Attached files
| file | filename |
|---|---|
| 8-K - 8-K 12.31.2014 - SAUL CENTERS, INC. | bfs-12312014x8k.htm |
EXHIBIT INDEX
Exhibit Description
No.
99.1 Press Release, dated March 5, 2015, 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 2014 Earnings
March 5, 2015, Bethesda, MD.
Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced its operating results for the quarter ended December 31, 2014 (“2014 Quarter”). Total revenue for the 2014 Quarter increased to $51.3 million from $50.1 million for the quarter ended December 31, 2013 (“2013 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 $12.3 million for the 2014 Quarter from $12.2 million for the 2013 Quarter.
Net income attributable to common stockholders was $5.3 million ($0.25 per diluted share) for the 2014 Quarter compared to $6.7 million ($0.33 per diluted share) for the 2013 Quarter. The decrease in net income attributable to common stockholders for the 2014 Quarter was primarily the result of (a) preferred stock redemption costs ($1.5 million), (b) higher depreciation expense ($0.6 million), (c) higher preferred stock dividends ($0.5 million), (d) higher general and administrative expense ($0.3 million) and (e) higher acquisition costs ($0.2 million) partially offset by (f) increased property operating income ($1.1 million), (g) lower predevelopment expenses related to Park Van Ness ($0.3 million) and (h) lower non-controlling interests ($0.5 million).
Same property revenue increased 1.2% and same property operating income increased 1.5% 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 2.6% and mixed-use same property operating income decreased 1.7%. The decline in Mixed-Use same property operating income was primarily the result of lower expense recoveries which, in turn, resulted from the resetting of base year expenses when certain leases were renewed.
For the year ended December 31, 2014 (“2014 Period”), total revenue increased to $207.1 million from $197.9 million for the year ended December 31, 2013 (“2013 Period”). Operating income was $51.9 million for the 2014 Period and $35.3 million for the 2013 Period. Operating income for the 2014 Period increased primarily due to (a) $8.0 million of lower depreciation expense and $3.4 million of lower predevelopment expenses, both of which are related to the Company’s activities at Park Van Ness, (b) $7.6 million of increased property operating income and (c) $0.6 million of lower interest expense and amortization of deferred debt costs partially offset by (d) $2.0 million of higher general and administrative expenses.
Net income attributable to common stockholders was $32.1 million ($1.54 per diluted share) for the 2014 Period compared to $11.7 million ($0.57 per diluted share) for the 2013 Period. Net income attributable to common stockholders for the 2014 Period increased primarily due to (a) lower depreciation and predevelopment expenses related to Park Van Ness ($11.4 million), (b) lower charges against common equity resulting from the redemption of preferred stock ($3.7 million), (c) higher gain on sales of property ($6.1 million), and (d) increased property operating income ($7.6 million) partially offset by (e) higher noncontrolling interests ($7.1 million) and (f) higher general and administrative expenses ($2.0 million).
Same property revenue increased 4.2% and same property operating income increased 4.4% for the 2014 Period compared to the 2013 Period. Shopping center same property operating income increased 5.4% and mixed-use same property operating income increased 1.2%. Shopping center operating income increased primarily due to (a) a bankruptcy settlement and collection related to a former tenant at Seven Corners ($1.6 million), (b) the impact of a lease termination at Seven Corners ($0.7 million) and (c) the impact of higher revenue as a result of a 95,000 square foot increase in average leased space.
www.SaulCenters.com
As of December 31, 2014, 94.4% of the commercial portfolio was leased (all properties except the apartments at Clarendon Center), compared to 93.9% at December 31, 2013. On a same property basis, 94.4% of the portfolio was leased at December 31, 2014, compared to 93.9% at December 31, 2013. The 2014 same property percentage leased was impacted by a net increase of approximately 39,800 square feet. As of December 31, 2014, the apartments at Clarendon Center were 95.9% leased compared to 99.2% as of December 31, 2013.
Funds From Operations ("FFO") available to common shareholders (after deducting preferred stock dividends and preferred stock redemption charges) decreased to $17.5 million ($0.62 per diluted share) in the 2014 Quarter from $18.7 million ($0.68 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 decrease in FFO available to common shareholders for the 2014 Quarter was primarily due to (a) higher preferred stock redemption costs ($1.5 million) and (b) higher preferred stock dividends ($0.5 million), partially offset by (c) improved overall property operating income ($1.1 million).
FFO available to common shareholders (after deducting preferred stock dividends and preferred stock redemptions) increased 21.0% to $78.3 million ($2.80 per diluted share) in the 2014 Period from $64.7 million ($2.37 per diluted share) in the 2013 Period. FFO available to common shareholders for the 2014 Period increased primarily due to (a) improved overall property operating income ($7.6 million), (b) lower preferred stock redemption costs ($3.7 million), (c) lower predevelopment expenses ($3.4 million) partially offset by (d) higher general and administrative expenses ($2.0 million) and (e) higher acquisition related costs ($0.8 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 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) 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.
Contact: | Scott V. Schneider | |
(301) 986-6220 | ||
www.SaulCenters.com
Saul Centers, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, 2014 | December 31, 2013 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Real estate investments | |||||||
Land | $ | 420,622 | $ | 354,967 | |||
Buildings and equipment | 1,109,276 | 1,094,605 | |||||
Construction in progress | 30,261 | 9,867 | |||||
1,560,159 | 1,459,439 | ||||||
Accumulated depreciation | (396,617 | ) | (364,663 | ) | |||
1,163,542 | 1,094,776 | ||||||
Cash and cash equivalents | 12,128 | 17,297 | |||||
Accounts receivable and accrued income, net | 46,784 | 43,884 | |||||
Deferred leasing costs, net | 26,928 | 26,052 | |||||
Prepaid expenses, net | 4,093 | 4,047 | |||||
Deferred debt costs, net | 9,874 | 9,675 | |||||
Other assets | 3,638 | 2,944 | |||||
Total assets | $ | 1,266,987 | $ | 1,198,675 | |||
Liabilities | |||||||
Mortgage notes payable | $ | 808,997 | $ | 820,068 | |||
Revolving credit facility payable | 43,000 | — | |||||
Construction loan payable | 5,391 | — | |||||
Dividends and distributions payable | 14,352 | 13,135 | |||||
Accounts payable, accrued expenses and other liabilities | 23,537 | 20,141 | |||||
Deferred income | 32,453 | 30,205 | |||||
Total liabilities | 927,730 | 883,549 | |||||
Stockholders’ equity | |||||||
Preferred stock | 180,000 | 180,000 | |||||
Common stock | 209 | 206 | |||||
Additional paid-in capital | 287,995 | 270,428 | |||||
Accumulated deficit and other comprehensive loss | (175,668 | ) | (173,956 | ) | |||
Total Saul Centers, Inc. stockholders’ equity | 292,536 | 276,678 | |||||
Noncontrolling interests | 46,721 | 38,448 | |||||
Total stockholders’ equity | 339,257 | 315,126 | |||||
Total liabilities and stockholders’ equity | $ | 1,266,987 | $ | 1,198,675 | |||
Saul Centers, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Revenue | |||||||||||||||
Base rent | $ | 41,546 | $ | 40,495 | $ | 164,599 | $ | 159,898 | |||||||
Expense recoveries | 7,784 | 8,024 | 32,132 | 30,949 | |||||||||||
Percentage rent | 400 | 422 | 1,492 | 1,575 | |||||||||||
Other | 1,534 | 1,205 | 8,869 | 5,475 | |||||||||||
Total revenue | 51,264 | 50,146 | 207,092 | 197,897 | |||||||||||
Operating expenses | |||||||||||||||
Property operating expenses | 6,440 | 6,463 | 26,479 | 24,559 | |||||||||||
Provision for credit losses | 200 | 228 | 680 | 968 | |||||||||||
Real estate taxes | 5,723 | 5,609 | 22,354 | 22,415 | |||||||||||
Interest expense and amortization of deferred debt costs | 11,497 | 11,425 | 46,034 | 46,589 | |||||||||||
Depreciation and amortization of deferred leasing costs | 10,458 | 9,814 | 41,203 | 49,130 | |||||||||||
General and administrative | 4,421 | 4,121 | 16,961 | 14,951 | |||||||||||
Acquisition related costs | 211 | 7 | 949 | 106 | |||||||||||
Predevelopment expenses | — | 268 | 503 | 3,910 | |||||||||||
Total operating expenses | 38,950 | 37,935 | 155,163 | 162,628 | |||||||||||
Operating income | 12,314 | 12,211 | 51,929 | 35,269 | |||||||||||
Change in fair value of derivatives | (4 | ) | (114 | ) | (10 | ) | (7 | ) | |||||||
Loss on early extinguishment of debt | — | — | — | (497 | ) | ||||||||||
Gain on sale of property | — | — | 6,069 | — | |||||||||||
Gain on casualty settlement | — | 77 | — | 77 | |||||||||||
Net Income | 12,310 | 12,174 | 57,988 | 34,842 | |||||||||||
Income attributable to noncontrolling interests | (1,814 | ) | (2,278 | ) | (11,045 | ) | (3,970 | ) | |||||||
Net income attributable to Saul Centers, Inc. | 10,496 | 9,896 | 46,943 | 30,872 | |||||||||||
Preferred stock redemption | (1,480 | ) | — | (1,480 | ) | (5,228 | ) | ||||||||
Preferred stock dividends | (3,742 | ) | (3,206 | ) | (13,361 | ) | (13,983 | ) | |||||||
Net income attributable to common stockholders | $ | 5,274 | $ | 6,690 | $ | 32,102 | $ | 11,661 | |||||||
Per share net income attributable to common stockholders | |||||||||||||||
Diluted | $ | 0.25 | $ | 0.33 | $ | 1.54 | $ | 0.57 | |||||||
Weighted Average Common Stock: | |||||||||||||||
Common stock | 20,911 | 20,555 | 20,772 | 20,364 | |||||||||||
Effect of dilutive options | 91 | 61 | 49 | 37 | |||||||||||
Diluted weighted average common stock | 21,002 | 20,616 | 20,821 | 20,401 | |||||||||||
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) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income | $ | 12,310 | $ | 12,174 | $ | 57,988 | $ | 34,842 | ||||||||
Subtract: | ||||||||||||||||
Gain on sale of property | — | — | (6,069 | ) | — | |||||||||||
Gain on casualty settlement | — | (77 | ) | — | (77 | ) | ||||||||||
Add: | ||||||||||||||||
Real estate depreciation and amortization | 10,458 | 9,814 | 41,203 | 49,130 | ||||||||||||
FFO | 22,768 | 21,911 | 93,122 | 83,895 | ||||||||||||
Subtract: | ||||||||||||||||
Preferred stock dividends | (3,742 | ) | (3,206 | ) | (13,361 | ) | (13,983 | ) | ||||||||
Preferred stock redemption | (1,480 | ) | — | (1,480 | ) | (5,228 | ) | |||||||||
FFO available to common shareholders | $ | 17,546 | $ | 18,705 | $ | 78,281 | $ | 64,684 | ||||||||
Weighted average shares: | ||||||||||||||||
Diluted weighted average common stock | 21,002 | 20,616 | 20,821 | 20,401 | ||||||||||||
Convertible limited partnership units | 7,199 | 6,973 | 7,156 | 6,929 | ||||||||||||
Average shares and units used to compute FFO per share | 28,201 | 27,589 | 27,977 | 27,330 | ||||||||||||
FFO per share available to common shareholders | $ | 0.62 | $ | 0.68 | $ | 2.80 | $ | 2.37 | ||||||||
(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 December 31, | Year Ended December 31, | |||||||||||||||
(In thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income | $ | 12,310 | $ | 12,174 | $ | 57,988 | $ | 34,842 | ||||||||
Add: Interest expense and amortization of deferred debt costs | 11,497 | 11,425 | 46,034 | 46,589 | ||||||||||||
Add: Depreciation and amortization of deferred leasing costs | 10,458 | 9,814 | 41,203 | 49,130 | ||||||||||||
Add: Loss on early extinguishment of debt | — | — | — | 497 | ||||||||||||
Add: General and administrative | 4,421 | 4,121 | 16,961 | 14,951 | ||||||||||||
Add: Predevelopment expenses | — | 268 | 503 | 3,910 | ||||||||||||
Add: Acquisition related costs | 211 | 7 | 949 | 106 | ||||||||||||
Add: Change in fair value of derivatives | 4 | 114 | 10 | 7 | ||||||||||||
Less: Gains on property dispositions | — | (77 | ) | (6,069 | ) | (77 | ) | |||||||||
Less: Interest income | (17 | ) | (12 | ) | (75 | ) | (69 | ) | ||||||||
Property operating income | 38,884 | 37,834 | 157,504 | 149,886 | ||||||||||||
Less: Acquisitions, dispositions & development property | (611 | ) | (130 | ) | (1,787 | ) | (719 | ) | ||||||||
Total same property operating income | $ | 38,273 | $ | 37,704 | $ | 155,717 | $ | 149,167 | ||||||||
Shopping centers | $ | 29,192 | $ | 28,462 | $ | 118,817 | $ | 112,708 | ||||||||
Mixed-Use properties | 9,081 | 9,242 | 36,900 | 36,459 | ||||||||||||
Total same property operating income | $ | 38,273 | $ | 37,704 | $ | 155,717 | $ | 149,167 | ||||||||