EXHIBIT INDEX
Exhibit Description
No.
99.1 Press Release, dated May 6, 2014, of Saul Centers, Inc.
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| 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 First Quarter 2014 Earnings
May 6, 2014, Bethesda, MD.
Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced its operating results for the quarter ended March 31, 2014 (“2014 Quarter”). Total revenue for the 2014 Quarter increased to $52.9 million from $49.2 million for the quarter ended March 31, 2013 (“2013 Quarter”). Operating income, which is net income before the impact of change in fair value of derivatives, loss on early extinguishment of debt and gains on sales of property and casualty settlements, if any, increased to $12.7 million for the 2014 Quarter from $3.4 million for the 2013 Quarter.
Net income attributable to common stockholders was $7.1 million ($0.34 per diluted share) for the 2014 Quarter compared to a loss of $4.6 million ($0.23 per diluted share) for the 2013 Quarter. The increase in net income attributable to common stockholders for the 2014 Quarter was primarily the result of (a) depreciation expense recognized in the 2013 Quarter as a result of the reduction in the depreciable life of Van Ness Square ($6.2 million), (b) lower preferred stock redemption charges ($5.2 million), (c) increased property operating income ($2.5 million), and (d) lower predevelopment expenses related to Park Van Ness ($1.8 million), partially offset by (e) higher noncontrolling interest ($4.0 million).
Same property revenue increased 8.3% and same property operating income increased 6.9% 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 6.7% primarily due to the $1.5 million impact of a lease termination at Seven Corners. Mixed-use same property operating income increased 7.3% primarily due to higher base rent and lower real estate taxes at 601 Pennsylvania Avenue.
As of March 31, 2014, 94.3% of the commercial portfolio was leased (all properties except the apartments at Clarendon Center), compared to 91.5% at March 31, 2013. On a same property basis, 94.3% of the portfolio was leased at March 31, 2014, compared to 92.8% at March 31, 2013. As of March 31, 2014, the apartments at Clarendon Center were 98.8% leased compared to 100% as of March 31, 2013.
Funds from operations ("FFO") available to common shareholders (after deducting preferred stock dividends and redemption charges) increased 93.8% to $19.7 million ($0.71 per diluted share) in the 2014 Quarter from $10.2 million ($0.37 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 increase in FFO available to common shareholders for the 2014 Quarter was primarily due to (a) lower preferred stock redemption charges ($5.2 million), (b) increased property operating income ($2.5 million), and (c) lower predevelopment expenses ($1.8 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 of 59 properties which includes (a) 56 community and neighborhood shopping centers, one of which is held-for-sale, 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 Schneider
(301) 986-6220
Saul Centers, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
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| | | | | | | |
| | March 31,
2014 | | December 31,
2013 |
| | (Unaudited) | | |
| Assets | | | |
| Real estate investments | | | |
| Land | $ | 364,146 |
| | $ | 354,967 |
|
| Buildings and equipment | 1,097,921 |
| | 1,094,605 |
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| Construction in progress | 11,880 |
| | 9,867 |
|
| | 1,473,947 |
| | 1,459,439 |
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| Accumulated depreciation | (372,041 | ) | | (364,663 | ) |
| | 1,101,906 |
| | 1,094,776 |
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| Cash and cash equivalents | 15,351 |
| | 17,297 |
|
| Accounts receivable and accrued income, net | 43,748 |
| | 43,884 |
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| Deferred leasing costs, net | 25,996 |
| | 26,052 |
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| Prepaid expenses, net | 3,390 |
| | 4,047 |
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| Deferred debt costs, net | 9,345 |
| | 9,675 |
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| Other assets | 4,861 |
| | 2,944 |
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| Total assets | $ | 1,204,597 |
| | $ | 1,198,675 |
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| | | | |
| Liabilities | | | |
| Mortgage notes payable | $ | 814,635 |
| | $ | 820,068 |
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| Revolving credit facility payable | — |
| | — |
|
| Dividends and distributions payable | 14,308 |
| | 13,135 |
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| Accounts payable, accrued expenses and other liabilities | 23,255 |
| | 20,141 |
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| Deferred income | 31,990 |
| | 30,205 |
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| Total liabilities | 884,188 |
| | 883,549 |
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| | | | |
| Stockholders’ equity | | | |
| Preferred stock | 180,000 |
| | 180,000 |
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| Common stock | 206 |
| | 206 |
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| Additional paid-in capital | 273,351 |
| | 270,428 |
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| Accumulated deficit and other comprehensive loss | (175,308 | ) | | (173,956 | ) |
| Total Saul Centers, Inc. stockholders’ equity | 278,249 |
| | 276,678 |
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| Noncontrolling interest | 42,160 |
| | 38,448 |
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| Total stockholders’ equity | 320,409 |
| | 315,126 |
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| Total liabilities and stockholders’ equity | $ | 1,204,597 |
| | $ | 1,198,675 |
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Saul Centers, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
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| | | | | | | |
| | Three Months Ended March 31, |
| | 2014 | | 2013 |
| Revenue | (unaudited) |
| Base rent | $ | 40,563 |
| | $ | 39,740 |
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| Expense recoveries | 8,789 |
| | 7,614 |
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| Percentage rent | 452 |
| | 600 |
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| Other | 3,143 |
| | 1,232 |
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| Total revenue | 52,947 |
| | 49,186 |
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| Operating expenses | | | |
| Property operating expenses | 7,585 |
| | 5,949 |
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| Provision for credit losses | 203 |
| | 264 |
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| Real estate taxes | 5,453 |
| | 5,763 |
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| Interest expense and amortization of deferred debt costs | 11,467 |
| | 11,717 |
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| Depreciation and amortization of deferred leasing costs | 10,180 |
| | 16,352 |
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| General and administrative | 4,680 |
| | 3,404 |
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| Acquisition related costs | 163 |
| | — |
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| Predevelopment expenses | 503 |
| | 2,349 |
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| Total operating expenses | 40,234 |
| | 45,798 |
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| Operating income | 12,713 |
| | 3,388 |
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| Change in fair value of derivatives | (2 | ) | | 10 |
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| Net Income | 12,711 |
| | 3,398 |
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| (Income) loss attributable to noncontrolling interests | (2,424 | ) | | 1,586 |
|
| Net income attributable to Saul Centers, Inc. | 10,287 |
| | 4,984 |
|
| Preferred stock redemption | — |
| | (5,228 | ) |
| Preferred stock dividends | (3,206 | ) | | (4,364 | ) |
| Net income (loss) attributable to common stockholders | $ | 7,081 |
| | $ | (4,608 | ) |
| Per share net income (loss) attributable to common stockholders | | | |
| Basic and diluted | $ | 0.34 |
| | $ | (0.23 | ) |
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| Weighted Average Common Stock: | | | |
| Common stock | 20,623 |
| | 20,146 |
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| Effect of dilutive options | 41 |
| | 33 |
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| Diluted weighted average common stock | 20,664 |
| | 20,179 |
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| Reconciliation of net income to FFO attributable to common shareholders (1) |
| | | | Three Months Ended
March 31, |
| | (In thousands, except per share amounts) | | 2014 | | 2013 |
| | | | (unaudited) |
| | Net income | | $ | 12,711 |
| | $ | 3,398 |
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| | Add: | | | | |
| | Real estate depreciation and amortization | | 10,180 |
| | 16,352 |
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| | FFO | | 22,891 |
| | 19,750 |
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| | Subtract: | | | | |
| | Preferred stock redemption | | — |
| | (5,228 | ) |
| | Preferred stock dividends | | (3,206 | ) | | (4,364 | ) |
| | FFO available to common shareholders | | $ | 19,685 |
| | $ | 10,158 |
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| | Weighted average shares: | | | | |
| | Diluted weighted average common stock | | 20,664 |
| | 20,179 |
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| | Convertible limited partnership units | | 7,063 |
| | 6,914 |
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| | Average shares and units used to compute FFO per share | | 27,727 |
| | 27,093 |
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| | FFO per share available to common shareholders | | $ | 0.71 |
| | $ | 0.37 |
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(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. |
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| | | | | | | | | |
| | Reconciliation of net income to same property operating income |
| | | Three Months Ended March 31, |
| | (In thousands) | | 2014 | | 2013 |
| | | | (unaudited) |
| | Net income | | $ | 12,711 |
| | $ | 3,398 |
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| | Add: Interest expense and amortization of deferred debt costs | | 11,467 |
| | 11,717 |
|
| | Add: Depreciation and amortization of deferred leasing costs | | 10,180 |
| | 16,352 |
|
| | Add: General and administrative | | 4,680 |
| | 3,404 |
|
| | Add: Predevelopment expenses | | 503 |
| | 2,349 |
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| | Add: Acquisition related costs | | 163 |
| | — |
|
| | Add (Less): Change in fair value of derivatives | | 2 |
| | (10 | ) |
| | Less: Interest income | | (15 | ) | | (31 | ) |
| | Property operating income | | 39,691 |
| | 37,179 |
|
| | Less: Acquisitions, dispositions and development property | | (133 | ) | | (161 | ) |
| | Total same property operating income | | $ | 39,558 |
| | $ | 37,018 |
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| | | | | | |
| | Shopping centers | | $ | 30,196 |
| | $ | 28,292 |
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| | Mixed-Use properties | | 9,362 |
| | 8,726 |
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| | Total same property operating income | | $ | 39,558 |
| | $ | 37,018 |
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