Saul Centers, Inc. Reports First Quarter 2017 Earnings

Saul Centers, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

March 31,
 2017

December 31,
 2016

(Unaudited)

Assets

Real estate investments

Land

$

454,006

$

422,546

Buildings and equipment

1,263,107

1,214,697

Construction in progress

66,008

63,570

1,783,121

1,700,813

Accumulated depreciation

(467,564)

(458,279)

1,315,557

1,242,534

Cash and cash equivalents

9,671

8,322

Accounts receivable and accrued income, net

52,021

53,033

Deferred leasing costs, net

27,761

25,983

Prepaid expenses, net

3,642

5,057

Other assets

11,130

8,096

Total assets

$

1,419,782

$

1,343,025

Liabilities

Notes payable

$

816,738

$

783,400

Revolving credit facility payable

83,347

48,217

Construction loan payable

69,553

68,672

Dividends and distributions payable

18,005

17,953

Accounts payable, accrued expenses and other liabilities

20,779

20,838

Deferred income

32,049

30,696

Total liabilities

1,040,471

969,776

Stockholders' equity

Preferred stock

180,000

180,000

Common stock

218

217

Additional paid-in capital

332,158

328,171

Accumulated deficit and other comprehensive loss

(190,171)

(189,883)

Total Saul Centers, Inc. stockholders' equity

322,205

318,505

Noncontrolling interests

57,106

54,744

Total stockholders' equity

379,311

373,249

Total liabilities and stockholders' equity

$

1,419,782

$

1,343,025

Saul Centers, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

Three Months Ended March 31,

2017

2016

Revenue

(unaudited)

Base rent

$

44,476

$

42,607

Expense recoveries

8,594

9,558

Percentage rent

382

363

Other

5,014

4,398

Total revenue

58,466

56,926

Operating expenses

Property operating expenses

6,652

7,995

Provision for credit losses

343

432

Real estate taxes

6,590

5,934

Interest expense and amortization of deferred debt costs

11,864

11,089

Depreciation and amortization of deferred leasing costs

11,342

11,035

General and administrative

4,301

4,060

Total operating expenses

41,092

40,545

Operating income

17,374

16,381

Change in fair value of derivatives

—

(7)

Net income

17,374

16,374

Income attributable to noncontrolling interests

(3,670)

(3,426)

Net income attributable to Saul Centers, Inc.

13,704

12,948

Preferred stock dividends

(3,094)

(3,094)

Net income attributable to common stockholders

$

10,610

$

9,854

Per share net income attributable to common stockholders

Basic and diluted

$

0.49

$

0.46

Weighted Average Common Stock:

Common stock

21,745

21,306

Effect of dilutive options

147

31

   Diluted weighted average common stock

21,892

21,337

Reconciliation of net income to FFO attributable to common stockholders and

noncontrolling interests (1)

Three Months Ended March 31,

(In thousands, except per share amounts)

2017

2016

(unaudited)

Net income

$

17,374

$

16,374

Add:

Real estate depreciation and amortization

11,342

11,035

FFO

28,716

27,409

Subtract:

Preferred stock dividends

(3,094)

(3,094)

FFO available to common stockholders and
noncontrolling interests

$

25,622

$

24,315

Weighted average shares:

Diluted weighted average common stock

21,892

21,337

Convertible limited partnership units

7,457

7,327

Average shares and units used to compute FFO per share

29,349

28,664

FFO per share available to common stockholders and
noncontrolling interests

$

0.87

$

0.85

(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
       extraordinary items, impairment charges on depreciable real estate assets and gains or losses from property 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

(in thousands)

Three months ended March 31,

2017

2016

Total revenue

$

58,466

$

56,926

Less: Interest income

(13)

(13)

Less: Acquisitions, dispositions and development properties

(2,702)

(483)

Total same property revenue

$

55,751

$

56,430

Shopping centers

$

42,479

$

43,194

Mixed-Use properties

13,272

13,236

Total same property revenue

$

55,751

$

56,430

Reconciliation of net income to same property operating income

Three Months Ended March 31,

(In thousands)

2017

2016

(unaudited)

Net income

$

17,374

$

16,374

Add: Interest expense and amortization of deferred debt costs

11,864

11,089

Add: Depreciation and amortization of deferred leasing costs

11,342

11,035

Add: General and administrative

4,301

4,060

Add: Change in fair value of derivatives

—

7

Less: Interest income

(13)

(13)

Property operating income

44,868

42,552

Less: Acquisitions, dispositions and development property

1,796

294

Total same property operating income

$

43,072

$

42,258

Shopping centers

$

33,904

$

33,075

Mixed-Use properties

9,168

9,183

Total same property operating income

$

43,072

$

42,258