Saul Centers, Inc. Reports First Quarter 2025 Earnings
- Total revenue increased 7.8% YoY to $71.9M
- Higher commercial base rent of $2.2M
- Strong residential portfolio occupancy at 99.3%
- Same property revenue grew 2.7%
- 274 residential units leased and occupied at Twinbrook Quarter Phase I
- Net income decreased 30% YoY to $12.8M
- FFO per share declined to $0.71 from $0.80 YoY
- Commercial portfolio occupancy decreased to 93.9% from 94.6%
- Same property NOI decreased 0.5%
- Shopping Center same property NOI declined by $0.5M
Insights
Saul Centers' Q1 shows revenue growth but earnings decline due to new development costs; core properties demonstrate stable performance with strong occupancy.
Saul Centers' Q1 2025 results demonstrate the expected financial pattern of a REIT in development mode. Total revenue increased
The primary factor driving this divergence is the Twinbrook Quarter Phase I development, which began expense recognition in October 2024 while revenue continues to ramp up as occupancy increases. This development alone reduced net income by
Looking at the core portfolio performance (excluding Twinbrook):
- Net income improved by
$1.0 million - Commercial base rent increased by
$2.2 million - Residential base rent rose by
$0.4 million - These gains were partially offset by lower expense recoveries (-
$0.7 million ) and decreased other property revenue (-$0.6 million )
Same-property metrics reveal nuanced performance. Same-property revenue grew
Occupancy metrics remain strong despite minor fluctuations. The commercial portfolio is
Funds from operations (FFO), a key REIT performance metric, decreased to
The balance sheet remains consistent with previous quarters, showing
Concurrent with the initial delivery of Twinbrook Quarter Phase I on October 1, 2024, interest, real estate taxes, depreciation and all other costs associated with the residential and retail portions of the property began to be charged to expense, while revenue continues to grow as occupancy increases. As a result, compared to the 2024 Quarter, net income for the 2025 Quarter was adversely impacted by
Same property revenue increased
Same property revenue and same property operating income are non-GAAP financial measures of performance that management believes improve the comparability of reporting periods 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 less straight-line base rent and above/below market lease amortization of leases acquired in connection with purchased real estate investment properties minus the revenue of properties not in operation for the entirety of the comparable reporting periods, and we define same property net 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 the early extinguishment of debt minus (f) gains on property dispositions, (g) straight-line base rent, (h) above/below market lease amortization of leases acquired in connection with purchased real estate investment properties and (i) the net operating income of properties that were 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) decreased to
As of March 31, 2025,
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 Form 10-K for the year ended December 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 our Annual Report on Form 10-K for the year ended December 31, 2024.
Saul Centers, Inc. | |||
Consolidated Balance Sheets | |||
(Unaudited) | |||
(Dollars in thousands, except per share amounts) | March 31, 2025 | December 31, 2024 | |
Assets | |||
Real estate investments | |||
Land | $ 562,857 | $ 562,047 | |
Buildings and equipment | 1,916,504 | 1,903,907 | |
Construction in progress | 337,446 | 326,193 | |
2,816,807 | 2,792,147 | ||
Accumulated depreciation | (779,214) | (767,842) | |
Total real estate investments, net | 2,037,593 | 2,024,305 | |
Cash and cash equivalents | 6,492 | 10,299 | |
Accounts receivable and accrued income, net | 50,674 | 50,949 | |
Deferred leasing costs, net | 26,119 | 25,907 | |
Other assets | 10,608 | 14,944 | |
Total assets | $ 2,131,486 | $ 2,126,404 | |
Liabilities | |||
Mortgage notes payable, net | $ 1,039,328 | $ 1,047,832 | |
Revolving credit facility payable, net | 195,683 | 186,489 | |
Term loan facility payable, net | 99,716 | 99,679 | |
Construction loans payable, net | 209,872 | 198,616 | |
Accounts payable, accrued expenses and other liabilities | 51,407 | 46,162 | |
Deferred income | 20,161 | 23,033 | |
Dividends and distributions payable | 23,583 | 23,469 | |
Total liabilities | 1,639,750 | 1,625,280 | |
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, 24,318,414 and 24,302,576 shares issued and outstanding, respectively | 243 | 243 | |
Additional paid-in capital | 455,112 | 454,086 | |
Distributions in excess of accumulated earnings | (313,879) | (306,541) | |
Accumulated other comprehensive income | 1,891 | 2,966 | |
Total Saul Centers, Inc. equity | 328,367 | 335,754 | |
Noncontrolling interests | 163,369 | 165,370 | |
Total equity | 491,736 | 501,124 | |
Total liabilities and equity | $ 2,131,486 | $ 2,126,404 | |
Saul Centers, Inc. | |||
Consolidated Statements of Operations | |||
(Unaudited) | |||
Three Months Ended March 31, | |||
(Dollars in thousands, except per share amounts) | 2025 | 2024 | |
Revenues | |||
Rental revenue | $ 70,547 | $ 65,299 | |
Other | 1,309 | 1,393 | |
Total revenue | 71,856 | 66,692 | |
Expenses | |||
Property operating expenses | 13,742 | 10,545 | |
Real estate taxes | 7,984 | 7,623 | |
Interest expense, net and amortization of deferred debt | 16,747 | 12,448 | |
Depreciation and amortization of deferred leasing costs | 14,523 | 12,029 | |
General and administrative | 6,012 | 5,784 | |
Total expenses | 59,008 | 48,429 | |
Net income | 12,848 | 18,263 | |
Noncontrolling interests | |||
Income attributable to noncontrolling interests | (3,049) | (4,633) | |
Net income attributable to Saul Centers, Inc. | 9,799 | 13,630 | |
Preferred stock dividends | (2,798) | (2,798) | |
Net income available to common stockholders | $ 7,001 | $ 10,832 | |
Per share net income available to common | |||
Basic and diluted: | $ 0.29 | $ 0.45 | |
Reconciliation of net income to FFO available to common stockholders and | |||
Three Months Ended March 31, | |||
(Dollars in thousands, except per share amounts) | 2025 | 2024 | |
Net income | $ 12,848 | $ 18,263 | |
Add: | |||
Real estate depreciation and amortization | 14,523 | 12,029 | |
FFO | 27,371 | 30,292 | |
Subtract: | |||
Preferred stock dividends | (2,798) | (2,798) | |
FFO available to common stockholders and | $ 24,573 | $ 27,494 | |
Weighted average shares and units: | |||
Basic | 34,686 | 34,348 | |
Diluted | 34,707 | 34,352 | |
Basic and diluted FFO per share available to common | $ 0.71 | $ 0.80 | |
(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. |
Reconciliation of revenue to same property revenue (2) | |||
Three Months Ended March 31, | |||
(Dollars in thousands) | 2025 | 2024 | |
Total revenue | $ 71,856 | $ 66,692 | |
Revenue adjustments (1) | (2,356) | (258) | |
Acquisitions, dispositions and development properties | (1,300) | — | |
Total same property revenue | $ 68,200 | $ 66,434 | |
Shopping Centers | $ 47,998 | $ 46,755 | |
Mixed-Use properties | 20,202 | 19,679 | |
Total same property revenue | $ 68,200 | $ 66,434 | |
Total Shopping Center revenue | $ 47,998 | $ 46,755 | |
Shopping Center acquisitions, dispositions and | — | — | |
Total Shopping Center same property revenue | $ 47,998 | $ 46,755 | |
Total Mixed-Use property revenue | $ 21,502 | $ 19,679 | |
Mixed-Use acquisitions, dispositions and development properties | (1,300) | — | |
Total Mixed-Use same property revenue | $ 20,202 | $ 19,679 | |
(1) | Revenue adjustments are straight-line base rent and above/below market lease amortization. |
(2) | 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, | |||
(Dollars in thousands) | 2025 | 2024 | |
Office mixed-use properties (1) | $ 9,781 | $ 9,781 | |
Residential mixed-use properties (residential activity) (2) | 9,296 | 8,774 | |
Residential mixed-use properties (retail activity) (3) | 1,125 | 1,124 | |
Total Mixed-Use same property revenue | $ 20,202 | $ 19,679 | |
(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 net operating income (2) | |||
Three Months Ended March 31, | |||
(Dollars in thousands) | 2025 | 2024 | |
Net income | $ 12,848 | $ 18,263 | |
Interest expense, net and amortization of deferred debt costs | 16,747 | 12,448 | |
Depreciation and amortization of deferred leasing costs | 14,523 | 12,029 | |
General and administrative | 6,012 | 5,784 | |
Revenue adjustments (1) | (2,356) | (258) | |
Total property net operating income | 47,774 | 48,266 | |
Acquisitions, dispositions, and development properties | 247 | — | |
Total same property net operating income | $ 48,021 | $ 48,266 | |
Shopping Centers | $ 35,273 | $ 35,792 | |
Mixed-Use properties | 12,748 | 12,474 | |
Total same property net operating income | $ 48,021 | $ 48,266 | |
Shopping Center property net operating income | $ 35,273 | $ 35,792 | |
Shopping Center acquisitions, dispositions and | — | — | |
Total Shopping Center same property net operating | $ 35,273 | $ 35,792 | |
Mixed-Use property net operating income | $ 12,501 | $ 12,474 | |
Mixed-Use acquisitions, dispositions and development | 247 | — | |
Total Mixed-Use same property net operating income | $ 12,748 | $ 12,474 | |
(1) | Revenue adjustments are straight-line base rent and above/below market lease amortization. |
(2) | Same property net 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 net operating income adjusts property net operating income by subtracting the results of properties that were not in operation for the entirety of the comparable periods. Same property net 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 net operating income should not be considered as an alternative to property net operating income, its most directly comparable GAAP measure, as an indicator of the Company's operating performance. Management considers same property net 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 net 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 net operating income. Accordingly, same property net operating income may not be comparable to those of other REITs. |
Mixed-Use same property net operating income is composed of the following: | |||
Three Months Ended March 31, | |||
(Dollars in thousands) | 2025 | 2024 | |
Office mixed-use properties (1) | $ 6,118 | $ 6,249 | |
Residential mixed-use properties (residential activity) (2) | 5,825 | 5,407 | |
Residential mixed-use properties (retail activity) (3) | 805 | 818 | |
Total Mixed-Use same property net operating income | $ 12,748 | $ 12,474 | |
(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
What were Saul Centers (BFS) key financial results for Q1 2025?
How did Twinbrook Quarter Phase I impact BFS earnings in Q1 2025?
What is the current occupancy rate for Saul Centers' commercial and residential properties?
How did BFS same property performance change in Q1 2025 vs Q1 2024?
What is the geographic concentration of Saul Centers' portfolio?
