BETHESDA, Md., May 6, 2021 /PRNewswire/ -- Saul Centers,
Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"),
announced its operating results for the quarter ended
March 31, 2021 ("2021 Quarter"). Total revenue for the
2021 Quarter increased to $58.7
million from $56.9 million for the quarter ended
March 31, 2020 ("2020 Quarter"). Net income decreased to
$12.8 million for the 2021
Quarter from $16.8 million for the
2020 Quarter. The Waycroft mixed-use development opened in
April 2020 and, as of May 4,
2021, applications have been received for 485 residential leases,
approximately 99% of the available units, and 478 units were
occupied. Concurrent with the opening in April 2020, interest, real estate taxes and all
other costs associated with the residential portion of the
property, including depreciation, began to be charged to expense,
while revenue continues to grow as occupancy increases. As a
result, compared to the 2020 Quarter, net income for the 2021
Quarter was adversely impacted by $2.0
million due to the initial operations of The Waycroft. Net
income also decreased from the 2020 Quarter due to higher credit
losses on operating lease receivables and corresponding reserves
(collectively, $1.0 million) and
lower lease termination fees ($0.3
million). Net income available to common stockholders
decreased to $7.5 million
($0.32 per diluted share) for the
2021 Quarter from $10.5 million
($0.45 per diluted share) for
the 2020 Quarter.
Same property revenue decreased $1.4
million (2.4%) and same property operating income decreased
$2.2 million (5.2%) for the 2021
Quarter compared to the 2020 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 lease 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 2021 Quarter totaled $32.4 million, a $0.3
million decrease from the 2020 Quarter. Mixed-Use same
property operating income totaled $8.2 million, a $1.9 million decrease from the 2020 Quarter.
The decrease in Shopping Center same property operating income was
primarily the result of (a) higher credit losses on operating lease
receivables and corresponding reserves
(collectively, $0.6 million), (b) lower lease
termination fees ($0.2 million)
and (c) lower other property revenues ($0.1
million), partially offset by (d) higher base rent
($0.7 million). The decrease in
Mixed-Use same property operating income was primarily the result
of (a) lower base rent ($1.2 million), (b) higher credit losses on
operating lease receivables and corresponding reserves
(collectively, $0.4 million) and
(c) lower lease termination fees ($0.2 million). Reconciliations of (a)
property revenue to same property revenue and (b) net income to
same property income are attached to this press release.
As of March 31, 2021, 92.2% of the commercial portfolio was
leased, compared to 95.3% at March 31, 2020. On a same
property basis, 92.2% of the commercial portfolio was leased as of
March 31, 2021, compared to 96.3% at March 31,
2020. As of March 31, 2021, the residential portfolio
was 96.9% leased compared to 96.7% at March 31, 2020.
Funds from operations ("FFO") available to common stockholders
and noncontrolling interests (after deducting preferred stock
dividends) was $22.7 million
($0.72 and $0.71 per basic and diluted share, respectively)
in the 2021 Quarter compared to $25.3 million ($0.81 per basic and diluted share) in the
2020 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
the result of (a) higher credit losses on operating lease
receivables and corresponding reserves (collectively, $1.0 million), (b) lower base rent,
exclusive of The Waycroft ($0.6
million), (c) lower lease termination fees ($0.3 million)
and (d) initial operations of The Waycroft ($0.3 million).
On March 11, 2020, the World
Health Organization declared a novel strain of coronavirus
("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 COVID-19 by ordering closure of nonessential
businesses and ordering residents to generally stay at home, and
subsequent phased re-openings, 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 store, pharmacy, bank and home
improvement store tenants generally remain open, restaurants are
operating with limited indoor seating, supplemented with delivery
and curbside pick-up, and most health, beauty supply and services,
fitness centers, and other non-essential businesses are re-opening
with limited customer capacity depending on location. As of
May 4, 2021, payments by tenants of contractual base rent and
operating expense and real estate tax recoveries totaled
approximately 96% for the 2021 Quarter. The Company is generally
not charging late fees or delinquent interest on past due payments
and, in many cases, rent deferral agreements have been 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,
2021.
The following is a summary of the Company's consolidated total
collections of first quarter and April
2021 rent billings, including minimum rent, operating
expense recoveries, and real estate tax reimbursements as of
May 4, 2021:
2021 first quarter
- 96% of 2021 first quarter total billings has been paid by our
tenants.
- 95% of retail
- 97% of office
- 99% of residential
- Additionally, rent deferral agreements comprising approximately
0.2% of 2021 first quarter total billings have been executed (or 5%
of the total unpaid balance) none of which are with anchor/national
tenants. The executed deferrals typically cover three months
of rent and are generally scheduled to be paid during 2021 and
2022. As a condition to granted rent deferrals, we have
sought, and in some cases received, extended lease terms, or
waivers of certain adjacent use or common area restrictions.
April 2021
- 93% of April 2021 total billings
has been paid by our tenants.
- 91% of retail
- 94% of office
- 99% of residential
- Additionally, rent deferral agreements comprising less than
0.1% of April total billings have been executed, none of which are
with anchor/national tenants. These deferrals are structured
similarly to the first quarter deferrals.
Although we are and will continue to be actively engaged in rent
collection efforts related to uncollected rent, and we continue to
work with certain tenants who have requested rent deferrals, we can
provide no assurance that such efforts or our efforts in future
periods will be successful, particularly in the event that the
COVID-19 pandemic and restrictions intended to prevent its spread
continue for a prolonged period. As of May 4, 2021, of
the deferred rents that have come due, approximately 92% has been
paid.
With cash balances of over $10.0 million and borrowing capacity of
approximately $212.8 million on
April 30, 2021, the Company believes that it has sufficient
liquidity and flexibility to meet the needs of the Company's
operations as the effects of the COVID-19 pandemic continue to
evolve.
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 61
properties which includes (a) 50 community and neighborhood
shopping centers and seven mixed-use properties with approximately
9.8 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, 2020 and
(ii) our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2021 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 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, 2020 and (ii) our Quarterly Report
on Form 10-Q for the quarter ended March 31, 2021.
Saul Centers,
Inc.
Consolidated
Balance Sheets
(Unaudited)
|
|
(Dollars in
thousands, except per share amounts)
|
March 31,
2021
|
|
December
31,
2020
|
Assets
|
|
|
|
Real estate
investments
|
|
|
|
Land
|
$
|
513,074
|
|
|
$
|
511,482
|
|
Buildings and
equipment
|
1,555,731
|
|
|
1,543,837
|
|
Construction in
progress
|
151,699
|
|
|
69,477
|
|
|
2,220,504
|
|
|
2,124,796
|
|
Accumulated
depreciation
|
(617,984)
|
|
|
(607,706)
|
|
|
1,602,520
|
|
|
1,517,090
|
|
Cash and cash
equivalents
|
14,554
|
|
|
26,856
|
|
Accounts receivable
and accrued income, net
|
62,645
|
|
|
64,917
|
|
Deferred leasing
costs, net
|
26,169
|
|
|
26,872
|
|
Finance lease
right-of-use asset
|
19,362
|
|
|
—
|
|
Other
assets
|
9,006
|
|
|
9,837
|
|
Total
assets
|
$
|
1,734,256
|
|
|
$
|
1,645,572
|
|
Liabilities
|
|
|
|
Notes
payable
|
$
|
814,268
|
|
|
$
|
827,603
|
|
Construction loan
payable
|
146,551
|
|
|
144,607
|
|
Revolving credit
facility payable
|
103,548
|
|
|
103,913
|
|
Term loan facility
payable
|
74,816
|
|
|
74,791
|
|
Accounts payable,
accrued expenses and other liabilities
|
27,464
|
|
|
24,384
|
|
Deferred
income
|
24,812
|
|
|
23,293
|
|
Dividends and
distributions payable
|
19,510
|
|
|
19,448
|
|
Finance lease
liability
|
19,425
|
|
|
—
|
|
Total
liabilities
|
1,230,394
|
|
|
1,218,039
|
|
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, 23,573,804 and 23,476,626
shares issued and outstanding, respectively
|
236
|
|
|
235
|
|
Additional paid-in
capital
|
423,787
|
|
|
420,625
|
|
Partnership units in
escrow
|
79,300
|
|
|
—
|
|
Distributions in
excess of accumulated net income
|
(246,559)
|
|
|
(241,535)
|
|
Total Saul Centers,
Inc. equity
|
441,764
|
|
|
364,325
|
|
Noncontrolling
interests
|
62,098
|
|
|
63,208
|
|
Total
equity
|
503,862
|
|
|
427,533
|
|
Total liabilities and
equity
|
$
|
1,734,256
|
|
|
$
|
1,645,572
|
|
|
The Notes to
Financial Statements are an integral part of these
statements.
|
Saul Centers,
Inc.
Consolidated
Statements of Operations
(In thousands, except
per share amounts)
|
|
|
Three Months Ended
March 31,
|
|
2021
|
|
2020
|
Revenue
|
(unaudited)
|
Rental
revenue
|
$
|
57,756
|
|
|
$
|
55,415
|
|
Other
|
968
|
|
|
1,528
|
|
Total
revenue
|
58,724
|
|
|
56,943
|
|
Expenses
|
|
|
|
Property operating
expenses
|
8,686
|
|
|
7,036
|
|
Real estate
taxes
|
7,829
|
|
|
7,153
|
|
Interest expense, net
and amortization of deferred debt costs
|
11,988
|
|
|
9,594
|
|
Depreciation and
amortization of lease costs
|
12,748
|
|
|
11,281
|
|
General and
administrative
|
4,678
|
|
|
5,050
|
|
Total
expenses
|
45,929
|
|
|
40,114
|
|
Net
Income
|
12,795
|
|
|
16,829
|
|
Noncontrolling
interests
|
|
|
|
Income attributable to
noncontrolling interests
|
(2,533)
|
|
|
(3,565)
|
|
Net income
attributable to Saul Centers, Inc.
|
10,262
|
|
|
13,264
|
|
Preferred stock
dividends
|
(2,798)
|
|
|
(2,798)
|
|
Net income
available to common stockholders
|
$
|
7,464
|
|
|
$
|
10,466
|
|
Per share net
income available to common stockholders
|
|
|
|
Basic and
diluted
|
$
|
0.32
|
|
|
$
|
0.45
|
|
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)
|
2021
|
|
2020
|
Net income
|
$
|
12,795
|
|
|
$
|
16,829
|
|
Add:
|
|
|
|
Real estate
depreciation and amortization
|
12,748
|
|
|
11,281
|
|
FFO
|
25,543
|
|
|
28,110
|
|
Subtract:
|
|
|
|
Preferred stock
dividends
|
(2,798)
|
|
|
(2,798)
|
|
FFO available to common
stockholders and noncontrolling interests
|
$
|
22,745
|
|
|
$
|
25,312
|
|
Weighted average
shares and units:
|
|
|
|
Basic
|
31,493
|
|
|
31,192
|
|
Diluted
(2)
|
31,965
|
|
|
31,196
|
|
Basic FFO per share
available to common stockholders and noncontrolling
interests
|
$
|
0.72
|
|
|
$
|
0.81
|
|
Diluted FFO per share
available to common stockholders and noncontrolling
interests
|
$
|
0.71
|
|
|
$
|
0.81
|
|
|
|
(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.
|
(2)
|
Beginning March 5,
2021, fully diluted shares and units includes 1,416,071 limited
partnership units that are currently held in escrow related to the
contribution of Twinbrook Quarter to the Company by the B. F. Saul
Real Estate Investment Trust. The units will remain in escrow until
the conditions of the Contribution Agreement, as amended, are
satisfied.
|
Reconciliation of
revenue to same property revenue (3)
|
(in
thousands)
|
|
Three months ended
March 31,
|
|
|
2021
|
|
2020
|
|
|
(unaudited)
|
Total
revenue
|
|
$
|
58,724
|
|
|
$
|
56,943
|
|
Less: Acquisitions,
dispositions and development properties
|
|
(3,173)
|
|
|
—
|
|
Total same property
revenue
|
|
$
|
55,551
|
|
|
$
|
56,943
|
|
|
|
|
|
|
Shopping
Centers
|
|
$
|
42,444
|
|
|
$
|
41,571
|
|
Mixed-Use
properties
|
|
13,107
|
|
|
15,372
|
|
Total same property
revenue
|
|
$
|
55,551
|
|
|
$
|
56,943
|
|
|
|
|
|
|
Total Shopping
Center revenue
|
|
$
|
42,444
|
|
|
$
|
41,571
|
|
Less: Shopping Center
acquisitions, dispositions and development properties
|
|
—
|
|
|
—
|
|
Total same Shopping
Center revenue
|
|
$
|
42,444
|
|
|
$
|
41,571
|
|
|
|
|
|
|
Total Mixed-Use
property revenue
|
|
$
|
16,280
|
|
|
$
|
15,372
|
|
Less: Mixed-Use
acquisitions, dispositions and development properties
|
|
(3,173)
|
|
|
—
|
|
Total same Mixed-Use
property revenue
|
|
$
|
13,107
|
|
|
$
|
15,372
|
|
|
|
(3)
|
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 (4)
|
|
Three Months Ended
March 31,
|
(In
thousands)
|
2021
|
|
2020
|
|
(unaudited)
|
Net
income
|
$
|
12,795
|
|
|
$
|
16,829
|
|
Add: Interest
expense, net and amortization of deferred debt costs
|
11,988
|
|
|
9,594
|
|
Add: Depreciation and
amortization of lease costs
|
12,748
|
|
|
11,281
|
|
Add: General and
administrative
|
4,678
|
|
|
5,050
|
|
Property operating
income
|
42,209
|
|
|
42,754
|
|
Less: Acquisitions,
dispositions and development properties
|
(1,676)
|
|
|
—
|
|
Total same property
operating income
|
$
|
40,533
|
|
|
$
|
42,754
|
|
|
|
|
|
Shopping
Centers
|
$
|
32,367
|
|
|
$
|
32,649
|
|
Mixed-Use
properties
|
8,166
|
|
|
10,105
|
|
Total same property
operating income
|
$
|
40,533
|
|
|
$
|
42,754
|
|
|
|
|
|
Shopping Center
operating income
|
$
|
32,367
|
|
|
$
|
32,649
|
|
Less: Shopping Center
acquisitions, dispositions and development properties
|
—
|
|
|
—
|
|
Total same Shopping
Center operating income
|
$
|
32,367
|
|
|
$
|
32,649
|
|
|
|
|
|
Mixed-Use property
operating income
|
$
|
9,842
|
|
|
$
|
10,105
|
|
Less: Mixed-Use
acquisitions, dispositions and development properties
|
(1,676)
|
|
|
—
|
|
Total same Mixed-Use
property operating income
|
$
|
8,166
|
|
|
10,105
|
|
|
|
(4)
|
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-2021-earnings-301286175.html
SOURCE Saul Centers, Inc.