BETHESDA, Md., May 3, 2018
/PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity real
estate investment trust ("REIT"), announced its operating results
for the quarter ended March 31, 2018 ("2018 Quarter").
Total revenue for the 2018 Quarter decreased to $56.5 million from $58.5 million for the quarter ended
March 31, 2017 ("2017 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
$14.9 million for the 2018
Quarter from $17.4 million for the
2017 Quarter.
Net income available to common stockholders decreased to
$6.9 million ($0.31 per diluted share) for the 2018 Quarter
compared to $10.6 million
($0.49 per diluted share) for the
2017 Quarter.
Same property revenue decreased $1.9
million (3.3%) and same property operating income decreased
$2.8 million (6.5%) for the 2018
Quarter compared to the 2017 Quarter. We define same property
revenue as total revenue minus the sum of interest income and
revenue of properties not in operation for the entirety of the
comparable reporting periods. We define same property
operating income as net income plus the sum of interest expense and
amortization of deferred debt costs, depreciation and amortization,
general and administrative expense, loss on the early
extinguishment of debt (if any), predevelopment expense and
acquisition related costs, minus the sum of interest income, the
change in the fair value of derivatives, gains on property
dispositions (if any) and the results of properties which were not
in operation for the entirety of the comparable periods.
Shopping Center same property operating income for the 2018 Quarter
totaled $31.0 million, a $2.8 million decrease from the 2017
Quarter. The decrease in Shopping Center same property
operating income was primarily due to (a) the impact of the
terminations of Safeway at Broadlands and K-Mart at Kentlands
($3.3 million) and (b) higher
property operating expenses net of recoveries ($0.2 million), partially offset by (c) higher
base rent ($0.6 million).
Mixed-Use same property operating income totaled $10.1 million, unchanged from the prior year.
As of March 31, 2018, 94.1% of the commercial portfolio was
leased (not including the residential portfolio), compared to 95.6%
at March 31, 2017. On a same property basis, 94.0% of
the commercial portfolio was leased as of March 31, 2018,
compared to 95.6% at March 31, 2017. As of
March 31, 2018, the residential portfolio was 95.9% leased
compared to 91.8% at March 31, 2017.
Funds from operations ("FFO") available to common stockholders
and noncontrolling interests (after deducting preferred stock
dividends) was $20.6 million
($0.69 per diluted share) in the 2018
Quarter compared to $25.6 million
($0.87 per diluted share) in the
2017 Quarter. FFO for the 2018 Quarter decreased primarily
due to (a) extinguishment of issuance costs upon redemption of
preferred shares ($2.3
million), (b) the impact of the terminations of
Safeway at Broadlands and K-Mart at Kentlands ($3.3 million), and (c) increased preferred stock
dividends as a result of the 30-day overlap between sale of $75.0
million of Series D Preferred Stock and redemption of $75.0 million
of Series C Preferred Stock ($0.3 million), partially offset by (d)
higher base rent ($0.9 million). 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.
Saul Centers, Inc. is a
self-managed, self-administered equity REIT headquartered in
Bethesda, Maryland, which
currently operates and manages a real estate portfolio of 58
properties which includes (a) 49 community and neighborhood
shopping centers and six mixed-use properties with approximately
9.2 million square feet of leasable area and (b) three land
and development properties. Over 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)
|
|
|
March 31,
2018
|
|
December 31,
2017
|
|
(Unaudited)
|
Assets
|
|
|
|
Real estate
investments
|
|
|
|
Land
|
$
|
450,256
|
|
|
$
|
450,256
|
|
Buildings and
equipment
|
1,262,320
|
|
|
1,261,830
|
|
Construction
in progress
|
108,735
|
|
|
91,114
|
|
|
1,821,311
|
|
|
1,803,200
|
|
Accumulated
depreciation
|
(498,002)
|
|
|
(488,166)
|
|
|
1,323,309
|
|
|
1,315,034
|
|
Cash and cash
equivalents
|
8,979
|
|
|
10,908
|
|
Accounts receivable
and accrued income, net
|
50,821
|
|
|
54,057
|
|
Deferred leasing
costs, net
|
26,838
|
|
|
27,255
|
|
Prepaid expenses,
net
|
4,085
|
|
|
5,248
|
|
Other
assets
|
15,115
|
|
|
9,950
|
|
Total
assets
|
$
|
1,429,147
|
|
|
$
|
1,422,452
|
|
|
|
|
|
Liabilities
|
|
|
|
Notes
payable
|
$
|
876,544
|
|
|
$
|
897,888
|
|
Revolving credit
facility payable
|
12,930
|
|
|
60,734
|
|
Term loan facility
payable
|
74,518
|
|
|
—
|
|
Dividends and
distributions payable
|
18,158
|
|
|
18,520
|
|
Accounts payable,
accrued expenses and other liabilities
|
26,035
|
|
|
23,123
|
|
Deferred
income
|
27,605
|
|
|
29,084
|
|
Total
liabilities
|
1,035,790
|
|
|
1,029,349
|
|
|
|
|
|
Equity
|
|
|
|
Preferred
stock
|
180,000
|
|
|
180,000
|
|
Common
stock
|
222
|
|
|
221
|
|
Additional paid-in
capital
|
356,715
|
|
|
352,590
|
|
Accumulated deficit
and other comprehensive loss
|
(202,812)
|
|
|
(198,406)
|
|
Total Saul Centers,
Inc. stockholders' equity
|
334,125
|
|
|
334,405
|
|
Noncontrolling
interests
|
59,232
|
|
|
58,698
|
|
Total
equity
|
393,357
|
|
|
393,103
|
|
Total liabilities and
equity
|
$
|
1,429,147
|
|
|
$
|
1,422,452
|
|
Saul Centers,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(In thousands, except
per share amounts)
|
|
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
Revenue
|
(unaudited)
|
Base
rent
|
$
|
45,867
|
|
|
$
|
44,476
|
|
Expense
recoveries
|
8,771
|
|
|
8,594
|
|
Percentage
rent
|
418
|
|
|
382
|
|
Other
|
1,440
|
|
|
5,014
|
|
Total
revenue
|
56,496
|
|
|
58,466
|
|
Operating
expenses
|
|
|
|
Property
operating expenses
|
7,123
|
|
|
6,652
|
|
Provision for
credit losses
|
286
|
|
|
343
|
|
Real estate
taxes
|
6,845
|
|
|
6,590
|
|
Interest
expense and amortization of deferred
debt costs
|
11,526
|
|
|
11,864
|
|
Depreciation
and amortization of deferred
leasing costs
|
11,349
|
|
|
11,342
|
|
General and
administrative
|
4,420
|
|
|
4,301
|
|
Total operating
expenses
|
41,549
|
|
|
41,092
|
|
Operating
income
|
14,947
|
|
|
17,374
|
|
Change in fair
value of derivatives
|
—
|
|
|
—
|
|
Net income
|
14,947
|
|
|
17,374
|
|
Income
attributable to noncontrolling interests
|
(2,359)
|
|
|
(3,670)
|
|
Net income
attributable to Saul Centers, Inc.
|
12,588
|
|
|
13,704
|
|
Extinguishment
of issuance costs upon
redemption of preferred shares
|
(2,328)
|
|
|
—
|
|
Preferred stock
dividends
|
(3,403)
|
|
|
(3,094)
|
|
Net income available
to common stockholders
|
$
|
6,857
|
|
|
$
|
10,610
|
|
Per share net income
available to common stockholders
|
|
|
|
Basic and
diluted
|
$
|
0.31
|
|
|
$
|
0.49
|
|
|
|
|
|
Weighted Average
Common Stock:
|
|
|
|
Common
stock
|
22,178
|
|
|
21,745
|
|
Effect of
dilutive options
|
40
|
|
|
147
|
|
Diluted
weighted average common stock
|
22,218
|
|
|
21,892
|
|
Reconciliation of net
income to FFO available to common stockholders and
noncontrolling
interests (1)
|
|
Three Months Ended
March 31,
|
(In thousands,
except per share amounts)
|
2018
|
|
2017
|
|
(unaudited)
|
Net income
|
$
|
14,947
|
|
|
$
|
17,374
|
|
Add:
|
|
|
|
Real estate
depreciation and amortization
|
11,349
|
|
|
11,342
|
|
FFO
|
26,296
|
|
|
28,716
|
|
Subtract:
|
|
|
|
Extinguishment
of issuance costs upon redemption of
preferred shares
|
(2,328)
|
|
|
—
|
|
Preferred
stock dividends
|
(3,403)
|
|
|
(3,094)
|
|
FFO available
to common stockholders and
noncontrolling interests
|
$
|
20,565
|
|
|
$
|
25,622
|
|
Weighted average
shares:
|
|
|
|
Diluted
weighted average common stock
|
22,218
|
|
|
21,892
|
|
Convertible
limited partnership units
|
7,567
|
|
|
7,457
|
|
Average shares
and units used to compute FFO per share
|
29,785
|
|
|
29,349
|
|
FFO per share
available to common stockholders and
noncontrolling interests
|
$
|
0.69
|
|
|
$
|
0.87
|
|
|
(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
March 31,
|
|
|
2018
|
|
2017
|
Total
revenue
|
|
$
|
56,496
|
|
|
$
|
58,466
|
|
Less: Interest
income
|
|
(102)
|
|
|
(13)
|
|
Less: Acquisitions,
dispositions and development
properties
|
|
(1,210)
|
|
|
(1,360)
|
|
Total same property
revenue
|
|
$
|
55,184
|
|
|
$
|
57,093
|
|
Shopping
Centers
|
|
$
|
39,762
|
|
|
$
|
42,077
|
|
Mixed-Use
properties
|
|
15,422
|
|
|
15,016
|
|
Total same property
revenue
|
|
$
|
55,184
|
|
|
$
|
57,093
|
|
Reconciliation of net
income to same property operating income
|
|
|
Three Months
Ended
March 31,
|
|
(In
thousands)
|
2018
|
|
2017
|
|
|
(unaudited)
|
|
Net income
|
$
|
14,947
|
|
|
$
|
17,374
|
|
|
Add: Interest expense
and amortization of deferred debt costs
|
11,526
|
|
|
11,864
|
|
|
Add: Depreciation and
amortization of deferred leasing costs
|
11,349
|
|
|
11,342
|
|
|
Add: General and
administrative
|
4,420
|
|
|
4,301
|
|
|
Less: Interest
income
|
(102)
|
|
|
(13)
|
|
|
Property operating
income
|
42,140
|
|
|
44,868
|
|
|
Less: Acquisitions,
dispositions and development property
|
(1,017)
|
|
|
(903)
|
|
|
Total same property
operating income
|
$
|
41,123
|
|
|
$
|
43,965
|
|
|
|
|
|
|
|
Shopping
Centers
|
$
|
31,030
|
|
|
$
|
33,830
|
|
|
Mixed-Use
properties
|
10,093
|
|
|
10,135
|
|
|
Total same property
operating income
|
$
|
41,123
|
|
|
$
|
43,965
|
|
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content:http://www.prnewswire.com/news-releases/saul-centers-inc-reports-first-quarter-2018-earnings-300642501.html
SOURCE Saul Centers, Inc.