BETHESDA, Md., Nov. 8, 2022
/PRNewswire/ -- Saul Centers, Inc.
(NYSE: BFS), an equity real estate investment trust ("REIT"),
announced its operating results for the quarter ended
September 30, 2022 ("2022 Quarter"). Total revenue for
the 2022 Quarter increased to $61.1
million from $60.3 million for the quarter ended
September 30, 2021 ("2021 Quarter"). Net income
decreased to $15.5 million for the
2022 Quarter from $16.9 million
for the 2021 Quarter primarily due to (a) higher general and
administrative expenses of $0.9
million, (b) loss on early extinguishment of debt of
$0.6 million, (c) lower recovery
income, net of expenses of $0.3 million, partially offset by (d) higher
base rent across the portfolio of $0.4
million. Net income available to common stockholders
decreased to $9.2 million, or
$0.38 per basic and diluted
share, for the 2022 Quarter from $10.3 million, or $0.44 per basic and diluted share, for the
2021 Quarter.
Same property revenue increased $0.8
million, or 1.4%, and same property operating income
increased $0.1 million, or 0.3%, for
the 2022 Quarter compared to the 2021 Quarter. Same property
revenue and same property operating income are non-GAAP financial
measures of performance and improve the comparability of these
measures by excluding the results of properties that were not in
operation for the entirety of the comparable reporting periods. We
define same property revenue as total revenue minus the revenue of
properties not in operation for the entirety of the comparable
reporting periods. We define same property operating income
as net income plus (a) interest expense, net and amortization of
deferred debt costs, (b) depreciation and amortization of lease
costs, (c) general and administrative expenses, (d) change in
fair value of derivatives, and (e) loss on early extinguishment of
debt minus (f) gains on sale of property and (g) the results
of properties not in operation for the entirety of the comparable
periods. No properties were excluded for same property
results for the 2022 Quarter. Shopping Center same property
operating income for the 2022 Quarter totaled $33.7 million, a $0.2
million decrease from the 2021 Quarter. Mixed-Use same
property operating income totaled $11.4 million, a $0.3 million increase from the 2021 Quarter.
Reconciliations of (a) total revenue to same property revenue and
(b) net income to same property operating income are attached
to this press release.
As of September 30, 2022, 93.0% of the commercial portfolio
was leased, compared to 92.5% at September 30, 2021. As
of September 30, 2022, the residential portfolio was 97.2%
leased compared to 97.8% at September 30, 2021.
For the nine months ended September 30, 2022 ("2022
Period"), total revenue increased to $183.5
million from $179.0 million for the nine months ended
September 30, 2021 ("2021 Period"). Net income increased
to $50.0 million for the 2022 Period
from $45.8 million for the 2021
Period. The increase in net income was primarily due to
(a) lower interest expense, net and amortization of deferred
debt costs of $2.4 million and (b)
higher base rent across the portfolio of $2.3 million, partially offset by (c) loss
on early extinguishment of debt of $0.6
million. Net income available to common stockholders
increased to $29.9 million, or
$1.25 per basic and diluted
share, for the 2022 Period compared to $27.8
million, or $1.17 per
basic and diluted share, for the 2021 Period.
No properties were excluded for same property results for the
2022 Period. Same property revenue increased $4.5 million, or 2.5%, and same property
operating income increased $3.3
million, or 2.5% for the 2022 Period, compared to the 2021
Period. Shopping Center same property operating income
increased $1.7 million, or 1.7%, and
Mixed-Use same property operating income increased $1.6 million, or 4.9%. Shopping Center same
property operating income increased primarily due to (a) higher
base rent of $0.8 million, (b) lower
credit losses on operating lease receivables and corresponding
reserves, net of $0.6 million and (c) higher percentage
rent of $0.2 million. Mixed-Use same
property operating income increased primarily due to (a) higher
base rent of $1.5 million, (b) higher
parking income, net of expenses of $0.4 million, (c) higher other property
revenue of $0.2 million, (d) lower
credit losses on operating lease receivables and corresponding
reserves, net of $0.1 million
partially offset by (e) lower recovery income, net of expenses of
$0.8 million.
Funds from operations ("FFO") available to common stockholders
and noncontrolling interests (after deducting preferred stock
dividends) was $24.9 million, or
$0.75 and $0.73 per basic and diluted share, respectively,
in the 2022 Quarter compared to $26.6 million, or $0.82 and $0.79 per basic and diluted share,
respectively, in the 2021 Quarter. FFO is a non-GAAP
supplemental earnings measure that the Company considers meaningful
in measuring its operating performance. A reconciliation of
net income to FFO is attached to this press release. The
decrease in FFO available to common stockholders and noncontrolling
interests was primarily the result of (a) higher general and
administrative expenses of $0.9
million, or $0.03 per basic
and diluted share, (b) loss on early extinguishment of debt of
$0.6 million, or $0.02 per basic and diluted share, (c) lower
recovery income, net of expenses of $0.3 million, or $0.01 per basic and diluted share, and (d) higher
interest expense, net and amortization of deferred debt costs of
$0.2 million, or $0.01 per basic and diluted share, partially
offset by (e) higher base rent across the portfolio of $0.4 million, or $0.01 per basic and diluted share.
FFO available to common stockholders and noncontrolling
interests, after deducting preferred stock dividends increased to
$78.5 million, or $2.36 and $2.31 per
basic and diluted share, respectively, in the 2022 Period from
$75.3 million, or $2.37 and $2.29 per
basic and diluted share, respectively, in the 2021 Period.
FFO available to common stockholders and noncontrolling interests
increased primarily due to (a) lower interest expense, net and
amortization of deferred debt costs of $2.4 million, or $0.07 per basic and diluted share, (b) higher
base rent of $2.3 million, or
$0.07 per basic and diluted share,
(c) lower credit losses on operating lease receivables and
corresponding reserves, net of $0.7 million, or $0.02 per basic and
diluted share, partially offset by (d) higher general and
administrative expenses of $1.8 million, or $0.05 per basic and
diluted share, and (e) loss on early extinguishment of debt of
$0.6 million, or $0.02 per basic and diluted share.
As of October 31, 2022, payments by tenants of contractual
base rent and operating expense and real estate tax recoveries
totaled approximately 99% for the 2022 Quarter. For additional
discussion of how the COVID-19 pandemic has impacted the Company's
business, please see Part 1, Item 2 (Management's Discussion and
Analysis of Financial Condition and Results of Operations) of our
Quarterly Report on Form 10-Q for the quarter ended
September 30,
2022.
Although we are and will continue to be actively engaged in rent
collection efforts related to uncollected rent, and we continue to
work with certain tenants who have requested rent deferrals, we can
provide no assurance that such efforts or our efforts in future
periods will be successful. As of September 30, 2022, of
the $9.4 million of rents previously
deferred, $8.0 million has come due
and $0.3 million has been written
off. Of the amounts that have come due, $7.6 million, or approximately 95%, has been
paid.
Saul Centers, Inc. is a
self-managed, self-administered equity REIT headquartered in
Bethesda, Maryland, which
currently operates and manages a real estate portfolio of 61
properties, which includes (a) 50 community and neighborhood
shopping centers and seven mixed-use properties with approximately
9.8 million square feet of leasable area and (b) four land and
development properties. Over 85% of the Saul Centers' property
operating income is generated by properties in the metropolitan
Washington, DC/Baltimore
area.
Safe Harbor Statement
Certain matters discussed within this press release may be
deemed to be forward-looking statements within the meaning of the
federal securities laws. For these statements, we claim the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of
1995. Although the Company believes the expectations
reflected in the forward-looking statements are based on reasonable
assumptions, it can give no assurance that its expectations will be
attained. These factors include, but are not limited to, the
risk factors described in our Annual Report on (i) Form 10-K for
the year ended December 31, 2021 and (ii) our Quarterly Report
on Form 10-Q for the quarter ended September 30, 2022 and
include the following: (i) general adverse economic and local real
estate conditions, (ii) the inability of major tenants to continue
paying their rent obligations due to bankruptcy, insolvency or a
general downturn in their business, (iii) financing risks, such as
the inability to obtain equity, debt or other sources of financing
or refinancing on favorable terms to the Company, (iv) the
Company's ability to raise capital by selling its assets,
(v) changes in governmental laws and regulations and
management's ability to estimate the impact of such changes, (vi)
the level and volatility of interest rates and management's ability
to estimate the impact thereof, (vii) the availability of suitable
acquisition, disposition, development and redevelopment
opportunities, and risks related to acquisitions not performing in
accordance with our expectations, (viii) increases in
operating costs, (ix) changes in the dividend policy for the
Company's common and preferred stock and the Company's ability to
pay dividends at current levels, (x) the reduction in the Company's
income in the event of multiple lease terminations by tenants or a
failure by multiple tenants to occupy their premises in a shopping
center, (xi) impairment charges, (xii) unanticipated changes
in the Company's intention or ability to prepay certain debt prior
to maturity and (xiii) an epidemic or pandemic (such as the
outbreak and worldwide spread of COVID-19), and the measures that
international, federal, state and local governments, agencies, law
enforcement and/or health authorities implement to address it,
which may (as with COVID-19) precipitate or exacerbate one or more
of the above-mentioned and/or other risks, and significantly
disrupt or prevent us from operating our business in the ordinary
course for an extended period. Given these uncertainties,
readers are cautioned not to place undue reliance on any
forward-looking statements that we make, including those in this
press release. Except as may be required by law, we make no
promise to update any of the forward-looking statements as a result
of new information, future events or otherwise. You should
carefully review the risks and risk factors included in (i) our
Annual Report on Form 10-K for the year ended December 31,
2021 and (ii) our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2022.
Saul Centers,
Inc.
Consolidated Balance
Sheets
(Unaudited)
|
(Dollars in
thousands, except per share amounts)
|
September
30,
2022
|
|
December 31,
2021
|
Assets
|
|
|
|
Real estate
investments
|
|
|
|
Land
|
$
511,529
|
|
$
511,529
|
Buildings and
equipment
|
1,574,872
|
|
1,566,686
|
Construction in
progress
|
285,810
|
|
205,911
|
|
2,372,211
|
|
2,284,126
|
Accumulated
depreciation
|
(679,121)
|
|
(650,113)
|
|
1,693,090
|
|
1,634,013
|
Cash and cash
equivalents
|
10,291
|
|
14,594
|
Accounts receivable
and accrued income, net
|
58,682
|
|
58,659
|
Deferred leasing
costs, net
|
22,221
|
|
24,005
|
Other
assets
|
25,734
|
|
15,490
|
Total
assets
|
$ 1,810,018
|
|
$ 1,746,761
|
Liabilities
|
|
|
|
Notes payable,
net
|
$
969,109
|
|
$
941,456
|
Revolving credit
facility payable, net
|
125,747
|
|
103,167
|
Term loan facility
payable, net
|
99,344
|
|
99,233
|
Accounts payable,
accrued expenses and other liabilities
|
39,169
|
|
25,558
|
Deferred
income
|
25,887
|
|
25,188
|
Dividends and
distributions payable
|
22,445
|
|
21,672
|
Total
liabilities
|
1,281,701
|
|
1,216,274
|
Equity
|
|
|
|
Preferred stock,
1,000,000 shares authorized:
|
|
|
|
Series D Cumulative
Redeemable, 30,000 shares issued and outstanding
|
75,000
|
|
75,000
|
Series E Cumulative
Redeemable, 44,000 shares issued and outstanding
|
110,000
|
|
110,000
|
Common stock, $0.01
par value, 42,000,000 shares authorized, 24,001,546 and 23,840,471
shares issued and outstanding, respectively
|
240
|
|
238
|
Additional paid-in
capital
|
445,456
|
|
436,609
|
Partnership units in
escrow
|
39,650
|
|
39,650
|
Distributions in
excess of accumulated net income
|
(268,451)
|
|
(256,448)
|
Accumulated other
comprehensive income
|
3,063
|
|
—
|
Total Saul Centers,
Inc. equity
|
404,958
|
|
405,049
|
Noncontrolling
interests
|
123,359
|
|
125,438
|
Total
equity
|
528,317
|
|
530,487
|
Total liabilities and
equity
|
$ 1,810,018
|
|
$ 1,746,761
|
Saul Centers,
Inc.
Consolidated
Statements of Operations
(In thousands, except
per share amounts)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenue
|
(unaudited)
|
|
(unaudited)
|
Rental
revenue
|
$
59,951
|
|
$
59,058
|
|
$
179,765
|
|
$
175,634
|
Other
|
1,136
|
|
1,198
|
|
3,759
|
|
3,351
|
Total
revenue
|
61,087
|
|
60,256
|
|
183,524
|
|
178,985
|
Expenses
|
|
|
|
|
|
|
|
Property operating
expenses
|
8,995
|
|
8,210
|
|
26,174
|
|
24,420
|
Real estate
taxes
|
7,078
|
|
7,154
|
|
21,652
|
|
22,121
|
Interest expense, net
and amortization of deferred debt costs
|
11,103
|
|
10,914
|
|
32,162
|
|
34,559
|
Depreciation and
amortization of lease costs
|
12,195
|
|
12,467
|
|
36,899
|
|
37,852
|
General and
administrative
|
5,555
|
|
4,626
|
|
15,988
|
|
14,234
|
Loss on early
extinguishment of debt
|
648
|
|
—
|
|
648
|
|
—
|
Total
expenses
|
45,574
|
|
43,371
|
|
133,523
|
|
133,186
|
Net
Income
|
15,513
|
|
16,885
|
|
50,001
|
|
45,799
|
Noncontrolling
interests
|
|
|
|
|
|
|
|
Income attributable to
noncontrolling interests
|
(3,563)
|
|
(3,747)
|
|
(11,670)
|
|
(9,653)
|
Net income
attributable to Saul Centers, Inc.
|
11,950
|
|
13,138
|
|
38,331
|
|
36,146
|
Preferred stock
dividends
|
(2,798)
|
|
(2,798)
|
|
(8,395)
|
|
(8,395)
|
Net income available
to common stockholders
|
$
9,152
|
|
$
10,340
|
|
$
29,936
|
|
$
27,751
|
Per share net income
available to common stockholders
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
0.38
|
|
$
0.44
|
|
$
1.25
|
|
$
1.17
|
Reconciliation of net
income to FFO available to common stockholders and
noncontrolling
interests (1)
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(In thousands,
except per share amounts)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net income
|
$
15,513
|
|
$
16,885
|
|
$
50,001
|
|
$
45,799
|
Add:
|
|
|
|
|
|
|
|
Real estate
depreciation and amortization
|
12,195
|
|
12,467
|
|
36,899
|
|
37,852
|
FFO
|
27,708
|
|
29,352
|
|
86,900
|
|
83,651
|
Subtract:
|
|
|
|
|
|
|
|
Preferred stock
dividends
|
(2,798)
|
|
(2,798)
|
|
(8,395)
|
|
(8,395)
|
FFO available to common
stockholders and noncontrolling interests
|
$
24,910
|
|
$
26,554
|
|
$
78,505
|
|
$
75,256
|
Weighted average shares
and units:
|
|
|
|
|
|
|
|
Basic
|
33,295
|
|
32,237
|
|
33,238
|
|
31,774
|
Diluted
(2)
|
34,005
|
|
33,656
|
|
33,957
|
|
32,877
|
Basic FFO per share
available to common stockholders and noncontrolling
interests
|
$
0.75
|
|
$
0.82
|
|
$
2.36
|
|
$
2.37
|
Diluted FFO per share
available to common stockholders and noncontrolling
interests
|
$
0.73
|
|
$
0.79
|
|
$
2.31
|
|
$
2.29
|
|
|
|
|
(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 impairment charges on
real estate assets and gains or
losses from real estate 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 the Company
believes occurs with its 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.
|
(2)
|
Beginning March 5,
2021, fully diluted shares and units includes 1,416,071 limited
partnership units that were held in escrow related to the
contribution of Twinbrook
Quarter. Half of the units held in escrow were released on October
18, 2021. The remaining units held in escrow are scheduled to be
released on October 18, 2023.
|
Reconciliation of
revenue to same property revenue (3)
|
(in
thousands)
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
(unaudited)
|
|
(unaudited)
|
Total
revenue
|
|
$
61,087
|
|
$
60,256
|
|
$
183,524
|
|
$
178,985
|
Less: Acquisitions,
dispositions and development properties
|
|
—
|
|
—
|
|
—
|
|
—
|
Total same property
revenue
|
|
$
61,087
|
|
$
60,256
|
|
$
183,524
|
|
$
178,985
|
|
|
|
|
|
|
|
|
|
Shopping
Centers
|
|
$
42,478
|
|
$
42,485
|
|
$
128,615
|
|
$
126,935
|
Mixed-Use
properties
|
|
18,609
|
|
17,771
|
|
54,909
|
|
52,050
|
Total same property
revenue
|
|
$
61,087
|
|
$
60,256
|
|
$
183,524
|
|
$
178,985
|
|
|
|
|
|
|
|
|
|
Total Shopping
Center revenue
|
|
$
42,478
|
|
$
42,485
|
|
$
128,615
|
|
$
126,935
|
Less: Shopping Center
acquisitions, dispositions and development properties
|
|
—
|
|
—
|
|
—
|
|
—
|
Total same Shopping
Center revenue
|
|
$
42,478
|
|
$
42,485
|
|
$
128,615
|
|
$
126,935
|
|
|
|
|
|
|
|
|
|
Total Mixed-Use
property revenue
|
|
$
18,609
|
|
$
17,771
|
|
$
54,909
|
|
$
52,050
|
Less: Mixed-Use
acquisitions, dispositions and development properties
|
|
—
|
|
—
|
|
—
|
|
—
|
Total same Mixed-Use
property revenue
|
|
$
18,609
|
|
$
17,771
|
|
$
54,909
|
|
$
52,050
|
|
|
|
|
(3)
|
Same property revenue
is a non-GAAP financial measure of performance that improves the
comparability of reporting periods by excluding the results of
properties that were not in operation for the entirety of the
comparable reporting periods. Same property revenue adjusts
property revenue by subtracting
the revenue of properties not in operation for the entirety of the
comparable reporting periods. Same property revenue is a
measure of the operating
performance of the Company's properties but does not measure the
Company's performance as a whole. Same property revenue
should not be
considered as an alternative to total revenue, its most directly
comparable GAAP measure, as an indicator of the Company's operating
performance.
Management considers same property revenue a meaningful
supplemental measure of operating performance because it is not
affected by the cost of the
Company's funding, the impact of depreciation and amortization
expenses, gains or losses from the acquisition and sale of
operating real estate assets,
general and administrative expenses or other gains and losses that
relate to ownership of the Company's properties. Management
believes the exclusion
of these items from same property revenue is useful because the
resulting measure captures the actual revenue generated and actual
expenses incurred
by operating the Company's properties. Other REITs may use
different methodologies for calculating same property
revenue. Accordingly, the Company's
same property revenue may not be comparable to those of other
REITs.
|
Reconciliation of net
income to same property operating income (4)
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(In
thousands)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(unaudited)
|
|
(unaudited)
|
Net
income
|
$
15,513
|
|
$
16,885
|
|
$
50,001
|
|
$
45,799
|
Add: Interest expense,
net and amortization of deferred debt costs
|
11,103
|
|
10,914
|
|
32,162
|
|
34,559
|
Add: Depreciation and
amortization of lease costs
|
12,195
|
|
12,467
|
|
36,899
|
|
37,852
|
Add: General and
administrative
|
5,555
|
|
4,626
|
|
15,988
|
|
14,234
|
Add: Loss on early
extinguishment of debt
|
648
|
|
—
|
|
648
|
|
—
|
Property operating
income
|
45,014
|
|
44,892
|
|
135,698
|
|
132,444
|
Less: Acquisitions,
dispositions and development properties
|
—
|
|
—
|
|
—
|
|
—
|
Total same property
operating income
|
$
45,014
|
|
$
44,892
|
|
$
135,698
|
|
$
132,444
|
|
|
|
|
|
|
|
|
Shopping
Centers
|
$
33,652
|
|
$
33,845
|
|
$
101,513
|
|
$
99,848
|
Mixed-Use
properties
|
11,362
|
|
11,047
|
|
34,185
|
|
32,596
|
Total same property
operating income
|
$
45,014
|
|
$
44,892
|
|
$
135,698
|
|
$
132,444
|
|
|
|
|
|
|
|
|
Shopping Center
operating income
|
$
33,652
|
|
$
33,845
|
|
$
101,513
|
|
$
99,848
|
Less: Shopping Center
acquisitions, dispositions and development properties
|
—
|
|
—
|
|
—
|
|
—
|
Total same Shopping
Center operating income
|
$
33,652
|
|
$
33,845
|
|
$
101,513
|
|
$
99,848
|
|
|
|
|
|
|
|
|
Mixed-Use property
operating income
|
$
11,362
|
|
$
11,047
|
|
$
34,185
|
|
$
32,596
|
Less: Mixed-Use
acquisitions, dispositions and development properties
|
—
|
|
—
|
|
—
|
|
—
|
Total same Mixed-Use
property operating income
|
$
11,362
|
|
$
11,047
|
|
$
34,185
|
|
$
32,596
|
|
|
|
|
(4)
|
Same property operating
income is a non-GAAP financial measure of performance that improves
the comparability of reporting periods by excluding the
results of properties that were not in operation for the entirety
of the comparable reporting periods. Same property operating
income adjusts property
operating income by subtracting the results of properties that were
not in operation for the entirety of the comparable periods.
Same property operating
income is a measure of the operating performance of the Company's
properties but does not measure the Company's performance as a
whole. Same
property operating income should not be considered as an
alternative to property operating income, its most directly
comparable GAAP measure, as an
indicator of the Company's operating performance. Management
considers same property operating income a meaningful supplemental
measure of
operating performance because it is not affected by the cost of the
Company's funding, the impact of depreciation and amortization
expenses, gains or
losses from the acquisition and sale of operating real estate
assets, general and administrative expenses or other gains and
losses that relate to
ownership of the Company's properties. Management believes
the exclusion of these items from property operating income is
useful because the
resulting measure captures the actual revenue generated and actual
expenses incurred by operating the Company's properties.
Other REITs may use
different methodologies for calculating same property operating
income. Accordingly, same property operating income may not
be comparable to those
of other REITs.
|
View original
content:https://www.prnewswire.com/news-releases/saul-centers-inc-reports-third-quarter-2022-earnings-301672237.html
SOURCE Saul Centers, Inc.