BETHESDA, Md., March 4, 2014 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity real
estate investment trust ("REIT"), announced its operating results
for the quarter ended December 31, 2013 ("2013 Quarter").
Total revenue for the 2013 Quarter increased to $50.1 million from $48.3 million for the quarter ended
December 31, 2012 ("2012 Quarter"). Operating income,
which is net income before the impact of the change in fair value
of derivatives, loss on early extinguishment of debt, the impact of
operations of sold properties, gains on sales of property and gains
on casualty settlements, increased to $12.2 million for the 2013 Quarter from
$8.0 million for the 2012
Quarter.
Net income attributable to common stockholders was $6.7 million ($0.33 per diluted share) for the 2013 Quarter
compared to $5.7 million
($0.29 per diluted share) for the
2012 Quarter. The increase in net income attributable to
common stockholders for the 2013 Quarter was primarily the result
of (a) increased property operating income ($1.7 million), (b) lower predevelopment
expenses related to Park Van Ness ($0.5 million), (c) lower interest
expense ($0.5 million), (d)
lower acquisition related costs ($1.1 million) and (e) lower preferred stock
dividends ($0.6 million)
partially offset by (f) lower gain on sale of property
($3.5 million).
Same property revenue increased 4.1% and same property operating
income increased 4.2% 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 3.1% and mixed-use
same property operating income increased 7.9%. Leasing
activity at Clarendon Center and 601 Pennsylvania Avenue was the
primary contributor of improved mixed-use property operating
income.
For the year ended December 31, 2013 ("2013 Period"), total
revenue increased to $197.9 million
from $190.1 million for the year
ended December 31, 2012 ("2012 Period"). Operating
income was $35.3 million for the 2013
Period and $35.1 million for the
2012 Period. Operating income for the 2013 Period was
adversely impacted by $8.0 million of additional depreciation
expense and $1.2 million of higher
predevelopment expenses, both of which are related to the Company's
activities at Park Van Ness, partially offset by $7.2 million of increased property operating
income and $3.0 million of lower
interest expense and amortization of deferred debt costs.
Adjusting for the expenses related to the Park Van Ness
redevelopment activities in both periods, operating income for the
2013 Period would have been $47.2 million or $9.4 million more than the 2012 Period.
Net income attributable to common stockholders was $11.7 million ($0.57 per diluted share) for the 2013 Period
compared to $18.2 million
($0.93 per diluted share) for the
2012 Period. Net income attributable to common stockholders
for the 2013 Period was adversely impacted primarily by (a)
increased depreciation and predevelopment expenses related to Park
Van Ness ($9.2 million), (b) a
charge against common equity resulting from the redemption of
preferred stock ($5.2 million),
and (c) lower gain on sales of property ($4.5 million) partially offset by (d)
increased property operating income ($7.2 million), (e) lower noncontrolling
interest ($2.4 million),
(f) lower interest expense and amortization of deferred debt
costs ($3.0 million), (g) lower
preferred stock dividends ($1.2 million) and (h) lower acquisition
related costs ($1.0 million).
Excluding the impact of Park Van Ness in both periods and the
preferred stock redemption in 2013, as adjusted for noncontrolling
interests, net income attributable to common stockholders would
have been approximately $24.5 million
or $4.2 million more than the
2012 Period.
Same property revenue increased 4.2% and same property operating
income increased 4.4% for the 2013 Period compared to the 2012
Period. Shopping center same property operating income
increased 3.6% and mixed-use same property operating income
increased 7.0%. Shopping center operating income benefited
primarily from higher revenue as a result of an 89,000 square foot
increase in leased space. The leasing of Clarendon Center office
space was the primary contributor to improved mixed-use property
operating income.
As of December 31, 2013, 93.9% of the commercial portfolio
was leased (all properties except the apartments at Clarendon
Center), compared to 91.7% at December 31, 2012. On a
same property basis, 93.9% of the portfolio was leased at
December 31, 2013, compared to 92.6% at December 31,
2012. The 2013 percentage leased was impacted by a net
increase of 123,100 square feet, 70,800 square feet of which
resulted from improved leasing of small shop shopping center space
(spaces totaling 10,000 square feet or less) throughout the
portfolio and 34,500 square feet of which resulted from improved
leasing in the mixed-use portfolio, primarily at Avenel Business
Park. As of December 31, 2013, the apartments at
Clarendon Center were 99.2% leased compared to 100.0% as of
December 31, 2012.
Funds from operations ("FFO") available to common shareholders
(after deducting preferred stock dividends) increased 28.0% to
$18.7 million ($0.68 per diluted share) in the 2013 Quarter from
$14.6 million ($0.54 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. The
increase in FFO available to common shareholders for the 2013
Quarter was primarily due to (a) increased property operating
income ($1.7 million), (b) lower
acquisition-related costs ($1.1 million), (c) lower preferred stock
dividends ($0.6 million), (d)
lower predevelopment expenses ($0.5 million) and (e) lower interest
expense ($0.5 million).
FFO available to common shareholders (after deducting preferred
stock dividends and the impact of preferred stock redemptions)
increased 7.6% to $64.7 million
($2.37 per diluted share) in the 2013
Period from $60.1 million
($2.26 per diluted share) in the 2012
Period. FFO available to common shareholders for the 2013
Period increased primarily due to (a) improved overall property
operating income ($7.2 million),
(b) lower interest expense and amortization of deferred debt costs
($3.0 million), (c) lower
preferred stock dividends ($1.2 million) and (d) lower
acquisition related costs ($1.0 million) partially offset by
(e) the redemption of preferred stock ($5.2 million), (f)
increased predevelopment expenses ($1.2 million) and (g)
higher general and administrative expenses ($0.7 million).
Excluding the impact of predevelopment expenses in both periods and
the preferred stock redemption in 2013, FFO available to common
shareholders would have been approximately $73.8 million or
$11.1 million more than the 2012 Period.
Saul Centers is a self-managed,
self-administered equity REIT headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a
real estate portfolio comprised of 59 properties which includes (a)
56 community and neighborhood shopping centers and mixed-use
properties with approximately 9.3 million square feet of
leasable area and (b) 3 land and development properties. 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)
|
|
|
|
|
|
December 31,
2013
|
|
December 31,
2012
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Real estate
investments
|
|
|
|
Land
|
$
|
354,967
|
|
|
$
|
353,890
|
|
Buildings and
equipment
|
1,094,605
|
|
|
1,109,911
|
|
Construction
in progress
|
9,867
|
|
|
2,267
|
|
|
1,459,439
|
|
|
1,466,068
|
|
Accumulated
depreciation
|
(364,663)
|
|
|
(353,305)
|
|
|
1,094,776
|
|
|
1,112,763
|
|
Cash and cash
equivalents
|
17,297
|
|
|
12,133
|
|
Accounts receivable
and accrued income, net
|
43,884
|
|
|
41,406
|
|
Deferred leasing
costs, net
|
26,052
|
|
|
26,102
|
|
Prepaid expenses,
net
|
4,047
|
|
|
3,895
|
|
Deferred debt costs,
net
|
9,675
|
|
|
7,713
|
|
Other
assets
|
2,944
|
|
|
3,297
|
|
Total
assets
|
$
|
1,198,675
|
|
|
$
|
1,207,309
|
|
|
|
|
|
Liabilities
|
|
|
|
Mortgage notes
payable
|
$
|
820,068
|
|
|
$
|
789,776
|
|
Revolving credit
facility payable
|
—
|
|
|
38,000
|
|
Dividends and
distributions payable
|
13,135
|
|
|
13,490
|
|
Accounts payable,
accrued expenses and other liabilities
|
20,141
|
|
|
27,434
|
|
Deferred
income
|
30,205
|
|
|
31,320
|
|
Total
liabilities
|
883,549
|
|
|
900,020
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Preferred
stock
|
180,000
|
|
|
179,328
|
|
Common
stock
|
206
|
|
|
201
|
|
Additional paid-in
capital
|
270,428
|
|
|
246,557
|
|
Accumulated deficit
and other comprehensive loss
|
(173,956)
|
|
|
(158,383)
|
|
Total Saul Centers,
Inc. stockholders' equity
|
276,678
|
|
|
267,703
|
|
Noncontrolling
interest
|
38,448
|
|
|
39,586
|
|
Total stockholders'
equity
|
315,126
|
|
|
307,289
|
|
Total liabilities and
stockholders' equity
|
$
|
1,198,675
|
|
|
$
|
1,207,309
|
|
Saul Centers,
Inc.
Condensed
Consolidated Statements of Operations
(In thousands, except
per share amounts)
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Revenue
|
(unaudited)
|
|
(unaudited)
|
|
|
Base rent
|
$
|
40,495
|
|
|
$
|
38,915
|
|
|
$
|
159,898
|
|
|
$
|
152,777
|
|
Expense
recoveries
|
8,024
|
|
|
7,685
|
|
|
30,949
|
|
|
30,391
|
|
Percentage
rent
|
422
|
|
|
436
|
|
|
1,575
|
|
|
1,545
|
|
Other
|
1,205
|
|
|
1,250
|
|
|
5,475
|
|
|
5,379
|
|
Total
revenue
|
50,146
|
|
|
48,286
|
|
|
197,897
|
|
|
190,092
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Property operating
expenses
|
6,463
|
|
|
6,262
|
|
|
24,559
|
|
|
23,794
|
|
Provision for credit
losses
|
228
|
|
|
390
|
|
|
968
|
|
|
1,151
|
|
Real estate
taxes
|
5,609
|
|
|
5,428
|
|
|
22,415
|
|
|
22,325
|
|
Interest expense and
amortization of deferred
debt costs
|
11,425
|
|
|
11,935
|
|
|
46,589
|
|
|
49,544
|
|
Depreciation and
amortization of deferred
leasing
costs
|
9,814
|
|
|
10,368
|
|
|
49,130
|
|
|
40,112
|
|
General and
administrative
|
4,121
|
|
|
3,971
|
|
|
14,951
|
|
|
14,274
|
|
Acquisition related
costs
|
7
|
|
|
1,129
|
|
|
106
|
|
|
1,129
|
|
Predevelopment
expenses
|
268
|
|
|
797
|
|
|
3,910
|
|
|
2,667
|
|
Total operating
expenses
|
37,935
|
|
|
40,280
|
|
|
162,628
|
|
|
154,996
|
|
Operating
income
|
12,211
|
|
|
8,006
|
|
|
35,269
|
|
|
35,096
|
|
Change in fair value
of derivatives
|
(114)
|
|
|
38
|
|
|
(7)
|
|
|
36
|
|
Loss on early
extinguishment of debt
|
—
|
|
|
—
|
|
|
(497)
|
|
|
—
|
|
Gain on casualty
settlement
|
77
|
|
|
—
|
|
|
77
|
|
|
219
|
|
Income from
continuing operations
|
12,174
|
|
|
8,044
|
|
|
34,842
|
|
|
35,351
|
|
Discontinued
operations
|
—
|
|
|
3,417
|
|
|
—
|
|
|
4,429
|
|
Net
Income
|
12,174
|
|
|
11,461
|
|
|
34,842
|
|
|
39,780
|
|
Income attributable
to noncontrolling interests
|
(2,278)
|
|
|
(1,978)
|
|
|
(3,970)
|
|
|
(6,406)
|
|
Net income
attributable to Saul Centers, Inc.
|
9,896
|
|
|
9,483
|
|
|
30,872
|
|
|
33,374
|
|
Preferred stock
redemption
|
—
|
|
|
—
|
|
|
(5,228)
|
|
|
—
|
|
Preferred stock
dividends
|
(3,206)
|
|
|
(3,785)
|
|
|
(13,983)
|
|
|
(15,140)
|
|
Net income
attributable to common
stockholders
|
$
|
6,690
|
|
|
$
|
5,698
|
|
|
$
|
11,661
|
|
|
$
|
18,234
|
|
Per share net
income attributable to common
stockholders
|
|
|
|
|
|
|
|
Diluted
|
$
|
0.33
|
|
|
$
|
0.29
|
|
|
$
|
0.57
|
|
|
$
|
0.93
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Stock:
|
|
|
|
|
|
|
|
Common
stock
|
20,555
|
|
|
19,914
|
|
|
20,364
|
|
|
19,649
|
|
Effect of dilutive
options
|
61
|
|
|
50
|
|
|
37
|
|
|
51
|
|
Diluted weighted
average common stock
|
20,616
|
|
|
19,964
|
|
|
20,401
|
|
|
19,700
|
|
Reconciliation of
net income to FFO attributable to common shareholders
(1)
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended December
31,
|
(In thousands,
except per share amounts)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Net income
|
$
|
12,174
|
|
|
$
|
11,461
|
|
|
$
|
34,842
|
|
|
$
|
39,780
|
|
Subtract:
|
|
|
|
|
|
|
|
Gain on sale
of property
|
—
|
|
|
(3,453)
|
|
|
—
|
|
|
(4,510)
|
|
Gain on
casualty settlement
|
(77)
|
|
|
—
|
|
|
(77)
|
|
|
(219)
|
|
Add:
|
|
|
|
|
|
|
|
Real estate
depreciation-discontinued operations
|
—
|
|
|
26
|
|
|
—
|
|
|
77
|
|
Real estate
depreciation and amortization
|
9,814
|
|
|
10,368
|
|
|
49,130
|
|
|
40,112
|
|
FFO
|
21,911
|
|
|
18,402
|
|
|
83,895
|
|
|
75,240
|
|
Subtract:
|
|
|
|
|
|
|
|
Preferred
stock dividends
|
(3,206)
|
|
|
(3,785)
|
|
|
(13,983)
|
|
|
(15,140)
|
|
Preferred
stock redemption
|
—
|
|
|
—
|
|
|
(5,228)
|
|
|
—
|
|
FFO available to common shareholders
|
$
|
18,705
|
|
|
$
|
14,617
|
|
|
$
|
64,684
|
|
|
$
|
60,100
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
Diluted weighted
average common stock
|
20,616
|
|
|
19,964
|
|
|
20,401
|
|
|
19,700
|
|
Convertible limited
partnership units
|
6,973
|
|
|
6,914
|
|
|
6,929
|
|
|
6,914
|
|
Average shares
and units used to compute FFO per share
|
27,589
|
|
|
26,878
|
|
|
27,330
|
|
|
26,614
|
|
FFO per share available to common shareholders
|
$
|
0.68
|
|
|
$
|
0.54
|
|
|
$
|
2.37
|
|
|
$
|
2.26
|
|
|
|
|
|
|
|
|
|
(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. 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 the
Company believes occurs with its 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.
|
Reconciliation of
net income to same property operating income
|
|
|
Three Months
Ended
December
31,
|
|
Year Ended December
31,
|
(In
thousands)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Net income
|
$
|
12,174
|
|
|
$
|
11,461
|
|
|
$
|
34,842
|
|
|
$
|
39,780
|
|
Add: Interest expense
and amortization of deferred debt costs
|
11,425
|
|
|
11,935
|
|
|
46,589
|
|
|
49,544
|
|
Add: Interest expense
- discontinued operations
|
—
|
|
|
10
|
|
|
—
|
|
|
49
|
|
Add: Depreciation and
amortization of deferred leasing costs
|
9,814
|
|
|
10,368
|
|
|
49,130
|
|
|
40,112
|
|
Add: Real property
depreciation - discontinued operations
|
—
|
|
|
26
|
|
|
—
|
|
|
77
|
|
Add: Loss on early
extinguishment of debt
|
—
|
|
|
—
|
|
|
497
|
|
|
—
|
|
Add: General and
administrative
|
4,121
|
|
|
3,971
|
|
|
14,951
|
|
|
14,274
|
|
Add: Predevelopment
expenses
|
268
|
|
|
797
|
|
|
3,910
|
|
|
2,667
|
|
Add: Acquisition
related costs
|
7
|
|
|
1,129
|
|
|
106
|
|
|
1,129
|
|
Add (Less): Change in
fair value of derivatives
|
114
|
|
|
(38)
|
|
|
7
|
|
|
(36)
|
|
Less: Gains on
property dispositions
|
(77)
|
|
|
(3,453)
|
|
|
(77)
|
|
|
(4,729)
|
|
Less: Interest
income
|
(12)
|
|
|
(27)
|
|
|
(69)
|
|
|
(136)
|
|
Property operating
income
|
37,834
|
|
|
36,179
|
|
|
149,886
|
|
|
142,731
|
|
Less: Acquisitions,
dispositions & development property
|
(551)
|
|
|
(409)
|
|
|
(2,563)
|
|
|
(1,598)
|
|
Total same
property operating income
|
$
|
37,283
|
|
|
$
|
35,770
|
|
|
$
|
147,323
|
|
|
$
|
141,133
|
|
|
|
|
|
|
|
|
|
Shopping
centers
|
$
|
28,041
|
|
|
$
|
27,202
|
|
|
$
|
110,864
|
|
|
$
|
107,052
|
|
Mixed-Use
properties
|
9,242
|
|
|
8,567
|
|
|
36,459
|
|
|
34,081
|
|
Total same
property operating income
|
$
|
37,283
|
|
|
$
|
35,769
|
|
|
$
|
147,323
|
|
|
$
|
141,133
|
|
SOURCE Saul Centers, Inc.