Saul Centers (BFS) 8-K Saul Centers, Inc Reports

EXHIBIT 99.1

SAUL CENTERS, INC

7501 Wisconsin Avenue, Suite 1500, Bethesda, Maryland 20814-6522

(301) 986-6200

Saul Centers, Inc Reports

Second Quarter 2008 Earnings

August 7, 2008, Bethesda, MD.

Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust (REIT), announced its operating results for the quarter ended June 30, 2008. Total revenue for the three months ended June 30, 2008 (“2008 Quarter”) increased 8.2% to $40,105,000 compared to $37,077,000 for the three months ended June 30, 2007 (“2007 Quarter”). Operating income, which is net income available to common stockholders before gain on property disposition, minority interests and preferred stock dividends, increased 9.9% to $12,175,000 for the 2008 Quarter compared to $11,077,000 for the 2007 Quarter. This $1,098,000 increase in operating income was offset by the $1,786,000 increase in preferred stock dividends from the Company’s issuance of approximately $79,300,000 of Series B preferred stock in March 2008. As a result, net income available to common stockholders was $6,443,000 or $0.36 per diluted share for the 2008 Quarter, compared to $6,926,000 or $0.39 per diluted share for the 2007 Quarter.

Same property revenue for the total portfolio increased 3.2% for the 2008 Quarter compared to the 2007 Quarter and same property operating income increased 1.2%. The same property comparisons exclude the results of operations of properties not in operation for each of the comparable reporting quarters. Same property operating income in the shopping center portfolio increased 1.0% for the 2008 Quarter compared to the 2007 Quarter. The quarter over quarter shopping center operating income increase resulted primarily from base rent growth at Southdale and several core shopping centers as well as the stabilization of Lansdowne Town Center. The same center operating income increases were offset in part by increased property operating expenses and real estate taxes, net of tenant recoveries, and an increase in credit loss reserves. Same property operating income in the office portfolio increased 2.0% for the 2008 Quarter compared to the 2007 Quarter.

For the six months ended June 30, 2008 (“2008 Period”), total revenue increased 6.9% to $78,827,000 compared to $73,761,000 for the six months ended June 30, 2007 (“2007 Period”) and operating income increased 5.3% to $23,248,000 compared to $22,086,000 for the 2007 Period. This $1,162,000 increase in operating income was offset by the $1,883,000 increase in preferred stock dividends from the Company’s Series B preferred stock issue. As a result, net income available to common stockholders was $13,476,000 or $0.75 per diluted share for the 2008 Period, compared to $13,800,000 or $0.78 per diluted share for the 2007 Period. Overall same property revenue for the total portfolio increased 3.7% for the 2008 Period compared to the 2007 Period and same property operating income increased 2.2%. For the 2008 Period, shopping center same property operating income increased 2.7% due to the stabilization of Lansdowne Town Center and rental rate growth at Southdale, Seven Corners and several core shopping centers. The same center operating income increases were offset in part by increased property operating expenses and real estate taxes, net of tenant recoveries, and an increase in credit loss reserves. Same property operating income in the office portfolio remained relatively stable, increasing 0.7% for the 2008 Period.

As of June 30, 2008, 94.8% of the operating portfolio was leased compared to 95.7% for June 30, 2007. On a same property basis, 94.8% of the portfolio was leased, compared to the prior year level of 95.8%. The 2008 same property leasing percentages decreased due to a net decrease of approximately 74,000 square feet of leased space. The majority of this leasing decrease, approximately 49,000 square feet, occurred at South Dekalb Plaza in Atlanta, Georgia. Leasing also decreased approximately 13,000 square feet at Smallwood Village Center where the Company is engaged in a major renovation.

Funds from operations (FFO) available to common shareholders (after deducting preferred stock dividends) decreased 1.3% to $15,378,000 in the 2008 Quarter compared to $15,580,000 for the 2007 Quarter. On a diluted per share basis, FFO available to common shareholders decreased 1.5% to $0.66 per share for the 2008 Quarter compared to $0.67 per share for the 2007 Quarter. FFO, a widely accepted non-GAAP financial measure of operating performance for REITs, is defined as net income plus minority interests, extraordinary items and real estate depreciation and amortization, excluding gains from property dispositions. FFO

available to common shareholders for the 2008 Period increased 0.8% to $31,297,000 from $31,037,000 during the 2007 Period. Per share FFO available to common shareholders for the 2008 Period remained level with the 2007 Period at $1.34 per diluted share. Improved property operating results were offset by increased preferred stock dividends of $1,786,000 ($0.08 per diluted share) and $1,883,000 ($.08 per diluted share), for the 2008 Quarter and 2008 Period, respectively, arising from the Company’s Series B preferred stock issue.

Saul Centers is a self-managed, self-administered equity real estate investment trust headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 50 community and neighborhood shopping center and office properties totaling approximately 8.2 million square feet of leasable area. Over 80% 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

Saul Centers, Inc.

Condensed Consolidated Balance Sheets

($ in thousands)

	June 30, 2008			December 31, 2007
	(Unaudited)
Assets
Real estate investments
Land	$	215,407		$	167,007
Buildings and equipment		711,592			673,328
Construction in progress		67,301			49,592
		994,300			889,927
Accumulated depreciation		(244,196	)		(232,669	)
		750,104			657,258
Cash and cash equivalents		36,964			5,765
Accounts receivable and accrued income, net		33,087			33,967
Deferred leasing costs, net		17,363			16,190
Prepaid expenses, net		1,407			2,571
Deferred debt costs, net		6,440			6,264
Other assets		6,674			5,428
Total assets	$	852,039		$	727,443
Liabilities
Mortgage notes payable	$	565,194		$	524,726
Revolving credit facility		—			8,000
Dividends and distributions payable		14,803			12,887
Accounts payable, accrued expenses and other liabilities		20,140			13,159
Deferred income		22,654			15,147
Total liabilities		622,791			573,919
Minority interests		3,747			4,745
Stockholders' equity
Preferred stock		179,328			100,000
Common stock		180			178
Additional paid-in capital		162,263			161,618
Accumulated deficit		(116,270	)		(113,017	)
Total stockholders’ equity		225,501			148,779
Total liabilities and stockholders' equity	$	852,039		$	727,443

Saul Centers, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
	(Unaudited)						(Unaudited)
Revenue
Base rent	$	31,751		$	29,531		$	62,133		$	58,552
Expense recoveries		6,945			6,282			14,078			12,880
Percentage rent		232			312			546			514
Other		1,177			952			2,070			1,815
Total revenue		40,105			37,077			78,827			73,761
Operating expenses
Property operating expenses		4,527			4,343			9,512			9,148
Provision for credit losses		241			103			424			215
Real estate taxes		4,278			3,538			8,289			7,064
Interest expense and amortization of deferred debt costs		8,705			8,325			17,309			16,619
Depreciation and amortization of deferred leasing costs		6,989			6,503			13,932			12,951
General and administrative		3,190			3,188			6,113			5,678
Total operating expenses		27,930			26,000			55,579			51,675
Operating income		12,175			11,077			23,248			22,086
Gain on property disposition		—			—			205			—
Minority interests		(1,946	)		(2,151	)		(4,094	)		(4,286	)
Net income		10,229			8,926			19,359			17,800
Preferred dividends		(3,786	)		(2,000	)		(5,883	)		(4,000	)
Net income available to common stockholders	$	6,443		$	6,926		$	13,476		$	13,800
Per share net income available to common stockholders :
Diluted	$	0.36		$	0.39		$	0.75		$	0.78
Weighted average common stock :
Common stock		17,803			17,531			17,785			17,473
Effect of dilutive options		175			176			176			190
Diluted weighted average common stock		17,978			17,707			17,961			17,663

Saul Centers, Inc.

Supplemental Information

(In thousands, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
	(Unaudited)						(Unaudited)
Reconciliation of net income to funds from operations (FFO):(1)
Net Income	$	10,229		$	8,926		$	19,359		$	17,800
Less: Gain on property disposition		—			—			(205	)		—
Add: Real property depreciation & amortization		6,989			6,503			13,932			12,951
Add: Minority interests		1,946			2,151			4,094			4,286
FFO		19,164			17,580			37,180			35,037
Less: Preferred dividends		(3,786	)		(2,000	)		(5,883	)		(4,000	)
FFO available to common shareholders	$	15,378		$	15,580		$	31,297		$	31,037
Weighted average shares :
Diluted weighted average common stock		17,978			17,707			17,961			17,663
Convertible limited partnership units		5,416			5,416			5,416			5,416
Diluted & converted weighted average shares		23,394			23,123			23,377			23,079
Per share amounts:
FFO available to common shareholders (diluted)	$	0.66		$	0.67		$	1.34		$	1.34
Reconciliation of net income to same property operating income:
Net income	$	10,229		$	8,926		$	19,359		$	17,800
Add: Interest expense and amortization of deferred debt costs		8,705			8,325			17,309			16,619
Add: Depreciation and amortization of deferred leasing costs		6,989			6,503			13,932			12,951
Add: General and administrative		3,190			3,188			6,113			5,678
Less: Gain on property disposition		—			—			(205	)		—
Less: Interest income		(244	)		(143	)		(311	)		(238	)
Add: Minority interests		1,946			2,151			4,094			4,286
Property operating income		30,815			28,950			60,291			57,096
Less: Acquisitions & developments		(1,513	)		—			(1,931	)		—
Total same property operating income	$	29,302		$	28,950		$	58,360		$	57,096
Total shopping centers	$	22,195		$	21,984		$	44,376		$	43,209
Total office properties		7,107			6,966			13,984			13,887
Total same property operating income	$	29,302		$	28,950		$	58,360		$	57,096

(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 minority interests, extraordinary items and real estate depreciation and amortization, excluding 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 a 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 we believe occurs with our 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.