BETHESDA, Md., March 7,
2017 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity
real estate investment trust ("REIT"), announced its operating
results for the quarter ended December 31, 2016 ("2016
Quarter"). Total revenue for the 2016 Quarter increased to
$54.2 million from $52.9 million for the quarter ended
December 31, 2015 ("2015 Quarter"). Operating income,
which is net income before the impact of the change in fair value
of derivatives, loss on early extinguishment of debt, gains on
sales of property and gains on casualty settlements, decreased to
$13.4 million for the 2016 Quarter
from $14.1 million for the 2015
Quarter.
The Park Van Ness mixed-use development opened in May 2016 and, as of March 1, 2017, 217
apartment leases have been executed (80.1%). Concurrent with
the opening in May, interest, real estate taxes and all other costs
associated with the property, including depreciation, began to be
charged to expense, while revenue continues to grow as occupancy
increases. As a result, net income for the 2016 Quarter was
adversely impacted by $0.9
million.
Net income attributable to common stockholders was $8.4 million ($0.38
per diluted share) for the 2016 Quarter compared to $8.2 million ($0.38 per diluted share) for the 2015
Quarter. The increase in net income attributable to common
stockholders was primarily due to (a) gain on sale of Crosstown
Business Center ($1.0 million)
partially offset by (b) the net impact of Park Van Ness
($0.9 million).
Same property revenue increased 0.3% and same property operating
income decreased 1.3% for the 2016 Quarter compared to the 2015
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 1.0% and Mixed-Use
same property operating income decreased 2.4%. The decrease
in Shopping Center same property operating income was primarily the
result of lower termination fee income. The decrease in
Mixed-Use same property operating income was the result of higher
provision for credit losses in 2016, as a result of collection in
2015 of previously reserved rents.
For the year ended December 31, 2016 ("2016 Period"), total
revenue increased to $217.1 million
from $209.1 million for the year
ended December 31, 2015 ("2015 Period"). Operating
income was $55.7 million for the 2016
Period compared to $52.9 million
for the 2015 Period. Operating income for the 2016 Period
increased primarily due to (a) $5.4
million of increased property operating income, partially
offset by (b) $1.1 million of higher
depreciation expense, (c) $1.1
million of higher general and administrative expenses, and
(d) $0.5 million of higher
interest expense and amortization of deferred debt costs.
Net income attributable to common stockholders was $32.9 million ($1.52 per diluted share) for the 2016 Period
compared to $30.1 million
($1.42 per diluted share) for the
2015 Period. Net income attributable to common stockholders
for the 2016 Period increased primarily due to (a) $5.4 million of increased property operating
income partially offset by (b) $1.1 million of higher
depreciation expense, (c) $1.1
million of higher general and administrative expenses, and
(d) $0.5 million of higher interest expense and
amortization of deferred debt costs.
Same property revenue increased 3.0% and same property operating
income increased 3.3% for the 2016 Period compared to the 2015
Period. Shopping Center same property operating income
increased 3.0% and Mixed-Use same property operating income
increased 4.6%. Shopping Center same property operating
income increased $3.6 million
primarily due to (a) higher base rent ($2.6
million), exclusive of the impact of a lease termination at
11503 Rockville Pike, (b) the net impact of a lease termination at
11503 Rockville Pike ($1.9 million),
and (c) higher operating expense recoveries, net of expenses
($0.8 million), partially offset
by (d) lower termination fee income ($0.9 million) and (e) higher provision for
credit losses ($0.5 million). Mixed-Use same property
operating income increased $1.6
million primarily due to (a) increased base rent
($0.8 million) and (b) increased
termination fee income ($0.6
million).
As of December 31, 2016, 95.4% of the commercial portfolio
was leased (all properties except the apartments at Clarendon
Center and Park Van Ness), compared to 94.8% at December 31,
2015. On a same property basis, 95.4% of the portfolio was
leased at December 31, 2016, compared to 95.0% at
December 31, 2015. As of December 31, 2016, the
apartments at Clarendon Center were 97.1% leased compared to 99.2%
leased at December 31, 2015, and the apartments at Park Van
Ness were 72.7% leased.
Funds From Operations ("FFO") available to common stockholders
and noncontrolling interests (after deducting preferred stock
dividends and preferred stock redemption charges) decreased to
$21.2 million ($0.73 per diluted share) in the 2016 Quarter from
$21.9 million ($0.76 per diluted share) in the 2015
Quarter. Concurrent with the opening of Park Van Ness in May,
interest, real estate taxes and all other costs associated with the
property began to be charged to expense while revenue continues to
grow as occupancy increases. 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 stockholders
and noncontrolling interests for the 2016 Quarter was primarily due
to (a) higher general and administrative expenses ($0.4 million) and (b) the adverse impact of the
initial operations of Park Van Ness ($0.2
million).
FFO available to common stockholders and noncontrolling
interests (after deducting preferred stock dividends and preferred
stock redemptions) increased 4.7% to $87.7 million ($3.03 per diluted share) in the 2016 Period from
$83.8 million ($2.95 per diluted share) in the 2015
Period. FFO available to common stockholders and
noncontrolling interests for the 2016 Period increased primarily
due to (a) higher overall property operating income ($4.8 million), exclusive of the impact of Park
Van Ness, (b) lower interest expense and amortization of debt
expense ($1.3 million), exclusive of
the impact of Park Van Ness, partially offset by (c) the adverse
impact of the initial operations of Park Van Ness ($1.1 million)
and (d) higher general and administrative expenses
($1.1 million).
In January 2017, the Company
purchased for $76.3 million,
including acquisition costs, Burtonsville Town Square, a 121,000
square foot shopping center located in Burtonsville, Maryland. Burtonsville
Town Square is 100% leased and anchored by Giant Food and CVS
Pharmacy. It has expansion development potential of up to
18,000 square feet of additional retail space. The purchase
was funded with a new $40.0 million
mortgage loan and through the Company's credit line facility.
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 9.5 million square feet of leasable
area and (b) three land and development properties.
Approximately 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,
2016
|
|
December 31,
2015
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Real estate
investments
|
|
|
|
Land
|
$
|
422,546
|
|
|
$
|
424,837
|
|
Buildings and
equipment
|
1,214,697
|
|
|
1,114,357
|
|
Construction in
progress
|
63,570
|
|
|
83,516
|
|
|
1,700,813
|
|
|
1,622,710
|
|
Accumulated
depreciation
|
(458,279)
|
|
|
(425,370)
|
|
|
1,242,534
|
|
|
1,197,340
|
|
Cash and cash
equivalents
|
8,322
|
|
|
10,003
|
|
Accounts receivable
and accrued income, net
|
53,033
|
|
|
51,076
|
|
Deferred leasing
costs, net
|
25,983
|
|
|
26,919
|
|
Prepaid expenses,
net
|
5,057
|
|
|
4,663
|
|
Other
assets
|
8,096
|
|
|
5,407
|
|
Total
assets
|
$
|
1,343,025
|
|
|
$
|
1,295,408
|
|
|
|
|
|
Liabilities
|
|
|
|
Mortgage notes
payable
|
$
|
783,400
|
|
|
$
|
796,169
|
|
Revolving credit
facility payable
|
48,217
|
|
|
26,695
|
|
Construction loan
payable
|
68,672
|
|
|
43,641
|
|
Dividends and
distributions payable
|
17,953
|
|
|
15,380
|
|
Accounts payable,
accrued expenses and other liabilities
|
20,838
|
|
|
27,687
|
|
Deferred
income
|
30,696
|
|
|
32,109
|
|
Total
liabilities
|
969,776
|
|
|
941,681
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
Preferred
stock
|
180,000
|
|
|
180,000
|
|
Common
stock
|
217
|
|
|
213
|
|
Additional paid-in
capital
|
328,171
|
|
|
305,008
|
|
Accumulated deficit
and other comprehensive loss
|
(189,883)
|
|
|
(181,893)
|
|
Total Saul Centers,
Inc. stockholders' equity
|
318,505
|
|
|
303,328
|
|
Noncontrolling
interests
|
54,744
|
|
|
50,399
|
|
Total stockholders'
equity
|
373,249
|
|
|
353,727
|
|
Total liabilities and
stockholders' equity
|
$
|
1,343,025
|
|
|
$
|
1,295,408
|
|
Saul Centers,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(In thousands, except
per share amounts)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(unaudited)
|
|
(unaudited)
|
Revenue
|
|
|
|
|
|
Base rent
|
$
|
44,043
|
|
|
$
|
42,517
|
|
|
$
|
172,381
|
|
|
$
|
168,303
|
|
Expense
recoveries
|
8,258
|
|
|
8,201
|
|
|
34,269
|
|
|
32,911
|
|
Percentage
rent
|
363
|
|
|
455
|
|
|
1,379
|
|
|
1,608
|
|
Other
|
1,537
|
|
|
1,729
|
|
|
9,041
|
|
|
6,255
|
|
Total
revenue
|
54,201
|
|
|
52,902
|
|
|
217,070
|
|
|
209,077
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Property operating
expenses
|
6,787
|
|
|
6,445
|
|
|
27,527
|
|
|
26,565
|
|
Provision for credit
losses
|
287
|
|
|
(366)
|
|
|
1,494
|
|
|
915
|
|
Real estate
taxes
|
6,414
|
|
|
5,953
|
|
|
24,680
|
|
|
23,663
|
|
Interest expense and
amortization of deferred debt costs
|
11,415
|
|
|
11,177
|
|
|
45,683
|
|
|
45,165
|
|
Depreciation and
amortization of deferred leasing costs
|
10,939
|
|
|
10,888
|
|
|
44,417
|
|
|
43,270
|
|
General and
administrative
|
4,996
|
|
|
4,641
|
|
|
17,496
|
|
|
16,353
|
|
Acquisition related
costs
|
3
|
|
|
6
|
|
|
60
|
|
|
84
|
|
Predevelopment
expenses
|
—
|
|
|
75
|
|
|
—
|
|
|
132
|
|
Total operating
expenses
|
40,841
|
|
|
38,819
|
|
|
161,357
|
|
|
156,147
|
|
Operating
income
|
13,360
|
|
|
14,083
|
|
|
55,713
|
|
|
52,930
|
|
Change in fair value
of derivatives
|
3
|
|
|
2
|
|
|
(6)
|
|
|
(10)
|
|
Gain on sale of
property
|
1,013
|
|
|
—
|
|
|
1,013
|
|
|
11
|
|
Net
Income
|
14,376
|
|
|
14,085
|
|
|
56,720
|
|
|
52,931
|
|
Income attributable
to noncontrolling interests
|
(2,911)
|
|
|
(2,835)
|
|
|
(11,441)
|
|
|
(10,463)
|
|
Net income
attributable to Saul Centers, Inc.
|
11,465
|
|
|
11,250
|
|
|
45,279
|
|
|
42,468
|
|
Preferred stock
redemption
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Preferred stock
dividends
|
(3,094)
|
|
|
(3,094)
|
|
|
(12,375)
|
|
|
(12,375)
|
|
Net income
attributable to common stockholders
|
$
|
8,371
|
|
|
$
|
8,156
|
|
|
$
|
32,904
|
|
|
$
|
30,093
|
|
Per share net
income attributable to common stockholders
|
|
|
|
|
|
|
|
Diluted
|
$
|
0.38
|
|
|
$
|
0.38
|
|
|
$
|
1.52
|
|
|
$
|
1.42
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Stock:
|
|
|
|
|
|
|
|
Common
stock
|
21,674
|
|
|
21,234
|
|
|
21,505
|
|
|
21,127
|
|
Effect of dilutive
options
|
154
|
|
|
80
|
|
|
110
|
|
|
69
|
|
Diluted weighted
average common stock
|
21,828
|
|
|
21,314
|
|
|
21,615
|
|
|
21,196
|
|
Reconciliation of
net income to FFO attributable to common stockholders and
noncontrolling interests (1)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended December
31,
|
|
(In thousands,
except per share amounts)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income
|
$
|
14,376
|
|
|
$
|
14,085
|
|
|
$
|
56,720
|
|
|
$
|
52,931
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Gain on sale of
property
|
(1,013)
|
|
|
—
|
|
|
(1,013)
|
|
|
(11)
|
|
|
Add:
|
|
|
|
|
|
|
|
|
Real estate
depreciation and amortization
|
10,939
|
|
|
10,888
|
|
|
44,417
|
|
|
43,270
|
|
|
FFO
|
24,302
|
|
|
24,973
|
|
|
100,124
|
|
|
96,190
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Preferred stock
dividends
|
(3,094)
|
|
|
(3,094)
|
|
|
(12,375)
|
|
|
(12,375)
|
|
|
FFO available to
common stockholders and noncontrolling interests
|
$
|
21,208
|
|
|
$
|
21,879
|
|
|
$
|
87,749
|
|
|
$
|
83,815
|
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
|
Diluted weighted
average common stock
|
21,828
|
|
|
21,314
|
|
|
21,615
|
|
|
21,196
|
|
|
Convertible limited
partnership units
|
7,420
|
|
|
7,296
|
|
|
7,375
|
|
|
7,253
|
|
|
Average shares
and units used to compute FFO per share
|
29,248
|
|
|
28,610
|
|
|
28,990
|
|
|
28,449
|
|
|
FFO per share
available to common stockholders and noncontrolling
interests
|
$
|
0.73
|
|
|
$
|
0.76
|
|
|
$
|
3.03
|
|
|
$
|
2.95
|
|
|
|
|
|
|
|
|
|
|
(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)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income
|
$
|
14,376
|
|
|
$
|
14,085
|
|
|
$
|
56,720
|
|
|
$
|
52,931
|
|
|
Add: Interest expense
and amortization of deferred debt costs
|
11,415
|
|
|
11,177
|
|
|
45,683
|
|
|
45,165
|
|
|
Add: Depreciation and
amortization of deferred leasing costs
|
10,939
|
|
|
10,888
|
|
|
44,417
|
|
|
43,270
|
|
|
Add: General and
administrative
|
4,996
|
|
|
4,641
|
|
|
17,496
|
|
|
16,353
|
|
|
Add: Predevelopment
expenses
|
—
|
|
|
75
|
|
|
—
|
|
|
132
|
|
|
Add: Acquisition
related costs
|
3
|
|
|
6
|
|
|
60
|
|
|
84
|
|
|
Add: Change in fair
value of derivatives
|
(3)
|
|
|
(2)
|
|
|
6
|
|
|
10
|
|
|
Less: Gains on
property dispositions
|
(1,013)
|
|
|
—
|
|
|
(1,013)
|
|
|
(11)
|
|
|
Less: Interest
income
|
(15)
|
|
|
(13)
|
|
|
(51)
|
|
|
(51)
|
|
|
Property operating
income
|
40,698
|
|
|
40,857
|
|
|
163,318
|
|
|
157,883
|
|
|
Less: Acquisitions,
dispositions & development property
|
(728)
|
|
|
(341)
|
|
|
(1,314)
|
|
|
(1,115)
|
|
|
Total same
property operating income
|
$
|
39,970
|
|
|
$
|
40,516
|
|
|
$
|
162,004
|
|
|
$
|
156,768
|
|
|
|
|
|
|
|
|
|
|
|
Shopping
centers
|
$
|
30,908
|
|
|
$
|
31,234
|
|
|
$
|
124,917
|
|
|
$
|
121,321
|
|
|
Mixed-Use
properties
|
9,062
|
|
|
9,282
|
|
|
37,087
|
|
|
35,447
|
|
|
Total same
property operating income
|
$
|
39,970
|
|
|
$
|
40,516
|
|
|
$
|
162,004
|
|
|
$
|
156,768
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/saul-centers-inc-reports-fourth-quarter-2016-earnings-300419779.html
SOURCE Saul Centers, Inc.