|
FORM
|
10-Q
|
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.)
|
|
Title of each class:
|
Name of exchange on which registered:
|
Trading symbol:
|
Common Stock, $0.01 par value
|
New York Stock Exchange
|
BFS
|
6.875% Series C Preferred Stock, $0.01 par value
|
New York Stock Exchange
|
BFS/PRC
|
6.125% Series D Preferred Stock, $0.01 par value
|
New York Stock Exchange
|
BFS/PRD
|
Large accelerated filer
|
|
☒
|
Accelerated filer
|
|
☐
|
|
|
|
|
||
Non-accelerated filer
|
|
☐
|
Smaller reporting company
|
|
☐
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
|
☐
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Page
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share amounts)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
Real estate investments
|
|
|
|
||||
Land
|
$
|
488,942
|
|
|
$
|
488,918
|
|
Buildings and equipment
|
1,280,397
|
|
|
1,273,275
|
|
||
Construction in progress
|
249,719
|
|
|
185,972
|
|
||
|
2,019,058
|
|
|
1,948,165
|
|
||
Accumulated depreciation
|
(544,811
|
)
|
|
(525,518
|
)
|
||
|
1,474,247
|
|
|
1,422,647
|
|
||
Cash and cash equivalents
|
9,262
|
|
|
14,578
|
|
||
Accounts receivable and accrued income, net
|
51,602
|
|
|
53,876
|
|
||
Deferred leasing costs, net
|
25,525
|
|
|
28,083
|
|
||
Prepaid expenses, net
|
1,806
|
|
|
5,175
|
|
||
Other assets
|
6,720
|
|
|
3,130
|
|
||
Total assets
|
$
|
1,569,162
|
|
|
$
|
1,527,489
|
|
Liabilities
|
|
|
|
||||
Notes payable
|
$
|
853,627
|
|
|
$
|
880,271
|
|
Term loan facility payable
|
74,641
|
|
|
74,591
|
|
||
Revolving credit facility payable
|
46,600
|
|
|
45,329
|
|
||
Construction loan payable
|
70,436
|
|
|
21,655
|
|
||
Dividends and distributions payable
|
19,313
|
|
|
19,153
|
|
||
Accounts payable, accrued expenses and other liabilities
|
42,287
|
|
|
32,419
|
|
||
Deferred income
|
25,649
|
|
|
28,851
|
|
||
Total liabilities
|
1,132,553
|
|
|
1,102,269
|
|
||
Equity
|
|
|
|
||||
Preferred stock, 1,000,000 shares authorized:
|
|
|
|
||||
Series C Cumulative Redeemable, 42,000 shares issued and outstanding
|
105,000
|
|
|
105,000
|
|
||
Series D Cumulative Redeemable, 30,000 shares issued and outstanding
|
75,000
|
|
|
75,000
|
|
||
Common stock, $0.01 par value, 40,000,000 shares authorized, 23,008,615 and 22,739,207 shares issued and outstanding, respectively
|
230
|
|
|
227
|
|
||
Additional paid-in capital
|
399,047
|
|
|
384,533
|
|
||
Distributions in excess of accumulated earnings
|
(212,109
|
)
|
|
(208,593
|
)
|
||
Accumulated other comprehensive loss
|
(384
|
)
|
|
(255
|
)
|
||
Total Saul Centers, Inc. equity
|
366,784
|
|
|
355,912
|
|
||
Noncontrolling interest
|
69,825
|
|
|
69,308
|
|
||
Total equity
|
436,609
|
|
|
425,220
|
|
||
Total liabilities and equity
|
$
|
1,569,162
|
|
|
$
|
1,527,489
|
|
(Dollars in thousands, except per share amounts)
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
Rental revenue
|
$
|
55,953
|
|
|
$
|
54,970
|
|
|
$
|
112,756
|
|
|
$
|
109,960
|
|
Other
|
2,188
|
|
|
1,111
|
|
|
5,135
|
|
|
2,230
|
|
||||
Total revenue
|
58,141
|
|
|
56,081
|
|
|
117,891
|
|
|
112,190
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Property operating expenses
|
7,115
|
|
|
6,732
|
|
|
15,116
|
|
|
13,856
|
|
||||
Real estate taxes
|
6,819
|
|
|
6,778
|
|
|
13,967
|
|
|
13,622
|
|
||||
Interest expense, net and amortization of deferred debt costs
|
10,793
|
|
|
11,168
|
|
|
21,860
|
|
|
22,594
|
|
||||
Depreciation and amortization of deferred leasing costs
|
11,524
|
|
|
11,351
|
|
|
23,167
|
|
|
22,700
|
|
||||
General and administrative
|
5,140
|
|
|
4,647
|
|
|
9,954
|
|
|
9,068
|
|
||||
Total expenses
|
41,391
|
|
|
40,676
|
|
|
84,064
|
|
|
81,840
|
|
||||
Change in fair value of derivatives
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
||||
Gain on sale of property
|
—
|
|
|
509
|
|
|
—
|
|
|
509
|
|
||||
Net Income
|
16,750
|
|
|
15,902
|
|
|
33,827
|
|
|
30,847
|
|
||||
Noncontrolling interests
|
|
|
|
|
|
|
|
||||||||
Income attributable to noncontrolling interests
|
(3,518
|
)
|
|
(3,359
|
)
|
|
(7,148
|
)
|
|
(5,718
|
)
|
||||
Net income attributable to Saul Centers, Inc.
|
13,232
|
|
|
12,543
|
|
|
26,679
|
|
|
25,129
|
|
||||
Extinguishment of issuance costs upon redemption of preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,328
|
)
|
||||
Preferred stock dividends
|
(2,953
|
)
|
|
(2,953
|
)
|
|
(5,906
|
)
|
|
(6,356
|
)
|
||||
Net income available to common stockholders
|
$
|
10,279
|
|
|
$
|
9,590
|
|
|
$
|
20,773
|
|
|
$
|
16,445
|
|
Per share net income available to common stockholders
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
0.45
|
|
|
$
|
0.43
|
|
|
$
|
0.91
|
|
|
$
|
0.74
|
|
Dividends declared per common share outstanding
|
$
|
0.53
|
|
|
$
|
0.52
|
|
|
$
|
1.06
|
|
|
$
|
1.04
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Dollars in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
16,750
|
|
|
$
|
15,902
|
|
|
$
|
33,827
|
|
|
$
|
30,847
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
||||||||
Change in unrealized loss on cash flow hedge
|
(127
|
)
|
|
165
|
|
|
(173
|
)
|
|
554
|
|
||||
Total comprehensive income
|
16,623
|
|
|
16,067
|
|
|
33,654
|
|
|
31,401
|
|
||||
Comprehensive income attributable to noncontrolling interests
|
(3,473
|
)
|
|
(3,402
|
)
|
|
(7,103
|
)
|
|
(5,861
|
)
|
||||
Total comprehensive income attributable to Saul Centers, Inc.
|
13,150
|
|
|
12,665
|
|
|
26,551
|
|
|
25,540
|
|
||||
Extinguishment of issuance costs upon redemption of preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,328
|
)
|
||||
Preferred stock dividends
|
(2,953
|
)
|
|
(2,953
|
)
|
|
(5,906
|
)
|
|
(6,356
|
)
|
||||
Total comprehensive income available to common stockholders
|
$
|
10,197
|
|
|
$
|
9,712
|
|
|
$
|
20,645
|
|
|
$
|
16,856
|
|
(Dollars in thousands, except per share amounts)
|
Preferred
Stock
|
|
Common
Stock
|
|
Additional Paid-in
Capital
|
|
Distributions in Excess of Accumulated Earnings
|
|
Accumulated
Other Comprehensive
(Loss)
|
|
Total Saul
Centers, Inc.
|
|
Noncontrolling
Interest
|
|
Total
|
||||||||||||||||
Balance, January 1, 2019
|
$
|
180,000
|
|
|
$
|
227
|
|
|
$
|
384,533
|
|
|
$
|
(208,593
|
)
|
|
$
|
(255
|
)
|
|
$
|
355,912
|
|
|
$
|
69,308
|
|
|
$
|
425,220
|
|
Issuance of 120,832 shares of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
120,347 shares pursuant to dividend reinvestment plan
|
—
|
|
|
1
|
|
|
6,170
|
|
|
—
|
|
|
—
|
|
|
6,171
|
|
|
—
|
|
|
6,171
|
|
||||||||
485 shares due to exercise of stock options and issuance of directors’ deferred stock
|
—
|
|
|
1
|
|
|
419
|
|
|
—
|
|
|
—
|
|
|
420
|
|
|
—
|
|
|
420
|
|
||||||||
Issuance of 13,742 partnership units pursuant to dividend reinvestment plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
705
|
|
|
705
|
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
13,447
|
|
|
—
|
|
|
13,447
|
|
|
3,630
|
|
|
17,077
|
|
||||||||
Change in unrealized loss on cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
(34
|
)
|
|
(12
|
)
|
|
(46
|
)
|
||||||||
Distributions payable preferred stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Series C, $42.97 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,805
|
)
|
|
—
|
|
|
(1,805
|
)
|
|
—
|
|
|
(1,805
|
)
|
||||||||
Series D, $38.28 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,148
|
)
|
|
—
|
|
|
(1,148
|
)
|
|
—
|
|
|
(1,148
|
)
|
||||||||
Distributions payable common stock ($0.53/share) and distributions payable partnership units ($0.53/unit)
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,108
|
)
|
|
—
|
|
|
(12,108
|
)
|
|
(4,155
|
)
|
|
(16,263
|
)
|
||||||||
Balance, March 31, 2019
|
180,000
|
|
|
229
|
|
|
391,122
|
|
|
(210,207
|
)
|
|
(289
|
)
|
|
360,855
|
|
|
69,476
|
|
|
430,331
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Issuance of 148,576 shares of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
99,804 shares pursuant to dividend reinvestment plan
|
—
|
|
|
1
|
|
|
5,127
|
|
|
—
|
|
|
—
|
|
|
5,128
|
|
|
—
|
|
|
5,128
|
|
||||||||
48,772 shares due to exercise of stock options and issuance of directors’ deferred stock
|
—
|
|
|
—
|
|
|
2,798
|
|
|
—
|
|
|
—
|
|
|
2,798
|
|
|
—
|
|
|
2,798
|
|
||||||||
Issuance of 20,041 partnership units pursuant to dividend reinvestment plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,029
|
|
|
1,029
|
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
13,232
|
|
|
—
|
|
|
13,232
|
|
|
3,518
|
|
|
16,750
|
|
||||||||
Change in unrealized loss on cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
(95
|
)
|
|
(32
|
)
|
|
(127
|
)
|
||||||||
Distributions payable preferred stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Series C, $42.97 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,805
|
)
|
|
—
|
|
|
(1,805
|
)
|
|
—
|
|
|
(1,805
|
)
|
||||||||
Series D, $38.28 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,148
|
)
|
|
—
|
|
|
(1,148
|
)
|
|
—
|
|
|
(1,148
|
)
|
||||||||
Distributions payable common stock ($0.53/share) and distributions payable partnership units ($0.53/unit)
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,181
|
)
|
|
—
|
|
|
(12,181
|
)
|
|
(4,166
|
)
|
|
(16,347
|
)
|
||||||||
Balance, June 30, 2019
|
$
|
180,000
|
|
|
$
|
230
|
|
|
$
|
399,047
|
|
|
$
|
(212,109
|
)
|
|
$
|
(384
|
)
|
|
366,784
|
|
|
$
|
69,825
|
|
|
$
|
436,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share amounts)
|
Preferred
Stock |
|
Common
Stock |
|
Additional Paid-in
Capital |
|
Distributions in Excess of Accumulated Earnings
|
|
Accumulated
Other Comprehensive (Loss) |
|
Total Saul
Centers, Inc. |
|
Noncontrolling
Interest |
|
Total
|
||||||||||||||||
Balance, January 1, 2018
|
$
|
180,000
|
|
|
$
|
221
|
|
|
$
|
352,590
|
|
|
$
|
(197,710
|
)
|
|
$
|
(696
|
)
|
|
$
|
334,405
|
|
|
$
|
58,698
|
|
|
$
|
393,103
|
|
Issuance of 30,000 shares of Series D Cumulative preferred stock
|
75,000
|
|
|
—
|
|
|
(2,631
|
)
|
|
—
|
|
|
—
|
|
|
72,369
|
|
|
—
|
|
|
72,369
|
|
||||||||
Partial redemption of 30,000 shares of Series C Cumulative preferred stock
|
(75,000
|
)
|
|
—
|
|
|
2,311
|
|
|
(2,328
|
)
|
|
—
|
|
|
(75,017
|
)
|
|
—
|
|
|
(75,017
|
)
|
||||||||
Issuance of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
69,750 shares pursuant to dividend reinvestment plan
|
—
|
|
|
1
|
|
|
3,676
|
|
|
—
|
|
|
—
|
|
|
3,677
|
|
|
—
|
|
|
3,677
|
|
||||||||
8,088 shares due to exercise of employee stock options and issuance of directors’ deferred shares
|
—
|
|
|
—
|
|
|
769
|
|
|
—
|
|
|
—
|
|
|
769
|
|
|
—
|
|
|
769
|
|
||||||||
Issuance of 38,037 partnership units pursuant to dividend reinvestment plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,017
|
|
|
2,017
|
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
12,588
|
|
|
—
|
|
|
12,588
|
|
|
2,359
|
|
|
14,947
|
|
||||||||
Change in unrealized loss on cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
289
|
|
|
289
|
|
|
100
|
|
|
389
|
|
||||||||
Preferred stock distributions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Series C
|
—
|
|
|
—
|
|
|
—
|
|
|
(730
|
)
|
|
—
|
|
|
(730
|
)
|
|
—
|
|
|
(730
|
)
|
||||||||
Distributions payable preferred stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Series C, $42.97 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,805
|
)
|
|
—
|
|
|
(1,805
|
)
|
|
—
|
|
|
(1,805
|
)
|
||||||||
Series D, $28.92 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(868
|
)
|
|
—
|
|
|
(868
|
)
|
|
—
|
|
|
(868
|
)
|
||||||||
Distributions payable common stock ($0.52/share) and distributions payable partnership units ($0.52/unit)
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,552
|
)
|
|
—
|
|
|
(11,552
|
)
|
|
(3,942
|
)
|
|
(15,494
|
)
|
||||||||
Balance, March 31, 2018
|
180,000
|
|
|
222
|
|
|
356,715
|
|
|
(202,405
|
)
|
|
(407
|
)
|
|
334,125
|
|
|
59,232
|
|
|
393,357
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Issuance of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
85,202 shares pursuant to dividend reinvestment plan
|
—
|
|
|
1
|
|
|
4,050
|
|
|
—
|
|
|
—
|
|
|
4,051
|
|
|
—
|
|
|
4,051
|
|
||||||||
2,647 shares due to exercise of stock options and issuance of directors’ deferred stock
|
—
|
|
|
—
|
|
|
648
|
|
|
—
|
|
|
—
|
|
|
648
|
|
|
—
|
|
|
648
|
|
||||||||
Issuance of 219,102 partnership units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,805
|
|
|
10,805
|
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
12,543
|
|
|
—
|
|
|
12,543
|
|
|
3,359
|
|
|
15,902
|
|
||||||||
Change in unrealized loss on cash flow hedge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
122
|
|
|
122
|
|
|
43
|
|
|
165
|
|
||||||||
Distributions payable preferred stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Series C, $42.97 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,805
|
)
|
|
—
|
|
|
(1,805
|
)
|
|
—
|
|
|
(1,805
|
)
|
||||||||
Series D, $38.28 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,148
|
)
|
|
—
|
|
|
(1,148
|
)
|
|
—
|
|
|
(1,148
|
)
|
||||||||
Distributions payable common stock ($0.52/share) and distributions payable partnership units ($0.52/unit)
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,589
|
)
|
|
—
|
|
|
(11,589
|
)
|
|
(4,055
|
)
|
|
(15,644
|
)
|
||||||||
Balance, June 30, 2018
|
$
|
180,000
|
|
|
$
|
223
|
|
|
$
|
361,413
|
|
|
$
|
(204,404
|
)
|
|
$
|
(285
|
)
|
|
$
|
336,947
|
|
|
$
|
69,384
|
|
|
$
|
406,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
(Unaudited)
|
|||||||
|
Six months ended June 30,
|
||||||
(Dollars in thousands)
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
33,827
|
|
|
$
|
30,847
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Change in fair value of derivatives
|
—
|
|
|
12
|
|
||
Gain on sale of property
|
—
|
|
|
(509
|
)
|
||
Depreciation and amortization of deferred leasing costs
|
23,167
|
|
|
22,700
|
|
||
Amortization of deferred debt costs
|
760
|
|
|
847
|
|
||
Compensation costs of stock grants and options
|
1,142
|
|
|
1,097
|
|
||
Credit losses on operating lease receivables
|
556
|
|
|
429
|
|
||
Decrease in accounts receivable and accrued income
|
1,718
|
|
|
2,994
|
|
||
Additions to deferred leasing costs
|
(581
|
)
|
|
(2,790
|
)
|
||
Decrease in prepaid expenses
|
3,369
|
|
|
3,579
|
|
||
Increase in other assets
|
(3,590
|
)
|
|
(4,536
|
)
|
||
Increase in accounts payable, accrued expenses and other liabilities
|
6,666
|
|
|
2,511
|
|
||
Decrease in deferred income
|
(3,202
|
)
|
|
(3,490
|
)
|
||
Net cash provided by operating activities
|
63,832
|
|
|
53,691
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Acquisitions of real estate investments (1)
|
(24
|
)
|
|
(162
|
)
|
||
Additions to real estate investments
|
(7,857
|
)
|
|
(2,911
|
)
|
||
Additions to development and redevelopment projects
|
(60,718
|
)
|
|
(35,246
|
)
|
||
Repayment of note receivable
|
—
|
|
|
1,326
|
|
||
Net cash used in investing activities
|
(68,599
|
)
|
|
(36,993
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from notes payable
|
22,100
|
|
|
—
|
|
||
Repayments on notes payable
|
(48,715
|
)
|
|
(29,001
|
)
|
||
Proceeds from term loan facility
|
—
|
|
|
75,000
|
|
||
Proceeds from revolving credit facility
|
36,000
|
|
|
50,000
|
|
||
Repayments on revolving credit facility
|
(35,000
|
)
|
|
(86,000
|
)
|
||
Proceeds from construction loan
|
48,731
|
|
|
—
|
|
||
Additions to deferred debt costs
|
(420
|
)
|
|
(3,212
|
)
|
||
Proceeds from the issuance of:
|
|
|
|
||||
Common stock
|
13,375
|
|
|
8,048
|
|
||
Partnership units (1)
|
1,734
|
|
|
4,046
|
|
||
Series D preferred stock
|
—
|
|
|
72,369
|
|
||
Series C preferred stock redemption payment
|
—
|
|
|
(75,000
|
)
|
||
Preferred stock redemption costs
|
—
|
|
|
(13
|
)
|
||
Distributions to:
|
|
|
|
||||
Series C preferred stockholders
|
(3,610
|
)
|
|
(5,628
|
)
|
||
Series D preferred stockholders
|
(2,296
|
)
|
|
(868
|
)
|
||
Common stockholders
|
(24,145
|
)
|
|
(23,058
|
)
|
||
Noncontrolling interests
|
(8,303
|
)
|
|
(7,864
|
)
|
||
Net cash used in financing activities
|
(549
|
)
|
|
(21,181
|
)
|
||
Net decrease in cash and cash equivalents
|
(5,316
|
)
|
|
(4,483
|
)
|
||
Cash and cash equivalents, beginning of period
|
14,578
|
|
|
10,908
|
|
||
Cash and cash equivalents, end of period
|
$
|
9,262
|
|
|
$
|
6,425
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
21,186
|
|
|
$
|
22,145
|
|
Increase in accrued real estate investments and development costs
|
$
|
3,029
|
|
|
$
|
3,987
|
|
|
1.
|
Organization, Basis of Presentation
|
2.
|
Summary of Significant Accounting Policies
|
3.
|
Real Estate
|
(in thousands)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Glebe Road
|
|
$
|
215,554
|
|
|
$
|
162,176
|
|
Ashbrook Marketplace
|
|
18,272
|
|
|
11,124
|
|
||
Other
|
|
15,893
|
|
|
12,672
|
|
||
Total
|
|
$
|
249,719
|
|
|
$
|
185,972
|
|
(in thousands)
|
Ashbrook Marketplace
|
|
7316 Wisconsin Avenue
|
|
Total
|
||||||
Land
|
$
|
8,776
|
|
|
$
|
38,686
|
|
|
$
|
47,462
|
|
Buildings
|
—
|
|
|
979
|
|
|
979
|
|
|||
In-place Leases
|
—
|
|
|
886
|
|
|
886
|
|
|||
Above Market Rent
|
—
|
|
|
168
|
|
|
168
|
|
|||
Below Market Rent
|
—
|
|
|
(21
|
)
|
|
(21
|
)
|
|||
Total Purchase Price
|
$
|
8,776
|
|
|
$
|
40,698
|
|
|
$
|
49,474
|
|
|
|
|
|
|
|
4.
|
Noncontrolling Interests - Holders of Convertible Limited Partnership Units in the Operating Partnership
|
5.
|
Notes Payable, Revolving Credit Facility, Interest and Amortization of Deferred Debt Costs
|
(In thousands)
|
Balloon
Payments
|
|
Scheduled
Principal
Amortization
|
|
Total
|
||||||
July 1 through December 31, 2019
|
$
|
—
|
|
|
$
|
14,675
|
|
|
$
|
14,675
|
|
2020
|
61,163
|
|
|
28,537
|
|
|
89,700
|
|
|||
2021
|
11,012
|
|
|
28,334
|
|
|
39,346
|
|
|||
2022
|
84,502
|
|
(a)
|
28,925
|
|
|
113,427
|
|
|||
2023
|
84,225
|
|
|
29,315
|
|
|
113,540
|
|
|||
2024
|
66,640
|
|
|
27,894
|
|
|
94,534
|
|
|||
Thereafter
|
474,181
|
|
|
115,902
|
|
|
590,083
|
|
|||
Principal amount
|
$
|
781,723
|
|
|
$
|
273,582
|
|
|
1,055,305
|
|
|
Unamortized deferred debt costs
|
|
|
|
|
10,001
|
|
|||||
Net
|
|
|
|
|
$
|
1,045,304
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest incurred
|
$
|
12,988
|
|
|
$
|
12,302
|
|
|
$
|
25,868
|
|
|
$
|
24,503
|
|
Amortization of deferred debt costs
|
375
|
|
|
377
|
|
|
760
|
|
|
847
|
|
||||
Capitalized interest
|
(2,522
|
)
|
|
(1,442
|
)
|
|
(4,668
|
)
|
|
(2,586
|
)
|
||||
Interest expense
|
10,841
|
|
|
11,237
|
|
|
21,960
|
|
|
22,764
|
|
||||
Less: Interest income
|
48
|
|
|
69
|
|
|
100
|
|
|
170
|
|
||||
Interest expense, net and amortization of deferred debt costs
|
$
|
10,793
|
|
|
$
|
11,168
|
|
|
$
|
21,860
|
|
|
$
|
22,594
|
|
6.
|
Equity
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
||||||||
(In thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
||||
Weighted average common stock outstanding-Basic
|
22,939
|
|
|
22,260
|
|
|
22,879
|
|
|
22,219
|
|
|
Effect of dilutive options
|
55
|
|
|
28
|
|
|
50
|
|
|
34
|
|
|
Weighted average common stock outstanding-Diluted
|
22,994
|
|
|
22,288
|
|
|
22,929
|
|
|
22,253
|
|
|
Non-dilutive options
|
698
|
|
|
635
|
|
|
568
|
|
|
541
|
|
|
Years non-dilutive options were issued
|
2016, 2017 and 2019
|
|
2015, 2016 and 2017
|
|
2016, 2017 and 2019
|
|
2015, 2016 and 2017
|
|
7.
|
Related Party Transactions
|
8.
|
Stock-based Employee Compensation, Stock Option Plans, and Deferred Compensation Plan for Directors
|
|
Directors
|
|
Officers
|
||||||||||
Grant date
|
May 11, 2018
|
May 3, 2019
|
|
May 11, 2018
|
May 3, 2019
|
||||||||
Exercise price
|
$
|
49.46
|
|
$
|
55.71
|
|
|
$
|
49.46
|
|
$
|
55.71
|
|
Volatility
|
0.192
|
|
0.236
|
|
|
0.177
|
|
0.206
|
|
||||
Expected life (years)
|
5.0
|
|
5.0
|
|
|
7.0
|
|
7.0
|
|
||||
Assumed yield
|
3.70
|
%
|
3.75
|
%
|
|
3.75
|
%
|
3.80
|
%
|
||||
Risk-free rate
|
2.84
|
%
|
2.33
|
%
|
|
2.94
|
%
|
2.43
|
%
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise Price
per share
|
|
Aggregate
Intrinsic Value
|
|||||
Outstanding at January 1
|
|
1,114,169
|
|
|
$
|
52.40
|
|
|
$
|
543,662
|
|
Granted
|
|
260,000
|
|
|
55.71
|
|
|
—
|
|
||
Exercised
|
|
(46,055
|
)
|
|
45.07
|
|
|
503,262
|
|
||
Expired/Forfeited
|
|
(7,500
|
)
|
|
56.07
|
|
|
—
|
|
||
Outstanding at June 30
|
|
1,320,614
|
|
|
53.29
|
|
|
4,728,314
|
|
||
Exercisable at June 30
|
|
774,614
|
|
|
52.28
|
|
|
3,640,270
|
|
9.
|
Fair Value of Financial Instruments
|
10.
|
Commitments and Contingencies
|
11.
|
Business Segments
|
(In thousands)
|
Shopping
Centers
|
|
Mixed-Use
Properties
|
|
Corporate
and Other
|
|
Consolidated
Totals
|
||||||||
Three months ended June 30, 2019
|
|
|
|
|
|
|
|
||||||||
Real estate rental operations:
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
42,259
|
|
|
$
|
15,882
|
|
|
$
|
—
|
|
|
$
|
58,141
|
|
Expenses
|
(8,552
|
)
|
|
(5,382
|
)
|
|
—
|
|
|
(13,934
|
)
|
||||
Income from real estate
|
33,707
|
|
|
10,500
|
|
|
—
|
|
|
44,207
|
|
||||
Interest expense, net and amortization of deferred debt costs
|
—
|
|
|
—
|
|
|
(10,793
|
)
|
|
(10,793
|
)
|
||||
Depreciation and amortization of deferred leasing costs
|
(7,375
|
)
|
|
(4,149
|
)
|
|
—
|
|
|
(11,524
|
)
|
||||
General and administrative
|
—
|
|
|
—
|
|
|
(5,140
|
)
|
|
(5,140
|
)
|
||||
Net income (loss)
|
$
|
26,332
|
|
|
$
|
6,351
|
|
|
$
|
(15,933
|
)
|
|
$
|
16,750
|
|
Capital investment
|
$
|
8,967
|
|
|
$
|
36,209
|
|
|
$
|
—
|
|
|
$
|
45,176
|
|
Total assets
|
$
|
970,028
|
|
|
$
|
590,294
|
|
|
$
|
8,840
|
|
|
$
|
1,569,162
|
|
|
|
|
|
|
|
|
|
||||||||
Three months ended June 30, 2018
|
|
|
|
|
|
|
|
||||||||
Real estate rental operations:
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
40,755
|
|
|
$
|
15,326
|
|
|
$
|
—
|
|
|
$
|
56,081
|
|
Expenses
|
(8,481
|
)
|
|
(5,029
|
)
|
|
—
|
|
|
(13,510
|
)
|
||||
Income from real estate
|
32,274
|
|
|
10,297
|
|
|
—
|
|
|
42,571
|
|
||||
Interest expense, net and amortization of deferred debt costs
|
—
|
|
|
—
|
|
|
(11,168
|
)
|
|
(11,168
|
)
|
||||
Depreciation and amortization of deferred leasing costs
|
(7,333
|
)
|
|
(4,018
|
)
|
|
—
|
|
|
(11,351
|
)
|
||||
General and administrative
|
—
|
|
|
—
|
|
|
(4,647
|
)
|
|
(4,647
|
)
|
||||
Change in fair value of derivatives
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
||||
Gain on sale of property
|
509
|
|
|
—
|
|
|
—
|
|
|
509
|
|
||||
Net income (loss)
|
$
|
25,450
|
|
|
$
|
6,279
|
|
|
$
|
(15,827
|
)
|
|
$
|
15,902
|
|
Capital investment
|
$
|
3,883
|
|
|
$
|
16,387
|
|
|
$
|
—
|
|
|
$
|
20,270
|
|
Total assets
|
$
|
804,939
|
|
|
$
|
464,534
|
|
|
$
|
177,009
|
|
|
$
|
1,446,482
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
Shopping
Centers |
|
Mixed-Use
Properties |
|
Corporate
and Other |
|
Consolidated
Totals |
||||||||
Six months ended June 30, 2019
|
|
|
|
|
|
|
|
||||||||
Real estate rental operations:
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
85,417
|
|
|
$
|
32,474
|
|
|
$
|
—
|
|
|
$
|
117,891
|
|
Expenses
|
(18,240
|
)
|
|
(10,843
|
)
|
|
—
|
|
|
(29,083
|
)
|
||||
Income from real estate
|
67,177
|
|
|
21,631
|
|
|
—
|
|
|
88,808
|
|
||||
Interest expense, net and amortization of deferred debt costs
|
—
|
|
|
—
|
|
|
(21,860
|
)
|
|
(21,860
|
)
|
||||
Depreciation and amortization of deferred leasing costs
|
(14,657
|
)
|
|
(8,510
|
)
|
|
—
|
|
|
(23,167
|
)
|
||||
General and administrative
|
—
|
|
|
—
|
|
|
(9,954
|
)
|
|
(9,954
|
)
|
||||
Net income (loss)
|
$
|
52,520
|
|
|
$
|
13,121
|
|
|
$
|
(31,814
|
)
|
|
$
|
33,827
|
|
Capital investment
|
$
|
13,580
|
|
|
$
|
55,019
|
|
|
$
|
—
|
|
|
$
|
68,599
|
|
Total assets
|
$
|
970,028
|
|
|
$
|
590,294
|
|
|
$
|
8,840
|
|
|
$
|
1,569,162
|
|
|
|
|
|
|
|
|
|
||||||||
Six months ended June 30, 2018
|
|
|
|
|
|
|
|
||||||||
Real estate rental operations:
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
81,679
|
|
|
$
|
30,511
|
|
|
$
|
—
|
|
|
$
|
112,190
|
|
Expenses
|
(17,357
|
)
|
|
(10,121
|
)
|
|
—
|
|
|
(27,478
|
)
|
||||
Income from real estate
|
64,322
|
|
|
20,390
|
|
|
—
|
|
|
84,712
|
|
||||
Interest expense, net and amortization of deferred debt costs
|
—
|
|
|
—
|
|
|
(22,594
|
)
|
|
(22,594
|
)
|
||||
Depreciation and amortization of deferred leasing costs
|
(14,631
|
)
|
|
(8,069
|
)
|
|
—
|
|
|
(22,700
|
)
|
||||
General and administrative
|
—
|
|
|
—
|
|
|
(9,068
|
)
|
|
(9,068
|
)
|
||||
Change in fair value of derivatives
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
||||
Gain on sale of property
|
509
|
|
|
—
|
|
|
—
|
|
|
509
|
|
||||
Net income (loss)
|
$
|
50,200
|
|
|
$
|
12,321
|
|
|
$
|
(31,674
|
)
|
|
$
|
30,847
|
|
Capital investment
|
$
|
7,143
|
|
|
$
|
29,850
|
|
|
$
|
—
|
|
|
$
|
36,993
|
|
Total assets
|
$
|
804,939
|
|
|
$
|
464,534
|
|
|
$
|
177,009
|
|
|
$
|
1,446,482
|
|
|
|
|
|
|
|
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
continuing risks related to the challenging domestic and global credit markets and their effect on discretionary spending;
|
•
|
risks that the Company’s tenants will not pay rent;
|
•
|
risks related to the Company’s reliance on shopping center “anchor” tenants and other significant tenants;
|
•
|
risks related to the Company’s substantial relationships with members of the Saul Organization;
|
•
|
risks of financing, such as increases in interest rates, restrictions imposed by the Company’s debt, the Company’s ability to meet existing financial covenants and the Company’s ability to consummate planned and additional financings on acceptable terms;
|
•
|
risks related to the Company’s development activities;
|
•
|
risks that the Company’s growth will be limited if the Company cannot obtain additional capital;
|
•
|
risks that planned and additional acquisitions or redevelopments may not be consummated, or if they are consummated, that they will not perform as expected;
|
•
|
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;
|
•
|
risks related to the Company’s status as a REIT for federal income tax purposes, such as the existence of complex regulations relating to the Company’s status as a REIT, the effect of future changes in REIT requirements as a result of new legislation and the adverse consequences of the failure to qualify as a REIT; and
|
•
|
such other risks as described in Part I, Item 1A of the Company’s Form 10-K for the year ended December 31, 2018.
|
|
|
Six months ended June 30,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Base rent
|
|
$
|
20.18
|
|
|
$
|
20.27
|
|
|
$
|
19.19
|
|
|
$
|
18.68
|
|
|
$
|
18.38
|
|
Effective rent
|
|
$
|
18.28
|
|
|
$
|
18.35
|
|
|
$
|
17.37
|
|
|
$
|
16.87
|
|
|
$
|
16.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
2018 to 2019 Change
|
|||||||||||
(Dollars in thousands)
|
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
|||||||
Base rent
|
|
$
|
46,874
|
|
|
$
|
45,943
|
|
|
$
|
931
|
|
|
2.0
|
%
|
Expense recoveries
|
|
8,677
|
|
|
8,601
|
|
|
76
|
|
|
0.9
|
%
|
|||
Percentage rent
|
|
330
|
|
|
249
|
|
|
81
|
|
|
32.5
|
%
|
|||
Other property revenue
|
|
390
|
|
|
320
|
|
|
70
|
|
|
21.9
|
%
|
|||
Credit losses on operating lease receivables
|
|
(318
|
)
|
|
(143
|
)
|
|
(175
|
)
|
|
122.4
|
%
|
|||
Rental revenue
|
|
55,953
|
|
|
54,970
|
|
|
983
|
|
|
1.8
|
%
|
|||
Other revenue
|
|
2,188
|
|
|
1,111
|
|
|
1,077
|
|
|
96.9
|
%
|
|||
Total revenue
|
|
$
|
58,141
|
|
|
$
|
56,081
|
|
|
$
|
2,060
|
|
|
3.7
|
%
|
|
Three months ended June 30,
|
|
2018 to 2019 Change
|
|||||||||||
(Dollars in thousands)
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
|||||||
Property operating expenses
|
$
|
7,115
|
|
|
$
|
6,732
|
|
|
$
|
383
|
|
|
5.7
|
%
|
Real estate taxes
|
6,819
|
|
|
6,778
|
|
|
41
|
|
|
0.6
|
%
|
|||
Interest expense, net and amortization of deferred debt costs
|
10,793
|
|
|
11,168
|
|
|
(375
|
)
|
|
(3.4
|
)%
|
|||
Depreciation and amortization of deferred leasing costs
|
11,524
|
|
|
11,351
|
|
|
173
|
|
|
1.5
|
%
|
|||
General and administrative
|
5,140
|
|
|
4,647
|
|
|
493
|
|
|
10.6
|
%
|
|||
Total expenses
|
$
|
41,391
|
|
|
$
|
40,676
|
|
|
$
|
715
|
|
|
1.8
|
%
|
|
|
Six Months Ended
June 30, |
|
2018 to 2019 Change
|
|||||||||||
(Dollars in thousands)
|
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
|||||||
Base rent
|
|
$
|
93,485
|
|
|
$
|
91,810
|
|
|
$
|
1,675
|
|
|
1.8
|
%
|
Expense recoveries
|
|
18,489
|
|
|
17,373
|
|
|
1,116
|
|
|
6.4
|
%
|
|||
Percentage rent
|
|
613
|
|
|
667
|
|
|
(54
|
)
|
|
(8.1
|
)%
|
|||
Other property revenue
|
|
725
|
|
|
539
|
|
|
186
|
|
|
34.5
|
%
|
|||
Credit losses on operating lease receivables
|
|
(556
|
)
|
|
(429
|
)
|
|
(127
|
)
|
|
29.6
|
%
|
|||
Rental revenue
|
|
112,756
|
|
|
109,960
|
|
|
2,796
|
|
|
2.5
|
%
|
|||
Other revenue
|
|
5,135
|
|
|
2,230
|
|
|
2,905
|
|
|
130.3
|
%
|
|||
Total revenue
|
|
$
|
117,891
|
|
|
$
|
112,190
|
|
|
$
|
5,701
|
|
|
5.1
|
%
|
|
Six Months Ended
June 30, |
|
2018 to 2019 Change
|
|||||||||||
(Dollars in thousands)
|
2019
|
|
2018
|
|
Amount
|
|
Percent
|
|||||||
Property operating expenses
|
$
|
15,116
|
|
|
$
|
13,856
|
|
|
$
|
1,260
|
|
|
9.1
|
%
|
Real estate taxes
|
13,967
|
|
|
13,622
|
|
|
345
|
|
|
2.5
|
%
|
|||
Interest expense, net and amortization of deferred debt costs
|
21,860
|
|
|
22,594
|
|
|
(734
|
)
|
|
(3.2
|
)%
|
|||
Depreciation and amortization of deferred leasing costs
|
23,167
|
|
|
22,700
|
|
|
467
|
|
|
2.1
|
%
|
|||
General and administrative
|
9,954
|
|
|
9,068
|
|
|
886
|
|
|
9.8
|
%
|
|||
Total expenses
|
$
|
84,064
|
|
|
$
|
81,840
|
|
|
$
|
2,224
|
|
|
2.7
|
%
|
(in thousands)
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Total revenue
|
|
$
|
58,141
|
|
|
$
|
56,081
|
|
|
$
|
117,891
|
|
|
$
|
112,190
|
|
Less: Acquisitions, dispositions and development properties
|
|
(194
|
)
|
|
—
|
|
|
(1,083
|
)
|
|
—
|
|
||||
Total same property revenue
|
|
$
|
57,947
|
|
|
$
|
56,081
|
|
|
$
|
116,808
|
|
|
$
|
112,190
|
|
|
|
|
|
|
|
|
|
|
||||||||
Shopping Centers
|
|
$
|
42,259
|
|
|
$
|
40,755
|
|
|
$
|
85,417
|
|
|
$
|
81,679
|
|
Mixed-Use properties
|
|
15,688
|
|
|
15,326
|
|
|
31,391
|
|
|
30,511
|
|
||||
Total same property revenue
|
|
$
|
57,947
|
|
|
$
|
56,081
|
|
|
$
|
116,808
|
|
|
$
|
112,190
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Shopping Center revenue
|
|
$
|
42,259
|
|
|
$
|
40,755
|
|
|
$
|
85,417
|
|
|
$
|
81,679
|
|
Less: Shopping Center acquisitions, dispositions and development properties
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total same Shopping Center revenue
|
|
$
|
42,259
|
|
|
$
|
40,755
|
|
|
$
|
85,417
|
|
|
$
|
81,679
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Mixed-Use property revenue
|
|
$
|
15,882
|
|
|
$
|
15,326
|
|
|
$
|
32,474
|
|
|
$
|
30,511
|
|
Less: Mixed-Use acquisitions, dispositions and development properties
|
|
(194
|
)
|
|
—
|
|
|
(1,083
|
)
|
|
—
|
|
||||
Total same Mixed-Use revenue
|
|
$
|
15,688
|
|
|
$
|
15,326
|
|
|
$
|
31,391
|
|
|
$
|
30,511
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
|
$
|
16,750
|
|
|
$
|
15,902
|
|
|
$
|
33,827
|
|
|
$
|
30,847
|
|
Add: Interest expense, net and amortization of deferred debt costs
|
|
10,793
|
|
|
11,168
|
|
|
21,860
|
|
|
22,594
|
|
||||
Add: Depreciation and amortization of deferred leasing costs
|
|
11,524
|
|
|
11,351
|
|
|
23,167
|
|
|
22,700
|
|
||||
Add: General and administrative
|
|
5,140
|
|
|
4,647
|
|
|
9,954
|
|
|
9,068
|
|
||||
Add: Change in fair value of derivatives
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||
Less: Gain on sale of property
|
|
—
|
|
|
(509
|
)
|
|
—
|
|
|
(509
|
)
|
||||
Property operating income
|
|
44,207
|
|
|
42,571
|
|
|
88,808
|
|
|
84,712
|
|
||||
Add (Less): Acquisitions, dispositions and development properties
|
|
12
|
|
|
—
|
|
|
(617
|
)
|
|
—
|
|
||||
Total same property operating income
|
|
$
|
44,219
|
|
|
$
|
42,571
|
|
|
$
|
88,191
|
|
|
$
|
84,712
|
|
|
|
|
|
|
|
|
|
|
||||||||
Shopping Centers
|
|
$
|
33,707
|
|
|
$
|
32,274
|
|
|
$
|
67,177
|
|
|
$
|
64,322
|
|
Mixed-Use properties
|
|
10,512
|
|
|
10,297
|
|
|
21,014
|
|
|
20,390
|
|
||||
Total same property operating income
|
|
$
|
44,219
|
|
|
$
|
42,571
|
|
|
$
|
88,191
|
|
|
$
|
84,712
|
|
|
|
|
|
|
|
|
|
|
||||||||
Shopping Center operating income
|
|
$
|
33,707
|
|
|
$
|
32,274
|
|
|
$
|
67,177
|
|
|
$
|
64,322
|
|
Less: Shopping Center acquisitions, dispositions and development properties
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total same Shopping Center operating income
|
|
$
|
33,707
|
|
|
$
|
32,274
|
|
|
$
|
67,177
|
|
|
$
|
64,322
|
|
|
|
|
|
|
|
|
|
|
||||||||
Mixed-Use property operating income
|
|
$
|
10,500
|
|
|
$
|
10,297
|
|
|
$
|
21,631
|
|
|
$
|
20,390
|
|
Add (Less): Mixed-Use acquisitions, dispositions and development properties
|
|
12
|
|
|
—
|
|
|
(617
|
)
|
|
—
|
|
||||
Total same Mixed-Use property operating income
|
|
$
|
10,512
|
|
|
$
|
10,297
|
|
|
$
|
21,014
|
|
|
$
|
20,390
|
|
|
Six Months Ended June 30,
|
||||||
(In thousands)
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
63,832
|
|
|
$
|
53,691
|
|
Net cash used in investing activities
|
(68,599
|
)
|
|
(36,993
|
)
|
||
Net cash used in financing activities
|
(549
|
)
|
|
(21,181
|
)
|
||
Decrease in cash and cash equivalents
|
$
|
(5,316
|
)
|
|
$
|
(4,483
|
)
|
•
|
limit the amount of debt as a percentage of gross asset value, as defined in the loan agreement, to less than 60% (leverage ratio);
|
•
|
limit the amount of debt so that interest coverage will exceed 2.0x on a trailing four-quarter basis (interest expense coverage); and
|
•
|
limit the amount of debt so that interest, scheduled principal amortization and preferred dividend coverage exceeds 1.4x on a trailing four-quarter basis (fixed charge coverage).
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands, except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
16,750
|
|
|
$
|
15,902
|
|
|
$
|
33,827
|
|
|
$
|
30,847
|
|
Subtract:
|
|
|
|
|
|
|
|
||||||||
Gain on sale of property
|
—
|
|
|
(509
|
)
|
|
—
|
|
|
(509
|
)
|
||||
Add:
|
|
|
|
|
|
|
|
||||||||
Real estate depreciation and amortization
|
11,524
|
|
|
11,351
|
|
|
23,167
|
|
|
22,700
|
|
||||
FFO
|
28,274
|
|
|
26,744
|
|
|
56,994
|
|
|
53,038
|
|
||||
Subtract:
|
|
|
|
|
|
|
|
||||||||
Extinguishment of issuance costs upon redemption of preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,328
|
)
|
||||
Preferred stock dividends
|
(2,953
|
)
|
|
(2,953
|
)
|
|
(5,906
|
)
|
|
(6,356
|
)
|
||||
FFO available to common stockholders and noncontrolling interests
|
$
|
25,321
|
|
|
$
|
23,791
|
|
|
$
|
51,088
|
|
|
$
|
44,354
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
||||||||
Diluted weighted average common stock
|
22,994
|
|
|
22,288
|
|
|
22,929
|
|
|
22,253
|
|
||||
Convertible limited partnership units
|
7,853
|
|
|
7,726
|
|
|
7,844
|
|
|
7,646
|
|
||||
Average shares and units used to compute FFO per share
|
30,847
|
|
|
30,014
|
|
|
30,773
|
|
|
29,899
|
|
||||
FFO per share available to common stockholders and noncontrolling interests
|
$
|
0.82
|
|
|
$
|
0.79
|
|
|
$
|
1.66
|
|
|
$
|
1.48
|
|
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.
|
|
Total Properties
|
|
Total Square Footage
|
|
Percent Leased
|
||||||||||||
|
Shopping
Centers
|
|
Mixed-Use
|
|
Shopping
Centers
|
|
Mixed-Use
|
|
Shopping
Centers
|
|
Mixed-Use
|
||||||
June 30, 2019
|
49
|
|
|
7
|
|
|
7,759,621
|
|
|
1,146,438
|
|
|
95.6
|
%
|
|
88.6
|
%
|
June 30, 2018
|
49
|
|
|
6
|
|
|
7,749,707
|
|
|
1,076,837
|
|
|
94.4
|
%
|
|
91.4
|
%
|
|
|
|
|
|
|
Average Base Rent per Square Foot
|
||||||||
Three months ended June 30,
|
Square
Feet
|
|
Number
of Leases
|
|
New/Renewed
Leases
|
|
Expiring
Leases
|
|||||||
2019
|
|
370,068
|
|
|
65
|
|
|
$
|
20.40
|
|
|
$
|
20.88
|
|
2018
|
|
651,806
|
|
|
90
|
|
|
20.41
|
|
|
20.02
|
|
|
|
New
Leases
|
|
Renewed
Leases
|
||||
Number of leases
|
|
19
|
|
|
51
|
|
||
Square feet
|
|
99,637
|
|
|
281,228
|
|
||
Per square foot average annualized:
|
|
|
|
|
||||
Base rent
|
|
$
|
23.99
|
|
|
$
|
20.14
|
|
Tenant improvements
|
|
(3.53
|
)
|
|
(0.51
|
)
|
||
Leasing costs
|
|
(0.61
|
)
|
|
(0.04
|
)
|
||
Rent concessions
|
|
(0.16
|
)
|
|
(0.02
|
)
|
||
Effective rents
|
|
$
|
19.69
|
|
|
$
|
19.57
|
|
|
|
|
|
|
Expiring Leases:
|
|
Total
|
||
Square feet
|
|
337,224
|
|
|
Average base rent per square foot
|
|
$
|
24.85
|
|
Estimated market base rent per square foot
|
|
$
|
24.44
|
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
10.
|
|
(1)
|
|
|
|
|
|
|
|
31.
|
|
|
|
|
|
|
|
|
|
32.
|
|
|
|
|
|
|
|
|
|
99.
|
|
(a)
|
|
|
|
|
|
|
|
101.
|
|
|
|
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2019, formatted in Extensible Business Reporting Language (“XBRL”): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of equity and comprehensive income, (iv) consolidated statements of cash flows, and
(v) the notes to the consolidated financial statements.
|
|
SAUL CENTERS, INC.
(Registrant)
|
|
|
Date: August 7, 2019
|
/s/ J. Page Lansdale
|
|
J. Page Lansdale, President and Chief Operating Officer
|
|
|
Date: August 7, 2019
|
/s/ Scott V. Schneider
|
|
Scott V. Schneider
Senior Vice President, Chief Financial Officer
(principal financial officer)
|
|
|
Date: August 7, 2019
|
/s/ Joel A. Friedman
|
|
Joel A. Friedman
Senior Vice President, Chief Accounting Officer
(principal accounting officer)
|
1.
|
Recitals. The above recitals are incorporated herein by this reference.
|
2.
|
Capitalized Terms. All capitalized terms used herein but not otherwise defined in this Amendment shall have the same meaning ascribed to such terms in the Original Agreement.
|
(a)
|
Retail Leasing Group. The Retail Leasing Group (the “Retail Leasing Group”) is composed of Employees of Saul Centers. From time to time, the Retail Leasing Group performs leasing services for Saul Company.
|
(b)
|
Retail Leasing Group Costs.
|
(i)
|
Commencing on the date hereof and continuing each year thereafter, Saul Centers shall determine the monthly costs (“Leasing Employee Cost”)
|
(1)
|
annual base salary paid by Saul Centers of such Leasing Employee;
|
(2)
|
annual bonus or other financial incentive paid by Saul Centers to the Leasing Employee excluding, however, any leasing commissions paid to any Leasing Employee;
|
(3)
|
annual employer contributions based on the amount of cash compensation such as social security tax and retirement account matching; and
|
(4)
|
other expenses of the home department of the Leasing Employee based on the average cost per person in his or her applicable group, which shall include all rent, office expenses, professional fees, information technology costs, and other related costs and depreciation attributable to the applicable group.
|
(ii)
|
In addition, commencing on the date hereof and continuing each year thereafter, Saul Centers shall also identify all leasing commissions and annual employer contributions based on the amount of cash compensation such as related payroll taxes and retirement account matching contributions incurred as a result of the leasing commission; attributable to Saul Company leases, paid to each Leasing Employee in accordance with the then applicable Leasing Employee commission schedule, as the same may be amended from time to time with notice to Saul Company (collectively, the “Commissions”).
|
(c)
|
Calculating Payment. Employees of the Retail Leasing Group will track the actual work hours spent in Saul Company matters. The parties will determine the percentage of time spent monthly by each Leasing Employee in Saul Company leasing matters and compute the ratio of actual work hours spent in Saul Company matters to the actual hours paid to the Leasing Employee (the “Leasing Monthly Percentage”). Saul Company agrees to pay to Saul Centers: (i) the Leasing Monthly Percentage of the Leasing Employee Costs for each of the Leasing Employees, and (ii) all of the Commissions (collectively, the “Leasing Group Costs”).
|
4.
|
Collection Costs.
|
(a)
|
Collection Group. The Collection Group (the “Collection Group”) is composed of Employees of Saul Centers. From time to time, the Collection Group performs services for Saul Company.
|
(b)
|
Collection Group Costs.
|
(1)
|
annual base salary paid by Saul Centers of such Collection Employee;
|
(2)
|
annual bonus or other financial incentive paid by Saul Centers to the Collection Employee;
|
(3)
|
annual employer contributions based on the amount of cash compensation such as social security tax and retirement account matching; and
|
(4)
|
other expenses of the home department of the Collection Employee based on the average cost per person in his or her applicable group, which shall include all rent, office expenses, professional fees, information technology costs, and other related costs and depreciation attributable to the applicable group.
|
(c)
|
Calculating Payment. Employees of the Collection Group will report the percentage of time historically spent on Saul Company matters (the “Semi-annual Percentage”). These percentages will be reported, reviewed, and used to update the billing rates on a semi-annual basis, in arrears. Saul Company agrees to pay to Saul Centers on a monthly basis the Semi-annual Percentage of the Collection Employee Costs for each of the Collection Employees (collectively, the “Collection Group Costs”).
|
5.
|
Incorporation of Other Terms; Payment. All of the provisions of the Original Agreement applicable to costs and services shall apply to the Leasing Group Costs and Collection Group Costs and are incorporated herein by reference. Without limiting the generality of the foregoing, Section 9(a) of the Original Agreement shall be supplemented to include the Leasing Group Costs and Collection Group Costs as follows:
|
“(a)
|
Monthly Payment. Each of the parties hereto agrees to pay to the other, on a monthly basis, its allocation of the following costs as calculated pursuant to this Agreement:
|
(i)
|
the Headquarters Shared Costs;
|
(ii)
|
the Auditor Space Costs;
|
(iii)
|
the Support Group Costs;
|
(iv)
|
the Industry Groups Costs;
|
(v)
|
the Company-Wide Shared Costs;
|
(vi)
|
the Shared Program Costs;
|
(vii)
|
the IT Shared Costs;
|
(viii)
|
the Legal Services;
|
(ix)
|
the Leasing Group Costs; and
|
(x)
|
the Collection Group Costs.
|
6.
|
Ratification of Agreement. The Original Agreement, as amended and supplemented by this Amendment, is hereby ratified and affirmed by the parties, and shall remain in full force and effect pursuant to its terms as amended hereby.
|
7.
|
Miscellaneous. In the event of any conflict between the terms of this Amendment and the terms of the Original Agreement, the terms of this Amendment shall prevail.
|
1.
|
I have reviewed this report on Form 10-Q of Saul Centers, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal period that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this report on Form 10-Q of Saul Centers, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal period that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|