SAUL CENTERS INC
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
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Item 2. Results of Operations:
Results of Operations
Three months ended September 30, 2024 (the “2024 Quarter”) compared to the three months ended September 30, 2023 (the “2023 Quarter”)
Net income for the 2024 Quarter increased to $19.6 million from $16.7 million for the 2023 Quarter. Significant changes in revenue and expenses are discussed below.
Revenue
| Three Months Ended September 30, · 2023 to 2024 Change | ||||
|---|---|---|---|---|
| (Dollars in thousands) | 2024 | 2023 | Amount | Percent |
| Base rent | $54,332 | $52,141 | $2,191 | 4.2% |
| Expense recoveries | 10,332 | 9,738 | 594 | 6.1% |
| Percentage rent | 381 | 233 | 148 | 63.5% |
| Other property revenue | 521 | 443 | 78 | 17.6% |
| Credit (losses) recoveries on operating lease receivables, net | (16) | (186) | 170 | (91.4)% |
| Rental revenue | 65,550 | 62,369 | 3,181 | 5.1% |
| Other revenue | 1,738 | 1,397 | 341 | 24.4% |
| Total revenue | $67,288 | $63,766 | $3,522 | 5.5% |
Base rent includes $0.4 million and $(0.1) million for the 2024 Quarter and 2023 Quarter, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $0.2 million and $0.3 million, for the 2024 Quarter and 2023 Quarter, respectively, to recognize income from the amortization of in-place leases acquired in connection with purchased real estate investment properties.
Total revenue increased 5.5% in the 2024 Quarter compared to the 2023 Quarter, as described below.
Base rent. The $2.2 million increase in base rent in the 2024 Quarter compared to the 2023 Quarter is primarily attributable to (a) higher commercial base rent of $1.9 million and (b) higher residential base rent of $0.3 million.
Expense recoveries. The $0.6 million increase in expense recoveries in the 2024 Quarter compared to the 2023 Quarter is primarily attributable to an increase in recoverable property operating expenses.
Other revenue. The $0.3 million increase in other revenue in the 2024 Quarter compared to the 2023 Quarter is primarily attributable to higher lease termination fees.
Expenses
| Three Months Ended September 30, · 2023 to 2024 Change | ||||
|---|---|---|---|---|
| (Dollars in thousands) | 2024 | 2023 | Amount | Percent |
| Property operating expenses | $10,111 | $9,720 | $391 | 4.0% |
| Real estate taxes | 7,620 | 7,641 | (21) | (0.3)% |
| Interest expense, net and amortization of deferred debt costs | 12,213 | 12,419 | (206) | (1.7)% |
| Depreciation and amortization of deferred leasing costs | 12,072 | 12,096 | (24) | (0.2)% |
| General and administrative | 5,680 | 5,179 | 501 | 9.7% |
| Total expenses | $47,696 | $47,055 | $641 | 1.4% |
Total expenses increased 1.4% in the 2024 Quarter compared to the 2023 Quarter, as described below.
Property operating expenses. The $0.4 million increase in property operating expenses in the 2024 Quarter compared to the 2023 Quarter is primarily attributable to higher repairs and maintenance expenses across the portfolio of $0.4 million.
General and Administrative. General and administrative expenses increased 9.7% in the 2024 Quarter compared to the 2023 Quarter primarily due to (a) higher marketing and leasing costs for Twinbrook Quarter Phase I of $0.2 million and (b) higher stock compensation expense of $0.2 million.
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Nine months ended September 30, 2024 (the “2024 Period”) compared to the nine months ended September 30, 2023 (the “2023 Period”)
Net income for the 2024 Period increased to $57.3 million from $51.6 million for the 2023 Period. Significant changes in revenue and expenses are discussed below.
Revenue
| Nine Months EndedSeptember 30, · 2023 to 2024 Change | ||||
|---|---|---|---|---|
| (Dollars in thousands) | 2024 | 2023 | Amount | Percent |
| Base rent | $160,641 | $155,750 | $4,891 | 3.1% |
| Expense recoveries | 30,663 | 27,652 | 3,011 | 10.9% |
| Percentage rent | 1,624 | 1,544 | 80 | 5.2% |
| Other property revenue | 2,146 | 1,413 | 733 | 51.9% |
| Credit (losses) recoveries on operating lease receivables, net | (530) | (160) | (370) | 231.3% |
| Rental revenue | 194,544 | 186,199 | 8,345 | 4.5% |
| Other revenue | 6,379 | 4,325 | 2,054 | 47.5% |
| Total revenue | $200,923 | $190,524 | $10,399 | 5.5% |
Base rent includes $(0.4) million and $(0.5) million for the 2024 Period and 2023 Period, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $0.7 million and $0.9 million for the 2024 Period and 2023 Period, respectively, to recognize income from the amortization of in-place leases acquired in connection with purchased real estate investment properties.
Total revenue increased 5.5% in the 2024 Period compared to the 2023 Period, as described below.
Base Rent. The $4.9 million increase in base rent in the 2024 Period compared to the 2023 Period is primarily attributable to (a) higher commercial base rent of $4.0 million and (b) higher residential base rent of $0.9 million.
Expense recoveries. The $3.0 million increase in expense recoveries in the 2024 Period compared to the 2023 Period is primarily attributable to an increase in recoverable property operating expenses.
Other property revenue. The $0.7 million increase in other property revenue in the 2024 Period compared to the 2023 Period is primarily attributable to insurance proceeds of $0.6 million relating to lost rents because of a tenant that temporarily closed its operations.
Other revenue. The $2.1 million increase in other revenue in the 2024 Period compared to the 2023 Period is primarily attributable to higher lease termination fees.
Expenses
| Nine Months EndedSeptember 30, · 2023 to 2024 Change | ||||
|---|---|---|---|---|
| (Dollars in thousands) | 2024 | 2023 | Amount | Percent |
| Property operating expenses | $30,312 | $27,502 | $2,810 | 10.2% |
| Real estate taxes | 22,852 | 22,589 | 263 | 1.2% |
| Interest expense, net and amortization of deferred debt costs | 36,928 | 36,518 | 410 | 1.1% |
| Depreciation and amortization of deferred leasing costs | 36,102 | 36,227 | (125) | (0.3)% |
| General and administrative | 17,565 | 16,125 | 1,440 | 8.9% |
| Total expenses | $143,759 | $138,961 | $4,798 | 3.5% |
Total expenses increased 3.5% in the 2024 Period compared to the 2023 Period, as described below.
Property Operating Expenses. Property operating expenses increased 10.2% in the 2024 Period compared to the 2023 Period primarily due to (a) higher repairs and maintenance expenses across the portfolio of $2.3 million, of which approximately $1.3 million is an increase in snow removal costs, (b) a lease termination fee paid to a tenant of $0.3 million and (c) higher utility expenses across the portfolio of $0.2 million.
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Interest Expense, net and Amortization of Deferred Debt Costs. Interest expense, net and amortization of deferred debt costs increased 1.1% in the 2024 Period compared to the 2023 Period primarily due to (a) higher interest incurred as a result of higher average outstanding debt of $6.0 million and (b) higher interest incurred as a result of higher weighted average interest rates of $0.5 million, partially offset by (c) higher capitalized interest of $6.3 million related to Twinbrook Quarter Phase I and Hampden House.
General and Administrative. General and administrative expenses increased 8.9% in the 2024 Period compared to the 2023 Period primarily due to (a) higher marketing and leasing costs for Twinbrook Quarter Phase I of $0.5 million, (b) higher consulting fees of $0.4 million, (c) higher salaries and benefits of $0.2 million and (d) higher legal fees of $0.2 million.
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