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, 2006. Total revenue for the quarter ended December 31, 2006 increased 9.5% to $35,903,000 compared to $32,774,000 for the 2005 quarter. Operating income, defined as net income available to common stockholders before minority interests and preferred stock dividends, increased 12.8% to $10,988,000 for the 2006 quarter compared to $9,740,000 for the comparable 2005 quarter. Net income available to common stockholders was $6,855,000 or $0.39 per diluted share for the 2006 quarter, a per share increase of 11.4% compared to net income available to common stockholders of $5,890,000 or $0.35 per diluted share for the 2005 quarter. For the year ended December 31, 2006, total revenue increased 8.6% to $137,978,000 compared to $127,015,000 for the 2005 year. Operating income before minority interests and preferred stock dividends increased 9.3% to $40,473,000 in 2006 compared to $37,025,000 in 2005. Net income available to common stockholders was $24,680,000 or $1.43 per diluted share in 2006, resulting in a per share increase of 12.6% compared to net income available to common stockholders of $21,227,000 or $1.27 per diluted share in 2005. 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 and year. Same property revenue for the total portfolio increased 3.2% for the 2006 fourth quarter compared to the same quarter in 2005 and same property operating income increased 4.4%. The same property comparisons exclude the results of operations of properties not in operation for each of the comparable reporting periods. Same property operating income in the shopping center portfolio increased 5.2% for the 2006 fourth quarter compared to the prior year's quarter. Same property operating income in the office portfolio grew 2.4% for the 2006 quarter. Same property revenue for the total portfolio increased 4.3% for the 2006 year compared to the 2005 year and same property operating income increased 4.5%. Same property operating income in the shopping center portfolio increased 6.0% from 2005 to 2006. Successful leasing activity at several core shopping centers produced the significant portion of increased shopping center operating income for the 2006 quarter and year. Same property operating income in the office portfolio grew 0.7% for the 2006 year. As of December 31, 2006, excluding development properties, 96.3% of the operating portfolio was leased, compared to 97.1% a year earlier. The company's significant development property, the 188,000 square foot Lansdowne Towne Center, was 85.0% leased at year-end 2006. On a same property basis, 96.7% of the portfolio was leased, compared to the prior year level of 97.1%. The 2006 leasing percentages decreased due to the departure of two local grocery anchors at the Belvedere and West Park shopping centers totaling 59,000 square feet. Funds From Operations (FFO) available to common shareholders (after deducting preferred stock dividends) increased 13.0% to $15,397,000 in the 2006 fourth quarter compared to $13,628,000 for the same quarter in 2005. On a diluted per share basis, FFO available to common shareholders increased 9.8% to $0.67 per share in 2006 compared to $0.61 per share for the 2005 quarter. 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 year increased 9.2% to $58,121,000 compared to $53,222,000 in 2005. Diluted per share FFO available to common shareholders increased 6.2% to $2.57 per share in 2006 compared to $2.42 per share for the 2005 year. During the 2005 year, 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 increased in the 2006 quarter and 2006 year, despite the impact of the one-time Lexington Mall land use settlement included in the prior year period, due to increased operating income from successful leasing activity at several core shopping centers and operating income from new developments. During 2006, the Company paid four quarterly dividends to its common stockholders totaling $1.68 per share, compared to $1.60 paid per share in 2005. On January 31, 2007, the Company paid a quarterly dividend of $0.42 per share to its common stockholders. Also during 2006, the Company acquired two grocery anchored shopping centers, Hunt Club Corners and Smallwood Village Center, totaling 299,000 square feet, and developed two neighborhood shopping centers, Lansdowne Towne Center and Broadlands Village III, totaling 211,000 square feet. Saul Centers is a self-managed, self-administered equity real estate investment trust headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 47 community and neighborhood shopping center and office properties totaling approximately 7.9 million square feet of leasable area. Over 80% of the Company's property operating income is generated from properties in the metropolitan Washington, DC/Baltimore area. Saul Centers, Inc. Condensed Consolidated Balance Sheets ($ in thousands) December 31, December 31, 2006 2005 Assets (Unaudited) Real estate investments Land $154,047 $139,421 Buildings and equipment 631,797 575,504 Construction in progress 56,017 47,868 841,861 762,793 Accumulated depreciation (214,210) (195,376) 627,651 567,417 Cash and cash equivalents 8,061 8,007 Accounts receivable and accrued income, net 33,248 23,410 Deferred leasing costs, net 18,137 19,834 Prepaid expenses, net 2,507 2,540 Deferred debt costs, net 5,328 5,875 Other assets 5,605 4,386 Total assets $700,537 $631,469 Liabilities Mortgage notes payable $487,443 $471,931 Revolving credit facility 35,000 10,500 Dividends and distributions payable 11,558 11,319 Accounts payable, accrued expenses and other liabilities 16,409 13,679 Deferred income 12,251 9,558 Total liabilities 562,661 516,987 Minority Interests 5,785 3,068 Stockholders' Equity Preferred stock 100,000 100,000 Common stock 173 169 Additional paid in capital 141,554 123,339 Accumulated deficit (109,636) (112,094) Total stockholders' equity 132,091 111,414 Total liabilities and stockholders' equity $700,537 $631,469 Saul Centers, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) Three Months Ended Years Ended December 31, December 31, 2006 2005 2006 2005 Revenue (Unaudited) (Unaudited) Base rent $28,295 $25,784 $110,121 $99,448 Expense recoveries 5,914 5,343 22,636 20,027 Percentage rent 843 639 1,767 2,057 Other 851 1,008 3,454 5,483 Total revenue 35,903 32,774 137,978 127,015 Operating Expenses Property operating expenses 4,083 4,031 16,278 14,724 Provision for credit losses 98 54 400 237 Real estate taxes 3,328 2,870 12,503 11,040 Interest expense and amortization of deferred debt 8,298 7,658 32,534 30,207 Depreciation and amortization of leasing costs 6,409 5,888 25,648 24,197 General and administrative 2,699 2,533 10,142 9,585 Total operating expenses 24,915 23,034 97,505 89,990 Operating Income 10,988 9,740 40,473 37,025 Minority Interests (2,133) (1,850) (7,793) (7,798) Net Income 8,855 7,890 32,680 29,227 Preferred Dividends (2,000) (2,000) (8,000) (8,000) Net Income Available to Common Stockholders $6,855 $5,890 $24,680 $21,227 Per Share Net Income Available to Common Stockholders: Diluted $0.39 $0.35 $1.43 $1.27 Weighted Average Common Stock Outstanding: Common stock 17,278 16,840 17,075 16,663 Effect of dilutive options 199 119 158 107 Diluted weighted average common stock 17,477 16,959 17,233 16,770 Saul Centers, Inc. Supplemental Information (In thousands, except per share amounts) Three Months Ended Years Ended December 31, December 31, 2006 2005 2006 2005 Reconciliation of Net Income to Funds From Operations (FFO)(1) (Unaudited) (Unaudited) Net Income $8,855 $7,890 $32,680 $29,227 Add: Real property depreciation & amortization 6,409 5,888 25,648 24,197 Add: Minority interests 2,133 1,850 7,793 7,798 FFO 17,397 15,628 66,121 61,222 Less: Preferred dividends (2,000) (2,000) (8,000) (8,000) FFO available to common shareholders $15,397 $13,628 $58,121 $53,222 Weighted Average Shares Outstanding: Diluted weighted average common stock 17,477 16,959 17,233 16,770 Convertible limited partnership units 5,416 5,291 5,395 5,233 Diluted & converted weighted average shares 22,893 22,250 22,628 22,003 Per Share Amounts: FFO available to common shareholders $0.67 $0.61 $2.57 $2.42 Reconciliation of Net Income to Same Property Operating Income Net Income $8,855 $7,890 $32,680 $29,227 Add: Interest expense and amortization of deferred debt 8,298 7,658 32,534 30,207 Add: Depreciation and amortization of leasing costs 6,409 5,888 25,648 24,197 Add: General and administrative 2,699 2,533 10,142 9,585 Less: Interest income (114) (140) (334) (661) Add: Minority interests 2,133 1,850 7,793 7,798 Property operating income 28,280 25,679 108,463 100,353 Less: Acquisitions & developments (1,779) (304) (7,523) (1,828) Less: Lexington property operating income - - (20) (1,966) Total same property operating income $26,501 $25,375 $100,920 $96,559 Total Shopping Centers $19,493 $18,532 $73,745 $69,577 Total Office Properties 7,008 6,843 27,175 26,982 Total same property operating income $26,501 $25,375 $100,920 $96,559 (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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