BETHESDA, Md., Feb. 29,
2024 /PRNewswire/ -- Saul
Centers, Inc. (NYSE: BFS), an equity real estate investment
trust ("REIT"), announced its operating results for the quarter
ended December 31, 2023 ("2023
Quarter"). Total revenue for the 2023 Quarter increased to
$66.7 million from $62.3 million for the quarter ended December 31, 2022 ("2022 Quarter"). Net
income increased to $17.5 million for
the 2023 Quarter from $15.4 million
for the 2022 Quarter. Net income for the 2023 Quarter
increased compared to the 2022 Quarter due to (a) higher
termination fees of $2.4 million and
(b) higher base rent of $1.4 million,
partially offset by (c) higher interest expense, net and
amortization of deferred debt costs of $0.9
million, and (d) higher general and administrative expenses
of $0.9 million. Net income available
to common stockholders was $10.4
million ($0.43 per basic and
diluted share) for the 2023 Quarter compared to $9.1 million ($0.38
per basic and diluted share) for the 2022 Quarter.
Same property revenue increased 7.0% and same property operating
income increased 8.8% for the 2023 Quarter compared to the 2022
Quarter. We define same property revenue as total revenue
minus the revenue of properties not in operation for the entirety
of the comparable reporting periods. We define same property
operating income as net income plus (a) interest expense, net and
amortization of deferred debt costs, (b) depreciation and
amortization of deferred leasing costs, (c) general and
administrative expenses, (d) change in fair value of derivatives,
and (e) loss on early extinguishment of debt minus (f) gain on sale
of property and (g) the results of properties not in operation for
the entirety of the comparable periods. No properties were
excluded from same property results for the 2023 Quarter.
Shopping Center same property operating income increased 10.9% and
Mixed-Use same property operating income increased 2.7% for the
2023 Quarter compared to the 2022 Quarter. The increase in
Shopping Center same property operating income was primarily due to
(a) higher termination fees of $2.5
million and (b) higher base rent of $1.0 million. The increase in Mixed-Use
same property operating income was primarily due to higher base
rent of $0.4 million. Same
property revenue and same property operating income are non-GAAP
supplemental performance measures that the Company considers
meaningful in measuring its operating performance.
Reconciliations of total revenue to same property revenue and net
income to same property operating income are attached to this press
release.
For the 2023 Quarter, Funds From Operations ("FFO") available to
common stockholders and noncontrolling interests (after deducting
preferred stock dividends and extinguishment of issuance costs upon
redemption of preferred shares) increased to $26.9 million ($0.79 and $0.79 per
basic and diluted share, respectively) from $24.7 million ($0.74 and $0.72 per
basic and diluted share, respectively) in the 2022 Quarter.
FFO is a non-GAAP supplemental earnings measure that the Company
considers meaningful in measuring its operating performance.
A reconciliation of net income to FFO is attached to this
press release. The increase in FFO available to common
stockholders and noncontrolling interests was primarily due
to (a) higher termination fees of $2.4
million and (b) higher base rent of $1.4 million, partially offset by (c) higher
interest expense, net and amortization of deferred debt costs of
$0.9 million, and (d) higher
general and administrative expenses of $0.9
million.
As of December 31, 2023, 94.2% of the commercial portfolio
was leased (all properties except the residential portfolio),
compared to 93.2% at December 31, 2022. The residential
portfolio was 98.0% leased at December 31, 2023, compared to
97.2% at December 31, 2022.
For the year ended December 31,
2023 ("2023 Period"), total revenue increased to
$257.2 million from $245.9 million for the year ended December 31, 2022 ("2022 Period"). Net
income increased to $69.0 million for
the 2023 Period from $65.4
million for the 2022 Period. The increase in net income was
primarily due to (a) higher base rent of $7.3 million, (b) higher termination fees of
$2.7 million, and (c) higher other
property revenue of $0.5 million,
partially offset by (d) higher interest expense, net and
amortization of deferred debt costs of $5.2
million, (e) lower expense recovery income, net of expenses,
of $1.5 million. Net income available
to common stockholders was $41.5 million ($1.73 per basic and diluted share) for the 2023
Period compared to $39.0 million
($1.63 per basic and diluted share)
for the 2022 Period.
Same property revenue increased 4.6% and same property operating
income increased 4.8% for the 2023 Period compared to the 2022
Period. No properties were excluded from same property
results for the 2023 Period. Shopping Center same property
operating income increased 4.2% and Mixed-Use same property
operating income increased 6.5% for the 2023 Period compared to the
2022 Period. Shopping Center same property operating income
increased primarily due to (a) higher base rent of $4.2 million, (b) higher termination fees of
$2.3 million, partially offset by (c)
lower expense recovery income, net of expenses of $0.7 million. Mixed-Use same property
operating income increased primarily due to higher base rent of
$3.1 million.
For the 2023 Period, FFO available to common stockholders and
noncontrolling interests (after deducting preferred stock dividends
and extinguishment of issuance costs upon redemption of preferred
shares) increased 3.0% to $106.3
million ($3.17 and $3.12 per basic and diluted share, respectively)
from $103.2 million ($3.10 and $3.04 per
basic and diluted share, respectively) in the 2022 Period.
FFO available to common stockholders and noncontrolling interests
increased primarily due to (a) higher base rent of $7.3 million and (b) higher termination fees of
$2.7 million, partially offset by (c)
higher interest expense, net and amortization of deferred debt
costs of $5.2 million, (d) lower expense recovery income, net of
expenses, of $1.5 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 comprised of 61 properties that includes (a)
57 community and neighborhood Shopping Centers and Mixed-Use
properties with approximately 9.8 million square feet of leasable
area and (b) four land and development properties. Over 85%
of the Company's property operating income is generated from
properties in the metropolitan Washington, DC/Baltimore area.
Safe Harbor Statement
Certain matters discussed within this press release may be
deemed to be forward-looking statements within the meaning of the
federal securities laws. For these statements, we claim the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of
1995. Although the Company believes the expectations
reflected in the forward-looking statements are based on reasonable
assumptions, it can give no assurance that its expectations will be
attained. These factors include, but are not limited to, the
risk factors described in our Annual Report on Form 10-K filed on
February 29, 2024, and include the
following: (i) general adverse economic and local real estate
conditions, (ii) the inability of major tenants to continue paying
their rent obligations due to bankruptcy, insolvency or a general
downturn in their business, (iii) financing risks, such as the
inability to obtain equity, debt or other sources of financing or
refinancing on favorable terms to the Company, (iv) the Company's
ability to raise capital by selling its assets, (v) changes in
governmental laws and regulations and management's ability to
estimate the impact of such changes, (vi) the level and volatility
of interest rates and management's ability to estimate the impact
thereof, (vii) the availability of suitable acquisition,
disposition, development and redevelopment opportunities, and risks
related to acquisitions not performing in accordance with our
expectations, (viii) increases in operating costs, (ix) changes in
the dividend policy for the Company's common and preferred stock
and the Company's ability to pay dividends at current levels, (x)
the reduction in the Company's income in the event of multiple
lease terminations by tenants or a failure by multiple tenants to
occupy their premises in a shopping center, (xi) impairment
charges, (xii) unanticipated changes in the Company's intention or
ability to prepay certain debt prior to maturity and (xiii) an
epidemic or pandemic (such as the outbreak and worldwide spread of
COVID-19), and the measures that international, federal, state and
local governments, agencies, law enforcement and/or health
authorities implement to address it, which may (as with COVID-19)
precipitate or exacerbate one or more of the above-mentioned and/or
other risks, and significantly disrupt or prevent us from operating
our business in the ordinary course for an extended period.
Given these uncertainties, readers are cautioned not to place undue
reliance on any forward-looking statements that we make, including
those in this press release. Except as may be required by
law, we make no promise to update any of the forward-looking
statements as a result of new information, future events or
otherwise. You should carefully review the risks and risk
factors included in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission on February 29, 2024.
|
Saul Centers,
Inc.
Consolidated Balance
Sheets
(In
thousands)
|
|
|
December
31,
|
|
(Dollars in
thousands, except per share amounts)
|
2023
|
|
2022
|
|
Assets
|
|
|
|
|
Real estate
investments
|
|
|
|
|
Land
|
$
511,529
|
|
$
511,529
|
|
Buildings and
equipment
|
1,595,023
|
|
1,574,381
|
|
Construction in
progress
|
514,553
|
|
322,226
|
|
2,621,105
|
|
2,408,136
|
|
Accumulated
depreciation
|
(729,470)
|
|
(688,475)
|
|
Total real estate
investments, net
|
1,891,635
|
|
1,719,661
|
|
Cash and cash
equivalents
|
8,407
|
|
13,279
|
|
Accounts receivable
and accrued income, net
|
56,032
|
|
56,323
|
|
Deferred leasing
costs, net
|
23,728
|
|
22,388
|
|
Other
assets
|
14,335
|
|
21,651
|
|
Total
assets
|
$
1,994,137
|
|
$
1,833,302
|
|
Liabilities
|
|
|
|
|
Mortgage notes
payable, net
|
$
935,451
|
|
$
961,577
|
|
Revolving credit
facility payable, net
|
274,715
|
|
161,941
|
|
Term loan facility
payable, net
|
99,530
|
|
99,382
|
|
Construction loans
payable, net
|
77,305
|
|
—
|
|
Accounts payable,
accrued expenses and other liabilities
|
57,022
|
|
42,978
|
|
Deferred
income
|
22,748
|
|
23,169
|
|
Dividends and
distributions payable
|
22,937
|
|
22,453
|
|
Total
liabilities
|
1,489,708
|
|
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, 24,082,887
and 24,016,009 shares issued and outstanding,
respectively
|
241
|
|
240
|
|
Additional paid-in
capital
|
449,959
|
|
446,301
|
|
Partnership units in
escrow
|
—
|
|
39,650
|
|
Distributions in
excess of accumulated earnings
|
(288,825)
|
|
(273,559)
|
|
Accumulated other
comprehensive income
|
2,014
|
|
2,852
|
|
Total Saul Centers,
Inc. equity
|
348,389
|
|
400,484
|
|
Noncontrolling
interests
|
156,040
|
|
121,318
|
|
Total
equity
|
504,429
|
|
521,802
|
|
Total liabilities and
equity
|
$
1,994,137
|
|
$
1,833,302
|
|
Saul Centers,
Inc.
Consolidated
Statements of Operations
(In thousands, except
per share amounts)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(unaudited)
|
|
|
|
Revenue
|
|
|
|
|
|
|
Rental
revenue
|
$
62,859
|
|
$
61,072
|
|
$
249,057
|
|
$
240,837
|
|
Other
|
3,824
|
|
1,264
|
|
8,150
|
|
5,023
|
|
Total
revenue
|
66,683
|
|
62,336
|
|
257,207
|
|
245,860
|
|
Expenses
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
9,987
|
|
9,760
|
|
37,489
|
|
35,934
|
|
Real estate
taxes
|
7,061
|
|
6,937
|
|
29,650
|
|
28,588
|
|
Interest expense, net
and amortization of deferred debt costs
|
12,635
|
|
11,775
|
|
49,153
|
|
43,937
|
|
Depreciation and
amortization of deferred leasing costs
|
12,203
|
|
12,069
|
|
48,430
|
|
48,969
|
|
General and
administrative
|
7,334
|
|
6,404
|
|
23,459
|
|
22,392
|
|
Loss on early
extinguishment of debt
|
—
|
|
—
|
|
—
|
|
648
|
|
Total
expenses
|
49,220
|
|
46,945
|
|
188,181
|
|
180,468
|
|
Net
Income
|
17,463
|
|
15,391
|
|
69,026
|
|
65,392
|
|
Noncontrolling
interests
|
|
|
|
|
|
|
|
|
Income attributable to
noncontrolling interests
|
(4,257)
|
|
(3,528)
|
|
(16,337)
|
|
(15,198)
|
|
Net income
attributable to Saul Centers, Inc.
|
13,206
|
|
11,863
|
|
52,689
|
|
50,194
|
|
Preferred stock
dividends
|
(2,799)
|
|
(2,799)
|
|
(11,194)
|
|
(11,194)
|
|
Net income available
to common stockholders
|
$
10,407
|
|
$
9,064
|
|
$
41,495
|
|
$
39,000
|
|
Per share net income
available to common stockholders
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
0.43
|
|
$
0.38
|
|
$
1.73
|
|
$
1.63
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Stock:
|
|
|
|
|
|
|
|
|
Common
stock
|
24,077
|
|
24,011
|
|
24,051
|
|
23,964
|
|
Effect of dilutive
options
|
2
|
|
—
|
|
2
|
|
8
|
|
Diluted weighted
average common stock
|
24,079
|
|
24,011
|
|
24,053
|
|
23,972
|
|
Reconciliation of
net income to FFO available to common stockholders and
noncontrolling interests (1)
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
(In thousands,
except per share amounts)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net income
|
$
17,463
|
|
$
15,391
|
|
$
69,026
|
|
$
65,392
|
|
Add:
|
|
|
|
|
|
|
|
|
Real estate
depreciation and amortization
|
12,203
|
|
12,069
|
|
48,430
|
|
48,969
|
|
FFO
|
29,666
|
|
27,460
|
|
117,456
|
|
114,361
|
|
Subtract:
|
|
|
|
|
|
|
|
|
Preferred stock
dividends
|
(2,799)
|
|
(2,799)
|
|
(11,194)
|
|
(11,194)
|
|
FFO available to common
stockholders and noncontrolling interests
|
$
26,867
|
|
$
24,661
|
|
$ 106,262
|
|
$ 103,167
|
|
Weighted average shares
and units:
|
|
|
|
|
|
|
|
|
Basic
|
33,876
|
|
33,309
|
|
33,474
|
|
33,256
|
|
Diluted
(2)
|
34,115
|
|
34,017
|
|
34,066
|
|
33,972
|
|
Basic FFO per share
available to common stockholders and noncontrolling
interests
|
$
0.79
|
|
$
0.74
|
|
$
3.17
|
|
$
3.10
|
|
Diluted FFO per share
available to common stockholders and noncontrolling
interests.
|
$
0.79
|
|
$
0.72
|
|
$
3.12
|
|
$
3.04
|
|
|
|
(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 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.
|
|
|
|
(2)
|
Beginning March 5,
2021, fully diluted shares and units includes 1.4 million limited
partnership units were held in escrow that related to the
contribution of Twinbrook Quarter by 1592 Rockville Pike. Half of
the units held in escrow were released on October 18, 2021. The
remaining units held in escrow were released on October 18,
2023.
|
|
Reconciliation of
total revenue to same property revenue (3)
|
|
|
(in
thousands)
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Total
revenue
|
|
$
66,683
|
|
$
62,336
|
|
$
257,207
|
|
$
245,860
|
|
Less: Acquisitions,
dispositions and development properties
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Total same property
revenue
|
|
$
66,683
|
|
$
62,336
|
|
$
257,207
|
|
$
245,860
|
|
|
|
|
|
|
|
|
|
|
Shopping
Centers
|
|
$
47,136
|
|
$
43,440
|
|
$
179,350
|
|
$
172,055
|
|
Mixed-Use
properties
|
|
19,547
|
|
18,896
|
|
77,857
|
|
73,805
|
|
Total same property
revenue
|
|
$
66,683
|
|
$
62,336
|
|
$
257,207
|
|
$
245,860
|
|
|
|
|
|
|
|
|
|
|
Total Shopping
Center revenue
|
|
$
47,136
|
|
$
43,440
|
|
$
179,350
|
|
$
172,055
|
|
Less: Shopping Center
acquisitions, dispositions and development properties
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Total same Shopping
Center revenue
|
|
$
47,136
|
|
$
43,440
|
|
$
179,350
|
|
$
172,055
|
|
|
|
|
|
|
|
|
|
|
Total Mixed-Use
property revenue
|
|
$
19,547
|
|
$
18,896
|
|
$
77,857
|
|
$
73,805
|
|
Less: Mixed-Use
acquisitions, dispositions and development properties
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Total same Mixed-Use
revenue
|
|
$
19,547
|
|
$
18,896
|
|
$
77,857
|
|
$
73,805
|
|
|
(3) Same property
revenue is a non-GAAP financial measure of performance that
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
December 31,
|
|
Year Ended December
31,
|
|
(In
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net
income
|
$ 17,463
|
|
$ 15,391
|
|
$ 69,026
|
|
$ 65,392
|
|
Add: Interest expense,
net and amortization of deferred debt costs
|
12,635
|
|
11,775
|
|
49,153
|
|
43,937
|
|
Add: Depreciation and
amortization of deferred leasing costs
|
12,203
|
|
12,069
|
|
48,430
|
|
48,969
|
|
Add: General and
administrative
|
7,334
|
|
6,404
|
|
23,459
|
|
22,392
|
|
Add: Loss on early
extinguishment of debt
|
—
|
|
—
|
|
—
|
|
648
|
|
Property operating
income
|
49,635
|
|
45,639
|
|
190,068
|
|
181,338
|
|
Less: Acquisitions,
dispositions and development properties
|
—
|
|
—
|
|
—
|
|
—
|
|
Total same property
operating income
|
$ 49,635
|
|
$ 45,639
|
|
$
190,068
|
|
$
181,338
|
|
|
|
|
|
|
|
|
|
|
Shopping
Centers
|
$ 37,319
|
|
$ 33,646
|
|
$
140,866
|
|
$
135,160
|
|
Mixed-Use
properties
|
12,316
|
|
11,993
|
|
49,202
|
|
46,178
|
|
Total same property
operating income
|
$ 49,635
|
|
$ 45,639
|
|
$
190,068
|
|
$
181,338
|
|
|
|
|
|
|
|
|
|
|
Shopping Center
operating income
|
$ 37,319
|
|
$ 33,646
|
|
$
140,866
|
|
$
135,160
|
|
Less: Shopping Center
acquisitions, dispositions and development properties
|
—
|
|
—
|
|
—
|
|
—
|
|
Total same Shopping
Center operating income
|
$ 37,319
|
|
$ 33,646
|
|
$
140,866
|
|
$
135,160
|
|
|
|
|
|
|
|
|
|
|
Mixed-Use property
operating income
|
$ 12,316
|
|
$ 11,993
|
|
$ 49,202
|
|
$ 46,178
|
|
Less: Mixed-Use
acquisitions, dispositions and development properties
|
—
|
|
—
|
|
—
|
|
—
|
|
Total same Mixed-Use
property operating income
|
$ 12,316
|
|
$ 11,993
|
|
$ 49,202
|
|
$ 46,178
|
|
|
(4) Same property
operating income is a non-GAAP financial measure of performance
that 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.
|
View original
content:https://www.prnewswire.com/news-releases/saul-centers-inc-reports-fourth-quarter-2023-earnings-302076452.html
SOURCE Saul Centers, Inc.
