BETHESDA, Md., March 1, 2011 /PRNewswire/ -- Saul Centers, Inc. , an equity real estate investment trust (REIT), announced its operating results for the quarter ended December 31, 2010. Total revenue for the three months ended December 31, 2010 ("2010 Quarter") decreased 3.4% to $40,295,000 compared to $41,698,000 for the three months ended December 31, 2009 ("2009 Quarter"). Operating income, which is net income available to common stockholders before loss on early extinguishment of debt, gain on casualty settlements, acquisition related costs, discontinued operations, income attributable to the noncontrolling interest and preferred stock dividends, decreased 13.8% to $10,049,000 for the 2010 Quarter compared to $11,660,000 for the 2009 Quarter, primarily due to a single-location office tenant default ($700,000) and increased general and administrative expense ($385,000). Net income decreased 22.3% to $8,870,000 for the 2010 Quarter compared to $11,417,000 for the 2009 Quarter primarily due to acquisition related costs arising from the purchases of two retail properties ($1,009,000), the office tenant default ($700,000) and increased general and administrative expense ($385,000). Net income available to common stockholders was $3,921,000, or $0.21 per diluted share, for the 2010 Quarter compared to $5,861,000, or $0.33 per diluted share, for the 2009 Quarter.
Same property revenue for the total portfolio decreased 4.7% for the 2010 Quarter compared to the 2009 Quarter and same property operating income decreased 5.3%. The same property comparisons exclude the results of operations of properties not fully in operation for each of the comparable reporting quarters. Same property operating income in the shopping center portfolio decreased 2.2% for the 2010 Quarter compared to the 2009 Quarter, due to reduced minimum rent income ($325,000) and reduced termination fee income ($240,000). Same property operating income in the office/mixed-use portfolio decreased 15.6% for the 2010 Quarter compared to the 2009 Quarter primarily due to a single-location office tenant default ($700,000).
For the year ended December 31, 2010 ("2010 Year"), total revenue increased 1.6% to $163,546,000 compared to $160,968,000 for the year ended December 31, 2009 ("2009 Year") and operating income decreased 3.1% to $43,818,000 compared to $45,199,000 for the 2009 Year primarily due to a single-location office tenant default ($1,400,000), increased snow removal expense, net of tenant recoveries, from severe winter storms impacting the Mid-Atlantic region ($1,200,000), increased general and administrative expense ($1,000,000) and decreased lease termination fees ($750,000) offset in part by the collection of rents and other past due charges from a former anchor tenant ($1,940,000) and operating income generated from shopping centers recently developed/acquired ($1,000,000). Net income available to common stockholders was $21,623,000 or $1.18 per diluted share for the 2010 Year, compared to $21,573,000 or $1.20 per diluted share for the 2009 Year.
Same property revenue for the total portfolio increased 0.6% for the 2010 Year compared to the 2009 Year and same property operating income decreased 0.7%. Shopping center same property operating income increased 1.4% for the 2010 Year primarily due to the collection of rents and other past due charges from a former anchor tenant ($1,940,000). Excluding this one-time revenue, same property shopping center operating income decreased 0.7% compared to the prior year. Same property operating income in the office/mixed-use portfolio decreased 7.5% for the 2010 Year due primarily to a single-location office tenant default ($1,400,000).
As of December 31, 2010, 90.3% of retail and office space was leased compared to 91.5% at December 31, 2009. Clarendon Center's newly constructed apartments were 44% leased at December 31, 2010. On a same property basis, 92.0% of the portfolio was leased as of December 31, 2010 compared to 92.7% at December 31, 2009.
Funds from operations (FFO) available to common shareholders (after deducting preferred stock dividends) decreased 20.4% to $11,436,000 in the 2010 Quarter compared to $14,359,000 for the 2009 Quarter. On a diluted per share basis, FFO available to common shareholders decreased 21.3% to $0.48 per share for the 2010 Quarter compared to $0.61 per share for the 2009 Quarter. FFO decreased in the 2010 Quarter primarily due to costs related to the acquisition of two retail properties, a single-location office tenant default, increased general and administrative expense and the increase in the expense incurred to retire debt prior to its maturity. 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 from property dispositions and extraordinary items. FFO available to common shareholders for the 2010 Year decreased 9.8% to $50,556,000 from $56,025,000 during the 2009 Year. Per share FFO available to common shareholders for the 2010 Year decreased 11.7% to $2.12 per diluted share compared to $2.40 per diluted share for the 2009 Year. FFO decreased in the 2010 Year primarily due to higher losses on early extinguishment of debt ($3,195,000 or $0.13 per diluted share), by a decline in property operating income due to (1) a single-location office tenant default, (2) increased snow removal expense, net of tenant recoveries, (3) increased general and administrative expense and (4) decreased lease termination fees, offset in part by (5) the collection of rents and other past due charges from a former anchor tenant, and (6) operating income generated from shopping centers recently developed/acquired (collectively $1,410,000 or $0.06 per diluted share) and costs of acquiring two properties (approximately $1,179,000 or $0.05 per diluted share).
In September 2010, the Company sold its Lexington property for $8,100,000 and recognized a gain of $3,591,000. Net proceeds from the sale of Lexington together with additional cash of $7,400,000 were used to purchase 11503 Rockville Pike, a property containing approximately 20,000 square feet of retail space located on the east side of Rockville Pike near the White Flint Metro Station in Montgomery County, Maryland. The property, which is fully leased, is zoned for up to 297,000 square feet of rentable mixed use space. The Company does not anticipate redeveloping this property in the foreseeable future.
In December 2010, the Company purchased for $34.3 million the Metro Pike Center, approximately 67,000 square feet of retail space located on the west side of Rockville Pike near the White Flint Metro Station in Montgomery County, Maryland. The property was acquired subject to the assumption of a $16.2 million mortgage loan. The property, which is 89% leased, is zoned for up to 807,000 square feet of rentable mixed use space. The Company does not anticipate redeveloping this property in the foreseeable future.
As of December 31, 2010, the Company substantially completed construction of Clarendon Center adjacent to the Clarendon Metro Station in Arlington, Virginia. Clarendon Center will provide 45,000 square feet of retail space, 170,000 square feet of office space and 244 apartment units. As of February 28, 2011, the office and retail space is 66% leased and the apartments are 83% leased.
At December 31, 2010, approximately 85% of the Company's debt consisted of fixed rate, amortizing non-recourse mortgage loans, none of which mature before October 2012. As a result of the Company's 2010 refinancing activities, no more than $62 million of fixed-rate debt will mature in any future calendar year. The Company's $150 million revolving credit facility matures June 2012, can be extended for one year at the Company's option, and had no outstanding borrowings as of December 31, 2010.
During 2010, the Company paid quarterly dividends to its common stockholders totaling $1.44 per share, compared to $1.53 per share in 2009. On January 31, 2011, the Company paid a quarterly dividend of $0.36 per share to its common stockholders ($1.44 per share annual rate).
Saul Centers is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 54 community and neighborhood shopping center and office/mixed-use properties totaling approximately 8.9 million square feet of leasable area. Over 80% of the Company's property operating income is generated from properties in the metropolitan Washington, DC/Baltimore area.
Saul Centers, Inc. Condensed Consolidated Balance Sheets ($ in thousands) December 31, December 31, 2010 2009 ---- ---- Assets (Unaudited) Real estate investments Land $275,044 $223,193 Buildings and equipment 870,143 740,442 Construction in progress 78,849 147,589 1,224,036 1,111,224 Accumulated depreciation (296,786) (276,310) 927,250 834,914 Cash and cash equivalents 12,968 20,607 Accounts receivable and accrued income, net 36,417 37,503 Deferred leasing costs, net 17,835 15,609 Prepaid expenses, net 3,024 3,096 Deferred debt costs, net 7,192 7,537 Other assets 9,202 6,308 ----- ----- Total assets $1,013,888 $925,574 Liabilities Mortgage notes payable $601,147 $576,069 Construction loans payable 110,242 60,737 Dividends and distributions payable 12,415 12,220 Accounts payable, accrued expenses and other liabilities 23,544 23,395 Deferred income 26,727 27,090 ------ ------ Total liabilities 774,075 699,511 Stockholders' equity Preferred stock 179,328 179,328 Common stock 186 180 Additional paid-in capital 189,787 169,363 Accumulated deficit and other comprehensive loss (129,345) (124,167) -------- -------- Total Saul Centers, Inc. stockholders' equity 239,956 224,704 Noncontrolling interest (143) 1,359 ---- ----- Total stockholders' equity 239,813 226,063 ------- ------- Total liabilities and stockholders' equity $1,013,888 $925,574 ========== ======== Saul Centers, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) Three Months Ended December 31, ------------------------------- 2010 2009 ---- ---- Revenue (Unaudited) Base rent $31,805 $32,244 Expense recoveries 6,951 7,684 Percentage rent 531 551 Other 1,008 1,219 ----- ----- Total revenue 40,295 41,698 ------ ------ Operating expenses Property operating expenses 5,492 6,246 Provision for credit losses 638 171 Real estate taxes 4,295 4,196 Interest expense and amortization of deferred debt costs 8,699 8,769 Depreciation and amortization of deferred leasing costs 7,109 7,028 General and administrative 4,013 3,628 ----- ----- Total operating expenses 30,246 30,038 ------ ------ Operating income 10,049 11,660 Loss on early extinguishment of debt (926) (550) Gain on casualty settlement 775 329 Acquisition related costs (1,009) - ------ --- Income from continuing operations 8,889 11,439 Discontinued operations: (Loss) income from operations of property sold (19) (22) Gain on property sale - - --- --- Income (loss) from discontinued operations (19) (22) --- --- Net income 8,870 11,417 Income attributable to the noncontrolling interest (1,164) (1,771) ------ ------ Net income attributable to Saul Centers, Inc. 7,706 9,646 Preferred dividends (3,785) (3,785) ------ ------ Net income available to common stockholders $3,921 $5,861 Per share net income available to common stockholders : Diluted $0.21 $0.33 ===== ===== Weighted average common stock : Common stock 18,465 17,975 Effect of dilutive options 124 43 --- --- Diluted weighted average common stock 18,589 18,018 ====== ====== Year Ended December 31, ----------------------- 2010 2009 ---- ---- Revenue (Unaudited) Base rent $126,518 $125,727 Expense recoveries 29,534 29,442 Percentage rent 1,458 1,326 Other 6,036 4,473 ----- ----- Total revenue 163,546 160,968 ------- ------- Operating expenses Property operating expenses 23,198 21,301 Provision for credit losses 1,337 919 Real estate taxes 17,793 17,754 Interest expense and amortization of deferred debt costs 34,958 34,689 Depreciation and amortization of deferred leasing costs 28,474 28,150 General and administrative 13,968 12,956 ------ ------ Total operating expenses 119,728 115,769 ------- ------- Operating income 43,818 45,199 Loss on early extinguishment of debt (5,405) (2,210) Gain on casualty settlement 2,475 329 Acquisition related costs (1,179) - ------ --- Income from continuing operations 39,709 43,318 Discontinued operations: (Loss) income from operations of property sold (115) (88) Gain on property sale 3,591 - ----- --- Income (loss) from discontinued operations 3,476 (88) ----- --- Net income 43,185 43,230 Income attributable to the noncontrolling interest (6,422) (6,517) ------ ------ Net income attributable to Saul Centers, Inc. 36,763 36,713 Preferred dividends (15,140) (15,140) ------- ------- Net income available to common stockholders $21,623 $21,573 Per share net income available to common stockholders : Diluted $1.18 $1.20 ===== ===== Weighted average common stock : Common stock 18,267 17,904 Effect of dilutive options 110 39 --- --- Diluted weighted average common stock 18,377 17,943 ====== ====== Saul Centers, Inc. Supplemental Information (In thousands, except per share amounts) Three Months Ended December 31, ------------------------------- 2010 2009 ---- ---- Reconciliation of net income to FFO available to common shareholders: (1) (Unaudited) Net income $8,870 $11,417 Less: Gain on property dispositions (775) (329) Real property depreciation and Add: amortization 7,109 7,028 Real property depreciation - Add: discontinued operations 17 28 FFO 15,221 18,144 Less: Preferred dividends (3,785) (3,785) ------- FFO available to common shareholders $11,436 $14,359 ======= ======= Weighted average shares : Diluted weighted average common stock 18,589 18,018 Convertible limited partnership units 5,416 5,416 ----- ----- Diluted & converted weighted average shares 24,005 23,434 ====== ====== Per share amounts: FFO available to common shareholders (diluted) $0.48 $0.61 ===== ===== Reconciliation of net income to same property operating income: Net income $8,870 $11,417 Interest expense and amortization of deferred debt Add: costs 8,699 8,769 Depreciation and amortization Add: of deferred leasing costs 7,109 7,028 Depreciation and amortization Add: -discontinued operations 17 28 Add: Acquisition related costs 1,009 - Add: General and administrative 4,013 3,628 Loss on early extinguishment Add: of debt 926 550 Less: Gain on casualty settlement (775) (329) Less: Gain on property sale - - Less: Interest income (11) (3) Property operating income 29,857 31,088 Less: Acquisitions & developments (760) (352) Total same property operating income $29,097 $30,736 ======= ======= Total shopping centers $23,080 $23,603 Total office properties 6,017 7,133 ----- ----- Total same property operating income $29,097 $30,736 ======= ======= Year Ended December 31, ----------------------- 2010 2009 ---- ---- Reconciliation of net income to FFO available to common shareholders: (1) (Unaudited) Net income $43,185 $43,230 Less: Gain on property dispositions (6,066) (329) Real property depreciation and Add: amortization 28,474 28,150 Real property depreciation - Add: discontinued operations 103 114 FFO 65,696 71,165 Less: Preferred dividends (15,140) (15,140) -------- FFO available to common shareholders $50,556 $56,025 ======= ======= Weighted average shares : Diluted weighted average common stock 18,377 17,943 Convertible limited partnership units 5,416 5,416 ----- ----- Diluted & converted weighted average shares 23,793 23,359 ====== ====== Per share amounts: FFO available to common shareholders (diluted) $2.12 $2.40 ===== ===== Reconciliation of net income to same property operating income: Net income $43,185 $43,230 Interest expense and amortization of deferred debt Add: costs 34,958 34,689 Depreciation and amortization Add: of deferred leasing costs 28,474 28,150 Depreciation and amortization Add: -discontinued operations 103 114 Add: Acquisition related costs 1,179 - Add: General and administrative 13,968 12,956 Loss on early extinguishment Add: of debt 5,405 2,210 Less: Gain on casualty settlement (2,475) (329) Less: Gain on property sale (3,591) - Less: Interest income (33) (9) Property operating income 121,173 121,011 Less: Acquisitions & developments (1,856) (846) Total same property operating income $119,317 $120,165 ======== ======== Total shopping centers $93,320 $92,057 Total office properties 25,997 28,108 ------ ------ Total same property operating income $119,317 $120,165 ======== ======== (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 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 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.
Saul Centers, Inc.
CONTACT: Scott V. Schneider, Saul Centers, Inc., +1-301-986-6220
Web Site: http://www.saulcenters.com/
