BFS Saul Centers Inc

Saul Centers, Inc. Reports Fourth Quarter and Annual 2004 Operating Results BETHESDA, Md., Feb. 23 /PRNewswire-FirstCall/ -- Saul Centers, Inc. (NYSE:BFS), an equity real estate investment trust (REIT), announced its operating results for the quarter and year ended December 31, 2004. Total revenues for the quarter ended December 31, 2004 increased 13.2% to $29,569,000 compared to $26,129,000 for the 2003 quarter. Operating income, defined as net income available to common stockholders before gain on property sold, minority interests and preferred stock dividends increased 9.3% to $8,256,000 compared to $7,556,000 for the comparable 2003 quarter. After preferred stock dividends, the Company reported net income available to common stockholders of $4,228,000 or $0.26 per share (basic & fully diluted) for the 2004 quarter, a per share decrease of 7.1% compared to net income available to common stockholders of $4,471,000 or $0.28 per share (basic & fully diluted) for the 2003 quarter. Increased operating income in the 2004 fourth quarter was more than offset by (1) a full quarter of preferred stock dividends in 2004 ($2,000,000) versus a partial quarter in 2003 ($1,244,000); (2) increased accounting and administrative expenses related primarily to new Sarbanes-Oxley documentation and compliance requirements; and (3) the 2003 fourth quarter gain of $182,000 resulting from the State of Maryland's condemnation and purchase of a piece of land at Avenel Business Park for improvement of an interchange on I-270, adjacent to the property. Overall same property revenues for the total portfolio increased 2.3% for the 2004 fourth quarter compared to the same quarter in 2003 and same property operating income increased 2.8%. The same property comparisons exclude the results of operations of properties not in operation for each of the comparable reporting periods. Property operating income is calculated as total property revenue less property operating expenses, provision for credit losses and real estate taxes. Same center operating income in the shopping center portfolio decreased 2.2% for the 2004 fourth quarter, due primarily to a $425,000 lease termination fee collected from a former shopping center tenant in the prior year's quarter. Same property operating income in the office portfolio grew 14.9% for the 2004 quarter, due primarily to the completion of lease-up of space and new tenant occupancy at 601 Pennsylvania Avenue contributing an incremental $240,000, and the collection of a lease termination fee and a payment from a former bankrupt tenant at Avenel Business Park and a lease termination fee at Washington Square totaling a combined $264,000. Excluding the impact of 601 Pennsylvania Avenue, overall portfolio same property operating growth was 1.8% for the 2004 quarter. For the year ended December 31, 2004, total revenues increased 15.3% to $112,842,000 compared to $97,884,000 for the 2003 year. Operating income before gain on property sold, minority interests and preferred stock dividends increased 24.2% to $33,707,000 compared to $27,146,000 for the 2003 year. After preferred stock dividends, the Company reported net income available to common stockholders of $18,174,000 or $1.13 per share (basic) and $1.12 per share (fully diluted) for the 2004 year, resulting in a fully diluted per share decrease of 2.6% compared to net income available to common stockholders of $17,998,000 or $1.15 per share (basic & fully diluted) for the 2003 year. Increased operating income in the 2004 year was more than offset by (1) a full year of preferred stock dividends in 2004 ($8,000,000) versus a partial year in 2003 ($1,244,000); (2) increased personnel expenses particularly related to the Company's acquisition and development program; and (3) increased accounting and administrative expenses related primarily to new Sarbanes-Oxley documentation and compliance requirements. Overall same property revenues for the total portfolio increased 4.2% for the 2004 year compared to the 2003 year and same property operating income increased 5.0%. Same center operating income in the shopping center portfolio increased 2.2% for the 2004 year. Same property operating income in the office portfolio grew 11.2% for the 2004 year, due primarily to the completion of lease-up of space and new tenant occupancy at 601 Pennsylvania Avenue. Excluding the impact of 601 Pennsylvania Avenue, overall portfolio same property operating income growth was 2.5% for the 2004 year. As of December 31, 2004, 93.9% of the portfolio was leased, compared to 94.4% a year earlier. On a same property basis, 94.0% of the portfolio was leased, compared to the prior year level of 94.4%. The comparative decrease in the year end 2004 same property leasing percentage is largely attributable to the departure of a 39,000 square foot local grocer at Southside Plaza in suburban Richmond, Virginia. Funds From Operations (FFO) available to common shareholders (after deducting preferred stock dividends) increased 7.2% to $12,084,000 in the 2004 fourth quarter compared to $11,274,000 for the same quarter in 2003. The $810,000 increase in FFO available to common shareholders in the 2004 quarter resulted from the combination of (1) increased operating income from retail acquisition and development properties and (2) successful leasing efforts in the core portfolio, primarily at 601 Pennsylvania Avenue; offset in part by the payment of $2,000,000 (compared to $1,244,000 for a portion of the 2003 quarter) in preferred dividends relating to the November 2003 offering. On a fully diluted per share basis, FFO available to common shareholders increased 3.7% to $.56 per share in 2004 compared to $.54 for the 2003 quarter. FFO available to common shareholders for the 2004 year increased by $3,291,000 (7.5%) to $47,031,000. Fully diluted per share FFO available to common shareholders increased 4.8% to $2.20 per share in 2004 compared to $2.10 for the 2003 year. FFO, a widely accepted non-GAAP financial measure of operating performance for real estate investment trusts, is defined as net income plus minority interests, extraordinary items and real estate depreciation and amortization, excluding gains and losses from property sales. Saul Centers is a self-managed, self-administered equity real estate investment trust headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 40 community and neighborhood shopping center and office properties totaling approximately 7.2 million square feet of leasable area. Over 80% of the Company's cash flow is generated from properties in the metropolitan Washington, DC/Baltimore area. Saul Centers, Inc. Condensed Consolidated Balance Sheets ($ in thousands) December 31, December 31, 2004 2003 Assets (Unaudited) Real estate investments Land $119,029 $82,256 Buildings 521,161 436,371 Construction in progress 42,618 33,488 682,808 552,115 Accumulated depreciation (181,420) (164,823) 501,388 387,292 Cash and cash equivalents 33,561 45,244 Accounts receivable and accrued income, net 20,654 14,642 Lease acquisition costs, net 17,745 15,344 Prepaid expenses 2,421 2,609 Deferred debt costs, net 5,011 4,224 Other assets 2,616 2,261 Total assets $583,396 $471,616 Liabilities Mortgage notes payable $453,646 $357,248 Dividends and distributions payable 10,424 9,454 Accounts payable, accrued expenses and other liabilities 12,318 7,793 Deferred income 6,044 4,478 Total liabilities 482,432 378,973 Stockholders' Equity Preferred stock 100,000 100,000 Common stock 164 159 Additional paid in capital 106,886 91,469 Accumulated deficit (106,086) (98,985) Total stockholders' equity 100,964 92,643 Total liabilities and stockholders' equity $583,396 $471,616 Saul Centers, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) Three Months Ended Year Ended December 31, December 31, 2004 2003 2004 2003 Revenue (Unaudited) (Unaudited) Base rent $23,774 $20,434 $91,125 $78,167 Expense Recoveries 4,352 3,965 16,712 14,438 Percentage Rent 491 593 1,635 1,695 Other 952 1,137 3,370 3,584 Total revenue 29,569 26,129 112,842 97,884 Operating Expenses Property operating expenses 3,122 3,102 12,070 11,363 Provision for credit losses 189 53 488 171 Real estate taxes 2,585 2,189 9,789 8,580 Interest expense and deferred debt amortization 7,114 6,449 27,022 26,573 Depreciation and amortization 5,828 4,962 21,324 17,838 General and administrative 2,475 1,818 8,442 6,213 Total operating expenses 21,313 18,573 79,135 70,738 Operating Income 8,256 7,556 33,707 27,146 Gain on property disposition - 182 572 182 Minority Interests (2,028) (2,023) (8,105) (8,086) Net Income 6,228 5,715 26,174 19,242 Preferred Dividends (2,000) (1,244) (8,000) (1,244) Net Income Available to Common Stockholders $4,228 $4,471 $18,174 $17,998 Per Share Amounts: Net income available to common stockholders (basic) $0.26 $0.28 $1.13 $1.15 Net income available to common stockholders (fully diluted) $0.26 $0.28 $1.12 $1.15 Weighted average common stock outstanding: Common stock 16,352 15,817 16,154 15,591 Effect of dilutive options 100 25 57 17 Fully diluted weighted average common stock 16,452 15,842 16,211 15,608 Saul Centers, Inc. Supplemental Information (Unaudited) (In thousands, except per share amounts) Three Months Ended Year Ended December 31, December 31, 2004 2003 2004 2003 Reconciliation of Net Income to Funds From Operations (FFO) (1) Net Income $6,228 $5,715 $26,174 $19,242 Less: Gain on sale of property - (182) (572) (182) Add: Real property depreciation & amortization 5,828 4,962 21,324 17,838 Add: Minority Interests 2,028 2,023 8,105 8,086 FFO 14,084 12,518 55,031 44,984 Less: Preferred dividends (2,000) (1,244) (8,000) (1,244) FFO available to common shareholders $12,084 $11,274 $47,031 $43,740 Weighted average shares outstanding: Fully diluted weighted average common stock 16,452 15,842 16,211 15,608 Convertible limited partnership units 5,198 5,187 5,194 5,182 Fully diluted & converted weighted average shares 21,650 21,029 21,405 20,790 Per Share Amounts: FFO available to common shareholders $0.56 $0.54 $2.20 $2.10 Reconciliation of Net Income to Same Property Operating Income Net Income $6,228 $5,715 $26,174 $19,242 Add: Interest expense and deferred debt amortization 7,114 6,449 27,022 26,573 Add: Depreciation and amortization 5,828 4,962 21,324 17,838 Add: General and administrative 2,475 1,818 8,442 6,213 Less: Gain on property disposition - (182) (572) (182) Less: Interest income (82) (53) (257) (91) Add: Minority Interests 2,028 2,023 8,105 8,086 Property operating income 23,591 20,732 90,238 77,679 Less: Acquisitions & developments (2,834) (537) (9,684) (985) Total same property operating income $20,757 $20,195 $80,554 $76,694 Total Shopping Centers $14,014 $14,328 $53,997 $52,811 Total Office Properties 6,743 5,867 26,557 23,883 Total same property operating income $20,757 $20,195 $80,554 $76,694 (1) FFO is a widely accepted non-GAAP financial measure of operating performance of real estate investment trusts ("REITs"). FFO is defined by the National Association of Real Estate Investment Trusts as net income, computed in accordance with GAAP, plus minority interests, extraordinary items and real estate depreciation and amortization, excluding gains or losses from property sales. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs, which is disclosed in the Consolidated Statements of Cash Flows in the Company's SEC reports for the applicable periods. FFO should not be considered as an alternative to net income, its most directly comparable GAAP measure, as an indicator of the Company's operating performance, or as an alternative to cash flows as a measure of liquidity. Management considers FFO a supplemental measure of operating performance and along with cash flow from operating activities, financing activities and investing activities, it provides investors with an indication of the ability of the Company to incur and service debt, to make capital expenditures and to fund other cash needs. FFO may not be comparable to similarly titled measures employed by other REITs. DATASOURCE: Saul Centers, Inc. CONTACT: Scott V. Schneider of Saul Centers, Inc., +1-301-986-6220 Web site: http://www.saulcenters.com/

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