EX-99.1 2 bfs-3312014xexhibit991.htm BFS-3.31.2014 EXHIBIT 99.1 BFS-3.31.2014-Exhibit 99.1

EXHIBIT INDEX
Exhibit        Description
No.
99.1         Press Release, dated May 6, 2014, of Saul Centers, Inc.

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


www.SaulCenters.com

Saul Centers, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
 
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

Construction in progress
11,880

 
9,867

 
1,473,947

 
1,459,439

Accumulated depreciation
(372,041
)
 
(364,663
)
 
1,101,906

 
1,094,776

Cash and cash equivalents
15,351

 
17,297

Accounts receivable and accrued income, net
43,748

 
43,884

Deferred leasing costs, net
25,996

 
26,052

Prepaid expenses, net
3,390

 
4,047

Deferred debt costs, net
9,345

 
9,675

Other assets
4,861

 
2,944

Total assets
$
1,204,597

 
$
1,198,675

 
 
 
 
Liabilities
 
 
 
Mortgage notes payable
$
814,635

 
$
820,068

Revolving credit facility payable
—

 
—

Dividends and distributions payable
14,308

 
13,135

Accounts payable, accrued expenses and other liabilities
23,255

 
20,141

Deferred income
31,990

 
30,205

Total liabilities
884,188

 
883,549

 
 
 
 
Stockholders’ equity
 
 
 
Preferred stock
180,000

 
180,000

Common stock
206

 
206

Additional paid-in capital
273,351

 
270,428

Accumulated deficit and other comprehensive loss
(175,308
)
 
(173,956
)
Total Saul Centers, Inc. stockholders’ equity
278,249

 
276,678

Noncontrolling interest
42,160

 
38,448

Total stockholders’ equity
320,409

 
315,126

Total liabilities and stockholders’ equity
$
1,204,597

 
$
1,198,675




Saul Centers, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
 
Three Months Ended March 31,
 
2014
 
2013
Revenue
(unaudited)
Base rent
$
40,563

 
$
39,740

Expense recoveries
8,789

 
7,614

Percentage rent
452

 
600

Other
3,143

 
1,232

Total revenue
52,947

 
49,186

Operating expenses
 
 
 
Property operating expenses
7,585

 
5,949

Provision for credit losses
203

 
264

Real estate taxes
5,453

 
5,763

Interest expense and amortization of deferred debt costs
11,467

 
11,717

Depreciation and amortization of deferred leasing costs
10,180

 
16,352

General and administrative
4,680

 
3,404

Acquisition related costs
163

 
—

Predevelopment expenses
503

 
2,349

Total operating expenses
40,234

 
45,798

Operating income
12,713

 
3,388

Change in fair value of derivatives
(2
)
 
10

Net Income
12,711

 
3,398

(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
)
 
 
 
 
Weighted Average Common Stock:
 
 
 
Common stock
20,623

 
20,146

Effect of dilutive options
41

 
33

Diluted weighted average common stock
20,664

 
20,179

 
 
 
 



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

 
Add:
 
 
 
 
 
Real estate depreciation and amortization
 
10,180

 
16,352

 
FFO
 
22,891

 
19,750

 
Subtract:
 
 
 
 
 
Preferred stock redemption
 
—

 
(5,228
)
 
Preferred stock dividends
 
(3,206
)
 
(4,364
)
 
FFO available to common shareholders
 
$
19,685

 
$
10,158

 
Weighted average shares:
 
 
 
 
 
Diluted weighted average common stock
 
20,664

 
20,179

 
Convertible limited partnership units
 
7,063

 
6,914

 
Average shares and units used to compute FFO per share
 
27,727

 
27,093

 
FFO per share available to common shareholders
 
$
0.71

 
$
0.37

 
 
 
 
 
 
(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 March 31,
 
(In thousands)
 
2014
 
2013
 
 
 
(unaudited)
 
Net income
 
$
12,711

 
$
3,398

 
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

 
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

 
 
 
 
 
 
 
Shopping centers
 
$
30,196

 
$
28,292

 
Mixed-Use properties
 
9,362

 
8,726

 
Total same property operating income
 
$
39,558

 
$
37,018