0000907254-16-000235.txt : 20160802 0000907254-16-000235.hdr.sgml : 20160802 20160802162525 ACCESSION NUMBER: 0000907254-16-000235 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20160802 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20160802 DATE AS OF CHANGE: 20160802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAUL CENTERS INC CENTRAL INDEX KEY: 0000907254 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 521833074 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12254 FILM NUMBER: 161800811 BUSINESS ADDRESS: STREET 1: 7501 WISCONSIN AVENUE STREET 2: SUITE 1500 CITY: BETHESDA STATE: MD ZIP: 20814 BUSINESS PHONE: 3019866207 MAIL ADDRESS: STREET 1: 7501 WISCONSIN AVENUE STREET 2: SUITE 1500 CITY: BETHESDA STATE: MD ZIP: 20814 8-K 1 bfs-06302016x8k.htm 8-K Document


Section 1: 8-K (FORM 8-K)
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 8-K
____________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 2, 2016
__________________________
Saul Centers, Inc.
(Exact name of registrant as specified in its charter)
_________________________
 
 
 
 
 
Maryland
 
1-12254
 
52-1833074
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification Number)

 
 
 
7501 Wisconsin Avenue, Bethesda, Maryland
 
20814
(Address of Principal Executive Offices)
 
(Zip Code)
(301) 986-6200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
_______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.02. Results of Operations and Financial Condition.  
On August 2, 2016, Saul Centers, Inc. issued a press release to report its financial results for the quarter ended June 30, 2016. The release is furnished as Exhibit 99.1 hereto.


Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press Release, dated August 2, 2016, of Saul Centers, Inc.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SAUL CENTERS, INC.
By:     /s/ Scott V. Schneider__________ ____________
Scott V. Schneider                                             Senior Vice President and Chief Financial Officer    
Dated: August 2, 2016    



 EX-99.1 2 bfs-06302016xex991.htm EXHIBIT 99.1 Exhibit
EXHIBIT INDEX
Exhibit        Description
No.
99.1         Press Release, dated August 2, 2016, 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 Second Quarter 2016 Earnings
August 2, 2016, Bethesda, MD.
Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced its operating results for the quarter ended June 30, 2016 (“2016 Quarter”). Total revenue for the 2016 Quarter increased to $52.7 million from $51.7 million for the quarter ended June 30, 2015 (“2015 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 $13.3 million for the 2016 Quarter from $12.9 million for the 2015 Quarter.
The Park Van Ness mixed-use development opened in May, and as of July 31, 2016, 130 apartment leases have been executed (48.0%). Concurrent with the opening in May, interest, real estate taxes and all other costs associated with the property, including depreciation, began to be charged to expense while revenue continues to grow as occupancy increases. As a result, net income for the 2016 Quarter was adversely impacted by $1.1 million.
Net income attributable to common stockholders increased to $7.5 million ($0.35 per diluted share) for the 2016 Quarter compared to $7.3 million ($0.35 per diluted share) for the 2015 Quarter.

Same property revenue increased $1.0 million (1.9%) and same property operating income increased $1.3 million (3.3%) for the 2016 Quarter compared to the 2015 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 $0.5 million (1.6%) primarily due to increased base rent. Mixed-use same property operating income increased $0.8 million (8.9%) primarily due to (a) higher other income ($0.3 million) and (b) lower provision for credit losses ($0.2 million).

As of June 30, 2016, 94.9% of the commercial portfolio was leased (not including the apartments at Clarendon Center and Park Van Ness), compared to 95.0% at June 30, 2015. On a same property basis, 95.1% of the portfolio was leased as of
June 30, 2016, compared to 95.0% at June 30, 2015. The apartments at Clarendon Center were 97.1% leased as of
June 30, 2016 compared to 98.8% as of June 30, 2015. The apartments at Park Van Ness were 34.7% leased as of
June 30, 2016.
For the six months ended June 30, 2016 (“2016 Period”), total revenue increased to $109.6 million from $103.8 million for the six months ended June 30, 2015 (“2015 Period”). Operating income increased to $29.6 million for the 2016 Period from $25.6 million for the 2015 Period. The increase in operating income was primarily due to (a) the net impact of a lease termination at 11503 Rockville Pike ($2.4 million) and (b) higher property operating income, exclusive of the above lease termination ($2.8 million), partially offset by (c) higher depreciation and amortization of deferred leasing costs
($0.6 million) and (d) higher general and administrative expense ($0.6 million).
Net income attributable to common stockholders increased to $17.4 million ($0.81 per diluted share) for the 2016 Period compared to $14.4 million ($0.68 per diluted share) for the 2015 Period. The increase in net income attributable to common stockholders was primarily due to (a) the net impact of a lease termination at 11503 Rockville Pike ($2.4 million) and (b) higher property operating income, exclusive of the above lease termination ($2.8 million), partially offset by (c) higher noncontrolling interests ($1.0 million), (d) higher depreciation and amortization of deferred leasing costs ($0.6 million) and (e) higher general and administrative expense ($0.6 million).


www.SaulCenters.com

Same property revenue increased 5.6% and same property operating income increased 7.2% for the 2016 Period compared to the 2015 Period. Shopping center same property operating income increased 6.6% and mixed-use same property operating income increased 9.3%. Shopping center operating income increased primarily due to (a) the net impact of a lease termination at 11503 Rockville Pike ($2.4 million) and (b) higher base rent throughout the remainder of the portfolio
($1.6 million). Avenel Business Park was the primary contributor to improved mixed-use property operating income.
Funds from operations ("FFO") available to common stockholders and noncontrolling interests (after deducting preferred stock dividends) increased 1.6% to $21.0 million ($0.73 per diluted share) in the 2016 Quarter from $20.6 million ($0.73 per diluted share) in the 2015 Quarter. Concurrent with the opening of Park Van Ness in May, interest, real estate taxes and all other costs associated with the property began to be charged to expense while revenue continues to grow as occupancy increases. As a result, FFO for the 2016 Quarter was adversely impacted by $0.7 million. 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.
FFO available to common stockholders and noncontrolling interests (after deducting preferred stock dividends and the impact of preferred stock redemptions) increased 11.4% to $45.3 million ($1.57 per diluted share) in the 2016 Period from $40.7 million ($1.43 per diluted share) in the 2015 Period. FFO available to common shareholders increased primarily due to (a) the net impact of a lease termination at 11503 Rockville Pike ($2.4 million) and (b) higher property operating income, exclusive of the above lease termination ($2.8 million), partially offset by (c) higher general and administrative expenses
($0.6 million).
Saul Centers is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland, which currently operates and manages a real estate portfolio of 59 properties which includes (a) 50 community and neighborhood shopping centers and seven mixed-use properties with approximately 9.6 million square feet of leasable area and (b) two land and development properties. Approximately 85% of the Saul Centers' property operating income is generated by 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)
 
June 30,
2016
 
December 31,
2015
 
(Unaudited)
 
 
Assets
 
 
 
Real estate investments
 
 
 
Land
$
427,112

 
$
424,837

Buildings and equipment
1,206,307

 
1,114,357

Construction in progress
7,327

 
83,516

 
1,640,746

 
1,622,710

Accumulated depreciation
(440,499
)
 
(425,370
)
 
1,200,247

 
1,197,340

Cash and cash equivalents
10,981

 
10,003

Accounts receivable and accrued income, net
48,508

 
51,076

Deferred leasing costs, net
26,371

 
26,919

Prepaid expenses, net
1,892

 
4,663

Other assets
7,456

 
5,407

Total assets
$
1,295,455

 
$
1,295,408

 
 
 
 
Liabilities
 
 
 
Notes payable
$
784,402

 
$
796,169

Revolving credit facility payable
10,956

 
26,695

Construction loan payable
61,460

 
43,641

Dividends and distributions payable
16,684

 
15,380

Accounts payable, accrued expenses and other liabilities
25,865

 
27,687

Deferred income
29,658

 
32,109

Total liabilities
929,025

 
941,681

 
 
 
 
Stockholders’ equity
 
 
 
Preferred stock
180,000

 
180,000

Common stock
215

 
213

Additional paid-in capital
318,778

 
305,008

Accumulated deficit and other comprehensive loss
(185,262
)
 
(181,893
)
Total Saul Centers, Inc. stockholders’ equity
313,731

 
303,328

Noncontrolling interests
52,699

 
50,399

Total stockholders’ equity
366,430

 
353,727

Total liabilities and stockholders’ equity
$
1,295,455

 
$
1,295,408




Saul Centers, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Revenue
(unaudited)
 
(unaudited)
Base rent
$
42,580

 
$
41,876

 
$
85,187

 
$
83,355

Expense recoveries
7,892

 
7,797

 
17,450

 
16,529

Percentage rent
596

 
558

 
959

 
996

Other
1,642

 
1,480

 
6,040

 
2,919

Total revenue
52,710

 
51,711

 
109,636

 
103,799

Operating expenses
 
 
 
 
 
 
 
Property operating expenses
6,060

 
6,196

 
14,055

 
13,812

Provision for credit losses
384

 
414

 
816

 
660

Real estate taxes
6,137

 
5,876

 
12,071

 
11,777

Interest expense and amortization of deferred debt costs
11,655

 
11,353

 
22,744

 
22,759

Depreciation and amortization of deferred leasing costs
10,817

 
10,811

 
21,852

 
21,251

General and administrative
4,407

 
4,139

 
8,467

 
7,910

Acquisition related costs
—

 
—

 
—

 
21

Total operating expenses
39,460

 
38,789

 
80,005

 
78,190

Operating income
13,250

 
12,922

 
29,631

 
25,609

Change in fair value of derivatives
(3
)
 
—

 
(10
)
 
(6
)
Gain on sale of property
—

 
11

 
—

 
11

Net Income
13,247

 
12,933

 
29,621

 
25,614

Income attributable to noncontrolling interests
(2,620
)
 
(2,537
)
 
(6,046
)
 
(5,011
)
Net income attributable to Saul Centers, Inc.
10,627

 
10,396

 
23,575

 
20,603

Preferred stock dividends
(3,094
)
 
(3,094
)
 
(6,188
)
 
(6,188
)
Net income attributable to common stockholders
$
7,533

 
$
7,302

 
$
17,387

 
$
14,415

Per share net income attributable to common stockholders
 
 
 
 
 
 
 
Basic and diluted
$
0.35

 
$
0.35

 
$
0.81

 
$
0.68

 
 
 
 
 
 
 
 
Weighted Average Common Stock:
 
 
 
 
 
 
 
Common stock
21,443

 
21,098

 
21,374

 
21,058

Effect of dilutive options
73

 
45

 
52

 
82

Diluted weighted average common stock
21,516

 
21,143

 
21,426

 
21,140

 
 
 
 
 
 
 
 





Reconciliation of net income to FFO attributable to common stockholders and noncontrolling interests (1)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
(In thousands, except per share amounts)
2016
 
2015
 
2016
 
2015
 
 
(unaudited)
 
(unaudited)
 
Net income
$
13,247

 
$
12,933

 
$
29,621

 
$
25,614

 
Subtract:
 
 
 
 
 
 
 
 
Gain on sale of property
—

 
(11
)
 
—

 
(11
)
 
Add:
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
10,817

 
10,811

 
21,852

 
21,251

 
FFO
24,064

 
23,733

 
51,473

 
46,854

 
Subtract:
 
 
 
 
 
 
 
 
Preferred stock dividends
(3,094
)
 
(3,094
)
 
(6,188
)
 
(6,188
)
 
FFO available to common stockholders and noncontrolling interests
$
20,970

 
$
20,639

 
$
45,285

 
$
40,666

 
Weighted average shares:
 
 
 
 
 
 
 
 
Diluted weighted average common stock
21,516

 
21,143

 
21,426

 
21,140

 
Convertible limited partnership units
7,361

 
7,237

 
7,345

 
7,225

 
Average shares and units used to compute FFO per share
28,877

 
28,380

 
28,771

 
28,365

 
FFO per share available to common stockholders and noncontrolling interests
$
0.73

 
$
0.73

 
$
1.57

 
$
1.43

 
 
 
 
 
 
 
 
 
(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 June 30,
 
Six Months Ended June 30,
 
(In thousands)
2016
 
2015
 
2016
 
2015
 
 
(unaudited)
 
(unaudited)
 
Net income
$
13,247

 
$
12,933

 
$
29,621

 
$
25,614

 
Add: Interest expense and amortization of deferred debt costs
11,655

 
11,353

 
22,744

 
22,759

 
Add: Depreciation and amortization of deferred leasing costs
10,817

 
10,811

 
21,852

 
21,251

 
Add: General and administrative
4,407

 
4,139

 
8,467

 
7,910

 
Add: Acquisition related costs
—

 
—

 
—

 
21

 
Add: Change in fair value of derivatives
3

 
—

 
10

 
6

 
Less: Gains on sale of property
—

 
(11
)
 
—

 
(11
)
 
Less: Interest income
(12
)
 
(13
)
 
(25
)
 
(26
)
 
Property operating income
40,117

 
39,212

 
82,669

 
77,524

 
(Add) Less: Acquisitions, dispositions and development property
(51
)
 
327

 
121

 
509

 
Total same property operating income
$
40,168

 
$
38,885

 
$
82,548

 
$
77,015

 
 
 
 
 
 
 
 
 
 
Shopping centers
$
30,509

 
$
30,019

 
$
63,584

 
$
59,665

 
Mixed-Use properties
9,659

 
8,866

 
18,964

 
17,350

 
Total same property operating income
$
40,168

 
$
38,885

 
$
82,548

 
$
77,015