BFS Saul Centers Inc

BETHESDA, Md., Feb. 22 /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, 2005. Total revenues for the quarter ended December 31, 2005 increased 10.8% to $32,774,000 compared to $29,569,000 for the 2004 quarter. Operating income, defined as net income available to common stockholders before minority interests and preferred stock dividends increased 18.0% to $9,740,000 compared to $8,256,000 for the comparable 2004 quarter. Net income available to common stockholders was $5,890,000 or $0.35 per diluted share for the 2005 quarter, a per share increase of 34.6% compared to net income available to common stockholders of $4,228,000 or $0.26 per diluted share for the 2004 quarter. Acquisitions and developments completed during the trailing twelve months produced the significant portion of increased operating income for the 2005 fourth quarter. Same property revenues for the total portfolio increased 4.4% for the 2005 fourth quarter compared to the same quarter in 2004 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. Additionally, Lexington Mall results are not included in same property performance due to the planned redevelopment of the center. Property operating income is calculated as total property revenue less property operating expenses, provision for credit losses and real estate taxes. Same property operating income in the shopping center portfolio increased 3.2% for the 2005 fourth quarter compared to the prior year's quarter. Same property operating income in the office portfolio grew 1.8% for the 2005 quarter. For the year ended December 31, 2005, total revenues increased 12.6% to $127,015,000 compared to $112,842,000 for the 2004 year. Operating income before gain on property sold, minority interests and preferred stock dividends increased 9.8% to $37,025,000 compared to $33,707,000 for the 2004 year. Net income available to common stockholders was $21,227,000 or $1.27 per diluted share for the 2005 year, resulting in a per share increase of 13.4% compared to net income available to common stockholders of $18,174,000 or $1.12 per diluted share for the 2004 year. Acquisitions and developments completed during 2004 and 2005 produced the significant portion of increased operating income for the 2005 year. Same property revenues for the total portfolio increased 3.4% for the 2005 year compared to the 2004 year and same property operating income increased 2.3%. Same property operating income in the shopping center portfolio increased 2.6% and same property operating income in the office portfolio grew 1.6% for the 2005 year. As of December 31, 2005, 97.1% of the operating portfolio was leased, compared to 93.9% a year earlier. The 2004 leasing percentage was adversely impacted by 133,000 square feet of vacant space in the Lexington Mall which the Company was not leasing in anticipation of redeveloping the shopping center. Since September 30, 2005, the Company has been actively planning the redevelopment of the property and has taken the space out of service. On a same property basis, 96.9% of the portfolio was leased, compared to the prior year level of 95.7%. The increase in 2005 leasing percentage resulted from the lease-up of space at Olde Forte Village and Southside Plaza and to a lesser extent, the full lease-up of Washington Square. Funds From Operations (FFO) available to common shareholders (after deducting preferred stock dividends) increased 12.8% to $13,628,000 in the 2005 fourth quarter compared to $12,084,000 for the same quarter in 2004. The $1,544,000 increase in FFO available to common shareholders in the 2005 quarter resulted primarily from increased operating income from retail acquisition and development properties. On a diluted per share basis, FFO available to common shareholders increased 8.9% to $0.61 per share in 2005 compared to $0.56 for the 2004 quarter. FFO available to common shareholders for the 2005 year increased by $6,191,000 (13.2%) to $53,222,000 primarily due to increased operating income from retail acquisition and development properties and to a lesser extent, the resolution of the Lexington Mall land use dispute during the third quarter. Diluted per share FFO available to common shareholders increased 10.0% to $2.42 per share in 2005 compared to $2.20 for the 2004 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. During 2005, the Company paid four quarterly dividends totaling $1.60 per share on its common stock. On January 31, 2006, the Company paid a quarterly common stock dividend of $0.42 per share, an annualized dividend rate of $1.68 per share. Also during 2005, the Company acquired three grocery anchored shopping centers totaling 370,000 square feet, and completed the construction and lease-up of three neighborhood shopping center developments totaling 180,000 square feet. Saul Centers is a self-managed, self-administered equity real estate investment trust headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 45 community and neighborhood shopping center and office properties totaling approximately 7.6 million square feet of leasable area. Over 80% of the Company's cash flow is generated from properties in the metropolitan Washington, DC/Baltimore area. Saul Centers, Inc. Condensed Consolidated Balance Sheets ($ in thousands) December 31, December 31, 2005 2004 Assets (Unaudited) Real estate investments Land $139,421 $119,029 Buildings 575,504 521,161 Construction in progress 47,868 42,618 762,793 682,808 Accumulated depreciation (195,376) (181,420) 567,417 501,388 Cash and cash equivalents 8,007 33,561 Accounts receivable and accrued income, net 23,410 20,654 Lease acquisition costs, net 19,834 17,745 Prepaid expenses 2,540 2,421 Deferred debt costs, net 5,875 5,011 Other assets 4,386 2,616 Total assets $631,469 $583,396 Liabilities Mortgage notes payable $471,931 $453,646 Revolving credit facility 10,500 - Dividends and distributions payable 11,319 10,424 Accounts payable, accrued expenses and other liabilities 13,679 12,318 Deferred income 9,558 6,044 Total liabilities 516,987 482,432 Minority Interests 3,068 - Stockholders' Equity Preferred stock 100,000 100,000 Common stock 169 164 Additional paid in capital 123,339 106,886 Accumulated deficit (112,094) (106,086) Total stockholders' equity 111,414 100,964 Total liabilities and stockholders' equity $631,469 $583,396 Saul Centers, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) Three Months Ended Year Ended December 31, December 31, 2005 2004 2005 2004 Revenue (Unaudited) (Unaudited) Base rent $25,784 $23,774 $99,448 $91,125 Expense Recoveries 5,343 4,352 20,027 16,712 Percentage Rent 639 491 2,057 1,635 Other 1,008 952 5,483 3,370 Total revenue 32,774 29,569 127,015 112,842 Operating Expenses Property operating expenses 4,031 3,122 14,724 12,070 Provision for credit losses 54 189 237 488 Real estate taxes 2,870 2,585 11,040 9,789 Interest expense and deferred debt amortization 7,658 7,114 30,207 27,022 Depreciation and amortization 5,888 5,828 24,197 21,324 General and administrative 2,533 2,475 9,585 8,442 Total operating expenses 23,034 21,313 89,990 79,135 Operating Income 9,740 8,256 37,025 33,707 Gain on Property Disposition - - - 572 Minority Interests (1,850) (2,028) (7,798) (8,105) Net Income 7,890 6,228 29,227 26,174 Preferred Dividends (2,000) (2,000) (8,000) (8,000) Net Income Available to Common Stockholders $5,890 $4,228 $21,227 $18,174 Per Share Net Income Available to Common Stockholders: Basic $0.35 $0.26 $1.27 $1.13 Diluted $0.35 $0.26 $1.27 $1.12 Weighted Average Common Stock Outstanding: Common stock 16,840 16,352 16,663 16,154 Effect of dilutive options 119 100 107 57 Diluted weighted average common stock 16,959 16,452 16,770 16,211 Saul Centers, Inc. Supplemental Information (In thousands, except per share amounts) Three Months Ended Year Ended December 31, December 31, 2005 2004 2005 2004 Reconciliation of Net Income to Funds From Operations (FFO)(1) (Unaudited) (Unaudited) Net Income $7,890 $6,228 $29,227 $26,174 Less: Gain on sale of property - - - (572) Add: Real property depreciation & amortization 5,888 5,828 24,197 21,324 Add: Minority interests 1,850 2,028 7,798 8,105 FFO 15,628 14,084 61,222 55,031 Less: Preferred dividends (2,000) (2,000) (8,000) (8,000) FFO available to common shareholders $13,628 $12,084 $53,222 $47,031 Weighted Average Shares Outstanding: Diluted weighted average common stock 16,959 16,452 16,770 16,211 Convertible limited partnership units 5,291 5,198 5,233 5,194 Diluted & converted weighted average shares 22,250 21,650 22,003 21,405 Per Share Amounts: FFO available to common shareholders $0.61 $0.56 $2.42 $2.20 Reconciliation of Net Income to Same Property Operating Income Net Income $7,890 $6,228 $29,227 $26,174 Add: Interest expense and deferred debt amortization 7,658 7,114 30,207 27,022 Add: Depreciation and amortization 5,888 5,828 24,197 21,324 Add: General and administrative 2,533 2,475 9,585 8,442 Less: Gain on property disposition - - - (572) Less: Interest income (140) (82) (661) (257) Add: Minority interests 1,850 2,028 7,798 8,105 Property operating income 25,679 23,591 100,353 90,238 Less: Acquisitions & developments (1,745) (321) (12,418) (6,101) Less: Lexington property operating income (41) (24) (1,966) (101) Total same property operating income $23,893 $23,246 $85,969 $84,036 Total Shopping Centers $17,050 $16,521 $58,987 $57,479 Total Office Properties 6,843 6,725 26,982 26,557 Total same property operating income $23,893 $23,246 $85,969 $84,036 (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. First Call Analyst: FCMN Contact: 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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