BETHESDA, Md., Feb. 27, 2018 /PRNewswire/ -- Saul Centers,
Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced its operating results for the quarter ended
December 31, 2017 ("2017 Quarter"). Total revenue for the 2017 Quarter increased to $56.7
million from $54.2 million for the quarter ended December 31, 2016 ("2016
Quarter"). Operating income, which is net income before the impact of the change in fair value of derivatives, loss on
early extinguishment of debt, gains on sales of property and gains on casualty settlements, increased to $14.4 million for the 2017 Quarter from $13.4 million for the 2016 Quarter.
Net income available to common stockholders was $8.5 million ($0.38 per diluted share) for the 2017 Quarter compared to $8.4 million
($0.38 per diluted share) for the 2016 Quarter. The increase in net income available to
common stockholders was primarily due to (a) higher property operating income ($1.6 million),
partially offset by (b) lower gain on sale of properties ($1.0 million) and (c) higher depreciation
and amortization ($0.4 million).
Same property revenue increased 3.5% and same property operating income increased 2.2% for the 2017 Quarter compared to the
2016 Quarter. Same property operating income equals property revenue minus the sum of (a) property operating expenses, (b)
provision for credit losses and (c) real estate taxes. The comparison excludes the results of properties not in operation
for the entirety of the comparable reporting periods. Shopping Center same property operating income increased 1.6% and
Mixed-Use same property operating income increased 4.1%. The increase in Shopping Center same property operating income was
primarily the result of higher base rent. The increase in Mixed-Use same property operating income was the result of (a)
higher base rent ($0.8 million), partially offset by (b) lower other income ($0.2 million) and (c) higher provision for credit losses ($0.2 million).
For the year ended December 31, 2017 ("2017 Period"), total revenue increased to $227.3
million from $217.1 million for the year ended December 31, 2016 ("2016 Period").
Operating income was $60.6 million for the 2017 Period compared to $55.7 million for the 2016 Period. Operating income for the 2017 Period increased primarily due to
(a) $8.3 million of increased property operating income, partially offset by (b) $1.5 million of higher interest expense and amortization of deferred debt costs, (c) $1.3 million of higher depreciation expense and (d) $0.7 million of higher
general and administrative expenses.
Net income available to common stockholders was $35.9 million ($1.63 per diluted share) for the 2017 Period compared to $32.9 million
($1.52 per diluted share) for the 2016 Period. Net income available to common stockholders
for the 2017 Period increased primarily due to (a) $8.3 million of increased property operating
income, partially offset by (b) $1.5 million of higher interest expense and amortization of deferred debt costs,
(c) $1.3 million of higher depreciation expense, (d) lower gain on sale of property
($1.0 million), (e) higher noncontrolling interest ($1.0 million) and
(f) $0.7 million of higher general and administrative expenses.
Same property revenue increased 0.9% and same property operating income increased 0.7% for the 2017 Period compared to the
2016 Period. Shopping Center same property operating income increased 2.1% and Mixed-Use same property operating income
decreased 4.2%. Shopping Center same property operating income increased $2.6 million
primarily due to (a) higher base rent ($1.5 million), exclusive of the net impact of a 2017 lease
termination at Broadlands and a 2016 lease termination at 11503 Rockville Pike, (b) the net impact of a 2017 lease termination at
Broadlands and a 2016 lease termination at 11503 Rockville Pike ($0.1 million), (c) higher
operating expense recoveries, net of expenses ($0.4 million), (d) lower provision for credit
losses ($0.3 million) and (e) higher termination fees throughout the portfolio ($0.3 million). Mixed-Use same property operating income decreased $1.5 million primarily due to (a) lower termination fee income ($0.9 million) and (b) lower parking revenue as a result of a garage refurbishment ($0.3 million).
As of December 31, 2017, 94.3% of the commercial portfolio was leased (all properties except the apartments at Clarendon
Center and Park Van Ness), compared to 95.4% at December 31, 2016. On a same property basis, 94.2% of the portfolio
was leased at December 31, 2017, compared to 95.5% at December 31, 2016. As of December 31, 2017, the
apartments at Clarendon Center were 96.7% leased compared to 97.1% leased at December 31, 2016, and the apartments at Park
Van Ness were 95.9% leased compared to 72.7% leased at December 31, 2016.
Funds From Operations ("FFO") available to common stockholders and noncontrolling interests (after deducting preferred stock
dividends and preferred stock redemption charges) increased to $22.7 million ($0.76 per diluted share) in the 2017 Quarter from $21.2 million
($0.73 per diluted share) in the 2016 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 increase in FFO available to common stockholders and noncontrolling interests for the 2017 Quarter was primarily
due to higher property operating income ($1.6 million).
FFO available to common stockholders and noncontrolling interests (after deducting preferred stock dividends and preferred
stock redemptions) increased 7.1% to $94.0 million ($3.18 per
diluted share) in the 2017 Period from $87.7 million ($3.03 per
diluted share) in the 2016 Period. FFO available to common stockholders and noncontrolling interests for the 2017 Period
increased primarily due to (a) higher overall property operating income ($8.3 million), partially
offset by (b) higher interest expense and amortization of debt expense ($1.5 million) and (c)
higher general and administrative expenses ($0.7 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 comprised of 58 properties which includes (a) 55 community and neighborhood shopping centers and mixed-use properties
with approximately 9.2 million square feet of leasable area and (b) three land and development properties. 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)
|
|
|
December 31,
2017
|
|
December 31,
2016
|
|
|
|
|
|
Assets
|
|
|
|
|
Real estate investments
|
|
|
|
|
Land
|
$
|
450,256
|
|
|
$
|
422,546
|
|
|
Buildings and equipment
|
1,261,830
|
|
|
1,214,697
|
|
|
Construction in progress
|
91,114
|
|
|
63,570
|
|
|
1,803,200
|
|
|
1,700,813
|
|
|
Accumulated depreciation
|
(488,166)
|
|
|
(458,279)
|
|
|
1,315,034
|
|
|
1,242,534
|
|
|
Cash and cash equivalents
|
10,908
|
|
|
8,322
|
|
|
Accounts receivable and accrued income, net
|
54,057
|
|
|
52,774
|
|
|
Deferred leasing costs, net
|
27,255
|
|
|
25,983
|
|
|
Prepaid expenses, net
|
5,248
|
|
|
5,057
|
|
|
Other assets
|
9,950
|
|
|
8,355
|
|
|
Total assets
|
$
|
1,422,452
|
|
|
$
|
1,343,025
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Mortgage notes payable
|
$
|
897,888
|
|
|
$
|
783,400
|
|
|
Revolving credit facility payable
|
60,734
|
|
|
48,217
|
|
|
Construction loan payable
|
—
|
|
|
68,672
|
|
|
Dividends and distributions payable
|
18,520
|
|
|
17,953
|
|
|
Accounts payable, accrued expenses and other liabilities
|
23,123
|
|
|
20,838
|
|
|
Deferred income
|
29,084
|
|
|
30,696
|
|
|
Total liabilities
|
1,029,349
|
|
|
969,776
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Preferred stock
|
180,000
|
|
|
180,000
|
|
|
Common stock
|
221
|
|
|
217
|
|
|
Additional paid-in capital
|
352,590
|
|
|
328,171
|
|
|
Accumulated deficit and other comprehensive loss
|
(198,406)
|
|
|
(189,883)
|
|
|
Total Saul Centers, Inc. equity
|
334,405
|
|
|
318,505
|
|
|
Noncontrolling interests
|
58,698
|
|
|
54,744
|
|
|
Total equity
|
393,103
|
|
|
373,249
|
|
|
Total liabilities and equity
|
$
|
1,422,452
|
|
|
$
|
1,343,025
|
|
|
Saul Centers, Inc.
|
|
Condensed Consolidated Statements of Operations
|
|
(In thousands, except per share amounts)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(unaudited)
|
|
|
|
Revenue
|
|
|
|
|
|
|
Base rent
|
$
|
45,705
|
|
|
$
|
44,043
|
|
|
$
|
181,141
|
|
|
$
|
172,381
|
|
|
Expense recoveries
|
8,969
|
|
|
8,258
|
|
|
35,347
|
|
|
34,269
|
|
|
Percentage rent
|
490
|
|
|
363
|
|
|
1,458
|
|
|
1,379
|
|
|
Other
|
1,511
|
|
|
1,537
|
|
|
9,339
|
|
|
9,041
|
|
|
Total revenue
|
56,675
|
|
|
54,201
|
|
|
227,285
|
|
|
217,070
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Property operating expenses
|
7,146
|
|
|
6,787
|
|
|
27,689
|
|
|
27,527
|
|
|
Provision for credit losses
|
304
|
|
|
287
|
|
|
906
|
|
|
1,494
|
|
|
Real estate taxes
|
6,873
|
|
|
6,414
|
|
|
26,997
|
|
|
24,680
|
|
|
Interest expense and amortization of deferred
debt costs
|
11,640
|
|
|
11,415
|
|
|
47,225
|
|
|
45,683
|
|
|
Depreciation and amortization of deferred leasing costs
|
11,298
|
|
|
10,939
|
|
|
45,694
|
|
|
44,417
|
|
|
General and administrative
|
4,998
|
|
|
4,996
|
|
|
18,176
|
|
|
17,496
|
|
|
Acquisition related costs
|
—
|
|
|
3
|
|
|
—
|
|
|
60
|
|
|
Total operating expenses
|
42,259
|
|
|
40,841
|
|
|
166,687
|
|
|
161,357
|
|
|
Operating income
|
14,416
|
|
|
13,360
|
|
|
60,598
|
|
|
55,713
|
|
|
Change in fair value of derivatives
|
72
|
|
|
3
|
|
|
70
|
|
|
(6)
|
|
|
Gain on sale of property
|
—
|
|
|
1,013
|
|
|
—
|
|
|
1,013
|
|
|
Net Income
|
14,488
|
|
|
14,376
|
|
|
60,668
|
|
|
56,720
|
|
|
Income attributable to noncontrolling interests
|
(2,928)
|
|
|
(2,911)
|
|
|
(12,411)
|
|
|
(11,441)
|
|
|
Net income attributable to Saul Centers, Inc.
|
11,560
|
|
|
11,465
|
|
|
48,257
|
|
|
45,279
|
|
|
Preferred stock dividends
|
(3,094)
|
|
|
(3,094)
|
|
|
(12,375)
|
|
|
(12,375)
|
|
|
Net income available to common stockholders
|
$
|
8,466
|
|
|
$
|
8,371
|
|
|
$
|
35,882
|
|
|
$
|
32,904
|
|
|
Per share net income available to common stockholders
|
|
|
|
|
|
|
|
|
Diluted
|
$
|
0.38
|
|
|
$
|
0.38
|
|
|
$
|
1.63
|
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Stock:
|
|
|
|
|
|
|
|
|
Common stock
|
22,072
|
|
|
21,674
|
|
|
21,901
|
|
|
21,505
|
|
|
Effect of dilutive options
|
114
|
|
|
154
|
|
|
107
|
|
|
110
|
|
|
Diluted weighted average common stock
|
22,186
|
|
|
21,828
|
|
|
22,008
|
|
|
21,615
|
|
|
Reconciliation of net income to FFO available to common stockholders and
noncontrolling interests (1)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December 31,
|
|
(In thousands, except per share amounts)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net income
|
$
|
14,488
|
|
|
$
|
14,376
|
|
|
$
|
60,668
|
|
|
$
|
56,720
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Gain on sale of property
|
—
|
|
|
(1,013)
|
|
|
—
|
|
|
(1,013)
|
|
|
Add:
|
|
|
|
|
|
|
|
|
Real estate depreciation and amortization
|
11,298
|
|
|
10,939
|
|
|
45,694
|
|
|
44,417
|
|
|
FFO
|
25,786
|
|
|
24,302
|
|
|
106,362
|
|
|
100,124
|
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
(3,094)
|
|
|
(3,094)
|
|
|
(12,375)
|
|
|
(12,375)
|
|
|
FFO available to common stockholders and noncontrolling
interests
|
$
|
22,692
|
|
|
$
|
21,208
|
|
|
$
|
93,987
|
|
|
$
|
87,749
|
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
Diluted weighted average common stock
|
22,186
|
|
|
21,828
|
|
|
22,008
|
|
|
21,615
|
|
|
Convertible limited partnership units
|
7,536
|
|
|
7,420
|
|
|
7,503
|
|
|
7,375
|
|
|
Average shares and units used to compute FFO per share
|
29,722
|
|
|
29,248
|
|
|
29,511
|
|
|
28,990
|
|
|
FFO per share available to common stockholders and noncontrolling
interests
|
$
|
0.76
|
|
|
$
|
0.73
|
|
|
$
|
3.18
|
|
|
$
|
3.03
|
|
|
|
(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
December 31,
|
|
Year Ended December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Total revenue
|
|
$
|
56,675
|
|
|
$
|
54,201
|
|
|
$
|
227,285
|
|
|
$
|
217,070
|
|
|
Less: Interest income
|
|
(49)
|
|
|
(15)
|
|
|
(80)
|
|
|
(52)
|
|
|
Less: Acquisitions, dispositions and development
properties
|
|
(1,175)
|
|
|
(605)
|
|
|
(13,746)
|
|
|
(5,364)
|
|
|
Total same property revenue
|
|
$
|
55,451
|
|
|
$
|
53,581
|
|
|
$
|
213,459
|
|
|
$
|
211,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shopping Centers
|
|
$
|
39,824
|
|
|
$
|
38,883
|
|
|
$
|
160,393
|
|
|
$
|
158,044
|
|
|
Mixed-Use properties
|
|
15,627
|
|
|
14,698
|
|
|
53,066
|
|
|
53,610
|
|
|
Total same property revenue
|
|
$
|
55,451
|
|
|
$
|
53,581
|
|
|
$
|
213,459
|
|
|
$
|
211,654
|
|
|
Reconciliation of net income to same property operating
income
|
|
Three Months Ended
December 31,
|
|
Year Ended December 31,
|
|
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net income
|
$
|
14,488
|
|
|
$
|
14,376
|
|
|
$
|
60,668
|
|
|
$
|
56,720
|
|
|
Add: Interest expense and amortization of deferred debt costs
|
11,640
|
|
|
11,415
|
|
|
47,225
|
|
|
45,683
|
|
|
Add: Depreciation and amortization of deferred leasing costs
|
11,298
|
|
|
10,939
|
|
|
45,694
|
|
|
44,417
|
|
|
Add: General and administrative
|
4,998
|
|
|
4,996
|
|
|
18,176
|
|
|
17,496
|
|
|
Add: Acquisition related costs
|
—
|
|
|
3
|
|
|
—
|
|
|
60
|
|
|
Add: Change in fair value of derivatives
|
(72)
|
|
|
(3)
|
|
|
(70)
|
|
|
6
|
|
|
Less: Gains on property dispositions
|
—
|
|
|
(1,013)
|
|
|
—
|
|
|
(1,013)
|
|
|
Less: Interest income
|
(49)
|
|
|
(15)
|
|
|
(80)
|
|
|
(52)
|
|
|
Property operating income
|
42,303
|
|
|
40,698
|
|
|
171,613
|
|
|
163,317
|
|
|
Less: Acquisitions, dispositions & development property
|
(948)
|
|
|
(238)
|
|
|
(8,978)
|
|
|
(1,760)
|
|
|
Total same property operating income
|
$
|
41,355
|
|
|
$
|
40,460
|
|
|
$
|
162,635
|
|
|
$
|
161,557
|
|
|
|
|
|
|
|
|
|
|
|
Shopping centers
|
$
|
31,230
|
|
|
$
|
30,737
|
|
|
$
|
127,096
|
|
|
$
|
124,470
|
|
|
Mixed-Use properties
|
10,125
|
|
|
9,723
|
|
|
35,539
|
|
|
37,087
|
|
|
Total same property operating income
|
$
|
41,355
|
|
|
$
|
40,460
|
|
|
$
|
162,635
|
|
|
$
|
161,557
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View original content:http://www.prnewswire.com/news-releases/saul-centers-inc-reports-fourth-quarter-2017-earnings-300605317.html
SOURCE Saul Centers, Inc.