BETHESDA, Md., Aug. 7 /PRNewswire-FirstCall/ -- Saul Centers, Inc.
(NYSE: BFS), an equity real estate investment trust (REIT), announced its
operating results for the quarter ended June 30, 2008. Total revenue for the
three months ended June 30, 2008 ("2008 Quarter") increased 8.2% to
$40,105,000 compared to $37,077,000 for the three months ended June 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, increased 9.9% to $12,175,000 for the 2008 Quarter
compared to $11,077,000 for the 2007 Quarter. This $1,098,000 increase in
operating income was offset by the $1,786,000 increase in preferred stock
dividends from the Company's issuance of approximately $79,300,000 of Series B
preferred stock in March 2008. As a result, net income available to common
stockholders was $6,443,000 or $0.36 per diluted share for the 2008 Quarter,
compared to $6,926,000 or $0.39 per diluted share for the 2007 Quarter.
Same property revenue for the total portfolio increased 3.2% for the 2008
Quarter compared to the 2007 Quarter and same property operating income
increased 1.2%. 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 1.0% for the 2008 Quarter compared to the 2007 Quarter. The quarter
over quarter shopping center operating income increase resulted primarily from
base rent growth at Southdale and several core shopping centers as well as the
stabilization of Lansdowne Town Center. The same center operating income
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 increased
2.0% for the 2008 Quarter compared to the 2007 Quarter.
For the six months ended June 30, 2008 ("2008 Period"), total revenue
increased 6.9% to $78,827,000 compared to $73,761,000 for the six months ended
June 30, 2007 ("2007 Period") and operating income increased 5.3% to
$23,248,000 compared to $22,086,000 for the 2007 Period. This $1,162,000
increase in operating income was offset by the $1,883,000 increase in
preferred stock dividends from the Company's Series B preferred stock issue.
As a result, net income available to common stockholders was $13,476,000 or
$0.75 per diluted share for the 2008 Period, compared to $13,800,000 or $0.78
per diluted share for the 2007 Period. Overall same property revenue for the
total portfolio increased 3.7% for the 2008 Period compared to the 2007 Period
and same property operating income increased 2.2%. For the 2008 Period,
shopping center same property operating income increased 2.7% due to the
stabilization of Lansdowne Town Center and rental rate growth at Southdale,
Seven Corners and several core shopping centers. The same center operating
income 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, increasing 0.7% for the 2008 Period.
As of June 30, 2008, 94.8% of the operating portfolio was leased compared
to 95.7% for June 30, 2007. On a same property basis, 94.8% of the portfolio
was leased, compared to the prior year level of 95.8%. The 2008 same property
leasing percentages decreased due to a net decrease of approximately 74,000
square feet of leased space. The majority of this leasing decrease,
approximately 49,000 square feet, occurred at South Dekalb Plaza in Atlanta,
Georgia. Leasing also decreased approximately 13,000 square feet at Smallwood
Village Center where the Company is engaged in a major renovation.
Funds from operations (FFO) available to common shareholders (after
deducting preferred stock dividends) decreased 1.3% to $15,378,000 in the 2008
Quarter compared to $15,580,000 for the 2007 Quarter. On a diluted per share
basis, FFO available to common shareholders decreased 1.5% to $0.66 per share
for the 2008 Quarter compared to $0.67 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
increased 0.8% to $31,297,000 from $31,037,000 during the 2007 Period. Per
share FFO available to common shareholders for the 2008 Period remained level
with the 2007 Period at $1.34 per diluted share. Improved property operating
results were offset by increased preferred stock dividends of $1,786,000
($0.08 per diluted share) and $1,883,000 ($0.08 per diluted share), for the
2008 Quarter and 2008 Period, respectively, arising from the Company's Series
B preferred stock issue.
Saul Centers is a self-managed, self-administered equity real estate
investment trust headquartered in Bethesda, Maryland. Saul Centers currently
operates and manages a real estate portfolio of 50 community and neighborhood
shopping center and office properties totaling approximately 8.2 million
square feet of leasable area. Over 80% of the Company's property operating
income is generated from properties in the metropolitan Washington,
DC/Baltimore area.
Saul Centers, Inc.
Condensed Consolidated Balance Sheets
($ in thousands)
June 30, December 31,
2008 2007
Assets (Unaudited)
Real estate investments
Land $215,407 $167,007
Buildings and equipment 711,592 673,328
Construction in progress 67,301 49,592
994,300 889,927
Accumulated depreciation (244,196) (232,669)
750,104 657,258
Cash and cash equivalents 36,964 5,765
Accounts receivable and
accrued income, net 33,087 33,967
Deferred leasing costs, net 17,363 16,190
Prepaid expenses, net 1,407 2,571
Deferred debt costs, net 6,440 6,264
Other assets 6,674 5,428
Total assets $852,039 $727,443
Liabilities
Mortgage notes payable $565,194 $524,726
Revolving credit facility - 8,000
Dividends and distributions payable 14,803 12,887
Accounts payable, accrued expenses
and other liabilities 20,140 13,159
Deferred income 22,654 15,147
Total liabilities 622,791 573,919
Minority interests 3,747 4,745
Stockholders' equity
Preferred stock 179,328 100,000
Common stock 180 178
Additional paid-in capital 162,263 161,618
Accumulated deficit (116,270) (113,017)
Total stockholders' equity 225,501 148,779
Total liabilities and
stockholders' equity $852,039 $727,443
Saul Centers, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue (Unaudited) (Unaudited)
Base rent $31,751 $29,531 $62,133 $58,552
Expense recoveries 6,945 6,282 14,078 12,880
Percentage rent 232 312 546 514
Other 1,177 952 2,070 1,815
Total revenue 40,105 37,077 78,827 73,761
Operating expenses
Property operating
expenses 4,527 4,343 9,512 9,148
Provision for credit
losses 241 103 424 215
Real estate taxes 4,278 3,538 8,289 7,064
Interest expense and
amortization of
deferred debt costs 8,705 8,325 17,309 16,619
Depreciation and
amortization of
deferred leasing
costs 6,989 6,503 13,932 12,951
General and
administrative 3,190 3,188 6,113 5,678
Total operating
expenses 27,930 26,000 55,579 51,675
Operating income 12,175 11,077 23,248 22,086
Gain on property
disposition - - 205 -
Minority interests (1,946) (2,151) (4,094) (4,286)
Net income 10,229 8,926 19,359 17,800
Preferred dividends (3,786) (2,000) (5,883) (4,000)
Net income available to
common stockholders $6,443 $6,926 $13,476 $13,800
Per share net income available
to common stockholders:
Diluted $0.36 $0.39 $0.75 $0.78
Weighted average common stock:
Common stock 17,803 17,531 17,785 17,473
Effect of dilutive options 175 176 176 190
Diluted weighted average
common stock 17,978 17,707 17,961 17,663
Saul Centers, Inc.
Supplemental Information
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Reconciliation of net income to
funds from operations (FFO)(1): (Unaudited) (Unaudited)
Net Income $10,229 $8,926 $19,359 $17,800
Less: Gain on property
disposition - - (205) -
Add: Real property depreciation
& amortization 6,989 6,503 13,932 12,951
Add: Minority interests 1,946 2,151 4,094 4,286
FFO 19,164 17,580 37,180 35,037
Less: Preferred dividends (3,786) (2,000) (5,883) (4,000)
FFO available to common
shareholders $15,378 $15,580 $31,297 $31,037
Weighted average shares:
Diluted weighted average
common stock 17,978 17,707 17,961 17,663
Convertible limited partnership
units 5,416 5,416 5,416 5,416
Diluted & converted weighted
average shares 23,394 23,123 23,377 23,079
Per share amounts:
FFO available to common
shareholders (diluted) $0.66 $0.67 $1.34 $1.34
Reconciliation of net income to
same property operating income:
Net income $10,229 $8,926 $19,359 $17,800
Add: Interest expense and
amortization of
deferred debt costs 8,705 8,325 17,309 16,619
Add: Depreciation and
amortization of
deferred leasing costs 6,989 6,503 13,932 12,951
Add: General and
administrative 3,190 3,188 6,113 5,678
Less: Gain on property
disposition - - (205) -
Less: Interest income (244) (143) (311) (238)
Add: Minority interests 1,946 2,151 4,094 4,286
Property operating income 30,815 28,950 60,291 57,096
Less: Acquisitions &
developments (1,513) - (1,931) -
Total same property
operating income $29,302 $28,950 $58,360 $57,096
Total shopping centers $22,195 $21,984 $44,376 $43,209
Total office properties 7,107 6,966 13,984 13,887
Total same property
operating income $29,302 $28,950 $58,360 $57,096
(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 a 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.
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