Attached files
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| 8-K - FORM 8-K - SAUL CENTERS, INC. | d498881d8k.htm |
Exhibit 99.1
SAULCENTERS, INC.
7501 Wisconsin Avenue, Suite 1500, Bethesda, Maryland 20814-6522
(301) 986-6200
Saul Centers, Inc. Reports
Fourth Quarter 2012 Earnings
March 7, 2013, Bethesda, MD.
Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust (REIT), announced its operating results for the quarter ended December 31, 2012 (“2012 Quarter”). Total revenue for the 2012 Quarter increased to $48.3 million from $46.8 million for the quarter ended December 31, 2011 (“2011 Quarter”). Operating income, which is net income available to common stockholders before income attributable to noncontrolling interests and preferred stock dividends, increased to $9.1 million for the 2012 Quarter from $8.7 million for the 2011 Quarter. Net income available to common stockholders was $5.7 million ($0.29 per diluted share) for the 2012 Quarter compared to $3.7 million ($0.19 per diluted share) for the 2011 Quarter. Included in the results for the 2012 Quarter is a $3.5 million gain on sale of the 55,000 square foot Belvedere Gardens shopping center, located in Baltimore, Maryland, which was partially offset by $1.1 million of acquisition costs related to the acquisition of two properties located along Rockville Pike in Montgomery County, Maryland.
Same property revenue increased 1.9% for the 2012 Quarter compared to the 2011 Quarter, and same property operating income increased 1.4%. Same property comparisons exclude the results of properties not in operation for the entirety of the comparable reporting periods. Shopping center portfolio same property operating income increased 3.6% and mixed-use portfolio same property operating income decreased 7.9%. The same property results were adversely impacted by Van Ness Square, where rental income has decreased as a result of the Company entering into early lease termination agreements with tenants to position the property for redevelopment. If Van Ness Square was excluded, overall same property operating income would have increased 3.2% and mixed-use same property operating income would have increased 1.1%.
For the year ended December 31, 2012 (“2012 Year”), total revenue increased to $190.1 million from $173.9 million for the year ended December 31, 2011 (“2011 Year”). Operating income increased to $36.2 million for the 2012 Year from $34.0 million for the 2011 Year. Net income available to common stockholders was $18.2 million ($0.93 per diluted share) for the 2012 Year compared to $11.6 million ($0.61 per diluted share) for the 2011 Year. The primary sources of the revenue increase were additional revenue from the shopping centers acquired in 2011 ($9.7 million) and from Clarendon Center ($4.9 million). The primary sources of increased operating income were the core portfolio ($4.1 million) and the shopping centers acquired in
www.SaulCenters.com
2011 ($1.1 million), partially offset by Van Ness Square predevelopment expenses ($2.7 million). Included in the results for the 2012 Year are gains on property sales of $4.5 million, which were partially offset by acquisition costs of $1.1 million.
Same property revenue increased 1.0% and same property operating income increased 1.8% for the 2012 Year compared to the 2011 Year. Shopping center portfolio same property operating income increased 2.0% and mixed-use portfolio same property operating income increased 0.6%. The same property results were adversely impacted by Van Ness Square. If Van Ness Square was excluded, overall same property operating income would have increased 2.6% and mixed-use same property operating income would have increased 5.0%. The increase in the mixed-use properties was primarily due to improved operating performance at Washington Square.
As of December 31, 2012, 91.7% of the commercial portfolio was leased (all properties except the apartments at Clarendon Center, which were 100% leased), compared to 90.1% at December 31, 2011. On a same property basis, 91.9% of the portfolio was leased compared to the prior year level of 90.7%. The 2012 leasing percentages were impacted by a net increase of 107,000 square feet of leased space, primarily caused by the leasing of a portion of the space vacated by major shopping center tenants in 2011.
Funds from operations (FFO) available to common shareholders (after deducting preferred stock dividends) decreased 3.2% to $14.6 million ($0.54 per diluted share) in the 2012 Quarter from $15.1 million ($0.58 per diluted share) in the 2011 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 primary causes for decreased FFO in the 2012 Quarter were increased acquisition costs ($1.1 million) and predevelopment expenses ($0.8 million), which were partially offset by improved overall portfolio operating results ($1.4 million).
FFO available to common shareholders for the 2012 Year increased 19.5% to $60.1 million ($2.26 per diluted share) from $50.3 million ($2.03 per diluted share) for the 2011 Year. FFO increased primarily as a result of (a) the shopping centers acquired in 2011 ($4.7 million), the core portfolio ($3.9 million), and Clarendon Center ($1.0 million), (b) reduced acquisition costs ($1.4 million) and (c) a change in the fair value of the Company’s interest rate swaps ($1.4 million), the combined impact of which was partially offset by predevelopment expenses ($2.7 million).
During 2012, Saul Centers incurred acquisition costs of $1.1 million related to the purchase of two operating shopping center properties intended for future redevelopment in Rockville, Maryland. The first property, 1500 Rockville Pike, a 6.7 acre property with 53,000
www.SaulCenters.com
rentable square feet located near the Twinbrook Metro Station, was acquired for $23.0 million, including acquisition costs. The second property, 5541 Nicholson Lane, a 1.1 acre property with 20,000 rentable square feet located adjacent to the Company’s 11503 Rockville Pike property near the White Flint Metro Station, was acquired for $12.2 million, including acquisition costs. The two properties are currently zoned for 1.1 million square feet of rentable mixed-use space.
The Company sold two properties during 2012 and recognized a combined gain on sale of $4.5 million. In July, the Company sold the 77,000 square foot and 11.7% leased West Park shopping center in Oklahoma City, Oklahoma, and in December, the 55,000 square foot and 34.2% leased Belvedere Gardens shopping center in Baltimore, Maryland.
Saul Centers is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 59 community and neighborhood shopping center and mixed-use properties totaling 9.5 million square feet of leasable area. Over 85% of the Company’s property operating income is generated from properties in the metropolitan Washington, DC/Baltimore area.
| Contact: | Scott V. Schneider |
| (301) 986-6220 |
www.SaulCenters.com
Saul Centers, Inc.
Condensed Consolidated Balance Sheets
($ in thousands)
| December 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
| (Unaudited) | ||||||||
| Assets |
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| Real estate investments |
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| Land |
$ | 353,890 | $ | 324,183 | ||||
| Buildings and equipment |
1,109,911 | 1,092,533 | ||||||
| Construction in progress |
2,267 | 1,129 | ||||||
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| 1,466,068 | 1,417,845 | |||||||
| Accumulated depreciation |
(353,305 | ) | (326,397 | ) | ||||
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| 1,112,763 | 1,091,448 | |||||||
| Cash and cash equivalents |
12,133 | 12,323 | ||||||
| Accounts receivable and accrued income, net |
41,406 | 39,094 | ||||||
| Deferred leasing costs, net |
26,102 | 25,876 | ||||||
| Prepaid expenses, net |
3,895 | 3,868 | ||||||
| Deferred debt costs, net |
7,713 | 7,090 | ||||||
| Other assets |
3,297 | 12,870 | ||||||
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| Total assets |
$ | 1,207,309 | $ | 1,192,569 | ||||
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| Liabilities |
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| Mortgage notes payable |
$ | 789,776 | $ | 823,871 | ||||
| Revolving credit facility payable |
38,000 | 8,000 | ||||||
| Dividends and distributions payable |
13,490 | 13,219 | ||||||
| Accounts payable, accrued expenses and other liabilities |
27,434 | 22,992 | ||||||
| Deferred income |
31,320 | 31,281 | ||||||
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| Total liabilities |
900,020 | 899,363 | ||||||
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| Stockholders’ equity |
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| Preferred stock |
179,328 | 179,328 | ||||||
| Common stock |
201 | 193 | ||||||
| Additional paid-in capital |
246,557 | 217,829 | ||||||
| Accumulated deficit and other comprehensive loss |
(158,383 | ) | (147,522 | ) | ||||
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| Total Saul Centers, Inc. stockholders’ equity |
267,703 | 249,828 | ||||||
| Noncontrolling interest |
39,586 | 43,378 | ||||||
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| Total stockholders’ equity |
307,289 | 293,206 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 1,207,309 | $ | 1,192,569 | ||||
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Saul Centers, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
| Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Revenue |
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| Base rent |
$ | 38,917 | $ | 37,520 | $ | 152,777 | $ | 138,486 | ||||||||
| Expense recoveries |
7,685 | 7,188 | 30,391 | 28,368 | ||||||||||||
| Percentage rent |
436 | 473 | 1,545 | 1,503 | ||||||||||||
| Other |
1,249 | 1,667 | 5,379 | 5,521 | ||||||||||||
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| Total revenue |
48,287 | 46,848 | 190,092 | 173,878 | ||||||||||||
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| Operating expenses |
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| Property operating expenses |
6,265 | 6,611 | 23,794 | 24,715 | ||||||||||||
| Provision for credit losses |
390 | 255 | 1,151 | 1,880 | ||||||||||||
| Real estate taxes |
5,428 | 4,593 | 22,325 | 18,435 | ||||||||||||
| Interest expense and amortization of deferred debt costs |
11,923 | 12,723 | 49,544 | 45,324 | ||||||||||||
| Depreciation and amortization of deferred leasing costs |
10,364 | 10,065 | 40,112 | 35,298 | ||||||||||||
| General and administrative |
3,971 | 3,854 | 14,274 | 14,256 | ||||||||||||
| Predevelopment expenses |
797 | — | 2,667 | — | ||||||||||||
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| Total operating expenses |
39,138 | 38,101 | 153,867 | 139,908 | ||||||||||||
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| Operating income |
9,149 | 8,747 | 36,225 | 33,970 | ||||||||||||
| Acquisition related costs |
(1,129 | ) | (21 | ) | (1,129 | ) | (2,534 | ) | ||||||||
| Change in fair value of derivatives |
38 | 42 | 36 | (1,332 | ) | |||||||||||
| Gain on casualty settlement |
— | 47 | 219 | 245 | ||||||||||||
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| Income from continuing operations |
8,058 | 8,815 | 35,351 | 30,349 | ||||||||||||
| Discontinued operations: |
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| Loss from operations of property sold |
(50 | ) | — | (81 | ) | (55 | ) | |||||||||
| Gain on property sale |
3,453 | — | 4,510 | — | ||||||||||||
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| Income (loss) from discontinued operations |
3,403 | — | 4,429 | (55 | ) | |||||||||||
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| Net income |
11,461 | 8,815 | 39,780 | 30,294 | ||||||||||||
| Income attributable to the noncontrolling interests |
(1,978 | ) | (1,293 | ) | (6,406 | ) | (3,561 | ) | ||||||||
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| Net income attributable to Saul Centers, Inc. |
9,483 | 7,522 | 33,374 | 26,733 | ||||||||||||
| Preferred dividends |
(3,785 | ) | (3,785 | ) | (15,140 | ) | (15,140 | ) | ||||||||
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| Net income available to common stockholders |
$ | 5,698 | $ | 3,737 | $ | 18,234 | $ | 11,593 | ||||||||
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| Per share net income available to common stockholders: |
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| Diluted |
$ | 0.29 | $ | 0.19 | $ | 0.93 | $ | 0.61 | ||||||||
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| Weighted average common stock: |
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| Common stock |
19,914 | 19,233 | 19,650 | 18,889 | ||||||||||||
| Effect of dilutive options |
50 | 34 | 50 | 60 | ||||||||||||
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| Diluted weighted average common stock |
19,964 | 19,267 | 19,700 | 18,949 | ||||||||||||
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Saul Centers, Inc.
Supplemental Information
(In thousands, except per share amounts)
| Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Reconciliation of net income to FFO available to common shareholders: (1) |
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| Net income |
$ | 11,461 | $ | 8,815 | $ | 39,780 | $ | 30,294 | ||||||||
| Less: Gains on property dispositions |
(3,453 | ) | (47 | ) | (4,729 | ) | (245 | ) | ||||||||
| Add: Real property depreciation and amortization |
10,364 | 10,065 | 40,112 | 35,298 | ||||||||||||
| Add: Real property depreciation - discontinued operations |
9 | 27 | 77 | 102 | ||||||||||||
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| FFO |
18,381 | 18,860 | 75,240 | 65,449 | ||||||||||||
| Less: Preferred dividends |
(3,785 | ) | (3,785 | ) | (15,140 | ) | (15,140 | ) | ||||||||
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| FFO available to common shareholders |
$ | 14,596 | $ | 15,075 | $ | 60,100 | $ | 50,309 | ||||||||
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| Weighted average shares: |
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| Diluted weighted average common stock |
19,964 | 19,267 | 19,700 | 18,949 | ||||||||||||
| Convertible limited partnership units |
6,914 | 6,914 | 6,914 | 5,791 | ||||||||||||
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| Diluted & converted weighted average shares |
26,878 | 26,181 | 26,614 | 24,740 | ||||||||||||
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| Per share amounts: |
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| FFO available to common shareholders (diluted) |
$ | 0.54 | $ | 0.58 | $ | 2.26 | $ | 2.03 | ||||||||
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| Reconciliation of net income to same property operating income: |
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| Net income |
$ | 11,461 | $ | 8,815 | $ | 39,780 | $ | 30,294 | ||||||||
| Add: Interest expense and amortization of deferred debt costs |
11,923 | 12,723 | 49,544 | 45,324 | ||||||||||||
| Add: Interest expense - discontinued operations |
10 | 38 | 49 | 151 | ||||||||||||
| Add: Depreciation and amortization of deferred leasing costs |
10,364 | 10,065 | 40,112 | 35,298 | ||||||||||||
| Add: Real property depreciation - discontinued operations |
9 | 27 | 77 | 102 | ||||||||||||
| Add: General and administrative |
3,971 | 3,854 | 14,274 | 14,256 | ||||||||||||
| Add: Predevelopment expenses |
797 | — | 2,667 | — | ||||||||||||
| Add: Acquisition related costs |
1,129 | 21 | 1,129 | 2,534 | ||||||||||||
| Less: Change in fair value of derivatives |
(38 | ) | (42 | ) | (36 | ) | 1,332 | |||||||||
| Less: Gains on property dispositions |
(3,453 | ) | (47 | ) | (4,729 | ) | (245 | ) | ||||||||
| Less: Interest income |
(28 | ) | (11 | ) | (136 | ) | (76 | ) | ||||||||
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| Property operating income |
36,145 | 35,443 | 142,731 | 128,970 | ||||||||||||
| Less: Acquisitions & developments |
(3,233 | ) | (3,000 | ) | (23,099 | ) | (11,405 | ) | ||||||||
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| Total same property operating income |
$ | 32,912 | $ | 32,443 | $ | 119,632 | $ | 117,565 | ||||||||
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| Shopping centers |
$ | 27,304 | $ | 26,354 | $ | 96,279 | $ | 94,354 | ||||||||
| Mixed-Use properties |
5,608 | 6,089 | 23,353 | 23,211 | ||||||||||||
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| Total same property operating income |
$ | 32,912 | $ | 32,443 | $ | 119,632 | $ | 117,565 | ||||||||
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| (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 (sales of properties and casualty settlements). 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. |