Saul Centers, Inc. Reports Fourth Quarter 2017 Earnings

BETHESDA, Md., Feb. 27, 2018 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced its operating results for the quarter ended December 31, 2017 ("2017 Quarter"). Total revenue for the 2017 Quarter increased to $56.7 million from $54.2 million for the quarter ended December 31, 2016 ("2016 Quarter").  Operating income, which is net income before the impact of the change in fair value of derivatives, loss on early extinguishment of debt, gains on sales of property and gains on casualty settlements, increased to $14.4 million for the 2017 Quarter from $13.4 million for the 2016 Quarter.

Net income available to common stockholders was $8.5 million ($0.38 per diluted share) for the 2017 Quarter compared to $8.4 million ($0.38 per diluted share) for the 2016 Quarter.  The increase in net income available to common stockholders was primarily due to (a) higher property operating income ($1.6 million), partially offset by (b) lower gain on sale of properties ($1.0 million) and (c) higher depreciation and amortization ($0.4 million).

Same property revenue increased 3.5% and same property operating income increased 2.2% for the 2017 Quarter compared to the 2016 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.  The comparison excludes the results of properties not in operation for the entirety of the comparable reporting periods.  Shopping Center same property operating income increased 1.6% and Mixed-Use same property operating income increased 4.1%.  The increase in Shopping Center same property operating income was primarily the result of higher base rent.  The increase in Mixed-Use same property operating income was the result of (a) higher base rent ($0.8 million), partially offset by (b) lower other income ($0.2 million) and (c) higher provision for credit losses ($0.2 million).

For the year ended December 31, 2017 ("2017 Period"), total revenue increased to $227.3 million from $217.1 million for the year ended December 31, 2016 ("2016 Period").  Operating income was $60.6 million for the 2017 Period compared to $55.7 million for the 2016 Period.  Operating income for the 2017 Period increased primarily due to (a) $8.3 million of increased property operating income, partially offset by (b) $1.5 million of higher interest expense and amortization of deferred debt costs, (c) $1.3 million of higher depreciation expense and (d) $0.7 million of higher general and administrative expenses.

Net income available to common stockholders was $35.9 million ($1.63 per diluted share) for the 2017 Period compared to $32.9 million ($1.52 per diluted share) for the 2016 Period.  Net income available to common stockholders for the 2017 Period increased primarily due to (a) $8.3 million of increased property operating income, partially offset by (b)  $1.5 million of higher interest expense and amortization of deferred debt costs, (c) $1.3 million of higher depreciation expense, (d) lower gain on sale of property ($1.0 million), (e) higher noncontrolling interest ($1.0 million) and (f) $0.7 million of higher general and administrative expenses.

Same property revenue increased 0.9% and same property operating income increased 0.7% for the 2017 Period compared to the 2016 Period.  Shopping Center same property operating income increased 2.1% and Mixed-Use same property operating income decreased 4.2%.  Shopping Center same property operating income increased $2.6 million primarily due to (a) higher base rent ($1.5 million), exclusive of the net impact of a 2017 lease termination at Broadlands and a 2016 lease termination at 11503 Rockville Pike, (b) the net impact of a 2017 lease termination at Broadlands and a 2016 lease termination at 11503 Rockville Pike ($0.1 million), (c) higher operating expense recoveries, net of expenses ($0.4 million), (d) lower provision for credit losses ($0.3 million) and (e) higher termination fees throughout the portfolio ($0.3 million).  Mixed-Use same property operating income decreased $1.5 million primarily due to (a) lower termination fee income ($0.9 million) and (b) lower parking revenue as a result of a garage refurbishment ($0.3 million).

As of December 31, 2017, 94.3% of the commercial portfolio was leased (all properties except the apartments at Clarendon Center and Park Van Ness), compared to 95.4% at December 31, 2016.  On a same property basis, 94.2% of the portfolio was leased at December 31, 2017, compared to 95.5% at December 31, 2016.  As of December 31, 2017, the apartments at Clarendon Center were 96.7% leased compared to 97.1% leased at December 31, 2016, and the apartments at Park Van Ness were 95.9% leased compared to 72.7% leased at December 31, 2016.

Funds From Operations ("FFO") available to common stockholders and noncontrolling interests (after deducting preferred stock dividends and preferred stock redemption charges) increased to $22.7 million ($0.76 per diluted share) in the 2017 Quarter from $21.2 million ($0.73 per diluted share) in the 2016 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 2017 Quarter was primarily due to higher property operating income ($1.6 million).

FFO available to common stockholders and noncontrolling interests (after deducting preferred stock dividends and preferred stock redemptions) increased 7.1% to $94.0 million ($3.18 per diluted share) in the 2017 Period from $87.7 million ($3.03 per diluted share) in the 2016 Period.  FFO available to common stockholders and noncontrolling interests for the 2017 Period increased primarily due to (a) higher overall property operating income ($8.3 million), partially offset by (b) higher interest expense and amortization of debt expense ($1.5 million) and (c) higher general and administrative expenses ($0.7 million).

Saul Centers is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio comprised of 58 properties which includes (a) 55 community and neighborhood shopping centers and mixed-use properties with approximately 9.2 million square feet of leasable area and (b) three land and development properties.  Over 85% of the Company's property operating income is generated from properties in the metropolitan Washington, DC/Baltimore area.

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SOURCE Saul Centers, Inc.