SAUL CENTERS, INC. - FORM 8-K - EX-99.1 - EXHIBIT 12/31/2013 - March 5, 2014

Attached files

file filename
8-K - 8-K - SAUL CENTERS, INC.bfs-12312013x8k.htm


EXHIBIT INDEX
Exhibit        Description
No.
99.1         Press Release, dated March 4, 2014, of Saul Centers, Inc.

Section 2: EX-99.1 (EX-99.1)
Exhibit 99.1
SAUL CENTERS, INC.
7501 Wisconsin Avenue, Suite 1500, Bethesda, Maryland 20814-6522
(301) 986-6200
Saul Centers, Inc. Reports Fourth Quarter 2013 Earnings
March 4, 2014, Bethesda, MD.
Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced its operating results for the quarter ended December 31, 2013 (“2013 Quarter”). Total revenue for the 2013 Quarter increased to $50.1 million from $48.3 million for the quarter ended December 31, 2012 (“2012 Quarter”). Operating income, which is net income before the impact of the change in fair value of derivatives, loss on early extinguishment of debt, the impact of operations of sold properties, gains on sales of property and gains on casualty settlements, increased to $12.2 million for the 2013 Quarter from $8.0 million for the 2012 Quarter.
Net income attributable to common stockholders was $6.7 million ($0.33 per diluted share) for the 2013 Quarter compared to $5.7 million ($0.29 per diluted share) for the 2012 Quarter. The increase in net income attributable to common stockholders for the 2013 Quarter was primarily the result of (a) increased property operating income ($1.7 million), (b) lower predevelopment expenses related to Park Van Ness ($0.5 million), (c) lower interest expense ($0.5 million), (d) lower acquisition related costs ($1.1 million) and (e) lower preferred stock dividends ($0.6 million) partially offset by (f) lower gain on sale of property ($3.5 million).
Same property revenue increased 4.1% and same property operating income increased 4.2% for the 2013 Quarter compared to the 2012 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 3.1% and mixed-use same property operating income increased 7.9%. Leasing activity at Clarendon Center and 601 Pennsylvania Avenue was the primary contributor of improved mixed-use property operating income.
For the year ended December 31, 2013 (“2013 Period”), total revenue increased to $197.9 million from $190.1 million for the year ended December 31, 2012 (“2012 Period”). Operating income was $35.3 million for the 2013 Period and $35.1 million for the 2012 Period. Operating income for the 2013 Period was adversely impacted by $8.0 million of additional depreciation expense and $1.2 million of higher predevelopment expenses, both of which are related to the Company’s activities at Park Van Ness, partially offset by $7.2 million of increased property operating income and $3.0 million of lower interest expense and amortization of deferred debt costs. Adjusting for the expenses related to the Park Van Ness redevelopment activities in both periods, operating income for the 2013 Period would have been $47.2 million or $9.4 million more than the 2012 Period.
Net income attributable to common stockholders was $11.7 million ($0.57 per diluted share) for the 2013 Period compared to $18.2 million ($0.93 per diluted share) for the 2012 Period. Net income attributable to common stockholders for the 2013 Period was adversely impacted primarily by (a) increased depreciation and predevelopment expenses related to Park Van Ness ($9.2 million), (b) a charge against common equity resulting from the redemption of preferred stock ($5.2 million), and (c) lower gain on sales of property ($4.5 million) partially offset by (d) increased property operating income ($7.2 million), (e) lower noncontrolling interest ($2.4 million), (f) lower interest expense and amortization of deferred debt costs ($3.0 million), (g) lower preferred stock dividends ($1.2 million) and (h) lower acquisition related costs ($1.0 million). Excluding the impact of Park Van Ness in both periods and the preferred stock redemption in 2013, as adjusted for noncontrolling interests, net income attributable to common stockholders would have been approximately $24.5 million, or $4.2 million more than the 2012 Period.

www.SaulCenters.com



Same property revenue increased 4.2% and same property operating income increased 4.4% for the 2013 Period compared to the 2012 Period. Shopping center same property operating income increased 3.6% and mixed-use same property operating income increased 7.0%. Shopping center operating income benefited primarily from higher revenue as a result of an 89,000 square foot increase in leased space. The leasing of Clarendon Center office space was the primary contributor to improved mixed-use property operating income.
As of December 31, 2013, 93.9% of the commercial portfolio was leased (all properties except the apartments at Clarendon Center), compared to 91.7% at December 31, 2012. On a same property basis, 93.9% of the portfolio was leased at December 31, 2013, compared to 92.6% at December 31, 2012. The 2013 percentage leased was impacted by a net increase of 123,100 square feet, 70,800 square feet of which resulted from improved leasing of small shop shopping center space (spaces totaling 10,000 square feet or less) throughout the portfolio and 34,500 square feet of which resulted from improved leasing in the mixed-use portfolio, primarily at Avenel Business Park. As of December 31, 2013, the apartments at Clarendon Center were 99.2% leased compared to 100.0% as of December 31, 2012.
Funds from operations ("FFO") available to common shareholders (after deducting preferred stock dividends) increased 28.0% to $18.7 million ($0.68 per diluted share) in the 2013 Quarter from $14.6 million ($0.54 per diluted share) in the 2012 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 2013 Quarter was primarily due to (a) increased property operating income ($1.7 million), (b) lower acquisition-related costs ($1.1 million), (c) lower preferred stock dividends ($0.6 million), (d) lower predevelopment expenses ($0.5 million) and (e) lower interest expense ($0.5 million).
FFO available to common shareholders (after deducting preferred stock dividends and the impact of preferred stock redemptions) increased 7.6% to $64.7 million ($2.37 per diluted share) in the 2013 Period from $60.1 million ($2.26 per diluted share) in the 2012 Period. FFO available to common shareholders for the 2013 Period increased primarily due to (a) improved overall property operating income ($7.2 million), (b) lower interest expense and amortization of deferred debt costs ($3.0 million), (c) lower preferred stock dividends ($1.2 million) and (d) lower acquisition related costs ($1.0 million) partially offset by (e) the redemption of preferred stock ($5.2 million), (f) increased predevelopment expenses ($1.2 million) and (g) higher general and administrative expenses ($0.7 million). Excluding the impact of predevelopment expenses in both periods and the preferred stock redemption in 2013, FFO available to common shareholders would have been approximately $73.8 million or $11.1 million more than the 2012 Period.
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 59 properties which includes (a) 56 community and neighborhood shopping centers and mixed-use properties with approximately 9.3 million square feet of leasable area and (b) 3 land and development properties. 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,
2013
 
December 31,
2012
 
(Unaudited)
 
 
Assets
 
 
 
Real estate investments
 
 
 
Land
$
354,967

 
$
353,890

Buildings and equipment
1,094,605

 
1,109,911

Construction in progress
9,867

 
2,267

 
1,459,439

 
1,466,068

Accumulated depreciation
(364,663
)
 
(353,305
)
 
1,094,776

 
1,112,763

Cash and cash equivalents
17,297

 
12,133

Accounts receivable and accrued income, net
43,884

 
41,406

Deferred leasing costs, net
26,052

 
26,102

Prepaid expenses, net
4,047

 
3,895

Deferred debt costs, net
9,675

 
7,713

Other assets
2,944

 
3,297

Total assets
$
1,198,675

 
$
1,207,309

 
 
 
 
Liabilities
 
 
 
Mortgage notes payable
$
820,068

 
$
789,776

Revolving credit facility payable
—

 
38,000

Dividends and distributions payable
13,135

 
13,490

Accounts payable, accrued expenses and other liabilities
20,141

 
27,434

Deferred income
30,205

 
31,320

Total liabilities
883,549

 
900,020

 
 
 
 
Stockholders’ equity
 
 
 
Preferred stock
180,000

 
179,328

Common stock
206

 
201

Additional paid-in capital
270,428

 
246,557

Accumulated deficit and other comprehensive loss
(173,956
)
 
(158,383
)
Total Saul Centers, Inc. stockholders’ equity
276,678

 
267,703

Noncontrolling interest
38,448

 
39,586

Total stockholders’ equity
315,126

 
307,289

Total liabilities and stockholders’ equity
$
1,198,675

 
$
1,207,309






Saul Centers, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
 
Three Months Ended 
 December 31,
 
Year Ended December 31,
 
2013
 
2012
 
2013
 
2012
Revenue
(unaudited)
 
(unaudited)
 
 
Base rent
$
40,495

 
$
38,915

 
$
159,898

 
$
152,777

Expense recoveries
8,024

 
7,685

 
30,949

 
30,391

Percentage rent
422

 
436

 
1,575

 
1,545

Other
1,205

 
1,250

 
5,475

 
5,379

Total revenue
50,146

 
48,286

 
197,897

 
190,092

Operating expenses
 
 
 
 
 
 
 
Property operating expenses
6,463

 
6,262

 
24,559

 
23,794

Provision for credit losses
228

 
390

 
968

 
1,151

Real estate taxes
5,609

 
5,428

 
22,415

 
22,325

Interest expense and amortization of deferred debt costs
11,425

 
11,935

 
46,589

 
49,544

Depreciation and amortization of deferred leasing costs
9,814

 
10,368

 
49,130

 
40,112

General and administrative
4,121

 
3,971

 
14,951

 
14,274

Acquisition related costs
7

 
1,129

 
106

 
1,129

Predevelopment expenses
268

 
797

 
3,910

 
2,667

Total operating expenses
37,935

 
40,280

 
162,628

 
154,996

Operating income
12,211

 
8,006

 
35,269

 
35,096

Change in fair value of derivatives
(114
)
 
38

 
(7
)
 
36

Loss on early extinguishment of debt
—

 
—

 
(497
)
 
—

Gain on casualty settlement
77

 
—

 
77

 
219

Income from continuing operations
12,174

 
8,044

 
34,842

 
35,351

Discontinued operations
—

 
3,417

 
—

 
4,429

Net Income
12,174

 
11,461

 
34,842

 
39,780

Income attributable to noncontrolling interests
(2,278
)
 
(1,978
)
 
(3,970
)
 
(6,406
)
Net income attributable to Saul Centers, Inc.
9,896

 
9,483

 
30,872

 
33,374

Preferred stock redemption
—

 
—

 
(5,228
)
 
—

Preferred stock dividends
(3,206
)
 
(3,785
)
 
(13,983
)
 
(15,140
)
Net income attributable to common stockholders
$
6,690

 
$
5,698

 
$
11,661

 
$
18,234

Per share net income attributable to common stockholders
 
 
 
 
 
 
 
Diluted
$
0.33

 
$
0.29

 
$
0.57

 
$
0.93

 
 
 
 
 
 
 
 
Weighted Average Common Stock:
 
 
 
 
 
 
 
Common stock
20,555

 
19,914

 
20,364

 
19,649

Effect of dilutive options
61

 
50

 
37

 
51

Diluted weighted average common stock
20,616

 
19,964

 
20,401

 
19,700






Reconciliation of net income to FFO attributable to common shareholders (1)
 
 
Three Months Ended 
 December 31,
 
Year Ended December 31,
 
(In thousands, except per share amounts)
2013
 
2012
 
2013
 
2012
 
Net income
$
12,174

 
$
11,461

 
$
34,842

 
$
39,780

 
Subtract:
 
 
 
 
 
 
 
 
Gain on sale of property
—

 
(3,453
)
 
—

 
(4,510
)
 
Gain on casualty settlement
(77
)
 
—

 
(77
)
 
(219
)
 
Add:
 
 
 
 
 
 
 
 
Real estate depreciation-discontinued operations
—

 
26

 
—

 
77

 
Real estate depreciation and amortization
9,814

 
10,368

 
49,130

 
40,112

 
FFO
21,911

 
18,402

 
83,895

 
75,240

 
Subtract:
 
 
 
 
 
 
 
 
Preferred stock dividends
(3,206
)
 
(3,785
)
 
(13,983
)
 
(15,140
)
 
Preferred stock redemption
—

 
—

 
(5,228
)
 
—

 
FFO available to common shareholders
$
18,705

 
$
14,617

 
$
64,684

 
$
60,100

 
Weighted average shares:
 
 
 
 
 
 
 
 
Diluted weighted average common stock
20,616

 
19,964

 
20,401

 
19,700

 
Convertible limited partnership units
6,973

 
6,914

 
6,929

 
6,914

 
Average shares and units used to compute FFO per share
27,589

 
26,878

 
27,330

 
26,614

 
FFO per share available to common shareholders
$
0.68

 
$
0.54

 
$
2.37

 
$
2.26

 
 
 
 
 
 
 
 
 
(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 December 31,
 
Year Ended December 31,
 
(In thousands)
2013
 
2012
 
2013
 
2012
 
Net income
$
12,174

 
$
11,461

 
$
34,842

 
$
39,780

 
Add: Interest expense and amortization of deferred debt costs
11,425

 
11,935

 
46,589

 
49,544

 
Add: Interest expense - discontinued operations
—

 
10

 
—

 
49

 
Add: Depreciation and amortization of deferred leasing costs
9,814

 
10,368

 
49,130

 
40,112

 
Add: Real property depreciation - discontinued operations
—

 
26

 
—

 
77

 
Add: Loss on early extinguishment of debt
—

 
—

 
497

 
—

 
Add: General and administrative
4,121

 
3,971

 
14,951

 
14,274

 
Add: Predevelopment expenses
268

 
797

 
3,910

 
2,667

 
Add: Acquisition related costs
7

 
1,129

 
106

 
1,129

 
Add (Less): Change in fair value of derivatives
114

 
(38
)
 
7

 
(36
)
 
Less: Gains on property dispositions
(77
)
 
(3,453
)
 
(77
)
 
(4,729
)
 
Less: Interest income
(12
)
 
(27
)
 
(69
)
 
(136
)
 
Property operating income
37,834

 
36,179

 
149,886

 
142,731

 
Less: Acquisitions, dispositions & development property
(551
)
 
(409
)
 
(2,563
)
 
(1,598
)
 
Total same property operating income
$
37,283

 
$
35,770

 
$
147,323

 
$
141,133

 
 
 
 
 
 
 
 
 
 
Shopping centers
$
28,041

 
$
27,202

 
$
110,864

 
$
107,052

 
Mixed-Use properties
9,242

 
8,567

 
36,459

 
34,081

 
Total same property operating income
$
37,283

 
$
35,769

 
$
147,323

 
$
141,133




Stock widget

Investing forum

SAUL CENTERS, INC. Reports