Saul Centers, Inc. Reports Second Quarter 2023 Earnings

Saul Centers, Inc.

Consolidated Balance Sheets

(Unaudited)

(Dollars in thousands, except per share amounts)

June 30,
2023

December 31,
2022

Assets

Real estate investments

Land

$         511,529

$         511,529

Buildings and equipment

1,590,762

1,576,924

Construction in progress

410,966

319,683

2,513,257

2,408,136

Accumulated depreciation

(708,770)

(688,475)

1,804,487

1,719,661

Cash and cash equivalents

11,473

13,279

Accounts receivable and accrued income, net

51,949

56,323

Deferred leasing costs, net

22,799

22,388

Other assets

15,986

21,651

Total assets

$      1,906,694

$      1,833,302

Liabilities

Notes payable, net

$         951,505

$         961,577

Revolving credit facility payable, net

217,328

161,941

Term loan facility payable, net

99,456

99,382

Construction loan payable, net

25,841

—

Accounts payable, accrued expenses and other liabilities

54,211

42,978

Deferred income

21,836

23,169

Dividends and distributions payable

22,473

22,453

Total liabilities

1,392,650

1,311,500

Equity

Preferred stock, 1,000,000 shares authorized:

Series D Cumulative Redeemable, 30,000 shares issued and outstanding

75,000

75,000

Series E Cumulative Redeemable, 44,000 shares issued and outstanding

110,000

110,000

Common stock, $0.01 par value, 40,000,000 shares authorized, 24,048,626 and

24,016,009 shares issued and outstanding, respectively

240

240

Additional paid-in capital

448,231

446,301

Partnership units in escrow

39,650

39,650

Distributions in excess of accumulated net income

(280,850)

(273,559)

Accumulated other comprehensive income

3,131

2,852

Total Saul Centers, Inc. equity

395,402

400,484

Noncontrolling interests

118,642

121,318

Total equity

514,044

521,802

Total liabilities and equity

$      1,906,694

$      1,833,302

Saul Centers, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Revenue

(unaudited)

(unaudited)

Rental revenue

$             62,002

$             59,134

$       123,830

$           119,814

Other

1,707

1,159

2,928

2,623

Total revenue

63,709

60,293

126,758

122,437

Expenses

Property operating expenses

8,997

7,641

17,783

17,179

Real estate taxes

7,453

7,156

14,948

14,574

Interest expense, net and amortization of deferred debt costs

12,278

10,457

24,099

21,059

Depreciation and amortization of deferred leasing costs

12,114

12,377

24,130

24,704

General and administrative

5,678

5,665

10,946

10,433

Total expenses

46,520

43,296

91,906

87,949

Net Income

17,189

16,997

34,852

34,488

Noncontrolling interests

Income attributable to noncontrolling interests

(4,027)

(3,981)

(8,188)

(8,107)

Net income attributable to Saul Centers, Inc.

13,162

13,016

26,664

26,381

Preferred stock dividends

(2,799)

(2,799)

(5,597)

(5,597)

Net income available to common stockholders

$             10,363

$             10,217

$         21,067

$             20,784

Per share net income available to common stockholders

Basic and diluted

$                  0.43

$                  0.43

$              0.88

$                  0.87

Reconciliation of net income to FFO available to common stockholders and

noncontrolling interests (1)

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except per share amounts)

2023

2022

2023

2022

Net income

$              17,189

$              16,997

$             34,852

$             34,488

Add:

Real estate depreciation and amortization

12,114

12,377

24,130

24,704

FFO

29,303

29,374

58,982

59,192

Subtract:

Preferred stock dividends

(2,799)

(2,799)

(5,597)

(5,597)

FFO available to common stockholders and noncontrolling interests

$              26,504

$              26,575

$             53,385

$             53,595

Weighted average shares and units:

Basic

33,340

33,256

33,332

33,210

Diluted ⁽²⁾

34,049

33,981

34,040

33,933

Basic FFO per share available to common stockholders and noncontrolling interests

$                  0.79

$                  0.80

$                 1.60

$                 1.61

Diluted FFO per share available to common stockholders and

noncontrolling interests

$                  0.78

$                  0.78

$                 1.57

$                 1.58

(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 impairment charges on real estate assets and gains or losses from real estate 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. 

(2)

Beginning March 5, 2021, fully diluted shares and units includes 1,416,071 limited partnership units that were held in escrow related to the contribution of Twinbrook Quarter. Half of the units held in escrow were released on October 18, 2021. The remaining units held in escrow are scheduled to be released on October 18, 2023. 

Reconciliation of revenue to same property revenue (3)

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

(unaudited)

(unaudited)

Total revenue

$              63,709

$              60,293

$           126,758

$           122,437

Less: Acquisitions, dispositions and development properties

—

—

—

—

Total same property revenue

$              63,709

$              60,293

$           126,758

$           122,437

Shopping Centers

$              43,974

$              42,038

$             88,199

$             86,137

Mixed-Use properties

19,735

18,255

38,559

36,300

Total same property revenue

$              63,709

$              60,293

$           126,758

$           122,437

Total Shopping Center revenue

$              43,974

$              42,038

$             88,199

$             86,137

Less: Shopping Center acquisitions, dispositions and development properties

—

—

—

—

Total same Shopping Center revenue

$              43,974

$              42,038

$             88,199

$             86,137

Total Mixed-Use property revenue

$              19,735

$              18,255

$             38,559

$             36,300

Less: Mixed-Use acquisitions, dispositions and development properties

—

—

—

—

Total same Mixed-Use property revenue

$              19,735

$              18,255

$             38,559

$             36,300

Same property revenue is a non-GAAP financial measure of performance that management believes improves the comparability of reporting periods by

excluding the results of properties that were not in operation for the entirety of the comparable reporting periods.  Same property revenue adjusts property

revenue by subtracting the revenue of properties not in operation for the entirety of the comparable reporting periods.  Same property revenue is a measure

of the operating performance of the Company's properties but does not measure the Company's performance as a whole.  Same property revenue should

not be considered as an alternative to total revenue, its most directly comparable GAAP measure, as an indicator of the Company's operating performance. 

Management considers same property revenue a meaningful supplemental measure of operating performance because it is not affected by the cost of the

Company's funding, the impact of depreciation and amortization expenses, gains or losses from the acquisition and sale of operating real estate assets,

general and administrative expenses or other gains and losses that relate to ownership of the Company's properties.  Management believes the exclusion of

these items from same property revenue is useful because the resulting measure captures the actual revenue generated and actual expenses incurred by

operating the Company's properties.  Other REITs may use different methodologies for calculating same property revenue.  Accordingly, the Company's

same property revenue may not be comparable to those of other REITs.

Reconciliation of net income to same property operating income (4)

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2023

2022

2023

2022

(unaudited)

(unaudited)

Net income

$              17,189

$              16,997

$             34,852

$             34,488

Add: Interest expense, net and amortization of deferred debt costs

12,278

10,457

24,099

21,059

Add: Depreciation and amortization of deferred leasing costs

12,114

12,377

24,130

24,704

Add: General and administrative

5,678

5,665

10,946

10,433

Property operating income

47,259

45,496

94,027

90,684

Less: Acquisitions, dispositions and development properties

—

—

—

—

Total same property operating income

$              47,259

$              45,496

$             94,027

$             90,684

Shopping Centers

$              34,512

$              33,854

$             69,477

$             67,861

Mixed-Use properties

12,747

11,642

24,550

22,823

Total same property operating income

$              47,259

$              45,496

$             94,027

$             90,684

Shopping Center operating income

$              34,512

$              33,854

$             69,477

$             67,861

Less: Shopping Center acquisitions, dispositions and development

properties

—

—

—

—

Total same Shopping Center operating income

$              34,512

$              33,854

$             69,477

$             67,861

Mixed-Use property operating income

$              12,747

$              11,642

$             24,550

$             22,823

Less: Mixed-Use acquisitions, dispositions and development properties

—

—

—

—

Total same Mixed-Use property operating income

$              12,747

$              11,642

$             24,550

$             22,823

Same property operating income is a non-GAAP financial measure of performance that management believes improves the comparability of reporting

periods by excluding the results of properties that were not in operation for the entirety of the comparable reporting periods.  Same property operating

income adjusts property operating income by subtracting the results of properties that were not in operation for the entirety of the comparable periods. 

Same property operating income is a measure of the operating performance of the Company's properties but does not measure the Company's performance

as a whole.  Same property operating income should not be considered as an alternative to property operating income, its most directly comparable GAAP

measure, as an indicator of the Company's operating performance.  Management considers same property operating income a meaningful supplemental

measure of operating performance because it is not affected by the cost of the Company's funding, the impact of depreciation and amortization expenses,

gains or losses from the acquisition and sale of operating real estate assets, general and administrative expenses or other gains and losses that relate to

ownership of the Company's properties.  Management believes the exclusion of these items from property operating income is useful because the resulting

measure captures the actual revenue generated and actual expenses incurred by operating the Company's properties. Other REITs may use different methodologies

for calculating same property operating income. Accordingly, same property operating income may not be comparable to those of other REITs.