Core Points - Saul Centers, Inc. announced the income tax treatment of its 2024 dividends, with a total of $2.36 per common share declared and paid [1] - For common stock dividends, 71.66% is classified as ordinary income ($1.69 per share) and 28.34% as return of capital ($0.67 per share) [1] - Preferred stock dividends are fully characterized as ordinary income [2] Company Overview - Saul Centers, Inc. is a self-managed, self-administered equity REIT based in Bethesda, Maryland, managing a portfolio of 62 properties [3] - The portfolio includes 58 community and neighborhood shopping centers and mixed-use properties, totaling approximately 10.2 million square feet of leasable area [3] - Over 85% of the company's property operating income is derived from properties located in the metropolitan Washington, DC/Baltimore area [3] Dividend Details - The company declared and paid four dividends totaling $1.53125 per depositary share on its 6.125% Series D Preferred Stock [5] - Additionally, four dividends totaling $1.50000 per depositary share were declared on its 6.000% Series E Preferred Stock [5]

Core Viewpoint - Saul Centers (BFS) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Company Performance and Outlook - The recent upgrade reflects an improvement in Saul Centers' underlying business, with analysts raising their earnings estimates [5][8]. - For the fiscal year ending December 2024, Saul Centers is expected to earn $3.14 per share, representing a year-over-year change of 0.6% [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7]. - The upgrade to Zacks Rank 2 places Saul Centers in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10][11].

Core Viewpoint - Saul Centers (NYSE:BFS) is a shopping center REIT primarily focused on the Washington DC MSA, currently trading at a discount compared to its historical FFO multiples and peers, presenting a potential investment opportunity [1][3][38] Company Overview - Saul Centers is a mid-cap REIT with a portfolio primarily consisting of shopping centers, with approximately 74.1% in shopping centers, 14.7% in office spaces, and 11.2% in apartments [5][6][7] - The majority of its properties are located in the DC/Baltimore area, which accounts for 85.6% of its portfolio [7][9] Financial Performance - The FFO multiple for Saul Centers has decreased to about 12X, which is lower than the grocery-anchored shopping center averages of 14.6X [3] - The company has shown a same-store NOI growth of over 6% in the most recent quarter, indicating strong performance in the current market [14] - The current dividend yield is approximately 6%, with a stable to growing dividend history [15][16] Growth Potential - Occupancy rates are nearly full, with growth potential primarily coming from rental rate increases, as the current rent per square foot is about $24, which is below market rates for the DC area [17][18] - Anticipated organic growth is around 5% annually, influenced by the expiration of existing leases [21] Valuation - Saul Centers is trading at a significant discount to its estimated NAV of $52.50, with its current price at $39.70 [26] - The company has higher leverage compared to peers, which affects its valuation multiples [22][25] Idiosyncratic Factors - Saul Centers operates quietly, with high insider ownership of 35.5% by the B.F. Saul Real Estate Investment Trust, which may lead to management being financially aligned with shareholders but also indicates concentrated control [30][31][33] - The company has potential buyout appeal due to its desirable property concentration in DC, making it an attractive target for other REITs or private equity [37][38]

Core Insights - Saul Centers (BFS) reported quarterly funds from operations (FFO) of $0.83 per share, exceeding the Zacks Consensus Estimate of $0.80 per share and up from $0.76 per share a year ago [1][2] - The company achieved revenues of $67.29 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.98% and increasing from $63.77 million year-over-year [3] - The stock has added approximately 4.3% since the beginning of the year, while the S&P 500 has gained 24.3% [4] Financial Performance - The FFO surprise for the quarter was 3.75%, with a previous quarter surprise of 7.79% [2] - Over the last four quarters, Saul Centers has exceeded consensus FFO estimates three times [2][3] - Current consensus FFO estimate for the upcoming quarter is $0.69 on revenues of $66.83 million, and for the current fiscal year, it is $3.12 on revenues of $266.24 million [8] Industry Context - Saul Centers operates within the Zacks REIT and Equity Trust - Retail industry, which is currently ranked in the top 33% of over 250 Zacks industries [9] - The performance of the stock may be influenced by the overall outlook for the industry, as top-ranked industries tend to outperform lower-ranked ones significantly [9]

Financial Performance - Net income for the third quarter of 2024 increased to $19.6 million, up from $16.7 million in the same quarter of 2023, representing a growth of approximately 17.4%[85]. - Total revenue for the three months ended September 30, 2024, increased by 5.5% to $67.288 million compared to $63.766 million in the same period of 2023[86]. - Net income for the nine months ended September 30, 2024, increased to $57.3 million from $51.6 million for the same period in 2023[88]. - Total revenue for the nine months ended September 30, 2024, increased by 5.5% to $200.923 million compared to $190.524 million in the same period of 2023[89]. - Funds From Operations (FFO) available to common stockholders for the 2024 Quarter totaled $28.9 million, an increase of 11.0% compared to the 2023 Quarter[114]. - FFO available to common stockholders for the nine months ended September 30, 2024, was $93,266,000, up from $87,790,000 in 2023, reflecting a growth of 6.3%[115]. Revenue and Rent Growth - Base rent for the three months ended September 30, 2024, rose by 4.2% to $54.332 million, driven by a $1.9 million increase in commercial base rent and a $0.3 million increase in residential base rent[86]. - Same property revenue for the three months ended September 30, 2024, increased by $3.5 million, or 5.5%, compared to the same period in 2023, primarily due to higher base rent, expense recoveries, and lease termination fees[96]. - The increase in same property revenue for the 2024 Period was $10.4 million, primarily due to higher base rent of $5.0 million[96]. - Average annualized base rent per square foot for commercial properties increased to $21.16 for the nine months ended September 30, 2024, from $20.75 in 2023, a change of 1.98%[120]. - The effective rent per square foot also rose to $19.57 in 2024, compared to $19.20 in 2023, marking an increase of 1.93%[120]. Expenses and Costs - Total expenses for the three months ended September 30, 2024, increased by 1.4% to $47.696 million from $47.055 million in the same period of 2023[87]. - Property operating expenses for the nine months ended September 30, 2024, increased by 10.2% to $30.312 million, primarily due to higher repairs and maintenance expenses[90]. - General and administrative expenses for the nine months ended September 30, 2024, increased by 8.9% to $17.565 million, attributed to higher marketing and leasing costs[92]. - Total expenses increased by 3.5% in the 2024 Period compared to the 2023 Period, reaching $143,759 thousand[90]. Development Projects - The company has a development pipeline that includes up to 3,700 apartment units and 975,000 square feet of retail and office space, primarily located near Metro stations in Montgomery County, Maryland[79]. - The total cost of the Twinbrook Quarter Phase I project is expected to be approximately $331.5 million, with $311.3 million already invested as of September 30, 2024[80]. - The Hampden House project in downtown Bethesda is expected to cost approximately $246.4 million, with $185.2 million invested to date[81]. - The development potential of the entire 18.4-acre Twinbrook Quarter site includes 1,865 residential units and 473,000 square feet of retail space[80]. Debt and Liquidity - The company's outstanding debt totaled approximately $1.51 billion as of September 30, 2024, with a weighted average remaining term of 8.7 years[79]. - The company maintains a total debt to total estimated asset market value ratio of under 50%, allowing for additional secured borrowings if necessary[79]. - The company has availability of approximately $172.6 million under its Credit Facility as of September 30, 2024[79]. - The Company was in compliance with all financial covenants as of September 30, 2024, including a leverage ratio of less than 60%[112]. - The Company expects to meet short-term liquidity requirements through cash provided from operations, available cash, and its existing line of credit[108]. Leasing and Occupancy - The commercial leasing percentage increased to 95.7% as of September 30, 2024, compared to 94.1% a year earlier, indicating improved occupancy rates[79]. - Approximately 96,200 square feet (91.6%) of the retail space in Twinbrook Quarter has been leased, with openings expected throughout 2025[80]. - The residential portfolio was 98.8% leased as of September 30, 2024, compared to 97.5% a year earlier[132]. - The leasing percentage at office mixed-use properties increased to 88.9% as of September 30, 2024, from 83.6% in 2023, showing improvement in this segment[124]. Cash Flow - Net cash provided by operating activities for the nine months ended September 30, 2024, was $92.4 million, compared to $85.0 million for the same period in 2023[104]. - Cash and cash equivalents totaled $7.2 million as of September 30, 2024, compared to $6.6 million as of September 30, 2023[103]. - The company reported a net decrease in cash and cash equivalents of $1.2 million for the nine months ended September 30, 2024, compared to a decrease of $6.7 million in the same period in 2023[104]. Stock and Incentives - The Company issued 43,452 shares under the Dividend Reinvestment Plan (DRIP) at a weighted average discounted price of $37.21 during the nine months ended September 30, 2024[110]. - The company granted 117,000 restricted shares to officers under the 2024 Stock Incentive Plan, with an estimated future expense of approximately $3.0 million related to unvested restricted stock grants[117].

Revenue Growth - Total revenue for Q3 2024 increased to $67.3 million, up from $63.8 million in Q3 2023, representing a growth of 5.5%[1] - For the nine months ended September 30, 2024, total revenue increased to $200.9 million from $190.5 million, a growth of 7.0%[2] - Total revenue for the nine months ended September 30, 2024, reached $200,923,000, up 5.5% from $190,524,000 in the same period of 2023[4] Net Income - Net income for Q3 2024 rose to $19.6 million, compared to $16.7 million in Q3 2023, an increase of 17.4%[1] - Net income for the nine months ended September 30, 2024, increased to $57.3 million, compared to $51.6 million in the same period of 2023, an increase of 11.0%[2] - Net income attributable to Saul Centers, Inc. for Q3 2024 was $14,481,000, a 13% increase compared to $12,819,000 in Q3 2023[4] - Net income for the three months ended September 30, 2024, was $19,592,000, compared to $16,711,000 for the same period in 2023, representing a 11.1% increase[9] - Net income available to common stockholders for the nine months ended September 30, 2024, was $34,164,000, compared to $31,088,000 in the same period of 2023[4] Funds from Operations (FFO) - Funds from operations (FFO) available to common stockholders increased to $28.9 million, or $0.84 per share, from $26.0 million, or $0.78 per share, in Q3 2023[1] - Funds from Operations (FFO) for Q3 2024 was $31,664,000, representing a 10% increase from $28,807,000 in Q3 2023[5] - Basic FFO per share available to common stockholders for Q3 2024 was $0.84, up from $0.78 in Q3 2023[5] Property Performance - Same property revenue increased by $3.5 million, or 5.5%, for Q3 2024 compared to Q3 2023[1] - Same property operating income for the nine months increased by $7.3 million, or 5.2%[2] - Total same property revenue for Q3 2024 was $67,288,000, an increase of 5.9% from $63,766,000 in Q3 2023[7] - Shopping Center same property operating income increased by $5.6 million to $109.1 million, primarily due to higher lease termination fees and base rent[2] - Total same property operating income for the nine months ended September 30, 2024, reached $147,759,000, compared to $140,433,000 in 2023, reflecting a 5.3% increase[9] Leasing and Portfolio - As of September 30, 2024, 95.7% of the commercial portfolio was leased, up from 94.2% a year earlier[1] Operating Income - Property operating income for the same period was $49,557,000, up from $46,405,000, indicating a 4.6% growth year-over-year[9] - Shopping Centers generated operating income of $36,362,000 for the three months ended September 30, 2024, compared to $34,069,000 in 2023, marking a 6.7% rise[9] - Mixed-Use properties contributed $13,195,000 to operating income for the three months ended September 30, 2024, compared to $12,336,000 in the same period last year, a 7% increase[10] - Office mixed-use properties reported $6,847,000 in operating income for the three months ended September 30, 2024, up from $6,177,000 in 2023, a 10.9% increase[10] - Residential mixed-use properties (residential activity) generated $5,489,000 for the three months ended September 30, 2024, compared to $5,297,000 in 2023, a 3.6% increase[10] Expenses - General and administrative expenses for the three months ended September 30, 2024, were $5,680,000, compared to $5,179,000 in the same period last year, a 9.7% increase[9] - The company reported a total of $36,928,000 in interest expense and amortization of deferred debt costs for the nine months ended September 30, 2024, compared to $36,518,000 in 2023[9] Strategic Focus - The company continues to focus on enhancing same property operating income as a key performance metric, excluding properties not in operation for the entire reporting periods[9]

BETHESDA, Md., Nov. 7, 2024 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust ("REIT"), announced operating results for the quarter ended September 30, 2024 ("2024 Quarter").  Total revenue for the 2024 Quarter increased to $67.3 million from $63.8 million for the quarter ended September 30, 2023 ("2023 Quarter").  Net income increased to $19.6 million for the 2024 Quarter from $16.7 million for the 2023 Quarter primarily due to (a) higher base rent of $2.2 million, (b) ...

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