SAUL CENTERS INC
For the period ended Dec 31, 2024. Filed Feb 28, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 28, 2025
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-29.
0000907254-24-000020
Item 7. Management’s Discussion and Analysis of Financial Condition And Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-28.
0000907254-25-000022
Item 7. Management’s Discussion and Analysis of Financial Condition And Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 105 previous paragraphs and 100 current paragraphs.
50 unchanged; 36 reworded; 13 added; 16 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Revenue
Current report
Other Revenue: The $0.5 million decrease in other revenue was primarily due to lower parking revenue of $0.3 million.
Current report
Expenses
Current report
Depreciation and amortization of deferred leasing costs: Depreciation and amortization of deferred leasing costs increased $2.1 million in 2024 compared to 2023 primarily due to Twinbrook Quarter Phase I assets being placed in service during 2024.
Current report
General and administrative: General and administrative costs increased $1.6 million in 2024 compared to 2023 primarily due to (a) higher development start-up costs relating to Twinbrook Quarter Phase 1 of $0.8 million, (b) higher consulting fees of $0.4 million and (c) higher director fees of $0.4 million.
Current report
(1)Includes $187.0 million outstanding under the Credit Facility. See Note 5 to the Consolidate Financial Statements.
Current report
On May 28, 2024, the Company closed on a 13.4-year, non-recourse, $100.0 million mortgage secured by Avenel Business Park, Leesburg Pike Plaza and White Oak Shopping Center. The loan matures in 2037, bears interest at a fixed-rate of 6.38%, requires monthly principal and interest payments of $686,300 based on a 23.4-year amortization schedule and requires a final principal payment of $61.5 million at maturity. Proceeds were used to repay the remaining balance of approximately $51.2 million on the existing mortgages secured by the properties and reduce the outstanding balance of the Company’s Credit Facility. The loan is cross-collateralized and coterminous with the mortgage secured by Beacon Center and Seven Corners Center.
Current report
On September 24, 2024, the Company closed on a 15-year, $70.0 million mortgage secured by Thruway Shopping Center. The loan matures in 2039, bears interest at a fixed-rate of 6.41%, requires monthly principal and interest payments of $468,700 based on a 25-year amortization schedule and requires a final principal payment of $41.7 million at maturity. Proceeds were used to reduce the outstanding balance of the Company’s Credit Facility.
Current report
Restricted Stock Compensation
Current report
On May 17, 2024, following shareholder approval, the Company established the Saul Centers, Inc. 2024 Stock Incentive Plan (the “Incentive Plan”), under which various equity incentives may be granted. On May 17, 2024, the Company granted 117,000 restricted shares to officers, divided equally between time-vested and performance-based awards. On May 20, 2024, the Company granted 18,000 restricted shares to non-employee directors, which will vest on an annual basis over three years.
Current report
The Company uses the fair value method to value and account for restricted stock grants. The fair value of restricted stock granted is determined at the time of the grant using a discounted cash flow analysis, and the following assumptions: (1) Expected Dividend Yield determined by management after considering the Company’s current and historic dividend yield, the Company’s yield in relation to other retail REITs and the Company’s market yield at the grant date; (2) the closing price of the Company’s common stock on the date of the grant; (3) estimated forfeitures; and (4) a present value discount rate equal to the Expected Dividend Yield.
Current report
For the year ended December 31, 2024, restricted stock compensation expense totaled $0.5 million, which was included in general and administrative expense in the Consolidated Statement of Operations. As of December 31, 2024, the estimated future expense related to unvested restricted stock grants was approximately $3.2 million.
Current report
For accounting purposes, performance-based awards are not treated as granted until the Board establishes the target for those awards. As of December 31, 2024, (a) no expense has been recognized and (b) no estimate of future expense has been made for the 35,100 performance-based restricted shares awarded to officers where the accounting grant date has not occurred. If those awards had been granted for accounting purposes as of December 31, 2024, the additional estimated future expense would have been approximately $1.3 million, calculated using the fair value method and based on the closing share price of $38.80 on December 31, 2024, the final trading day of 2024.
Removed paragraphs (16)
Previous report
Base rent
Previous report
Expense recoveries
Previous report
Other property revenue
Previous report
The $0.5 million increase in 2023 compared to 2022 is primarily attributable to higher miscellaneous income received in the Shopping Center portfolio.
Previous report
Other Revenue
Previous report
Other revenue increased $3.1 million primarily due to (a) higher termination fees of $2.7 million and (b) higher parking revenue of $0.4 million.
Previous report
Property operating expenses
Previous report
Real estate taxes
Previous report
General and administrative
Previous report
General and administrative costs increased $1.1 million in 2023 compared to 2022 primarily due to (a) higher employee compensation and benefits of $1.9 million, partially offset by (b) fees paid in 2022 to third-parties related to the early refinance of loans at Beacon Center and Seven Corners Center totaling $0.6 million, which were accounted for as loan modifications and (c) lower credit facility administration costs of $0.3 million.
Previous report
(1)Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square
Previous report
(2)Includes The Waycroft and Park Van Ness
Previous report
(3)Includes Clarendon South Block, The Waycroft and Park Van Ness
Previous report
(1)Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square
Previous report
(2)Includes The Waycroft and Park Van Ness
Previous report
(3)Includes Clarendon South Block, The Waycroft and Park Van Ness
Reworded paragraphs (36)
Previous wording
The Company’s primary strategy is to continue to focus on diversification of its assets through development of transit-oriented, residential mixed-use projects and expansion of and additions to its grocery-anchored shopping centers in the Washington, DC metropolitan area. The Company’s operating strategy also includes improvement of the operating performance of its assets, internal growth of its Shopping Centers through the addition of pad sites, and supplementing its development pipeline with selective redevelopment and renovations of its core Shopping Centers. Including Twinbrook Quarter and Hampden House, the Company has a pipeline of entitled sites in its portfolio, some of which are currently Shopping Centers, for development of up to 3,700 apartment units and 975,000 square feet of retail and office space. All such sites are located proximate to Washington Metropolitan Area Transit Authority red line Metro stations in Montgomery County, Maryland.
Current wording
The Company’s primary strategy is to continue to focus on diversification of its assets through development of transit-oriented, residential mixed-use projects and expansion of and additions to its grocery-anchored shopping centers in the Washington, DC metropolitan area. The Company’s operating strategy also includes improvement of the operating performance of its assets, internal growth of its Shopping Centers through the additions of pad sites, and supplementing its development pipeline with selective redevelopment and renovations of its core Shopping Centers. Including Twinbrook Quarter and Hampden House, the Company has a pipeline of entitled sites in its portfolio, some of which are currently Shopping Centers, for development of up to an additional 3,200 apartment units and 870,000 square feet of retail and office space. All such sites are located proximate to Washington Metropolitan Area Transit Authority red line Metro stations in Montgomery County, Maryland.
Previous wording
The Company intends to selectively add free-standing pad site buildings within its Shopping Center portfolio and replace underperforming tenants with tenants that generate strong traffic, including anchor stores such as supermarkets and drug stores. The Company has two executed leases and three leases are under negotiation for a total of five more pad sites.
Current wording
The Company intends to selectively add free-standing pad site buildings within its Shopping Center portfolio and replace underperforming tenants with tenants that generate strong traffic, including anchor stores such as grocery stores. The Company has two executed leases and four leases are under negotiation for a total of six more pad sites.
Previous wording
Prior to the COVID-19 pandemic, economic conditions within the local Washington, DC metropolitan area had remained relatively stable. Issues facing the Federal government relating to taxation, spending and interest rate policy will likely continue to impact the office, retail and residential real estate markets over the coming years. Because the majority of the Company’s property operating income is produced by our Shopping Centers, we continually monitor the implications of government policy changes, as well as shifts in consumer demand between on-line and in-store shopping, on future shopping center construction and retailer store expansion and closure plans. Based on our observations, we continue to adapt our marketing and merchandising strategies in ways to maximize our future performance. The Company's commercial leasing percentage, on a same property basis, which excludes the impact of properties not in operation for the entirety of the comparable periods, increased to 94.2% at December 31, 2023, from 93.2% at December 31, 2022.
Current wording
Actions taken by the Federal government will likely continue to impact the office, retail and residential real estate markets over the coming years. Because the majority of the Company’s property operating income is produced by our Shopping Centers, we continually monitor the implications of government policy changes, as well as shifts in consumer demand between on-line and in-store shopping, on future shopping center construction and retailer store expansion and closure plans. Based on our observations, we continue to adapt our marketing and merchandising strategies in ways to maximize our future performance. The Company's commercial leasing percentage, on a same property basis, which excludes the impact of properties not in operation for the entirety of the comparable periods, increased to 95.2% at December 31, 2024, from 94.1% at December 31, 2023.
Previous wording
The Company maintains a ratio of total debt to total asset value of under 50%, which allows the Company to obtain additional secured borrowings if necessary. As of December 31, 2023, including $100.0 million of hedged variable-rate debt, total fixed-rate debt with staggered maturities from 2024 to 2041 represented approximately 80.4% of the Company’s notes payable, thus minimizing refinancing risk. The Company’s unhedged variable-rate debt consists of $276.0 million outstanding under the Credit Facility. As of December 31, 2023, the Company has availability of approximately $137.9 million under its Credit Facility.
Current wording
The Company maintains a ratio of total debt to total asset value of under 50%, which allows the Company to obtain additional secured borrowings if necessary. As of December 31, 2024, including $100.0 million of hedged variable-rate debt, total fixed-rate debt with staggered maturities from 2026 to 2041 represented approximately 88.0% of the Company’s notes payable, thus minimizing refinancing risk. The Company’s unhedged variable-rate debt consists of $187.0 million outstanding under the Credit Facility. As of December 31, 2024, the Company has availability of approximately $134.5 million under its Credit Facility.
Previous wording
The following is a discussion of the components of revenue and expense for the entire Company. This section generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
Current wording
The following is a discussion of the components of revenue and expense for the entire Company. This section generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on February 29, 2024.
Previous wording
Total revenue increased 4.6% in 2023 compared to 2022 as described below.
Current wording
Total revenue increased 4.5% in 2024 compared to 2023 as described below.
Previous wording
The $7.1 million increase in base rent in 2023 compared to 2022 was primarily attributable to (a) higher commercial base rent of $4.3 million and (b) higher residential rent of $2.8 million.
Current wording
Base rent: Base rent includes $(7.8) million and $(0.6) million for 2024 and 2023, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $0.8 million and $1.3 million for 2024 and 2023, respectively, to recognize income from the amortization of in-place leases acquired in connection with purchased real estate investment properties. The $8.3 million increase in base rent in 2024 compared to 2023 was primarily attributable to (a) higher commercial base rent of $6.4 million and (b) higher residential rent of $1.9 million.
Previous wording
The $1.1 million increase in expense recoveries in 2023 compared to 2022 is primarily attributable to an increase in recoverable property operating expenses.
Current wording
Expense recoveries: The $3.7 million increase in expense recoveries in 2024 compared to 2023 is primarily attributable to an increase in recoverable property operating expenses.
Previous wording
Credit (losses) recoveries on operating lease receivables, net was a loss of $0.5 million during 2023. The loss is primarily due to higher lease receivable reserves in 2023.
Current wording
Credit (losses) recoveries on operating lease receivables, net: Credit (losses) recoveries on operating lease receivables, net was a loss of $0.9 million during 2024. The loss is primarily due to higher reserve on lease receivables in 2024.
Previous wording
Total expenses increased 4.3% in 2023 compared to 2022 as described below.
Current wording
Total expenses increased 7.0% in 2024 compared to 2023 as described below.
Previous wording
Property operating expenses increased $1.6 million in 2023 compared to 2022 primarily due to (a) increased insurance premiums across the portfolio of $0.6 million, (b) higher property employee compensation and benefits of $0.4 million, (c) increased repairs and maintenance across the portfolio of $0.3 million, and (d) higher parking expenses in the Mixed-Use portfolio of $0.1 million.
Current wording
Property operating expenses: Property operating expenses increased $4.2 million in 2024 compared to 2023 primarily due to (a) increased repairs and maintenance expense across the portfolio of $3.3 million, of which $1.4 million was related to snow removal costs, (b) higher property employee compensation and benefits of $0.4 million and (c) increased utilities expense across the portfolio of $0.3 million.
Previous wording
Real estate taxes increased $1.1 million in 2023 compared to 2022 primarily due to higher tax assessments across the Shopping Center portfolio of $1.0 million.
Current wording
Real estate taxes: Real estate taxes increased $0.7 million in 2024 compared to 2023, which was due to higher tax assessments across the portfolio.
Previous wording
Interest expense, net and amortization of deferred debt costs increased $5.2 million in 2023 compared to 2022 primarily due to (a) higher interest incurred as a result of higher average interest rates of $7.5 million, (b) higher interest incurred as a result of higher average outstanding debt of $5.9 million, partially offset by (c) higher capitalized interest of $8.3 million related to Twinbrook Quarter Phase I and Hampden House.
Current wording
Interest expense, net and amortization of deferred debt costs: Interest expense, net and amortization of deferred debt costs increased $4.5 million in 2024 compared to 2023 primarily due to (a) $7.9 million of higher interest incurred as a result of higher average outstanding debt partially offset by (b) $0.3 million of lower interest incurred as a result of lower average interest rates and (c) higher capitalized interest of $3.3 million related to Twinbrook Quarter Phase I and Hampden House.
Previous wording
We define same property revenue as total revenue minus the revenue of properties not in operation for the entirety of the comparable reporting periods, and we define same property 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 sale of property and (g) the operating income of properties that were not in operation for the entirety of the comparable periods.
Current wording
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 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 sale of property, (g) straight-line base rent and above/below market lease amortization of leases acquired in connection with purchased real estate investment properties and (h) the operating income of properties that were not in operation for the entirety of the comparable periods.
Previous wording
The tables below provide reconciliations of property revenue and property operating income under GAAP to same property revenue and same property operating income for the indicated periods. No properties were excluded from same property results.
Current wording
The tables below provide reconciliations of property revenue and property operating income under GAAP to same property revenue and same property operating income for the indicated periods. One property, Twinbrook Quarter Phase I, was excluded from same property results.
Previous wording
The $11.3 million increase in same property revenue in 2023 compared to 2022 was primarily due to (a) higher base rent of $7.3 million, (b) higher termination fees of $2.7 million, and (c) higher expense recoveries of $1.1 million.
Current wording
The $10.0 million increase in same property revenue in 2024 compared to 2023 was primarily due to (a) higher commercial base rent of $5.5 million, (b) higher property operating expense recoveries of $3.7 million and (c) higher residential base rent of $1.3 million partially offset by (d) higher credit losses on operating receivables of $0.3 million.
Previous wording
During the year ended 2023, Shopping Center same property operating income increased 4.2% and Mixed-Use same property operating income increased 6.5%. Shopping Center same property operating income increased primarily due to (a) higher base rent of $4.2 million and (b) higher termination fees of $2.3 million, partially offset by (c) lower expense recoveries, net of expenses of $0.7 million. Mixed-Use same property operating income increased primarily due to higher base rent of $3.1 million.
Current wording
During 2024, Shopping Center same property operating income increased 3.3% and Mixed-Use same property operating income increased 3.3%. Shopping Center same property operating income increased primarily due to higher base rent of $4.5 million. Mixed-Use same property operating income increased primarily due to (a) higher residential base rent of $1.3 million and (b) higher commercial base rent of $1.0 million partially offset by (c) lower parking income, net of expenses, of $0.5 million.
Previous wording
Cash and cash equivalents were $8.4 million and $13.3 million at December 31, 2023 and 2022, respectively. The changes in cash and cash equivalents during the years ended December 31, 2023 and 2022 were attributable to operating, investing and financing activities, as described below.
Current wording
Cash and cash equivalents were $10.3 million and $8.4 million at December 31, 2024 and 2023, respectively. The changes in cash and cash equivalents during the years ended December 31, 2024 and 2023 were attributable to operating, investing and financing activities, as described below.
Previous wording
Net cash used in investing activities includes property acquisitions, developments, redevelopments, tenant improvements and other property capital expenditures. The $86.8 million increase in cash used in investing activities is primarily due to (a) higher development expenditures of $76.4 million and (b) higher additions to real estate investments throughout the portfolio of $10.4 million.
Current wording
Net cash used in investing activities includes property acquisitions, developments, redevelopments, tenant improvements and other property capital expenditures. The $14.9 million decrease in cash used in investing activities is primarily due to (a) decreased development expenditures of $25.8 million partially offset by (b) increased additions to real estate investments throughout the portfolio of $11.0 million.
Previous wording
Net cash provided by (used in) financing activities represents (a) cash received from loan proceeds and issuance of common stock, preferred stock and limited partnership units minus (b) cash used to repay and curtail loans, redeem preferred stock and pay dividends and distributions to holders of common stock, preferred stock and limited partnership units. See Note 5 to the Consolidated Financial Statements for a discussion of financing activity.
Current wording
Net cash provided by financing activities represents (a) cash received from loan proceeds and issuance of common stock, preferred stock and limited partnership units minus (b) cash used to repay and curtail loans, redeem preferred stock and pay dividends and distributions to holders of common stock, preferred stock and limited partnership units. See Note 5 to the Consolidated Financial Statements for a discussion of financing activity.
Previous wording
The Company is developing Twinbrook Quarter Phase I (“Phase I”) located in Rockville, Maryland. Phase I includes an 80,000 square foot Wegmans, approximately 25,000 square feet of small shop space, 450 apartments and a 230,000 square foot office building. The office tower portion of Phase I is not being constructed at this time. In connection with the development of the residential and retail portions of Phase I, we must also invest in infrastructure and other items that will support both Phase I and other portions of the development of Twinbrook Quarter. Excluding imputed capitalized interest, the total cost of the project is expected to be approximately $331.5 million, of which $271.4 million is related to the development of the residential and retail portions of Phase I and $60.1 million is related to infrastructure and other items. Of the expected $331.5 million total cost, $263.2 million has been invested to date. A portion of the cost of the project is being financed by a $145.0 million construction-to-permanent loan. During the second quarter of 2023, the Company commenced drawing on the loan and, as of December 31, 2023, the outstanding balance of the loan was $72.4 million, net of unamortized deferred debt costs. Sitework and ground floor retail façade work continues around all four sides of the building. Apartment unit construction is in process on levels two through 12 and work is in process on the lobbies and interior amenity spaces. Initial delivery of Phase I is anticipated in late 2024. The development potential of all phases of the entire 18.4 acre Twinbrook Quarter site totals 1,865 residential units, 473,000 square feet of retail space, and 431,000 square feet of office space.
Current wording
The Company is developing Twinbrook Quarter Phase I (“Phase I”) located in Rockville, Maryland. The residential portion of Phase I was delivered on October 1, 2024 and includes 452 apartment units. The remaining portions of Phase I include an 80,000 square foot Wegmans supermarket, approximately 25,000 square feet of small shop space, and a 230,000 square foot office building. The office tower portion of Phase I is not being constructed at this time. In connection with the development of the residential and retail portions of Phase I, we also invested in infrastructure and other items that will support both Phase I and other portions of the development of Twinbrook Quarter. Excluding imputed capitalized interest, the total cost of the project is expected to be approximately $331.5 million, of which $271.4 million is related to the development of the residential and retail portions of Phase I and $60.1 million is related to infrastructure and other items. Of the expected $331.5 million total cost, $318.0 million has been invested to date. A portion of the cost of the project is being financed by a $145.0 million construction-to-permanent loan. During the second quarter of 2023, the Company commenced drawing on the loan and, as of December 31, 2024, the outstanding balance of the loan was $127.3 million, net of unamortized deferred debt costs. Construction of the residential building is complete and The Milton at Twinbrook Quarter opened and residential tenants began moving in on October 1, 2024. As of February 24, 2025, 202 residential units have been leased and occupied. Of the approximately 105,000 square feet of ground floor retail, the base building is complete and 96,600 square feet (92.0%) has been leased. The leased retail space, including Wegmans, is expected to open at various times over 2025 and 2026 as tenants complete their buildouts. The development potential of all phases of the entire 18.4 acre Twinbrook Quarter site totals 1,865 residential units, 473,000 square feet of retail space, and 431,000 square feet of office space.
Previous wording
The Company is developing Hampden House, a project located in downtown Bethesda, Maryland that will include up to 366 apartment units and 10,100 square feet of retail space. Excluding imputed capitalized interest, the total cost of the project is expected to be approximately $246.4 million, of which $133.0 million has been invested to date. A portion of the cost of the project is being financed by a $133.0 million construction-to-permanent loan. During the fourth quarter of 2023, the Company commenced drawing on the loan and, as of December 31, 2023, the outstanding balance of the loan was $4.9 million, net of unamortized deferred debt costs. Above grade construction of the structure is on-going with framing and pouring of concrete being performed at the 23rd level above ground. Installation of the precast façade along with exterior metal and framing is in process. Construction is expected to be completed in late 2025.
Current wording
The Company is developing Hampden House, a project located in downtown Bethesda, Maryland that will include up to 366 apartment units and 10,100 square feet of retail space. Excluding imputed capitalized interest, the total cost of the project is expected to be approximately $246.4 million, of which $200.5 million has been invested to date. A portion of the cost of the project is being financed by a $133.0 million construction-to-permanent loan. During the fourth quarter of 2023, the Company commenced drawing on the loan and, as of December 31, 2024, the outstanding balance of the loan was $71.4 million, net of unamortized deferred debt costs. Exterior façade installation is nearing completion. Interior construction and installation of unit finishes continues. Delivery and opening is expected in late 2025.
Previous wording
Long-term liquidity requirements consist primarily of obligations under our long-term debt and dividends paid to our preferred shareholders. The Company anticipates that long-term liquidity requirements will also include amounts required for property acquisitions and developments. The Company may also redevelop certain of the Current Portfolio Properties and may develop additional freestanding outparcels or expansions within certain of the Shopping Centers. Acquisition and development of properties are undertaken only after careful analysis and review, and management’s determination that such properties are expected to provide long-term earnings and cash flow growth. During the coming year, developments, expansions or acquisitions (if any) are expected to be funded with available cash, bank borrowings from the Company’s credit line, construction and permanent financing, proceeds from the operation of the Company’s Dividend Reinvestment and Share Purchase Plan or other external debt or equity capital resources available to the Company. Any future borrowings may be at the Saul Centers, Operating Partnership or Subsidiary Partnership level, and securities offerings may include (subject to certain limitations) the issuance of additional limited partnership interests in the Operating Partnership which can be converted into shares of Saul Centers common stock. The availability and terms of any such financing will depend upon market and other conditions.
Current wording
The Company may also redevelop certain of the Current Portfolio Properties and may develop additional freestanding outparcels or expansions within certain of the Shopping Centers. Acquisition and development of properties are undertaken only after careful analysis and review, and management’s determination that such properties are expected to provide long-term earnings and cash flow growth. During the coming year, developments, expansions or acquisitions (if any) are expected to be funded with available cash, bank borrowings from the Company’s credit line, construction and permanent financing, proceeds from the operation of the Company’s Dividend Reinvestment and Share Purchase Plan or other external debt or equity capital resources available to the Company. Any future borrowings may be at the Saul Centers, Operating Partnership or Subsidiary Partnership level, and securities offerings may include (subject to certain limitations) the issuance of additional limited partnership interests in the Operating Partnership which can be converted into shares of Saul Centers common stock. The availability and terms of any such financing will depend upon market and other conditions.
Previous wording
As of December 31, 2023, the Company had unfunded contractual payment obligations totaling approximately $278.9 million, excluding operating obligations, due within the next 12 months. The table below shows the total contractual payment obligations as of December 31, 2023.
Current wording
As of December 31, 2024, the Company had unfunded contractual payment obligations totaling approximately $333.4 million, excluding operating obligations, due within the next 12 months. The table below shows the total contractual payment obligations as of December 31, 2024.
Previous wording
(1)See Note 7 to Consolidated Financial Statements. Corporate Headquarters Lease amounts represent an allocation to the Company based upon employees’ time dedicated to the Company’s business as specified in the Shared Services Agreement. Future amounts are subject to change as the number of employees employed by each of the parties to the lease fluctuates.
Current wording
(2)See Note 7 to Consolidated Financial Statements. Corporate Headquarters Lease amounts represent an allocation to the Company based upon employees’ time dedicated to the Company’s business as specified in the Shared Services Agreement. Future amounts are subject to change as the number of employees employed by each of the parties to the lease fluctuates.
Previous wording
In December 1995, the Company established a Dividend Reinvestment and Stock Purchase Plan (the “Plan”) to allow its common stockholders and holders of limited partnership interests an opportunity to buy additional shares of common stock by reinvesting all or a portion of their dividends or distributions. The Plan provides for investing in newly issued shares of common stock at a 3% discount from market price without payment of any brokerage commissions, service charges or other expenses. All expenses of the Plan are paid by the Company. The Company issued 53,716 and 138,142 shares under the Plan at a weighted average discounted price of $36.46 and $48.56 per share during the years ended December 31, 2023 and 2022, respectively. The Company issued 44,500 and 26,659 limited partnership units under the Plan at a weighted average price of $33.83 and $49.81 per unit during the years ended December 31, 2023 and 2022, respectively. The Company also credited 7,643 and 5,815 shares to directors pursuant to the reinvestment of dividends specified by the Directors’ Deferred Compensation Plan at a weighted average discounted price of $36.50 and $46.74 per share, during the years ended December 31, 2023 and 2022, respectively.
Current wording
In December 1995, the Company established a Dividend Reinvestment and Stock Purchase Plan (the “Plan”) to allow its common stockholders and holders of limited partnership interests an opportunity to buy additional shares of common stock by reinvesting all or a portion of their dividends or distributions. The Plan provides for investing in newly issued shares of common stock at a 3% discount from market price without payment of any brokerage commissions, service charges or other expenses. All expenses of the Plan are paid by the Company. The Company issued 57,689 and 53,716 shares under the Plan at a weighted average discounted price of $37.50 and $36.46 per share during the years ended December 31, 2024 and 2023, respectively. The Company issued 431,495 and 44,500 limited partnership units under the Plan at a weighted average price of $38.20 and $33.83 per unit during the years ended December 31, 2024 and 2023, respectively. The Company also credited 7,539 and 7,643 shares to directors pursuant to the reinvestment of dividends specified by the Directors’ Deferred Compensation Plan at a weighted average discounted price of $37.50 and $36.50 per share, during the years ended December 31, 2024 and 2023, respectively.
Previous wording
The organizational documents of the Company do not limit the absolute amount or percentage of indebtedness that it may incur. The Board of Directors may, from time to time, reevaluate the Company’s debt capitalization policy in light of current economic conditions, relative costs of capital, market values of the Company property portfolio, opportunities for acquisition, development or expansion, and such other factors as the Board of Directors then deems relevant. The Board of Directors may modify the Company’s debt capitalization policy based on such a reevaluation without shareholder approval and may increase or decrease the Company’s debt to total asset ratio above or below 50% or may waive the policy for certain periods of time. The Company continues to refinance or renegotiate the terms of its outstanding debt in order to extend maturities and obtain generally more favorable loan terms, whenever management determines the financing environment is favorable.
Current wording
The organizational documents of the Company do not limit the absolute amount or percentage of indebtedness that it may incur. The Board of Directors may, from time to time, reevaluate the Company’s debt capitalization policy in light of current economic conditions, relative costs of capital, market values of the Company property portfolio, opportunities for acquisition, development or expansion, and such other factors as the Board of Directors then deems relevant. The Board of Directors may modify the Company’s debt capitalization policy based on such a reevaluation without shareholder approval and may increase or decrease the Company’s debt to total asset ratio above or below 50% or may waive the policy for certain periods of time.
Previous wording
On March 8, 2023, the Company closed on a 10-year, non-recourse, $15.3 million mortgage secured by BJ’s Wholesale Club in Alexandria, Virginia. The loan matures in 2033, bears interest at a fixed-rate of 6.07%, requires monthly principal and interest payments of $99,200 based on a 25-year amortization schedule and requires a final principal payment of $11.7 million at maturity. Proceeds were used to repay the remaining balance of approximately $9.3 million on the existing mortgage and reduce the outstanding balance of the Credit Facility.
Current wording
On December 18, 2024, the Company closed on a 15-year, non-recourse, $50.0 million mortgage secured by Ashburn Village Shopping Center. The loan matures in 2040, bears interest at a fixed-rate of 5.47%, requires monthly principal and interest payments of $306,100 based on a 25-year amortization schedule and requires a final principal payment of $28.4 million at maturity. Proceeds were used to repay the remaining balance of approximately $20.5 million on the existing mortgage and reduce the outstanding balance of the Company’s Credit Facility.
Previous wording
** The interest rate incurred on our variable rate debt changes monthly and is based on the 1-month Term SOFR rate plus a 0.10% SOFR credit spread plus the applicable margin on the Credit Facility, which was 1.40% as of December 31, 2023.
Current wording
** The interest rate incurred on our variable rate debt changes monthly and is based on the 1-month Term Secured Overnight Financing Rate (“SOFR”) rate plus a 0.10% SOFR credit spread plus the applicable margin on the Credit Facility, which was 1.40% as of December 31, 2024.
Previous wording
In 2023, the Company reported Funds From Operations (“FFO”)1 available to common stockholders and noncontrolling interests of $106.3 million, a 3.0% increase from 2022 FFO available to common stockholders and noncontrolling interests of $103.2 million. FFO available to common stockholders and noncontrolling interests increased primarily due to (a) higher base rent of $7.3 million and (b) higher termination fees of $2.7 million, partially offset by (c) higher interest expense, net and amortization of deferred debt costs of $5.2 million and (d) lower expense recovery income, net of expenses, of $1.5 million. The following table presents a reconciliation from net income to FFO available to common stockholders and noncontrolling interests for the periods indicated:
Current wording
In 2024, the Company reported Funds From Operations (“FFO”)1 available to common stockholders and noncontrolling interests of $106.8 million, a 0.5% increased from 2023 FFO available to common stockholders and noncontrolling interests of $106.3 million. FFO available to common stockholders and noncontrolling interests increased primarily due to (a) higher commercial base rent of $6.4 million and (b) higher residential rent of $1.3 million partially offset by (c) the initial operations of Twinbrook Quarter Phase I, which adversely impacted FFO by $5.0 million (d) higher general and administrative costs of $1.2 million and (e) higher credit losses on operating lease receivables of $0.8 million. The following table presents a reconciliation from net income to FFO available to common stockholders and noncontrolling interests for the periods indicated:
Previous wording
The following table sets forth average annualized base rent per square foot and average annualized effective rent per square foot for the Company's commercial properties (all properties except for the apartments within The Waycroft, Clarendon Center and Park Van Ness properties). For purposes of this table, annualized effective rent is annualized base rent minus amortized tenant improvements and amortized leasing commissions.
Current wording
The following table sets forth average annualized base rent per square foot and average annualized effective rent per square foot for the Company's commercial properties (all properties except for the apartments within The Waycroft, Clarendon Center, Park Van Ness and The Milton at Twinbrook Quarter properties). For purposes of this table, annualized effective rent is annualized base rent minus amortized tenant improvements and amortized leasing commissions.
Previous wording
The overall commercial portfolio leasing percentage, on a comparative same property basis, increased to 94.2% at December 31, 2023 from 93.2% at December 31, 2022. Included in the 94.2% of space leased as of December 31, 2023, is approximately 157,355 square feet of space, representing 1.75% of total commercial square footage, that has not been occupied by the tenant. Collectively, these leases are expected to produce approximately $4.1 million of additional annualized base rent, an average of $26.20 per square foot, upon tenant occupancy and following any contractual rent concessions.
Current wording
The overall commercial portfolio leasing percentage, on a comparative same property basis, increased to 95.2% at December 31, 2024 from 94.1% at December 31, 2023. Included in the 95.2% of space leased as of December 31, 2024, is approximately 170,422 square feet of space, representing 1.9% of total commercial square footage, that has not been occupied by the tenant. Collectively, these leases are expected to produce approximately $4.4 million of additional annualized base rent, an average of $25.63 per square foot, upon tenant occupancy and following any contractual rent concessions.
Previous wording
The Mixed-Use commercial leasing percentage is composed of commercial leases at office mixed-use properties and residential mixed-use properties. The Mixed-Use portfolio includes 164,892 square feet of retail space and 971,993 square feet of office space. The leasing percentage at office mixed-use properties increased to 85.3% at December 31, 2023 from 82.0% at December 31, 2022. The retail leasing percentage at residential mixed-use properties increased to 97.0% at December 31, 2023 from 91.2% at December 31, 2022.
Current wording
The Mixed-Use commercial leasing percentage is composed of commercial leases at office mixed-use properties and residential mixed-use properties. The Mixed-Use portfolio includes 68,895 square feet of leasable retail space and 1,067,990 square feet of leasable office space. On a comparative same property basis, the leasing percentage at office mixed-use properties increased to 86.9% at December 31, 2024 from 85.3% at December 31, 2023 and the retail leasing percentage at residential mixed-use properties was unchanged at 97.0% at December 31, 2024 and 2023.
Previous wording
The following table shows selected data for leases executed in the indicated periods. The information is based on executed leases without adjustment for the timing of occupancy, tenant defaults, or landlord concessions. The base rent for an expiring lease is the annualized contractual base rent, on a cash basis, as of the expiration date of the lease. The base rent for a new or renewed lease is the annualized contractual base rent, on a cash basis, as of the expected rent commencement date. Because tenants that execute leases may not ultimately take possession of their space or pay all of their contractual rent, the changes presented in the table provide information only about trends in market rental rates. The actual changes in rental income received by the Company may be different.
Current wording
The following table shows selected data for leases executed in the indicated periods, excluding first generation and/or development leases. The information is based on executed leases without adjustment for the timing of occupancy, tenant defaults, or landlord concessions. The base rent for an expiring lease is the annualized contractual base rent, on a cash basis, as of the expiration date of the lease. The base rent for a new or renewed lease is the annualized contractual base rent, on a cash basis, as of the expected rent commencement date. Because tenants that execute leases may not ultimately take possession of their space or pay all of their contractual rent, the changes presented in the table provide information only about trends in market rental rates. The actual changes in rental income received by the Company may be different.
Previous wording
As of December 31, 2023, 713,271 square feet of Commercial space was subject to leases scheduled to expire in 2024. Below is information about existing and estimated market base rents per square foot for that space.
Current wording
As of December 31, 2024, 930,297 square feet of Commercial space was subject to leases scheduled to expire in 2025. Below is information about existing and estimated market base rents per square foot for that space.
Previous wording
The Residential portfolio was 98.0% leased at December 31, 2023, compared to 97.2% at December 31, 2022.
Current wording
On a same property basis, excluding The Milton at Twinbrook Quarter, the Residential portfolio was 98.3% leased at December 31, 2024, compared to 98.0% at December 31, 2023.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Long-term liquidity requirements consist primarily of obligations under our long-term debt and dividends paid to our preferred shareholders. The Company anticipates that long-term liquidity requirements will also include amounts required for property acquisitions and developments.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on March 2, 2023.
Previous report — wording carried elsewhere
Credit (losses) recoveries on operating lease receivables, net
Previous report — wording carried elsewhere
Interest expense, net and amortization of deferred debt costs