Property Operations

In order to evaluate the performance of the Company’s overall portfolio, management analyzes the operating performance of a consistent group of properties (11.8 million net rentable square feet). These properties in which the Company currently has an ownership interest (herein referred to as the “Same Park” facilities) have been owned and operated by the Company for the comparable periods. The “Same Park” facilities represent approximately 82% of the square footage of the Company’s wholly-owned portfolio at December 31, 2002.

The following tables summarize the pre-depreciation historical operating results of the “Same Park” facilities and the entire portfolio, excluding the effects of accounting for rental income on a straight-line basis.

"Same Park" Facilities (11.8 million square feet)

(1)     Rental income does not include the effect of straight-line accounting.

(2)     Gross margin is computed by dividing property net operating income by rental income.

(3)     Realized rent per square foot represents the actual revenues earned per occupied square foot.

Total Portfolio Statistics

Development Properties

The Company has developed one office and one flex facility that are currently shell complete and in the lease-up phase. The projects total approximately 238,000 square feet and have an estimated aggregate cost of approximately $25 million. The office development completed in June 2001, consists of two buildings totaling 97,000 square feet in the Beaverton submarket of Portland, Oregon and is 26% leased. There were no new leases signed for this facility during the year ended December 31, 2002. The flex development, completed in November 2000, consists of two buildings totaling 141,000 square feet in the Chantilly submarket of Northern Virginia. The Company leased an additional 42,000 square feet during 2002 at the Northern Virginia development bringing the development to 88% leased. Both properties are classified as operating as of December 31, 2002 and the Company has ceased capitalizing interest.

Financial Condition

The Company continued to maintain financial strength and flexibility. The following are the Company's key financial ratios with respect to its leverage at December 31, 2002.

Joint Venture Property Dispositions

Through a joint venture with an institutional investor, the Company holds a 25% equity interest in an industrial park in the City of Industry, submarket of Los Angeles County. Initially the joint venture consisted of 14 buildings totaling 294,000 square feet. During 2002, the joint venture sold eight of the buildings totaling approximately 170,000 square feet. The Company recognized gains of approximately $861,000 on the disposition of these eight buildings which were included in equity in income of joint venture. The gains have been excluded from funds from operations. In addition, the Company recognized joint venture incentive compensation totaling $1,008,000 which are included in FFO. As of December 31, 2002, the joint venture holds six buildings totaling 124,000 square feet. During January, 2003, five of the remaining six buildings were sold and the Company recognized gains of approximately $1.0 million as a result of these sales and incentive compensation of approximately $0.7 million. There is currently only one property remaining with approximately 29,000 square feet which is being marketed for sale.

At December 31, 2002, the joint venture has a variable rate mortgage obligation of approximately $2.5 million which currently bears interest at 5.45%. After the January dispositions, the mortgage balance was reduced to approximately $50,000.

Property Acquisitions

On February 14, 2003, the Company completed the acquisition of Westwood Business Park in the Farmer's Branch submarket of Dallas, Texas for $7.9 million. The park totals 113,000 square feet of flex space.

Property Dispositions

As previously announced in the fourth quarter of 2001, the Company identified two properties totaling 199,000 square feet that do not meet its ongoing investment strategy. In the fourth quarter of 2002, the Company sold both of these properties totaling 43,000 square feet for net proceeds of $2.5 million. In the third quarter of 2002, the Company determined that the net proceeds from the sale will be less than the carrying value and recorded a $900,000 impairment. The Company recognized a total net loss on the sale of the two properties of approximately $1.1 million ($900,000 impairment loss in the third quarter of 2002 and the remaining in the fourth quarter of 2002) for accounting purposes.

During the third quarter of 2002, the Company identified two additional properties that did not meet the Company's ongoing investment criteria. One property located in Overland Park Kansas totaling 62,000 square feet was sold on August 26, 2002 for $5.3 million resulting in net proceeds of $5.1 and a gain of approximately $2.1 million for accounting purposes. This was the Company's only facility in Kansas. The other property located in Landover Maryland totaling 125,000 square feet, was sold on October 1, 2002. The property was sold for approximately $9.6 million generating net proceeds of $9.5 million and a gain of approximately $1.7 million for accounting purposes which was recognized in the fourth quarter of 2002.

Stock Repurchase Program

The Company's Board of Directors has authorized the repurchase from time to time of up to 4,500,000 shares of the Company's common stock on the open market or in privately negotiated transactions. In 2002, the Company repurchased 38,800 shares of common stock and no common units in its operating partnership at an aggregate cost of approximately $1.2 million (average cost of $31.04 per share/unit). In addition, during January, 2003, the Company repurchased 161,200 shares at an aggregate cost of $5.1 million. Since the inception of the program (March 2000), the Company has repurchased an aggregate total of 2,521,711 shares of common stock and 30,484 common units in its operating partnership at an aggregate cost of approximately $67.7 million (average cost of $26.52 per share/unit).

Distributions Declared

The Board of Directors declared a quarterly dividend of $0.29 per common share on February 27, 2003. Distributions were also declared with respect to the Company's various series of preferred stock. All of the distributions are payable on March 31, 2003 to shareholders of record as of the close of business on March 14, 2002.

Company Information

PSB is a self-advised and self-managed equity real estate investment trust that acquires, develops, owns and operates commercial properties, primarily flex, multi-tenant office and industrial space. The Company defines "flex" space as buildings that are configured with a combination of office and warehouse space and can be designed to fit an almost limitless number of uses (including office, assembly, showroom, laboratory, light manufacturing and warehouse space). As of December 31, 2002, PSB wholly-owned approximately 14.4 million net rentable square feet of commercial space with approximately 3,200 customers located in eight states, concentrated primarily in California (4,673,000 sq. ft.), Texas (2,409,000 sq. ft.), Oregon (1,973,000 sq. ft.), Virginia (2,621,000 sq. ft.) and Maryland (1,646,000 sq. ft.).

Forward-Looking Statements

When used within this press release, the words "expects," "believes," "anticipates," "should," "estimates," and similar expressions are intended to identify "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results and performance of the Company to be materially different from those expressed or implied in the forward-looking statements. Such factors include the impact of competition from new and existing commercial facilities which could impact rents and occupancy levels at the Company's facilities, the Company's ability to evaluate, finance, and integrate acquired and developed properties into the Company's existing operations; the Company's ability to effectively compete in the markets that it does business in; the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing Real Estate Investment Trusts; the impact of general economic conditions upon rental rates and occupancy levels at the Company's facilities; the availability of permanent capital at attractive rates, the outlook and actions of Rating Agencies and risks detailed from time to time in the Company's SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.

Additional information about PS Business Parks, Inc. including more financial analysis of the fourth quarter's operating results is available on the Internet. The Company's web site is www.psbusinessparks.com.

A conference call is scheduled for Friday, February 28, 2003 at 10:00 a.m. (PDT) to discuss these results. The toll free number is 1-800-399-4409, the conference ID is 10435. An instant replay of the conference call will be available through March 7, 2003 at 1-800-642-1687. The replay can also be accessed under the "Investor Relations" section of our web site.

Additional financial data attached.

PS BUSINESS PARKS, INC.
Selected Financial Data

PS BUSINESS PARKS, INC.
Selected Financial Data

PS BUSINESS PARKS, INC.
Computation of Funds from Operations ("FFO")