BETHESDA, Md., Aug. 3,
2018 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity
real estate investment trust ("REIT"), announced its operating
results for the quarter ended June 30, 2018 ("2018
Quarter"). Total revenue for the 2018 Quarter increased to
$56.3 million from $55.9 million for the quarter ended June 30,
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, increased to $15.4 million for the 2018 Quarter from
$14.4 million for the 2017
Quarter.
Net income available to common stockholders increased to
$9.6 million ($0.43 per diluted share) for the 2018 Quarter
from $8.4 million ($0.38 per diluted share) for the 2017
Quarter.
Same property revenue increased $0.7
million (1.2%) and same property operating income increased
$0.1 million (0.3%) for the 2018
Quarter compared to the 2017 Quarter. We define same property
revenue as property revenue minus the revenue of properties not in
operation for the entirety of the comparable reporting
periods. We define same property operating income as property
operating income minus 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 $32.3 million, a $0.1 million increase from the 2017
Quarter. Mixed-Use same property operating income totaled
$10.3 million, unchanged from the
prior year.
As of June 30, 2018, 94.0% of the commercial portfolio was
leased (not including the residential portfolio), compared to 94.3%
at June 30, 2017. On a same property basis, 94.0% of the
commercial portfolio was leased as of June 30, 2018, compared
to 95.6% at June 30, 2017. As of June 30, 2018, the
residential portfolio was 98.6% leased compared to 96.7% at
June 30, 2017.
For the six months ended June 30, 2018 ("2018 Period"),
total revenue decreased to $112.8
million from $114.4 million for the six months ended
June 30, 2017 ("2017 Period"). Operating income
decreased to $30.4 million for the
2018 Period from $31.8 million
for the 2017 Period. The decrease in operating income was
primarily due to (a) the net impact of terminating leases for the
spaces previously occupied by Safeway at Broadlands and Kmart at
Kentlands ($3.6 million), partially
offset by (b) increased capitalized interest ($1.0 million), and (c) an increase in residential
rent ($0.7 million).
Net income available to common stockholders decreased to
$16.4 million ($0.74 per diluted share) for the 2018 Period
compared to $19.0 million
($0.87 per diluted share) for the
2017 Period. The decrease in net income available to common
stockholders was primarily due to extinguishment of issuance costs
upon redemption of preferred shares ($2.3
million).
Same property revenue decreased $1.2
million (1.1%) and same property operating income decreased
$2.7 million (3.1%) for the 2018
Period, compared to the 2017 Period. Shopping Center same
property operating income decreased 4.0% and mixed-use same
property operating income decreased 0.3%. Shopping Center
same property operating income decreased primarily due to (a) the
net impact of terminating leases for the spaces previously occupied
by Safeway at Broadlands and Kmart at Kentlands ($3.6 million), partially offset by (b) an
increase in base rent ($2.3
million).
Funds from operations ("FFO") available to common stockholders
and noncontrolling interests (after deducting preferred stock
dividends) was $23.8 million
($0.79 per diluted share) in the 2018
Quarter compared to $23.0 million
($0.78 per diluted share) in the
2017 Quarter. FFO for the 2018 Quarter increased primarily
due to lower interest and amortization of debt expense. FFO,
a widely accepted non-GAAP financial measure of operating
performance for REITs, is defined as net income plus real estate
depreciation and amortization, excluding gains and losses from
property dispositions and impairment charges on real estate
assets.
FFO available to common stockholders and noncontrolling
interests (after deducting preferred stock dividends and the impact
of preferred stock redemptions) decreased 8.8% to $44.4 million ($1.48 per diluted share) in the 2018 Period from
$48.6 million ($1.66 per diluted share) in the 2017
Period. FFO available to common stockholders and
noncontrolling interests decreased primarily due to (a) the net
impact of terminating leases for the spaces previously occupied by
Safeway at Broadlands and Kmart at Kentlands ($3.6 million) and (b) extinguishment of issuance
costs upon redemption of preferred shares ($2.3 million), partially offset by (c) higher
base rent ($1.9 million).
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 59
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) four 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)
|
|
|
June 30,
2018
|
|
December 31,
2017
|
|
(Unaudited)
|
Assets
|
|
|
|
Real estate
investments
|
|
|
|
Land
|
$
|
450,256
|
|
|
$
|
450,256
|
|
Buildings and
equipment
|
1,263,865
|
|
|
1,261,830
|
|
Construction
in progress
|
139,285
|
|
|
91,114
|
|
|
1,853,406
|
|
|
1,803,200
|
|
Accumulated
depreciation
|
(507,084)
|
|
|
(488,166)
|
|
|
1,346,322
|
|
|
1,315,034
|
|
Cash and cash
equivalents
|
6,425
|
|
|
10,908
|
|
Accounts receivable
and accrued income, net
|
50,634
|
|
|
54,057
|
|
Deferred leasing
costs, net
|
27,139
|
|
|
27,255
|
|
Prepaid expenses,
net
|
1,669
|
|
|
5,248
|
|
Other
assets
|
14,293
|
|
|
9,950
|
|
Total
assets
|
$
|
1,446,482
|
|
|
$
|
1,422,452
|
|
|
|
|
|
Liabilities
|
|
|
|
Notes
payable
|
$
|
869,272
|
|
|
$
|
897,888
|
|
Revolving credit
facility payable
|
23,065
|
|
|
60,734
|
|
Term loan facility
payable
|
74,543
|
|
|
—
|
|
Dividends and
distributions payable
|
18,599
|
|
|
18,520
|
|
Accounts payable,
accrued expenses and other liabilities
|
29,078
|
|
|
23,123
|
|
Deferred
income
|
25,594
|
|
|
29,084
|
|
Total
liabilities
|
1,040,151
|
|
|
1,029,349
|
|
|
|
|
|
Equity
|
|
|
|
Preferred
stock
|
180,000
|
|
|
180,000
|
|
Common
stock
|
223
|
|
|
221
|
|
Additional paid-in
capital
|
361,413
|
|
|
352,590
|
|
Distributions in
excess of accumulated net income and accumulated
other
comprehensive loss
|
(204,689)
|
|
|
(198,406)
|
|
Total Saul Centers,
Inc. equity
|
336,947
|
|
|
334,405
|
|
Noncontrolling
interests
|
69,384
|
|
|
58,698
|
|
Total
equity
|
406,331
|
|
|
393,103
|
|
Total liabilities and
equity
|
$
|
1,446,482
|
|
|
$
|
1,422,452
|
|
Saul Centers,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(In thousands, except
per share amounts)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Property
revenue
|
(unaudited)
|
|
(unaudited)
|
Base rent
|
$
|
45,943
|
|
|
$
|
45,575
|
|
|
$
|
91,810
|
|
|
$
|
90,051
|
|
Expense
recoveries
|
8,601
|
|
|
8,337
|
|
|
17,373
|
|
|
16,931
|
|
Percentage
rent
|
249
|
|
|
519
|
|
|
667
|
|
|
901
|
|
Other property
revenue
|
1,431
|
|
|
1,466
|
|
|
2,769
|
|
|
6,467
|
|
Total property
revenue
|
56,224
|
|
|
55,897
|
|
|
112,619
|
|
|
114,350
|
|
Property
expenses
|
|
|
|
|
|
|
|
Property operating
expenses
|
6,732
|
|
|
6,473
|
|
|
13,856
|
|
|
13,125
|
|
Provision for credit
losses
|
143
|
|
|
207
|
|
|
429
|
|
|
550
|
|
Real estate
taxes
|
6,778
|
|
|
6,700
|
|
|
13,622
|
|
|
13,290
|
|
Total property
expenses
|
13,653
|
|
|
13,380
|
|
|
27,907
|
|
|
26,965
|
|
Property operating
income
|
42,571
|
|
|
42,517
|
|
|
84,712
|
|
|
87,385
|
|
|
|
|
|
|
|
|
|
Other
revenue
|
69
|
|
|
10
|
|
|
170
|
|
|
23
|
|
Other
expenses
|
|
|
|
|
|
|
|
Interest expense and
amortization of deferred
debt costs
|
11,237
|
|
|
11,900
|
|
|
22,764
|
|
|
23,764
|
|
Depreciation and
amortization of deferred leasing costs
|
11,351
|
|
|
11,691
|
|
|
22,700
|
|
|
23,033
|
|
General and
administrative
|
4,647
|
|
|
4,514
|
|
|
9,068
|
|
|
8,815
|
|
Total other
expenses
|
27,235
|
|
|
28,105
|
|
|
54,532
|
|
|
55,612
|
|
Operating
income
|
15,405
|
|
|
14,422
|
|
|
30,350
|
|
|
31,796
|
|
Change in fair value
of derivatives
|
(12)
|
|
|
(1)
|
|
|
(12)
|
|
|
(1)
|
|
Gain on sale of
property
|
509
|
|
|
—
|
|
|
509
|
|
|
—
|
|
Net
income
|
15,902
|
|
|
14,421
|
|
|
30,847
|
|
|
31,795
|
|
Income attributable
to noncontrolling interests
|
(3,359)
|
|
|
(2,911)
|
|
|
(5,718)
|
|
|
(6,581)
|
|
Net income
attributable to Saul Centers, Inc.
|
12,543
|
|
|
11,510
|
|
|
25,129
|
|
|
25,214
|
|
Extinguishment of
issuance costs upon
redemption of preferred shares
|
—
|
|
|
—
|
|
|
(2,328)
|
|
|
—
|
|
Preferred stock
dividends
|
(2,953)
|
|
|
(3,094)
|
|
|
(6,356)
|
|
|
(6,188)
|
|
Net income
available to common stockholders
|
$
|
9,590
|
|
|
$
|
8,416
|
|
|
$
|
16,445
|
|
|
$
|
19,026
|
|
Per share net income
available to common
stockholders
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
0.43
|
|
|
$
|
0.38
|
|
|
$
|
0.74
|
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Stock:
|
|
|
|
|
|
|
|
Common
stock
|
22,260
|
|
|
21,846
|
|
|
22,219
|
|
|
21,796
|
|
Effect of dilutive
options
|
28
|
|
|
81
|
|
|
34
|
|
|
114
|
|
Diluted
weighted average common stock
|
22,288
|
|
|
21,927
|
|
|
22,253
|
|
|
21,910
|
|
Reconciliation of net
income to FFO available to common stockholders and
noncontrolling
interests (1)
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
(In thousands,
except per share amounts)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(unaudited)
|
|
(unaudited)
|
Net income
|
$
|
15,902
|
|
|
$
|
14,421
|
|
|
$
|
30,847
|
|
|
$
|
31,795
|
|
Subtract:
|
|
|
|
|
|
|
|
Gain on sale
of property
|
(509)
|
|
|
—
|
|
|
(509)
|
|
|
—
|
|
Add:
|
|
|
|
|
|
|
|
Real estate
depreciation and amortization
|
11,351
|
|
|
11,691
|
|
|
22,700
|
|
|
23,033
|
|
FFO
|
26,744
|
|
|
26,112
|
|
|
53,038
|
|
|
54,828
|
|
Subtract:
|
|
|
|
|
|
|
|
Extinguishment
of issuance costs upon redemption of
preferred shares
|
—
|
|
|
—
|
|
|
(2,328)
|
|
|
—
|
|
Preferred
stock dividends
|
(2,953)
|
|
|
(3,094)
|
|
|
(6,356)
|
|
|
(6,188)
|
|
FFO available
to common stockholders and
noncontrolling interests
|
$
|
23,791
|
|
|
$
|
23,018
|
|
|
$
|
44,354
|
|
|
$
|
48,640
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
Diluted weighted
average common stock
|
22,288
|
|
|
21,927
|
|
|
22,253
|
|
|
21,910
|
|
Convertible limited
partnership units
|
7,726
|
|
|
7,497
|
|
|
7,646
|
|
|
7,476
|
|
Average shares
and units used to compute FFO per share
|
30,014
|
|
|
29,424
|
|
|
29,899
|
|
|
29,386
|
|
FFO per share
available to common stockholders and
noncontrolling interests
|
$
|
0.79
|
|
|
$
|
0.78
|
|
|
$
|
1.48
|
|
|
$
|
1.66
|
|
|
(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 impairment
charges on 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
property revenue to same property revenue
|
(in
thousands)
|
|
Three months ended
June 30,
|
|
Six months ended June
30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Total property
revenue
|
|
$
|
56,224
|
|
|
$
|
55,897
|
|
|
$
|
112,619
|
|
|
$
|
114,350
|
|
Less: Acquisitions,
dispositions and development properties
|
|
—
|
|
|
(344)
|
|
|
(2,421)
|
|
|
(2,934)
|
|
Total same property
revenue
|
|
$
|
56,224
|
|
|
$
|
55,553
|
|
|
$
|
110,198
|
|
|
$
|
111,416
|
|
|
|
|
|
|
|
|
|
|
Shopping
Centers
|
|
$
|
40,848
|
|
|
$
|
40,239
|
|
|
$
|
79,400
|
|
|
$
|
81,086
|
|
Mixed-Use
properties
|
|
15,376
|
|
|
15,314
|
|
|
30,798
|
|
|
30,330
|
|
Total same property
revenue
|
|
$
|
56,224
|
|
|
$
|
55,553
|
|
|
$
|
110,198
|
|
|
$
|
111,416
|
|
|
|
|
|
|
|
|
|
|
Total Shopping
Center revenue
|
|
$
|
40,848
|
|
|
$
|
40,583
|
|
|
$
|
81,821
|
|
|
$
|
84,020
|
|
Less: Shopping Center
acquisitions, dispositions and development
properties
|
|
—
|
|
|
(344)
|
|
|
(2,421)
|
|
|
(2,934)
|
|
Total same Shopping
Center revenue
|
|
$
|
40,848
|
|
|
$
|
40,239
|
|
|
$
|
79,400
|
|
|
$
|
81,086
|
|
|
|
|
|
|
|
|
|
|
Total Mixed-Use
property revenue
|
|
$
|
15,376
|
|
|
$
|
15,314
|
|
|
$
|
30,798
|
|
|
$
|
30,330
|
|
Less: Mixed-Use
acquisitions, dispositions and development properties
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total same Mixed-Use
property revenue
|
|
$
|
15,376
|
|
|
$
|
15,314
|
|
|
$
|
30,798
|
|
|
$
|
30,330
|
|
|
|
Reconciliation of
property operating income to same property operating
income
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
(In
thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(unaudited)
|
|
(unaudited)
|
Property operating
income
|
|
$
|
42,571
|
|
|
$
|
42,517
|
|
|
$
|
84,712
|
|
|
$
|
87,385
|
|
Less: Acquisitions,
dispositions and development properties
|
|
—
|
|
|
(73)
|
|
|
(2,024)
|
|
|
(2,047)
|
|
Total same property
operating income
|
|
$
|
42,571
|
|
|
$
|
42,444
|
|
|
$
|
82,688
|
|
|
$
|
85,338
|
|
|
|
|
|
|
|
|
|
|
Shopping
Centers
|
|
$
|
32,274
|
|
|
$
|
32,132
|
|
|
$
|
62,298
|
|
|
$
|
64,896
|
|
Mixed-Use
properties
|
|
10,297
|
|
|
10,312
|
|
|
20,390
|
|
|
20,442
|
|
Total same property
operating income
|
|
$
|
42,571
|
|
|
$
|
42,444
|
|
|
$
|
82,688
|
|
|
$
|
85,338
|
|
|
|
|
|
|
|
|
|
|
Shopping Center
operating income
|
|
$
|
32,274
|
|
|
$
|
32,205
|
|
|
$
|
64,322
|
|
|
$
|
66,943
|
|
Less: Shopping Center
acquisitions, dispositions and development
properties
|
|
—
|
|
|
(73)
|
|
|
(2,024)
|
|
|
(2,047)
|
|
Total same Shopping
Center operating income
|
|
$
|
32,274
|
|
|
$
|
32,132
|
|
|
$
|
62,298
|
|
|
$
|
64,896
|
|
|
|
|
|
|
|
|
|
|
Mixed-Use
operating income
|
|
$
|
10,297
|
|
|
$
|
10,312
|
|
|
$
|
20,390
|
|
|
$
|
20,442
|
|
Less: Mixed-Use
Acquisitions, dispositions and development properties
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total same Mixed-Use
property operating income
|
|
$
|
10,297
|
|
|
$
|
10,312
|
|
|
$
|
20,390
|
|
|
$
|
20,442
|
|
View original
content:http://www.prnewswire.com/news-releases/saul-centers-inc-reports-second-quarter-2018-earnings-300691932.html
SOURCE Saul Centers, Inc.