Saul Centers, Inc. Reports Third Quarter 2015 Earnings

BETHESDA, Md., Oct. 29, 2015 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced its operating results for the quarter ended September 30, 2015 ("2015 Quarter").  Total revenue for the 2015 Quarter increased to $52.4 million from $50.6 million for the quarter ended September 30, 2014 ("2014 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 $13.2 million for the 2015 Quarter from $12.5 million for the 2014 Quarter. 

Net income attributable to common stockholders was $7.5 million ($0.36 per diluted share) for the 2015 Quarter compared to $6.9 million ($0.33 per diluted share) for the 2014 Quarter.  The increase in net income attributable to common stockholders resulted primarily from (a) higher property operating income ($1.0 million) and (b) lower interest expense and amortization of deferred debt costs ($0.4 million) partially offset by (c) higher depreciation and amortization of deferred leasing costs ($0.9 million).

Same property revenue increased $1.6 million (3.1%) and same property operating income increased $0.8 million (2.1%) for the 2015 Quarter compared to the 2014 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 $1.0 million (3.4%) primarily due to $0.9 million of increased base rent.  Mixed-use same property operating income decreased $0.2 million (2.0%) primarily due to higher provision for credit losses related to a rent dispute ($0.3 million).

For the nine months ended September 30, 2015 ("2015 Period"), total revenue increased to $156.2 million from $155.8 million for the nine months ended September 30, 2014 ("2014 Period").  Operating income decreased to $38.8 million for the 2015 Period from $39.6 million for the 2014 Period.  The decrease in operating income was due primarily to (a) the net impact in 2014 of a lease termination ($1.0 million), (b) the impact in 2014 of a bankruptcy settlement and collection ($1.6 million) and (c) higher depreciation and amortization of deferred leasing costs ($1.6 million) partially offset by (d) higher property operating income, exclusive of items (a) and (b) above ($1.0 million), (e) lower general and administrative expenses, primarily due to severance expense in 2014 ($0.8 million), (f) lower acquisition related costs ($0.7 million), (g) lower interest expense and amortization of deferred debt costs ($0.5 million) and (h) lower predevelopment expenses ($0.4 million).

Net income attributable to common stockholders was $21.9 million ($1.04 per diluted share) for the 2015 Period compared to $26.8 million ($1.29 per diluted share) for the 2014 Period.  The decrease in net income attributable to common stockholders was due primarily to (a) the impacts to operating income discussed in the preceding paragraph and (b) the gain on sale of property in 2014 ($6.1 million), partially offset by (c) lower noncontrolling interests ($1.6 million).

Same property revenue decreased $0.7 million (0.5%) and same property operating income decreased $2.6 million (2.2%) for the 2015 Period compared to the 2014 Period.  Shopping center same property operating income decreased $1.0 million (1.1%) primarily due to (a) the net impact in 2014 of a lease termination ($1.0 million), (b) the impact in 2014 of a bankruptcy settlement and collection ($1.6 million) partially offset by (c) increased base rent ($1.4 million).  Mixed-use same property operating income decreased $1.6 million (5.7%) primarily due to (a) higher real estate tax expense, the majority of which is not recoverable ($0.7 million), (b) higher provision for credit losses related to a rent dispute ($0.6 million) and (c) lower base rent ($0.3 million).

As of September 30, 2015, 94.8% of the commercial portfolio was leased (not including the apartments at Clarendon Center), unchanged from September 30, 2014.  On a same property basis, 94.8% of the portfolio was leased as of September 30, 2015, unchanged from September 30, 2014.  The apartments at Clarendon Center were 97.1% leased as of September 30, 2015 compared to 99.6% as of September 30, 2014.

Funds from operations ("FFO") available to common stockholders and noncontrolling interests (after deducting preferred stock dividends) increased 8.9% to $21.3 million ($0.75 per diluted share) in the 2015 Quarter from $19.5 million ($0.70 per diluted share) in the 2014 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 stockholders and noncontrolling interests for the 2015 Quarter was primarily due to (a) higher property operating income ($1.0 million), (b) lower interest expense and amortization of deferred debt costs ($0.4 million) and (c) lower acquisition related costs ($0.3 million).

FFO available to common stockholders and noncontrolling interests increased 2.0% to $61.9 million ($2.18 per diluted share) in the 2015 Period from $60.7 million ($2.18 per diluted share) in the 2014 Period.  The increase in FFO available to common stockholders and noncontrolling interests for the 2015 Period was primarily attributable to (a) higher property operating income, other than items (h) and (i) below, ($1.0 million), (b) lower general and administrative expenses ($0.8 million), (c) lower predevelopment expenses ($0.4 million), (d) lower acquisition related costs ($0.7 million), (f) lower interest expense and amortization of deferred debt costs ($0.5 million) and (g) lower preferred stock dividends ($0.3 million) partially offset by (h) the net impact in 2014 of a lease termination ($1.0 million) and (i) the impact in 2014 of a bankruptcy settlement and collection ($1.6 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 six mixed-use properties with approximately 9.4 million square feet of leasable area and (b) three 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.