BFS Saul Centers Inc

BETHESDA, Md., Nov. 7 /PRNewswire-FirstCall/ -- Saul Centers, Inc. (NYSE:BFS), an equity real estate investment trust, announced its third quarter 2006 operating results. Total revenue for the quarter ended September 30, 2006 increased 5.1% to $34,860,000 compared to $33,182,000 for the 2005 quarter. Operating income before minority interests and preferred stock dividends increased 6.5% to $10,328,000 compared to $9,694,000 for the comparable 2005 quarter. Net income available to common stockholders was $6,321,000 or $0.37 per diluted share for the 2006 quarter, a per share increase of 5.7% compared to $5,856,000 or $0.35 per diluted share for the 2005 quarter. Successful leasing activity at several core shopping centers and operating income from development properties produced the significant portion of increased operating income for the 2006 quarter. Overall same property revenue for the total portfolio increased 5.3% for the 2006 third quarter compared to the same quarter in 2005 and same property operating income increased 4.5%. 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 property operating income in the shopping center portfolio increased 5.2% for the 2006 third quarter, compared to the prior year's quarter. Successful leasing activity at several core shopping centers was the primary contributor to the improvement in same property results. Same property operating income in the office portfolio increased 2.6% for the 2006 quarter, compared to the prior year's quarter. For the nine month period ended September 30, 2006, total revenue increased 8.3% to $102,075,000 compared to $94,241,000 for the 2005 period. Operating income before minority interests and preferred stock dividends increased 8.1% to $29,485,000 compared to $27,285,000 for the comparable 2005 period. Net income available to common stockholders was $17,825,000 or $1.04 per diluted share for the 2006 period, a per share increase of 13.0% compared to $15,337,000 or $0.92 per diluted share for the 2005 period. Overall same property revenue for the total portfolio increased 4.7% for the 2006 nine month period compared to the same period in 2005 and same property operating income increased 4.4%. Shopping center same property operating income increased 6.1% due to successful leasing activity at several core shopping centers and office same property operating income increased 0.1% compared to the 2005 period. As of September 30, 2006, 97.0% of the operating portfolio was leased, compared to 97.2% a year earlier. Funds From Operations (FFO) available to common shareholders (after deducting preferred stock dividends) decreased 0.4% to $14,791,000 in the 2006 third quarter compared to $14,856,000 for the same quarter in 2005. On a diluted per share basis, FFO available to common shareholders decreased 3.0% to $0.65 per share for the 2006 quarter compared to $0.67 per share for the 2005 quarter. During the 2005 quarter, the Company included $1,555,000 ($0.07 per diluted share) in FFO due to the resolution of a land use dispute with a property owner adjacent to Lexington Mall. 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. FFO available to common shareholders for the 2006 nine month period increased 7.9% to $42,724,000 from $39,594,000 during the 2005 period. FFO available to common shareholders increased 5.0% to $1.89 per diluted share for the 2006 nine month period compared to $1.80 per diluted share for the 2005 period. Without considering the effects of the Lexington Mall land use settlement in each of the prior year periods, FFO increased in the 2006 quarter and year to date periods primarily as a result of increased operating income from successful leasing activity at several core shopping centers and operating income from new developments. Saul Centers is a self-managed, self-administered equity real estate investment trust headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 46 community and neighborhood shopping center and office properties totaling approximately 7.7 million square feet of leaseable area. Over 80% of the Company's cash flow is generated from properties in the metropolitan Washington, DC/Baltimore area. Saul Centers, Inc. Condensed Consolidated Balance Sheets ($ in thousands) September 30, December 31, 2006 2005 Assets (Unaudited) Real estate investments Land $149,863 $139,421 Buildings and equipment 611,585 575,504 Construction in progress 72,603 47,868 834,051 762,793 Accumulated depreciation (210,025) (195,376) 624,026 567,417 Cash and cash equivalents 7,514 8,007 Accounts receivable and accrued income, net 24,497 23,410 Deferred leasing costs, net 19,056 19,834 Prepaid expenses, net 3,961 2,540 Deferred debt costs, net 5,595 5,875 Other assets 5,090 4,386 Total assets $689,739 $631,469 Liabilities Mortgage notes payable $490,897 $471,931 Revolving credit facility 31,000 10,500 Dividends and distributions payable 11,492 11,319 Accounts payable, accrued expenses and other liabilities 18,624 13,679 Deferred income 12,684 9,558 Total liabilities 564,697 516,987 Minority Interests 5,926 3,068 Stockholders' Equity Preferred stock 100,000 100,000 Common stock 172 169 Additional paid in capital 134,699 123,339 Accumulated deficit (115,755) (112,094) Total stockholders' equity 119,116 111,414 Total liabilities and stockholders' equity $689,739 $631,469 Saul Centers, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 Revenue (Unaudited) (Unaudited) Base rent $27,736 $25,023 $81,826 $73,664 Expense recoveries 5,802 5,004 16,722 14,684 Percentage rent 326 407 924 1,418 Other 996 2,748 2,603 4,475 Total revenue 34,860 33,182 102,075 94,241 Operating Expenses Property operating expenses 4,264 3,437 12,195 10,693 Provision for credit losses 115 50 302 183 Real estate taxes 3,129 2,830 9,175 8,170 Interest expense and amortization of deferred debt 8,145 7,525 24,236 22,549 Depreciation and amortization of leasing costs 6,463 7,162 19,239 18,309 General and administrative 2,416 2,484 7,443 7,052 Total operating expenses 24,532 23,488 72,590 66,956 Operating Income 10,328 9,694 29,485 27,285 Minority Interests (2,007) (1,838) (5,660) (5,948) Net Income 8,321 7,856 23,825 21,337 Preferred Dividends (2,000) (2,000) (6,000) (6,000) Net Income Available to Common Stockholders $6,321 $5,856 $17,825 $15,337 Per Share Net Income Available to Common Stockholders : Diluted $0.37 $0.35 $1.04 $0.92 Weighted Average Common Stock Outstanding : Common stock 17,118 16,733 17,008 16,604 Effect of dilutive options 148 127 144 103 Diluted weighted average common stock 17,266 16,860 17,152 16,707 Saul Centers, Inc. Supplemental Information (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 Reconciliation of Net Income to Funds From Operations (FFO) (1) (Unaudited) (Unaudited) Net Income $8,321 $7,856 $23,825 $21,337 Add: Real property depreciation & amortization 6,463 7,162 19,239 18,309 Add: Minority interests 2,007 1,838 5,660 5,948 FFO 16,791 16,856 48,724 45,594 Less: Preferred dividends (2,000) (2,000) (6,000) (6,000) FFO available to common shareholders $14,791 $14,856 $42,724 $39,594 Weighted Average Shares Outstanding : Diluted weighted average common stock 17,266 16,860 17,152 16,707 Convertible limited partnership units 5,417 5,236 5,387 5,214 Diluted & converted weighted average shares 22,683 22,096 22,539 21,921 Per Share Amounts: FFO available to common shareholders $0.65 $0.67 $1.89 $1.80 Reconciliation of Net Income to Same Property Operating Income Net Income $8,321 $7,856 $23,825 $21,337 Add: Interest expense and amortization of deferred debt 8,145 7,525 24,236 22,549 Add: Depreciation and amortization of leasing costs 6,463 7,162 19,239 18,309 Add: General and administrative 2,416 2,484 7,443 7,052 Less: Interest income (54) (224) (220) (521) Add: Minority interests 2,007 1,838 5,660 5,948 Property operating income 27,298 26,641 80,183 74,674 Less: Acquisitions & developments (1,506) (133) (5,139) (919) Less: Lexington property operating income (22) (1,846) (25) (1,926) Total same property operating income $25,770 $24,662 $75,019 $71,829 Total Shopping Centers $18,837 $17,905 $54,853 $51,690 Total Office Properties 6,933 6,757 20,166 20,139 Total same property operating income $25,770 $24,662 $75,019 $71,829 (1) The National Association of Real Estate Investment Trusts (NAREIT) developed FFO as a relative non-GAAP financial measure of performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO is defined by NAREIT 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 Company's Consolidated Statements of Cash Flows for the applicable periods. There are no material legal or functional restrictions on the use of FFO. FFO should not be considered as an alternative to net income, its most directly comparable GAAP measure, as a indicator of the Company's operating performance, or as an alternative to cash flows as a measure of liquidity. Management considers FFO a meaningful supplemental measure of operating performance because it primarily excludes the assumption that the value of the real estate assets diminishes predictably over time (i.e. depreciation), which is contrary to what we believe occurs with our assets, and because industry analysts have accepted it as a performance measure. 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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