BETHESDA, Md., March 4, 2014 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced its operating results for the quarter ended December31, 2013 ("2013 Quarter"). Total revenue for the 2013 Quarter increased to $50.1million from $48.3million for the quarter ended December31, 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 $12.2million for the 2013 Quarter from $8.0million for the 2012 Quarter.
Net income attributable to common stockholders was $6.7million ($0.33 per diluted share) for the 2013 Quarter compared to $5.7million ($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 ($1.7million), (b) lower predevelopment expenses related to Park Van Ness ($0.5million), (c)lower interest expense ($0.5million), (d) lower acquisition related costs ($1.1million) and (e) lower preferred stock dividends ($0.6million) partially offset by (f) lower gain on sale of property ($3.5million).
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 December31, 2013 ("2013 Period"), total revenue increased to $197.9 million from $190.1 million for the year ended December31, 2012 ("2012 Period"). Operating income was $35.3 million for the 2013 Period and $35.1million for the 2012 Period. Operating income for the 2013 Period was adversely impacted by $8.0million 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 $3.0million 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 $47.2million or $9.4million more than the 2012 Period.
Net income attributable to common stockholders was $11.7million ($0.57 per diluted share) for the 2013 Period compared to $18.2million ($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 ($9.2million), (b) a charge against common equity resulting from the redemption of preferred stock ($5.2million), and (c) lower gain on sales of property ($4.5million) partially offset by (d) increased property operating income ($7.2million), (e) lower noncontrolling interest ($2.4million), (f)lower interest expense and amortization of deferred debt costs ($3.0million), (g) lower preferred stock dividends ($1.2million) and (h) lower acquisition related costs ($1.0million). 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 $4.2million more than the 2012 Period.
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 December31, 2013, 93.9% of the commercial portfolio was leased (all properties except the apartments at Clarendon Center), compared to 91.7% at December31, 2012. On a same property basis, 93.9% of the portfolio was leased at December31, 2013, compared to 92.6% at December31, 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 December31, 2013, the apartments at Clarendon Center were 99.2% leased compared to 100.0% as of December31, 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 ($0.54per 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 ($1.1million), (c) lower preferred stock dividends ($0.6million), (d) lower predevelopment expenses ($0.5million) and (e)lower interest expense ($0.5million).
FFO available to common shareholders (after deducting preferred stock dividends and the impact of preferred stock redemptions) increased 7.6% to $64.7million ($2.37 per diluted share) in the 2013 Period from $60.1million ($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 ($7.2million), (b) lower interest expense and amortization of deferred debt costs ($3.0million), (c) lower preferred stock dividends ($1.2million) and (d) lower acquisition related costs ($1.0million) partially offset by (e) the redemption of preferred stock ($5.2million), (f) increased predevelopment expenses ($1.2million) and (g) higher general and administrative expenses ($0.7million). 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 $73.8million or $11.1million 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 9.3million 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.
Saul Centers, Inc. Condensed Consolidated Balance Sheets (In thousands) | |||||||
December31, | December31, | ||||||
(Unaudited) | |||||||
Assets |
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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 | 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 | 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 | |||||||
SOURCESaul Centers, Inc.
