Saul Centers, Inc. Reports Third Quarter 2012 Earnings

            Saul Centers, Inc. Reports Third Quarter 2012 Earnings

PR Newswire

BETHESDA, Md., Nov. 1, 2012

BETHESDA, Md., Nov. 1, 2012 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an
equity real estate investment trust (REIT), announced its operating results
for the quarter ended September 30, 2012 ("2012 Quarter"). Total revenue for
the 2012 Quarter increased to $47.5 million from $42.9 million for the quarter
ended September 30, 2011 ("2011 Quarter"). Operating income, which is net
income available to common stockholders before income attributable to
noncontrolling interests and preferred stock dividends, decreased to $8.1
million for the 2012 Quarter from $8.7 million for the 2011 Quarter. Net
income available to common stockholders was $4.2 million ($0.21 per diluted
share) for the 2012 Quarter compared to $1.7 million ($0.09 per diluted share)
for the 2011 Quarter. Revenue increased primarily due to $3.0million of
rents generated by the shopping centers acquired in 2011 and $0.9million of
additional revenue generated by Clarendon Center. Operating income declined
primarily due to $1.9 million of predevelopment expenses, which was partially
offset by $1.3million of additional operating income generated by the core
portfolio and $0.2million generated by the shopping centers acquired in 2011.

Same property revenue increased 1.9% for the 2012 Quarter compared to the 2011
Quarter, and same property operating income increased 3.3%. The same property
comparisons exclude the results of properties not in operation for the
entirety of the comparable reporting periods. Shopping center portfolio same
property operating income increased 3.7%, primarily due to lower provision for
credit losses, and the mixed-use portfolio same property operating income
increased 2.0%.

For the nine months ended September 30, 2012 ("2012 Period"), total revenue
increased to $142.2 million from $127.4 million for the nine months ended
September 30, 2011 ("2011 Period"). Operating income increased to $27.0
million for the 2012 Period from $25.2 million for the 2011 Period. Net
income available to common stockholders was $12.5 million ($0.64 per diluted
share) for the 2012 Period compared to $7.9 million ($0.42 per diluted share)
for the 2011 Period. The primary sources of the revenue increase were
additional revenue from the shopping centers acquired in 2011 ($9.7 million)
and Clarendon Center ($4.3 million). The primary sources of the increase in
operating income were the core portfolio ($2.9 million) and the shopping
centers acquired in 2011 ($1.3 million), partially offset by predevelopment
expenses ($1.9 million). Same property revenue increased 0.6% for the 2012
Period compared to the 2011 Period, and same property operating income
increased 1.7%. Shopping center portfolio same property operating income
increased 1.2% and the mixed-use portfolio same property operating income
increased 3.6% due to improved operating performance at Washington Square.

As of September 30, 2012, 91.6% of the commercial portfolio was leased (all
properties except the apartments at Clarendon Center, which were 100% leased),
compared to 90.4% at September 30, 2011. On a same property basis, 91.1% of
the portfolio was leased compared to the prior year level of 89.9%. The 2012
leasing percentages were impacted by a net increase of approximately 105,000
square feet of leased space, primarily caused by the leasing of a portion of
the space vacated by major shopping center tenants in 2011.

Funds from operations (FFO) available to common shareholders (after deducting
preferred stock dividends) increased 36.2% to $14.6 million ($0.55 per diluted
share) in the 2012 Quarter from $10.7million ($0.44 per diluted share) in the
2011 Quarter. FFO, a widely accepted non-GAAP financial measure of operating
performance for REITs, is defined as net income plus real estate depreciation
and amortization, and excluding gains and losses from property dispositions,
impairment charges on depreciable real estate assets and extraordinary items.
The primary sources of increased FFO in the 2012 Quarter were (a) acquisition
costs incurred in 2011 ($2.4 million), (b) additional FFO generated by the
shopping center properties acquired in 2011 ($1.5 million), the core portfolio
($1.5 million), and Clarendon Center ($0.1 million) and (c) the change in fair
value recognized on the Company's interest rate swaps ($0.2 million),
partially offset by predevelopment expenses ($1.9 million or $0.07 per diluted
share).

FFO available to common shareholders for the 2012 Period increased 29.1% to
$45.5 million ($1.72 per diluted share) from $35.2 million ($1.45 per diluted
share) during the 2011 Period. The primary sources of increased FFO in the
2012 Period were (a) additional FFO generated by the shopping centers acquired
in 2011 ($4.8 million), the core portfolio ($2.5 million), and Clarendon
Center ($0.8 million), (b) acquisition costs incurred in the 2011 Period ($2.5
million), (c) a change in the fair value loss recognized on the Company's
interest rate swaps ($1.4 million), partially offset by predevelopment
expenses ($1.9 million).

Saul Centers is a self-managed, self-administered equity REIT headquartered in
Bethesda, Maryland. Saul Centers currently operates and manages a real estate
portfolio of 57 community and neighborhood shopping center and mixed-use
properties totaling approximately 9.5 million square feet of leasable area.
Over 85% 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,
                                                   2012           2011
Assets                                             (Unaudited)
        Real estate investments
                  Land                             $   323,723  $  324,183
                  Buildings and equipment          1,101,339      1,092,533
                  Construction in progress         1,422          1,129
                                                   1,426,484      1,417,845
                  Accumulated depreciation         (346,426)      (326,397)
                                                   1,080,058      1,091,448
        Cash and cash equivalents                  33,498         12,323
        Accounts receivable and accrued income,    41,916         39,094
        net
        Deferred leasing costs, net                25,396         25,876
        Prepaid expenses, net                      6,367          3,868
        Deferred debt costs, net                   8,106          7,090
        Other assets                               5,106          12,870
                  Total assets                     $ 1,200,447   $ 1,192,569
Liabilities
        Mortgage notes payable                     $   827,963  $  823,871
        Revolving credit facility payable          -              8,000
        Dividends and distributions payable        13,394         13,219
        Accounts payable, accrued expenses and     30,044         22,992
        other liabilities
        Deferred income                            30,128         31,281
                  Total liabilities                901,529        899,363
Stockholders' equity
        Preferred stock                            179,328        179,328
        Common stock                               198            193
        Additional paid-in capital                 236,459        217,829
        Accumulated deficit and other              (157,085)      (147,522)
        comprehensive loss
                  Total Saul Centers, Inc.         258,900        249,828
                  stockholders' equity
        Noncontrolling interest                    40,018         43,378
                  Total stockholders' equity       298,918        293,206
                  Total liabilities and            $ 1,200,447   $ 1,192,569
                  stockholders' equity



Saul Centers, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
                                  Three Months Ended      Nine Months Ended
                                  September 30,           September 30,
                                  2012         2011       2012       2011
Revenue                           (Unaudited)             (Unaudited)
      Base rent                   $         $       $         $ 
                                  38,403       34,390     114,091   101,280
      Expense recoveries          7,576        6,994      22,741     21,211
      Percentage rent             259          209        1,118      1,037
      Other                       1,296        1,285      4,208      3,862
              Total revenue       47,534       42,878     142,158    127,390
Operating expenses
      Property operating          5,977        5,829      17,775     18,289
      expenses
      Provision for credit        168          595        761        1,628
      losses
      Real estate taxes           5,546        4,743      16,928     13,881
      Interest expense and
      amortization of deferred    12,322       11,250     37,660     32,714
      debt costs
      Depreciation and
      amortization of deferred    10,268       8,512      29,816     25,308
      leasing costs
      General and administrative  3,272        3,293      10,303     10,402
      Predevelopment expenses     1,870        -          1,870      -
              Total operating     39,423       34,222     115,113    102,222
              expenses
Operating income                  8,111        8,656      27,045     25,168
      Acquisition related costs   -            (2,439)    -          (2,513)
      Change in fair value of     17           (217)      (2)        (1,374)
      derivatives
      Gain on sale of property    1,057        -          1,057      -
      Gain on casualty            219          -          219        198
      settlement
Net income                        9,404        6,000      28,319     21,479
      Income attributable to the  (1,456)      (496)      (4,428)    (2,268)
      noncontrolling interests
Net income attributable to Saul   7,948        5,504      23,891     19,211
Centers, Inc.
      Preferred dividends         (3,785)      (3,785)    (11,355)   (11,355)
Net income available to common    $        $      $        $   
stockholders                      4,163        1,719      12,536    7,856
Per share net income available
to common stockholders :
      Diluted                     $       $      $      $    
                                  0.21          0.09     0.64      0.42
Weighted average common stock :
      Common stock                19,721       18,893     19,561     18,774
      Effect of dilutive options  63           44         51         69
      Diluted weighted average    19,784       18,937     19,612     18,843
      common stock



Saul Centers, Inc.
Supplemental Information
(In thousands, except per share amounts)
                                       Three Months Ended  Nine Months Ended
                                       September 30,       September 30,
                                       2012      2011      2012       2011
Reconciliation of net income to
FFO available to common            (1) (Unaudited)         (Unaudited)
shareholders:
  Net income                           $      $      $        $  
                                        9,404    6,000   28,319    21,479
  Less:     Gains on property          (1,276)   -         (1,276)    (198)
            dispositions
            Real property
  Add:      depreciation and           10,268    8,512     29,816     25,308
            amortization
       FFO                             18,396    14,512    56,859     46,589
  Less:     Preferred dividends        (3,785)   (3,785)   (11,355)   (11,355)
       FFO available to common         $      $      $        $  
       shareholders                    14,611    10,727    45,504    35,234
Weighted average shares :
  Diluted weighted average common      19,784    18,937    19,612     18,843
  stock
  Convertible limited partnership      6,914     5,416     6,914      5,416
  units
  Diluted & converted weighted         26,698    24,353    26,526     24,259
  average shares
Per share amounts:
  FFO available to common              $      $      $      $   
  shareholders (diluted                  0.55    0.44  1.72       1.45
Reconciliation of net income to
same property operating income:
  Net income                           $      $      $        $  
                                        9,404    6,000   28,319    21,479
            Interest expense and
  Add:      amortization of            12,322    11,250    37,660     32,714
            deferred debt costs
            Depreciation and
  Add:      amortization of            10,268    8,512     29,816     25,308
            deferred leasing costs
  Add:      General and                3,272     3,293     10,303     10,402
            administrative
  Add:      Predevelopment             1,870     -         1,870      -
            expenses
  Add:      Acquisition related        -         2,439     -          2,513
            costs
  Add:      Change in fair value       (17)      217       2          1,374
            of derivatives
  Less:     Gains on property          (1,276)   -         (1,276)    (198)
            dispositions
  Less:     Interest income            (59)      (18)      (108)      (65)
       Property operating income       35,784    31,693    106,586    93,527
  Less:     Acquisitions &             (5,738)   (2,618)   (17,003)   (5,421)
            developments
       Total same property             $      $      $        $  
       operating income                30,046    29,075    89,583    88,106
  Shopping centers                     $      $      $        $  
                                       24,169    23,311    71,838    70,984
  Mixed-Use properties                 5,877     5,764     17,745     17,122
       Total same property             $      $      $        $  
       operating income                30,046    29,075    89,583    88,106
(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 real
estate depreciation and amortization, and excluding extraordinary items,
impairment charges on depreciable real estate assets and 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.

Website: http://www.saulcenters.com
Contact: Scott V. Schneider, +1-301-986-6220
 
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