BFS Saul Centers Inc

Saul Centers, Inc. Reports Third Quarter 2004 Earnings BETHESDA, Md., Nov. 2 /PRNewswire-FirstCall/ -- Saul Centers, Inc. (NYSE:BFS), an equity real estate investment trust (REIT), announced its third quarter operating results. Total revenues for the quarter ended September 30, 2004 increased 17.8% to $29,044,000 compared to $24,659,000 for the 2003 quarter. Operating income before gain on property sale, minority interests and preferred stock dividends increased 25.0% to $8,793,000 compared to $7,035,000 for the comparable 2003 quarter. After preferred stock dividends and a $572,000 property sale gain resulting from the State of Maryland's condemnation of a small strip of unimproved land for a road widening project at White Oak shopping center, the Company reported net income available to common stockholders of $5,355,000 or $0.33 per share for the 2004 quarter, a per share increase of 3.1% compared to net income available to common stockholders of $5,012,000 or $0.32 per share for the 2003 quarter (basic & diluted). Overall same property revenues for the total portfolio increased 5.5% for the 2004 third quarter compared to the same quarter in 2003 and same property operating income increased 5.6%. The same property comparisons exclude the results of operations of properties not in operation for each of the comparable reporting periods. 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 3.8% for the 2004 third quarter, due primarily to new leasing resulting from minor redevelopments at Thruway and Southdale. Same property operating income in the office portfolio grew 9.3% for the 2004 quarter, due primarily to the completion of lease-up of space, vacant during a portion of 2003, at 601 Pennsylvania Avenue. Excluding the impact of 601 Pennsylvania Avenue, overall portfolio same property growth was 3.5% for the 2004 quarter. For the nine month period ended September 30, 2004, total revenues increased 16.1% to $83,273,000 compared to $71,755,000 for the 2003 period. Operating income before gain on property sale, minority interests and preferred stock dividends increased 29.9% to $25,451,000 compared to $19,590,000 for the comparable 2003 period. After preferred stock dividends and the third quarter property sale gain, net income available to common stockholders was $13,946,000 or $.86 per fully diluted share for the 2004 period, a per share decrease of 1.1% compared to net income available to common stockholders of $13,527,000 or $0.87 per fully diluted share for the 2003 period. Overall same property revenues for the total portfolio increased 4.9% for the 2004 nine month period compared to the same period in 2003 and same property operating income increased 5.8%. The shopping center portfolio same center operating income increased 3.9% and the office portfolio grew 10.0%. Excluding the impact of 601 Pennsylvania Avenue, overall portfolio same property operating income growth was 2.7% for the 2004 period. As of September 30, 2004, 94.2% of the portfolio was leased, compared to 93.8% a year earlier. On a same property basis, 94.8% of the portfolio was leased, compared to the prior year level of 94.4%. The comparative increase in the 2004 same property leasing percentage is largely attributable to the leasing of approximately 31,000 square feet of office space at two Washington DC office properties, 601 Pennsylvania Avenue (20,000 square feet) and Van Ness Square (11,000 square feet). Funds From Operations (FFO) available to common shareholders (after deducting preferred stock dividends), increased 6.2% to $12,304,000 in the 2004 third quarter compared to $11,584,000 for the same quarter in 2003. The $720,000 increase in FFO available to common shareholders in the 2004 quarter resulted from the combination of (1) increased operating income from retail acquisition and development properties and (2) successful leasing efforts in the core portfolio, 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 3.6% to $.57 per share in 2004 compared to $.55 for the 2003 quarter. FFO available to common shareholders for the 2004 nine month period increased by $2,481,000 (7.6%) to $34,947,000. Fully diluted per share FFO available to common shareholders increased 4.5% to $1.64 per share in 2004 compared to $1.57 for the 2003 period. FFO, a widely accepted non- GAAP financial measure of operating performance for real estate investment trusts, is defined as net income, plus minority interests, extraordinary items and real estate depreciation and amortization, excluding gains and losses from property sales. Saul Centers is a self-managed, self-administered equity real estate investment trust headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 39 community and neighborhood shopping center and office properties totaling approximately 7.1 million square feet of leasable area. Over 80% of the Company's cash flow is generated from properties in the metropolitan Washington, DC/Baltimore area. Saul Centers, Inc. Condensed Consolidated Balance Sheets ($ in thousands) September 30, December 31, 2004 2003 Assets (Unaudited) Real estate investments Land $109,153 $82,256 Buildings 500,351 436,371 Construction in progress 57,330 33,488 666,834 552,115 Accumulated depreciation (176,848) (164,823) 489,986 387,292 Cash and cash equivalents 21,785 45,244 Accounts receivable and accrued income, net 18,394 14,642 Lease acquisition costs, net 18,571 15,344 Prepaid expenses 3,072 3,633 Deferred debt costs, net 4,982 4,224 Other assets 3,339 1,237 Total assets $560,129 $471,616 Liabilities Mortgage notes payable $429,498 $357,248 Dividends and distributions payable 10,371 9,454 Accounts payable, accrued expenses and other liabilities 16,667 7,793 Deferred income 4,716 4,478 Total liabilities 461,252 378,973 Stockholders' Equity Preferred stock 100,000 100,000 Common stock 163 159 Additional paid in capital 102,630 91,469 Accumulated deficit (103,916) (98,985) Total stockholders' equity 98,877 92,643 Total liabilities and stockholders' equity $560,129 $471,616 Saul Centers, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Revenue Base rent $23,324 $19,751 $67,351 $57,733 Expense Recoveries 4,448 3,303 12,360 10,473 Percentage Rent 440 438 1,144 1,102 Other 832 1,167 2,418 2,447 Total revenue 29,044 24,659 83,273 71,755 Operating Expenses Property operating expenses 3,186 2,653 8,948 8,261 Provision for credit losses 131 26 299 118 Real estate taxes 2,325 2,130 7,204 6,391 Interest expense and deferred debt amortization 7,008 6,767 19,908 20,124 Depreciation and amortization 5,511 4,549 15,496 12,876 General and administrative 2,090 1,499 5,967 4,395 Total operating expenses 20,251 17,624 57,822 52,165 Operating Income 8,793 7,035 25,451 19,590 Gain on property disposition 572 - 572 - Minority Interests (2,010) (2,023) (6,077) (6,063) Net Income 7,355 5,012 19,946 13,527 Preferred Dividends (2,000) - (6,000) - Net Income Available to Common Stockholders $5,355 $5,012 $13,946 $13,527 Per Share Amounts : Net income available to common stockholders $0.33 $0.32 $0.87 $0.87 Net income available to common stockholders (fully diluted) $0.33 $0.32 $0.86 $0.87 Weighted average common stock outstanding : Common stock 16,227 15,683 16,088 15,516 Effect of dilutive options 68 16 42 14 Fully diluted weighted average common stock 16,295 15,699 16,130 15,530 Saul Centers, Inc. Supplemental Information (Unaudited) (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Reconciliation of Net Income to Funds From Operations (FFO) (1) Net Income $7,355 $5,012 $19,946 $13,527 Less: Gain on sale of property (572) - (572) - Add: Real property depreciation & amortization 5,511 4,549 15,496 12,876 Add: Minority Interests 2,010 2,023 6,077 6,063 FFO 14,304 11,584 40,947 32,466 Less: Preferred dividends (2,000) - (6,000) - FFO available to common shareholders $12,304 $11,584 $34,947 $32,466 Weighted average shares outstanding : Fully diluted weighted average common stock 16,295 15,699 16,130 15,530 Convertible limited partnership units 5,196 5,184 5,193 5,181 Fully diluted & converted weighted average shares 21,491 20,883 21,323 20,711 Per Share Amounts: FFO available to common shareholders $0.57 $0.55 $1.64 $1.57 Reconciliation of Net Income to Same Property Operating Income Net Income $7,355 $5,012 $19,946 $13,527 Add: Interest expense and deferred debt amortization 7,008 6,767 19,908 20,124 Add: Depreciation and amortization 5,511 4,549 15,496 12,876 Add: General and administrative 2,090 1,499 5,967 4,395 Less: Gain on property disposition (572) - (572) - Less: Interest income (70) (6) (176) (39) Add: Minority Interests 2,010 2,023 6,077 6,063 Property operating income 23,332 19,844 66,646 56,946 Less: Acquisitions & developments (2,858) (448) (6,850) (448) Total same property operating income $20,474 $19,396 $59,796 $56,498 Total Shopping Centers $13,668 $13,171 $39,982 $38,482 Total Office Properties 6,806 6,225 19,814 18,016 Total same property operating income $20,474 $19,396 $59,796 $56,498 (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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