[8-K] Saul Centers, Inc. Reports Material Event

Rhea-AI Filing Summary

Vestis Corporation (VSTS) Q3 FY-25 10-Q highlights

• Revenue slipped 3.5% YoY to $673.8 m; nine-month sales down 4.7% to $2.02 bn.
• Operating income fell 33% to $25.0 m; net swung to a $0.7 m loss (-$0.01 EPS) versus $5.0 m profit a year ago. YTD loss is $27.7 m (-$0.21 EPS).
• Cost pressure sustained: SG&A up 6% YTD and severance charges reached $12.4 m (vs. $1.4 m prior period).
• Operating cash flow collapsed to $33.3 m YTD (vs. $176.2 m), driven by working-capital use and higher credit-loss allowance (+$15 m).
• Net debt stands at $1.16 bn; weighted-avg interest 6.68%. May-25 credit-agreement amendment raised net-leverage covenant to 5.25× and suspended dividends/buybacks until leverage ≤4.5×, signalling tighter lender oversight.
• Liquidity: $23.7 m cash plus $266 m revolver availability.
• Segment view: U.S. revenue -3.7%, OI -37%; Canada revenue -1.5% but OI doubled to $2.5 m.
• No goodwill impairment despite trigger review; allowance for credit losses now $30.8 m.
• Multiple shareholder class- and derivative actions filed May–Jul 2025; settlement of prior pricing suit cost $3.1 m.

Overall, softer volumes, margin compression and litigation overshadow modest interest-expense savings and adequate liquidity.

Positive

• Interest expense declined 25% YoY (to $22.5 m) following February-24 refinancing, easing bottom-line pressure.
• Credit-agreement amendment increased leverage headroom and extended covenants, reducing immediate default risk.
• Liquidity remains available with $266 m unused revolver capacity plus $23.7 m cash.
• Canada segment doubled operating income to $2.5 m despite slight revenue dip.

Negative

• Revenue contraction: -3.5% Q3 and -4.7% YTD, indicating demand softness.
• Profitability reversal: Net loss of $0.7 m vs $5.0 m profit YoY; operating income down 33%.
• Operating cash flow plunged 81% YTD to $33.3 m, straining internal funding.
• High leverage: $1.16 bn debt vs $882 m equity; dividend suspended until leverage improves.
• Allowance for credit losses jumped to $30.8 m (+15 m adjustment), signalling collection risk.
• Severance costs surged to $12.4 m, reflecting executive turnover.
• Shareholder litigation and derivative suits create legal and reputational overhang.

Insights

Equity Analyst

TL;DR: Earnings reversed to loss, cash generation weak, leverage high—equity story deteriorates.

Revenue decline coupled with expense creep pushed Vestis into the red. Operating margin dropped 140 bp and nine-month OCF fell 81%, raising concerns on cash generation for a highly levered balance sheet. The covenant reset buys time but at the cost of dividend restrictions, confirming limited capital-allocation flexibility. Litigation overhang and credit-loss build highlight execution and governance risks. Equity holders face a tougher recovery path absent clear volume or pricing catalysts.

Credit Analyst

TL;DR: Covenant relief averts breach but fundamentals weaken; leverage and liquidity need close monitoring.

Net leverage remains elevated (~4.9× EBITDA by our quick estimate). Amendment raises threshold to 5.25× through FY-26, offering cushion, yet OCF erosion and higher bad-debt expense pressure coverage. Interest expense dropped 25% YoY after refinancing, though variable-rate exposure persists. $266 m revolver headroom plus $24 m cash suffice near-term, but dividend ban underscores lender precaution. Any further earnings slippage could reignite covenant risk.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 30, 2025

SAUL CENTERS, INC.

(Exact name of registrant as specified in its charter)

Maryland

1-12254

52-1833074

(State or Other Jurisdiction of Incorporation)

(Commission File Number)

(IRS Employer Identification Number)

7501 Wisconsin Avenue, Suite 1500E, Bethesda, Maryland 20814

(Address of principal executive office) (Zip Code)

Registrant’s telephone number, including area code (301) 986-6200

Not Applicable

(Former name or former address, if changed since last report)

_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:			Trading symbol:			Name of exchange on which registered:
Common Stock, Par Value $0.01 Per Share			BFS			New York Stock Exchange
Depositary Shares each representing 1/100th of a share of 6.125% Series D Cumulative Redeemable Preferred Stock, Par Value $0.01 Per Share			BFS/PRD			New York Stock Exchange
Depositary Shares each representing 1/100th of a share of 6.000% Series E Cumulative Redeemable Preferred Stock, Par Value $0.01 Per Share			BFS/PRE			New York Stock Exchange

    Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

    Emerging growth company ☐

    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Item 1.01. Entry into a Material Definitive Agreement.

On July 30, 2025, Saul Holdings Limited Partnership (the "Partnership"), the operating partnership of Saul Centers, Inc. (the "Company"), entered into a Credit Agreement by and among the Partnership, as borrower; Wells Fargo Securities, LLC ("Wells Fargo Securities") as joint lead arranger and joint bookrunner; Wells Fargo Bank, National Association ("Wells Fargo"), as administrative agent; Capital One, National Association ("Capital One"), as syndication agent, joint lead arranger and joint bookrunner; U.S. Bank National Association ("US Bank"), as documentation agent and joint lead arranger; Truist Bank ("Truist"), as documentation agent and joint lead arranger; The Huntington National Bank ("Huntington"), as documentation agent and joint lead arranger; and Wells Fargo, Capital One, US Bank, Truist, Huntington, Associated Bank, National Association ("Associated Bank") and Atlantic Union Bank, as lenders (the "New Credit Agreement").

The New Credit Agreement replaces the Credit Agreement dated August 31, 2021, by and among the Partnership, as borrower; Wells Fargo Securities, as joint lead arranger and sole bookrunner; Wells Fargo, as administrative agent; Capital One, as syndication agent and joint lead arranger; TD Bank, N.A. ("TD Bank") and US Bank, as documentation agents; and Wells Fargo, Capital One, TD Bank, US Bank, Regions Bank, PNC Bank, National Association and Associated Bank, as lenders (the "Existing Credit Agreement").

The Existing Credit Agreement provided for a $525,000,000 senior unsecured credit facility comprised of a $425,000,000 revolving credit facility (the "Existing Revolving Line") and a $100,000,000 term loan (the “Existing Term Loan"). The Existing Revolving Line was scheduled to mature on August 29, 2025, and the Existing Term Loan was scheduled to mature on February 26, 2027.

The New Credit Agreement provides for a $600,000,000 senior unsecured credit facility (the "New Credit Facility") comprised of a $460,000,000 revolving credit facility (the "New Revolving Line") and a $140,000,000 term loan (the "New Term Loan"). The New Revolving Line has an initial maturity date of July 30, 2029, with a one-year extension option. The New Term Loan has an initial maturity date of July 28, 2028, with two one-year extension options.

The Company and certain subsidiaries of the Partnership have guaranteed the payment obligations of the Partnership under the New Credit Facility.

As of July 30, 2025, $326,000,000 is outstanding under the New Credit Facility, $140,000,000 of which is drawn under the New Term Loan and $186,000,000 of which is drawn under the New Revolving Line. As of July 30, 2025, approximately $106,900,000 was available and undrawn under the New Revolving Line and approximately $185,000 was committed for letters of credit.

In general, loan availability under the New Credit Facility is primarily determined by operating income from the Partnership's and certain of its subsidiaries' existing unencumbered properties. Interest accrues at the Secured Overnight Financing Rate ("SOFR") plus a spread of 1.35% to 1.95% under the New Revolving Line, and 1.30% to 1.90% under the New Term Loan, each as determined by certain leverage tests. As of July 30, 2025, the applicable spreads for borrowings under the New Revolving Line and the New Term Loan are 1.40% and 1.35%, respectively.

The New Credit Agreement, similar to the Existing Credit Agreement, contains a number of covenants related to the Partnership's ability to make investments, incur liens, and engage in certain affiliate transactions and major transactions, such as mergers. The Credit Agreement contains certain financial covenants, including, but not limited to:

•a maximum ratio of Total Indebtedness to Total Asset Value not to exceed 0.6 to 1.0;

•minimum Interest Coverage of not less than 2.0 to 1.0 on a trailing four consecutive fiscal quarters basis; and

•minimum Fixed Charge Coverage of not less than 1.4 to 1.0 on a trailing four consecutive fiscal quarters basis.

Capitalized terms used herein and not otherwise defined are defined in the New Credit Agreement, which is attached as an exhibit hereto. Some of the lenders and/or their affiliates have, from time to time, provided in the past, and may provide in the future, commercial lending services to the Company, the Partnership and their affiliates in the ordinary course of business.

The above summaries of the terms and conditions of the New Credit Agreement and the Existing Credit Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the New Credit Agreement and the Existing Credit Agreement, respectively, which are filed as Exhibit 10.1 hereto and Exhibit 10.1 to the Company's Current Report on Form 8-K dated September 1, 2021, respectively.

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Item 1.02. Termination of a Material Definitive Agreement.

The disclosure required by this Item 1.02 is included in Item 1.01 and incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure required by this Item 2.03 is included in Item 1.01 and incorporated herein by reference.

Item 9.01.    Financial Statements and Exhibits

(d) Exhibits

Exhibit No.						Description
10.1						Credit Agreement, dated July 30, 2025, by and among Saul Holdings Limited Partnership, as Borrower; Wells Fargo Securities, LLC, as Joint Lead Arranger and Joint Bookrunner; Wells Fargo Bank, National Association, as Administrative Agent; Capital One, National Association, as Syndication Agent, Joint Lead Arranger and Joint Bookrunner; U.S. Bank National Association, as Documentation Agent and Joint Lead Arranger; Truist Bank, as Documentation Agent and Joint Lead Arranger; The Huntington National Bank, as Documentation Agent and Joint Lead Arranger; and Wells Fargo, Capital One, US Bank, Truist, Huntington, Associated Bank, National Association, and Atlantic Union Bank, as Lenders (the "Credit Agreement").
10.2						Guaranty dated July 30, 2025, by Saul Centers, Inc.; Saul Subsidiary I Limited Partnership; Saul Subsidiary II Limited Partnership; Briggs Chaney Plaza, LLC; 11503 Rockville Pike LLC; 1500 Rockville Pike LLC; Smallwood Village Center LLC; Westview Village Center LLC; and Metro Pike Center LLC, as Guarantors; in favor of Wells Fargo, as Administrative Agent for the lenders from time to time party to the Credit Agreement.

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SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                        SAUL CENTERS, INC.

                        By:    /s/ Carlos L. Heard

                            Carlos L. Heard

Senior Vice President and Chief Financial Officer

Dated: August 5, 2025    

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FAQ

How did VSTS perform financially in Q3 FY-25?

Revenue was $673.8 m (-3.5% YoY) and net loss was $0.7 m (-$0.01 EPS).

What is Vestis' current leverage and liquidity position?

Net debt is $1.16 bn; liquidity includes $23.7 m cash and $266 m undrawn revolver.

Why was the credit agreement amended in May 2025?

To raise the net-leverage covenant to 5.25× and restrict dividends/buybacks until leverage ≤4.5×, providing extra covenant cushion.

How did operating cash flow change year-to-date?

OCF fell to $33.3 m from $176.2 m in the prior year due to working-capital outflows and higher credit-loss reserves.

Are there any legal proceedings investors should note?

Yes. Multiple shareholder class and derivative actions were filed between May–July 2025, and a $3.1 m pricing suit was settled.

Did Vestis record any goodwill impairment this quarter?

No. A trigger test was performed but fair values exceeded carrying amounts.