SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED September 30, 2004
COMMISSION FILE NUMBER 1-12254
SAUL CENTERS, INC.
(Exact name of registrant as specified in its charter)
| Maryland | 52-1833074 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
7501 Wisconsin Avenue, Bethesda, Maryland 20814
(Address of principal executive office) (Zip Code)
Registrant’s telephone number, including area code (301) 986-6200
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. YES x NO ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES x NO ¨
Number of shares of common stock, par value $0.01 per share outstanding as of November 1, 2004: 16,387,000
Table of Contents
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Basis of Presentation
In the opinion of management, the accompanying consolidated financial statements reflect all adjustments necessary for the fair presentation of the financial position and results of operations of Saul Centers, Inc. All such adjustments are of a normal recurring nature. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements of Saul Centers, Inc. for the year ended December 31, 2003, which are included in its Annual Report on Form 10-K. The results of operations for interim periods are not necessarily indicative of results to be expected for the year.
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CONSOLIDATED BALANCE SHEETS
| (Dollars in thousands) |
September 30, 2004 (Unaudited) |
December 31, 2003 |
||||||
| Assets |
||||||||
| Real estate investments |
||||||||
| Land |
$ | 109,153 | $ | 82,256 | ||||
| Buildings and equipment |
500,351 | 436,371 | ||||||
| Construction in progress |
57,330 | 33,488 | ||||||
| 666,834 | 552,115 | |||||||
| Accumulated depreciation |
(176,848 | ) | (164,823 | ) | ||||
| 489,986 | 387,292 | |||||||
| Cash and cash equivalents |
21,785 | 45,244 | ||||||
| Accounts receivable and accrued income, net |
18,394 | 14,642 | ||||||
| Leasing costs, net |
18,571 | 15,344 | ||||||
| Prepaid expenses |
3,072 | 3,633 | ||||||
| Deferred debt costs, net |
4,982 | 4,224 | ||||||
| Other assets |
3,339 | 1,237 | ||||||
| Total assets |
$ | 560,129 | $ | 471,616 | ||||
| Liabilities |
||||||||
| Mortgage notes payable |
$ | 429,498 | $ | 357,248 | ||||
| Dividends and distributions payable |
10,371 | 9,454 | ||||||
| Accounts payable, accrued expenses and other liabilities |
16,667 | 7,793 | ||||||
| Deferred income |
4,716 | 4,478 | ||||||
| Total liabilities |
461,252 | 378,973 | ||||||
| Stockholders’ equity |
||||||||
| Series A Cumulative Redeemable Preferred stock, par value $0.01 per share, 1,000,000 shares authorized and 40,000 shares issued and outstanding |
100,000 | 100,000 | ||||||
| Common stock, $0.01 par value, 30,000,000 shares authorized, 16,266,466 and 15,861,234 shares issued and outstanding, respectively |
163 | 159 | ||||||
| Additional paid-in capital |
102,630 | 91,469 | ||||||
| Accumulated deficit |
(103,916 | ) | (98,985 | ) | ||||
| Total stockholders’ equity |
98,877 | 92,643 | ||||||
| Total liabilities and stockholders’ equity |
$ | 560,129 | $ | 471,616 | ||||
The accompanying notes are an integral part of these statements
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CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| (Dollars in thousands, except per share amounts) |
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenue |
||||||||||||||||
| Base rent |
$ | 23,324 | $ | 19,751 | $ | 67,351 | $ | 57,733 | ||||||||
| Expense recoveries |
4,448 | 3,303 | 12,360 | 10,473 | ||||||||||||
| Percentage rent |
440 | 438 | 1,144 | 1,102 | ||||||||||||
| Other |
832 | 1,167 | 2,418 | 2,447 | ||||||||||||
| Total revenue |
29,044 | 24,659 | 83,273 | 71,755 | ||||||||||||
| Operating expenses |
||||||||||||||||
| Property operating expenses |
3,186 | 2,653 | 8,948 | 8,261 | ||||||||||||
| Provision for credit losses |
131 | 26 | 299 | 118 | ||||||||||||
| Real estate taxes |
2,325 | 2,130 | 7,204 | 6,391 | ||||||||||||
| Interest and amortization of deferred debt expense |
7,008 | 6,767 | 19,908 | 20,124 | ||||||||||||
| Depreciation and amortization |
5,511 | 4,549 | 15,496 | 12,876 | ||||||||||||
| General and administrative |
2,090 | 1,499 | 5,967 | 4,395 | ||||||||||||
| Total operating expenses |
20,251 | 17,624 | 57,822 | 52,165 | ||||||||||||
| Operating income before minority interests and gain on sale of property |
8,793 | 7,035 | 25,451 | 19,590 | ||||||||||||
| Non-operating item Gain on sale of property |
572 | — | 572 | — | ||||||||||||
| Income before minority interests |
9,365 | 7,035 | 26,023 | 19,590 | ||||||||||||
| Minority interests |
||||||||||||||||
| Minority share of income |
(1,784 | ) | (1,747 | ) | (4,886 | ) | (4,898 | ) | ||||||||
| Distributions in excess of earnings |
(226 | ) | (276 | ) | (1,191 | ) | (1,165 | ) | ||||||||
| Total minority interests |
(2,010 | ) | (2,023 | ) | (6,077 | ) | (6,063 | ) | ||||||||
| Net income |
7,355 | 5,012 | 19,946 | 13,527 | ||||||||||||
| Preferred dividends |
(2,000 | ) | — | (6,000 | ) | — | ||||||||||
| Net income available to common shareholders |
$ | 5,355 | $ | 5,012 | $ | 13,946 | $ | 13,527 | ||||||||
| Net Income per share |
||||||||||||||||
| Basic |
$ | 0.33 | $ | 0.32 | $ | 0.87 | $ | 0.87 | ||||||||
| Dilutive |
$ | 0.33 | $ | 0.32 | $ | 0.86 | $ | 0.87 | ||||||||
| Distributions declared per common share outstanding |
$ | 0.39 | $ | 0.39 | $ | 1.17 | $ | 1.17 | ||||||||
The accompanying notes are an integral part of these statements
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| (Dollars in thousands, except per share amounts) |
Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total |
||||||||||||
| Stockholders’ equity: |
|||||||||||||||||
| Balance, December 31, 2003 |
$ | 100,000 | $ | 159 | $ | 91,469 | $ | (98,985 | ) | $ | 92,643 | ||||||
| Issuance of 128,235 shares of common stock: |
|||||||||||||||||
| 123,689 shares due to dividend reinvestment plan |
1 | 3,391 | 3,392 | ||||||||||||||
| 4,546 shares due to directors deferred stock plan |
126 | 126 | |||||||||||||||
| Net income |
6,305 | 6,305 | |||||||||||||||
| Distributions payable preferred stock ($50.00 per share) |
(2,000 | ) | (2,000 | ) | |||||||||||||
| Distributions payable common stock ($.39 per share) |
(6,236 | ) | (6,236 | ) | |||||||||||||
| Balance, March 31, 2004 |
100,000 | 160 | 94,986 | (100,916 | ) | 94,230 | |||||||||||
| Issuance of 155,721 shares of common stock: |
|||||||||||||||||
| 140,253 shares due to dividend reinvestment plan |
1 | 3,479 | 3,480 | ||||||||||||||
| 15,468 shares due to employee stock options and directors deferred stock plan |
515 | ||||||||||||||||