expect to use the proceeds from these dispositions to fund new acquisitions,
development or other cash requirements.

Access to Capital Markets: As a REIT, we are required to distribute at least 90%
of our "REIT taxable income" to our stockholders each year, which relative to a
taxable C corporation, limits the amount of cash flow from operations that we
can retain for investment purposes, such as to fund acquisitions and
developments. As a result, in order to grow our asset base, access to capital is
important.

Our financial profile is characterized by strong credit metrics, including low
leverage relative to our total capitalization and operating cash flows. We are a
highly rated REIT, as determined by Moody's and Standard & Poor's. Our corporate
credit rating by Standard and Poor's is A-, while our preferred stock are rated
BBB by Standard and Poor's and Baa2 by Moody's. We believe our credit profile
and ratings will enable us to efficiently access both the public and private
capital markets to raise capital, as necessary.

In order to maintain efficient access to the capital markets, we target a
minimum ratio of FFO (as defined below) to combined fixed charges and preferred
distributions of 3.0 to 1.0. Ratio of FFO to fixed charges and preferred
distributions is calculated by dividing FFO excluding fixed charges and
preferred distributions by fixed charges and preferred distributions paid. Fixed
charges include interest expense, capitalized interest and preferred equity
distributions paid. For the year ended December 31, 2021, the ratio of FFO to
combined fixed charges and preferred distributions paid was 6.1 to 1.0.

In August 2021, we amended and restated the credit agreement governing our
revolving Credit Facility to increase the aggregate principal amount of the
Credit Facility from $250.0 million to $400.0 million and extend the expiration
date to August 2025. The Credit Facility can also be expanded to $700.0 million.
We can use the Credit Facility as necessary as temporary financing until we are
able to raise longer term capital. Historically we have funded our long-term
capital requirements with retained operating cash flow and proceeds from the
issuance of common and preferred securities. We will select among these sources
of capital based upon availability, relative cost, the impact of constraints on
our operations (such as covenants), and the desire for leverage.
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Cash Requirements


Contractual Commitments: Our material contractual commitments as of December 31,
2021 consist of principal and interest on our Credit Facility, payment of
dividends on our preferred stock (which if not paid will accrue), contractual
construction commitments for development projects, and ground lease obligations:

?Credit Facility: As of December 31, 2021, we have $32.0 million outstanding on
our Credit Facility. Subsequent to December 31, 2021, the Company repaid in full
the balance outstanding as of December 31, 2021. We are in compliance with all
of the covenants and other requirements of our Credit Facility. Our Credit
Facility expires in August 2025.

?Preferred stock dividends: We paid $46.6 million to preferred stockholders
during the year ended December 31, 2021. We expect to continue to pay quarterly
distributions of $9.6 million to our preferred stockholders for the foreseeable
future or until such time as there is a change in the amount or composition of
our series of preferred equity outstanding. Dividends on preferred equity are
paid when and if declared by our Board and accumulate if not paid.

?Contractual commitments: Contractual construction commitments as of December
31, 2021
are approximately $43.6 million.


?Ground lease obligations: Our contractual payment requirements under various
operating leases as of December 31, 2021 are approximately $0.2 million for 2022
and $1.4 million thereafter.

Capital Expenditures: We define recurring capital expenditures as those
necessary to maintain and operate our real estate at its current economic value.
Nonrecurring capital improvements generally are related to property
reconfigurations and other capital expenditures related to repositioning asset
acquisitions.

The following table sets forth our commercial capital expenditures paid for in
the years ended December 31, 2021, 2020, and 2019 on an aggregate and per square
foot basis:

                                          For the Years Ended December 31,
                          2021        2020        2019         2021        2020       2019
Commercial Real Estate           (in thousands)               (per total weighted average
                                                                      square foot)
Recurring capital
expenditures
Capital improvements    $ 11,636    $  9,497    $ 11,224     $   0.42    $  0.34    $  0.40
(1)
Tenant improvements       14,767      15,948      17,360         0.53       0.58       0.62
Lease commissions          8,719       8,878       8,267         0.31       0.32       0.29
Total commercial
recurring
capital expenditures
(1)                       35,122      34,323      36,851         1.26       1.24       1.31
Nonrecurring capital       2,705       1,715       2,494         0.10       0.06       0.09
improvements
Total commercial
capital
expenditures (1)        $ 37,827    $ 36,038    $ 39,345     $   1.36    $  1.30    $  1.40


____________________________

(1)Per square foot amounts are calculated based on capital expenditures divided
by total weighted average square feet owned for the periods presented.

(2)Excludes $13, $24, and $20 of recurring capital improvements on our
multifamily asset in 2021, 2020, and 2019, respectively.


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The following table summarizes recurring capital expenditures paid and the
related percentage of NOI for Same Park by region for the years ended December
31, 2021
, 2020, and 2019 (in thousands):


                                                For the Years Ended December 31,
                                                                                        Recurring Capital
                                                                                          Expenditures
                             Recurring Capital Expenditures                          as a Percentage of NOI
Region                2021       2020    Change       2020       2019    Change     2021      2020      2019
Same Park
Northern           $          $           36.2%    $          $           44.0%
California            8,654      6,354                6,354      4,411                9.5%      7.7%      5.3%
Southern                                  2.9%                           (19.9%)
California            3,302      3,209                3,209      4,007                8.3%      9.0%     11.1%
Dallas                3,491      2,466    41.6%       2,466      2,655   (7.1%)      25.8%     20.0%     19.7%
Austin                1,887      1,955   (3.5%)       1,955      4,539   (56.9%)      8.9%      9.2%     22.9%
Northern                                  1.5%                           (26.3%)
Virginia              8,880      8,751                8,751     11,880               17.3%     16.8%     23.1%
South Florida         2,273      2,313   (1.7%)       2,313      2,191    5.6%        6.3%      7.3%      6.9%
Seattle               1,713      1,326    29.2%       1,326        914    45.1%      11.3%      9.4%      7.0%
Suburban                                  19.4%                          (12.4%)
Maryland              2,141      1,793                1,793      2,046               17.1%     14.0%     15.9%
Total Same Park      32,341     28,167    14.8%      28,167     32,643   (13.7%)     11.5%     10.7%     12.5%
Non-Same Park
Northern                                 (10.5%)                         100.0%
California               68         76                   76          -
Southern                                 (76.2%)                         3851.9%
California              508      2,134                2,134         54
Dallas                  371          -   100.0%           -          -      -
Northern                                 329.4%                          100.0%
Virginia                219         51                   51          -
Total Non-Same                           (48.4%)                         4087.0%
Park                  1,166      2,261                2,261         54
Assets sold or                           (58.5%)                         (6.2%)
held for sale         1,615      3,895                3,895      4,154
Total commercial
recurring
capital                                   2.3%                           (6.9%)
expenditures         35,122     34,323               34,323     36,851
Multifamily              13         24   (45.8%)         24         20    20.0%
Total              $ 35,135   $ 34,347    2.3%     $ 34,347   $ 36,871   (6.8%)


In the last five years, our annual Same Park recurring capital expenditures have
ranged between 10.7% and 14.3% as a percentage of NOI, and we expected future
recurring capital expenditures to be within this range. While what we disclose
herein with respect to capital expenditures represents our best estimates at
this time, there can be no assurance that these amounts will not change
substantially in the future for various reasons, including the potential impact
of the COVID-19 pandemic on capital projects and leasing volume.

Redemption of Preferred Stock: Shares of preferred stock are redeemable by the
Company five years after issuance or in order to preserve its status as a REIT,
but shares of preferred stock are never redeemable at the option of the holder.
Historically, we have reduced our cost of capital by refinancing higher coupon
preferred securities with lower coupon preferred securities. In November 2021,
our 5.20% Series W preferred shares, with a par value of $189.8 million, were
redeemed at par. Our Series X preferred shares, with a coupon rate of 5.25%, at
a par value of $230.0 million and Series Y preferred shares, with a coupon rate
of 5.20% ,at a par value of $200.0 million are redeemable in September 2022 and
December 2022, respectively. Future redemptions of preferred stock will depend
upon many factors, including available cash and our cost of capital. Refer to
Note 9 to our consolidated financial statements or more information on our
preferred stock.

Acquisitions of real estate facilities: Refer to "Business Overview-Acquisition
of Real Estate Facilities" above for a discussion of our recent acquisitions. We
continue to seek to acquire additional real estate facilities; however, there is
significant competition to acquire existing facilities in our markets and there
can be no assurance as to the volume of future acquisition activity.

Development real estate facilities: Refer to “Business Overview-Development of
Real Estate Facilities” above for a discussion of our recently completed
developments.


As of December 31, 2021, we were in the process of developing an approximately
83,000 square foot multi-tenant industrial building at our 212 Business Park
located in Kent, Washington. As of December 31, 2021, $2.2 million of the
estimated $15.4 million total development costs had been incurred and was
reflected under land and building held for development, net on our consolidated
balance sheets. This construction project is scheduled to be completed in the
fourth quarter of 2022. As of December 31, 2021, we have contractual
construction commitments totaling $1.2 million that will be paid to various
contractors as the project is completed.

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As of December 31, 2021, we were in the process of developing an approximately
17,000 square foot multi-tenant industrial building at our Boca Commerce Park,
located in Boca Raton, Florida. As of December 31, 2021, $1.1 million of the
estimated $4.0 million total development costs had been incurred and was
reflected under land and building held for development, net on our consolidated
balance sheets. This construction project is scheduled to be completed in the
fourth quarter of 2022. As of December 31, 2021, we have contractual
construction commitments totaling $2.9 million that will be paid to various
contractors as the project is completed.

In August 2020, we entered into the Brentford Joint Venture for the purpose of
developing a second multifamily property, Brentford at The Mile, a planned
411-unit multifamily apartment complex. We contributed the Brentford Parcel at a
value of $18.5 million, for which we received equity contribution credit in the
Brentford Joint Venture. Our cost basis in the Brentford Parcel was $5.1 million
as of December 31, 2021.

Construction of Brentford at The Mile commenced in August 2020 and is
anticipated to be completed over a period of 24 to 36 months at an estimated
development cost of $110 million to $115 million, excluding land cost. As of
December 31, 2021, the development cost incurred was $54.8 million, which is
reflected in land and building held for development, net on our consolidated
balance sheets along with our $5.1 million cost basis in the Brentford Parcel.
During the year ended December 31, 2020, the Company recorded non-capitalizable
demolition costs of $0.3 million in interest and other expense on our
consolidated statements of income. As of December 31, 2021, we have contractual
construction commitments totaling $39.3 million that will be paid to various
contractors as the project is completed.

Repurchase of Common Stock: Our Board has approved a common stock repurchase
program and we may in the future acquire our shares under the program. As of
December 31, 2021, management has the authorization to repurchase an additional
1,614,721 shares. No shares of common stock were repurchased under the
board-approved common stock repurchase program during the years ended December
31, 2021, 2020, and 2019.

Requirement to Pay Distributions: Our election to be taxed as a REIT, as defined
by the Code, applies to all periods presented herein. As a REIT, we do not incur
U.S. federal corporate income tax on our "REIT taxable income" that is
distributed each year (for this purpose, certain distributions paid in a
subsequent year may be considered), and we continue to meet certain
organizational and operational requirements. We believe we have met these
requirements in all periods presented herein, and we expect we will continue to
qualify as a REIT in future periods.

We paid REIT qualifying distributions of $288.3 million ($45.7 million to
preferred stockholders and $242.6 million to common stockholders) during the
year ended December 31, 2021.


We declared a one-time special cash dividend of $4.60 per share (the "Special
Cash Dividend") along with the fourth quarter regular dividend of $1.05 per
share for the three months ended December 31, 2021. The Special Cash Dividend
was declared to distribute a portion of the excess income attributable to gains
on sales from asset dispositions during 2021.

Our consistent, long-term dividend policy has been to set dividend distribution
amounts based on our taxable income. Future quarterly distributions with respect
to common stock will continue to be determined based upon our REIT distribution
requirements and, along with distributions to preferred stockholders, we expect
will be funded with cash provided by operating activities.


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Funds from Operations, Core Funds from Operations, and Funds Available for
Distribution



Funds from Operations ("FFO") is a non-GAAP measure defined by the National
Association of Real Estate Investment Trusts and is considered a helpful measure
of REIT performance by REITs and many REIT analysts. FFO represents GAAP net
income before real estate depreciation and amortization expense, gains or losses
on sales of operating properties and land and impairment charges on real estate
assets.

We also present Core FFO and Funds Available for Distribution ("FAD") which are
both also non-GAAP measures. The Company defines Core FFO as FFO excluding the
impact of (i) income allocated to preferred stockholders to the extent
redemption value exceeds the related carrying value and (ii) other nonrecurring
income or expense items as appropriate. FAD represents Core FFO adjusted to (i)
deduct recurring capital improvements and capitalized tenant improvements and
lease commissions and (ii) remove certain non-cash income or expense items such
as amortization of deferred rent receivable and stock compensation expense.

FFO for the year ended December 31, 2021 was $6.67 per share representing an
increase of 2.5% from the same period in 2020. The increases in FFO per share
were the result of higher NOI, partially offset by the $6.4 million non-cash
charge related to the redemption of the Series W preferred stock, the $3.6
million for state income tax provision as described above, as well as higher
general and administrative expense.

Core FFO was $6.97 and $6.57 per share for the years ended December 31, 2021 and
2020, respectively. For the year ended December 31, 2021, Core FFO excludes the
impact of (i) the $6.4 million non-cash charge related to the redemption of the
Series W preferred stock in November 2021 (ii) a $3.6 million charge for a state
income tax provision due to differences between state and federal tax code, and
(iii) a one-time cost associated with the Company's reincorporation as a
Maryland corporation of $0.5 million incurred during the second quarter of 2021.
For the year ended December 31, 2020, Core FFO excludes the impact of (i)
accelerated amortization of stock compensation expense of $1.7 million related
to the retirement of our former President and CEO and (ii) non-capitalizable
demolition costs of $0.3 million.


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The following table reconciles net income allocable to common stockholders to
FFO, Core FFO and FAD as well as net income per share to FFO per share and Core
FFO per share (amounts in thousands, except per share data):

                                                   For the Years Ended 

December 31,

                                                  2021              2020    

2019

Net income allocable to common stockholders $ 393,088 $ 124,645

    $  108,703
Adjustments
Gain on sale of real estate facilities            (359,875)         (27,273)      (16,644)
Depreciation and amortization expense               93,486           96,314 

104,249

Net income allocated to noncontrolling
interests                                          104,270           33,158 

29,006

Net income allocated to restricted stock             2,613              716 

910

unit holders
FFO allocated to JV partner                            (78)            (118)         (149)
FFO allocable to diluted common stock and          233,504          227,442 

226,075

units

Maryland reincorporation costs                         510                 -             -
Non-capitalizable demolition costs                        -             335              -
Acceleration of stock compensation expense
due to President and CEO retirement                       -           1,687              -
Preferred securities redemption charge               6,434                 -       11,007
Income tax expense                                   3,600                 -             -

Core FFO allocable to diluted common stock $ 244,048 $ 229,464

    $  237,082
and units
Adjustments
Recurring capital improvements                     (11,649)          (9,521)      (11,244)
Tenant improvements                                (14,767)         (15,948)      (17,360)
Capitalized lease commissions                       (8,719)          (8,878)       (8,267)
Non-cash rental income (1)                          (2,800)          (4,713)       (3,936)
Non-cash stock compensation expense (2)              8,495            3,961 

4,956

Cash paid for taxes in lieu of stock upon
vesting
of restricted stock units                           (3,940)          (4,216)       (6,350)
FAD allocable to diluted common stock and    $     210,668       $  190,149    $  194,881
units

Weighted average outstanding
Common stock                                        27,534           27,475        27,418
Common operating partnership units                   7,305            7,305         7,305
Restricted stock units                                  50               51           124
Common stock equivalents                               102               88           108
Total common and dilutive stock                     34,991           34,919 

34,955


Reconciliation of Earnings per Share to FFO
per Share
Net income per common share - diluted        $       14.22       $     4.52    $     3.95
Gain on sale of real estate facilities              (10.29)           (0.78)        (0.48)
Net income allocated to restricted stock              0.07             0.02 

0.02

unit holders
Depreciation and amortization expense                 2.67             2.75 

2.98

FFO per share                                         6.67             6.51 

6.47

Maryland reincorporation costs                        0.02                 -             -
Non-capitalizable demolition costs                        -            0.01              -
Acceleration of stock compensation expense
due to President and CEO retirement                       -            0.05              -
Preferred securities redemption charge                0.18                 -         0.31
Income tax expense                                    0.10                 -             -
Core FFO per share                           $        6.97       $     6.57    $     6.78


____________________________

(1)Non-cash rental income includes amortization of deferred rent receivable (net
of write-offs), in-place lease intangible, tenant improvement reimbursements,
and lease incentives.

(2)Amounts shown are net of accelerated stock compensation expense related to
the former President and CEO retirement, which is also excluded from the
computation of Core FFO.


We believe FFO, Core FFO, and FAD assist investors in analyzing and comparing
the operating and financial performance of a company's real estate from period
to period. FFO, Core FFO, and FAD are not substitutes for GAAP net income. In
addition, other REITs may compute FFO, Core FFO, and FAD differently, which
could inhibit comparability.

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