BFS Saul Centers Inc

Saul Centers, Inc. Reports Second Quarter Earnings BETHESDA, Md., Aug. 3 /PRNewswire-FirstCall/ -- Saul Centers, Inc. (NYSE:BFS), an equity real estate investment trust (REIT), announced its second quarter operating results. Total revenues for the quarter ended June 30, 2004 increased 20.1% to $27,888,000 compared to $23,226,000 for the 2003 quarter. Operating income before minority interests and preferred stock dividends increased 38.4% to $8,329,000 compared to $6,016,000 for the comparable 2003 quarter. After preferred stock dividends, the Company reported net income available to common stockholders of $4,286,000 or $.27 per share for the 2004 quarter, a per share increase of 3.8% compared to net income available to common stockholders of $3,996,000 or $0.26 per share for the 2003 quarter (basic & diluted). Overall same property revenues for the total portfolio increased 6.3% for the 2004 second quarter compared to the same quarter in 2003 and same property operating income increased 7.3%. The same property comparisons exclude the results of operations of development and acquisition properties not in operation for each of the quarters. Operating income is calculated as total revenue less property operating expenses, provision for credit losses and real estate taxes. Same center operating income in the shopping center portfolio increased 3.6% for the 2004 second quarter, due primarily to successful re- leasing activity. Same property operating income in the office portfolio grew 15.7% for the 2004 quarter, due to the completion of lease-up of space, vacant during 2003, at 601 Pennsylvania Avenue. Excluding the impact of 601 Pennsylvania Avenue, overall portfolio same property growth was 1.6% for the 2004 quarter. For the six month period ended June 30, 2004, total revenues increased 15.1% to $54,229,000 compared to $47,096,000 for the 2003 period. Operating income before minority interests and preferred stock dividends increased 32.7% to $16,658,000 compared to $12,555,000 for the comparable 2003 period. Net income available to common stockholders was $8,591,000 or $.54 per share for the 2004 period, a per share decrease of 1.8% compared to net income available to common stockholders of $8,515,000 or $0.55 per share for the 2003 period (basic & diluted). Overall same property revenues for the total portfolio increased 4.6% for the 2004 six month period compared to the same period in 2003 and same property operating income increased 6.2%. The shopping center portfolio same center operating income increased 4.2% and the office portfolio grew 10.3%. Excluding the impact of 601 Pennsylvania Avenue, overall portfolio same property operating income growth was 2.1% for the 2004 period. As of June 30, 2004, 94.0% of the portfolio was leased, compared to 93.6% a year earlier. On a same property basis, 94.6% of the portfolio was leased, compared to the prior year level of 93.6%. The comparative increase in the 2004 total portfolio, same property leasing percentage is largely attributable to the leasing of approximately 30,000 square feet of office space at 601 Pennsylvania Avenue, 24,000 square feet of space at Southdale and 21,000 square feet of space at Thruway shopping centers. Funds From Operations (FFO) available to common shareholders (after deducting preferred stock dividends), increased 13.3% to $11,676,000 in the 2004 second quarter compared to $10,301,000 for the same quarter in 2003. The $1,375,000 increase in FFO available to common shareholders in the 2004 quarter resulted from retail acquisition and development property operating income and successful leasing efforts, primarily at 601 Pennsylvania Avenue, offset in part by the payment of $2,000,000 in preferred dividends relating to the November 2003 offering. On a fully diluted per share basis, FFO available to common shareholders increased 10.0% to $.55 per share in 2004 compared to $.50 for the 2003 quarter. FFO available to common shareholders for the 2004 six month period increased $1,761,000 (8.4%) to $22,643,000 from $20,882,000 during the 2003 period. Fully diluted per share FFO available to common shareholders increased 5.9% to $1.07 per share in 2004 compared to $1.01 for the 2003 period. FFO, a widely accepted non-GAAP financial measure of operating performance for real estate investment trusts, is defined as net income, plus minority interests, extraordinary items and real estate depreciation and amortization, excluding gains and losses from property sales. Saul Centers is a self-managed, self-administered equity real estate investment trust headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 39 community and neighborhood shopping center and office properties totaling approximately 7.1 million square feet of leasable area. Over 80% of the Company's cash flow is generated from properties in the metropolitan Washington, DC/Baltimore area. Saul Centers, Inc. Condensed Consolidated Balance Sheets ($ in thousands) June 30, December 31, 2004 2003 Assets (Unaudited) Real estate investments Land $109,153 $82,256 Buildings 500,086 436,487 Construction in progress 41,938 33,372 651,177 552,115 Accumulated depreciation (172,851) (164,823) 478,326 387,292 Cash and cash equivalents 10,066 45,244 Accounts receivable and accrued income, net 15,558 14,642 Lease acquisition costs, net 18,887 15,345 Prepaid expenses 2,170 3,632 Deferred debt costs, net 4,509 4,224 Other assets 5,266 1,237 Total assets $534,782 $471,616 Liabilities Mortgage notes payable $389,544 $354,248 Revolving credit facility 22,000 3,000 Dividends and distributions payable 10,322 9,454 Accounts payable, accrued expenses and other liabilities 12,482 7,793 Deferred income 4,220 4,478 Total liabilities 438,568 378,973 Stockholders' Equity Preferred stock 100,000 100,000 Common stock 161 159 Additional paid in capital 98,980 91,469 Accumulated deficit (102,927) (98,985) Total stockholders' equity 96,214 92,643 Total liabilities and stockholders' equity $534,782 $471,616 Saul Centers, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Revenue Base rent $22,751 $18,931 $44,027 $37,982 Expense recoveries 4,018 3,365 7,912 7,170 Percentage rent 260 215 704 664 Other 859 715 1,586 1,280 Total revenue 27,888 23,226 54,229 47,096 Operating Expenses Property operating expenses 2,870 2,579 5,762 5,608 Provision for credit losses 99 56 168 92 Real estate taxes 2,488 2,130 4,879 4,261 Interest expense 6,407 6,466 12,456 12,960 Amortization of deferred debt expense 227 199 444 397 Depreciation and amortization 5,347 4,285 9,985 8,327 General and administrative 2,121 1,495 3,877 2,896 Total operating expenses 19,559 17,210 37,571 34,541 Operating Income 8,329 6,016 16,658 12,555 Minority Interests (2,043) (2,020) (4,067) (4,040) Net Income 6,286 3,996 12,591 8,515 Preferred Dividends (2,000) - (4,000) - Net Income Available to Common Stockholders $4,286 $3,996 $8,591 $8,515 Per Share (basic and fully diluted) Net income available to common stockholders $0.27 $0.26 $0.54 $0.55 Weighted average common stock outstanding: Common stock 16,090 15,534 16,019 15,432 Effect of dilutive options 33 12 31 10 Fully diluted weighted average common stock 16,123 15,546 16,050 15,442 Saul Centers, Inc. Supplemental Information (Unaudited) (In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Reconciliation of Net Income to Funds From Operations (FFO):(1) Net Income $6,286 $3,996 $12,591 $8,515 Add: Real property depreciation & amortization 5,347 4,285 9,985 8,327 Add: Minority Interests 2,043 2,020 4,067 4,040 FFO 13,676 10,301 26,643 20,882 Less: Preferred dividends (2,000) - (4,000) - FFO available to common shareholders $11,676 $10,301 $22,643 $20,882 Weighted average shares outstanding: Fully diluted weighted average common stock 16,123 15,546 16,050 15,442 Convertible limited partnership units 5,193 5,181 5,191 5,180 Fully diluted & converted weighted average shares 21,316 20,727 21,241 20,622 Per Share Amounts: FFO available to common shareholders $0.55 $0.50 $1.07 $1.01 Reconciliation of Net Income to Same Property Operating Income: Net Income $6,286 $3,996 $12,591 $8,515 Add: Interest expense 6,407 6,466 12,456 12,960 Add: Amortization of deferred debt expense 227 199 444 397 Add: Depreciation and amortization 5,347 4,285 9,985 8,327 Add: General and administrative 2,121 1,495 3,877 2,896 Add: Minority Interests 2,043 2,020 4,067 4,040 Property operating income 22,431 18,461 43,420 37,135 Less: Acquisition & developments (2,616) - (3,992) - Total same property operating income $19,815 $18,461 $39,428 $37,135 Total Shopping Centers $13,222 $12,763 $26,420 $25,345 Total Office Properties 6,593 5,698 13,008 11,790 Total same property operating income $19,815 $18,461 $39,428 $37,135 (1) FFO is a widely accepted non-GAAP financial measure of operating performance of real estate investment trusts ("REITs"). FFO is defined by the National Association of Real Estate Investment Trusts as net income, computed in accordance with GAAP, plus minority interests, extraordinary items and real estate depreciation and amortization, excluding gains or losses from property sales. 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 Consolidated Statements of Cash Flows in the Company's SEC reports for the applicable periods. 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 supplemental measure of operating performance and along with cash flow from operating activities, financing activities and investing activities, it provides investors with an indication of the ability of the Company to incur and service debt, to make capital expenditures and to fund other cash needs. FFO may not be comparable to similarly titled measures employed by other REITs. DATASOURCE: Saul Centers, Inc. CONTACT: Scott V. Schneider of Saul Centers, Inc., +1-301-986-6220 Web site: http://www.saulcenters.com/

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