Saul Centers, Inc. Reports First Quarter 2014 Earnings - WAFF-TV: News, Weather and Sports for Huntsville, AL

Saul Centers, Inc. Reports First Quarter 2014 Earnings

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SOURCE Saul Centers, Inc.

BETHESDA, Md., May 6, 2014 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced its operating results for the quarter ended March 31, 2014 ("2014 Quarter"). Total revenue for the 2014 Quarter increased to $52.9 million from $49.2 million for the quarter ended March 31, 2013 ("2013 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 $12.7 million for the 2014 Quarter from $3.4 million for the 2013 Quarter. 

Net income attributable to common stockholders was $7.1 million ($0.34 per diluted share) for the 2014 Quarter compared to a loss of $4.6 million ($0.23 per diluted share) for the 2013 Quarter.  The increase in net income attributable to common stockholders for the 2014 Quarter was primarily the result of (a) depreciation expense recognized in the 2013 Quarter as a result of the reduction in the depreciable life of Van Ness Square ($6.2 million), (b) lower preferred stock redemption charges ($5.2 million), (c) increased property operating income ($2.5 million), and (d) lower predevelopment expenses related to Park Van Ness ($1.8 million), partially offset by (e) higher noncontrolling interest ($4.0 million). 

Same property revenue increased 8.3% and same property operating income increased 6.9% for the 2014 Quarter compared to the 2013 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 and the comparisons exclude the results of properties not in operation for the entirety of the comparable reporting periods.  Shopping center same property operating income increased 6.7% primarily due to the $1.5 million impact of a lease termination at Seven Corners.  Mixed-use same property operating income increased 7.3% primarily due to higher base rent and lower real estate taxes at 601 Pennsylvania Avenue.

As of March 31, 2014, 94.3% of the commercial portfolio was leased (all properties except the apartments at Clarendon Center), compared to 91.5% at March 31, 2013.  On a same property basis, 94.3% of the portfolio was leased at March 31, 2014, compared to 92.8% at March 31, 2013.  As of March 31, 2014, the apartments at Clarendon Center were 98.8% leased compared to 100% as of March 31, 2013.

Funds from operations ("FFO") available to common shareholders (after deducting preferred stock dividends and redemption charges) increased 93.8% to $19.7 million ($0.71 per diluted share) in the 2014 Quarter from $10.2 million ($0.37 per diluted share) in the 2013 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 shareholders for the 2014 Quarter was primarily due to (a) lower preferred stock redemption charges ($5.2 million), (b) increased property operating income ($2.5 million), and (c) lower predevelopment expenses ($1.8 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 59 properties which includes (a) 56 community and neighborhood shopping centers, one of which is held-for-sale, and mixed-use properties with approximately 9.3 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)



March 31,
 2014


December 31,
 2013


(Unaudited)




Assets






Real estate investments






Land

$

364,146



$

354,967


Buildings and equipment

1,097,921



1,094,605


Construction in progress

11,880



9,867



1,473,947



1,459,439


Accumulated depreciation

(372,041)



(364,663)



1,101,906



1,094,776


Cash and cash equivalents

15,351



17,297


Accounts receivable and accrued income, net

43,748



43,884


Deferred leasing costs, net

25,996



26,052


Prepaid expenses, net

3,390



4,047


Deferred debt costs, net

9,345



9,675


Other assets

4,861



2,944


Total assets

$

1,204,597



$

1,198,675








Liabilities






Mortgage notes payable

$

814,635



$

820,068


Revolving credit facility payable

-



-


Dividends and distributions payable

14,308



13,135


Accounts payable, accrued expenses and other liabilities

23,255



20,141


Deferred income

31,990



30,205


Total liabilities

884,188



883,549








Stockholders' equity






Preferred stock

180,000



180,000


Common stock

206



206


Additional paid-in capital

273,351



270,428


Accumulated deficit and other comprehensive loss

(175,308)



(173,956)


Total Saul Centers, Inc. stockholders' equity

278,249



276,678


Noncontrolling interest

42,160



38,448


Total stockholders' equity

320,409



315,126


Total liabilities and stockholders' equity

$

1,204,597



$

1,198,675


 

Saul Centers, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)



Three Months Ended March 31,


2014



2013


Revenue

(unaudited)

Base rent

$

40,563



$

39,740


Expense recoveries

8,789



7,614


Percentage rent

452



600


Other

3,143



1,232


Total revenue

52,947



49,186


Operating expenses






Property operating expenses

7,585



5,949


Provision for credit losses

203



264


Real estate taxes

5,453



5,763


Interest expense and amortization of deferred debt costs

11,467



11,717


Depreciation and amortization of deferred leasing costs

10,180



16,352


General and administrative

4,680



3,404


Acquisition related costs

163



-


Predevelopment expenses

503



2,349


Total operating expenses

40,234



45,798


Operating income

12,713



3,388


Change in fair value of derivatives

(2)



10


Net Income

12,711



3,398


(Income) loss attributable to noncontrolling interests

(2,424)



1,586


Net income attributable to Saul Centers, Inc.

10,287



4,984


Preferred stock redemption

-



(5,228)


Preferred stock dividends

(3,206)



(4,364)


Net income (loss) attributable to common stockholders

$

7,081



$

(4,608)


Per share net income (loss) attributable to common stockholders






Basic and diluted

$

0.34



$

(0.23)








Weighted Average Common Stock:






Common stock

20,623



20,146


Effect of dilutive options

41



33


Diluted weighted average common stock

20,664



20,179









 

Reconciliation of net income to FFO attributable to common shareholders (1)




Three Months Ended
 March 31,


(In thousands, except per share amounts)


2014



2013





(unaudited)


Net income


$

12,711



$

3,398



Add:








Real estate depreciation and amortization


10,180



16,352



FFO


22,891



19,750



Subtract:








Preferred stock redemption


-



(5,228)



Preferred stock dividends


(3,206)



(4,364)



FFO available to common shareholders


$

19,685



$

10,158



Weighted average shares:








Diluted weighted average common stock


20,664



20,179



Convertible limited partnership units


7,063



6,914



Average shares and units used to compute FFO per share


27,727



27,093



FFO per share available to common shareholders


$

0.71



$

0.37










(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 net income to same property operating income



Three Months Ended March 31,


(In thousands)


2014



2013





(unaudited)


Net income


$

12,711



$

3,398



Add: Interest expense and amortization of deferred debt costs


11,467



11,717



Add: Depreciation and amortization of deferred leasing costs


10,180



16,352



Add: General and administrative


4,680



3,404



Add: Predevelopment expenses


503



2,349



Add: Acquisition related costs


163



-



Add (Less): Change in fair value of derivatives


2



(10)



Less: Interest income


(15)



(31)



Property operating income


39,691



37,179



Less: Acquisitions, dispositions and development property


(133)



(161)



Total same property operating income


$

39,558



$

37,018











Shopping centers


$

30,196



$

28,292



Mixed-Use properties


9,362



8,726



Total same property operating income


$

39,558



$

37,018


 

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