Real Estate Central

BETHESDA, Md., Aug. 7 /PRNewswire-FirstCall/ — Saul Centers, Inc.
(NYSE: BFS), an equity real estate investment trust (REIT), announced its
operating results for the quarter ended June 30, 2008. Total revenue for
the three months ended June 30, 2008 (”2008 Quarter”) increased 8.2% to
$40,105,000 compared to $37,077,000 for the three months ended June 30,
2007 (”2007 Quarter”). Operating income, which is net income available to
common stockholders before gain on property disposition, minority interests
and preferred stock dividends, increased 9.9% to $12,175,000 for the 2008
Quarter compared to $11,077,000 for the 2007 Quarter. This $1,098,000
increase in operating income was offset by the $1,786,000 increase in
preferred stock dividends from the Company’s issuance of approximately
$79,300,000 of Series B preferred stock in March 2008. As a result, net
income available to common stockholders was $6,443,000 or $0.36 per diluted
share for the 2008 Quarter, compared to $6,926,000 or $0.39 per diluted
share for the 2007 Quarter.

Same property revenue for the total portfolio increased 3.2% for the
2008 Quarter compared to the 2007 Quarter and same property operating
income increased 1.2%. The same property comparisons exclude the results of
operations of properties not in operation for each of the comparable
reporting quarters. Same property operating income in the shopping center
portfolio increased 1.0% for the 2008 Quarter compared to the 2007 Quarter.
The quarter over quarter shopping center operating income increase resulted
primarily from base rent growth at Southdale and several core shopping
centers as well as the stabilization of Lansdowne Town Center. The same
center operating income increases were offset in part by increased property
operating expenses and real estate taxes, net of tenant recoveries, and an
increase in credit loss reserves. Same property operating income in the
office portfolio increased 2.0% for the 2008 Quarter compared to the 2007
Quarter.

For the six months ended June 30, 2008 (”2008 Period”), total revenue
increased 6.9% to $78,827,000 compared to $73,761,000 for the six months
ended June 30, 2007 (”2007 Period”) and operating income increased 5.3% to
$23,248,000 compared to $22,086,000 for the 2007 Period. This $1,162,000
increase in operating income was offset by the $1,883,000 increase in
preferred stock dividends from the Company’s Series B preferred stock
issue. As a result, net income available to common stockholders was
$13,476,000 or $0.75 per diluted share for the 2008 Period, compared to
$13,800,000 or $0.78 per diluted share for the 2007 Period. Overall same
property revenue for the total portfolio increased 3.7% for the 2008 Period
compared to the 2007 Period and same property operating income increased
2.2%. For the 2008 Period, shopping center same property operating income
increased 2.7% due to the stabilization of Lansdowne Town Center and rental
rate growth at Southdale, Seven Corners and several core shopping centers.
The same center operating income increases were offset in part by increased
property operating expenses and real estate taxes, net of tenant
recoveries, and an increase in credit loss reserves. Same property
operating income in the office portfolio remained relatively stable,
increasing 0.7% for the 2008 Period.

As of June 30, 2008, 94.8% of the operating portfolio was leased
compared to 95.7% for June 30, 2007. On a same property basis, 94.8% of the
portfolio was leased, compared to the prior year level of 95.8%. The 2008
same property leasing percentages decreased due to a net decrease of
approximately 74,000 square feet of leased space. The majority of this
leasing decrease, approximately 49,000 square feet, occurred at South
Dekalb Plaza in Atlanta, Georgia. Leasing also decreased approximately
13,000 square feet at Smallwood Village Center where the Company is engaged
in a major renovation.

Funds from operations (FFO) available to common shareholders (after
deducting preferred stock dividends) decreased 1.3% to $15,378,000 in the
2008 Quarter compared to $15,580,000 for the 2007 Quarter. On a diluted per
share basis, FFO available to common shareholders decreased 1.5% to $0.66
per share for the 2008 Quarter compared to $0.67 per share for the 2007
Quarter. FFO, a widely accepted non-GAAP financial measure of operating
performance for REITs, is defined as net income plus minority interests,
extraordinary items and real estate depreciation and amortization,
excluding gains from property dispositions. FFO available to common
shareholders for the 2008 Period increased 0.8% to $31,297,000 from
$31,037,000 during the 2007 Period. Per share FFO available to common
shareholders for the 2008 Period remained level with the 2007 Period at
$1.34 per diluted share. Improved property operating results were offset by
increased preferred stock dividends of $1,786,000 ($0.08 per diluted share)
and $1,883,000 ($0.08 per diluted share), for the 2008 Quarter and 2008
Period, respectively, arising from the Company’s Series B preferred stock
issue.

Saul Centers is a self-managed, self-administered equity real estate
investment trust headquartered in Bethesda, Maryland. Saul Centers
currently operates and manages a real estate portfolio of 50 community and
neighborhood shopping center and office properties totaling approximately
8.2 million square feet of leasable area. Over 80% of the Company’s
property operating income is generated from properties in the metropolitan
Washington, DC/Baltimore area.





Saul Centers, Inc.
Condensed Consolidated Balance Sheets
($ in thousands)

June 30, December 31,
2008 2007
Assets (Unaudited)
Real estate investments
Land $215,407 $167,007
Buildings and equipment 711,592 673,328
Construction in progress 67,301 49,592
994,300 889,927
Accumulated depreciation (244,196) (232,669)
750,104 657,258
Cash and cash equivalents 36,964 5,765
Accounts receivable and
accrued income, net 33,087 33,967
Deferred leasing costs, net 17,363 16,190
Prepaid expenses, net 1,407 2,571
Deferred debt costs, net 6,440 6,264
Other assets 6,674 5,428
Total assets $852,039 $727,443

Liabilities
Mortgage notes payable $565,194 $524,726
Revolving credit facility - 8,000
Dividends and distributions payable 14,803 12,887
Accounts payable, accrued expenses
and other liabilities 20,140 13,159
Deferred income 22,654 15,147
Total liabilities 622,791 573,919

Minority interests 3,747 4,745

Stockholders’ equity
Preferred stock 179,328 100,000
Common stock 180 178
Additional paid-in capital 162,263 161,618
Accumulated deficit (116,270) (113,017)
Total stockholders’ equity 225,501 148,779

Total liabilities and
stockholders’ equity $852,039 $727,443



Saul Centers, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue (Unaudited) (Unaudited)

Base rent $31,751 $29,531 $62,133 $58,552
Expense recoveries 6,945 6,282 14,078 12,880
Percentage rent 232 312 546 514
Other 1,177 952 2,070 1,815
Total revenue 40,105 37,077 78,827 73,761

Operating expenses
Property operating
expenses 4,527 4,343 9,512 9,148
Provision for credit
losses 241 103 424 215
Real estate taxes 4,278 3,538 8,289 7,064
Interest expense and
amortization of
deferred debt costs 8,705 8,325 17,309 16,619
Depreciation and
amortization of
deferred leasing
costs 6,989 6,503 13,932 12,951
General and
administrative 3,190 3,188 6,113 5,678
Total operating
expenses 27,930 26,000 55,579 51,675
Operating income 12,175 11,077 23,248 22,086
Gain on property
disposition - - 205 -
Minority interests (1,946) (2,151) (4,094) (4,286)
Net income 10,229 8,926 19,359 17,800
Preferred dividends (3,786) (2,000) (5,883) (4,000)
Net income available to
common stockholders $6,443 $6,926 $13,476 $13,800

Per share net income available
to common stockholders:

Diluted $0.36 $0.39 $0.75 $0.78

Weighted average common stock:

Common stock 17,803 17,531 17,785 17,473
Effect of dilutive options 175 176 176 190
Diluted weighted average
common stock 17,978 17,707 17,961 17,663



Saul Centers, Inc.
Supplemental Information
(In thousands, except per share amounts)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007

Reconciliation of net income to
funds from operations (FFO)(1): (Unaudited) (Unaudited)

Net Income $10,229 $8,926 $19,359 $17,800
Less: Gain on property
disposition - - (205) -
Add: Real property depreciation
& amortization 6,989 6,503 13,932 12,951
Add: Minority interests 1,946 2,151 4,094 4,286
FFO 19,164 17,580 37,180 35,037
Less: Preferred dividends (3,786) (2,000) (5,883) (4,000)
FFO available to common
shareholders $15,378 $15,580 $31,297 $31,037

Weighted average shares:
Diluted weighted average
common stock 17,978 17,707 17,961 17,663
Convertible limited partnership
units 5,416 5,416 5,416 5,416
Diluted & converted weighted
average shares 23,394 23,123 23,377 23,079

Per share amounts:
FFO available to common
shareholders (diluted) $0.66 $0.67 $1.34 $1.34

Reconciliation of net income to
same property operating income:
Net income $10,229 $8,926 $19,359 $17,800
Add: Interest expense and
amortization of
deferred debt costs 8,705 8,325 17,309 16,619
Add: Depreciation and
amortization of
deferred leasing costs 6,989 6,503 13,932 12,951
Add: General and
administrative 3,190 3,188 6,113 5,678
Less: Gain on property
disposition - - (205) -
Less: Interest income (244) (143) (311) (238)
Add: Minority interests 1,946 2,151 4,094 4,286
Property operating income 30,815 28,950 60,291 57,096
Less: Acquisitions &
developments (1,513) - (1,931) -
Total same property
operating income $29,302 $28,950 $58,360 $57,096

Total shopping centers $22,195 $21,984 $44,376 $43,209
Total office properties 7,107 6,966 13,984 13,887
Total same property
operating income $29,302 $28,950 $58,360 $57,096


(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 minority interests, extraordinary items and real
estate depreciation and amortization, excluding gains or losses from
property 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 a 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 we believe occurs with
our 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.

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[Via Real Estate Newswire]