BETHESDA, Md., Feb. 23 /PRNewswire-FirstCall/ -- Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust (REIT), announced its operating results for the quarter ended December 31, 2008. Total revenue for the three months ended December 31, 2008 ('2008 Quarter') increased 4.5% to $40,571,000 compared to $38,810,000 for the three months ended December 31, 2007 ('2007 Quarter'). Operating income, which is net income available to common stockholders before gain on property dispositions, minority interests and preferred stock dividends, increased 4.5% to $11,853,000 for the 2008 Quarter compared to $11,340,000 for the 2007 Quarter. For the 2008 Quarter, the Company recognized a non-operating, gain on property dispositions of $1,096,000, arising from insurance proceeds related to minor fire damage sustained at two shopping centers during 2008. These insurance proceeds are expected to fund substantially all of the restoration. The gain recognized was measured as the difference between insurance proceeds and the depreciated carrying value of the assets replaced. 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. Net income available to common stockholders decreased to $7,029,000 or $0.39 per diluted share for the 2008 Quarter, compared to $7,279,000 or $0.41 per diluted share for the 2007 Quarter.

Same property revenue for the total portfolio increased 1.2% for the 2008 Quarter compared to the 2007 Quarter but same property operating income decreased 1.7%. The same property comparisons exclude the results of properties not in operation for each of the comparable reporting quarters. Same property operating income in the shopping center portfolio decreased 2.6% for the 2008 Quarter compared to the 2007 Quarter. This shopping center operating income decrease resulted primarily from an increase in the provision for credit loss reserves on delinquent tenant rents and to a lesser extent, a decrease in lease termination fee income. Same property operating income in the office portfolio increased 1.1% for the 2008 Quarter compared to the 2007 Quarter. This office portfolio operating income increase resulted primarily from the 0.6% leasing percentage increase, from 95.2% at the 2007 Quarter end, to 95.8% at the 2008 Quarter end.

For the year ended December 31, 2008 ('2008 Year'), total revenue increased 6.5% to $160,345,000 compared to $150,585,000 for the year ended December 31, 2007 ('2007 Year') and operating income increased 2.2% to $46,365,000 compared to $45,382,000 for the 2007 Year. This $983,000 increase in operating income was impacted by 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 increase in operating income combined with the previously mentioned $1,096,000 gain, was more than offset by an increase in preferred stock dividends of $5,453,000 for the 2008 Year. As a result, net income available to common stockholders decreased to $26,241,000 or $1.46 per diluted share for the 2008 Year, compared to $28,703,000 or $1.62 per diluted share for the 2007 Year. Same property revenue for the total portfolio increased 3.1% for the 2008 Year compared to the 2007 Year and same property operating income increased 0.9%. For the 2008 Year, shopping center same property operating income increased 1.2% due primarily to the stabilization of operations at Lansdowne Town Center and rental rate growth at Southdale and several other shopping centers. These increases were offset in part by an increase in credit loss reserves and increased property operating expenses and real estate taxes, net of tenant recoveries. Same property operating income in the office portfolio remained relatively stable, decreasing 0.2% for the 2008 Year compared to the 2007 Year.

As of December 31, 2008, 94.2% of the operating portfolio was leased compared to 95.3% for December 31, 2007. On a same property basis, 94.1% 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 99,000 square feet of leased space. The largest contributor to the leasing decrease, approximately 29,000 square feet, occurred at South Dekalb Plaza in Atlanta, Georgia. Leasing also decreased approximately 14,000 square feet at Village Center, approximately 13,000 square feet at Broadlands Village and approximately 10,000 square feet at Ashburn Village, located in the Northern Virginia suburbs of Washington, DC.

Funds from operations (FFO) available to common shareholders (after deducting preferred stock dividends) decreased 5.5% to $15,432,000 in the 2008 Quarter compared to $16,328,000 for the 2007 Quarter. On a diluted per share basis, FFO available to common shareholders decreased 5.7% to $0.66 per share for the 2008 Quarter compared to $0.70 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.