BETHESDA, Md., May 5, 2022
/PRNewswire/ -- Saul Centers, Inc.
(NYSE: BFS), an equity real estate investment trust ("REIT"),
announced its operating results for the quarter ended
March 31, 2022 ("2022 Quarter"). Total revenue for the
2022 Quarter increased to $62.1
million from $58.7 million for the quarter ended
March 31, 2021 ("2021 Quarter"). Net income increased to
$17.5 million for the 2022
Quarter from $12.8 million for the
2021 Quarter primarily due to (a) lower credit losses on operating
lease receivables and corresponding reserves (collectively,
$1.2 million), (b) higher capitalized
interest ($1.1 million), primarily
due to the Twinbrook Quarter development project, (c) higher base
rent at The Waycroft ($1.0
million), (d) lower depreciation and amortization of lease
costs ($0.4 million), (e) higher
base rent, exclusive of The Waycroft ($0.2
million), (f) higher lease termination fees
($0.2 million) and (g) higher
parking income, net of expenses ($0.2
million). Net income available to common stockholders
increased to $10.6 million
($0.44 per diluted share) for the
2022 Quarter from $7.5 million
($0.32 per diluted share) for
the 2021 Quarter.
Same property revenue increased $3.4
million (5.8%) and same property operating income increased
$3.0 million (7.1%) for the 2022
Quarter compared to the 2021 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 2022 Quarter totaled $34.0 million, a $1.6
million increase from the 2021 Quarter. Mixed-Use same
property operating income totaled $11.2 million, a $1.3 million increase from the 2021 Quarter.
The increase in Shopping Center same property operating income was
primarily the result of (a) lower credit losses on operating lease
receivables and corresponding reserves
(collectively, $0.8 million) and (b) higher base rent
($0.4 million). The increase in
Mixed-Use same property operating income was primarily the result
of (a) higher base rent ($0.7
million), (b) lower credit losses on operating lease
receivables and corresponding reserves (collectively, $0.4 million) and (c) higher parking income, net
of expenses ($0.2 million).
Reconciliations of (a) total revenue to same property revenue and
(b) net income to same property operating income are attached
to this press release.
As of March 31, 2022, 92.5% of the commercial portfolio was
leased, compared to 92.2% at March 31, 2021. On a same
property basis, 92.5% of the commercial portfolio was leased as of
March 31, 2022, compared to 92.2% at March 31,
2021. As of March 31, 2022, the residential portfolio
was 96.8% leased compared to 96.9% at March 31, 2021.
Funds from operations ("FFO") available to common stockholders
and noncontrolling interests (after deducting preferred stock
dividends) was $27.0 million
($0.81 and $0.80 per basic and diluted share, respectively)
in the 2022 Quarter compared to $22.7 million ($0.72 and $0.71 per basic and diluted share,
respectfully) in the 2021 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 increase in FFO available to common stockholders
and noncontrolling interests was primarily the result of (a)
lower credit losses on operating lease receivables and
corresponding reserves (collectively, $1.2
million), (b) higher capitalized interest ($1.1 million), primarily due to the Twinbrook
Quarter development project, (c) higher base rent at
The Waycroft ($1.0 million), (d) higher base rent, exclusive
of The Waycroft ($0.2 million), (e) higher lease termination
fees ($0.2 million) and (f) higher parking income, net of
expenses ($0.2 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, resulted in many of our tenants
announcing mandated or temporary closures of their operations
and/or requesting adjustments to their lease terms. While most of
our tenants that closed due to COVID-19 have re-opened their
businesses, there remains significant uncertainty around the
long-term economic impact of the COVID-19 pandemic, which 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 have generally remained fully open
throughout the COVID-19 pandemic, many restaurants have operated
with reduced hours and/or 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
open with limited or full capacity depending on location. As
of April 30, 2022, payments by tenants of contractual base
rent and operating expense and real estate tax recoveries totaled
approximately 98% for the 2022 Quarter. In some 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, 2022.
While we expect collections of rent billings, including minimum
rent, operating expense recoveries and real estate tax
reimbursements, to remain below pre-pandemic levels in the
near-term, when taking into account the amount of time elapsed
since the due date of the payment, we continue to experience
sequential improvement in our collection rates. The following table
summarizes the Company's consolidated total collections of the 2022
Quarter rent billings as of April 30, 2022:
|
Retail
|
Office
|
Residential
|
Total
|
2022 First
Quarter
|
98 %
|
99 %
|
99 %
|
98 %
|
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 March 31, 2022,
approximately 73% of the amount of rent deferred, or approximately
$6.7 million, has come due. Of
the amount that has come due, $6.5
million, or approximately 97%, has been paid.
With cash balances of over $6.8 million and borrowing capacity of
approximately $217.5 million on
April 30, 2022, 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, 2021 and (ii) our Quarterly Report
on Form 10-Q for the quarter ended March 31, 2022 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,
2021 and (ii) our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2022.
Saul Centers, Inc.
|
Consolidated Balance Sheets
|
(Unaudited)
|
|
(Dollars in thousands, except per share
amounts)
|
March 31,
2022
|
|
December 31,
2021
|
Assets
|
|
|
|
Real estate investments
|
|
|
|
Land
|
$
511,529
|
|
$
511,529
|
Buildings and
equipment
|
1,570,123
|
|
1,566,686
|
Construction in
progress
|
225,087
|
|
205,911
|
|
2,306,739
|
|
2,284,126
|
Accumulated
depreciation
|
(660,855)
|
|
(650,113)
|
|
1,645,884
|
|
1,634,013
|
Cash and cash equivalents
|
12,313
|
|
14,594
|
Accounts receivable and accrued income, net
|
56,357
|
|
58,659
|
Deferred leasing costs, net
|
23,420
|
|
24,005
|
Other assets
|
17,578
|
|
15,490
|
Total assets
|
$ 1,755,552
|
|
$ 1,746,761
|
Liabilities
|
|
|
|
Notes payable
|
$
905,225
|
|
$
941,456
|
Revolving credit facility payable
|
135,360
|
|
103,167
|
Term loan facility payable
|
99,270
|
|
99,233
|
Accounts payable, accrued expenses and other
liabilities
|
39,649
|
|
25,558
|
Deferred income
|
23,867
|
|
25,188
|
Dividends and distributions payable
|
21,722
|
|
21,672
|
Total liabilities
|
1,225,093
|
|
1,216,274
|
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, 42,000,000 shares authorized,
23,910,338 and
23,840,471 shares issued and outstanding,
respectively
|
239
|
|
238
|
Additional paid-in capital
|
440,151
|
|
436,609
|
Partnership units in escrow
|
39,650
|
|
39,650
|
Distributions in excess of accumulated net income
|
(259,506)
|
|
(256,448)
|
Total Saul Centers, Inc.
equity
|
405,534
|
|
405,049
|
Noncontrolling interests
|
124,925
|
|
125,438
|
Total equity
|
530,459
|
|
530,487
|
Total liabilities and
equity
|
$ 1,755,552
|
|
$ 1,746,761
|
Saul Centers,
Inc.
|
Consolidated
Statements of Operations
|
(In thousands, except
per share amounts)
|
|
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
Revenue
|
(unaudited)
|
Rental revenue
|
$
60,680
|
|
$
57,756
|
Other
|
1,464
|
|
968
|
Total revenue
|
62,144
|
|
58,724
|
Expenses
|
|
|
|
Property operating expenses
|
9,538
|
|
8,686
|
Real estate taxes
|
7,418
|
|
7,829
|
Interest expense, net and amortization of deferred debt
costs
|
10,602
|
|
11,988
|
Depreciation and amortization of lease costs
|
12,327
|
|
12,748
|
General and administrative
|
4,768
|
|
4,678
|
Total expenses
|
44,653
|
|
45,929
|
Net Income
|
17,491
|
|
12,795
|
Noncontrolling interests
|
|
|
|
Income attributable to noncontrolling interests
|
(4,126)
|
|
(2,533)
|
Net income attributable to Saul Centers,
Inc.
|
13,365
|
|
10,262
|
Preferred stock dividends
|
(2,798)
|
|
(2,798)
|
Net income available to common
stockholders
|
$
10,567
|
|
$
7,464
|
Per share net income available to common
stockholders
|
|
|
|
Basic and diluted
|
$
0.44
|
|
$
0.32
|
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)
|
2022
|
|
2021
|
Net income
|
$
17,491
|
|
$
12,795
|
Add:
|
|
|
|
Real estate depreciation and
amortization
|
12,327
|
|
12,748
|
FFO
|
29,818
|
|
25,543
|
Subtract:
|
|
|
|
Preferred stock
dividends
|
(2,798)
|
|
(2,798)
|
FFO available to common
stockholders and noncontrolling interests
|
$
27,020
|
|
$
22,745
|
Weighted average shares
and units:
|
|
|
|
Basic
|
33,164
|
|
31,493
|
Diluted (2)
|
33,886
|
|
31,965
|
Basic FFO per share
available to common stockholders and noncontrolling
interests
|
$
0.81
|
|
$
0.72
|
Diluted FFO per share
available to common stockholders and noncontrolling
interests
|
$
0.80
|
|
$
0.71
|
|
|
(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 were held in escrow related to the
contribution of Twinbrook Quarter. Half of the units held in escrow
were released on October 18, 2021. The remaining units held in
escrow are scheduled to be released on October 18, 2023.
|
Reconciliation of
revenue to same property revenue (3)
|
|
(in thousands)
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
|
|
(unaudited)
|
Total revenue
|
|
$
62,144
|
|
$
58,724
|
Less: Acquisitions,
dispositions and development properties
|
|
—
|
|
—
|
Total same property revenue
|
|
$
62,144
|
|
$
58,724
|
|
|
|
|
|
Shopping Centers
|
|
$
44,099
|
|
$
42,444
|
Mixed-Use properties
|
|
18,045
|
|
16,280
|
Total same property revenue
|
|
$
62,144
|
|
$
58,724
|
|
|
|
|
|
Total Shopping Center revenue
|
|
$
44,099
|
|
$
42,444
|
Less: Shopping Center
acquisitions, dispositions and development properties
|
|
—
|
|
—
|
Total same Shopping Center revenue
|
|
$
44,099
|
|
$
42,444
|
|
|
|
|
|
Total Mixed-Use property
revenue
|
|
$
18,045
|
|
$
16,280
|
Less: Mixed-Use
acquisitions, dispositions and development properties
|
|
—
|
|
—
|
Total same Mixed-Use property revenue
|
|
$
18,045
|
|
$
16,280
|
|
|
(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)
|
2022
|
|
2021
|
|
(unaudited)
|
Net income
|
$
17,491
|
|
$
12,795
|
Add: Interest expense,
net and amortization of deferred debt costs
|
10,602
|
|
11,988
|
Add: Depreciation and
amortization of lease costs
|
12,327
|
|
12,748
|
Add: General and
administrative
|
4,768
|
|
4,678
|
Property operating
income
|
45,188
|
|
42,209
|
Less: Acquisitions,
dispositions and development properties
|
—
|
|
—
|
Total same property
operating income
|
$
45,188
|
|
$
42,209
|
|
|
|
|
Shopping Centers
|
$
34,007
|
|
$
32,367
|
Mixed-Use properties
|
11,181
|
|
9,842
|
Total same property
operating income
|
$
45,188
|
|
$
42,209
|
|
|
|
|
Shopping Center operating
income
|
$
34,007
|
|
$
32,367
|
Less: Shopping Center
acquisitions, dispositions and development properties
|
—
|
|
—
|
Total same Shopping
Center operating income
|
$
34,007
|
|
$
32,367
|
|
|
|
|
Mixed-Use property operating
income
|
$
11,181
|
|
$
9,842
|
Less: Mixed-Use
acquisitions, dispositions and development properties
|
—
|
|
—
|
Total same Mixed-Use
property operating income
|
$
11,181
|
|
9,842
|
|
|
(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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SOURCE Saul Centers, Inc.