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 $150
million and extended the maturity date to June 2012, with a
one-year extension at the Company's option. As of August 6, 2009,
the Company had no balance outstanding on the line. Saul Centers is
a self-managed, self-administered equity REIT headquartered in
Bethesda, Maryland. Saul Centers currently operates and manages a
real estate portfolio of 52 community and neighborhood shopping
center and office properties totaling approximately 8.4 million
square feet of leasable area. Over 80% of the Company's property
operating income is generated from properties in the metropolitan
Washington, DC/Baltimore area. Saul Centers, Inc. Condensed
Consolidated Balance Sheets ($ in thousands) June 30, December 31,
2009 2008 ---- ---- Assets (Unaudited) Real estate investments Land
$220,974 $215,407 Buildings and equipment 730,763 713,154
Construction in progress 112,248 98,920 ------- ------ 1,063,985
1,027,481 Accumulated depreciation (264,530) (252,763) --------
-------- 799,455 774,718 Cash and cash equivalents 38,213 13,006
Accounts receivable and accrued income, net 34,204 37,495 Deferred
leasing costs, net 16,427 16,901 Prepaid expenses, net 1,507 2,981
Deferred debt costs, net 5,969 5,875 Other assets 9,676 2,897 -----
----- Total assets $905,451 $853,873 ======== ======== Liabilities
Mortgage notes payable $606,256 $567,495 Revolving credit facility
15,000 - Dividends and distributions payable 12,872 12,864 Accounts
payable, accrued expenses and other liabilities 24,092 22,394
Deferred income 23,530 23,233 ------ ------ Total liabilities
681,750 625,986 ------- ------- Stockholders' equity Preferred
stock 179,328 179,328 Common stock 179 179 Additional paid-in
capital 165,367 164,278 Accumulated deficit (122,920) (118,865)
-------- -------- Total Saul Centers, Inc. stockholders' equity
221,954 224,920 Noncontrolling interest 1,747 2,967 ----- -----
Total stockholders' equity 223,701 227,887 ------- ------- Total
liabilities and stockholders' equity $905,451 $853,873 ========
======== Saul Centers, Inc. Condensed Consolidated Statements of
Operations (In thousands, except per share amounts) Three Months
Six Months Ended June 30, Ended June 30, ---------------
--------------- 2009 2008 2009 2008 Revenue (Unaudited) (Unaudited)
Base rent $31,131 $31,751 $61,796 $62,133 Expense recoveries 7,048
6,945 14,628 14,078 Percentage rent 328 232 561 546 Other 909 1,177
2,120 2,070 ----- ----- ----- ----- Total revenue 39,416 40,105
79,105 78,827 ------ ------ ------ ------ Operating expenses
Property operating expenses 4,845 4,527 10,215 9,512 Provision for
credit losses 232 241 559 424 Real estate taxes 4,620 4,278 9,036
8,289 Interest expense and amortization of deferred debt costs
8,782 8,705 16,978 17,309 Depreciation and amortization of deferred
leasing costs 7,083 6,989 14,124 13,932 General and administrative
3,280 3,190 6,069 6,113 ----- ----- ----- ----- Total operating
expenses 28,842 27,930 56,981 55,579 ------ ------ ------ ------
Operating income 10,574 12,175 22,124 23,248 Loss on early
extinguishment of debt (1,660) - (1,660) - Gain on property
dispositions - - - 205 ----- ----- ----- ----- Net income 8,914
12,175 20,464 23,453 Income attributable to the noncontrolling
interest (1,195) (1,946) (3,004) (4,094) ------ ------ ------
------ Net income attributable to Saul Centers, Inc. 7,719 10,229
17,460 19,359 Preferred dividends (3,785) (3,786) (7,570) (5,883)
------ ------ ------ ------ Net income available to common
stockholders $3,934 $6,443 $9,890 $13,476 ====== ====== ======
======= Per share net income available to common stockholders :
Diluted $0.22 $0.36 $0.55 $0.75 ===== ===== ===== ===== Weighted
average common stock : Common stock 17,882 17,803 17,876 17,785
Effect of dilutive options 35 175 32 176 ------ ------ ------
------ Diluted weighted average common stock 17,917 17,978 17,908
17,961 ====== ====== ====== ====== Saul Centers, Inc. Supplemental
Information (In thousands, except per share amounts) Three Months
Six Months Ended Ended June 30, June 30, 2009 2008 2009 2008 ----
---- ---- ---- Reconciliation of net income (Unaudited) (Unaudited)
attributable to Saul Centers to FFO:(1) Net income attributable to
Saul Centers $7,719 $10,229 $17,460 $19,359 Less: Gain on property
dispositions - - - (205) Add: Real property depreciation &
amortization 7,083 6,989 14,124 13,932 Add: Income attributable to
the noncontrolling interest 1,195 1,946 3,004 4,094 ----- -----
----- ----- FFO 15,997 19,164 34,588 37,180 Less: Preferred
dividends (3,785) (3,786) (7,570) (5,883) ------ ------ ------
------ FFO available to common shareholders $12,212 $15,378 $27,018
$31,297 ======= ======= ======= ======= Weighted average shares:
Diluted weighted average common stock 17,917 17,978 17,908 17,961
Convertible limited partnership units 5,416 5,416 5,416 5,416 -----
----- ----- ----- Diluted & converted weighted average shares
23,333 23,394 23,324 23,377 ====== ====== ====== ====== Per share
amounts: FFO available to common shareholders (diluted) $0.52 $0.66
$1.16 $1.34 ===== ===== ===== ===== Reconciliation of net income
attributable to Saul Centers to same property operating income: Net
income attributable to Saul Centers $7,719 $10,229 $17,460 $19,359
Add: Interest expense and amortization of deferred debt costs 8,782
8,705 16,978 17,309 Add: Depreciation and amortization of deferred
leasing costs 7,083 6,989 14,124 13,932 Add: General and
administrative 3,280 3,190 6,069 6,113 Add: Loss on early
extinguishment of debt 1,660 - 1,660 - Less: Gain on property
dispositions - - - (205) Less: Interest income (3) (244) (6) (311)
Add: Income attributable to the noncontrolling interest 1,195 1,946
3,004 4,094 ----- ----- ----- ----- Property operating income
29,716 30,815 59,289 60,291 Less: Acquisitions & developments
(124) 11 (2,339) (1,168) ----- ----- ------ ------ Total same
property operating income $29,592 $30,826 $56,950 $59,123 =======
======= ======= ======= Total shopping centers $22,626 $23,719
$42,842 $45,139 Total office properties 6,966 7,107 14,108 13,984
----- ----- ------ ------ Total same property operating income
$29,592 $30,826 $56,950 $59,123 ====== ====== ====== ====== (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 income attributable
to the noncontrolling interest, 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 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. DATASOURCE: Saul Centers,
Inc. CONTACT: Scott V. Schneider of Saul Centers, Inc.,
+1-301-986-6220 Web Site: http://www.saulcenters.com/
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