BETHESDA, Md., Nov. 7, 2024 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced operating results for the quarter ended September 30, 2024 ("2024 Quarter").  Total revenue for the 2024 Quarter increased to $67.3 million from $63.8 million for the quarter ended September 30, 2023 ("2023 Quarter").  Net income increased to $19.6 million for the 2024 Quarter from $16.7 million for the 2023 Quarter primarily due to (a) higher base rent of $2.2 million, (b) higher lease termination fees of $0.6 million, (c) higher expense recoveries, net of expenses, of $0.2 million and (d) higher percentage rent of $0.1 million, partially offset by (e) higher general and administrative costs of $0.5 million. Net income available to common stockholders increased to $11.7 million, or $0.48 per basic and diluted share, for the 2024 Quarter from $10.0 million, or $0.42 per basic and diluted share, for the 2023 Quarter.

Same property revenue increased $3.5 million, or 5.5%, and same property operating income increased $3.2 million, or 6.8%, for the 2024 Quarter compared to the 2023 Quarter.  The $3.5 million increase in same property revenue for the 2024 Quarter compared to the 2023 Quarter was primarily due to (a) higher base rent of $2.2 million, (b) higher expense recoveries of $0.6 million and (c) higher lease termination fees of $0.6 million. Shopping Center same property operating income for the 2024 Quarter totaled $36.4 million, an increase of $2.3 million compared to the 2023 Quarter.  Shopping Center same property operating income increased primarily due to (a) higher base rent of $1.1 million, (b) higher lease termination fees of $0.5 million and (c) higher expense recoveries, net of expenses, of $0.4 million. Mixed-Use same property operating income totaled $13.2 million, an increase of $0.9 million compared to the 2023 Quarter. Mixed-Use same property operating income increased primarily due to (a) higher base rent of $1.1 million partially offset by (b) lower parking income, net of expenses, of $0.3 million. No properties were excluded from same property results.  Reconciliations of (a) total revenue to same property revenue and (b) net income to same property operating income are attached to this press release.

Same property revenue and same property operating income are non-GAAP financial measures of performance and improve the comparability of these measures by excluding the results of properties that were not in operation for the entirety of the comparable reporting periods. We define same property revenue as total revenue minus the revenue of properties not in operation for the entirety of the comparable reporting periods. We define same property operating income as net income plus (a) interest expense, net and amortization of deferred debt costs, (b) depreciation and amortization of deferred leasing costs, (c) general and administrative expenses, (d) change in fair value of derivatives and (e) loss on early extinguishment of debt minus (f) gains on property dispositions and (g) the operating income of properties that were not in operation for the entirety of the comparable periods.

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Funds from operations ("FFO") available to common stockholders and noncontrolling interests (after deducting preferred stock dividends) increased to $28.9 million, or $0.84 and $0.83 per basic and diluted share, respectively, in the 2024 Quarter compared to $26.0 million, or $0.78 and $0.76 per basic and diluted share, respectively, in the 2023 Quarter.  FFO is a non-GAAP supplemental earnings measure that the Company considers meaningful in measuring its operating performance. A reconciliation of net income to FFO is attached to this press release. The increase in FFO available to common stockholders and noncontrolling interests was primarily the result of (a) higher base rent of $2.2 million, (b) higher lease termination fees of $0.6 million, (c) higher expense recoveries, net of expenses, of $0.2 million and (d) higher percentage rent of $0.1 million, partially offset by (e) higher general and administrative costs of $0.5 million.

As of September 30, 2024, 95.7% of the commercial portfolio was leased compared to 94.2% as of September 30, 2023.  As of September 30, 2024, the residential portfolio was 98.8% leased compared to 97.5% as of September 30, 2023.

For the nine months ended September 30, 2024 ("2024 Period"), total revenue increased to $200.9 million from $190.5 million for the nine months ended September 30, 2023 ("2023 Period"). Net income increased to $57.3 million for the 2024 Period from $51.6 million for the 2023 Period.  The increase in net income was primarily due to (a) higher base rent of $5.0 million and (b) higher termination fees of $2.3 million, partially offset by (c) higher general and administrative costs of $1.4 million and (d) lower parking revenue, net of expenses, of $0.4 million. Net income available to common stockholders increased to $34.2 million, or $1.42 per basic and diluted share, for the 2024 Period compared to $31.1 million, or $1.29 per basic and diluted share, for the 2023 Period.

Same property revenue increased $10.4 million, or 5.5%, and same property operating income increased $7.3 million, or 5.2%, for the 2024 Period compared to the 2023 Period. Shopping Center same property operating income increased by $5.6 million to $109.1 million primarily due to (a) higher lease termination fees of $2.8 million and (b) higher base rent of $2.6 million. Mixed-Use same property operating income increased by $1.7 million to $38.6 million primarily due to (a) higher base rent of $2.4 million, partially offset by (b) lower lease termination fees of $0.5 million. No properties were excluded from same property results.

FFO available to common stockholders and noncontrolling interests, after deducting preferred stock dividends, increased to $84.9 million, or $2.46 per basic and diluted share, in the 2024 Period from $79.4 million, or $2.38 and $2.33 per basic and diluted share, respectively, in the 2023 Period. FFO available to common stockholders and noncontrolling interests increased primarily due to (a) higher base rent of $5.0 million and (b) higher lease termination fees of $2.3 million partially offset by (c) higher general and administrative costs of $1.4 million and (d) lower parking revenue, net of expenses, of $0.4 million.

Saul Centers, Inc. is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland, which currently operates and manages a real estate portfolio of 61 properties, which includes (a) 50 community and neighborhood shopping centers and seven mixed-use properties with approximately 9.8 million square feet of leasable area and (b) four non-operating land and development properties. Over 85% of the Saul Centers' property operating income is generated by properties in the metropolitan Washington, D.C./Baltimore area.

Safe Harbor Statement

Certain matters discussed within this press release may be deemed to be forward-looking statements within the meaning of the federal securities laws.  For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.  Although the Company believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained.  These factors include, but are not limited to, the risk factors described in our Annual Report on (i) Form 10-K for the year ended December 31, 2023 and (ii) our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 and include the following: (i) the ability of our tenants to pay rent, (ii) our reliance on shopping center "anchor" tenants and other significant tenants, (iii) our substantial relationships with members of the B. F. Saul Company and certain other affiliated entities, each of which is controlled by B. Francis Saul II and his family members, (iv) risks of financing, such as increases in interest rates, restrictions imposed by our debt, our ability to meet existing financial covenants and our ability to consummate planned and additional financings on acceptable terms, (v) our development activities, (vi) our access to additional capital, (vii) our ability to successfully complete additional acquisitions, developments or redevelopments, or if they are consummated, whether such acquisitions, developments or redevelopments perform as expected, (viii) adverse trends in the retail, office and residential real estate sectors, (ix) risks relating to cybersecurity, including disruption to our business and operations and exposure to liabilities from tenants, employees, capital providers, and other third parties, (x) risks generally incident to the ownership of real property, including adverse changes in economic conditions, changes in the investment climate for real estate, changes in real estate taxes and other operating expenses, adverse changes in governmental rules and fiscal policies, the relative illiquidity of real estate and environmental risks, and (xi) risks related to our status as a REIT for federal income tax purposes, such as the existence of complex regulations relating to our status as a REIT, the effect of future changes to REIT requirements as a result of new legislation and the adverse consequences of the failure to qualify as a REIT.  Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this press release.  Except as may be required by law, we make no promise to update any of the forward-looking statements as a result of new information, future events or otherwise.  You should carefully review the risks and risk factors included in (i) our Annual Report on Form 10-K for the year ended December 31, 2023 and (ii) our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.

Saul Centers, Inc.

Consolidated Balance Sheets

(Unaudited)  (Dollars in thousands, except per share amounts) September 30,
2024  December 31,
2023 Assets  Real estate investments  Land $         501,787  $         511,529 Buildings and equipment 1,608,995  1,595,023 Construction in progress 653,176  514,553 2,763,958  2,621,105 Accumulated depreciation (758,105)  (729,470) Total real estate investments, net 2,005,853  1,891,635 Cash and cash equivalents 7,197  8,407 Accounts receivable and accrued income, net 59,824  56,032 Deferred leasing costs, net 25,474  23,728 Other assets 14,676  14,335 Total assets $      2,113,024  $      1,994,137 Liabilities  Mortgage notes payable, net $      1,027,386  $         935,451 Revolving credit facility payable, net 187,296  274,715 Term loan facility payable, net 99,642  99,530 Construction loans payable, net 178,558  77,305 Accounts payable, accrued expenses and other liabilities 59,211  57,022 Deferred income 28,889  22,748 Dividends and distributions payable 23,358  22,937 Total liabilities 1,604,340  1,489,708 Equity  Preferred stock, 1,000,000 shares authorized:  Series D Cumulative Redeemable, 30,000 shares issued and outstanding 75,000  75,000 Series E Cumulative Redeemable, 44,000 shares issued and outstanding 110,000  110,000 Common stock, $0.01 par value, 50,000,000 and 40,000,000 shares authorized,

respectively, 24,279,719 and 24,082,887 shares issued and outstanding, respectively 241  241 Additional paid-in capital 453,074  449,959 Distributions in excess of accumulated net income (297,498)  (288,825) Accumulated other comprehensive income 1,029  2,014 Total Saul Centers, Inc. equity 341,846  348,389 Noncontrolling interests 166,838  156,040 Total equity 508,684  504,429 Total liabilities and equity $      2,113,024  $      1,994,137

Saul Centers, Inc.

Consolidated Statements of Operations

(Unaudited)  Three Months Ended

September 30,  Nine Months Ended

September 30, (Dollars in  thousands, except per share amounts 2024  2023  2024  2023 Revenue  Rental revenue $           65,550  $           62,369  $         194,544  $         186,199 Other 1,738  1,397  6,379  4,325 Total revenue 67,288  63,766  200,923  190,524 Expenses  Property operating expenses 10,111  9,720  30,312  27,502 Real estate taxes 7,620  7,641  22,852  22,589 Interest expense, net and amortization of deferred debt costs 12,213  12,419  36,928  36,518 Depreciation and amortization of deferred leasing costs 12,072  12,096  36,102  36,227 General and administrative 5,680  5,179  17,565  16,125 Total expenses 47,696  47,055  143,759  138,961 Gain on disposition of property —  —  181  — Net Income 19,592  16,711  57,345  51,563 Noncontrolling interests  Income attributable to noncontrolling interests (5,111)  (3,892)  (14,786)  (12,080) Net income attributable to Saul Centers, Inc. 14,481  12,819  42,559  39,483 Preferred stock dividends (2,798)  (2,798)  (8,395)  (8,395) Net income available to common stockholders $           11,683  $           10,021  $           34,164  $           31,088 Per share net income available to common stockholders  Basic and diluted $                0.48  $                0.42  $                1.42  $                1.29

Reconciliation of net income to FFO available to common stockholders and

noncontrolling interests (1) Three Months Ended

September 30,  Nine Months Ended

September 30, (Dollars in thousands, except per share amounts) 2024  2023  2024  2023 Net income $           19,592  $           16,711  $           57,345  $           51,563 Subtract:  Gain on disposition of property —  —  (181)  — Add:  Real estate depreciation and amortization 12,072  12,096  36,102  36,227 FFO 31,664  28,807  93,266  87,790 Subtract:  Preferred stock dividends (2,798)  (2,798)  (8,395)  (8,395) FFO available to common stockholders and noncontrolling interests $           28,866  $           26,009  $           84,871  $           79,395 Weighted average shares and units:  Basic 34,560  33,357  34,469  33,341 Diluted (2) 34,582  34,068  34,479  34,049 Basic FFO per share available to common stockholders and noncontrolling interests $                0.84  $                0.78  $                2.46  $                2.38 Diluted FFO per share available to common stockholders and noncontrolling interests $                0.83  $                0.76  $                2.46  $                2.33

(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. (2) Beginning March 5, 2021, fully diluted shares and units includes 1,416,071 limited partnership units that were held in escrow related to the contribution of Twinbrook Quarter. Half of the units held in escrow were released on October 18, 2021. The remaining units held in escrow were released on October 18, 2023.

Reconciliation of revenue to same property revenue (1) Three Months Ended

September 30,  Nine Months Ended

September 30, (Dollars in thousands, except per share amounts) 2024  2023  2024  2023 Total revenue $           67,288  $           63,766  $         200,923  $         190,524 Less: Acquisitions, dispositions and development properties —  —  —  — Total same property revenue $           67,288  $           63,766  $         200,923  $         190,524  Shopping Centers $           46,463  $           44,014  $         140,161  $         132,214 Mixed-Use properties 20,825  19,752  60,762  58,310 Total same property revenue $           67,288  $           63,766  $         200,923  $         190,524  Total Shopping Center revenue $           46,463  $           44,014  $         140,161  $         132,214 Less: Shopping Center acquisitions, dispositions and development properties —  —  —  — Total same Shopping Center revenue $           46,463  $           44,014  $         140,161  $         132,214  Total Mixed-Use property revenue $           20,825  $           19,752  $           60,762  $           58,310 Less: Mixed-Use acquisitions, dispositions and development properties —  —  —  — Total same Mixed-Use property revenue $           20,825  $           19,752  $           60,762  $           58,310

(1) Same property revenue is a non-GAAP financial measure of performance that management believes 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 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.

Mixed-Use same property revenue is composed of the following:  Three Months Ended

September 30,  Nine Months Ended

September 30, (Dollars in thousands) 2024  2023  2024  2023 Office mixed-use properties (1) $           10,596  $              9,805  $           30,411  $           28,806 Residential mixed-use properties (residential activity) (2) 9,047  8,774  26,853  26,043 Residential mixed-use properties (retail activity) (3) 1,182  1,173  3,498  3,461 Total Mixed-Use same property revenue $           20,825  $           19,752  $           60,762  $           58,310

(1) Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square (2) Includes Clarendon South Block, The Waycroft and Park Van Ness (3) Includes The Waycroft and Park Van Ness

Reconciliation of net income to same property operating income (1) Three Months Ended

September 30,  Nine Months Ended

September 30, (Dollars in thousands) 2024  2023  2024  2023 Net income $           19,592  $           16,711  $           57,345  $           51,563 Add: Interest expense, net and amortization of deferred debt costs 12,213  12,419  36,928  36,518 Add: Depreciation and amortization of deferred leasing costs 12,072  12,096  36,102  36,227 Add: General and administrative 5,680  5,179  17,565  16,125 Less: Gain on disposition of property —  —  (181)  — Property operating income 49,557  46,405  147,759  140,433 Less: Acquisitions, dispositions and development properties —  —  —  — Total same property operating income $           49,557  $           46,405  $         147,759  $         140,433  Shopping Centers $           36,362  $           34,069  $         109,143  $         103,547 Mixed-Use properties 13,195  12,336  38,616  36,886 Total same property operating income $           49,557  $           46,405  $         147,759  $         140,433  Shopping Center operating income $           36,362  $           34,069  $         109,143  $         103,547 Less: Shopping Center acquisitions, dispositions and development properties —  —  —  — Total same Shopping Center operating income $           36,362  $           34,069  $         109,143  $         103,547  Mixed-Use property operating income $           13,195  $           12,336  $           38,616  $           36,886 Less: Mixed-Use acquisitions, dispositions and development properties —  —  —  — Total same Mixed-Use property operating income $           13,195  $           12,336  $           38,616  $           36,886

(1) Same property operating income is a non-GAAP financial measure of performance that management believes 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.

Mixed-Use same property operating income is composed of the following:  Three Months Ended

September 30,  Nine Months Ended

September 30, (Dollars in thousands) 2024  2023  2024  2023 Office mixed-use properties (1) $              6,847  $              6,177  $           19,644  $           18,354 Residential mixed-use properties (residential activity) (2) 5,489  5,297  16,412  16,023 Residential mixed-use properties (retail activity) (3) 859  862  2,560  2,509 Total Mixed-Use same property operating income $           13,195  $           12,336  $           38,616  $           36,886

(1) Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square (2) Includes Clarendon South Block, The Waycroft and Park Van Ness (3) Includes The Waycroft and Park Van NessCision

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SOURCE Saul Centers, Inc.

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