BETHESDA, Md., July 30, 2013 /PRNewswire/ -- Saul Centers,
Inc. (NYSE: BFS), an equity real estate investment trust (REIT),
announced its operating results for the quarter ended June 30, 2013 ("2013 Quarter"). Total
revenue for the 2013 Quarter increased to $48.8 million from $47.4
million for the quarter ended June
30, 2012 ("2012 Quarter"). Operating income, which is
net income available to common stockholders before income
attributable to noncontrolling interests, preferred stock dividends
and the impact of preferred stock redemptions, decreased to
$7.7 million for the 2013 Quarter
from $9.6 million for the 2012
Quarter. Operating income for the 2013 Quarter was adversely
impacted by $2.0 million of
additional depreciation expense and $1.2
million of predevelopment expenses, both of which are
related to the Company's redevelopment of Van Ness Square.
Without these expenses, operating income for the 2013 Quarter would
have been $10.9 million, or
$1.3 million more than the 2012
Quarter.
The Company recently completed negotiation of lease termination
agreements with tenants of Van Ness Square and the building is
currently vacant. The Company intends to develop a primarily
residential project with street-level retail. Costs incurred
to terminate leases were recognized as expense over the remaining
terms of the leases and costs to demolish the existing improvements
are recognized as expenses when incurred. The Company will
recognize additional predevelopment expenses in future periods when
the existing improvements of Van Ness Square and the adjacent 4469
Connecticut Avenue are demolished, the timing of which is uncertain
and dependent on the issuance of various governmental approvals and
permits.
Net income attributable to common stockholders was $3.4 million ($0.17
per diluted share) for the 2013 Quarter compared to $4.3 million ($0.22
per diluted share) for the 2012 Quarter. Net income
attributable to common stockholders for the 2013 Quarter was
adversely impacted primarily by the $3.2
million of depreciation and predevelopment expense related
to Van Ness Square offset in part by a $0.6
million decrease in preferred stock dividends. Without
these items, as adjusted for noncontrolling interests, net income
attributable to common stockholders would have been $5.4 million, or $1.1
million more than the 2012 Quarter. The $1.1 million increase is primarily attributable
to reduced interest expense, increased operating income generated
by Clarendon Center and the leasing of major tenant space in the
shopping center portfolio.
During the quarter ended March 31,
2013, the Company issued $140.0
million of 6.875% Series C Cumulative Redeemable Preferred
Stock, redeemed all $79.3 million of
its 9.0% Series B preferred stock and redeemed $60.0 million of its 8.0% Series A preferred
stock. The changes in preferred stock reduced second quarter
2013 preferred stock dividends to $3.2
million from $3.8 million in
2012.
Same property revenue increased 3.2% and same property operating
income increased 3.0% for the 2013 Quarter compared to the 2012
Quarter. Same property operating income equals property
revenue minus the sum of (a) property operating expenses, (b)
provision for credit losses and (c) real estate taxes and the
comparisons exclude the results of properties not in operation for
the entirety of the comparable reporting periods. Shopping
center same property operating income increased 2.2% and mixed-use
same property operating income increased 5.7%. The leasing of
office space at Clarendon Center was the primary contributor of
improved mixed-use property operating income.
For the six months ended June 30,
2013 ("2013 Period"), total revenue increased to
$98.0 million from $94.4 million for the six months ended
June 30, 2012 ("2012 Period").
Operating income decreased to $11.1
million for the 2013 Period from $18.9 million for the 2012 Period.
Operating income for the 2013 Period was adversely impacted by
$8.0 million of additional
depreciation expense and $3.6 million
of predevelopment expenses, both of which are related to the
Company's activities at Van Ness Square. Without these
expenses, operating income for the 2013 Period would have been
$22.7 million, or $3.9 million more than the 2012 Period.
Net loss attributable to common stockholders was $1.2 million ($0.06
per diluted share) for the 2013 Period compared to net income of
$8.4 million ($0.43 per diluted share) for the 2012
Period. Net income attributable to common stockholders for
the 2013 Period was adversely impacted primarily by the
$11.6 million of depreciation and
predevelopment expense related to Van Ness Square and a
$5.2 million charge against common
equity resulting from the redemption of preferred stock.
Without these items, as adjusted for noncontrolling interests, net
income attributable to common stockholders would have been
$12.6 million, or $4.2 million more than the 2012 Period. The
$4.2 million increase is primarily
attributable to reduced interest expense, increased operating
income generated by Clarendon Center and the leasing of major
tenant space in the shopping center portfolio.
Same property revenue increased 3.7% and same property operating
income increased 4.1% for the 2013 Period compared to the 2012
Period. Shopping center same property operating income
increased 3.7% and mixed-use same property operating income
increased 5.3%. The shopping centers were primarily impacted
by revenue received as a result of the occupancy of approximately
132,000 square feet of anchor-tenant space which was vacant during
the 2012 Period. The leasing of Clarendon Center office space
was the primary contributor of improved mixed-use property
operating income.
As of June 30, 2013, 93.6% of the
commercial portfolio was leased (all properties except the
apartments at Clarendon Center, which were 98% leased), compared to
91.1% at June 30, 2012. On a
same property basis, 93.8% of the portfolio was leased at
June 30, 2013, compared to 92.8% for
the prior year.
Funds from operations (FFO) available to common shareholders
(after deducting preferred stock dividends) increased 9.3% to
$17.0 million ($0.63 per diluted share) in the 2013 Quarter from
$15.6 million ($0.59 per diluted share) in the 2012
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 and
losses from property dispositions, impairment charges on
depreciable real estate assets and extraordinary items. FFO
available to common shareholders for the 2013 Quarter was adversely
impacted by predevelopment expenses ($1.2
million). Without this item, FFO available to common
shareholders would have been $18.2
million, or $2.6 million more
than the 2012 Quarter. The $2.6
million increase is primarily attributable to improved
overall portfolio property operating income ($1.3 million) and reduced interest expense and
amortization of deferred debt costs ($0.8
million).
FFO available to common shareholders (after deducting preferred
stock dividends and the impact of preferred stock redemptions)
decreased 12.0% to $27.2 million
($1.00 per diluted share) in the 2013
Period from $30.9 million
($1.17 per diluted share) in the 2012
Period. FFO available to common shareholders for the 2013
Period was adversely impacted by the redemption of preferred stock
($5.2 million) and predevelopment
expenses ($3.6 million).
Without these items, FFO available to common shareholders would
have been $36.0 million, or
$5.1 million more than the 2012
Period. The $5.1 million
increase is attributable to improved overall portfolio property
operating income ($3.5 million) and
reduced interest expense and amortization of deferred debt costs
($1.8 million).
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 59 community and neighborhood shopping
center and mixed-use properties totaling 9.3 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. Condensed
Consolidated Balance Sheets (In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
|
|
2013
|
|
2012
|
Assets
|
|
|
(Unaudited)
|
|
|
|
Real estate
investments
|
|
|
|
|
|
|
Land
|
|
$
351,647
|
|
$
353,890
|
|
|
Buildings and
equipment
|
|
1,117,976
|
|
1,109,911
|
|
|
Construction in
progress
|
|
6,165
|
|
2,267
|
|
|
|
|
1,475,788
|
|
1,466,068
|
|
|
Accumulated
depreciation
|
|
(378,775)
|
|
(353,305)
|
|
|
|
|
1,097,013
|
|
1,112,763
|
|
Cash and cash
equivalents
|
|
12,945
|
|
12,133
|
|
Accounts receivable
and accrued income, net
|
|
41,701
|
|
41,406
|
|
Deferred leasing
costs, net
|
|
24,757
|
|
26,102
|
|
Prepaid expenses,
net
|
|
1,669
|
|
3,895
|
|
Deferred debt costs,
net
|
|
8,342
|
|
7,713
|
|
Other
assets
|
|
5,183
|
|
3,297
|
|
|
Total
assets
|
|
$
1,191,610
|
|
$
1,207,309
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Mortgage notes
payable
|
|
$
826,224
|
|
$
789,776
|
|
Revolving credit
facility payable
|
|
-
|
|
38,000
|
|
Dividends and
distributions payable
|
|
13,022
|
|
13,490
|
|
Accounts payable,
accrued expenses and other liabilities
|
|
22,576
|
|
27,434
|
|
Deferred
income
|
|
26,961
|
|
31,320
|
|
|
Total
liabilities
|
|
888,783
|
|
900,020
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Preferred
stock
|
|
180,000
|
|
179,328
|
|
Common
stock
|
|
204
|
|
201
|
|
Additional paid-in
capital
|
|
260,371
|
|
246,557
|
|
Accumulated deficit
and other comprehensive loss
|
|
(172,515)
|
|
(158,383)
|
|
|
Total Saul Centers,
Inc. stockholders' equity
|
|
268,060
|
|
267,703
|
|
Noncontrolling
interest
|
|
34,767
|
|
39,586
|
|
|
Total stockholders'
equity
|
|
302,827
|
|
307,289
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
1,191,610
|
|
$
1,207,309
|
Saul Centers,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(In thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Revenue
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
Base rent
|
|
$
39,553
|
|
$
38,043
|
|
$
79,293
|
|
$
75,528
|
|
|
Expense
recoveries
|
|
7,463
|
|
7,441
|
|
15,077
|
|
15,142
|
|
|
Percentage
rent
|
|
338
|
|
453
|
|
938
|
|
859
|
|
|
Other
|
|
1,455
|
|
1,435
|
|
2,687
|
|
2,832
|
|
|
Total revenue
|
|
48,809
|
|
47,372
|
|
97,995
|
|
94,361
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
6,041
|
|
5,918
|
|
11,990
|
|
11,655
|
|
|
Provision for credit
losses
|
|
285
|
|
241
|
|
549
|
|
593
|
|
|
Real estate
taxes
|
|
5,433
|
|
5,526
|
|
11,196
|
|
11,362
|
|
|
Interest expense and
amortization of deferred debt costs
|
|
11,709
|
|
12,554
|
|
23,426
|
|
25,287
|
|
|
Depreciation and
amortization of deferred leasing costs
|
|
12,472
|
|
9,749
|
|
28,824
|
|
19,507
|
|
|
General and
administrative
|
|
3,925
|
|
3,784
|
|
7,329
|
|
7,031
|
|
|
Predevelopment
expenses
|
|
1,233
|
|
-
|
|
3,582
|
|
-
|
|
|
Total operating expenses
|
|
41,098
|
|
37,772
|
|
86,896
|
|
75,435
|
|
Operating
income
|
|
7,711
|
|
9,600
|
|
11,099
|
|
18,926
|
|
|
Change in fair value
of derivatives
|
|
51
|
|
(16)
|
|
61
|
|
(19)
|
|
Income from
continuing operations
|
|
7,762
|
|
9,584
|
|
11,160
|
|
18,907
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
Income from
operations of properties sold
|
|
-
|
|
11
|
|
-
|
|
8
|
|
Net
income
|
|
7,762
|
|
9,595
|
|
11,160
|
|
18,915
|
|
|
(Income) loss
attributable to the noncontrolling interests
|
|
(1,168)
|
|
(1,516)
|
|
418
|
|
(2,972)
|
|
Net income
attributable to Saul Centers, Inc.
|
|
6,594
|
|
8,079
|
|
11,578
|
|
15,943
|
|
|
Preferred stock
redemption
|
-
|
|
-
|
|
(5,228)
|
|
-
|
|
|
Preferred
dividends
|
|
(3,207)
|
|
(3,785)
|
|
(7,571)
|
|
(7,570)
|
|
Net income (loss)
attributable to common stockholders
|
|
$
3,387
|
|
$
4,294
|
|
$
(1,221)
|
|
$
8,373
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share net
income (loss) attributable to common stockholders :
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
0.17
|
|
$
0.22
|
|
$
(0.06)
|
|
$
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common stock :
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
20,301
|
|
19,559
|
|
20,224
|
|
19,482
|
|
|
Effect of dilutive
options
|
|
22
|
|
43
|
|
27
|
|
44
|
|
|
Diluted weighted
average common stock
|
|
20,323
|
|
19,602
|
|
20,251
|
|
19,526
|
Saul Centers,
Inc.
Supplemental Information
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Reconciliation of
net income to FFO attributable to common shareholders: (1)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
Net income
|
|
$
7,762
|
|
$
9,595
|
|
$
11,160
|
|
$
18,915
|
|
Add:
|
Real property
depreciation and amortization
|
|
12,472
|
|
9,749
|
|
28,824
|
|
19,507
|
|
Add:
|
Real property
depreciation - discontinued operations
|
|
-
|
|
21
|
|
-
|
|
41
|
|
FFO
|
|
20,234
|
|
19,365
|
|
39,984
|
|
38,463
|
|
Less:
|
Preferred stock
redemption
|
|
-
|
|
-
|
|
(5,228)
|
|
-
|
|
Less:
|
Preferred
dividends
|
|
(3,207)
|
|
(3,785)
|
|
(7,571)
|
|
(7,570)
|
|
FFO attributable to
common shareholders
|
|
$
17,027
|
|
$
15,580
|
|
$
27,185
|
|
$
30,893
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares :
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average common stock
|
|
20,323
|
|
19,602
|
|
20,251
|
|
19,526
|
|
Convertible limited
partnership units
|
|
6,914
|
|
6,914
|
|
6,914
|
|
6,914
|
|
Diluted &
converted weighted average shares
|
|
27,237
|
|
26,516
|
|
27,165
|
|
26,440
|
|
|
|
|
|
|
|
|
|
|
Per share
amounts:
|
|
|
|
|
|
|
|
|
|
FFO attributable to
common shareholders (diluted)
|
|
$
0.63
|
|
$
0.59
|
|
$
1.00
|
|
$
1.17
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
net income to same property operating income:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
7,762
|
|
$
9,595
|
|
$
11,160
|
|
$
18,915
|
|
Add:
|
Interest expense and
amortization of deferred debt costs
|
|
11,709
|
|
12,554
|
|
23,426
|
|
25,287
|
|
Add:
|
Interest expense -
discontinued operations
|
|
-
|
|
13
|
|
-
|
|
51
|
|
Add:
|
Depreciation and
amortization of deferred leasing costs
|
|
12,472
|
|
9,749
|
|
28,824
|
|
19,507
|
|
Add:
|
Real property
depreciation - discontinued operations
|
|
-
|
|
21
|
|
-
|
|
41
|
|
Add:
|
General and
administrative
|
|
3,925
|
|
3,784
|
|
7,329
|
|
7,031
|
|
Add:
|
Predevelopment
expenses
|
|
1,233
|
|
-
|
|
3,582
|
|
-
|
|
Less:
|
Change in fair value
of derivatives
|
|
(51)
|
|
16
|
|
(61)
|
|
19
|
|
Less:
|
Interest
income
|
|
(13)
|
|
(37)
|
|
(44)
|
|
(49)
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating
income
|
|
37,037
|
|
35,695
|
|
74,216
|
|
70,802
|
|
Less:
|
Acquisitions,
dispositions & development property
|
|
(636)
|
|
(368)
|
|
(1,451)
|
|
(887)
|
|
Total same property
operating income
|
|
$
36,401
|
|
$
35,327
|
|
$
72,765
|
|
$
69,915
|
|
|
|
|
|
|
|
|
|
|
|
|
Shopping
centers
|
|
$
27,297
|
|
$
26,717
|
|
$
54,935
|
|
$
52,986
|
|
Mixed-Use
properties
|
|
9,104
|
|
8,610
|
|
17,830
|
|
16,929
|
|
Total same property
operating income
|
|
$
36,401
|
|
$
35,327
|
|
$
72,765
|
|
$
69,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, impairment charges
on depreciable real estate assets and gains or losses from property
dispositions (sales of properties and casualty
settlements). 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.
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SOURCE Saul Centers, Inc.