BETHESDA, Md., Feb. 27, 2018 /PRNewswire/ -- Saul Centers,
Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"),
announced its operating results for the quarter ended
December 31, 2017 ("2017 Quarter"). Total revenue for the 2017
Quarter increased to $56.7 million
from $54.2 million for the quarter
ended December 31, 2016 ("2016 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, increased
to $14.4 million for the 2017 Quarter
from $13.4 million for the 2016
Quarter.
Net income available to common stockholders was $8.5 million ($0.38
per diluted share) for the 2017 Quarter compared to $8.4 million ($0.38 per diluted share) for the 2016
Quarter. The increase in net income available to common
stockholders was primarily due to (a) higher property operating
income ($1.6 million), partially
offset by (b) lower gain on sale of properties ($1.0 million) and (c) higher depreciation and
amortization ($0.4 million).
Same property revenue increased 3.5% and same property operating
income increased 2.2% for the 2017 Quarter compared to the 2016
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. The
comparison excludes the results of properties not in operation for
the entirety of the comparable reporting periods. Shopping
Center same property operating income increased 1.6% and Mixed-Use
same property operating income increased 4.1%. The increase
in Shopping Center same property operating income was primarily the
result of higher base rent. The increase in Mixed-Use same
property operating income was the result of (a) higher base rent
($0.8 million), partially offset by
(b) lower other income ($0.2 million)
and (c) higher provision for credit losses ($0.2 million).
For the year ended December 31, 2017 ("2017 Period"), total
revenue increased to $227.3 million
from $217.1 million for the year
ended December 31, 2016 ("2016 Period"). Operating
income was $60.6 million for the 2017
Period compared to $55.7 million
for the 2016 Period. Operating income for the 2017 Period
increased primarily due to (a) $8.3
million of increased property operating income, partially
offset by (b) $1.5 million of
higher interest expense and amortization of deferred debt costs,
(c) $1.3 million of higher
depreciation expense and (d) $0.7
million of higher general and administrative expenses.
Net income available to common stockholders was $35.9 million ($1.63 per diluted share) for the 2017 Period
compared to $32.9 million
($1.52 per diluted share) for the
2016 Period. Net income available to common stockholders for
the 2017 Period increased primarily due to (a) $8.3 million of increased property operating
income, partially offset by (b) $1.5 million of
higher interest expense and amortization of deferred debt costs,
(c) $1.3 million of higher
depreciation expense, (d) lower gain on sale of property
($1.0 million), (e) higher
noncontrolling interest ($1.0
million) and (f) $0.7 million
of higher general and administrative expenses.
Same property revenue increased 0.9% and same property operating
income increased 0.7% for the 2017 Period compared to the 2016
Period. Shopping Center same property operating income
increased 2.1% and Mixed-Use same property operating income
decreased 4.2%. Shopping Center same property operating
income increased $2.6 million
primarily due to (a) higher base rent ($1.5
million), exclusive of the net impact of a 2017 lease
termination at Broadlands and a 2016 lease termination at 11503
Rockville Pike, (b) the net impact of a 2017 lease termination at
Broadlands and a 2016 lease termination at 11503 Rockville Pike
($0.1 million), (c) higher operating
expense recoveries, net of expenses ($0.4 million), (d) lower provision for
credit losses ($0.3 million) and
(e) higher termination fees throughout the portfolio ($0.3 million). Mixed-Use same property
operating income decreased $1.5 million primarily due to (a) lower
termination fee income ($0.9 million) and (b) lower parking
revenue as a result of a garage refurbishment ($0.3 million).
As of December 31, 2017, 94.3% of the commercial portfolio
was leased (all properties except the apartments at Clarendon
Center and Park Van Ness), compared to 95.4% at December 31,
2016. On a same property basis, 94.2% of the portfolio was
leased at December 31, 2017, compared to 95.5% at
December 31, 2016. As of December 31, 2017, the
apartments at Clarendon Center were 96.7% leased compared to 97.1%
leased at December 31, 2016, and the apartments at Park Van
Ness were 95.9% leased compared to 72.7% leased at
December 31, 2016.
Funds From Operations ("FFO") available to common stockholders
and noncontrolling interests (after deducting preferred stock
dividends and preferred stock redemption charges) increased to
$22.7 million ($0.76 per diluted share) in the 2017 Quarter from
$21.2 million ($0.73 per diluted share) in the 2016
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 stockholders and noncontrolling
interests for the 2017 Quarter was primarily due to higher property
operating income ($1.6 million).
FFO available to common stockholders and noncontrolling
interests (after deducting preferred stock dividends and preferred
stock redemptions) increased 7.1% to $94.0 million ($3.18 per diluted share) in the 2017 Period from
$87.7 million ($3.03 per diluted share) in the 2016
Period. FFO available to common stockholders and
noncontrolling interests for the 2017 Period increased primarily
due to (a) higher overall property operating income ($8.3 million), partially offset by
(b) higher interest expense and amortization of debt expense
($1.5 million) and (c) higher general
and administrative expenses ($0.7 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 comprised of 58 properties which includes (a)
55 community and neighborhood shopping centers and mixed-use
properties with approximately 9.2 million square feet of leasable
area and (b) three 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,
2017
|
|
December 31,
2016
|
|
|
|
|
Assets
|
|
|
|
Real estate
investments
|
|
|
|
Land
|
$
|
450,256
|
|
|
$
|
422,546
|
|
Buildings and
equipment
|
1,261,830
|
|
|
1,214,697
|
|
Construction in
progress
|
91,114
|
|
|
63,570
|
|
|
1,803,200
|
|
|
1,700,813
|
|
Accumulated
depreciation
|
(488,166)
|
|
|
(458,279)
|
|
|
1,315,034
|
|
|
1,242,534
|
|
Cash and cash
equivalents
|
10,908
|
|
|
8,322
|
|
Accounts receivable
and accrued income, net
|
54,057
|
|
|
52,774
|
|
Deferred leasing
costs, net
|
27,255
|
|
|
25,983
|
|
Prepaid expenses,
net
|
5,248
|
|
|
5,057
|
|
Other
assets
|
9,950
|
|
|
8,355
|
|
Total
assets
|
$
|
1,422,452
|
|
|
$
|
1,343,025
|
|
|
|
|
|
Liabilities
|
|
|
|
Mortgage notes
payable
|
$
|
897,888
|
|
|
$
|
783,400
|
|
Revolving credit
facility payable
|
60,734
|
|
|
48,217
|
|
Construction loan
payable
|
—
|
|
|
68,672
|
|
Dividends and
distributions payable
|
18,520
|
|
|
17,953
|
|
Accounts payable,
accrued expenses and other liabilities
|
23,123
|
|
|
20,838
|
|
Deferred
income
|
29,084
|
|
|
30,696
|
|
Total
liabilities
|
1,029,349
|
|
|
969,776
|
|
|
|
|
|
Equity
|
|
|
|
Preferred
stock
|
180,000
|
|
|
180,000
|
|
Common
stock
|
221
|
|
|
217
|
|
Additional paid-in
capital
|
352,590
|
|
|
328,171
|
|
Accumulated deficit
and other comprehensive loss
|
(198,406)
|
|
|
(189,883)
|
|
Total Saul Centers,
Inc. equity
|
334,405
|
|
|
318,505
|
|
Noncontrolling
interests
|
58,698
|
|
|
54,744
|
|
Total
equity
|
393,103
|
|
|
373,249
|
|
Total liabilities and
equity
|
$
|
1,422,452
|
|
|
$
|
1,343,025
|
|
Saul Centers,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(In thousands, except
per share amounts)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(unaudited)
|
|
|
Revenue
|
|
|
|
|
|
Base rent
|
$
|
45,705
|
|
|
$
|
44,043
|
|
|
$
|
181,141
|
|
|
$
|
172,381
|
|
Expense
recoveries
|
8,969
|
|
|
8,258
|
|
|
35,347
|
|
|
34,269
|
|
Percentage
rent
|
490
|
|
|
363
|
|
|
1,458
|
|
|
1,379
|
|
Other
|
1,511
|
|
|
1,537
|
|
|
9,339
|
|
|
9,041
|
|
Total
revenue
|
56,675
|
|
|
54,201
|
|
|
227,285
|
|
|
217,070
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Property operating
expenses
|
7,146
|
|
|
6,787
|
|
|
27,689
|
|
|
27,527
|
|
Provision for credit
losses
|
304
|
|
|
287
|
|
|
906
|
|
|
1,494
|
|
Real estate
taxes
|
6,873
|
|
|
6,414
|
|
|
26,997
|
|
|
24,680
|
|
Interest expense and
amortization of deferred
debt costs
|
11,640
|
|
|
11,415
|
|
|
47,225
|
|
|
45,683
|
|
Depreciation and
amortization of deferred leasing costs
|
11,298
|
|
|
10,939
|
|
|
45,694
|
|
|
44,417
|
|
General and
administrative
|
4,998
|
|
|
4,996
|
|
|
18,176
|
|
|
17,496
|
|
Acquisition related
costs
|
—
|
|
|
3
|
|
|
—
|
|
|
60
|
|
Total operating
expenses
|
42,259
|
|
|
40,841
|
|
|
166,687
|
|
|
161,357
|
|
Operating
income
|
14,416
|
|
|
13,360
|
|
|
60,598
|
|
|
55,713
|
|
Change in fair value
of derivatives
|
72
|
|
|
3
|
|
|
70
|
|
|
(6)
|
|
Gain on sale of
property
|
—
|
|
|
1,013
|
|
|
—
|
|
|
1,013
|
|
Net
Income
|
14,488
|
|
|
14,376
|
|
|
60,668
|
|
|
56,720
|
|
Income attributable
to noncontrolling interests
|
(2,928)
|
|
|
(2,911)
|
|
|
(12,411)
|
|
|
(11,441)
|
|
Net income
attributable to Saul Centers, Inc.
|
11,560
|
|
|
11,465
|
|
|
48,257
|
|
|
45,279
|
|
Preferred stock
dividends
|
(3,094)
|
|
|
(3,094)
|
|
|
(12,375)
|
|
|
(12,375)
|
|
Net income
available to common stockholders
|
$
|
8,466
|
|
|
$
|
8,371
|
|
|
$
|
35,882
|
|
|
$
|
32,904
|
|
Per share net
income available to common stockholders
|
|
|
|
|
|
|
|
Diluted
|
$
|
0.38
|
|
|
$
|
0.38
|
|
|
$
|
1.63
|
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Stock:
|
|
|
|
|
|
|
|
Common
stock
|
22,072
|
|
|
21,674
|
|
|
21,901
|
|
|
21,505
|
|
Effect of dilutive
options
|
114
|
|
|
154
|
|
|
107
|
|
|
110
|
|
Diluted weighted
average common stock
|
22,186
|
|
|
21,828
|
|
|
22,008
|
|
|
21,615
|
|
Reconciliation of
net income to FFO available to common stockholders and
noncontrolling interests (1)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended December
31,
|
|
(In thousands,
except per share amounts)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net income
|
$
|
14,488
|
|
|
$
|
14,376
|
|
|
$
|
60,668
|
|
|
$
|
56,720
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Gain on sale of
property
|
—
|
|
|
(1,013)
|
|
|
—
|
|
|
(1,013)
|
|
|
Add:
|
|
|
|
|
|
|
|
|
Real estate
depreciation and amortization
|
11,298
|
|
|
10,939
|
|
|
45,694
|
|
|
44,417
|
|
|
FFO
|
25,786
|
|
|
24,302
|
|
|
106,362
|
|
|
100,124
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Preferred stock
dividends
|
(3,094)
|
|
|
(3,094)
|
|
|
(12,375)
|
|
|
(12,375)
|
|
|
FFO available to
common stockholders and noncontrolling
interests
|
$
|
22,692
|
|
|
$
|
21,208
|
|
|
$
|
93,987
|
|
|
$
|
87,749
|
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
|
Diluted weighted
average common stock
|
22,186
|
|
|
21,828
|
|
|
22,008
|
|
|
21,615
|
|
|
Convertible limited
partnership units
|
7,536
|
|
|
7,420
|
|
|
7,503
|
|
|
7,375
|
|
|
Average shares and
units used to compute FFO per share
|
29,722
|
|
|
29,248
|
|
|
29,511
|
|
|
28,990
|
|
|
FFO per share
available to common stockholders and noncontrolling
interests
|
$
|
0.76
|
|
|
$
|
0.73
|
|
|
$
|
3.18
|
|
|
$
|
3.03
|
|
|
(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
revenue to same property revenue
|
(in
thousands)
|
|
Three Months
Ended
December 31,
|
|
Year Ended December
31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Total
revenue
|
|
$
|
56,675
|
|
|
$
|
54,201
|
|
|
$
|
227,285
|
|
|
$
|
217,070
|
|
Less: Interest
income
|
|
(49)
|
|
|
(15)
|
|
|
(80)
|
|
|
(52)
|
|
Less: Acquisitions,
dispositions and development
properties
|
|
(1,175)
|
|
|
(605)
|
|
|
(13,746)
|
|
|
(5,364)
|
|
Total same property
revenue
|
|
$
|
55,451
|
|
|
$
|
53,581
|
|
|
$
|
213,459
|
|
|
$
|
211,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shopping
Centers
|
|
$
|
39,824
|
|
|
$
|
38,883
|
|
|
$
|
160,393
|
|
|
$
|
158,044
|
|
Mixed-Use
properties
|
|
15,627
|
|
|
14,698
|
|
|
53,066
|
|
|
53,610
|
|
Total same property
revenue
|
|
$
|
55,451
|
|
|
$
|
53,581
|
|
|
$
|
213,459
|
|
|
$
|
211,654
|
|
|
Reconciliation of
net income to same property operating income
|
|
Three Months
Ended
December 31,
|
|
Year Ended December
31,
|
|
(In
thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net income
|
$
|
14,488
|
|
|
$
|
14,376
|
|
|
$
|
60,668
|
|
|
$
|
56,720
|
|
|
Add: Interest expense
and amortization of deferred debt costs
|
11,640
|
|
|
11,415
|
|
|
47,225
|
|
|
45,683
|
|
|
Add: Depreciation and
amortization of deferred leasing costs
|
11,298
|
|
|
10,939
|
|
|
45,694
|
|
|
44,417
|
|
|
Add: General and
administrative
|
4,998
|
|
|
4,996
|
|
|
18,176
|
|
|
17,496
|
|
|
Add: Acquisition
related costs
|
—
|
|
|
3
|
|
|
—
|
|
|
60
|
|
|
Add: Change in fair
value of derivatives
|
(72)
|
|
|
(3)
|
|
|
(70)
|
|
|
6
|
|
|
Less: Gains on
property dispositions
|
—
|
|
|
(1,013)
|
|
|
—
|
|
|
(1,013)
|
|
|
Less: Interest
income
|
(49)
|
|
|
(15)
|
|
|
(80)
|
|
|
(52)
|
|
|
Property operating
income
|
42,303
|
|
|
40,698
|
|
|
171,613
|
|
|
163,317
|
|
|
Less: Acquisitions,
dispositions & development property
|
(948)
|
|
|
(238)
|
|
|
(8,978)
|
|
|
(1,760)
|
|
|
Total same
property operating income
|
$
|
41,355
|
|
|
$
|
40,460
|
|
|
$
|
162,635
|
|
|
$
|
161,557
|
|
|
|
|
|
|
|
|
|
|
|
Shopping
centers
|
$
|
31,230
|
|
|
$
|
30,737
|
|
|
$
|
127,096
|
|
|
$
|
124,470
|
|
|
Mixed-Use
properties
|
10,125
|
|
|
9,723
|
|
|
35,539
|
|
|
37,087
|
|
|
Total same
property operating income
|
$
|
41,355
|
|
|
$
|
40,460
|
|
|
$
|
162,635
|
|
|
$
|
161,557
|
|
View original
content:http://www.prnewswire.com/news-releases/saul-centers-inc-reports-fourth-quarter-2017-earnings-300605317.html
SOURCE Saul Centers, Inc.