SAUL CENTERS INC
For the period ended Mar 31, 2025. Filed May 8, 2025.
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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.
Mar 31, 2025 · Filed May 8, 2025
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Item 2. Results of Operations:
Three months ended March 31, 2025 (the “2025 Quarter”) compared to the three months ended March 31, 2024 (the “2024 Quarter”)
Net income for the 2025 Quarter decreased to $12.8 million from $18.3 million for the 2024 Quarter. The primary reason for the decline in net income was the $6.5 million adverse impact of the initial operations of Twinbrook Quarter Phase I. Significant changes in revenue and expenses are discussed below.
Revenue
| Three Months Ended March 31, · 2024 to 2025 Change | ||||
|---|---|---|---|---|
| (Dollars in thousands) | 2025 | 2024 | Amount | Percent |
| Base rent | $57,554 | $53,098 | $4,456 | 8.4% |
| Expense recoveries | 11,898 | 10,566 | 1,332 | 12.6% |
| Percentage rent | 872 | 878 | (6) | (0.7)% |
| Other property revenue | 610 | 1,099 | (489) | (44.5)% |
| Credit losses on operating lease receivables, net | (387) | (342) | (45) | 13.2% |
| Rental revenue | 70,547 | 65,299 | 5,248 | 8.0% |
| Other revenue | 1,309 | 1,393 | (84) | (6.0)% |
| Total revenue | $71,856 | $66,692 | $5,164 | 7.7% |
Total revenue increased 7.7% in the 2025 Quarter compared to the 2024 Quarter, as described below.
Base Rent. Base rent includes $2.2 million and $13,500 for the 2025 Quarter and 2024 Quarter, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $0.2 million and $0.2 million for the 2025 Quarter and 2024 Quarter, respectively, to recognize income from the amortization of in-place leases acquired in connection with purchased real estate investment properties. The $4.5 million increase in base rent in the 2025 Quarter compared to the 2024 Quarter is primarily attributable to (a) higher commercial base rent, exclusive of Twinbrook Quarter Phase I, of $2.2 million, (b) higher base rent related to Twinbrook Quarter Phase I of $1.9 million and (c) higher residential base rent, exclusive of Twinbrook Quarter Phase I, of $0.4 million.
Expense recoveries. The $1.3 million increase in expense recoveries in the 2025 Quarter compared to the 2024 Quarter is primarily attributable to an increase in recoverable property operating expenses.
Other property revenue. The $0.5 million decrease in other property revenue in the 2025 Quarter compared to the 2024 Quarter is primarily attributable to insurance proceeds in the 2024 Quarter relating to lost rents because of a tenant that temporarily closed its operations.
Expenses
| Three Months Ended March 31, · 2024 to 2025 Change | ||||
|---|---|---|---|---|
| (Dollars in thousands) | 2025 | 2024 | Amount | Percent |
| Property operating expenses | $13,742 | $10,545 | $3,197 | 30.3% |
| Real estate taxes | 7,984 | 7,623 | 361 | 4.7% |
| Interest expense, net and amortization of deferred debt costs | 16,747 | 12,448 | 4,299 | 34.5% |
| Depreciation and amortization of deferred leasing costs | 14,523 | 12,029 | 2,494 | 20.7% |
| General and administrative | 6,012 | 5,784 | 228 | 3.9% |
| Total expenses | $59,008 | $48,429 | $10,579 | 21.8% |
Total expenses increased 21.8% in the 2025 Quarter compared to the 2024 Quarter, as described below. The increase in total expenses is primarily due to the initial operations of Twinbrook Quarter Phase I, which generated $8.6 million of expenses during the 2025 Quarter.
Property Operating Expenses. Property operating expenses increased 30.3% in the 2025 Quarter compared to the 2024 Quarter primarily due to (a) higher repairs and maintenance expenses, exclusive of Twinbrook Quarter, of $2.0 million, of which approximately $1.7 million is an increase in snow removal costs and (b) the operations of Twinbrook Quarter Phase I, which was not in operations in the 2024 Quarter, of $1.1 million.
Interest Expense, net and Amortization of Deferred Debt Costs. Interest expense, net and amortization of deferred debt costs increased 34.5% in the 2025 Quarter compared to the 2024 Quarter primarily due to (a) the initial operations of Twinbrook Quarter Phase I of $4.8 million and (b) $1.3 million of higher interest incurred as a result of higher average outstanding debt, partially offset by (c) $1.0 million of lower interest incurred as a result of lower average interest rates and (d) higher capitalized interest of $0.9 million relating to Hampden House.
Depreciation and amortization of deferred leasing costs: Depreciation and amortization of deferred leasing costs increased 20.7% in the 2025 Quarter compared to the 2024 Quarter primarily due to $2.2 million of depreciation expense related to Twinbrook Quarter Phase I, which was not in service in the 2024 Quarter.
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