Saul Centers, Inc. Reports First Quarter 2024 Earnings
Saul Centers, Inc. reported positive financial results for the first quarter of 2024, with total revenue increasing to $66.7 million and net income rising to $18.3 million. Same property revenue and operating income also saw significant boosts compared to the previous year. The company's Funds from Operations (FFO) increased to $27.5 million, reflecting a strong operating performance. Saul Centers, Inc. maintains high occupancy rates in both commercial and residential portfolios.
Total revenue increased to $66.7 million in the first quarter of 2024.
Net income rose to $18.3 million for the same period, driven by higher commercial and residential base rent.
Same property revenue and operating income saw significant increases compared to the previous year.
Funds from Operations (FFO) increased to $27.5 million, indicating a robust operating performance.
High occupancy rates of 94.6% for the commercial portfolio and 98.7% for the residential portfolio demonstrate strong property leasing.
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Insights
The reported increase in total revenue and net income for Saul Centers, Inc. indicates a positive trend in the company's profitability. The specific growth in commercial and residential base rent suggests that the company's core operations are strengthening, which can be seen as a solid foundation for future financial health.
Furthermore, the disclosed leasing percentages with commercial portfolio at
The performance metrics like same property revenue and operating income providing a
The importance of Saul Centers' strategic focus on the metropolitan Washington, D.C./Baltimore area cannot be overstated. This region's economic stability and growth potential likely contribute to the company's solid performance. Potential investors should view the company's concentration in this geographic area both as an asset and a risk to evaluate, considering the potential impacts of localized economic shifts.
Funds from Operations (FFO), a key metric in evaluating REITs, showed an increase, although the per-share figure experienced a slight decline due to changes in share count or dividends. FFO is a important metric because it provides a clearer picture of the REIT's operating performance by excluding depreciation, which can significantly affect net income. This uptick is a testament to the company's operational efficiency and hints at a potentially well-managed portfolio.
The fact that Saul Centers operates largely in a specific region may be seen as a concentrated investment strategy, which has its pros and cons. While it capitalizes on the strong economic fundamentals of the area, it also exposes the REIT to regional economic fluctuations. Investors should consider the implications of this geographical focus in light of their individual risk tolerance and portfolio diversity objectives.
Same property revenue increased
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 sale of property and (g) the results of properties not in operation for the entirety of the comparable periods.
Funds from operations ("FFO") available to common stockholders and noncontrolling interests (after deducting preferred stock dividends) increased to
As of March 31, 2024,
Saul Centers, Inc. is a self-managed, self-administered equity REIT headquartered in
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 March 31, 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 March 31, 2024.
Saul Centers, Inc. Consolidated Balance Sheets (Unaudited)
| |||
(Dollars in thousands, except per share amounts) | March 31, | December 31, | |
Assets | |||
Real estate investments | |||
Land | $ 511,529 | $ 511,529 | |
Buildings and equipment | 1,599,887 | 1,595,023 | |
Construction in progress | 557,711 | 514,553 | |
2,669,127 | 2,621,105 | ||
Accumulated depreciation | (739,406) | (729,470) | |
Total real estate investments, net | 1,929,721 | 1,891,635 | |
Cash and cash equivalents | 7,079 | 8,407 | |
Accounts receivable and accrued income, net | 53,814 | 56,032 | |
Deferred leasing costs, net | 23,931 | 23,728 | |
Other assets | 15,761 | 14,335 | |
Total assets | $ 2,030,306 | $ 1,994,137 | |
Liabilities | |||
Mortgage notes payable, net | $ 927,256 | $ 935,451 | |
Revolving credit facility payable, net | 272,909 | 274,715 | |
Term loan facility payable, net | 99,568 | 99,530 | |
Construction loans payable, net | 108,917 | 77,305 | |
Accounts payable, accrued expenses and other liabilities | 62,988 | 57,022 | |
Deferred income | 21,610 | 22,748 | |
Dividends and distributions payable | 23,127 | 22,937 | |
Total liabilities | 1,516,375 | 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, | 241 | 241 | |
Additional paid-in capital | 450,781 | 449,959 | |
Distributions in excess of accumulated net income | (292,213) | (288,825) | |
Accumulated other comprehensive income | 3,278 | 2,014 | |
Total Saul Centers, Inc. equity | 347,087 | 348,389 | |
Noncontrolling interests | 166,844 | 156,040 | |
Total equity | 513,931 | 504,429 | |
Total liabilities and equity | $ 2,030,306 | $ 1,994,137 | |
Saul Centers, Inc. Consolidated Statements of Operations (In thousands, except per share amounts) | |||
Three Months Ended March 31, | |||
2024 | 2023 | ||
Revenue | (unaudited) | ||
Rental revenue | $ 65,299 | $ 61,829 | |
Other | 1,393 | 1,220 | |
Total revenue | 66,692 | 63,049 | |
Expenses | |||
Property operating expenses | 10,545 | 8,785 | |
Real estate taxes | 7,623 | 7,495 | |
Interest expense, net and amortization of deferred debt costs | 12,448 | 11,821 | |
Depreciation and amortization of deferred leasing costs | 12,029 | 12,017 | |
General and administrative | 5,784 | 5,268 | |
Total expenses | 48,429 | 45,386 | |
Net Income | 18,263 | 17,663 | |
Noncontrolling interests | |||
Income attributable to noncontrolling interests | (4,633) | (4,161) | |
Net income attributable to Saul Centers, Inc. | 13,630 | 13,502 | |
Preferred stock dividends | (2,798) | (2,798) | |
Net income available to common stockholders | $ 10,832 | $ 10,704 | |
Per share net income available to common stockholders | |||
Basic and diluted | $ 0.45 | $ 0.45 | |
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) | 2024 | 2023 | |
Net income | $ 18,263 | $ 17,663 | |
Add: | |||
Real estate depreciation and amortization | 12,029 | 12,017 | |
FFO | 30,292 | 29,680 | |
Subtract: | |||
Preferred stock dividends | (2,798) | (2,798) | |
FFO available to common stockholders and noncontrolling interests | $ 27,494 | $ 26,882 | |
Weighted average shares and units: | |||
Basic | 34,348 | 33,323 | |
Diluted (2) | 34,352 | 34,031 | |
Basic FFO per share available to common stockholders and noncontrolling interests | $ 0.80 | $ 0.81 | |
Diluted FFO per share available to common stockholders and noncontrolling interests | $ 0.80 | $ 0.79 | |
(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) | ||||
(in thousands) | Three Months Ended March 31, | |||
2024 | 2023 | |||
(unaudited) | ||||
Total revenue | $ 66,692 | $ 63,049 | ||
Less: Acquisitions, dispositions and development properties | — | — | ||
Total same property revenue | $ 66,692 | $ 63,049 | ||
Shopping Centers | $ 46,932 | $ 44,225 | ||
Mixed-Use properties | 19,760 | 18,824 | ||
Total same property revenue | $ 66,692 | $ 63,049 | ||
Total Shopping Center revenue | $ 46,932 | $ 44,225 | ||
Less: Shopping Center acquisitions, dispositions and development properties | — | — | ||
Total same Shopping Center revenue | $ 46,932 | $ 44,225 | ||
Total Mixed-Use property revenue | $ 19,760 | $ 18,824 | ||
Less: Mixed-Use acquisitions, dispositions and development properties | — | — | ||
Total same Mixed-Use property revenue | $ 19,760 | $ 18,824 | ||
(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 March 31, | ||||
(In thousands) | 2024 | 2023 | ||
Office mixed-use properties (1) | $ 9,753 | $ 9,145 | ||
Residential mixed-use properties (residential activity) (2) | 8,838 | 8,532 | ||
Residential mixed-use properties (retail activity) (3) | 1,169 | 1,147 | ||
Total Mixed-Use same property revenue | $ 19,760 | $ 18,824 | ||
(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 March 31, | |||
(In thousands) | 2024 | 2023 | |
(unaudited) | |||
Net income | $ 18,263 | $ 17,663 | |
Add: Interest expense, net and amortization of deferred debt costs | 12,448 | 11,821 | |
Add: Depreciation and amortization of deferred leasing costs | 12,029 | 12,017 | |
Add: General and administrative | 5,784 | 5,268 | |
Property operating income | 48,524 | 46,769 | |
Less: Acquisitions, dispositions and development properties | — | — | |
Total same property operating income | $ 48,524 | $ 46,769 | |
Shopping Centers | $ 35,969 | $ 34,965 | |
Mixed-Use properties | 12,555 | 11,804 | |
Total same property operating income | $ 48,524 | $ 46,769 | |
Shopping Center operating income | $ 35,969 | $ 34,965 | |
Less: Shopping Center acquisitions, dispositions and development properties | — | — | |
Total same Shopping Center operating income | $ 35,969 | $ 34,965 | |
Mixed-Use property operating income | $ 12,555 | $ 11,804 | |
Less: Mixed-Use acquisitions, dispositions and development properties | — | — | |
Total same Mixed-Use property operating income | $ 12,555 | $ 11,804 | |
(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 March 31, | ||||
(In thousands) | 2024 | 2023 | ||
Office mixed-use properties (1) | $ 6,221 | $ 5,708 | ||
Residential mixed-use properties (residential activity) (2) | 5,472 | 5,289 | ||
Residential mixed-use properties (retail activity) (3) | 862 | 807 | ||
Total Mixed-Use same property operating income | $ 12,555 | $ 11,804 | ||
(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 |
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SOURCE Saul Centers, Inc.
FAQ
<p>What were Saul Centers, Inc.'s total revenue and net income for the first quarter of 2024?</p>
In the first quarter of 2024, Saul Centers, Inc. reported total revenue of $66.7 million and net income of $18.3 million.
<p>What is Funds from Operations (FFO) and how did it perform for Saul Centers, Inc. in the first quarter of 2024?</p>
Funds from Operations (FFO) is a non-GAAP earnings measure that increased to $27.5 million for Saul Centers, Inc. in the first quarter of 2024, indicating strong operating performance.
<p>What were the occupancy rates for Saul Centers, Inc.'s commercial and residential portfolios as of March 31, 2024?</p>
As of March 31, 2024, the commercial portfolio had an occupancy rate of 94.6%, while the residential portfolio had an occupancy rate of 98.7%.
