Fitch Affirms PS Business Parks, Inc.'s Preferred Stock at 'BBB-'

--Issuer Default Rating (IDR) at 'BBB';

--Unsecured Credit Facility rating at 'BBB';

--Preferred stock rating at 'BBB-'.

Fitch's action affects approximately $716 million of securities. The Rating Outlook is Stable.

The affirmations are substantiated by PSB's consistent business model of owning office, industrial and flex properties catered to tenants that utilize smaller spaces. With respect to core operations, PSB has renewed or replaced existing leases, with an average size of 3,300 square feet at an average term of 3.3 years, over the past year, demonstrating that small users remain active in PSB's markets. Through this activity, PSB has been able to increase same-park net operating income and same-park occupancy in spite of challenges in some of the company's markets such as a rise in speculative construction in Northern Virginia and the concentration of sub-prime lenders in Southern California.

The company's fixed charge coverage ratio (defined as recurring EBITDA less recurring capital expenditures less straight-line rent adjustments divided by interest expense, preferred stock distributions and preferred unit distributions) is approximately 2.4 times (x) for the nine months ending September 30, 2007, an appropriate level for the company's ratings and a level that Fitch believes is sustainable going forward.

The ratings affirmations are also reflective of the financial position of PSB, a seasoned preferred stock issuer. Leverage, defined as debt plus preferred stock divided by undepreciated book capital, was 43.2% as of September 30, 2007, a level that Fitch considers strong for IDR level. The company's risk-adjusted capitalization is also adequate for the rating category. In addition, the company has no floating-rate obligations outstanding as of September 30, 2007, thereby effectively eliminating interest rate fluctuation risk, and negligible upcoming debt maturities, minimizing obligatory refinance risk.

Furthermore, the company's credit profile is strengthened by PSB's largely unencumbered property portfolio, enabling financial flexibility through real estate and capital market cycles. PSB's liquidity position is further enhanced by growing cash flow from operating activities and full borrowing capacity on a $100 unsecured bank credit facility with Wells Fargo & Co. (rated 'AA' with a Stable Outlook by Fitch).

Several offsetting factors are incorporated into the current credit ratings. Fitch believes that PSB continues to have a modest level of concentration of assets within several geographic regions, with a focus on the west coast, the greater Washington D.C. area, and southern Florida. In addition, because of PSB's above-average utilization of preferred stock, the company has a higher cost of capital when compared to that of comparable senior unsecured notes issuers. However, PSB has adroitly lowered its weighted average dividend rate through interest rate cycles.

The Stable Outlook reflects Fitch's view that PSB is a very consistent credit. The company continues to perform steadily with respect to both the types of properties it owns and the way in which it finances its portfolio. The Stable Outlook further acknowledges that PSB pays its preferred dividends mainly from recurring property earnings and refrains from generating less traditional earnings streams such as joint venture investment income, earnings from development activities, and fee-related income.

During the coming year, Fitch will monitor industrial and office property construction and absorption trends in PSB's markets and the company's opportunism with respect to potential asset acquisitions. Another ratings consideration during the 12 month-24 month outlook period will be the company's funds from operations payout ratios, considering the fact that the company raised its common dividend in the second quarter of 2007.

PS Business Parks, Inc. is a real estate investment trust (REIT) based in Glendale, CA. As of September 30, 2007, PSB's portfolio was comprised of 19.6 million of rentable square feet of commercial space. The company also manages approximately 1.4 million net rentable square feet on behalf of the Public Storage, Inc. (rated 'A-' by Fitch) and its affiliates. As of September 30, 2007, the company had approximately $2 billion in undepreciated book assets and approximately $983 million in undepreciated book equity.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, . Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.