BETHESDA, Md., May 6, 2020
/PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity real
estate investment trust ("REIT"), announced its operating results
for the quarter ended March 31, 2020 ("2020 Quarter").
Total revenue for the 2020 Quarter decreased to $56.9 million from $59.8 million for the quarter ended
March 31, 2019 ("2019 Quarter"). Net income decreased to
$16.8 million for the 2020
Quarter from $17.1 million for the
2019 Quarter. Net income decreased due to (a) lower other
revenue, primarily lease termination fees ($1.4 million), (b) lower base rent, primarily due
to the lease expiration and re-leasing of the grocery anchors at
Seven Corners, which opened in March 2020, and at Shops at
Fairfax, projected to open in the third quarter of 2020
(collectively, $0.4 million) and (c) lower expense
recoveries net of property expenses ($0.2
million), partially offset by (d) lower interest expense,
net and amortization of deferred debt costs due to higher
capitalized interest ($1.6 million). Net income available to
common stockholders was $10.5 million ($0.45 per diluted share) for the 2020 Quarter,
unchanged from the 2019 Quarter ($0.46 per diluted share).
Same property revenue decreased $2.0
million (3.5%) and same property operating income decreased
$1.3 million (3.0%) for the 2020
Quarter compared to the 2019 Quarter. We define same property
revenue as total revenue minus the revenue of properties not in
operation for the entirety of the comparable reporting
periods. We define same property operating income as net
income plus (a) interest expense, net and amortization of deferred
debt costs, (b) depreciation and amortization of deferred leasing
costs, (c) general and administrative expenses and (d) change
in fair value of derivatives minus (e) gains on sale of property
and (f) the results of properties which were not in operation for
the entirety of the comparable periods. Shopping Center same
property operating income for the 2020 Quarter totaled $32.5 million, a $0.9
million decrease from the 2019 Quarter. Mixed-Use same
property operating income totaled $10.1
million, a $0.4 million
decrease from the 2019 Quarter. The decrease in Shopping Center
same property operating income was primarily the result of lower
termination fees ($0.9 million).
The decrease in Mixed-Use same property operating income was
primarily the result of (a) lower expense recoveries net of
property expenses ($0.3 million) and
(b) lower parking income ($0.1 million).
As of March 31, 2020, 95.3% of the commercial portfolio was
leased (not including the residential portfolio), compared to 95.2%
at March 31, 2019. On a same property basis, 95.3% of
the commercial portfolio was leased as of March 31, 2020,
compared to 95.7% at March 31, 2019. As of
March 31, 2020, the residential portfolio was 96.7% leased
compared to 99.0% at March 31, 2019.
Funds from operations ("FFO") available to common stockholders
and noncontrolling interests (after deducting preferred stock
dividends) was $25.3 million
($0.81 per diluted share) in the 2020
Quarter compared to $25.8 million
($0.84 per diluted share) in the
2019 Quarter. FFO is a non-GAAP supplemental earnings measure
which the Company considers meaningful in measuring its operating
performance. A reconciliation of net income to FFO is
attached to this press release. The decrease in FFO available
to common stockholders and noncontrolling interests was primarily
due to (a) lower other revenue, primarily lease termination fees
($1.4 million), (b) lower base
rent, primarily due to the lease expiration and re-leasing of the
grocery anchors at Seven Corners, which opened in March 2020, and at Shops at Fairfax, projected to
open in the third quarter of 2020 (collectively, $0.4 million) and (c) lower expense
recoveries net of property expenses ($0.2 million), partially
offset by (d) lower interest expense, net and amortization of
deferred debt costs due to higher capitalized interest ($1.6
million).
A novel strain of coronavirus ("COVID-19") was reported to have
surfaced in Wuhan, China in
December 2019, and has since spread
globally, including to every state in the United States. On
March 11, 2020, the World Health
Organization declared COVID-19 a pandemic, and on March 13, 2020, the
United States declared a national emergency with respect to
COVID-19. As a result, the COVID-19 pandemic is negatively
affecting almost every industry directly or indirectly.
The actions taken by federal, state and local governments to
mitigate the spread of the novel coronavirus ("COVID-19") by
ordering closure of nonessential businesses and ordering residents
to generally stay at home have resulted in many of our tenants
announcing mandated or temporary closures of their operations
and/or requesting adjustments to their lease terms. Experts
predict that the COVID-19 pandemic will trigger a period of global
economic slowdown or a global recession. COVID-19 could have
a material and adverse effect on or cause disruption to our
business or financial condition, results from operations, cash
flows and the market value and trading price of our securities.
While the Company's grocery stores, pharmacies, banks and home
improvement stores generally remain open, restaurants, if open, are
operating with delivery and curb side pick-up only, and most
health, beauty supply and services, fitness centers, and other
non-essential businesses remain closed. As of May 5, 2020, approximately 32% of the Company's
contractual base rent and operating expense and real estate tax
recoveries for April 2020 remains
unpaid, excluding rent subject to executed deferral agreements
totaling approximately $355,600
(2%). The Company is generally not charging late fees or
delinquent interest on these past due payments and, in many cases,
additional rent deferral agreements are being negotiated to allow
tenants temporary relief where needed. For additional discussion of
how the COVID-19 pandemic has impacted the Company's business,
please see Part 1, Item 2 (Management's Discussion and Analysis of
Financial Condition and Results of Operations) of our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2020.
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 60
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) four land and
development properties. Approximately 85% of the Saul Centers'
property operating income is generated by properties in the
metropolitan Washington,
DC/Baltimore area.
Safe Harbor Statement
Certain matters discussed within this press release may be
deemed to be forward-looking statements within the meaning of the
federal securities laws. For these statements, we claim the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of
1995. Although the Company believes the expectations
reflected in the forward-looking statements are based on reasonable
assumptions, it can give no assurance that its expectations will be
attained. These factors include, but are not limited to, the
risk factors described in our Annual Report on (i) Form 10-K for
the year ended December 31, 2019 and
(ii) our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2020 and include the
following: (i) general adverse economic and local real estate
conditions, (ii) the inability of major tenants to continue paying
their rent obligations due to bankruptcy, insolvency or a general
downturn in their business, (iii) financing risks, such as the
inability to obtain equity, debt or other sources of financing or
refinancing on favorable terms to the Company, (iv) the Company's
ability to raise capital by selling its assets, (v) changes in
governmental laws and regulations and management's ability to
estimate the impact of such changes, (vi) the level and volatility
of interest rates and management's ability to estimate the impact
thereof, (vii) the availability of suitable acquisition,
disposition, development and redevelopment opportunities, and risks
related to acquisitions not performing in accordance with our
expectations, (viii) increases in operating costs, (ix)
changes in the dividend policy for the Company's common and
preferred stock and the Company's ability to pay dividends at
current levels, (x) the reduction in the Company's income in the
event of multiple lease terminations by tenants or a failure by
multiple tenants to occupy their premises in a shopping center,
(xi) impairment charges, (xii) unanticipated changes in the
Company's intention or ability to prepay certain debt prior to
maturity and (xiii) an epidemic or pandemic (such as the outbreak
and worldwide spread of the novel coronavirus ("COVID-19")), and
the measures that international, federal, state and local
governments, agencies, law enforcement and/or health authorities
implement to address it, which may (as with COVID-19) precipitate
or exacerbate one or more of the above-mentioned and/or other
risks, and significantly disrupt or prevent us from operating our
business in the ordinary course for an extended period. Given
these uncertainties, readers are cautioned not to place undue
reliance on any forward-looking statements that we make, including
those in this press release. Except as may be required by
law, we make no promise to update any of the forward-looking
statements as a result of new information, future events or
otherwise. You should carefully review the risks and risk
factors included in (i) our Annual Report on Form 10-K for the year
ended December 31, 2019 and (ii) our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
Saul Centers,
Inc.
Consolidated
Balance Sheets
(In
thousands)
|
|
|
|
March 31,
2020
|
|
December 31,
2019
|
|
(Unaudited)
|
Assets
|
|
|
|
Real estate
investments
|
|
|
|
Land
|
$
|
453,322
|
|
|
$
|
453,322
|
|
Buildings and
equipment
|
1,300,605
|
|
|
1,292,631
|
|
Construction in
progress
|
345,880
|
|
|
335,644
|
|
|
2,099,807
|
|
|
2,081,597
|
|
Accumulated
depreciation
|
(572,912)
|
|
|
(563,474)
|
|
|
1,526,895
|
|
|
1,518,123
|
|
Cash and cash
equivalents
|
31,935
|
|
|
13,905
|
|
Accounts receivable
and accrued income, net
|
49,994
|
|
|
52,311
|
|
Deferred leasing
costs, net
|
27,546
|
|
|
24,083
|
|
Prepaid expenses,
net
|
3,611
|
|
|
5,363
|
|
Other
assets
|
4,859
|
|
|
4,555
|
|
Total
assets
|
$
|
1,644,840
|
|
|
$
|
1,618,340
|
|
|
|
|
|
Liabilities
|
|
|
|
Notes
payable
|
$
|
798,343
|
|
|
$
|
821,503
|
|
Term loan facility
payable
|
74,716
|
|
|
74,691
|
|
Revolving credit
facility payable
|
123,507
|
|
|
86,371
|
|
Construction loan
payable
|
122,510
|
|
|
108,623
|
|
Dividends and
distributions payable
|
19,350
|
|
|
19,291
|
|
Accounts payable,
accrued expenses and other liabilities
|
35,122
|
|
|
35,199
|
|
Deferred
income
|
24,686
|
|
|
29,306
|
|
Total
liabilities
|
1,198,234
|
|
|
1,174,984
|
|
|
|
|
|
Equity
|
|
|
|
Preferred stock,
1,000,000 shares authorized:
|
|
|
|
Series D Cumulative
Redeemable, 30,000 shares issued and outstanding
|
75,000
|
|
|
75,000
|
|
Series E Cumulative
Redeemable, 44,000 shares issued and outstanding
|
110,000
|
|
|
110,000
|
|
Common stock, $0.01
par value, 40,000,000 shares authorized, 23,326,963 and 23,231,240
shares issued and outstanding, respectively
|
233
|
|
|
232
|
|
Additional paid-in
capital
|
415,962
|
|
|
410,926
|
|
Distributions in
excess of accumulated earnings
|
(223,075)
|
|
|
(221,177)
|
|
Total Saul Centers,
Inc. equity
|
378,120
|
|
|
374,981
|
|
Noncontrolling
interests
|
68,486
|
|
|
68,375
|
|
Total
equity
|
446,606
|
|
|
443,356
|
|
Total liabilities and
equity
|
$
|
1,644,840
|
|
|
$
|
1,618,340
|
|
Saul Centers,
Inc.
Consolidated
Statements of Operations
(In thousands, except
per share amounts)
|
|
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
Revenue
|
(unaudited)
|
Rental
revenue
|
$
|
55,415
|
|
|
$
|
56,803
|
|
Other
|
1,528
|
|
|
2,947
|
|
Total
revenue
|
56,943
|
|
|
59,750
|
|
Expenses
|
|
|
|
Property operating
expenses
|
7,036
|
|
|
8,001
|
|
Real estate
taxes
|
7,153
|
|
|
7,148
|
|
Interest expense, net
and amortization of deferred debt costs
|
9,594
|
|
|
11,067
|
|
Depreciation and
amortization of deferred leasing costs
|
11,281
|
|
|
11,643
|
|
General and
administrative
|
5,050
|
|
|
4,814
|
|
Total
expenses
|
40,114
|
|
|
42,673
|
|
Net
Income
|
16,829
|
|
|
17,077
|
|
Noncontrolling
interests
|
|
|
|
Income attributable
to noncontrolling interests
|
(3,565)
|
|
|
(3,630)
|
|
Net income
attributable to Saul Centers, Inc.
|
13,264
|
|
|
13,447
|
|
Preferred stock
dividends
|
(2,798)
|
|
|
(2,953)
|
|
Net income
available to common stockholders
|
$
|
10,466
|
|
|
$
|
10,494
|
|
Per share net
income available to common stockholders
|
|
|
|
Basic and
diluted
|
$
|
0.45
|
|
|
$
|
0.46
|
|
Dividends declared
per common share outstanding
|
$
|
0.53
|
|
|
$
|
0.53
|
|
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)
|
2020
|
|
2019
|
|
(unaudited)
|
Net income
|
$
|
16,829
|
|
|
$
|
17,077
|
|
Add:
|
|
|
|
Real estate
depreciation and amortization
|
11,281
|
|
|
11,643
|
|
FFO
|
28,110
|
|
|
28,720
|
|
Subtract:
|
|
|
|
Preferred stock
dividends
|
(2,798)
|
|
|
(2,953)
|
|
FFO available to
common stockholders and noncontrolling interests
|
$
|
25,312
|
|
|
$
|
25,767
|
|
Weighted average
shares:
|
|
|
|
Diluted weighted
average common stock
|
23,299
|
|
|
22,863
|
|
Convertible limited
partnership units
|
7,897
|
|
|
7,835
|
|
Average shares and
units used to compute FFO per share
|
31,196
|
|
|
30,698
|
|
FFO per share
available to common stockholders and noncontrolling
interests
|
$
|
0.81
|
|
|
$
|
0.84
|
|
|
|
(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 real estate 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 (2)
|
|
(in
thousands)
|
|
Three months ended
March 31,
|
|
|
2020
|
|
2019
|
|
|
(unaudited)
|
Total
revenue
|
|
$
|
56,943
|
|
|
$
|
59,750
|
|
Less: Acquisitions,
dispositions and development properties
|
|
(130)
|
|
|
(889)
|
|
Total same property
revenue
|
|
$
|
56,813
|
|
|
$
|
58,861
|
|
|
|
|
|
|
Shopping
Centers
|
|
$
|
41,441
|
|
|
$
|
43,159
|
|
Mixed-Use
properties
|
|
15,372
|
|
|
15,702
|
|
Total same property
revenue
|
|
$
|
56,813
|
|
|
$
|
58,861
|
|
|
|
|
|
|
Total Shopping
Center revenue
|
|
$
|
41,571
|
|
|
$
|
43,159
|
|
Less: Shopping Center
acquisitions, dispositions and development properties
|
|
(130)
|
|
|
—
|
|
Total same Shopping
Center revenue
|
|
$
|
41,441
|
|
|
$
|
43,159
|
|
|
|
|
|
|
Total Mixed-Use
property revenue
|
|
$
|
15,372
|
|
|
$
|
16,591
|
|
Less: Mixed-Use
acquisitions, dispositions and development properties
|
|
—
|
|
|
(889)
|
|
Total same Mixed-Use
property revenue
|
|
$
|
15,372
|
|
|
$
|
15,702
|
|
|
|
(2)
|
Same property revenue
is a non-GAAP financial measure of performance that improves the
comparability of reporting periods by excluding the results of
properties that were not in operation for the entirety of the
comparable reporting periods. Same property revenue adjusts
property revenue by subtracting the revenue of properties not in
operation for the entirety of the comparable reporting
periods. Same property revenue is a measure of the operating
performance of the Company's properties but does not measure the
Company's performance as a whole. Same property revenue
should not be considered as an alternative to total revenue, its
most directly comparable GAAP measure, as an indicator of the
Company's operating performance. Management considers same
property revenue a meaningful supplemental measure of operating
performance because it is not affected by the cost of the Company's
funding, the impact of depreciation and amortization expenses,
gains or losses from the acquisition and sale of operating real
estate assets, general and administrative expenses or other gains
and losses that relate to ownership of the Company's
properties. Management believes the exclusion of these items
from same property revenue is useful because the resulting measure
captures the actual revenue generated and actual expenses incurred
by operating the Company's properties. Other REITs may use
different methodologies for calculating same property
revenue. Accordingly, the Company's same property revenue may
not be comparable to those of other REITs.
|
Reconciliation of net
income to same property operating income (3)
|
|
|
Three Months Ended
March 31,
|
(In
thousands)
|
2020
|
|
2019
|
|
(unaudited)
|
Net
income
|
$
|
16,829
|
|
|
$
|
17,077
|
|
Add: Interest
expense, net and amortization of deferred debt costs
|
9,594
|
|
|
11,067
|
|
Add: Depreciation and
amortization of deferred leasing costs
|
11,281
|
|
|
11,643
|
|
Add: General and
administrative
|
5,050
|
|
|
4,814
|
|
Property operating
income
|
42,754
|
|
|
44,601
|
|
Less: Acquisitions,
dispositions and development properties
|
(104)
|
|
|
(628)
|
|
Total same property
operating income
|
$
|
42,650
|
|
|
$
|
43,973
|
|
|
|
|
|
Shopping
Centers
|
$
|
32,545
|
|
|
$
|
33,471
|
|
Mixed-Use
properties
|
10,105
|
|
|
10,502
|
|
Total same property
operating income
|
$
|
42,650
|
|
|
$
|
43,973
|
|
|
|
|
|
Shopping Center
operating income
|
$
|
32,649
|
|
|
$
|
33,471
|
|
Less: Shopping Center
acquisitions, dispositions and development properties
|
(104)
|
|
|
—
|
|
Total same Shopping
Center operating income
|
$
|
32,545
|
|
|
$
|
33,471
|
|
|
|
|
|
Mixed-Use property
operating income
|
$
|
10,105
|
|
|
$
|
11,130
|
|
Less: Mixed-Use
acquisitions, dispositions and development properties
|
—
|
|
|
(628)
|
|
Total same Mixed-Use
property operating income
|
$
|
10,105
|
|
|
$
|
10,502
|
|
|
|
(3)
|
Same property
operating income is a non-GAAP financial measure of performance
that improves the comparability of reporting periods by excluding
the results of properties that were not in operation for the
entirety of the comparable reporting periods. Same property
operating income adjusts property operating income by subtracting
the results of properties that were not in operation for the
entirety of the comparable periods. Same property operating
income is a measure of the operating performance of the Company's
properties but does not measure the Company's performance as a
whole. Same property operating income should not be
considered as an alternative to property operating income, its most
directly comparable GAAP measure, as an indicator of the Company's
operating performance. Management considers same property
operating income a meaningful supplemental measure of operating
performance because it is not affected by the cost of the Company's
funding, the impact of depreciation and amortization expenses,
gains or losses from the acquisition and sale of operating real
estate assets, general and administrative expenses or other gains
and losses that relate to ownership of the Company's
properties. Management believes the exclusion of these items
from property operating income is useful because the resulting
measure captures the actual revenue generated and actual expenses
incurred by operating the Company's properties. Other REITs
may use different methodologies for calculating same property
operating income. Accordingly, same property operating income
may not be comparable to those of other REITs.
|
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content:http://www.prnewswire.com/news-releases/saul-centers-inc-reports-first-quarter-2020-earnings-301054320.html
SOURCE Saul Centers, Inc.