PS BUSINESS PARKS, L.P. AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP RELATING TO 6.70% SERIES P CUMULATIVE REDEEMABLE PREFERRED UNITS

Exhibit 10.35

PS BUSINESS PARKS, L.P.

AMENDMENT TO AGREEMENT OF LIMITED
PARTNERSHIP RELATING TO
6.70% SERIES P CUMULATIVE REDEEMABLE
PREFERRED UNITS

This Amendment to the Agreement of Limited Partnership of PS Business Parks, L.P., a California limited partnership (the "Partnership" ), dated as of January 17, 2007 (this "Amendment" ), amends the Agreement of Limited Partnership of the Partnership, dated as of March 17, 1998, as amended, by and among PS Business Parks, Inc. (the "General Partner" ) and each of the limited partners described on Exhibit A to that partnership agreement (the "Partnership Agreement" ). Section references are (unless otherwise specified) references to sections in this Amendment.

WHEREAS, the General Partner agreed to issue 5,750,000 Depositary Shares each representing 1/1000th of a share of the General Partner’s preferred stock designated as the "6.70% Cumulative Preferred Stock, Series P" (the "Depositary Shares" ) for a price of $25.00 per Depositary Share;

WHEREAS, Section 4.1(b)(2) of the Partnership Agreement requires the General Partner to contribute to the Partnership the funds raised through the issuance of additional shares of the General Partner in return for additional Partnership Units, and provides that the General Partner’s capital contribution shall be deemed to equal the amount of the gross proceeds of that share issuance (i.e., the net proceeds actually contributed, plus any underwriter’s discount or other expenses incurred, with any such discount or expense deemed to have been incurred on behalf of the Partnership);

WHEREAS, Section 4.2(a) of the Partnership Agreement provides generally for the creation and issuance of Partnership Units with such designations, preferences and relative, participating, optional or other special rights, powers and duties, including rights, powers and duties senior to other Partnership Interests, all as shall be determined by the General Partner, without the consent of the Limited Partners, and Section 4.2(b) of the Partnership Agreement specifically contemplates the issuance of Units to the General Partner having designations, preferences and other rights, all such that the economic interests are substantially similar to the designations, preferences and other rights of shares issued by the General Partner, such as the Depositary Shares;

WHEREAS, the General Partner desires to cause the Partnership to issue additional Units of a new class and series, with the designations, preferences and relative, participating, optional or other special rights, powers and duties set forth herein; and

WHEREAS, the General Partner desires by this Amendment to so amend the Partnership Agreement as of the date first set forth above to provide for the designation and issuance of such new class and series of Units.

NOW, THEREFORE, the Partnership Agreement is hereby amended by establishing and fixing the rights, limitations and preferences of a new class and series of Units as follows:

Section 1.       Definitions . Capitalized terms not otherwise defined herein shall have their respective meanings set forth in the Partnership Agreement. Capitalized terms that are used in this Amendment shall have the meanings set forth below:

(a)      "Liquidation Preference" means, with respect to the Series P Preferred Units (as defined below), $25.00 per Series P Preferred Unit, plus the amount of any accumulated and unpaid Priority Return (as defined below) with respect to such Series P Preferred Unit, whether or not declared, minus any distributions in excess of the Priority Return that has accrued with respect to such Series P Preferred Units, to the date of payment.

(b)      "Parity Preferred Units" means any class or series of Partnership Interests (as such term is defined in the Partnership Agreement) of the Partnership now or hereafter authorized, issued or outstanding and expressly designated by the Partnership to rank on a parity with the Series P Preferred Units with respect to distributions and rights upon voluntary or involuntary liquidation, winding-up or dissolution of the Partnership, including the 8 ³ / 4 % Series F Cumulative Redeemable Preferred Units (the "Series F Preferred Units" ), the 7.95% Series G Cumulative Redeemable Preferred Units (the "Series G Preferred Units" ), the 7.000% Series H Cumulative Redeemable Preferred Units (the "Series H Preferred Units" ), the 6.875% Series I Cumulative Redeemable Preferred Units (the "Series I Preferred Units" ), the 7.50% Series J Cumulative Redeemable Preferred Units (the "Series J Preferred Units" ), the 7.950% Series K Cumulative Redeemable Preferred Units (the "Series K Preferred Units" ), the 7.60% Series L Cumulative Redeemable Preferred Units (the "Series L Preferred Units" ), the 7.20% Series M Cumulative Redeemable Preferred Units (the "Series M Preferred Units" ), the 7 ¹ / 8 % Series N Cumulative Redeemable Preferred Units (the "Series N Preferred Units" ) and the 7.375% Series O Cumulative Redeemable Preferred Units (the " Series O Preferred Units "). Notwithstanding the differing allocation rights set forth in Section 4 below that apply to the Series F, H, I, K, L, M, O and P Preferred Units (as compared to the Series G, J and N Preferred Units), for purposes of this Amendment those Series F, H, I, K, L, M, O and P Preferred Units and any future series of preferred units that rank in parity with those series also shall be considered Parity Preferred Units to the Series G, J and N Preferred Units.

(c)      "Priority Return" means an amount equal to 6.70% per annum, of the Liquidation Preference per Series P Preferred Unit, commencing on the date of issuance of such Series P Preferred Unit, determined on the basis of a 360-day year (and twelve 30-day months), cumulative to the extent not distributed on any Series P Preferred Unit Distribution Payment Date (as defined below).

Section 2.      Creation of Series P Preferred Units . (a) Designation and Number. Pursuant to Section 4.2(a) of the Partnership Agreement, a series of Partnership Units (as such term is defined in the Partnership Agreement) in the Partnership designated as the "6.70% Series P Cumulative Redeemable Preferred Units" (the "Series P Preferred Units" ) is hereby established effective as of January 17, 2007. The number of Series P Preferred Units shall be 5,750,000. The Holders of Series P Preferred Units shall not have any Percentage Interest (as such term is defined in the Partnership Agreement) in the Partnership.

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(b)      Capital Contribution . In return for the issuance to the General Partner of the Series P Preferred Units set forth on Exhibit C to this Amendment, the General Partner has contributed to the Partnership the funds raised through the General Partner’s issuance of the Depositary Shares (the General Partner’s capital contribution shall be deemed to equal the amount of the gross proceeds of that share issuance, i.e. , the net proceeds actually contributed, plus any underwriter’s discount or other expenses incurred, with any such discount or expense deemed to have been incurred by the General Partner on behalf of the Partnership).

(c)      Construction . The Series P Preferred Units have been created and are being issued in conjunction with the General Partner’s issuance of the Depositary Shares relating to the General Partner’s 6.70% Cumulative Preferred Stock, Series P, and as such, the Series P Preferred Units are intended to have designations, preferences and other rights, all such that the economic interests are substantially similar to the designations, preferences and other rights of the Depositary Shares, and the terms of this Amendment shall be interpreted in a fashion consistent with this intent.

Section 3.      Distributions . (a) Payment of Distributions . Subject to the rights of holders of Parity Preferred Units as to the payment of distributions, pursuant to Section 5.1 of the Partnership Agreement, holders of Series P Preferred Units shall be entitled to receive, when, as and if declared by the Partnership acting through the General Partner, the Priority Return. Such distributions shall be cumulative, shall accrue from the original date of issuance of the Series P Preferred Units and, notwithstanding Section 5.1 of the Partnership Agreement, will be payable (i) quarterly in arrears on March 31, June 30, September 30 and December 31 of each year commencing on March 31, 2007 and (ii) in the event of a redemption of Series P Preferred Units (each a "Series P Preferred Unit Distribution Payment Date" ). If any date on which distributions are to be made on the Series P Preferred Units is not a Business Day (as defined below), then payment of the distribution to be made on such date will be made on the Business Day immediately preceding such date with the same force and effect as if made on such date. Distributions on the Series P Preferred Units will be made to the holders of record of the Series P Preferred Units on the relevant record dates to be fixed by the Partnership acting through the General Partner, which record dates shall in no event exceed fifteen (15) Business Days prior to the relevant Series P Preferred Unit Distribution Payment Date. Business Day shall be any day other than a Saturday, Sunday or day on which banking institutions in the State of New York or the State of California are authorized or obligated by law to close, or a day which is or is declared a national or a New York or California state holiday.

(b)      Prohibition on Distribution . No distributions on Series P Preferred Units shall be authorized by the General Partner or paid or set apart for payment by the Partnership at any such time as the terms and provisions of any agreement of the Partnership or the General Partner, including any agreement relating to their indebtedness, prohibits such authorization, payment or setting apart for payment or provides that such authorization, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or to the extent that such authorization or payment shall be restricted or prohibited by law.

(c)      Distributions Cumulative . Distributions on the Series P Preferred Units will accrue whether or not the terms and provisions of any agreement of the Partnership, including any agreement relating to its indebtedness, at any time prohibit the current payment of

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distributions, whether or not the Partnership has earnings, whether or not there are funds legally available for the payment of such distributions and whether or not such distributions are authorized. Accrued but unpaid distributions on the Series P Preferred Units will accumulate as of the Series P Preferred Unit Distribution Payment Date on which they first become payable. Distributions on account of arrears for any past distribution periods may be declared and paid at any time, without reference to a regular Series P Preferred Unit Distribution Payment Date, to holders of record of the Series P Preferred Units on the record date fixed by the Partnership acting through the General Partner which date shall not exceed fifteen (15) Business Days prior to the payment date. Accumulated and unpaid distributions will not bear interest.

(d)      Priority as to Distributions . Subject to the provisions of Article 13 of the Partnership Agreement:

(i)      So long as any Series P Preferred Units are outstanding, no distribution of cash or other property shall be authorized, declared, paid or set apart for payment on or with respect to any class or series of Partnership Interests ranking junior as to the payment of distributions or rights upon a voluntary or involuntary liquidation, dissolution or winding-up of the Partnership to the Series P Preferred Units (collectively, "Junior Units" ), nor shall any cash or other property be set aside for or applied to the purchase, redemption or other acquisition for consideration of any Series P Preferred Units, any Parity Preferred Units or any Junior Units, unless, in each case, all distributions accumulated on all Series P Preferred Units and all classes and series of outstanding Parity Preferred Units have been paid in full. The foregoing sentence shall not prohibit (x) distributions payable solely in Junior Units, or (y