Saul Centers, Inc. Reports First Quarter 2024 Earnings

Saul Centers, Inc.

Consolidated Balance Sheets

(Unaudited)

(Dollars in thousands, except per share amounts)

March 31,
2024

December 31,
2023

Assets

Real estate investments

Land

$         511,529

$         511,529

Buildings and equipment

1,599,887

1,595,023

Construction in progress

557,711

514,553

2,669,127

2,621,105

Accumulated depreciation

(739,406)

(729,470)

Total real estate investments, net

1,929,721

1,891,635

Cash and cash equivalents

7,079

8,407

Accounts receivable and accrued income, net

53,814

56,032

Deferred leasing costs, net

23,931

23,728

Other assets

15,761

14,335

Total assets

$      2,030,306

$      1,994,137

Liabilities

Mortgage notes payable, net

$         927,256

$         935,451

Revolving credit facility payable, net

272,909

274,715

Term loan facility payable, net

99,568

99,530

Construction loans payable, net

108,917

77,305

Accounts payable, accrued expenses and other liabilities

62,988

57,022

Deferred income

21,610

22,748

Dividends and distributions payable

23,127

22,937

Total liabilities

1,516,375

1,489,708

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, 24,099,077
and 24,082,887 shares issued and outstanding, respectively

241

241

Additional paid-in capital

450,781

449,959

Distributions in excess of accumulated net income

(292,213)

(288,825)

Accumulated other comprehensive income

3,278

2,014

Total Saul Centers, Inc. equity

347,087

348,389

Noncontrolling interests

166,844

156,040

Total equity

513,931

504,429

Total liabilities and equity

$      2,030,306

$      1,994,137

Saul Centers, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

Three Months Ended March 31,

2024

2023

Revenue

(unaudited)

Rental revenue

$             65,299

$             61,829

Other

1,393

1,220

Total revenue

66,692

63,049

Expenses

Property operating expenses

10,545

8,785

Real estate taxes

7,623

7,495

Interest expense, net and amortization of deferred debt costs

12,448

11,821

Depreciation and amortization of deferred leasing costs

12,029

12,017

General and administrative

5,784

5,268

Total expenses

48,429

45,386

Net Income

18,263

17,663

Noncontrolling interests

Income attributable to noncontrolling interests

(4,633)

(4,161)

Net income attributable to Saul Centers, Inc.

13,630

13,502

Preferred stock dividends

(2,798)

(2,798)

Net income available to common stockholders

$             10,832

$             10,704

Per share net income available to common stockholders

Basic and diluted

$                  0.45

$                  0.45

Reconciliation of net income to FFO available to common stockholders and

noncontrolling interests (1)

Three Months Ended March 31,

(In thousands, except per share amounts)

2024

2023

Net income

$              18,263

$              17,663

Add:

Real estate depreciation and amortization

12,029

12,017

FFO

30,292

29,680

Subtract:

Preferred stock dividends

(2,798)

(2,798)

FFO available to common stockholders and noncontrolling interests

$              27,494

$              26,882

Weighted average shares and units:

Basic

34,348

33,323

Diluted ⁽²⁾

34,352

34,031

Basic FFO per share available to common stockholders and noncontrolling interests

$                  0.80

$                  0.81

Diluted FFO per share available to common stockholders and noncontrolling interests

$                  0.80

$                  0.79

(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 real estate assets and gains or losses from real estate 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 1,416,071 limited partnership units that were held in escrow related to the contribution of Twinbrook Quarter. 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 revenue to same property revenue (1)

(in thousands)

Three Months Ended March 31,

2024

2023

(unaudited)

Total revenue

$              66,692

$              63,049

Less: Acquisitions, dispositions and development properties

—

—

Total same property revenue

$              66,692

$              63,049

Shopping Centers

$              46,932

$              44,225

Mixed-Use properties

19,760

18,824

Total same property revenue

$              66,692

$              63,049

Total Shopping Center revenue

$              46,932

$              44,225

Less: Shopping Center acquisitions, dispositions and development properties

—

—

Total same Shopping Center revenue

$              46,932

$              44,225

Total Mixed-Use property revenue

$              19,760

$              18,824

Less: Mixed-Use acquisitions, dispositions and development properties

—

—

Total same Mixed-Use property revenue

$              19,760

$              18,824

(1)

Same property revenue is a non-GAAP financial measure of performance that management believes 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 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.

Mixed-Use same property revenue is composed of the following:

Three Months Ended March 31,

(In thousands)

2024

2023

Office mixed-use properties (1)

$                9,753

$                9,145

Residential mixed-use properties (residential activity) (2)

8,838

8,532

Residential mixed-use properties (retail activity) (3)

1,169

1,147

Total Mixed-Use same property revenue

$              19,760

$              18,824

(1)

Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square

(2)

Includes Clarendon South Block, The Waycroft and Park Van Ness

(3)

Includes The Waycroft and Park Van Ness

Reconciliation of net income to same property operating income (1)

Three Months Ended March 31,

(In thousands)

2024

2023

(unaudited)

Net income

$              18,263

$              17,663

Add: Interest expense, net and amortization of deferred debt costs

12,448

11,821

Add: Depreciation and amortization of deferred leasing costs

12,029

12,017

Add: General and administrative

5,784

5,268

Property operating income

48,524

46,769

Less: Acquisitions, dispositions and development properties

—

—

Total same property operating income

$              48,524

$              46,769

Shopping Centers

$              35,969

$              34,965

Mixed-Use properties

12,555

11,804

Total same property operating income

$              48,524

$              46,769

Shopping Center operating income

$              35,969

$              34,965

Less: Shopping Center acquisitions, dispositions and development properties

—

—

Total same Shopping Center operating income

$              35,969

$              34,965

Mixed-Use property operating income

$              12,555

$              11,804

Less: Mixed-Use acquisitions, dispositions and development properties

—

—

Total same Mixed-Use property operating income

$              12,555

$              11,804

(1)

Same property operating income is a non-GAAP financial measure of performance that management believes 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.

Mixed-Use same property operating income is composed of the following:

Three Months Ended March 31,

(In thousands)

2024

2023

Office mixed-use properties (1)

$                6,221

$                5,708

Residential mixed-use properties (residential activity) (2)

5,472

5,289

Residential mixed-use properties (retail activity) (3)

862

807

Total Mixed-Use same property operating income

$              12,555

$              11,804

(1)

Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square

(2)

Includes Clarendon South Block, The Waycroft and Park Van Ness

(3)

Includes The Waycroft and Park Van Ness