<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - ----- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
-------------------------------------------------
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - ----- EXCHANGE ACT OF 1934
For the transition period from to
------------------------ ---------------------
Commission file number: 1-12254
-------
SAUL CENTERS, INC.
- - --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in Its Charter)
Maryland 52-1833074
- - --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
8401 Connecticut Avenue
Chevy Chase, Maryland 20815
- - --------------------------------------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
(301) 986-6000
- - --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filled by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days. YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date: 11,994,130 shares of common
stock, $0.01 par value, outstanding as of May 13, 1996.
<PAGE>
SAUL CENTERS, INC.
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. FINANCIAL STATEMENTS (UNAUDITED)
(a) Consolidated Balance Sheets as of March 31, 1996
and December 31, 1995. 3
(b) Consolidated Statements of Operations for the
three months ended March 31, 1996 and 1995. 4
(c) Consolidated Statements of Stockholders' Equity
as of March 31, 1996. 5
(d) Consolidated Statements of Cash Flows for the
three months ended March 31, 1996 and 1995 6
(e) Notes to Consolidated Financial Statements 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
(a) Financial Condition 17
(b) Liquidity and Capital Resources 19
(c) Results of Operations
Three Months Ended March 31, 1996 compared to
Three Months Ended March 31, 1995 20
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 22
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 22
2
<PAGE>
SAUL CENTERS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
(IN THOUSANDS) 1996 1995
---------- ------------
<S> <C> <C>
ASSETS
Real estate investments
Land $ 64,682 $ 64,258
Buildings and equipment 258,519 257,404
------------- ------------
323,201 321,662
Accumulated depreciation (94,626) (92,237)
------------- ------------
228,575 229,425
Construction in progress 8,263 6,986
Cash 987 674
Accounts receivable and accrued income,
net 9,068 9,522
Prepaid expenses 4,168 4,629
Deferred debt expense, net 14,705 15,423
Other assets 2,578 2,748
------------- ------------
TOTAL ASSETS $ 268,344 $ 269,407
============= ============
LIABILITIES
Notes payable $ 274,329 $ 273,083
Accounts payable, accrued expenses and
other liabilities 11,907 11,982
Deferred income 1,072 1,077
------------- ------------
TOTAL LIABILITIES 287,308 286,142
------------- ------------
MINORITY INTERESTS -- --
------------- ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.01 par value, 30,000,000
shares authorized, 11,935,150 and
11,879,100 shares issued and outstanding,
respectively 119 119
Additional paid-in capital 12,982 12,243
Accumulated deficit (32,065) (29,097)
------------- ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (18,964) (16,735)
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 268,344 $ 269,407
============= ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
SAUL CENTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE THREE
MONTHS MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996 1995
-------------- --------------
<S> <C> <C>
REVENUE
Base rent $ 12,260 $ 11,739
Expense recoveries 2,293 2,212
Percentage rent 716 601
Other 364 629
-------------- --------------
TOTAL REVENUE 15,633 15,181
-------------- --------------
EXPENSES
Operating expenses 2,217 2,045
Provision for credit losses 55 104
Real estate taxes 1,370 1,400
Interest expense 4,426 4,297
Amortization of deferred debt expense 732 537
Depreciation and amortization 2,680 2,412
General and administrative 754 742
------------- --------------
TOTAL EXPENSES 12,234 11,537
------------- --------------
NET INCOME BEFORE MINORITY INTERESTS 3,399 3,644
------------- --------------
MINORITY INTERESTS
Minority share of income (918) (984)
Distributions in excess of earnings (795) (729)
------------- --------------
TOTAL MINORITY INTERESTS (1,713) (1,713)
------------- --------------
NET INCOME $ 1,686 $ 1,931
============= =============
NET INCOME PER SHARE
Net income per share before minority interests $ 0.21 $ 0.22
============= =============
Net income per share $ 0.14 $ 0.16
============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
SAUL CENTERS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) STOCK CAPITAL DEFICIT TOTAL
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY (DEFICIT):
Balance, December 31, 1994 $ 119 $ 12,243 $ (16,926) $ (4,564)
Net income -- -- 6,361 6,361
Distributions ($1.17 per share) -- -- (13,899) (13,899)
Distributions payable ($.39 per share) -- -- (4,633) (4,633)
------------- ------------- ------------- -------------
Balance, December 31, 1995 119 12,243 (29,097) (16,735)
Issuance of 56,050 shares of common
stock through dividend reinvestment plan -- 739 -- 739
Net income -- -- 1,686 1,686
Distributions payable ($.39 per share) -- -- (4,654) (4,654)
------------- ------------- ------------- -------------
Balance, March 31, 1996 $ 119 $ 12,982 $ (32,065) $ (18,964)
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
SAUL CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE THREE
MONTHS MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
(IN THOUSANDS) 1996 1995
- - -------------- ---------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,686 $ 1,931
---------- ----------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Minority interests 1,713 1,713
Depreciation and amortization 3,412 2,949
Provision for credit losses 55 104
Decrease in accounts receivable 399 1,037
Decrease in prepaid expenses 170 151
Decrease (increase) in other assets 170 (304)
Increase (decrease) in accounts payable
and other liabilities (75) 2,405
Increase (decrease) in deferred income (5) (602)
---------- ----------
Total adjustments 5,839 7,453
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,525 9,384
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate investments (1,539) (1,231)
Additions to construction in progress (1,277) (4,187)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (2,816) (5,418)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 6,402 5,900
Repayments on notes payable (5,156) (987)
Additions to deferred debt expense (14) (2,252)
Proceeds from the reinvestment of dividends
in shares of common stock 739 --
Distributions to common stockholders and
holders of convertible limited partnership
units in the Operating Partnership (6,367) (6,346)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (4,396) (3,685)
---------- ----------
Net increase in cash 313 281
Cash, beginning of period 674 1,027
---------- ----------
Cash, end of period $ 987 $ 1,308
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
SAUL CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION, FORMATION, STRUCTURE AND BASIS OF PRESENTATION
ORGANIZATION
Saul Centers, Inc. ("Saul Centers") was incorporated under the Maryland
General Corporation Law on June 10, 1993. The authorized capital stock of Saul
Centers consists of 30,000,000 shares of common stock, having a par value of
$0.01 per share, and 1,000,000 shares of preferred stock. Each holder of common
stock is entitled to one vote for each share held. In conjunction with the
organization of Saul Centers, 50 shares of common stock were issued to The Saul
Organization (as defined below). Saul Centers, together with its wholly owned
subsidiaries and the limited partnerships of which Saul Centers or one of its
subsidiaries is the sole general partner are referred to collectively as the
"Company".
FORMATION AND STRUCTURE OF COMPANY
Saul Centers was formed to continue and expand the shopping center business
previously owned and conducted by the B.F. Saul Real Estate Investment Trust,
the B.F. Saul Company, Chevy Chase Bank, F.S.B. and certain other affiliated
entities (collectively, "The Saul Organization"). On August 26, 1993, The Saul
Organization transferred to Saul Holdings Limited Partnership, a newly formed
Maryland limited partnership (the "Operating Partnership"), and two newly formed
subsidiary limited partnerships (the "Subsidiary Partnerships") 26 shopping
center properties, one office property, one research park and one office/retail
property and the management functions related to the transferred properties.
These properties and related management functions collectively represent the
"Saul Centers Portfolio Properties." Since its formation, the Company has
purchased three additional community and neighborhood shopping center
properties, and purchased a land parcel which the Company developed into a
neighborhood shopping center. Therefore, as of March 31, 1996, the Company's
properties (the "Current Portfolio Properties") consisted of 30 operating
shopping center properties (the "Shopping Centers"), and three predominantly
office properties (the "Commercial Properties"). Saul Centers completed its
initial stock offerings on August 26, 1993, with the sale of 11,400,000 shares
of common stock at $20 per share in an initial public offering and 479,050
shares of common stock at $20 per share in a private offering to The Saul
Organization (collectively, the "Offerings"). Subsequent to the Offerings,
there were 11,879,100 shares of common stock and no shares of preferred stock
outstanding. Net proceeds of the Offerings (after expenses of approximately
$18.2 million), and net proceeds of new bank borrowings were primarily used to
curtail existing indebtedness related to the Saul Centers Portfolio Properties.
After consummation of the Offerings, Saul Centers owned a 73.0 percent general
partnership interest in the Operating Partnership and a 1.0 percent general
partnership interest in each of the two Subsidiary Partnerships, which were
formed for tax planning purposes and to facilitate future financing by the
Company. Saul Centers made an election to be treated as a real estate
investment trust under the Internal Revenue Code of 1986, as amended (a "REIT").
7
<PAGE>
SAUL CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
1. ORGANIZATION, FORMATION, STRUCTURE AND BASIS OF PRESENTATION
(CONTINUED)
In July 1994, the Company established Saul QRS, Inc. and SC Finance
Corporation, each of which is a wholly owned subsidiary of Saul Centers. Saul
QRS, Inc. was established to succeed to the interest of Saul Centers as the sole
general partner of Saul Subsidiary I Limited Partnership, one of the Subsidiary
Partnerships, and SC Finance Corporation was established for the purpose of
issuing $128 million of collateralized floating rate mortgage notes (the
"Mortgage Notes"). In connection with these transactions, the Operating
Partnership transferred ten Shopping Centers previously owned by it to Saul
Subsidiary I Limited Partnership as an additional capital contribution and Saul
Subsidiary II Limited Partnership transferred one Shopping Center previously
owned by it to Saul Subsidiary I Limited Partnership as an initial capital
contribution in return for a limited partnership interest in Saul Subsidiary I
Limited Partnership. As a consequence of these transfers, Saul Subsidiary I
Limited Partnership currently owns a total of 17 Shopping Centers (the
"Mortgaged Properties"). The Mortgaged Properties, which continue to be managed
by the Operating Partnership, secure the mortgage purchased with proceeds of
issuance of the Mortgage Notes.
As a consequence of the transactions constituting the formation of the
Company and the later transactions described above undertaken in connection with
the Mortgage Note financing, Saul Centers serves as the sole general partner of
Saul Subsidiary II Limited Partnership, one of the Subsidiary Partnerships, and
Saul QRS, Inc., its wholly owned subsidiary, serves as the sole general partner
of Saul Subsidiary I Limited Partnership, in each case holding a 1 percent
general partnership interest. The remaining 99 percent interest in Saul
Subsidiary II Limited Partnership is held by the Operating Partnership as the
sole limited partner. The remaining 99 percent interest in Saul Subsidiary I
Limited Partnership is held in the form of 96.53 percent and 2.47 percent
limited partnership interests by the Operating Partnership and Saul Subsidiary
II Limited Partnership, respectively. Through this structure, the Company owns
100 percent of the Current Portfolio Properties.
BASIS OF PRESENTATION
In the opinion of management, the consolidated financial statements reflect
all adjustments necessary for fair presentation of the financial position and
results of operations of Saul Centers. All such adjustments are of a normal
recurring nature. These consolidated financial statements and the accompanying
notes should be read in conjunction with the audited consolidated financial
statements of Saul Centers for the year ended December 31, 1995, which are
included in its
8
<PAGE>
SAUL CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
1. ORGANIZATION, FORMATION, STRUCTURE AND BASIS OF PRESENTATION
(CONTINUED)
Annual Report on Form 10-K. The results of operations for interim periods are
not necessarily indicative of results to be expected for the year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
The Company, which conducts all of its activities through its subsidiaries,
the Operating Partnership and Subsidiary Partnerships, engages in the ownership,
operation, management, leasing, acquisition, renovation, expansion, development
and financing of community and neighborhood shopping centers and, to a limited
extent, other commercial properties, primarily in the Mid-Atlantic region.
A majority of the Shopping Centers are anchored by several major tenants.
Eighteen of the 30 Shopping Centers are anchored by a grocery store and offer
primarily day-to-day necessities and services. As of April 1996, no single
Shopping Center accounted for more than 11.5 percent of the total Shopping
Center GLA. Only one Shopping Center tenant, Giant Food, accounted for more
than 2.0 percent of the Company's total revenues for the year ending December
31, 1995 and only three Shopping Center tenants, Giant Food, Best Buy, and Chevy
Chase Bank, F.S.B., individually accounted for more than 1.5 percent of total
revenues for 1995.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements of the Company include
the accounts of Saul Centers and the Operating Partnership and Subsidiary
Partnerships which are majority owned by Saul Centers. All significant
intercompany balances and transactions have been eliminated in consolidation.
REAL ESTATE INVESTMENT PROPERTIES
Real estate investment properties are stated at the lower of depreciated
cost or net realizable value based on management's intent to hold such
properties on a long-term basis.
9
<PAGE>
SAUL CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Interest, real estate taxes and other carrying costs are capitalized on
projects under construction. Once construction is substantially complete and
the assets are placed in service, rental income, direct operating expenses,
and depreciation associated with such properties are included in current
operations. Expenditures for repairs and maintenance are charged to
operations as incurred. Interest expense capitalized during the three months
ended March 31, 1996 and 1995, was $171,000 and $18,000, respectively.
In the initial rental operations of development projects, a project is
considered substantially complete and available for occupancy upon completion of
tenant improvements, but no later than one year from the cessation of major
construction activity. Substantially completed portions of a project are
accounted for as separate projects. Depreciation is calculated using the
straight-line method and estimated useful lives of 33 to 50 years for buildings
and up to 20 years for certain other improvements. Leasehold improvements are
amortized over the lives of the related leases using the straight-line method.
ACCOUNTS RECEIVABLE AND ACCRUED INCOME
Accounts receivable primarily represent amounts currently due from tenants
in accordance with the terms of the respective leases. In addition, accounts
receivable include $2,202,000 at March 31, 1996, representing minimum rental
income accrued on a straight-line basis to be paid by tenants over the term of
the respective leases. Receivables are reviewed monthly and reserves are
established with a charge to current period operations when, in the opinion of
management, collection of the receivable is doubtful. Accounts receivable in
the accompanying financial statements are shown net of an allowance for doubtful
accounts of $179,000 at March 31, 1996.
DEFERRED DEBT EXPENSE
Deferred debt expense consists of financing fees and costs incurred to
obtain long-term financing and interest rate protection agreements. These fees
and costs are being amortized over the terms of the respective loans or
agreements. Deferred debt expense in the accompanying financial statements is
shown net of accumulated amortization of $1,622,000 at March 31, 1996.
REVENUE RECOGNITION
Rental and interest income are accrued as earned, except, when doubt exists
as to
10
<PAGE>
SAUL CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
collectibility, accrual is discontinued. When rental payments due under
leases vary from a straight-line basis because of free rent periods or
stepped increases, income is recognized on a straight-line basis in
accordance with generally accepted accounting principles. Expense recoveries
represent property operating expenses billed to tenants, including common
area maintenance, real estate taxes and other recoverable costs. Expense
recoveries are recognized in the period in which the expenses are accrued.
Generally, additional rental income based on a tenant's gross revenue
("percentage rent") is accrued on the basis of the tenant's prior year's
percentage rent, adjusted to give effect to current sales data.
INCOME TAXES
Saul Centers made an election to be treated, and intends to continue
operating so as to qualify, as a REIT under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended, commencing with its taxable year
ended December 31, 1993. A REIT generally will not be subject to federal
income taxation on that portion of its income that qualifies as REIT taxable
income to the extent that it distributes to stockholders at least 95 percent
of its REIT taxable income and complies with certain other requirements.
Saul Centers continues to qualify as a REIT and, therefore, no provision has
been made for federal income taxes in the accompanying financial statements.
STATEMENT OF CASH FLOWS
For purposes of reporting cash flows, cash includes balances on hand and
demand deposits with financial institutions.
PER SHARE DATA
Per share data for net income before minority interests is presented on a
fully converted basis and is computed using weighted average shares of
16,309,628 and 16,272,263, for the quarters ended March 31, 1996 and 1995,
respectively. Per share data relating to net income after minority interests is
computed on the basis of 11,916,465 and 11,879,100 weighted average common
shares outstanding during the quarters ended March 31, 1996 and 1995,
respectively.
11
<PAGE>
SAUL CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
MINORITY INTERESTS - HOLDERS OF CONVERTIBLE LIMITED PARTNER UNITS IN THE
OPERATING PARTNERSHIP
The Saul Organization had a 26.9 percent limited partnership interest,
represented by 4,393,163 Convertible Limited Partnership Units, in the Operating
Partnership as of March 31, 1996. Under the terms of the Operating Partnership
Agreement, The Saul Organization received rights which enable it to convert its
Convertible Limited Partnership Units into shares of Saul Centers' common stock
on a one-for-one basis at the end of the 36-month period commencing after the
completion of the Offerings, provided that it may not exercise the rights at any
time that The Saul Organization owns, directly or indirectly, in the aggregate
more than 24.9 percent of the outstanding equity securities of Saul Centers.
The Saul Organization's 26.9 percent limited partnership interest in the
Operating Partnership is presented as minority interests in the accompanying
financial statements.
DIRECTORS DEFERRED COMPENSATION PLAN
A Deferred Compensation Plan was established by Saul Centers, effective
January 1, 1994, for the benefit of its directors and their beneficiaries.
Before the beginning of any calendar year, a director may elect to defer all
or part of his or her director's fees to be earned in that year and the
following years. A director has the option to have deferred director's fees
paid in cash or in shares of common stock. If the director elects to have
the deferred fees paid in stock, the number of shares distributed to the
director is determined based on the market value of the common stock on the
day the deferred director's fee was earned. Shares authorized and registered
for use under the plan total 70,000. As of March 31, 1996, 18,721 shares had
been credited to the director's deferred fee accounts.
3. CONSTRUCTION IN PROGRESS
Construction in progress includes the costs of redeveloping Seven Corners
center and developing the Caldor store at Great Eastern. Development costs
include direct construction costs and indirect costs such as architectural,
engineering, construction management and carrying costs such as interest, real
estate taxes and insurance. Construction in progress balances as of March 31,
1996 are as follows:
12
<PAGE>
SAUL CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. CONSTRUCTION IN PROGRESS (CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
------------
<S> <C>
Great Eastern $6,742
Seven Corners 1,521
------
$8,263
======
</TABLE>
Construction of the Caldor store at Great Eastern has been completed and
the facility became operational in April, 1996.
4. NOTES PAYABLE
In conjunction with the Offerings, the Company assumed and refinanced with
the existing lenders $74.8 million of mortgage notes payable. The remaining
mortgage and other notes payable assumed by the Company (including accrued
interest and prepayment penalties) were repaid with the net proceeds of the
Offerings and $117.8 million of new bank borrowings. Notes payable totaled
$274.3 million at March 31, 1996, of which $263.0 million is floating rate debt
and $249.8 million of which was capped by interest rate protection agreements
(see "Notes Payable - Interest Rate Protection Agreements").
On August 1, 1994, SC Finance Corporation, a wholly owned subsidiary of
Saul Centers, issued $128 million of Fitch Investors Services, Inc. rated seven-
year Mortgage Notes, consisting of $91 million of Class A Collateralized
Floating Rate Commercial Mortgage Notes, rated "AA", bearing interest at a rate
equal to 0.65 percent above LIBOR, $13 million of Class B Collateralized
Floating Rate Commercial Mortgage Notes, rated "A", bearing interest at a rate
equal to 1.05 percent above LIBOR and $24 million of Class C Collateralized
Floating Rate Commercial Mortgage Notes, rated "BBB", bearing interest at a
rate equal to 1.55 percent above LIBOR. Proceeds from the issuance of these
Mortgage Notes were used to prepay debt of approximately $118 million, which was
scheduled to mature primarily in 1996 and 1997.
As of March 31, 1996, the Company had a $100.1 million secured revolving
credit facility with outstanding borrowings of $83.6 million. The line requires
monthly interest payments of LIBOR plus 1.875 percent. At March 31, 1996, $16.5
million was available for borrowing on the line.
13
<PAGE>
SAUL CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. NOTES PAYABLE (CONTINUED)
As of March 31, 1996, the scheduled maturities of all debt for years ending
December 31, are as follows:
<TABLE>
<CAPTION>
DEBT MATURITY SCHEDULE
----------------------
(IN THOUSANDS)
--------------
<S> <C>
April to December 31, 1996................... $ 956
1997......................................... 1,592
1998......................................... 85,410
1999......................................... 37,917
2000......................................... 11,098
2001......................................... 128,436
Thereafter................................... 8,920
--------
Total $274,329
========
</TABLE>
INTEREST RATE PROTECTION AGREEMENTS
Simultaneously with the completion of the Offerings, the Company (i)
entered into interest rate protection agreements (interest rate caps) to
limit the Company's exposure to increases in interest rates on $199.8 million
of its floating rate debt above a LIBOR strike price of 4.25 percent for a
period of one year ending in August 1994 and (ii) entered into additional
interest rate protection agreements for $199.8 million with a LIBOR strike
price of 5.25 percent for the ensuing four years ending in August 1998. When
adding the Company's current weighted average interest rate "spread" of
approximately 1.45 percent over LIBOR at March 31, 1996 to the 5.25 percent
strike price, the result is a maximum interest rate of approximately 6.70
percent for $199.8 million of the Company's debt. The costs of these
interest rate protection agreements were paid at the time of the Offerings
and the expense is being amortized over the terms of the respective
agreements.
In conjunction with the August 1994 issue of the Mortgage Notes, the
Company purchased $128 million of interest rate protection with a LIBOR strike
price of 7.50 percent for a three-year term following the August 1998 expiration
of the 5.25 percent interest rate protection agreement. The cost of this
interest rate protection agreement was paid at the time of the issue of the
Mortgage Notes and the expense will be amortized over the final three-year term
of the Notes.
14
<PAGE>
SAUL CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. NOTES PAYABLE (CONTINUED)
In March of 1995, the Company purchased $50 million of interest rate
protection with a LIBOR strike price of 7.5 percent for a four-year term
expiring March 1999. When adding the Company's current weighted average
interest rate "spread" of approximately 1.45 percent over LIBOR at March 31,
1996 to the 7.5 percent strike price, the result is a maximum interest rate of
approximately 8.95 percent for $50 million of the Company's March 31, 1996
floating rate debt. Additionally the Company purchased $71.8 million of
interest rate protection with a LIBOR strike price of 7.5 percent for a two-year
term following the August 1998 expiration of the 5.25 percent interest rate
protection agreement. The cost of these interest rate protection agreements was
paid at the March 20, 1995 purchase date and will be amortized on a straight-
line basis over the respective term of the agreements.
As a result of the purchased interest rate protection agreements, $249.8
million of the Company's current floating rate debt is capped, at LIBOR prices
of 5.25 percent ($199.8 million), and 7.5 percent ($50.0 million), respectively.
Approximately $13.2 million of the Company's March 31, 1996 floating rate debt
was not capped.
The Company is exposed to interest rate risk and to risk of credit loss to
the extent the counter party to the interest rate protection agreement is unable
to perform. The interest rate risk refers to the Company's continuing
obligation related to the stated interest rates in the existing debt agreements.
Risk of credit loss is limited to the cost of replacing the interest rate
protection agreements at current rates and not the notional principal amount,
which is the amount upon which interest rates are applied to determine payment
streams under the agreements. The Company does not anticipate non-performance
by the counter parties of which there are three separate institutions. Income
earned by the operation of the interest rate protection agreements for the
quarters ended March 31, 1996 and 1995 was $192,000 and $380,000, respectively,
and was reported as an offset to interest expense.
5. SHAREHOLDERS' EQUITY AND MINORITY INTERESTS
In September 1994, the Emerging Issues Task Force (EITF) reached a
consensus regarding the calculation and presentation of minority interests in
the financial statements of certain real estate investment trusts. The Company
had followed an accepted industry practice presenting minority interests
(calculated as the excess of liabilities over assets contributed, at the
predecessor's historical cost basis, together with the predecessor's subsequent
share of income and distributions) as a component of shareholders' equity. The
EITF concluded that the minority interests should be calculated based on the
predecessor's percentage interest in the equity of the Operating Partnership and
presented outside of shareholders' equity.
15
<PAGE>
SAUL CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. SHAREHOLDERS' EQUITY AND MINORITY INTERESTS (CONTINUED)
The financial statements for the three months ended March 31, 1996 and 1995
reflect the EITF consensus and include a charge to net income of $1,713,000 for
each period, consisting of $918,000 and $984,000 related to the predecessor's
share of the net income for the respective 1996 and 1995 quarters and $795,000
and $729,000 related to distributions to minority interests in excess of
allocated net income for the respective 1996 and 1995 periods.
16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion is based primarily on the consolidated financial
statements of Saul Centers, Inc. ("Saul Centers" and, together with its wholly
owned subsidiaries and the limited partnerships of which it or one if its wholly
owned subsidiaries is the sole general partner, the "Company") as of March 31,
1996 and for the three month period ending March 31, 1996.
FINANCIAL CONDITION
As of March 31, 1996, the Current Portfolio Properties consisted of 30
community and neighborhood shopping center properties (the "Shopping Centers"),
and three predominantly office properties (the "Commercial Properties"), located
in seven states and the District of Columbia. The Commercial Properties consist
of one office property and one office/retail property, both located in the
District of Columbia, and one research park located in a Maryland suburb of
Washington, D.C. See attached Exhibit (Schedule of Portfolio Properties) for a
listing of all properties owned as of March 31, 1996.
At March 31, 1996 and 1995, tenants leased 91 percent of the Company's
leasable area, exclusive of the Seven Corners center which is undergoing a
significant redevelopment (see discussion below). The Company's total
percentage leased as of March 31, 1996 and 1995 was 88 percent and 91 percent,
respectively, including Seven Corners.
The Company has been selectively involved in development and acquisition
activities. The Company continues to evaluate land parcels for retail
development and to evaluate potential acquisitions of operating retail
properties in order to enhance operating income and cash flow growth. The
Company also continues to take advantage of redevelopment and renovation
opportunities within the portfolio, as demonstrated by its recent activities at
Great Eastern, Seven Corners, and Leesburg Pike.
Great Eastern, a neighborhood shopping center currently anchored by Giant
Food, has more than doubled in size to over 250,000 square feet with the
addition of a 113,000 square foot Caldor store and approximately 22,500 square
feet of retail shop space. The construction and development of the Caldor store
was completed in late 1995, and a facade renovation of the entire shopping
center was also substantially completed at that time. The Caldor store opened
and the tenant began paying rent on April 18, 1996.
The renovation and repositioning of Seven Corners, the Company's largest
shopping center, from an enclosed mall to a large community retail center has
been completed. The facade of the second half of the redeveloped center was
completed in September 1995. A 35,000 square foot Barnes & Noble book
superstore opened in early October 1995, and a 50,000 square foot Bob's Store
opened in March 1996. These new tenants accompany the 26,000 square foot Ross
Dress for Less, the 50,000 square foot Best Buy and the renovated and reopened
23,000 square foot Woolworth's store. These five anchor tenants comprise nearly
34 percent of the current leasable space in the shopping center. Construction
was completed in June 1995 of a 16,000
17
<PAGE>
square foot expansion of an outparcel building. This space is fully leased to
service oriented tenants, some of which relocated from the former enclosed mall.
Construction began in February 1996 on two free-standing restaurant pads,
Pizzeria Uno and Wendy's, totaling 10,000 square feet. These tenants are
projected to open for business in early summer of 1996.
Also at Seven Corners, in February 1996, the Company entered into a lease
agreement with Shoppers Food Warehouse to locate their latest prototype 65,000
square foot Shoppers Club grocery store in a portion of the former Woodward &
Lothrop store. The area leased by Shoppers Club consists of 31,000 square feet
of the former department store and 34,000 square feet of new construction. Upon
completion of this phase of expansion, the shopping center will total
approximately 575,000 net leasable square feet. Construction and development of
the grocery store is projected to be completed in the spring of 1997. The
procurement of Shoppers Club as a new grocery store anchor was made possible
when the Company executed an agreement with Woodward & Lothrop to acquire its
135,000 square foot department store lease and 30,000 square foot furniture
store lease in July 1995 for a payment of $1 million, in exchange for the tenant
closing and granting possession of their store to the Company. The stores were
closed and returned to the Company on October 1, 1995.
The Company recently completed a facade renovation at its 80,000 square
foot Leesburg Pike shopping center in Baileys Crossroads, Virginia, which is now
100 percent leased. Zany Brainy, a children's educational game and toy
retailer, opened a 13,300 foot store in September 1995 and joins other
recognized tenants such as CVS Pharmacy, Kinko's and California Pizza Kitchen in
the center.
On January 22, 1996, the Company acquired Clarendon Station, 4,868 square
feet of retail shop space adjacent to the Company's Clarendon property. Both
properties are located across from a Metro subway station entrance in Arlington,
Virginia. The newly acquired property is 100 percent leased to 5 retail service
tenants. The purchase price was $833,500, of which $431,750 was paid in cash
and $401,750 was paid in the form of a four-year mortgage note at a fixed
interest rate of 8.0 percent. The property is zoned for higher density retail
and office uses. There is considerable development activity in the neighborhood
surrounding the Clarendon property.
The Company's capital strategy is to maintain a ratio of total debt to
total asset value of 50 percent or less. Management believes that current total
debt remains less that 50 percent of total asset value. Additionally, the
Company's interest rate protection agreements cap LIBOR on $249.8 million of its
$263.0 million of floating rate debt, which was outstanding at March 31, 1996,
limiting the Company's exposure to increases in interest rates. The Company has
capped LIBOR at 5.25 percent on $199.8 million through August 1998 and has
capped LIBOR at 7.50 percent on an additional $50 million through March 1999.
In conjunction with the August 1, 1994 issue of the Mortgage Notes, the Company
purchased $128 million of interest rate protection agreements, with a LIBOR
strike price of 7.50 percent for a three-year term following the expiration of
the 5.25 percent interest rate protection agreements. In March 1995, the
Company purchased $71.8 million of interest rate protection agreements, with a
LIBOR strike price of 7.50
18
<PAGE>
percent for a two-year term following the expiration of the balance of the 5.25
percent interest rate protection agreements.
The Company expects to use a portion of its unused line of credit, of
which $16.5 million was available at March 31, 1996, to fund the remaining
construction and development costs for its Seven Corners redevelopment and
other renovation activities (see "Liquidity and Capital Resources - Borrowing
Capacity"). The Company intends to finance future acquisitions, development
and debt repayments by utilizing various capital sources, which could include
bank and institutional borrowings and private and public offerings of debt or
equity securities.
The ratings of the Company's $128 million of Mortgage Notes (see "Notes to
Consolidated Financial Statements - Note 4"), which were issued in July, 1994,
were affirmed by Fitch Investors Service, Inc. as of March 1996. Fitch noted
that the affirmation of ratings reflected financial performance consistent with
the initial underwriting of these Mortgage Notes.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
The Company's principal demands for liquidity are expected to be
distributions to its common stockholders and holders of convertible limited
partnership units, debt service and loan repayments, repair and renovation of
the Current Portfolio Properties and acquisition and development activities. In
order to qualify as a REIT for federal income tax purposes, the Company must
distribute to its stockholders at least 95 percent of its "real estate
investment trust taxable income," as defined in the Internal Revenue Code of
1986, as amended.
The Company anticipates that operating revenues will provide the funds
necessary for operations, debt service and distributions. Balloon principal
repayments are expected to be funded by refinancings. The Company expects to
use its unused line of credit to fund its current construction and development
activities.
The Company expects to fulfill its requirements for capital resources in a
variety of ways, by using undistributed cash flow from operations, secured or
unsecured bank and institutional borrowings, private or public offerings of debt
or equity securities and proceeds from the sales of properties. 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 convertible into shares of Saul Centers common stock.
In December 1995, the Company established a Dividend Reinvestment and Stock
Purchase Plan (the "Plan"), to allow its 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
19
<PAGE>
stock at a 3 percent discount from market price without payment of any brokerage
commission, service charges or other expenses. All expenses of the Plan will be
paid for by the Company. The January 31, 1996 dividend was the initial dividend
payment date under which the Company's stockholders could participate in the
Plan. On January 31, 1996, stockholders owning a total of 2,038,758 shares of
common stock reinvested their dividends resulting in the issue of 56,050 new
shares at a discounted share price of $14.19 per share. Subsequent to the
quarter ended March 31, 1996, stockholders owning a total of 2,108,732 shares of
common stock reinvested their dividends on April 30, 1996, resulting in the
issue of 58,980 new shares at a discounted share price of $13.94 per share.
For the three months ended March 31, 1996, cash flow of $7,525,000 was
provided from operations, $1,000,000 was provided from borrowings on a line of
credit and $739,000 was provided by dividends reinvested in the Company's
dividend reinvestment program. Cash was required primarily for net repayment of
debt of $156,000, distributions to common stockholders and holders of
convertible limited partnership units of $6,367,000, additions to real estate
investments (including the Clarendon Station acquisition) of $1,539,000, and
construction projects of $1,277,000.
Management believes that the Company's current capital resources, together
with its borrowing capacity as described below and its intended refinancings,
will be sufficient to meet its liquidity needs for the foreseeable future.
BORROWING CAPACITY
As of March 31, 1996, the Company had a $100.1 million secured revolving
credit facility with outstanding borrowings of $83.6 million. Borrowings under
this facility require monthly interest payments at 1.875 percent above LIBOR.
The Company had $16.5 million available under the line of credit as of March 31,
1996.
RESULTS OF OPERATIONS
The following discussion compares the results of the Company for the three
months ended March 31, 1996 and 1995. This information should be read in
conjunction with the accompanying consolidated and combined financial statements
and the notes related thereto. These financial statements include all
adjustments (consisting solely of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the interim
periods presented.
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995.
Base rent and expense recoveries were $12,260,000 and $2,293,000,
respectively, for the three months ended March 31, 1996 (the "1996 Quarter"),
compared to $11,739,000 and $2,212,000, respectively, for the comparable period
in 1995 (the "1995 Quarter"), representing a $521,000 (4.4 percent) increase in
base rent and an $81,000 (3.7 percent) increase in expense
20
<PAGE>
recoveries. The increase in base rent results primarily from new leases placed
in service at Seven Corners and Leesburg Pike for the 1996 Quarter but not
present during the 1995 Quarter. Expense recoveries increased principally due
to increased 1996 winter operating costs recovered from tenants.
Percentage rent was $716,000 in the 1996 Quarter, compared to $601,000 in
the 1995 Quarter, representing an increase of $115,000 (19.1 percent). The
increase resulted from improved sales reported at the Company's recently
renovated Leesburg Pike and White Oak shopping centers, in addition to modest
sales improvements reported throughout the Company's portfolio.
Other income, which is composed primarily of parking income, kiosk leasing,
temporary leases, and payments associated with early termination of leases, was
$364,000 in the 1996 Quarter, compared to $629,000 in the 1995 Quarter,
representing a decrease of $265,000 (42.1 percent). The decrease resulted
primarily from the absence in the 1996 Quarter of lease termination payments
comparable to a $200,000 payment received during the 1995 Quarter.
Operating expenses, composed primarily of repairs and maintenance,
utilities, payroll and insurance, increased $172,000 (8.4 percent) to $2,217,000
in the 1996 Quarter from $2,045,000 in the 1995 Quarter. The operating expense
increase was largely due to increased snow removal and utility expenses
resulting from the severe weather experienced during the 1996 winter.
Provisions for credit losses decreased $49,000 (47.1 percent) to $55,000 in
the 1996 Quarter from $104,000 in the 1995 Quarter. The credit loss decrease
resulted from several collections of tenant receivables previously written-off.
Interest expense of $4,426,000 for the 1996 Quarter represented an increase
of $129,000 (3.0 percent) over $4,297,000 reported for the 1995 Quarter. This
increase is primarily attributable to an approximately $23 million increase in
average loan balances outstanding. The additional borrowings were used
primarily to fund the Company's acquisition and development activities. The
interest expense increase was partially offset by a 56 basis point decrease in
average LIBOR during the 1996 Quarter compared to the 1995 Quarter. LIBOR is
the rate used as the base index for the Company's floating rate debt.
Amortization of deferred debt expense increased to $732,000 for the 1996
Quarter from $537,000 for the 1995 Quarter, representing an increase of
$195,000 (36.3 percent). The increase resulted primarily from amortization
of costs incurred for interest rate protection agreements acquired in March
1995.
General and administrative expense, which consists primarily of
administrative, payroll and other overhead expense, was $754,000 for the 1996
Quarter, as compared to $742,000 for the 1995 Quarter, representing an increase
of $12,000 (1.6 percent).
21
<PAGE>
Depreciation and amortization expense increased $268,000 (11.1 percent)
from $2,412,000 in the 1995 Quarter to $2,680,000 in the 1996 Quarter. The
increase resulted primarily from placing in service the newly redeveloped
portions of Seven Corners center.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 26, 1996, the Company held its Annual Meeting of Stockholders, at
which Messrs. Saul, Symington and Whitmore were reelected to the Board of
Directors, each receiving in excess of 99 percent of the votes of the
approximately 11 million shares represented. The terms of Messrs. Caraci,
Grosvenor, Jackson, Kelley, Longsworth and Noonan did not expire as of the April
26, 1996 meeting and such individuals continue as directors of the Company.
Additionally, the vote to approve the Directors Deferred Compensation Plan, the
reservation for listing and the issuance of an additional 50,000 shares of
common stock in connection with the plan passed, with approximately 95 percent
of the shares represented voting in favor of the measure.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The Company's Schedule of Portfolio Properties and the Financial Data
Schedule are attached hereto.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAUL CENTERS, INC.
(Registrant)
Date: May 15, 1996 /s/ Philip D. Caraci
------------- --------------------------------------
Philip D. Caraci, President
Date: May 15, 1996 /s/ Scott V. Schneider
------------- --------------------------------------
Scott V. Schneider
Vice President, Chief Financial Officer
23
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- - ------- ----------- -------------
3. (a) First Amended and Restated Articles of *
Incorporation of Saul Centers, Inc. filed with the
Maryland Department of Assessments and Taxation on
August 23, 1994 (incorporated herein by reference
to Exhibit 3.(a) of the 1993 Annual Report of the
Company on Form 10-K).
(b) Amended and Restated Bylaws of Saul Centers, Inc. *
as in effect at and after August 24, 1993 and as
of August 26, 1993 (incorporated herein by
reference to Exhibit 3(b) of the 1993 Annual
Report of the Company on Form 10-K).
10. (a) First Amended and Restated Agreement of Limited *
Partnership of Saul Holdings Limited Partnership
(incorporated herein by reference to Exhibit No.
10.1 to Registration Statement No. 33-64562 ).
The First Amendment to the First Amended and *
Restated Agreement of Limited Partnership of Saul
Holdings Limited Partnership, the Second Amendment
to the First Amended and Restated Agreement of
Limited Partnership of Saul Holdings Limited
Partnership, and the Third Amendment to the First
Amended and Restated Agreement of Limited
Partnership of Saul Holdings Limited Partnership
(incorporated herein by reference to Exhibit No.
10.(a) of the 1995 Annual Report of the Company on
Form 10-K).
(b) First Amended and Restated Agreement of Limited *
Partnership of Saul Subsidiary I Limited
Partnership and Amendment No. 1 (incorporated
herein by reference to Exhibit 10.2 to
Registration Statement No. 33-64562).
(c) First Amended and Restated Agreement of Limited *
Partnership of Saul II Subsidiary Partnership and
Amendment No. 1 (incorporated herein by reference
to Exhibit 10.3 to Registration Statement No.
33-64562).
<PAGE>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED
- - ------- ----------- -------------
(d) Property Conveyance Agreement (incorporated *
herein by reference to Exhibit 10.4 to
Registration Statement No. 33-64562).
(e) Management Functions Conveyance Agreement *
(incorporated herein by reference to Exhibit 10.5
to Registration Statement No. 33-64562).
(f) Registration Rights and Lock-Up Agreement *
(incorporated herein by reference to Exhibit 10.6
to Registration Statement No. 33-64562).
(g) Exclusivity and Right of first Refusal Agreement *
(incorporated herein by reference to Exhibit 10.7
to Registration Statement No. 33-64562).
(h) Saul Centers, Inc. 1993 Stock Option Plan *
(incorporated herein by reference to Exhibit 10.8
to Registration Statement No. 33-64562).
(i) Agreement of Assumption dated as of August 26, 1993 *
executed by Saul Holding Limited Partnership
(incorporated herein by reference to Exhibit
10.(i) of the 1993 Annual Report of the Company on
Form 10-K).
(j) Loan Agreement dated as of August 26, 1993 by and *
between Wells Fargo Realty Advisors Funding,
Incorporated and Saul Subsidiary II Limited
Partnership (incorporated herein by reference to
Exhibit 10.(j) of the 1993 Annual Report of the
Company on Form 10-K).
The First Amendment to Loan Agreement dated *
December 20, 1994 (incorporated herein by
reference to Exhibit No. 10.(j) of the 1995 Annual
Report of the Company on Form 10-K).
- - --------------------
*Previously Filed
-2-
<PAGE>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED
- - ------- ----------- -------------
(k) First Amended and Restated Revolving Credit Agreement *
dated as of November 2, 1995 among Saul Holdings Limited
Partnership, Saul Subsidiary II Limited Partnership and
The First National Bank of Chicago, First Bank National
Association, BHF-Bank Aktiengesellschaft, Crestar Bank, Bank
of America Illinois and the First National Bank of Chicago,
as Agent (incorporated herein by reference to Exhibit No.
10.(k) of the 1995 Annual Report of the Company on Form
10-K).
(l) Indenture dated as of August 1, 1994 among SC Finance *
Corporation, as Issuer, Bankers Trust Company, as Master
Service and in certain other capacities, and Marine Midland
Bank, as Trustee (incorporated herein by reference to
Exhibit 10.(o) of the 1994 Annual Report of the Company
on Form 10-K).
(m) Master Servicing Agreement dated as of August 1, 1994 *
among SC Finance Corporation, as Issuer, Marine Midland
Bank, as Trustee, and Bankers Trust Company, as Master
Servicer (incorporated herein by reference to Exhibit 10.(p)
of the 1994 Annual Report of the Company on Form 10-K).
(n) Mortgage Loan Purchase Agreement dated as of August 1, 1994 *
between SC Finance Corporation, Purchaser, and Value Line
Mortgage Corporation, Originator (incorporated herein by
reference to Exhibit 10.(q) of the 1994 Annual Report of the
Company on Form 10-K).
(o) Deed to Secure Debt, Deed of Trust, Mortgage, Security *
Agreement and Assignment of Rent; Modification and
Consolidation Agreement dated as of July 31, 1994 among
Saul Subsidiary I Limited Partnership, Mortgagor, Value
Line Mortgage Corporation, Mortgagee, Stuart S. Levin
and Kenneth Kraus, District of Columbia Trustee,
Kenneth Kraus, Maryland Trustee, Kenneth Kraus, North
Carolina Trustee, and Gerald R. Perras and Leonard W.
Harrington, Jr., Virginia Trustee (incorporated herein by
reference to Exhibit 10.(r) of the 1994 Annual Report of
the Company on Form 10-K).
- - --------------------
*Previously Filed
-3-
<PAGE>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED
- - ------- ----------- -------------
(p) Interest Rate and Currency Exchange Agreement dated *
as of July 27, 1994 between General Re Financial Products
Corporation and Saul Subsidiary I Limited Partnership
(incorporated herein by reference to Exhibit 10.(s) of the
1994 Annual Report of the Company on Form 10-K).
(q) Saul Centers, Inc. 1995 Dividend Reinvestment and *
Stock Purchase Plan (incorporated herein by reference to the
Securities and Exchange Commission as Filed No. 33-80291).
(r) Deferred Compensation Plan for Directors dated as of *
December 13, 1993 (incorporated herein by reference to
Exhibit No. 10.(r) of the 1995 Annual Report of the
Company on Form 10-K).
(s) Loan Agreement dated as of June 29, 1994 (and First *
Amendment to Loan Agreement dated as of August 4, 1995)
by and between Saul Holdings Limited Partnership and Compass
Bank (incorporated herein by reference to Exhibit No. 10.(s)
of the 1995 Annual Report of the Company on Form 10-K).
(t) Deed of Trust, Assignment of Rents, and Security Agreement *
dated as of June 9, 1994 by and between Saul Holdings
Limited Partnership and Ameribanc Savings Bank, FSB
(incorporated herein by reference to Exhibit No. 10.(t) of
the 1995 Annual Report of the Company on Form 10-K).
(u) Interest Rate Agreements dated as of March 16, 1995 *
between Saul Holdings Limited Partnership and Wells
Fargo Bank, National Association (incorporated herein by
reference to Exhibit No. 10.(u) of the 1995 Annual Report
of the Company on Form 10-K).
99 Schedule of Portfolio Properties --
Financial Data Schedule --
305763
- - --------------------
*Previously Filed
-4-
<PAGE>
SAUL CENTERS, INC
SCHEDULE OF CURRENT PORTFOLIO PROPERTIES
MARCH 31, 1996
<TABLE>
<CAPTION>
Leasable Year
Area Developed Land Percentage Leased
(Square or Acquired Area Anchor /
Property Location Feet) (Renovated) (Acres) 03/31/96 03/31/95 Significant Tenants
- - ------------------- --------------- -------- ----------- -------- --------- --------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS
Ashburn Village Ashburn, VA 108,204 1994 12.7 100% 96% Giant Food,
Blockbuster
Beacon Mall Alexandria, VA 290,845 1972 (1993) 32.3 74% 94% Giant Food, Office
Depot, Outback
Steakhouse, Marshalls
Belvedere Baltimore, MD 54,941 1972 4.8 100% 100% Giant Food, Rite Aid
Boulevard Fairfax, VA 56,578 1994 5.0 100% 100% Magruders, Danker
Furniture
Clarendon Arlington, VA 6,940 1974 0.5 100% 100%
Clarendon Station Arlington, VA 4,868 1996 (0.1) 100% (A)
Crosstown Tulsa, OK 197,135 1975 26.4 36% 18% C. R. Anthony
Flagship Center Rockville, MD 21,500 1972, 1989 0.5 100% 100% NationsBank, Chevy
Chase Bank, F.S.B.
French Market Oklahoma City, OK 213,658 1974 (1984) 13.8 97% 98% Fleming Food,
Treasury Drug, Furr's
Cafeteria
Germantown Germantown, MD 26,241 1992 2.7 78% 58%
Giant Baltimore, MD 70,040 1972 (1990) 5.0 100% 100% Giant Food
The Glen Lake Ridge, VA 109,759 1994 14.7 100% 97% Safeway Marketplace,
CVS Pharmacy
Great Eastern District Heights, MD 255,448 1972 (1995) 23.9 90% 92% Giant Food, Caldor,
Pep Boys
Hampshire Langley Langley Park, MD 137,669 1972 (1979) 9.9 87% 100% Safeway, McCrory,
Rite Aid
Leesburg Pike Baileys Crossroads, VA 80,854 1966 (1982/95) 9.4 100% 77% Zany Brainy, CVS
Pharmacy, Trak Auto,
California Pizza
Kitchen
Lexington Mall Lexington, KY 308,426 1974 30.0 97% 93% McAlpin's, Dawahares
of Lexington,
Rite Aid
Lumberton Lumberton, NJ 182,229 1975 (1992/3) 23.3 84% 83% Super Fresh, Rite
Aid, Blockbuster,
Mandee
North Washington Alexandria, VA 41,500 1974 2.0 100% 100% Mastercraft Interiors
Olney Olney, MD 53,765 1975 (1990) 3.7 95% 95%
Park Road Center Washington, DC 106,650 1974 (1993) 1.7 100% 100% Woolworth
Ravenwood Baltimore, MD 87,750 1972 8.0 100% 98% Giant Food
Shops at Fairfax Fairfax, VA 64,580 1975 (1992/3) 6.7 41% 43% Office Depot
Southdale Glen Burnie, MD 470,744 1972 (1986) 39.6 99% 97% Circuit City, Giant
Food, Hechinger,
Kids R Us, Michaels,
Marshalls,
Petsmart, Value City
Furniture,
Discovery Zone
Southside Plaza Richmond, VA 345,330 1972 32.8 94% 95% G.C. Murphy, Nick's
Supermarket,
CVS Pharmacy
Sunshine City Atlanta, GA 195,653 1976 14.6 98% 99% Bolton Furniture,
McFrugals, Pep Boys,
The Emory Clinic
</TABLE>
EXHIBIT
<PAGE>
SAUL CENTERS, INC
SCHEDULE OF CURRENT PORTFOLIO PROPERTIES
MARCH 31, 1996
<TABLE>
<CAPTION>
Leasable Year
Area Developed Land Percentage Leased
(Square or Acquired Area Anchor /
Property Location Feet) (Renovated) (Acres) 03/31/96 03/31/95 Significant Tenants
- - ------------------- --------------- -------- ----------- -------- --------- --------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS (CONTINUED)
Thruway Winston-Salem, NC 339,564 1972 30.5 94% 95% Steinmart, Reading
China & Glass, Harris
Teeter, Fresh Market,
Woolworth,
Blockbuster
Village Center Centreville, VA 142,577 1990 17.2 81% 83% Giant Food
West Park Oklahoma City, OK 107,906 1975 11.2 72% 74% Homeland Stores,
Treasury Drug
White Oak Silver Spring, MD 479,656 1972 (1993) 28.5 99% 99% Giant Food, Sears
---------- ------- ---- -----
Total Shopping Centers 4,561,010 411.3 90% 90%
---------- ------- ---- -----
COMMERCIAL PROPERTIES
Avenel Gaithersburg, MD 284,557 1981/85/89 28.2 98% 98% Oncor, Quanta
Systems, General
Services
Administration
601 Pennsylvania Ave Washington, DC 225,153 1974 (1986) 1.0 99% 95% General Services
Administration,
Capital Grille
Van Ness Square Washington, DC 161,058 1974 (1990) 1.2 74% 91% United Mine Workers
---------- ------- ---- ----- Pension Trust, Office
Depot
Total Commercial Properties 670,768 30.4 93% 96%
---------- ------- ---- -----
TOTAL SHOPPING CENTER
AND COMMERCIAL PROPERTIES 5,231,778 SF 441.5 91% 91%
=========== ======= ==== =====
- - ------------------------------------------------------------------------------------------------------------------------------------
SHOPPING CENTER REDEVELOPMENT PROPERTY
(B)
Seven Corners Falls Church, VA 578,692 1974 (1994/5) 31.6 63% 91% Best Buy, Bob's,
=========== ======= ==== ===== Stores, Woolworth,
Shoppers Club
TOTAL DEVELOPMENT PROPERTIES 578,692 31.6 63% 91%
=========== ======= ==== =====
- - ------------------------------------------------------------------------------------------------------------------------------------
TOTAL PORTFOLIO 5,810,470 SF
===========
</TABLE>
(A) Contiguous retail space adjacent to Clarendon, acquired January 22,
1996.
(B) Of the 65,000 square feet leased to Shoppers Club, 34,000 square
feet is expansion space and has not yet been constructed.
EXHIBIT
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS, SCHEDULES AND OTHER DISCLOSURE CONTAINED IN FORM 10-Q FOR THE PERIOD
ENDED MARCH 31, 1996 OF SAUL CENTERS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS, SCHEDULES AND OTHER DISCLOSURE.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
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0
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