Saul Centers, Inc. Reports First Quarter 2019 Earnings

March 31, 2019

December 31, 2018

(Unaudited)

Assets

Real estate investments

Land

$

488,942

$

488,918

Buildings and equipment

1,275,927

1,273,275

Construction in progress

216,545

185,972

1,981,414

1,948,165

Accumulated depreciation

(535,269)

(525,518)

1,446,145

1,422,647

Cash and cash equivalents

11,456

14,578

Accounts receivable and accrued income, net

51,603

53,876

Deferred leasing costs, net

26,967

28,083

Prepaid expenses, net

4,064

5,175

Other assets

5,593

3,130

Total assets

$

1,545,828

$

1,527,489

Liabilities

Notes payable

$

873,143

$

880,271

Revolving credit facility payable

38,465

45,329

Term loan facility payable

74,616

74,591

Construction loan payable

36,897

21,655

Dividends and distributions payable

19,224

19,153

Accounts payable, accrued expenses and other liabilities

47,671

32,419

Deferred income

25,481

28,851

Total liabilities

1,115,497

1,102,269

Equity

Preferred stock, 1,000,000 shares authorized:

Series C Cumulative Redeemable, 42,000 shares issued and outstanding

105,000

105,000

Series D Cumulative Redeemable, 30,000 shares issued and outstanding

75,000

75,000

Common stock, $0.01 par value, 40,000,000 shares authorized, 22,860,039 and 22,739,207 shares issued and outstanding, respectively

229

227

Additional paid-in capital

391,122

384,533

Distributions in excess of accumulated net income and accumulated

 other comprehensive loss

(210,207)

(208,593)

Accumulated other comprehensive loss

(289)

(255)

Total Saul Centers, Inc. equity

360,855

355,912

Noncontrolling interests

69,476

69,308

Total equity

430,331

425,220

Total liabilities and equity

$

1,545,828

$

1,527,489

Saul Centers, Inc.Consolidated Statements of Operations(In thousands, except per share amounts)

Three Months Ended March 31,

2019

2018

Revenue

(unaudited)

Rental Revenue

$

56,803

$

54,990

Other

2,947

1,118

Total revenue

59,750

56,108

Expenses

Property operating expenses

8,001

7,123

Real estate taxes

7,148

6,845

Interest expense, net and amortization of deferred debt costs

11,067

11,424

Depreciation and amortization of deferred leasing costs

11,643

11,349

General and administrative

4,814

4,420

Total expenses

42,673

41,161

Net Income

17,077

14,947

Noncontrolling interests

Income attributable to noncontrolling interests

(3,630)

(2,359)

Net income attributable to Saul Centers, Inc.

13,447

12,588

Extinguishment of issuance costs upon redemption of preferred shares

—

(2,328)

Preferred stock dividends

(2,953)

(3,403)

Net income available to common stockholders

$

10,494

$

6,857

Per share net income available to common stockholders

Basic and diluted

$

0.46

$

0.31

Dividends declared per common share outstanding

$

0.53

$

0.52

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)

2019

2018

(unaudited)

Net income

$

17,077

$

14,947

Add:

Real estate depreciation and amortization

11,643

11,349

FFO

28,720

26,296

Subtract:

Preferred stock dividends

(2,953)

(3,403)

Extinguishment of issuance costs upon redemption of preferred shares

—

(2,328)

FFO available to common stockholders and noncontrolling interests

$

25,767

$

20,565

Weighted average shares:

Diluted weighted average common stock

22,863

22,218

Convertible limited partnership units

7,835

7,567

Average shares and units used to compute FFO per share

30,698

29,785

FFO per share available to common stockholders and noncontrolling interests

$

0.84

$

0.69

(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.

Reconciliation of revenue to same property revenue (2)

(in thousands)

Three months ended March 31,

2019

2018

(unaudited)

Total revenue

$

59,750

$

56,108

Less: Acquisitions, dispositions and development properties

(889)

—

Total same property revenue

$

58,861

$

56,108

Shopping Centers

$

43,159

$

40,924

Mixed-Use properties

15,702

15,184

Total same property revenue

$

58,861

$

56,108

Total Shopping Center revenue

$

43,159

$

40,924

Less: Shopping Center acquisitions, dispositions and development properties

—

—

Total same Shopping Center revenue

$

43,159

$

40,924

Total Mixed-Use property revenue

$

16,591

$

15,184

Less: Mixed-Use acquisitions, dispositions and development properties

(889)

—

Total same Mixed-Use property revenue

$

15,702

$

15,184

(2)

Same property revenue is a non-GAAP financial measure of performance that 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 and actual expenses incurred 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.

Reconciliation of net income to same property operating income (3)

Three Months Ended March 31,

(In thousands)

2019

2018

(unaudited)

Net income

$

17,077

$

14,947

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

11,067

11,424

Add: Depreciation and amortization of deferred leasing costs

11,643

11,349

Add: General and administrative

4,814

4,420

Property operating income

44,601

42,140

Less: Acquisitions, dispositions and development properties

(628)

—

Total same property operating income

$

43,973

$

42,140

Shopping Centers

$

33,471

$

32,047

Mixed-Use properties

10,502

10,093

Total same property operating income

$

43,973

$

42,140

Shopping Center operating income

$

33,471

$

32,047

Less: Shopping Center acquisitions, dispositions and development properties

—

—

Total same Shopping Center operating income

$

33,471

$

32,047

Mixed-Use property operating income

$

11,130

$

10,093

Less: Mixed-Use acquisitions, dispositions and development properties

(628)

—

Total same Mixed-Use property operating income

$

10,502

$

10,093

(3)

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