Saul Centers, Inc. Reports Second Quarter 2016 Earnings

BETHESDA, Md., Aug. 2, 2016 /PRNewswire/ -- 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).

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.

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SOURCE Saul Centers, Inc.