BETHESDA, Md., Aug. 6 /PRNewswire-FirstCall/ -- Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust (REIT), announced its operating results for the quarter ended June 30, 2009. Total revenue for the three months ended June 30, 2009 ("2009 Quarter") decreased 1.7% to $39,416,000 compared to $40,105,000 for the three months ended June 30, 2008 ("2008 Quarter"). Operating income, which is net income available to common stockholders before gain on property dispositions, loss on early extinguishment of debt, income attributable to the noncontrolling interest and preferred stock dividends, decreased 13.1% to $10,574,000 for the 2009 Quarter compared to $12,175,000 for the 2008 Quarter. Net income available to common stockholders was $3,934,000 or $0.22 per diluted share for the 2009 Quarter, compared to net income available to common stockholders of $6,443,000 or $0.36 per diluted share for the 2008 Quarter. During the 2009 Quarter, the Company refinanced mortgage debt on four properties. As a result of these refinancings, the Company incurred expense totaling $1,660,000 related to the early retirement of the existing mortgage debt due to mature December 2011. The Company also modified its existing revolving credit agreement which was due to expire in December 2010. Interest expense and amortization of deferred debt costs includes $280,000 associated with the modification. Total expense recognized in the 2009 Quarter for these financing activities was $1,940,000.

Same property revenue for the total portfolio decreased 1.5% for the 2009 Quarter compared to the 2008 Quarter and same property operating income decreased 4.0%. 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 decreased 4.6% for the 2009 Quarter compared to the 2008 Quarter. The primary cause of this decrease were vacancies at four shopping centers; small shop space at Lansdowne Town Center and Broadlands Village, both located in Loudoun County, Virginia; an anchor space at Seven Corners in Falls Church, Virginia; and an anchor space at White Oak in Silver Spring, Maryland. The vacant anchor spaces at both Seven Corners and White Oak have been re-leased with rents commencing in June and July, 2009, respectively. Increased property operating expenses and real estate taxes, net of recovered amounts, also contributed to the decrease in property operating income for the 2009 Quarter. Same property operating income in the office portfolio decreased 2.0% for the 2009 Quarter largely due to increased tenant vacancy at Avenel Business Park.

For the six months ended June 30, 2009 ("2009 Period"), total revenue increased 0.4% to $79,105,000 compared to $78,827,000 for the six months ended June 30, 2008 ("2008 Period") and operating income decreased 4.8% to $22,124,000 compared to $23,248,000 for the 2008 Period. Net income available to common stockholders was $9,890,000 or $0.55 per diluted share for the 2009 Period, compared to $13,476,000 or $0.75 per diluted share for the 2008 Period. Overall same property revenue for the total portfolio decreased 1.1% for the 2009 Period compared to the 2008 Period and same property operating income decreased 3.7%. For the 2009 Period, shopping center same property operating income decreased 5.1% due to overall increases in tenant vacancies and credit loss reserves. Same property operating income in the office portfolio remained relatively stable, increasing 0.9% for the 2009 Period, due primarily to lease termination fees received, which were largely offset by increased tenant vacancy at Avenel Business Park.

As of June 30, 2009, 91.8% of the operating portfolio, including the Northrock and Westview Village development projects which are phasing into service, was leased compared to 94.8% at June 30, 2008. On a same property basis, 93.1% of the portfolio was leased, compared to the prior year level of 94.8%. The 2009 leasing percentages declined due to a net decrease of approximately 144,000 square feet of leased space.

Funds from operations (FFO) available to common shareholders (after deducting preferred stock dividends) decreased 20.6% to $12,212,000 in the 2009 Quarter compared to $15,378,000 for the 2008 Quarter. On a diluted per share basis, FFO available to common shareholders decreased 21.2% to $0.52 per share for the 2009 Quarter compared to $0.66 per share for the 2008 Quarter. FFO, a widely accepted non-GAAP financial measure of operating performance for REITs, is defined as net income plus income attributable to the noncontrolling interest, extraordinary items and real estate depreciation and amortization, excluding gains from property dispositions. FFO available to common shareholders for the 2009 Period decreased 13.7% to $27,018,000 from $31,297,000 during the 2008 Period. Per share FFO available to common shareholders for the 2009 Period decreased 13.4% to $1.16 per diluted share compared to $1.34 per diluted share for the 2008 Period. FFO decreased in the 2009 Period primarily due to $1,940,000 ($0.08 per diluted share) of expense associated with the previously discussed second quarter financing activities, increased preferred stock dividends and to a lesser extent, decreased property operating income.

During the 2009 Quarter, Saul Centers refinanced a significant portion of its $62.7 million of fixed-rate mortgage debt due to mature December 2011. The Company closed on four new 15-year, non-recourse mortgage loans totaling $85 million, which require monthly payments at a weighted average interest rate of 7.6% and 25-year amortization schedule. These refinancings provided the Company with net cash proceeds of over $25 million. As a result of the refinancing of this debt, only $19 million of the Company's remaining fixed-rate mortgage debt will mature prior to 2012. Saul Centers also modified its revolving line of credit facility and in July increased the facility to $150 million and extended the maturity date to June 2012, with a one-year extension at the Company's option. As of August 6, 2009, the Company had no balance outstanding on the line.

Saul Centers is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland.