BETHESDA, Md., Nov. 2, 2017 /PRNewswire/ -- Saul Centers,
Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced its operating results for the quarter ended
September 30, 2017 ("2017 Quarter"). Total revenue for the 2017 Quarter increased to $56.2 million from $53.2 million for the quarter ended
September 30, 2016 ("2016 Quarter"). Operating income, which is net income before the impact of change in fair value
of derivatives, loss on early extinguishment of debt and gains on sales of property and casualty settlements, if any, increased
to $14.4 million for the 2017 Quarter from $12.7 million for the
2016 Quarter.
The Park Van Ness mixed-use development opened in May 2016, and, as of September 30, 2017,
254 apartments were leased (93.7%). Concurrent with the opening in 2016, interest, real estate taxes and all other costs
associated with the property, including depreciation, began to be charged to expense, while revenue continues to grow as
occupancy increases. As a result, net income for the 2017 Quarter was adversely impacted by $0.4
million.
Net income attributable to common stockholders increased to $8.4 million ($0.38 per diluted share) for the 2017 Quarter compared to $7.1 million
($0.33 per diluted share) for the 2016 Quarter.
Same property revenue increased $2.2 million (4.2%) and same property operating income increased
$1.1 million (2.8%) for the 2017 Quarter compared to the 2016 Quarter. We define same
property revenue as total revenue minus the sum of interest income and revenue of properties not in operation for the entirety of
the comparable reporting periods. We define same property operating income as net income plus the sum of interest expense
and amortization of deferred debt costs, depreciation and amortization, general and administrative expense, loss on the early
extinguishment of debt (if any), predevelopment expense and acquisition related costs, minus the sum of interest income, the
change in the fair value of derivatives, gains on property dispositions (if any) and the results of properties which were not in
operation for the entirety of the comparable periods. Shopping Center same property operating income for the 2017 Quarter
totaled $31.0 million, a $0.7 million increase from the 2016
Quarter. The increase in Shopping Center same property operating income was primarily due to (a) higher base rent
($0.4 million), (b) higher other revenue ($0.2 million) and
(c) lower provision for credit losses ($0.1 million). Mixed-Use same property operating
income totaled $9.9 million, a $0.4 million increase from the
2016 Quarter. The increase in Mixed-Use same property operating income was due primarily to (a) Park Van Ness ($1.1 million) partially offset by (b) lower termination fees ($0.3 million) and
(c) lower parking revenue as a result of a garage refurbishment ($0.2 million).
As of September 30, 2017, 95.5% of the commercial portfolio was leased (not including the apartments at Clarendon Center
and Park Van Ness), compared to 94.7% at September 30, 2016. On a same property basis, 95.4% of the commercial
portfolio was leased as of September 30, 2017, compared to 95.3% at September 30, 2016. The apartments at
Clarendon Center were 96.3% leased as of September 30, 2017, compared to 96.7% as of September 30, 2016. The
apartments at Park Van Ness were 93.7% leased as of September 30, 2017, compared to 61.3% at September 30,
2016.
For the nine months ended September 30, 2017 ("2017 Period"), total revenue increased to $170.6
million from $162.9 million for the nine months ended September 30, 2016 ("2016
Period"). Operating income increased to $46.2 million for the 2017 Period from $42.4 million for the 2016 Period. The increase in operating income was primarily due to (a) higher
property operating income ($6.7 million) partially offset by (b) higher interest expense
and amortization of deferred debt costs ($1.3 million), (c) higher depreciation and amortization of
deferred leasing costs ($0.9 million), and (d) higher general and administrative
expenses ($0.7 million).
Net income attributable to common stockholders increased to $27.4 million ($1.25 per diluted share) for the 2017 Period compared to $24.5 million
($1.14 per diluted share) for the 2016 Period. The increase in net income attributable to
common stockholders was primarily due to (a) higher property operating income ($6.7 million)
partially offset by (b) higher interest expense and amortization of deferred debt costs ($1.3
million), (c) higher income attributable to noncontrolling interests ($1.0 million),
(d) higher depreciation and amortization of deferred leasing costs ($0.9 million), and (e)
higher general and administrative expenses ($0.7 million).
Same property revenue increased 0.5% and same property operating income increased 0.7% for the 2017 Period, compared to the
2016 Period. Shopping Center same property operating income increased 2.3% and mixed-use same property operating income
decreased 4.7%. Shopping Center same property operating income increased primarily due to (a) higher other revenue
($0.9 million), (b) higher base rent ($0.7 million) and (c) a
reduction in property operating expenses, net of recoveries ($0.4 million). Mixed-Use same
property operating income decreased primarily due to (a) lower termination fees ($0.6 million) and
(b) lower parking revenue as a result of a garage refurbishment ($0.3 million).
Funds from operations ("FFO") available to common stockholders and noncontrolling interests (after deducting preferred stock
dividends) was $22.7 million ($0.77 per diluted share) in the 2017
Quarter compared to $21.3 million ($0.73 per diluted share) in
the 2016 Quarter. FFO for the 2017 Quarter increased primarily due to (a) Park Van Ness ($1.0
million), (b) lower interest expense exclusive of interest expense related to Park Van Ness and Burtonsville Town Square
($0.4 million), and (c) Burtonsville Town Square, which was acquired in January 2017 ($0.4 million). 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.
FFO available to common stockholders and noncontrolling interests (after deducting preferred stock dividends) increased 7.1%
to $71.3 million ($2.42 per diluted share) in the 2017 Period from
$66.5 million ($2.30 per diluted share) in the 2016
Period. FFO available to common stockholders and noncontrolling interests increased primarily due to (a) lower interest
expense exclusive of interest expense related to Park Van Ness and Burtonsville Town Square ($2.2
million), (b) Park Van Ness ($1.8 million) and (c) Burtonsville Town Square
($1.2 million).
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 58
properties which includes (a) 49 community and neighborhood shopping centers and six mixed-use properties with approximately
9.2 million square feet of leasable area and (b) three land and development properties. Approximately 85% of the Saul
Centers' property operating income is generated by properties in the metropolitan Washington,
DC/Baltimore area.
|
Saul Centers, Inc.
|
|
|
Condensed Consolidated Balance Sheets
|
|
|
(In thousands)
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
(Unaudited)
|
|
|
|
Assets
|
|
|
|
|
Real estate investments
|
|
|
|
|
Land
|
$
|
450,256
|
|
|
$
|
422,546
|
|
|
Buildings and equipment
|
1,257,886
|
|
|
1,214,697
|
|
|
Construction in progress
|
80,163
|
|
|
63,570
|
|
|
1,788,305
|
|
|
1,700,813
|
|
|
Accumulated depreciation
|
(478,284)
|
|
|
(458,279)
|
|
|
1,310,021
|
|
|
1,242,534
|
|
|
Cash and cash equivalents
|
9,385
|
|
|
8,322
|
|
|
Accounts receivable and accrued income, net
|
55,619
|
|
|
52,774
|
|
|
Deferred leasing costs, net
|
27,679
|
|
|
25,983
|
|
|
Prepaid expenses, net
|
8,901
|
|
|
5,057
|
|
|
Other assets
|
12,123
|
|
|
8,355
|
|
|
Total assets
|
$
|
1,423,728
|
|
|
$
|
1,343,025
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Notes payable
|
$
|
873,538
|
|
|
$
|
783,400
|
|
|
Revolving credit facility payable
|
88,608
|
|
|
48,217
|
|
|
Construction loan payable
|
—
|
|
|
68,672
|
|
|
Dividends and distributions payable
|
18,143
|
|
|
17,953
|
|
|
Accounts payable, accrued expenses and other liabilities
|
24,267
|
|
|
20,838
|
|
|
Deferred income
|
31,040
|
|
|
30,696
|
|
|
Total liabilities
|
1,035,596
|
|
|
969,776
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Preferred stock
|
180,000
|
|
|
180,000
|
|
|
Common stock
|
220
|
|
|
217
|
|
|
Additional paid-in capital
|
344,820
|
|
|
328,171
|
|
|
Accumulated deficit and other comprehensive loss
|
(195,584)
|
|
|
(189,883)
|
|
|
Total Saul Centers, Inc. stockholders' equity
|
329,456
|
|
|
318,505
|
|
|
Noncontrolling interests
|
58,676
|
|
|
54,744
|
|
|
Total equity
|
388,132
|
|
|
373,249
|
|
|
Total liabilities and equity
|
$
|
1,423,728
|
|
|
$
|
1,343,025
|
|
|
Saul Centers, Inc.
|
|
|
|
|
|
Condensed Consolidated Statements of Operations
|
|
|
|
|
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenue
|
(unaudited)
|
|
(unaudited)
|
|
Base rent
|
$
|
45,385
|
|
|
$
|
43,151
|
|
|
$
|
135,436
|
|
|
$
|
128,338
|
|
|
Expense recoveries
|
9,447
|
|
|
8,561
|
|
|
26,378
|
|
|
26,011
|
|
|
Percentage rent
|
67
|
|
|
57
|
|
|
968
|
|
|
1,016
|
|
|
Other
|
1,338
|
|
|
1,464
|
|
|
7,828
|
|
|
7,504
|
|
|
Total revenue
|
56,237
|
|
|
53,233
|
|
|
170,610
|
|
|
162,869
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Property operating expenses
|
7,418
|
|
|
6,685
|
|
|
20,543
|
|
|
20,740
|
|
|
Provision for credit losses
|
52
|
|
|
391
|
|
|
602
|
|
|
1,207
|
|
|
Real estate taxes
|
6,834
|
|
|
6,195
|
|
|
20,124
|
|
|
18,266
|
|
|
Interest expense and amortization of deferred
debt costs
|
11,821
|
|
|
11,524
|
|
|
35,585
|
|
|
34,268
|
|
|
Depreciation and amortization of deferred
leasing costs
|
11,363
|
|
|
11,626
|
|
|
34,396
|
|
|
33,478
|
|
|
General and administrative
|
4,363
|
|
|
4,033
|
|
|
13,178
|
|
|
12,500
|
|
|
Acquisition related costs
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
|
Total operating expenses
|
41,851
|
|
|
40,511
|
|
|
124,428
|
|
|
120,516
|
|
|
Operating income
|
14,386
|
|
|
12,722
|
|
|
46,182
|
|
|
42,353
|
|
|
Change in fair value of derivatives
|
(1)
|
|
|
1
|
|
|
(2)
|
|
|
(9)
|
|
|
Net income
|
14,385
|
|
|
12,723
|
|
|
46,180
|
|
|
42,344
|
|
|
Income attributable to noncontrolling interests
|
(2,902)
|
|
|
(2,484)
|
|
|
(9,483)
|
|
|
(8,530)
|
|
|
Net income attributable to Saul Centers, Inc.
|
11,483
|
|
|
10,239
|
|
|
36,697
|
|
|
33,814
|
|
|
Preferred stock dividends
|
(3,093)
|
|
|
(3,093)
|
|
|
(9,281)
|
|
|
(9,281)
|
|
|
Net income attributable to common stockholders
|
$
|
8,390
|
|
|
$
|
7,146
|
|
|
$
|
27,416
|
|
|
$
|
24,533
|
|
|
Per share net income attributable to common
stockholders
|
|
|
|
|
|
|
|
|
Basic and diluted
|
$
|
0.38
|
|
|
$
|
0.33
|
|
|
$
|
1.25
|
|
|
$
|
1.14
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Stock:
|
|
|
|
|
|
|
|
|
Common stock
|
21,942
|
|
|
21,597
|
|
|
21,844
|
|
|
21,448
|
|
|
Effect of dilutive options
|
86
|
|
|
182
|
|
|
105
|
|
|
96
|
|
|
Diluted weighted average common stock
|
22,028
|
|
|
21,779
|
|
|
21,949
|
|
|
21,544
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income to FFO attributable to common stockholders
and
noncontrolling interests (1)
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(In thousands, except per share amounts)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Net income
|
$
|
14,385
|
|
|
$
|
12,723
|
|
|
$
|
46,180
|
|
|
$
|
42,344
|
|
|
Add:
|
|
|
|
|
|
|
|
|
Real estate depreciation and amortization
|
11,363
|
|
|
11,626
|
|
|
34,396
|
|
|
33,478
|
|
|
FFO
|
25,748
|
|
|
24,349
|
|
|
80,576
|
|
|
75,822
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
(3,093)
|
|
|
(3,093)
|
|
|
(9,281)
|
|
|
(9,281)
|
|
|
FFO available to common stockholders and
noncontrolling interests
|
$
|
22,655
|
|
|
$
|
21,256
|
|
|
$
|
71,295
|
|
|
$
|
66,541
|
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
Diluted weighted average common stock
|
22,028
|
|
|
21,779
|
|
|
21,949
|
|
|
21,544
|
|
|
Convertible limited partnership units
|
7,521
|
|
|
7,391
|
|
|
7,491
|
|
|
7,360
|
|
|
Average shares and units used to compute FFO per share
|
29,549
|
|
|
29,170
|
|
|
29,440
|
|
|
28,904
|
|
|
FFO per share available to common stockholders and
noncontrolling interests
|
$
|
0.77
|
|
|
$
|
0.73
|
|
|
$
|
2.42
|
|
|
$
|
2.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 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.
|
|
Reconciliation of revenue to same property revenue
|
|
|
(in thousands)
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Total revenue
|
|
$
|
56,237
|
|
|
$
|
53,233
|
|
|
$
|
170,610
|
|
|
$
|
162,869
|
|
|
Less: Interest income
|
|
(9)
|
|
|
(12)
|
|
|
(31)
|
|
|
(36)
|
|
|
Less: Acquisitions, dispositions and development
properties
|
|
(1,351)
|
|
|
(580)
|
|
|
(10,336)
|
|
|
(3,314)
|
|
|
Total same property revenue
|
|
$
|
54,877
|
|
|
$
|
52,641
|
|
|
$
|
160,243
|
|
|
$
|
159,519
|
|
|
Shopping Centers
|
|
$
|
39,483
|
|
|
$
|
38,331
|
|
|
$
|
120,569
|
|
|
$
|
119,161
|
|
|
Mixed-Use properties
|
|
15,394
|
|
|
14,310
|
|
|
39,674
|
|
|
40,358
|
|
|
Total same property revenue
|
|
$
|
54,877
|
|
|
$
|
52,641
|
|
|
$
|
160,243
|
|
|
$
|
159,519
|
|
|
Reconciliation of net income to same property operating income
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(unaudited)
|
|
(unaudited)
|
|
Net income
|
$
|
14,385
|
|
|
$
|
12,723
|
|
|
$
|
46,180
|
|
|
$
|
42,344
|
|
|
Add: Interest expense and amortization of deferred debt costs
|
11,821
|
|
|
11,524
|
|
|
35,585
|
|
|
34,268
|
|
|
Add: Depreciation and amortization of deferred leasing costs
|
11,363
|
|
|
11,626
|
|
|
34,396
|
|
|
33,478
|
|
|
Add: General and administrative
|
4,363
|
|
|
4,033
|
|
|
13,178
|
|
|
12,500
|
|
|
Add: Acquisition related costs
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
|
Add: Change in fair value of derivatives
|
1
|
|
|
(1)
|
|
|
2
|
|
|
9
|
|
|
Less: Interest income
|
(9)
|
|
|
(12)
|
|
|
(31)
|
|
|
(36)
|
|
|
Property operating income
|
41,924
|
|
|
39,950
|
|
|
129,310
|
|
|
122,620
|
|
|
Less: Acquisitions, dispositions and development property
|
1,060
|
|
|
192
|
|
|
6,737
|
|
|
862
|
|
|
Total same property operating income
|
$
|
40,864
|
|
|
$
|
39,758
|
|
|
$
|
122,573
|
|
|
$
|
121,758
|
|
|
|
|
|
|
|
|
|
|
|
Shopping Centers
|
$
|
30,971
|
|
|
$
|
30,290
|
|
|
$
|
95,866
|
|
|
$
|
93,733
|
|
|
Mixed-Use properties
|
9,893
|
|
|
9,468
|
|
|
26,707
|
|
|
28,025
|
|
|
Total same property operating income
|
$
|
40,864
|
|
|
$
|
39,758
|
|
|
$
|
122,573
|
|
|
$
|
121,758
|
|
View original content:http://www.prnewswire.com/news-releases/saul-centers-inc-reports-third-quarter-2017-earnings-300548841.html
SOURCE Saul Centers, Inc.