BETHESDA, Md., Nov. 7 /PRNewswire-FirstCall/ -- Saul Centers, Inc.
(NYSE: BFS), an equity real estate investment trust (REIT), announced its
operating results for the quarter ended September 30, 2008. Total revenue for
the three months ended September 30, 2008 ('2008 Quarter') increased 7.7% to
$40,947,000 compared to $38,014,000 for the three months ended September 30,
2007 ('2007 Quarter'). Operating income, which is net income available to
common stockholders before gain on property disposition, minority interests
and preferred stock dividends, decreased 5.8% to $11,264,000 for the 2008
Quarter compared to $11,956,000 for the 2007 Quarter. This $692,000 decrease
in operating income includes a one-time $1,112,000 non-cash depreciation
charge resulting from the demolition of a portion of the Smallwood Village
Center in conjunction with the Company's redevelopment of the property. The
Company issued approximately $79,300,000 of Series B preferred stock in March
2008, which increased the 2008 Quarter preferred stock dividends by
$1,785,000. Primarily as a result of these two events, net income available
to common stockholders decreased to $5,736,000 or $0.32 per diluted share for
the 2008 Quarter, compared to $7,624,000 or $0.43 per diluted share for the
2007 Quarter.
Same property revenue for the total portfolio increased 3.9% for the 2008
Quarter compared to the 2007 Quarter and same property operating income
increased 0.7%. The same property comparisons exclude the results of
operations of properties not in operation for each of the comparable reporting
quarters. Same property operating income in the shopping center portfolio
increased 1.9% for the 2008 Quarter compared to the 2007 Quarter. This
shopping center operating income increase resulted primarily from base rent
growth and to a lesser extent, an increase in lease termination fees. These
increases were offset in part by increased real estate taxes and property
operating expenses, net of tenant recoveries, and an increase in credit loss
reserves. Same property operating income in the office portfolio decreased
3.2% for the 2008 Quarter compared to the 2007 Quarter. This decrease
resulted primarily from the 1.2% leasing percentage decrease, from 96.5% at
the 2007 Quarter end to 95.3% at the 2008 Quarter end.
For the nine months ended September 30, 2008 ('2008 Period'), total
revenue increased 7.2% to $119,774,000 compared to $111,775,000 for the nine
months ended September 30, 2007 ('2007 Period') and operating income increased
1.4% to $34,512,000 compared to $34,042,000 for the 2007 Period. This
$470,000 increase in operating income includes a one-time $1,112,000 non-cash
depreciation charge resulting from the demolition of a portion of the
Smallwood Village Center in conjunction with the Company's redevelopment of
the property. Preferred stock dividends increased by $3,668,000 in the 2008
Period due to the Company's Series B preferred stock issue. Primarily as a
result of these two events, net income available to common stockholders
decreased to $19,212,000 or $1.07 per diluted share for the 2008 Period,
compared to $21,424,000 or $1.21 per diluted share for the 2007 Period. Same
property revenue for the total portfolio increased 3.8% for the 2008 Period
compared to the 2007 Period and same property operating income increased 1.8%.
For the 2008 Period, shopping center same property operating income increased
2.5% due to the stabilization of Lansdowne Town Center, rental rate growth at
Southdale and several other shopping centers, and to a lesser extent, an
increase in lease termination fees. These increases were offset in part by
increased property operating expenses and real estate taxes, net of tenant
recoveries, and an increase in credit loss reserves. Same property operating
income in the office portfolio remained relatively stable, decreasing 0.6% for
the 2008 Period.
As of September 30, 2008, 94.7% of the operating portfolio was leased
compared to 95.4% for September 30, 2007. On a same property basis, 94.6% of
the portfolio was leased, compared to the prior year level of 95.4%. The 2008
same property leasing percentages decreased due to a net decrease of
approximately 65,000 square feet of leased space. The majority of this
leasing decrease, approximately 37,000 square feet, occurred at South Dekalb
Plaza in Atlanta, Georgia. Leasing also decreased approximately 12,000 square
feet at Avenel Business Park in Gaithersburg, Maryland and approximately
11,000 square feet at Seabreeze Plaza in Palm Harbor, Florida.
Funds from operations (FFO) available to common shareholders (after
deducting preferred stock dividends) decreased 3.1% to $15,966,000 in the 2008
Quarter compared to $16,481,000 for the 2007 Quarter. On a diluted per share
basis, FFO available to common shareholders decreased 4.2% to $0.68 per share
for the 2008 Quarter compared to $0.71 per share for the 2007 Quarter. FFO, a
widely accepted non-GAAP financial measure of operating performance for REITs,
is defined as net income plus minority interests, extraordinary items and real
estate depreciation and amortization, excluding gains from property
dispositions. FFO available to common shareholders for the 2008 Period
decreased 0.5% to $47,263,000 from $47,518,000 during the 2007 Period. Per
share FFO available to common shareholders for the 2008 Period decreased 1.5%
to $2.02 from $2.05 per diluted share, for the 2007 Period. Improved property
operating results were offset by increased preferred stock dividends of
$1,785,000 ($0.08 per diluted share) and $3,668,000 ($0.16 per diluted share),
for the 2008 Quarter and 2008 Period, respectively, arising from the Company's
Series B preferred stock issue.
Approximately 97% of the Company's debt consists of fixed rate, amortizing
non-recourse mortgage loans, none of which mature until December 2011. The
mortgage maturing December 2011 will have a remaining balance of $62,233,000,
or only 54% of the original amount borrowed, as a result of loan principal
repaid monthly over the term of the loan. The Company has no outstanding
borrowings on its $150 million revolving credit facility.
Saul Centers is a self-managed, self-administered equity real estate
investment trust headquartered in Bethesda, Maryland. Saul Centers currently
operates and manages a real estate portfolio of 50 community and neighborhood
shopping center and office properties totaling approximately 8.2 million
square feet of leasable area. Over 80% of the Company's property operating
income is generated from properties in the metropolitan Washington,
DC/Baltimore area.
Saul Centers, Inc.
Condensed Consolidated Balance Sheets
($ in thousands)
September 30, December 31,
2008 2007
(Unaudited)
Assets
Real estate investments
Land $215,407 $167,007
Buildings and equipment 711,628 673,328
Construction in progress 83,322 49,592
1,010,357 889,927
Accumulated depreciation (247,994) (232,669)
762,363 657,258
Cash and cash equivalents 25,137 5,765
Accounts receivable and
accrued income, net 35,821 33,967
Deferred leasing costs, net 16,558 16,190
Prepaid expenses, net 4,642 2,571
Deferred debt costs, net 6,148 6,264
Other assets 4,971 5,428
Total assets $855,640 $727,443
Liabilities
Mortgage notes payable $567,680 $524,726
Revolving credit facility - 8,000
Dividends and distributions
payable 14,722 12,887
Accounts payable, accrued
expenses and other
liabilities 21,107 13,159
Deferred income 24,790 15,147
Total liabilities 628,299 573,919
Minority interests 2,944 4,745
Stockholders' equity
Preferred stock 179,328 100,000
Common stock 181 178
Additional paid-in capital 163,813 161,618
Accumulated deficit (118,925) (113,017)
Total stockholders' equity 224,397 148,779
Total liabilities and
stockholders' equity $855,640 $727,443
Saul Centers, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenue (Unaudited) (Unaudited)
Base rent $31,466 $30,064 $93,599 $88,616
Expense recoveries 7,652 6,638 21,730 19,518
Percentage rent 253 249 799 763
Other 1,576 1,063 3,646 2,878
Total revenue 40,947 38,014 119,774 111,775
Operating expenses
Property operating
expenses 5,360 4,777 14,872 13,925
Provision for credit
losses 236 65 660 280
Real estate taxes 4,241 3,558 12,530 10,622
Interest expense and
amortization of
deferred debt costs 8,568 8,497 25,877 25,116
Depreciation and
amortization of
deferred leasing
costs 8,487 6,525 22,419 19,476
General and
administrative 2,791 2,636 8,904 8,314
Total operating
expenses 29,683 26,058 85,262 77,733
Operating income 11,264 11,956 34,512 34,042
Gain on property
disposition - - 205 -
Minority interests (1,743) (2,332) (5,837) (6,618)
Net income 9,521 9,624 28,880 27,424
Preferred dividends (3,785) (2,000) (9,668) (6,000)
Net income available to
common stockholders $5,736 $7,624 $19,212 $21,424
Per share net income
available to common
stockholders :
Diluted $0.32 $0.43 $1.07 $1.21
Weighted average common
stock :
Common stock 17,834 17,674 17,801 17,540
Effect of dilutive
options 157 157 170 179
Diluted weighted
average common stock 17,991 17,831 17,971 17,719
Saul Centers, Inc.
Supplemental Information
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Reconciliation of net income (Unaudited) (Unaudited)
to funds from operations
(FFO): (1)
Net Income $9,521 $9,624 $28,880 $27,424
Less: Gain on property
disposition - - (205) -
Add: Real property
depreciation & amortization 8,487 6,525 22,419 19,476
Add: Minority interests 1,743 2,332 5,837 6,618
FFO 19,751 18,481 56,931 53,518
Less: Preferred dividends (3,785) (2,000) (9,668) (6,000)
FFO available to common
shareholders $15,966 $16,481 $47,263 $47,518
Weighted average shares :
Diluted weighted average
common stock 17,991 17,831 17,971 17,719
Convertible limited
partnership units 5,416 5,416 5,416 5,416
Diluted & converted
weighted average shares 23,407 23,247 23,387 23,135
Per share amounts:
FFO available to common
shareholders (diluted) $0.68 $0.71 $2.02 $2.05
Reconciliation of net income
to same property operating
income:
Net income $9,521 $9,624 $28,880 $27,424
Add: Interest expense and
amortization of deferred
debt costs 8,568 8,497 25,877 25,116
Add: Depreciation and
amortization of deferred
leasing costs 8,487 6,525 22,419 19,476
Add: General and
administrative 2,791 2,636 8,904 8,314
Less: Gain on property
disposition - - (205) -
Less: Interest income (190) (115) (501) (353)
Add: Minority interests 1,743 2,332 5,837 6,618
Property operating income 30,920 29,499 91,211 86,595
Less: Acquisitions &
developments (1,508) (291) (3,456) (370)
Total same property
operating income $29,412 $29,208 $87,755 $86,225
Total shopping centers $22,641 $22,211 $67,000 $65,341
Total office properties 6,771 6,997 20,755 20,884
Total same property
operating income $29,412 $29,208 $87,755 $86,225
(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
minority interests, extraordinary items and real estate depreciation and
amortization, excluding gains or losses from property 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 we believe occurs with our 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.
SOURCE Saul Centers, Inc.
