BETHESDA, Md., July 30,
2015 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity
real estate investment trust ("REIT"), announced its operating
results for the quarter ended June 30, 2015 ("2015
Quarter"). Total revenue for the 2015 Quarter decreased to
$51.7 million from $52.3 million for the quarter ended
June 30, 2014 ("2014 Quarter"). Operating income, which
is net income before the impact of change in fair value of
derivatives, loss on early extinguishment of debt and gains on
sales of property and casualty settlements, if any, decreased to
$12.9 million for the 2015
Quarter from $14.4 million for the
2014 Quarter.
Net income attributable to common stockholders was $7.3 million ($0.35 per diluted share) for the 2015 Quarter
compared to $12.8 million
($0.62 per diluted share) for the
2014 Quarter. The decrease in net income attributable to
common stockholders resulted primarily from (a) a $6.1 million gain on sale of property in 2014 and
(b) the $1.6 million impact of a
bankruptcy settlement and collection in 2014, partially offset by
(c) $1.9 million lower noncontrolling
interest.
Same property revenue decreased $1.0
million (2.0%) and same property operating income decreased
$1.7 million (4.1%) for the 2015
Quarter compared to the 2014 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
decreased $1.1 million (3.7%)
primarily due to the $1.6 million impact of a bankruptcy
settlement and collection in 2014 which was partially offset by
$0.5 million of increased base
rent. Mixed-use same property operating income decreased
$0.5 million (5.5%) primarily
due to (a) higher real estate tax expense, the majority of which is
not recoverable ($0.3 million)
and (b) higher provision for credit losses related to a rent
dispute ($0.2 million).
For the six months ended June 30,
2015 ("2015 Period"), total revenue decreased to
$103.8 million from $105.2 million for the six months ended
June 30, 2014 ("2014 Period").
Operating income decreased to $25.6
million for the 2015 Period from $27.1 million for the 2014 Period. The
decrease in operating income was due primarily to (a) the net
impact in 2014 of a lease termination ($1.2 million), and (b) the impact in 2014 of
a bankruptcy settlement and collection ($1.6 million) partially offset by (c) lower
general and administrative expenses, primarily due to severance
expense in 2014 ($0.8 million)
and (d) lower predevelopment expenses ($0.5
million).
Net income attributable to common stockholders was $14.4 million ($0.68 per diluted share) for the 2015 Period
compared to $19.9 million
($0.96 per diluted share) for the
2014 Period. The decrease in net income attributable to
common stockholders was due primarily to (a) the gain on sale of
property in 2014 ($6.1 million), (b)
the impact in 2014 of a bankruptcy settlement and collection
($1.6 million), (c) the net
impact in 2014 of a lease termination ($1.2 million), partially offset by
(d) lower noncontrolling interest ($1.8 million), (e) lower general and
administrative expenses, primarily due to severance expense in 2014
($0.8 million) and (f) lower
predevelopment expenses ($0.5
million).
Same property revenue decreased $2.3 million (2.2%) and same property
operating income decreased $3.4 million (4.3%) for the 2015 Period
compared to the 2014 Period. Shopping center same property
operating income decreased $2.0 million (3.3%) primarily due to (a) the
net impact in 2014 of a lease termination ($1.2 million), (b) the impact in 2014 of a
bankruptcy settlement and collection ($1.6 million) partially offset by (c)
increased base rent ($0.7 million). Mixed-use same property
operating income decreased $1.4 million (7.4%) primarily due to
(a) higher real estate tax expense, the majority of which is
not recoverable ($0.6 million),
(b) higher provision for credit losses related to a rent
dispute ($0.3 million),
(c) lower base rent ($0.2 million) and (d) higher repairs and
maintenance expense, the majority of which is not recoverable
($0.2 million).
As of June 30, 2015, 95.0% of the commercial portfolio was
leased (not including the apartments at Clarendon Center), compared
to 94.2% as of June 30, 2014. On a same property basis,
94.9% of the portfolio was leased as of June 30, 2015,
compared to 94.2% as of June 30, 2014. The apartments at
Clarendon Center were 98.8% leased as of June 30, 2015
compared to 100.0% as of June 30, 2014.
Funds from operations ("FFO") available to common shareholders
(after deducting preferred stock dividends) decreased 4.1% to
$20.6 million ($0.73 per diluted share) in the 2015 Quarter from
$21.5 million ($0.77 per diluted share) in the 2014
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
decrease in FFO available to common shareholders for the 2015
Quarter was primarily due to the impact in 2014 of a bankruptcy
settlement and collection in 2014 ($1.6
million) which was partially offset by higher property
operating income ($0.4 million).
FFO available to common shareholders decreased 1.3% to
$40.7 million ($1.43 per diluted share) in the 2015 Period from
$41.2 million ($1.48 per diluted share) in the 2014
Period. The decrease in FFO available to common shareholders
for the 2015 Period was primarily attributable to (a) the net
impact in 2014 of a lease termination ($1.2 million), (b) the impact in 2014 of a
bankruptcy settlement and collection ($1.6 million), partially offset by (c) lower
general and administrative expenses ($0.8 million), (d) lower
predevelopment expenses ($0.5 million), (e) lower acquisition
related costs ($0.4 million), and (f) lower preferred
stock dividends ($0.2 million).
Saul Centers is a self-managed,
self-administered equity REIT headquartered in Bethesda, Maryland, which currently operates
and manages a real estate portfolio of 59 properties which includes
(a) 50 community and neighborhood shopping centers and six
mixed-use properties with approximately 9.4 million square
feet of leasable area and (b) three land and development
properties. Approximately 85% of the Saul Centers' property
operating income is generated by properties in the metropolitan
Washington, DC/Baltimore area.
Saul Centers,
Inc.
|
Condensed
Consolidated Balance Sheets
|
(In
thousands)
|
|
|
June 30,
2015
|
|
December 31,
2014
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Real estate
investments
|
|
|
|
Land
|
$
|
421,499
|
|
|
$
|
420,622
|
|
Buildings and
equipment
|
1,116,381
|
|
|
1,109,276
|
|
Construction in
progress
|
53,485
|
|
|
30,261
|
|
|
1,591,365
|
|
|
1,560,159
|
|
Accumulated
depreciation
|
(414,694)
|
|
|
(396,617)
|
|
|
1,176,671
|
|
|
1,163,542
|
|
Cash and cash
equivalents
|
11,714
|
|
|
12,128
|
|
Accounts receivable
and accrued income, net
|
47,084
|
|
|
46,784
|
|
Deferred leasing
costs, net
|
27,049
|
|
|
26,928
|
|
Prepaid expenses,
net
|
1,663
|
|
|
4,093
|
|
Deferred debt costs,
net
|
9,455
|
|
|
9,874
|
|
Other
assets
|
4,407
|
|
|
3,638
|
|
Total
assets
|
$
|
1,278,043
|
|
|
$
|
1,266,987
|
|
|
|
|
|
Liabilities
|
|
|
|
Notes
payable
|
$
|
813,861
|
|
|
$
|
808,997
|
|
Revolving credit
facility payable
|
22,000
|
|
|
43,000
|
|
Construction loan
payable
|
17,531
|
|
|
5,391
|
|
Dividends and
distributions payable
|
15,290
|
|
|
14,352
|
|
Accounts payable,
accrued expenses and other liabilities
|
31,724
|
|
|
23,537
|
|
Deferred
income
|
31,816
|
|
|
32,453
|
|
Total
liabilities
|
932,222
|
|
|
927,730
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Preferred
stock
|
180,000
|
|
|
180,000
|
|
Common
stock
|
211
|
|
|
209
|
|
Additional paid-in
capital
|
297,009
|
|
|
287,995
|
|
Accumulated deficit
and other comprehensive loss
|
(179,373)
|
|
|
(175,668)
|
|
Total Saul Centers,
Inc. stockholders' equity
|
297,847
|
|
|
292,536
|
|
Noncontrolling
interests
|
47,974
|
|
|
46,721
|
|
Total stockholders'
equity
|
345,821
|
|
|
339,257
|
|
Total liabilities and
stockholders' equity
|
$
|
1,278,043
|
|
|
$
|
1,266,987
|
|
Saul Centers,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(In thousands, except
per share amounts)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue
|
(unaudited)
|
|
(unaudited)
|
Base rent
|
$
|
41,876
|
|
|
$
|
41,038
|
|
|
$
|
83,355
|
|
|
$
|
81,601
|
|
Expense
recoveries
|
7,797
|
|
|
7,825
|
|
|
16,529
|
|
|
16,614
|
|
Percentage
rent
|
558
|
|
|
453
|
|
|
996
|
|
|
905
|
|
Other
|
1,480
|
|
|
2,970
|
|
|
2,919
|
|
|
6,113
|
|
Total
revenue
|
51,711
|
|
|
52,286
|
|
|
103,799
|
|
|
105,233
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Property operating
expenses
|
6,196
|
|
|
6,138
|
|
|
13,812
|
|
|
13,723
|
|
Provision for credit
losses
|
414
|
|
|
107
|
|
|
660
|
|
|
310
|
|
Real estate
taxes
|
5,876
|
|
|
5,584
|
|
|
11,777
|
|
|
11,037
|
|
Interest expense and
amortization of deferred
debt costs
|
11,353
|
|
|
11,486
|
|
|
22,759
|
|
|
22,953
|
|
Depreciation and
amortization of deferred
leasing costs
|
10,811
|
|
|
10,309
|
|
|
21,251
|
|
|
20,489
|
|
General and
administrative
|
4,139
|
|
|
4,023
|
|
|
7,910
|
|
|
8,703
|
|
Acquisition related
costs
|
—
|
|
|
216
|
|
|
21
|
|
|
379
|
|
Predevelopment
expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
503
|
|
Total operating
expenses
|
38,789
|
|
|
37,863
|
|
|
78,190
|
|
|
78,097
|
|
Operating
income
|
12,922
|
|
|
14,423
|
|
|
25,609
|
|
|
27,136
|
|
Change in fair value
of derivatives
|
—
|
|
|
(5)
|
|
|
(6)
|
|
|
(7)
|
|
Gain on sale of
property
|
11
|
|
|
6,069
|
|
|
11
|
|
|
6,069
|
|
Net
Income
|
12,933
|
|
|
20,487
|
|
|
25,614
|
|
|
33,198
|
|
Income attributable
to noncontrolling interests
|
(2,537)
|
|
|
(4,433)
|
|
|
(5,011)
|
|
|
(6,857)
|
|
Net income
attributable to Saul Centers, Inc.
|
10,396
|
|
|
16,054
|
|
|
20,603
|
|
|
26,341
|
|
Preferred stock
dividends
|
(3,094)
|
|
|
(3,207)
|
|
|
(6,188)
|
|
|
(6,413)
|
|
Net income
attributable to common
stockholders
|
$
|
7,302
|
|
|
$
|
12,847
|
|
|
$
|
14,415
|
|
|
$
|
19,928
|
|
Per share net
income attributable to common
stockholders
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
0.35
|
|
|
$
|
0.62
|
|
|
$
|
0.68
|
|
|
$
|
0.96
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Stock:
|
|
|
|
|
|
|
|
Common
stock
|
21,098
|
|
|
20,717
|
|
|
21,058
|
|
|
20,670
|
|
Effect of dilutive
options
|
45
|
|
|
26
|
|
|
82
|
|
|
32
|
|
Diluted weighted
average common stock
|
21,143
|
|
|
20,743
|
|
|
21,140
|
|
|
20,702
|
|
|
|
|
|
|
|
|
|
Reconciliation of
net income to FFO attributable to common shareholders
(1)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
(In thousands,
except per share amounts)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Net income
|
$
|
12,933
|
|
|
$
|
20,487
|
|
|
$
|
25,614
|
|
|
$
|
33,198
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Gain on sale of
property
|
(11)
|
|
|
(6,069)
|
|
|
(11)
|
|
|
(6,069)
|
|
|
Add:
|
|
|
|
|
|
|
|
|
Real estate
depreciation and amortization
|
10,811
|
|
|
10,309
|
|
|
21,251
|
|
|
20,489
|
|
|
FFO
|
23,733
|
|
|
24,727
|
|
|
46,854
|
|
|
47,618
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Preferred stock
dividends
|
(3,094)
|
|
|
(3,207)
|
|
|
(6,188)
|
|
|
(6,413)
|
|
|
FFO available to
common shareholders
|
$
|
20,639
|
|
|
$
|
21,520
|
|
|
$
|
40,666
|
|
|
$
|
41,205
|
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
|
Diluted weighted
average common stock
|
21,143
|
|
|
20,743
|
|
|
21,140
|
|
|
20,702
|
|
|
Convertible limited
partnership units
|
7,237
|
|
|
7,164
|
|
|
7,225
|
|
|
7,114
|
|
|
Average shares and
units used to compute FFO per share
|
28,380
|
|
|
27,907
|
|
|
28,365
|
|
|
27,816
|
|
|
FFO per share
available to common shareholders
|
$
|
0.73
|
|
|
$
|
0.77
|
|
|
$
|
1.43
|
|
|
$
|
1.48
|
|
|
|
|
|
|
|
|
|
|
(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
June 30,
|
|
Six Months Ended June
30,
|
|
(In
thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Net income
|
$
|
12,933
|
|
|
$
|
20,487
|
|
|
$
|
25,614
|
|
|
$
|
33,198
|
|
|
Add: Interest expense
and amortization of deferred debt costs
|
11,353
|
|
|
11,486
|
|
|
22,759
|
|
|
22,953
|
|
|
Add: Depreciation and
amortization of deferred leasing costs
|
10,811
|
|
|
10,309
|
|
|
21,251
|
|
|
20,489
|
|
|
Add: General and
administrative
|
4,139
|
|
|
4,023
|
|
|
7,910
|
|
|
8,703
|
|
|
Add: Predevelopment
expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
503
|
|
|
Add: Acquisition
related costs
|
—
|
|
|
216
|
|
|
21
|
|
|
379
|
|
|
Add: Change in fair
value of derivatives
|
—
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
Less: Gains on sale
of property
|
(11)
|
|
|
(6,069)
|
|
|
(11)
|
|
|
(6,069)
|
|
|
Less: Interest
income
|
(13)
|
|
|
(21)
|
|
|
(26)
|
|
|
(35)
|
|
|
Property operating
income
|
39,212
|
|
|
40,436
|
|
|
77,524
|
|
|
80,128
|
|
|
Less: Acquisitions,
dispositions and development property
|
660
|
|
|
221
|
|
|
1,181
|
|
|
362
|
|
|
Total same
property operating income
|
$
|
38,552
|
|
|
$
|
40,215
|
|
|
$
|
76,343
|
|
|
$
|
79,766
|
|
|
|
|
|
|
|
|
|
|
|
Shopping
centers
|
$
|
29,686
|
|
|
$
|
30,833
|
|
|
$
|
58,993
|
|
|
$
|
61,021
|
|
|
Mixed-Use
properties
|
8,866
|
|
|
9,382
|
|
|
17,350
|
|
|
18,745
|
|
|
Total same
property operating income
|
$
|
38,552
|
|
|
$
|
40,215
|
|
|
$
|
76,343
|
|
|
$
|
79,766
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/saul-centers-inc-reports-second-quarter-2015-earnings-300121603.html
SOURCE Saul Centers, Inc.