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Continuing a trend we have seen throughout the summer, another REIT tapped the preferred stock market seeking sub 6% perpetual capital.

PS Business Parks (NYSE:PSB) brought the following issue on Wednesday:

IssuerPS Business Parks, Inc.
SeriesSeries U cumulative perpetual preferred
TickerPSBPrU (expected)
Coupon5.75%
Deal Size8,000,000 shares ($200,000,000)
Optional RedemptionSeptember 2017

Term sheet, Prospectus

Issuer Description:

PS Business Parks is a REIT focused on "flex" properties that can be easily configured to suit a variety of uses and are located in high population growth markets near decision maker housing. This property type supports a wide variety of uses and customers. As of July 2012 the Company owned and operated approximately 28.2 million rentable square feet of commercial space located in eight states: Arizona, California, Florida, Maryland, Oregon, Texas, Virginia, and Washington. The Company also manages approximately 1.3 million rentable square feet on behalf of Public Storage, Inc. and its affiliated entities.

Relative Value:

In order to see if there is value in this issue, a comparison to recent issues from this issuer as well as Public Storage (NYSE:PSA), Kimco Realty (NYSE:KIM) and Vornado Realty (NYSE:VNO) is used.

(click to enlarge)

Bottom Line: If you are considering investing in the new PS Business Parks preferred, be sure to get in at a discount or a price where the yield is at least equal to the PSBPrT. The PSBPrT does trade at a slight premium, but approximately $0.27 of this premium is accrued dividend. There is value in this preferred versus other recent issues, but an investor must understand that these will truly be perpetual issues.

Source: PS Business Parks - A Fixed Rate For Flex Space

Additional disclosure: This article is for informational purposes only, it is not a recommendation to buy or sell any security and is strictly the opinion of Rubicon Associates LLC. Every investor is strongly encouraged to do their own research prior to investing.