BETHESDA, Md., April 28, 2011 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity real
estate investment trust (REIT), announced its operating results for
the quarter ended March 31, 2011.
Total revenue for the three months ended March 31, 2011 ("2011 Quarter") decreased 4.1% to
$41,820,000 compared to $43,613,000 for the three months ended
March 31, 2010 ("2010 Quarter").
Operating income, which is net income available to common
stockholders before income attributable to the noncontrolling
interest and preferred stock dividends, decreased 33.4% to
$8,406,000 for the 2011 Quarter
compared to $12,612,000 for the 2010
Quarter. Net income available to common stockholders was
$3,524,000, or $0.19 per diluted share, for the 2011 Quarter
compared to net income available to common stockholders of
$6,768,000, or $0.37 per diluted share, for the 2010 Quarter.
From time to time, non-recurring events impact earnings and
the 2011 Quarter was negatively affected by two such occurrences.
The $3,244,000 decline in net
income compared to the 2010 Quarter was almost entirely due to (1)
the collection in the 2010 Quarter of $1,939,000 of past due rents from a former
tenant, and (2) a loss of $1,435,000
arising from the start of operations during the initial lease-up
period at the newly constructed Clarendon Center when construction
interest expense and depreciation and amortization exceeded the
property operating income. Also of significance during the
2011 Quarter were the offsetting affects of a $1,100,000 property income decline due to reduced
occupancy in the Mixed-Use portfolio, and a comparative
$1,200,000 property income increase
due to lower 2011 snow removal expenses.
Same property revenue for the total portfolio decreased 10.1%
for the 2011 Quarter compared to the 2010 Quarter and same property
operating income decreased 8.6%. The same property
comparisons exclude the results of operations of properties not in
operation for each of the comparable reporting quarters. Same
property operating income in the shopping center portfolio
decreased 6.5% for the 2011 Quarter compared to the 2010 Quarter.
The primary cause of this decrease was the prior year's collection
of rents and other past due charges from a former anchor tenant.
Excluding this one-time revenue, same property shopping center
operating income increased 1.7% compared to the prior year.
Same property operating income in the mixed-use portfolio
decreased 16.3% for the 2011 Quarter compared to the 2010 Quarter,
primarily due to decreased occupancy.
As of March 31, 2011, 89.6% of the
commercial portfolio (all properties except Clarendon Center's
apartments) was leased compared to 91.6% at March 31, 2010. On a same property basis,
90.2% of the commercial portfolio was leased, compared to the prior
year level of 91.6%. The Clarendon Center apartments were
92.2% leased at March 31, 2011.
The 2011 commercial leasing percentages decreased due to a
net decrease of approximately 115,000 square feet of leased space,
of which approximately 94,000 square feet was attributable to
mixed-use properties.
Funds from operations (FFO) available to common shareholders
(after deducting preferred stock dividends) decreased 18.9% to
$12,871,000 in the 2011 Quarter
compared to $15,862,000 for the 2010
Quarter. On a diluted per share basis, FFO available to
common shareholders decreased 20.9% to $0.53 per share for the 2011 Quarter compared to
$0.67 per share for the 2010 Quarter.
FFO, a widely accepted non-GAAP financial measure of
operating performance for REITs, is defined as net income plus real
estate depreciation and amortization, and excluding gains from
property dispositions and extraordinary items. FFO decreased
in the 2011 Quarter compared to the 2010 Quarter primarily due to
(1) the collection of rents and other past due charges from a
former anchor tenant in the 2010 Quarter ($1,939,000 or $0.08
per diluted share), (2) reduced occupancy in the Mixed-Use
portfolio ($1,101,000 or $0.05 per diluted share) and (3) the start of
operations at Clarendon Center ($489,000 or $0.02
per diluted share ), all of which was partially offset by (4) the
improvement in property operating income resulting from reduced
snow removal expense, net of tenant recoveries, compared to the
2010 Quarter ($1,200,000 or
$0.05 per diluted share).
In light of the current favorable long-term interest rate
environment and the potential for future interest rate increases,
in late March 2011, the Company
replaced its Clarendon Center construction loan with long-term
financing. The new 15-year, $125
million loan requires monthly payments of principal and
interest based upon a 5.31% interest rate and 25 year amortization
schedule. The loan proceeds repaid the $104 million outstanding under the construction
loan, and provided net cash proceeds of approximately $20 million, which will be used primarily to fund
the remaining Clarendon Center development costs. At
March 31, 2011, approximately 97% of
the Company's total debt consisted of fixed-rate, amortizing
non-recourse mortgage loans, none of which matures before
October 2012.
Saul Centers is a self-managed,
self-administered equity REIT headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a
real estate portfolio of 55 community and neighborhood shopping
center and mixed-use properties totaling approximately 9.0 million
square feet of leasable area. Over 85% of the Company's
property operating income is generated from properties in the
metropolitan Washington,
DC/Baltimore area.
Saul
Centers, Inc.
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Condensed
Consolidated Balance Sheets
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($ in
thousands)
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|
|
|
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|
|
|
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|
March
31,
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December
31,
|
|
|
|
|
2011
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|
2010
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|
Assets
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|
(Unaudited)
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|
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|
Real estate
investments
|
|
|
|
|
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Land
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$
278,313
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|
$
275,044
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|
|
|
Buildings and
equipment
|
906,417
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|
870,143
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|
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|
Construction in
progress
|
50,677
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|
78,849
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|
|
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|
1,235,407
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1,224,036
|
|
|
|
Accumulated
depreciation
|
(303,958)
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|
(296,786)
|
|
|
|
|
931,449
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|
927,250
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Cash and cash
equivalents
|
33,106
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12,968
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Accounts receivable and accrued
income, net
|
36,771
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|
36,417
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Deferred leasing costs,
net
|
18,248
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|
17,835
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Prepaid expenses, net
|
2,694
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|
3,024
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Deferred debt costs,
net
|
7,211
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|
7,192
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Other assets
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13,854
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9,202
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Total assets
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$ 1,043,333
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$ 1,013,888
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Liabilities
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Mortgage notes
payable
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$
722,132
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$
601,147
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Construction loans
payable
|
19,409
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|
110,242
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Construction loans
payable
|
|
|
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Dividends and distributions
payable
|
12,464
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|
12,415
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Accounts payable, accrued
expenses and other liabilities
|
20,663
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|
23,544
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Deferred income
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26,737
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|
26,727
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Total liabilities
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801,405
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774,075
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Stockholders'
equity
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Preferred stock
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179,328
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179,328
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Common stock
|
187
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|
186
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Additional paid-in
capital
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195,477
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189,787
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Accumulated deficit and other
comprehensive income/loss
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(132,123)
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(129,345)
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Total Saul Centers, Inc.
stockholders' equity
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242,869
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239,956
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Noncontrolling
interest
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(941)
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(143)
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Total stockholders'
equity
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241,928
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239,813
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Total liabilities and
stockholders' equity
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$ 1,043,333
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$ 1,013,888
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Saul Centers,
Inc.
Condensed Consolidated
Statements of Operations
(In thousands, except per share
amounts)
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Three Months
Ended March 31,
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2011
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2010
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Revenue
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(Unaudited)
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Base rent
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$ 32,697
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$ 31,665
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Expense recoveries
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7,426
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8,722
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Percentage rent
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375
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358
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Other
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1,322
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|
2,868
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Total revenue
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41,820
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43,613
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Operating
expenses
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|
|
|
|
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Property operating
expenses
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6,633
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7,638
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Provision for credit
losses
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|
515
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|
197
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Real estate taxes
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4,482
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4,682
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Interest expense and
amortization of deferred debt costs
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10,294
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8,591
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Depreciation and amortization of
deferred leasing costs
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8,324
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7,044
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General and
administrative
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3,166
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2,849
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Total operating
expenses
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33,414
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31,001
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Operating income
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8,406
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12,612
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Acquisition related
costs
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(74)
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-
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Income from continuing
operations
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8,332
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12,612
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Discontinued
operations:
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Loss from operations of property
sold
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-
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(38)
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Net income
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8,332
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|
12,574
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Income attributable to the
noncontrolling interest
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(1,023)
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(2,021)
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Net income attributable to Saul
Centers, Inc.
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7,309
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10,553
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Preferred dividends
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(3,785)
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(3,785)
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Net income available to common
stockholders
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$
3,524
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$
6,768
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Per share net income available
to common stockholders :
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Diluted
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$
0.19
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$
0.37
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Weighted average common stock
:
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Common stock
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18,659
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18,084
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Effect of dilutive
options
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95
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|
82
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Diluted weighted average common
stock
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18,754
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18,166
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Saul
Centers, Inc.
Supplemental
Information
(in
thousands, except per share amounts)
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Three Months
Ended March 31,
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2011
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2010
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Reconciliation of net income to
FFO available to common shareholders:
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(1)
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(Unaudited)
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Net income
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$
8,332
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$ 12,574
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Add:
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Real property depreciation and
amortization
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8,324
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7,044
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Add:
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Real property depreciation -
discontinued operations
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-
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|
29
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FFO
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16,656
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19,647
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Less:
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Preferred dividends
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(3,785)
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(3,785)
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FFO available to common
shareholders
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$ 12,871
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|
$ 15,862
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Weighted average shares
:
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|
|
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Diluted weighted average common
stock
|
|
18,754
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|
18,166
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|
|
Convertible limited partnership
units
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|
5,416
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|
5,416
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Diluted & converted weighted
average shares
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24,170
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|
23,582
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|
|
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|
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Per share
amounts:
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FFO available to common
shareholders (diluted)
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$
0.53
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|
$
0.67
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Reconciliation of net income to
same property operating income:
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|
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Net income
|
|
|
|
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$
8,332
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|
$ 12,574
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|
|
Add:
|
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Interest expense and
amortization of deferred debt costs
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|
10,294
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|
8,591
|
|
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Add:
|
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Depreciation and amortization of
deferred leasing costs
|
|
8,324
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|
7,044
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|
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Add:
|
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Depreciation and amortization -
discontinued operations
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|
-
|
|
29
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|
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Add:
|
|
Acquisition related
costs
|
|
74
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|
-
|
|
|
Add:
|
|
General and
administrative
|
|
3,166
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|
2,849
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Less:
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Interest income
|
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(14)
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|
-
|
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|
Less:
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Valuation of interest rate
swap
|
|
(87)
|
|
-
|
|
|
|
Property operating
income
|
|
|
30,089
|
|
31,087
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|
|
Less:
|
|
Acquisitions &
developments
|
|
(1,952)
|
|
(293)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total same property operating
income
|
|
$ 28,137
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|
$ 30,794
|
|
|
|
|
|
|
|
|
|
|
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Shopping centers
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|
$ 22,502
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|
$ 24,060
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|
|
Mixed-Use properties
|
|
|
|
5,635
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|
6,734
|
|
|
|
Total same property operating
income
|
|
$ 28,137
|
|
$ 30,794
|
|
|
|
|
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|
|
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(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 real estate
depreciation and amortization, and excluding extraordinary
items and gains or losses from property dispositions. 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 an
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.
SOURCE Saul Centers, Inc.