Saul Centers, Inc. Reports First Quarter 2018 Earnings

BETHESDA, Md., May 3, 2018

Net income available to common stockholders decreased to $6.9 million ($0.31 per diluted share) for the 2018 Quarter compared to $10.6 million ($0.49 per diluted share) for the 2017 Quarter.

Same property revenue decreased $1.9 million (3.3%) and same property operating income decreased $2.8 million (6.5%) for the 2018 Quarter compared to the 2017 Quarter.  We define same property revenue as total revenue minus the sum of interest income and revenue of properties not in operation for the entirety of the comparable reporting periods.  We define same property operating income as net income plus the sum of interest expense and amortization of deferred debt costs, depreciation and amortization, general and administrative expense, loss on the early extinguishment of debt (if any), predevelopment expense and acquisition related costs, minus the sum of interest income, the change in the fair value of derivatives, gains on property dispositions (if any) and the results of properties which were not in operation for the entirety of the comparable periods.  Shopping Center same property operating income for the 2018 Quarter totaled $31.0 million, a $2.8 million decrease from the 2017 Quarter.  The decrease in Shopping Center same property operating income was primarily due to (a) the impact of the terminations of Safeway at Broadlands and K-Mart at Kentlands ($3.3 million) and (b) higher property operating expenses net of recoveries ($0.2 million), partially offset by (c) higher base rent ($0.6 million).  Mixed-Use same property operating income totaled $10.1 million, unchanged from the prior year.

As of March 31, 2018, 94.1% of the commercial portfolio was leased (not including the residential portfolio), compared to 95.6% at March 31, 2017.  On a same property basis, 94.0% of the commercial portfolio was leased as of March 31, 2018, compared to 95.6% at March 31, 2017.  As of March 31, 2018, the residential portfolio was 95.9% leased compared to 91.8% at March 31, 2017.

Funds from operations ("FFO") available to common stockholders and noncontrolling interests (after deducting preferred stock dividends) was $20.6 million ($0.69 per diluted share) in the 2018 Quarter compared to $25.6 million ($0.87 per diluted share) in the 2017 Quarter.  FFO for the 2018 Quarter decreased primarily due to (a) extinguishment of issuance costs upon redemption of preferred shares ($2.3 million),  (b) the impact of the terminations of Safeway at Broadlands and K-Mart at Kentlands ($3.3 million), and (c) increased preferred stock dividends as a result of the 30-day overlap between sale of $75.0 million of Series D Preferred Stock and redemption of $75.0 million of Series C Preferred Stock ($0.3 million), partially offset by (d) higher base rent ($0.9 million).  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.

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 58 properties which includes (a) 49 community and neighborhood shopping centers and six mixed-use properties with approximately 9.2 million square feet of leasable area and (b) three land and development properties. Over 85% of the Saul Centers' property operating income is generated by properties in the metropolitan Washington, DC/Baltimore area.