BFS Saul Centers Inc

BETHESDA, Md., Aug. 8 /PRNewswire-FirstCall/ -- Saul Centers, Inc. (NYSE:BFS), an equity real estate investment trust, announced its second quarter 2005 operating results. Total revenues for the quarter ended June 30, 2005 increased 10.3% to $30,752,000 compared to $27,888,000 for the 2004 quarter. Operating income before minority interests and preferred stock dividends increased 7.5% to $8,952,000 compared to $8,329,000 for the comparable 2004 quarter. After preferred stock dividends and minority interests, the Company reported net income available to common stockholders of $4,871,000 or $0.29 per share (basic & diluted) for the 2005 quarter, a per share increase of 7.4% compared to net income available to common stockholders of $4,286,000 or $0.27 per share (basic & diluted) for the 2004 quarter. Overall same property revenues for the total portfolio increased 3.9% for the 2005 second quarter compared to the same quarter in 2004 and same property operating income increased 2.5%. 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 property operating income in the shopping center portfolio increased 2.7% for the 2005 second quarter, compared to the prior year's quarter, despite the departure of two tenants, one each in Southside Plaza and Great Eastern Plaza, whose spaces combined total 152,000 square feet, and the resulting loss of revenues relating to these tenants during the entire 2005 quarter. While these spaces represent approximately 2.0% of the Company's total gross leaseable area, the combined rent payments were less than 1.0% of the Company's 2004 annual revenues. During the second quarter, the Company leased the 39,000 square feet of space at Southside Plaza, and subsequent to the end of the quarter, also leased the 113,000 square feet at Great Eastern Plaza. The loss of rental revenues from these spaces at Great Eastern Plaza and Southside Plaza was more than overcome by increased rental revenue from redevelopment of a portion of Thruway and improved operations at the balance of the Company's shopping center portfolio. Same property operating income in the office portfolio grew 2.1% for the 2005 quarter primarily due to the lease-up of space at Avenel Business Park. For the six month period ended June 30, 2005, total revenues increased 12.6% to $61,059,000 compared to $54,229,000 for the 2004 period. Operating income before minority interests and preferred stock dividends increased 5.6% to $17,591,000 compared to $16,658,000 for the comparable 2004 period. Net income available to common stockholders was $9,481,000 or $.57 per share (basic & diluted) for the 2005 period, a per share increase of 5.6% compared to net income available to common stockholders of $8,591,000 or $0.54 per share (basic & diluted) for the 2004 period. Overall same property revenues for the total portfolio increased 4.0% for the 2005 six month period compared to the same period in 2004 and same property operating income increased 2.8%. The shopping center portfolio same center operating income increased 2.7% and the office portfolio grew 2.9%. As of June 30, 2005, on an overall and same property basis, 93.2% of the portfolio was leased, compared to 94.0% a year earlier. The comparative decrease in the 2005 leasing percentage is attributable to the 113,000 square foot vacancy at Great Eastern Plaza. The space was re-leased in July 2005. Funds From Operations (FFO) available to common shareholders (after deducting preferred stock dividends) increased 6.9% to $12,484,000 in the 2005 second quarter compared to $11,676,000 for the same quarter in 2004. 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. The $808,000 increase in FFO available to common shareholders in the 2005 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 Thruway and Avenel Business Park. On a diluted per share basis, FFO available to common shareholders increased 3.6% to $0.57 per share in 2005 compared to $0.55 per share for the 2004 quarter. FFO available to common shareholders for the 2005 six month period increased 9.3% to $24,738,000 from $22,643,000 during the 2004 period. Fully diluted per share FFO available to common shareholders increased 5.6% to $1.13 per share in 2005 compared to $1.07 per share for the 2004 period. On July 29, 2005, Saul Centers paid a quarterly dividend of $0.40 per share on its common stock, a $0.01 per share increase (2.6%) over the prior quarter's dividend. Saul Centers is a self-managed, self-administered equity real estate investment trust headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 42 community and neighborhood shopping center and office properties totaling approximately 7.4 million square feet of leaseable area. Over 80% of the Company's cash flow is generated from properties in the metropolitan Washington, DC/Baltimore area. Saul Centers, Inc. Condensed Consolidated Balance Sheets ($ in thousands) June 30, December 31, 2005 2004 Assets (Unaudited) Real estate investments Land $125,213 $119,029 Buildings 537,827 521,161 Construction in progress 50,243 42,618 713,283 682,808 Accumulated depreciation (190,198) (181,420) 523,085 501,388 Cash and cash equivalents 28,585 33,561 Accounts receivable and accrued income, net 21,309 20,654 Lease acquisition costs, net 17,445 17,745 Prepaid expenses 1,098 2,421 Deferred debt costs, net 6,177 5,011 Other assets 4,708 2,616 Total assets $602,407 $583,396 Liabilities Mortgage notes payable $464,367 $453,646 Dividends and distributions payable 10,748 10,424 Accounts payable, accrued expenses and other liabilities 13,742 12,318 Deferred income 7,271 6,044 Total liabilities 496,128 482,432 Stockholders' Equity Preferred stock 100,000 100,000 Common stock 167 164 Additional paid in capital 115,820 106,886 Accumulated deficit (109,708) (106,086) Total stockholders' equity 106,279 100,964 Total liabilities and stockholders' equity $602,407 $583,396 Saul Centers, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) Three Months Ended June 30, 2005 2004 Revenue (Unaudited) Base rent $24,509 $22,751 Expense Recoveries 4,700 4,018 Percentage Rent 507 260 Other 1,036 859 Total revenue 30,752 27,888 Operating Expenses Property operating expenses 3,483 2,870 Provision for credit losses 79 99 Real estate taxes 2,757 2,488 Interest expense and deferred debt amortization 7,615 6,634 Depreciation and amortization 5,532 5,347 General and administrative 2,334 2,121 Total operating expenses 21,800 19,559 Operating Income 8,952 8,329 Minority Interests (2,081) (2,043) Net Income 6,871 6,286 Preferred Dividends (2,000) (2,000) Net Income Available to Common Stockholders $4,871 $4,286 Per Share Net Income Available to Common Stockholders: Basic and diluted $0.29 $0.27 Weighted average common stock outstanding: Common stock 16,613 16,090 Effect of dilutive options 94 33 Diluted weighted average common stock 16,707 16,123 Six Months Ended June 30, 2005 2004 Revenue (Unaudited) Base rent $48,641 $44,027 Expense Recoveries 9,680 7,912 Percentage Rent 1,011 704 Other 1,727 1,586 Total revenue 61,059 54,229 Operating Expenses Property operating expenses 7,256 5,762 Provision for credit losses 133 168 Real estate taxes 5,340 4,879 Interest expense and deferred debt amortization 15,024 12,900 Depreciation and amortization 11,147 9,985 General and administrative 4,568 3,877 Total operating expenses 43,468 37,571 Operating Income 17,591 16,658 Minority Interests (4,110) (4,067) Net Income 13,481 12,591 Preferred Dividends (4,000) (4,000) Net Income Available to Common Stockholders $9,481 $8,591 Per Share Net Income Available to Common Stockholders: Basic and diluted $0.57 $0.54 Weighted average common stock outstanding: Common stock 16,540 16,019 Effect of dilutive options 92 31 Diluted weighted average common stock 16,632 16,050 Saul Centers, Inc. Supplemental Information (In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Reconciliation of Net Income to Funds From Operations (FFO)(1) (Unaudited) (Unaudited) Net Income $6,871 $6,286 $13,481 $12,591 Add: Real property depreciation & amortization 5,532 5,347 11,147 9,985 Add: Minority Interests 2,081 2,043 4,110 4,067 FFO 14,484 13,676 28,738 26,643 Less: Preferred dividends (2,000) (2,000) (4,000) (4,000) FFO available to common shareholders $12,484 $11,676 $24,738 $22,643 Weighted average shares outstanding: Diluted weighted average common stock 16,707 16,123 16,632 16,050 Convertible limited partnership units 5,201 5,193 5,201 5,191 Diluted & converted weighted average shares 21,908 21,316 21,833 21,241 Per Share Amounts: FFO available to common shareholders $0.57 $0.55 $1.13 $1.07 Reconciliation of Net Income to Same Property Operating Income: Net Income $6,871 $6,286 $13,481 $12,591 Add: Interest expense and deferred debt amortization 7,615 6,634 15,024 12,900 Add: Depreciation and amortization 5,532 5,347 11,147 9,985 Add: General and administrative 2,334 2,121 4,568 3,877 Less: Interest income (157) (18) (297) (106) Add: Minority Interests 2,081 2,043 4,110 4,067 Property operating income 24,276 22,413 48,033 43,314 Less: Acquisitions & developments (1,753) (448) (5,689) (2,119) Total same property operating income $22,523 $21,965 $42,344 $41,195 Total Shopping Centers $15,790 $15,373 $28,962 $28,188 Total Office Properties 6,733 6,592 13,382 13,007 Total same property operating income $22,523 $21,965 $42,344 $41,195 (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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