BETHESDA, Md., Feb. 23 /PRNewswire-FirstCall/ -- Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust (REIT), announced its operating results for the quarter and year ended December 31, 2009. Total revenue for the three months ended December 31, 2009 ("2009 Quarter") increased 2.9% to $41,735,000 compared to $40,571,000 for the three months ended December 31, 2008 ("2008 Quarter"). Operating income, which is net income available to common stockholders before gain on property dispositions, loss on early extinguishment of debt, income attributable to the noncontrolling interest and preferred stock dividends, decreased 1.8% to $11,638,000 for the 2009 Quarter compared to $11,853,000 for the 2008 Quarter. Net income available to common stockholders decreased to $5,861,000 or $0.33 per diluted share for the 2009 Quarter, compared to $7,029,000 or $0.39 per diluted share for the 2008 Quarter. During the 2009 Quarter, the Company refinanced mortgage debt which was due to mature December 2011 and incurred expense totaling $550,000 related to the early retirement of the existing mortgage debt. Gains on property dispositions were $329,000 for the 2009 Quarter compared to $1,096,000 for the 2008 Quarter, primarily related to insurance proceeds received as a result of minor damage sustained at three shopping center properties.
Same property revenue for the total portfolio increased 1.8% for the 2009 Quarter compared to the 2008 Quarter but same property operating income decreased 0.7%. The same property comparisons exclude the results of properties not in operation for each of the comparable reporting quarters. Same property operating income in the shopping center portfolio decreased 1.5% for the 2009 Quarter compared to the 2008 Quarter, primarily due to increased property operating expenses (net of expenses recoverable from tenants) and, to a lesser extent, a decrease in percentage rent. Same property operating income in the office portfolio increased 2.1% for the 2009 Quarter compared to the 2008 Quarter, primarily due to increased base rent and parking revenue.
For the year ended December 31, 2009 ("2009 Year"), total revenue increased 0.5% to $161,113,000 compared to $160,345,000 for the year ended December 31, 2008 ("2008 Year") and operating income decreased 2.7% to $45,111,000 compared to $46,365,000 for the 2008 Year. Net income available to common stockholders decreased to $21,573,000 or $1.20 per diluted share for the 2009 Year, compared to $26,241,000 or $1.46 per diluted share for the 2008 Year. Same property revenue for the total portfolio decreased 0.6% for the 2009 Year compared to the 2008 Year and same property operating income decreased 2.4%. For the 2009 Year, same property operating income in the shopping center portfolio decreased 3.5% due primarily to decreased base rent, as a result of tenant vacancies, and increased property operating expenses (net of expenses recoverable from tenants). Same property operating income in the office portfolio increased 1.3% for the 2009 Year compared to the 2008 Year.
As of December 31, 2009, 91.5% of the operating portfolio was leased compared to 94.2% at December 31, 2008. On a same property basis, 92.7% of the portfolio was leased compared to the prior year level of 94.1%, a net decrease of approximately 130,000 square feet of leased space.
Funds from operations (FFO) available to common shareholders (after deducting preferred stock dividends) decreased 7.0% to $14,359,000 in the 2009 Quarter compared to $15,432,000 for the 2008 Quarter. On a diluted per share basis, FFO available to common shareholders decreased 7.6% to $0.61 per share for the 2009 Quarter compared to $0.66 per share for the 2008 Quarter. FFO, a widely accepted non-GAAP financial measure of operating performance for REITs, is defined as net income plus extraordinary items and real estate depreciation and amortization, excluding gains from property dispositions. FFO available to common shareholders for the 2009 Year decreased 10.6% to $56,025,000 from $62,695,000 for the 2008 Year. On a diluted per share basis, FFO available to common shareholders decreased 10.4% to $2.40 per share for the 2009 Year from $2.68 per share for the 2008 Year. The FFO decrease for the 2009 Quarter was primarily caused by 1) expenses associated with refinancing activity ($550,000), 2) increased interest expense ($370,000) and 3) increased general and administrative expense ($210,000), partially offset by increased property operating income ($140,000). The FFO decrease for the 2009 Year was caused by 1) expenses associated with refinancing activities ($2,490,000) , 2) the full-year effect of dividends on the Company's Series B preferred stock issued in March 2008 ($1,690,000), 3) decreased property operating income ($1,145,000), 4) increased general and administrative expenses ($635,000) and 5) reduced investment income ($580,000).
At December 31, 2009, approximately 90% of the Company's debt consisted of fixed rate, amortizing non-recourse mortgage loans, none of which mature before October 2012. The Company's $150 million revolving credit facility matures June 2012, can be extended for one year at the Company's option, and had no outstanding borrowings as of December 31, 2009.
During 2009, the Company paid quarterly dividends to its common stockholders totaling $1.53 per share, compared to $1.88 per share in 2008. On January 29, 2010, the Company paid a quarterly dividend of $0.36 per share to its common stockholders ($1.44 per share annual rate).
During 2009, the Company completed construction of the 103,000 square foot Northrock shopping center, which is currently 67% leased, located in Warrenton, Virginia, and anchored by Harris Teeter. The Company also completed construction of the 105,000 square foot Westview Village neighborhood shopping center which is currently 27% leased and located in Frederick, Maryland. The Company continues construction of Clarendon Center adjacent to the Clarendon Metro Station in Arlington, Virginia. Clarendon Center will provide 45,000 square feet of retail space, 170,000 square feet of office space and 244 residential units. Substantial completion of the building shell is scheduled for late 2010.
Saul Centers is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 52 community and neighborhood shopping center and office properties totaling approximately 8.4 million square feet of leasable area. Approximately 82% of the Company's property operating income is generated from properties in the metropolitan Washington, DC/Baltimore area.
Saul Centers, Inc. Condensed Consolidated Balance Sheets ($ in thousands) December 31, 2009 2008 ---- ---- Assets (Unaudited) Real estate investments Land $223,193 $215,407 Buildings and equipment 740,442 713,154 Construction in progress 147,589 98,920 ------- ------ 1,111,224 1,027,481 Accumulated depreciation (276,310) (252,763) -------- -------- 834,914 774,718 Cash and cash equivalents 20,607 13,006 Accounts receivable and accrued income, net 37,503 37,495 Deferred leasing costs, net 15,609 16,901 Prepaid expenses, net 3,096 2,981 Deferred debt costs, net 7,537 5,875 Other assets 6,308 2,897 ----- ----- Total assets $925,574 $853,873 ======== ======== Liabilities Mortgage notes payable $576,069 $548,265 Construction loans payable 60,737 19,230 Dividends and distributions payable 12,219 12,864 Accounts payable, accrued expenses and other liabilities 23,396 22,394 Deferred income 27,090 23,233 ------ ------ Total liabilities 699,511 625,986 ------- ------- Stockholders' equity Preferred stock 179,328 179,328 Common stock 180 179 Additional paid-in capital 169,363 164,278 Accumulated deficit (124,167) (118,865) -------- -------- Total Saul Centers, Inc. stockholders' equity 224,704 224,920 Noncontrolling interest 1,359 2,967 ----- ----- Total stockholders' equity 226,063 227,887 ------- ------- Total liabilities and stockholders' equity $925,574 $853,873 ======== ======== Saul Centers, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) Three Months Ended Years Ended December 31, December 31, ------------------ ------------------ 2009 2008 2009 2008 -------- ------- -------- -------- Revenue (Unaudited) (Unaudited) Base rent $32,273 $31,400 $125,845 $124,999 Expense recoveries 7,689 7,336 29,462 29,066 Percentage rent 551 710 1,326 1,509 Other 1,222 1,125 4,480 4,771 ----- ----- ----- ----- Total revenue 41,735 40,571 161,113 160,345 ------ ------ ------- ------- Operating expenses Property operating expenses 6,274 5,005 21,408 19,877 Provision for credit losses 171 453 919 1,113 Real estate taxes 4,199 4,078 17,766 16,608 Interest expense and amortization of deferred debt costs 8,769 8,401 34,689 34,278 Depreciation and amortization of deferred leasing costs 7,056 7,364 28,264 29,783 General and administrative 3,628 3,417 12,956 12,321 ----- ----- ------ ------ Total operating expenses 30,097 28,718 116,002 113,980 ------ ------ ------- ------- Operating income 11,638 11,853 45,111 46,365 Loss on early extinguishment of debt (550) - (2,210) - Gain on property dispositions 329 1,096 329 1,301 --- ----- --- ----- Net income 11,417 12,949 43,230 47,666 Income attributable to the noncontrolling interest (1,771) (2,135) (6,517) (7,972) ------ ------ ------ ------ Net income attributable to Saul Centers, Inc. 9,646 10,814 36,713 39,694 Preferred dividends (3,785) (3,785) (15,140) (13,453) ------ ------ ------- ------- Net income available to common stockholders $5,861 $7,029 $21,573 $26,241 ====== ====== ======= ======= Per share net income available to common stockholders : Diluted $0.33 $0.39 $1.20 $1.46 ===== ===== ===== ===== Weighted average common stock : Common stock 17,975 17,860 17,904 17,816 Effect of dilutive options 43 74 39 145 -- -- -- --- Diluted weighted average common stock 18,018 17,934 17,943 17,961 ====== ====== ====== ====== Saul Centers, Inc. Supplemental Information (In thousands, except per share amounts) Three Months Ended Years Ended December 31, December 31, ---------------- ----------------- 2009 2008 2009 2008 ---- ---- ---- ---- Reconciliation of net income to FFO available to common shareholders:(1) (Unaudited) (Unaudited) Net income $11,417 $12,949 $43,230 $47,666 Less: Gain on property dispositions (329) (1,096) (329) (1,301) Add: Real property depreciation and amortization 7,056 7,364 28,264 29,783 ------ ------ ------ ------ FFO 18,144 19,217 71,165 76,148 Less: Preferred dividends (3,785) (3,785) (15,140) (13,453) ------ ------ ------- ------- FFO available to common shareholders $14,359 $15,432 $56,025 $62,695 ======= ======= ======= ======= Weighted average shares : Diluted weighted average common stock 18,018 17,934 17,943 17,961 Convertible limited partnership units 5,416 5,416 5,416 5,416 ----- ----- ----- ----- Diluted & converted weighted average shares 23,434 23,350 23,359 23,377 ====== ====== ====== ====== Per share amounts: FFO available to common shareholders (diluted) $0.61 $0.66 $2.40 $2.68 ===== ===== ===== ===== Reconciliation of net income to same property operating income: Net income $11,417 $12,949 $43,230 $47,666 Add: Interest expense and amortization of deferred debt costs 8,769 8,401 34,689 34,278 Add: Depreciation and amortization of deferred leasing costs 7,056 7,364 28,264 29,783 Add: General and administrative 3,628 3,417 12,956 12,321 Add: Loss on early extinguishment of debt 550 - 2,210 - Less: Gain on property dispositions (329) (1,096) (329) (1,301) Less: Interest income (3) (90) (9) (591) ------ ------ ------- ------- Property operating income 31,088 30,945 121,011 122,156 Less: Acquisitions & developments (345) - (5,125) (3,475) Total same property operating income $30,743 $30,945 $115,886 $118,681 ======= ======= ======== ======== Total shopping centers $23,610 $23,958 $87,778 $90,939 Total office properties 7,133 6,987 28,108 27,742 ----- ----- ------ ------ Total same property operating income $30,743 $30,945 $115,886 $118,681 ======= ======= ======== ======== (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, excluding extraordinary items 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
SOURCE Saul Centers, Inc.
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