<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED March 31, 2000
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Commission file number 1-12254
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SAUL CENTERS, INC.
-----------------
(Exact name of registrant as specified in its charter)
Maryland 52-1833074
- -------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8401 Connecticut Avenue, Chevy Chase, Maryland 20815
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (301) 986-6200
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Number of shares of common stock, par value $0.01 per share
outstanding as of May 10, 2000: 13,600,181
----------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed 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
----- -----
<PAGE>
SAUL CENTERS, INC.
Table of Contents
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements (Unaudited)
--------------------------------
(a) Consolidated Balance Sheets as of March 31, 2000 and
December 31, 1999.............................................. 4
(b) Consolidated Statements of Operations for the three months
ended March 31, 2000 and 1999.................................. 5
(c) Consolidated Statements of Stockholders' Equity as of
March 31, 2000 and December 31, 1999........................... 6
(d) Consolidated Statements of Cash Flows for the three months
ended March 31, 2000 and 1999.................................. 7
(e) Notes to Consolidated Financial Statements.................... 8
Item 2. Management's Discussion and Analysis of Financial Condition and
----------------------------------------------------------------
Results of Operations
---------------------
(a) Liquidity and Capital Resources 15
(b) Results of Operations
Three months ended March 31, 2000 compared to three months
ended March 31, 1999.......................................... 20
Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 21
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................... 22
Item 2. Changes in Securities........................................... 22
Item 3. Defaults Upon Senior Securities................................. 22
Item 4. Submission of Matters to a Vote of Security Holders............. 22
Item 5. Other Information............................................... 22
Item 6. Exhibits and Reports on Form 8-K................................ 22
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<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Basis of Presentation
In the opinion of management, the accompanying consolidated financial
statements reflect all adjustments necessary for the fair presentation of the
financial position and results of operations of Saul Centers, Inc. 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, Inc. for the year
ended December 31, 1999, which are included in its 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.
-3-
<PAGE>
Saul Centers, Inc.
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
(Dollars in thousands) 2000 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Real estate investments
Land $ 64,233 $ 64,233
Buildings and equipment 307,502 304,149
------------- ------------
371,735 368,382
Accumulated depreciation (115,029) (112,272)
------------- ------------
256,706 256,110
Construction in progress 31,785 21,201
Cash and cash equivalents 5,738 957
Accounts receivable and accrued income, net 6,493 8,723
Prepaid expenses 7,776 7,959
Deferred debt costs, net 3,257 3,197
Other assets 2,558 1,518
------------- ------------
Total assets $ 314,313 $ 299,665
============= ============
Liabilities
Notes payable $ 319,183 $ 310,268
Accounts payable, accrued expenses and other liabilities 24,339 18,391
Deferred income 2,443 2,865
------------- ------------
Total liabilities 345,965 331,524
------------- ------------
Minority interests -- --
------------- ------------
Stockholders' equity (deficit)
Common stock, $0.01 par value, 30,000,000 shares
authorized, 13,468,841 and 13,334,145 shares issued and
outstanding, respectively 135 133
Additional paid-in capital 46,559 44,616
Accumulated deficit (78,346) (76,608)
------------- ------------
Total stockholders' equity (deficit) (31,652) (31,859)
------------- ------------
Total liabilities and stockholders' equity (deficit) $ 314,313 $ 299,665
============= ============
</TABLE>
The accompaning notes are an integral part of these statements.
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<PAGE>
Saul Centers, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
(Dollars in thousands, except per share amounts) 2000 1999
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenue
Base rent $ 15,647 $ 14,333
Expense recoveries 2,822 2,448
Percentage rent 588 780
Other 350 403
----------- ---------
Total revenue 19,407 17,964
----------- ---------
Operating expenses
Property operating expenses 2,256 1,936
Provision for credit losses 121 61
Real estate taxes 1,641 1,534
Interest expense 5,788 5,530
Amortization of deferred debt expense 103 103
Depreciation and amortization 3,047 2,897
General and administrative 918 862
----------- ----------
Total operating expenses 13,874 12,923
----------- ----------
Net income before minority interests 5,533 5,041
----------- ----------
Minority interests
Minority share of income (1,538) (1,381)
Distributions in excess of earnings (479) (540)
----------- ----------
Total minority interests (2,017) (1,921)
----------- ----------
Net income $ 3,516 $ 3,120
=========== ==========
Per share (basic and dilutive)
Net income before minority interests $ 0.30 $ 0.28
=========== ==========
Net income $ 0.26 $ 0.24
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE>
Saul Centers, Inc.
Consolidated Statements of Stockholders' Equity (Deficit)
(Unaudited)
<TABLE>
<CAPTION>
Additional
Common Paid-in Accumulated
(Dollars in thousands, except per share amounts) Stock Capital Deficit Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stockholders' equity (deficit):
Balance, December 31, 1998 $ 129 $ 31,967 $ (69,380) $ (37,284)
Issuance of 497,767 shares of
common stock 4 7,158 -- 7,162
Issuance of 373,546 convertible
limited partnership units in the
Operating Partnership -- 5,491 -- 5,491
Net income -- -- 13,297 13,297
Distributions ($1.17 per share) -- -- (15,323) (15,323)
Distributions payable ($.39 per share) -- -- (5,202) (5,202)
---------- ----------- ----------- -----------
Balance, December 31, 1999 133 44,616 (76,608) (31,859)
Issuance of 134,696 shares of
common stock 2 1,943 -- 1,945
Net income -- -- 3,516 3,516
Distributions payable ($.39 per share) -- -- (5,254) (5,254)
---------- ----------- ----------- -----------
Balance, March 31, 2000 $ 135 $ 46,559 $ (78,346) $ (31,652)
========== =========== =========== -----------
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE>
Saul Centers, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
(Dollars in thousands) 2000 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,516 $ 3,120
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interests 2,017 1,921
Depreciation and amortization 3,150 3,000
Provision for credit losses 121 61
Decrease in accounts receivable 2,109 625
Increase in prepaid expenses (107) (62)
Increase in other assets (1,040) (1,336)
Increase in accounts payable, accrued expenses and
other liabilities 5,948 1,567
Decrease in deferred income (422) (45)
----------- -----------
Net cash provided by operating activities 15,292 8,851
----------- -----------
Cash flows from investing activities:
Additions to real estate investments (3,353) (2,932)
Additions to construction in progress (10,584) (3,891)
----------- -----------
Net cash used in investing activities (13,937) (6,823)
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable 12,691 5,808
Repayments on notes payable (3,776) (4,650)
Additions to deferred debt expense (163) (9)
Proceeds from the issuance of common stock and
convertible limited partnership units in
the Operating Partnership 1,945 3,485
Distributions to common stockholders and holders
of convertible limited partnership units in
the Operating Partnership (7,271) (6,996)
----------- -----------
Net cash provided by (used in) financing activities 3,426 (2,362)
----------- -----------
Net increase (decrease) in cash 4,781 (334)
Cash, beginning of period 957 2,395
----------- -----------
Cash, end of period $ 5,738 $ 2,061
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-7-
<PAGE>
Saul Centers, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
1. Organization, Formation and Structure
Organization
Saul Centers, Inc. ("Saul Centers") was incorporated under the Maryland
General Corporation Law on June 10, 1993. Saul Centers operates as a real
estate investment trust (a "REIT") under the Internal Revenue Code of 1986, as
amended (the "Code"). Saul Centers generally will not be subject to federal
income tax, provided it annually distributes at least 95% of its REIT taxable
income to its stockholders and meets certain organizational and other
requirements. Saul Centers has made and intends to continue to make regular
quarterly distributions to its stockholders. 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". B. Francis Saul II serves as Chairman of the
Board of Directors and Chief Executive Officer of Saul Centers.
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", and collectively
with the Operating Partnership, the "Partnerships"), shopping center and office
properties, and the management functions related to the transferred properties.
Since its formation, the Company has purchased and developed additional
properties. The Company is currently developing Washington Square at Old Town,
a 235,000 square foot Class A mixed-use office/retail complex, on the two-acre
site of the former North Washington shopping center property, and Ashburn
Village II, a 39,700 square foot retail and office suite expansion to the
Company's Ashburn Village shopping center and repositioning an under-performing
shopping center to an industrial/warehouse use (the "Industrial Property"). As
of March 31, 2000, the Company's properties (the "Current Portfolio Properties")
consisted of 27 operating shopping center properties and Ashburn II (the
"Shopping Centers"), three predominantly office operating properties and
Washington Square at Old Town (the "Office Properties") and the Industrial
Property.
To facilitate the placement of collateralized mortgage debt, the Company
established Saul QRS, Inc. and SC Finance Corporation, each of which is a wholly
owned subsidiary of Saul Centers. Saul Centers serves as the sole general
partner of the Operating Partnership and of Saul Subsidiary II Limited
Partnership, while Saul QRS, Inc. serves as the sole general partner of Saul
Subsidiary I Limited Partnership. The remaining limited partnership interests
in Saul Subsidiary I Limited Partnership and Saul Subsidiary II Limited
Partnership are held by the Operating Partnership as the sole limited partner.
Through this structure, the Company owns 100% of the Current Portfolio
Properties.
-8-
<PAGE>
Saul Centers, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
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 office
properties, primarily in the Mid-Atlantic region. The Company's long-term
objectives are to increase cash flow from operations and to maximize capital
appreciation of its real estate.
The Company is the owner and operator of a real estate portfolio of 33
properties totaling approximately 6,100,000 square feet of gross leasable area
("GLA") located primarily in the Washington, D.C./Baltimore metropolitan area.
The portfolio is composed of 28 neighborhood and community Shopping Centers, 4
Office Properties and one Industrial Property, totaling 4,931,000, 975,000 and
197,000 square feet of GLA, respectively. Only the United States Government
(10.6%), a tenant of seven properties and Giant Food (7.3%), a tenant of eight
Shopping Centers, individually accounted for more than 1.6% of the Company's
1999 total revenues. With the exception of five Shopping Center properties and
a portion of one Office Property purchased or developed during the past four
years, the Company's Current Portfolio Properties consist of seasoned properties
that have been owned and managed by The Saul Organization for 15 years or more.
The Company expects to hold its properties as long-term investments, and it has
no maximum period for retention of any investment. The Company plans to
selectively acquire additional income-producing properties and to expand,
renovate, and improve its properties when circumstances warrant.
Principles of Consolidation
The accompanying consolidated financial statements of the Company include
the accounts of Saul Centers, its subsidiaries, 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
These financial statements are prepared in conformity with generally
accepted accounting principles, and accordingly, do not report the current value
of the Company's real estate assets. Real estate investment properties are
stated at the lower of depreciated cost or fair value less cost to sell.
Management believes that these assets have generally appreciated in value and,
accordingly, the aggregate current value exceeds their aggregate net book value
and also exceeds the value of the Company's liabilities as reported in these
financial statements. Real estate investment properties are reviewed for
potential impairment losses whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. If the
-9-
<PAGE>
Saul Centers, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
sum of an individual property's undiscounted expected future cash flows is less
than its carrying amount, the Company's policy is to recognize an impairment
loss measured by the amount the depreciated cost of the property exceeds its
fair value. Fair value is calculated as the present value of expected future
cash flows.
Interest, real estate taxes and other carrying costs are capitalized on
projects under development and construction. Interest expense capitalized
during the three month periods ended March 31, 2000 and 1999, was $151,000 and
$133,000, respectively. Once construction is substantially completed and the
assets are placed in service, their rental income, direct operating expenses and
depreciation are included in current operations. Expenditures for repairs and
maintenance are charged to operations as incurred.
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, at March
31, 2000 and December 31, 1999, accounts receivable included $2,064,000 and
$1,803,000, respectively, representing minimum rental income accrued on a
straight-line basis to be paid by tenants over the terms of the respective
leases. Receivables are reviewed monthly and reserves are established 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 $702,000 and $594,000, at March 31, 2000 and
December 31, 1999, respectively.
Deferred Debt Costs
Deferred debt costs consist of financing fees and costs incurred to obtain
long-term financing. These fees and costs are being amortized over the terms of
the respective loans or agreements. Deferred debt costs in the accompanying
financial statements are shown net of accumulated amortization of $1,099,000 and
$1,005,000, at March 31, 2000 and December 31, 1999, respectively.
Revenue Recognition
Rental and interest income is accrued as earned except when doubt exists as
to collectibility, in which case the accrual is discontinued. When rental
payments due under leases
-10-
<PAGE>
Saul Centers, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
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 a portion
of property operating expenses billed to the tenants, including common area
maintenance, real estate taxes and other recoverable costs. Expense recoveries
are recognized in the period when the expenses are incurred. Rental income based
on a tenant's revenues ("percentage rent") is accrued when a tenant reports
sales that exceed a specified breakpoint.
Income Taxes
The Company made an election to be treated, and intends to continue
operating so as to qualify as a REIT under the Code, commencing with its taxable
year ending 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 at least 95% of its REIT taxable income
to stockholders and complies with certain other requirements. Therefore, no
provision has been made for federal income taxes in the accompanying
consolidated financial statements.
Per Share Data
Per share data is calculated in accordance with SFAS No. 128, "Earnings Per
Share." The Company has no dilutive securities; therefore, basic and diluted
earnings per share are identical. Net income before minority interests is
presented on a fully converted basis, as if the limited partners had exercised
their right to convert their partnership ownership into shares of Saul Centers,
and is computed using weighted average shares of 18,597,000 and 17,800,000, for
the quarters ended March 31, 2000 and 1999, respectively. Per share data for
net income after minority interests is computed using weighted average shares of
13,424,000 and 12,917,000, for the quarters ended March 31, 2000 and 1999,
respectively.
Reclassifications
Certain reclassifications have been made to the prior year financial
statements to conform to the current year presentation. The reclassifications
have no impact on operating results previously reported.
Minority Interests - Holders of Convertible Limited Partner Units in the
Operating Partnership
The Saul Organization has a 27.7% limited partnership interest, represented
by 5,172,000 convertible limited partnership units in the Operating Partnership,
as of March 31, 2000. These Convertible Limited Partnership Units are
convertible into shares of Saul Centers' common stock on a one-for-one basis.
The impact of The Saul Organization's 27.7% limited partnership interest in the
Operating Partnership is reflected as minority interests in the accompanying
consolidated financial statements.
-11-
<PAGE>
Saul Centers, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Deferred Compensation and Stock Plan for Directors
Saul Centers has established a Deferred Compensation and Stock Plan for
Directors (the "Plan") for the benefit of its directors and their beneficiaries.
A director may elect to defer all or part of his or her director's fees and has
the option to have the fees paid in cash, in shares of common stock or in a
combination of cash and shares of common stock upon termination from the Board.
If the director elects to have fees paid in stock, the number of shares
allocated to the director is determined by the market price of the common stock
on the day the fee is earned. As of March 31, 2000, 120,000 shares were
authorized and registered for use under the Plan, and 77,000 shares had been
credited to the directors' deferred fee accounts.
Beginning in 1999, pursuant to the Plan, 100 shares of the Company's common
stock are awarded annually as additional compensation to each director serving
on the Board of Directors as of the record date for the Annual Meeting of
Stockholders. The shares are issued on the date of the Annual Meeting, their
issuance may not be deferred and transfer of the shares is restricted for a
period of twelve months following the date of issue.
3. Construction In Progress
Construction in progress includes the costs of active development projects
and other predevelopment project costs. Development costs include direct
construction costs and indirect costs such as architectural, engineering,
construction management and carrying costs consisting of interest, real estate
taxes and insurance. Construction in progress balances as of March 31, 2000 and
December 31, 1999 are as follows:
Construction in Progress
------------------------
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
<S> <C> <C>
2000 1999
------- -------
Washington Square................................. $25,368 $18,009
Ashburn Village II................................ 4,268 2,326
French Market..................................... 1,856 509
Crosstown Business Center......................... 293 357
------- -------
Total ............................................ $31,785 $21,201
======= =======
</TABLE>
4. Notes Payable
Notes payable totaled $319,183,000 at March 31, 2000, of which
$265,614,000 (83.2%) was fixed rate debt and $53,569,000 (16.8%) was floating
rate debt. At March 31, 2000, the Company had a $60,000,000 unsecured revolving
credit facility with outstanding borrowings of $34,000,000 and additional
borrowing availability of $26,000,000. The facility requires monthly interest
payments at a rate of LIBOR plus a spread of 1.375% to 1.625% (determined by
certain debt service coverage and leverage tests) or upon the bank's reference
rate plus 1/2% at the
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<PAGE>
Saul Centers, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Company's option. The facility matures September 30, 2000. The Company and the
agent bank are negotiating a new three year agreement which the parties expect
to execute during the early portion of the third quarter of this year. The
Company also had borrowed $19,569,000 of a $42,000,000 construction loan secured
by Washington Square at March 31, 2000. The facility requires monthly interest
payments at a rate of LIBOR plus 1.9%.
Notes payable totaled $310,268,000 at December 31,1999, of which
$266,990,000 (86.1%), was fixed rate debt and $43,278,000 (13.9%) was floating
rate debt. Outstanding borrowings on the $60,000,000 unsecured revolving credit
facility were $31,000,000 at December 31,1999, with additional borrowing
availability of $29,000,000.
At March 31, 2000, the scheduled maturities of all debt for years ending
December 31, were as follows:
Debt Maturity Schedule
----------------------
(In thousands)
April 1 through December 31, 2000................ $ 37,923
2001............................................. 6,074
2002............................................. 25,322
2003............................................. 6,232
2004............................................. 15,999
2005............................................. 7,029
Thereafter....................................... 220,604
--------
Total............................................ $319,183
========
5. Shareholders' Equity (Deficit) and Minority Interests
The accompanying consolidated financial statements are prepared in
conformity with generally accepted accounting principles and, accordingly, do
not report the current value of the Company's real estate assets. The
Shareholders' Equity (Deficit) reported on the Consolidated Balance Sheets does
not reflect any increase in the value resulting from the difference between the
current value and the net book value of the Company's assets. Therefore,
Shareholders' Equity (Deficit) reported on the Consolidated Balance Sheets does
not reflect the market value of stockholders' investment in the Company.
The Consolidated Statement of Operations for the three months ended March
31, 2000 includes a charge for minority interests of $2,017,000 consisting of
$1,538,000 related to The Saul Organization's share of the net income for such
quarter and $479,000 related to distributions to minority interests in excess of
allocated net income for that period. The charge for the three months ended
March 31, 1999 of $1,921,000 consists of $1,381,000 related to The Saul
Organization's share of net income for such quarter, and $540,000 related to
distributions to minority interests in excess of allocated net income for that
period.
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<PAGE>
Saul Centers, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
6. Business Segments
The Company has two reportable business segments: Shopping Centers and
Office Properties. The accounting policies for the segments presented
below are the same as those described in the summary of significant
accounting policies (see Note 2). The Company evaluates performance based
upon net operating income for properties in each segment.
<TABLE>
<CAPTION>
(Dollars in thousands) Shopping Office Corporate Consolidated
Centers Properties and Other(1) Totals
-------------------------------------------------------------- ============ ============ ============ =============
Quarter ended March 31, 2000
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Real estate rental operations:
Revenues............................................... $ 14,105 $ 5,223 $ 79 $ 19,407
Expenses............................................... (2,810) (1,203) (5) (4,018)
------------ ------------ ------------- --------------
Income from real estate.................................... 11,295 4,020 74 15,389
Interest expense & amortization of debt costs.......... -- -- (5,891) (5,891)
General and administrative............................. -- -- (918) (918)
------------ ------------ ------------- --------------
Subtotal................................................... 11,295 4,020 (6,735) 8,580
Depreciation and amortization.......................... (2,103) (923) (21) (3,047)
Minority interests..................................... -- -- (2,017) (2,017)
------------ ------------ ------------- --------------
Net income................................................. $ 9,192 $ 3,097 $ (8,773) $ 3,516
============ ============ ============= ==============
Capital investment......................................... $ 5,813 $ 7,817 $ 307 $ 13,937
============ ============ ============= ==============
Total assets............................................... $ 190,479 $ 95,204 $ 28,630 $ 314,313
============ ============ ============= ==============
<CAPTION>
--------------------------------------------------------------
Quarter ended March 31, 1999
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Real estate rental operations:
Revenues............................................... $ 13,397 $ 4,566 $ 1 $ 17,964
Expenses............................................... (2,408) (1,121) (2) (3,531)
------------ ------------ ------------- --------------
Income from real estate.................................... 10,989 3,445 (1) 14,433
Interest expense & amortization of debt costs.......... -- -- (5,633) (5,633)
General and administrative............................. -- -- (862) (862)
------------ ------------ ------------- --------------
Subtotal................................................... 10,989 3,445 (6,496) 7,938
Depreciation and amortization.......................... (2,004) (871) (22) (2,897)
Minority interests..................................... -- -- (1,921) (1,921)
------------ ------------ ------------- --------------
Net income................................................. $ 8,985 $ 2,574 $ (8,439) $ 3,120
============ ============ ============= ==============
Capital investment......................................... $ 5,420 $ 1,298 $ 105 $ 6,823
============ ============ ============= ==============
Total assets............................................... $ 182,210 $ 70,609 $ 22,425 $ 275,244
============ ============ ============= ==============
</TABLE>
(1) Includes the Industrial Property, Crosstown. The United States Government
provided more than 10% of total revenues for the quarter ended March 31,
2000.
-14-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This section should be read in conjunction with the consolidated
financial statements of the Company and the accompanying notes in "Item 1.
Financial Statements" of this report. Historical results and percentage
relationships set forth in Item 1 and this section should not be taken as
indicative of future operations of the Company. Capitalized terms used but not
otherwise defined in this section, have the meanings given to them in Item 1 of
this Form 10-Q. This Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These statements are
generally characterized by terms such as "believe", "expect" and "may".
Although the Company believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, the Company's
actual results could differ materially from those given in the forward-looking
statements as a result of changes in factors which include among others, the
following: general economic and business conditions, which will, among other
things, affect demand for retail and office space; demand for retail goods;
availability and credit worthiness of the prospective tenants; lease rents and
the terms and availability of financing; adverse changes in the real estate
markets including, among other things, competition with other companies and
technology, risks of real estate development and acquisition, governmental
actions and initiatives, debt refinancing risk, conflicts of interests,
maintenance of REIT status and environmental/safety requirements.
General
- -------
The following discussion is based primarily on the consolidated financial
statements of the Company, as of March 31, 2000 and for the three month period
ended March 31, 2000.
Liquidity and Capital Resources
- -------------------------------
The Company's principal demands for liquidity are expected to be
distributions to its stockholders, debt service and loan repayments, expansion,
renovation, and redevelopment of the Current Portfolio Properties and selective
acquisition and development of additional properties. In order to qualify as a
REIT for federal income tax purposes, the Company must distribute to its
stockholders at least 95% of its "real estate investment trust taxable income,"
as defined in the Code. The Company anticipates that operating revenues will
provide the funds necessary for operations, debt service, distributions, and
required recurring capital expenditures. Balloon principal repayments are
expected to be funded by refinancings.
Management anticipates that during the current year the Company may: i)
redevelop certain of the Shopping Centers, ii) develop additional freestanding
outparcels or expansions within certain of the Shopping Centers, iii) acquire
existing neighborhood and community shopping centers and/or office properties
and iv) develop new shopping center or office sites. Acquisition and
development of properties are undertaken only after careful analysis and review,
and management's determination that such property is expected to provide long-
term earnings
-15-
<PAGE>
and cash flow growth. During the current year, any developments, redevelopments,
expansions or acquisitions are expected to be funded with bank borrowings from
the Company's credit line, construction financing, proceeds from the operation
of the Company's dividend reinvestment plan or other external capital resources
available to the Company.
The Company expects to fulfill its long range requirements for capital
resources in a variety of ways, including 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 which can be converted into shares of Saul Centers
common stock.
Management believes that the Company's current capital resources, which
include the Company's credit line of which $26,000,000 was available for
borrowing as of March 31, 2000, will be sufficient to meet its liquidity needs
for the foreseeable future.
Financial Information
- ---------------------
For the first quarter of 2000, the Company reported Funds From Operations
("FFO") of $8,580,000. This represents an 8.1% increase over the comparable
1999 period's FFO of $7,938,000. FFO is presented on a fully converted basis
and as the most widely accepted measure of operating performance for REITs is
defined as net income before extraordinary items and before real estate
depreciation and amortization. The following table represents a reconciliation
from net income before minority interests to FFO:
Funds From Operations Schedule
- ------------------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
2000 1999
---- ----
<S> <C> <C>
Net income before minority interests................................. $5,533 $5,041
Add:
Depreciation and amortization of real property................. 3,047 2,897
------ ------
Funds From Operations ............................................... $8,580 $7,938
====== ======
</TABLE>
FFO, as defined by the National Association of Real Estate Investment
Trusts, is net income before minority interests excluding gains or losses from
sales of property, adjustments for unconsolidated partnerships and joint
ventures, depreciation and amortization. FFO does not represent cash generated
from operating activities in accordance with generally accepted accounting
principles and is not necessarily indicative of cash available to fund cash
needs, which is disclosed in the accompanying Consolidated Statements of Cash
Flows for the applicable periods. There are no material legal or functional
restrictions on the use of FFO. FFO should not be considered as an alternative
to net income, as an indicator of the Company's
-16-
<PAGE>
operating performance, or as an alternative to cash flows as a measure of
liquidity. Management considers FFO a supplemental measure of operating
performance and along with cash flow from operating activities, investing
activities and financing activities, it provides investors with an indication of
the ability of the Company to incur and service debt, to make capital
expenditures and to fund other cash needs. FFO may not be comparable to
similarly titled measures employed by other REITs.
Cash flow from operating activities, investing activities and financing
activities for the three months ended March 31, 2000 and 1999 are as follows:
Cash flow provided by (used in):
- --------------------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
<S> <C> <C>
2000 1999
-------- --------
Operating activities................ $ 15,292 $ 8,851
Investing activities................ -13,937 -6,823
Financing activities................ 3,426 -2,362
</TABLE>
Capital Strategy and Financing Activity
- ---------------------------------------
The Company's capital strategy is to maintain a ratio of total debt to
total asset value of approximately 50% or less, and to actively manage the
Company's leverage and debt expense on an ongoing basis in order to maintain
prudent coverage of fixed charges. Management believes that current total debt
remains less than 50% of total asset value.
On April 5, 2000, the Company entered into a commitment letter with a
financial institution for a $14,300,000, 15 year, fixed rate mortgage loan. The
proceeds are to be used to repay a portion of outstanding indebtedness under the
Company's variable rate credit line. The loan will be collateralized by the
Shops at Fairfax and Boulevard shopping centers. The loan will bear interest at
8.33% and requires monthly payments of principal and interest. Documents are
being prepared and the loan is expected to close in the second quarter of 2000.
In 1999, the Company closed a $42,000,000 construction loan, which it
anticipates will substantially fund the development costs associated with the
235,000 square foot Washington Square mixed-use office/retail complex, located
in Old Town Alexandria, Virginia. The loan has an initial three-year term with
an interest rate of LIBOR plus 1.90%, which will decline as leasing of the
office and retail space proceeds. At May 10, 2000, outstanding borrowings on
this construction loan totaled $22,086,000.
At May 10, 2000, outstanding borrowings on the Company's $60,000,000
unsecured
-17-
<PAGE>
credit line totaled $38,500,000, leaving $21,500,000 of credit availability. The
facility matures September 30, 2000. The Company and the agent bank are
negotiating a new three year agreement which the parties expect to execute
during the early portion of the third quarter of this year.
At May 10, 2000, the Company has fixed interest rates on approximately
81.4% of its total debt outstanding, which now has a weighted remaining term of
approximately 10 years.
Redevelopment, Renovations and Acquisitions
- -------------------------------------------
The Company has been selectively involved in redevelopment, renovation and
acquisition activities. It continues to evaluate land parcels for retail and
office development and potential acquisitions of operating properties for
opportunities to enhance operating income and cash flow growth. The Company also
continues to take advantage of redevelopment, renovation and expansion
opportunities within the portfolio, as demonstrated by its activities at
Washington Square, Ashburn II, French Market and Crosstown Business Center.
In February 1999, the Company announced the development of Washington
Square at Old Town, a new Class A mixed-use office / retail complex along North
Washington Street in historic Old Town Alexandria in Northern Virginia. The
project will provide 235,000 square feet of leaseable area and is well located
on a two-acre site, along Alexandria's main street. The project is comprised of
two identical buildings separated by a brick courtyard. Construction of the
southern building is nearing completion. The tower crane has been removed and
the building's facade and curtain wall are substantially completed. Work
continues on the building's interior common areas and mechanical systems. The
Company expects to deliver a portion of the retail space to tenants in July.
Work on the north building is proceeding on schedule, with delivery lagging the
south building by approximately six weeks. Base building construction of both
buildings is scheduled to be completed by the third quarter of 2000. The 45,000
square feet of retail space is 62% pre-leased and several leases are under
negotiation with office tenant prospects.
The Company recently purchased land located within the 1,580 acre community
of Ashburn Village in Loudoun County, Virginia, adjacent to its 108,000 square
foot Ashburn Village neighborhood shopping center. The land is being developed
into Ashburn Village II, a 39,700 square foot in-line and pad expansion to the
existing shopping center, containing 23,600 square feet of retail space and
16,100 square feet of professional office suites. Pad sites are being leased to
restaurant and other users for free-standing buildings. Construction began in
November and is nearing completion. On May 2, 2000, the Company delivered over
85% of the retail space to tenants to begin their work in preparation of store
openings approximately 90 days later. Tenant finish work has commenced for a
portion of the office space. Approximately 60% of the new space has been pre-
leased.
During 1999, the Company completed construction on a facade renovation and
retenanting of a 103,000 square foot anchor space at the 213,000 square foot
French Market center in Oklahoma City, Oklahoma. In December, a 90,000 square
foot lease was signed with Burlington Coat Factory ("Burlington") to locate in
the adjacent enclosed mall portion of the
-18-
<PAGE>
center. The common areas of the mall will become part of the Burlington leasable
area, increasing the center to 247,000 square feet upon completion of tenant
improvements. Mall tenants have been relocated to other space in the center or
have ceased operations, which allowed construction to commence in February 2000.
Burlington is scheduled to open in the fall of 2000, thereby increasing the
center's occupancy to over 95%.
The conversion and redevelopment of the Tulsa, Oklahoma shopping center, to
an industrial/office campus named Crosstown Business Center has commenced. The
first tenants have occupied their spaces and the project is now 15% leased with
several other leases under negotiation.
Portfolio Leasing Status
- ------------------------
At March 31, 2000, the portfolio consisted of 28 Shopping Centers, four Office
Properties and one Industrial Property, all of which are located in seven states
and the District of Columbia. The Office Properties consist of one office
property and one office/retail property, both located in the District of
Columbia, a research park located in a Maryland suburb of Washington, D.C. and
an office/retail property under construction in Old Town Alexandria, Virginia.
At March 31, 2000, 92.1% of the Company's 5.8 million square feet of operating
leaseable space was leased to tenants, as compared to 91.5% at March 31, 1999.
The shopping center portfolio was 94.3% leased at March 31, 2000 and 94.5%
leased at March 31, 1999. The Office Properties (excluding the Washington
Square project under development) were 97.6% leased at March 31, 2000 compared
to 95.6% as of March 31, 1999. The Industrial Property was 15% leased at March
31, 2000 compared to 2% as of March 31, 1999. The overall improvement in the
current quarter's leasing percentage compared to the prior year quarter resulted
primarily from improved office leasing at 601 Pennsylvania Avenue and Van Ness
Square and the advancement of leasing at Crosstown Business Center.
Results of Operations
- ---------------------
The following discussion compares the results of the Company for the three
month periods ended March 31, 2000 and 1999, respectively. This information
should be read in conjunction with the accompanying consolidated 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, 2000 Compared to Three Months Ended March 31, 1999
- -------------------------------------------------------------------------------
Revenues for the three month period ended March 31, 2000 (the "2000 Quarter"),
totaled $19,407,000 compared to $17,964,000 for the comparable quarter in 1999
(the "1999 Quarter"), an increase of $1,443,000 (8.0%).
-19-
<PAGE>
Base rent income was $15,647,000 for the 2000 Quarter, compared to $14,333,000
for the 1999 Quarter, representing an increase of $1,314,000 (9.2%). The
increase in base rent resulted primarily from new leases in effect at recently
redeveloped shopping centers (French Market, Shops at Fairfax, Thruway and
Boulevard), leases rolling-over to higher rents in the Office Properties and the
rollover of two anchor tenant leases into higher paying base rent in lieu of
percentage rent at White Oak and Giant shopping centers.
Expense recoveries were $2,822,000 for the 2000 Quarter compared to $2,448,000
for the comparable 1999 Quarter, representing an increase of $374,000 (15.3%).
This increase resulted primarily from substantial snow removal expenses during
the 2000 Quarter, due to be recovered from many of the Company's shopping center
tenants.
Percentage rent was $588,000 in the 2000 Quarter, compared to $780,000 in the
1999 Quarter, a decrease of $192,000 (24.6%). The decrease in percentage rent
resulted primarily from the rollover of two anchor tenant leases into higher
paying base rent in lieu of percentage rent at White Oak and Giant shopping
centers.
Other income, which primarily consists of parking income, kiosk and temporary
leasing, and fees associated with early termination of leases, was $350,000 in
the 2000 Quarter, compared to $403,000 in the 1999 Quarter, representing a
decrease of $53,000 (13.2%). The decrease in other income resulted primarily
from the collection of two shopping center lease termination fees in the 1999
Quarter.
Operating expenses, consisting primarily of repairs and maintenance,
utilities, payroll, insurance and other property related expenses, increased
$320,000 (16.5%) to $2,256,000 in the 2000 Quarter from $1,936,000 in the 1999
Quarter. The increase was primarily caused by higher snow removal expenses
resulting from two severe snowstorms impacting the Mid-Atlantic region during
January and February 2000.
The provision for credit losses increased $60,000 (98.4%) to $121,000 in the
2000 Quarter from $61,000 in the 1999 Quarter. The credit loss increase
resulted primarily from additions to credit loss reserves for a retail tenant in
bankruptcy and rent in dispute with an office tenant.
Real estate taxes increased $107,000 (7.0%) to $1,641,000 in the 2000 Quarter
from $1,534,000 in the 1999 Quarter. Increased real estate tax expense was
reported for the 2000 Quarter at three of the of the Company's Northern Virginia
shopping centers redeveloped during 1999, and to a lesser extent, increased tax
expense at Avenel Business Park.
Interest expense increased $258,000 (4.7%) to $5,788,000 for the 2000 Quarter
from $5,530,000 reported for the 1999 Quarter. The increase resulted from
increased average borrowing balances on the Company's credit line used to fund
redevelopments placed in service during 1999 and to a lesser extent, interest
rates on the Company's floating rate credit line debt averaging 71 basis points
higher in the 2000 Quarter compared to the 1999 Quarter.
-20-
<PAGE>
Amortization of deferred debt expense was unchanged at $103,000 for both
the 2000 and 1999 Quarters.
Depreciation and amortization expense increased $150,000 (5.2%) from
$2,897,000 in the 1999 Quarter to $3,047,000 in the 2000 Quarter, reflecting
increased depreciation expense on redevelopments placed in service during 1999.
General and administrative expense, which consists of payroll,
administrative and other overhead expense, was $918,000 for the 2000 Quarter, an
increase of $56,000 (6.5%) over the 1999 Quarter. The increase in 2000 expenses
compared to 1999 resulted from a 5% increase in payroll related expenses and
increased legal expense.
Related Party Transactions
- --------------------------
The Company acquired a 6.58 acre parcel of land at a cash purchase price of
$1,438,000 in October 1999 from a subsidiary of Chevy Chase Bank, F.S.B., a
member of The Saul Organization. Ashburn II, an expansion to the Ashburn
Village shopping center is being developed on this parcel of land. The Company
believes that the price paid to the seller was fair and was comparable to the
price that would have been obtained from an unrelated third party. The Company
also signed a contract with the seller to purchase an additional 7.4 acre parcel
of land at Ashburn Village. The price to be paid will be determined based on
the timing of the closing, which may not be later than December 2001.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to certain financial market risks, the most predominant
being fluctuations in interest rates. Interest rate fluctuations are monitored
by management as an integral part of the Company's overall risk management
program, which recognizes the unpredictability of financial markets and seeks to
reduce the potentially adverse effect on the Company's results of operations.
The Company does not enter into financial instruments for trading purposes.
The Company is exposed to interest rate fluctuations primarily as a result of
its variable rate debt used to finance the Company's development and acquisition
activities and for general corporate purposes. As of March 31, 2000, the
Company had variable rate indebtedness totaling $53,569,000. Interest rate
fluctuations will affect the Company's annual interest expense on its variable
rate debt. If the interest rate on the Company's variable rate debt instruments
outstanding at March 31, 2000 had been one percent higher, our annual interest
expense relating to these debt instruments would have increased by $536,000,
based on those balances. Interest rate fluctuations will also affect the fair
value of the Company's fixed rate debt instruments. As of March 31, 2000, the
Company had fixed rate indebtedness totaling $265,614,000. If interest rates on
the Company's fixed rate debt instruments at March 31, 2000 had been one percent
higher, the fair value of those debt instruments on that date would have
decreased by approximately $16,400,000.
-21-
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
On April 28, 2000, the Company held its Annual Meeting of
Stockholders, at which Messrs. Philip D. Caraci, Gilbert M. Grosvenor
and Philip C. Jackson, Jr. were reelected to the Board of Directors, for
three year terms expiring at the 2003 Annual Meeting, each receiving in
excess of 90% of the votes of the approximately 13,468,000 shares
outstanding and eligible to vote at the meeting. The terms of the
remaining Board members did not expire as of the April 28, 2000 meeting
and such individuals continue as directors of the Company
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Exhibits
--------
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 and filed as
Exhibit 3.(a) of the 1993 Annual Report of the Company on Form
10-K are hereby incorporated by reference.
(b) Amended and Restated Bylaws of Saul Centers, Inc. as in
effect at and after August 24, 1993 and as of August 26, 1993
and filed as Exhibit 3.(b) of the 1993 Annual Report of the
Company on Form 10-K are hereby incorporated by reference. The
First Amendment to the First Amended and Restated
-22-
<PAGE>
Agreement of Limited Partnership of Saul Subsidiary I Limited
Partnership, the Second Amendment to the First Amended and
Restated Agreement of Limited Partnership of Saul Subsidiary I
Limited Partnership, the Third Amendment to the First Amended
and Restated Agreement of Limited Partnership of Saul
Subsidiary I Limited Partnership and the Fourth Amendment to
the First Amended and Restated Agreement of Limited
Partnership of Saul Subsidiary I Limited Partnership as filed
as Exhibit 3.(b) of the 1997 Annual Report of the Company on
Form 10-K are hereby incorporated by reference.
10. (a) First Amended and Restated Agreement of Limited Partnership
of Saul Holdings Limited Partnership filed as Exhibit No.
10.1 to Registration Statement No. 33-64562 is hereby
incorporated by reference. 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 filed as
Exhibit 10.(a) of the 1995 Annual Report of the Company on
Form 10-K are hereby incorporated by reference. The Fourth
Amendment to the First Amended and Restated Agreement of
Limited Partnership of Saul Holdings Limited Partnership
filed as Exhibit 10.(a) of the March 31, 1997 Quarterly
Report of the Company is hereby incorporated by reference.
(b) First Amended and Restated Agreement of Limited Partnership of
Saul Subsidiary I Limited Partnership and Amendment No. 1
thereto filed as Exhibit 10.2 to Registration Statement
No. 33-64562 are hereby incorporated by reference. The Second
Amendment to the First Amended and Restated Agreement of
Limited Partnership of Saul Subsidiary I Limited Partnership,
the Third Amendment to the First Amended and Restated
Agreement of Limited Partnership of Saul Subsidiary I Limited
Partnership and the Fourth Amendment to the First Amended and
Restated Agreement of Limited Partnership of Saul Subsidiary I
Limited Partnership as filed as Exhibit 10.(b) of the 1997
Annual Report of the Company on Form 10-K are hereby
incorporated by reference.
(c) First Amended and Restated Agreement of Limited Partnership of
Saul Subsidiary II Limited Partnership and Amendment No. 1
thereto filed as Exhibit 10.3 to Registration Statement
No. 33-64562 are hereby incorporated by reference.
(d) Property Conveyance Agreement filed as Exhibit 10.4 to
Registration Statement No. 33-64562 is hereby incorporated by
reference.
(e) Management Functions Conveyance Agreement filed as Exhibit
10.5 to Registration Statement No. 33-64562 is hereby
incorporated by reference.
(f) Registration Rights and Lock-Up Agreement filed as Exhibit
10.6 to Registration Statement No. 33-64562 is hereby
incorporated by reference.
-23-
<PAGE>
(g) Exclusivity and Right of First Refusal Agreement filed as
Exhibit 10.7 to Registration Statement No. 33-64562 is hereby
incorporated by reference.
(h) Saul Centers, Inc. 1993 Stock Option Plan filed as Exhibit
10.8 to Registration Statement No. 33-64562 is hereby
incorporated by reference.
(i) Agreement of Assumption dated as of August 26, 1993 executed
by Saul Holdings Limited Partnership and filed as Exhibit
10.(i) of the 1993 Annual Report of the Company on Form 10-K
is hereby incorporated by reference.
(j) Saul Centers, Inc. 1995 Dividend Reinvestment and Stock
Purchase Plan as filed with the Securities and Exchange
Commission as File No. 33-80291 is hereby incorporated by
reference.
(k) Deferred Compensation Plan for Directors dated as of
December 13, 1993 as filed as Exhibit 10.(r) of the 1995
Annual Report of the Company on Form 10-K, as amended and
restated by the Deferred Compensation and Stock Plan for
Directors, dated as of March 18, 1999, filed as Exhibit 10.(k)
of the March 31, 1999 Quarterly Report of the Company, is
hereby incorporated by reference.
(l) Deed of Trust, Assignment of Rents, and Security Agreement
dated as of September 9, 1994 by and between Saul Holdings
Limited Partnership and Ameribanc Savings Bank, FSB as filed
as Exhibit 10.(t) of the 1995 Annual Report of the Company on
Form 10-K is hereby incorporated by reference.
(m) Deed of Trust Note dated as of January 22, 1996 by and between
Saul Holdings Limited Partnership and Clarendon Station
Limited Partnership, filed as Exhibit 10.(s) of the March 31,
1997 Quarterly Report of the Company, is hereby incorporated
by reference.
(n) Loan Agreement dated as of November 7, 1996 by and among Saul
Holdings Limited Partnership, Saul Subsidiary II Limited
Partnership and PFL Life Insurance Company, c/o AEGON USA
Realty Advisors, Inc., filed as Exhibit 10.(t) of the March
31, 1997 Quarterly Report of the Company, is hereby
incorporated by reference.
(o) Promissory Note dated as of January 10, 1997 by and between
Saul Subsidiary II Limited Partnership and The Northwestern
Mutual Life Insurance Company, filed as Exhibit 10.(z) of the
March 31, 1997 Quarterly Report of the Company, is hereby
incorporated by reference.
(p) Loan Agreement dated as of October 1, 1997 between Saul
Subsidiary I Limited Partnership as Borrower and Nomura Asset
Capital Corporation as Lender filed as Exhibit 10.(p) of the
1997 Annual Report of the
-24-
<PAGE>
Company on Form 10-K is hereby incorporated by reference.
(q) Revolving Credit Agreement dated as of October 1, 1997 by and
between Saul Holdings Limited Partnership and Saul Subsidiary
II Limited Partnership as Borrower and U.S. Bank National
Association as agent filed as Exhibit 10.(q) of the 1997
Annual Report of the Company on Form 10-K is hereby
incorporated by reference.
(r) Promissory Note dated as of November 30, 1999 by and between
Saul Holdings Limited Partnership as Borrower and Wells Fargo
Bank National Association as Lender filed as Exhibit 10.(r) of
the 1999 Annual Report of the Company on Form 10-K is hereby
incorporated by reference.
27. Financial Data Schedule
99. Schedule of Portfolio Properties
Reports on Form 8-K
-------------------
None.
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, 2000 /s/ Philip D. Caraci
--------------------------------------
Philip D. Caraci, President
Date: May 15, 2000 /s/ Scott V. Schneider
--------------------------------------
Scott V. Schneider
Senior Vice President, Chief Financial Officer
-25-
<PAGE>
Saul Centers, Inc
Schedule of Current Portfolio Properties
March 31, 2000
<TABLE>
<CAPTION>
Leasable Year
Area Developed Land
(Square or Acquired Area Percentage Leased
Property Location Feet) (Renovated) (Acres) Mar-00 Mar-99
===================== ===================== ============= =============== ========== ========== =========
Shopping Centers
----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ashburn Village Ashburn, VA 108,204 1994 12.7 100% 100%
Ashburn Village II (a) Ashburn, VA 39,679 1999/2000 6.6 56% n / a
Beacon Center Alexandria, VA 355,659 1972 (1993/99) 32.3 95% 100%
Belvedere Baltimore, MD 54,941 1972 4.8 94% 94%
Boulevard Fairfax, VA 56,350 1994 (1999) 5.0 100% 92%
Clarendon Arlington, VA 6,940 1973 0.5 100% 100%
Clarendon Station Arlington, VA 4,868 1996 0.1 100% 100%
Flagship Center Rockville, MD 21,500 1972, 1989 0.5 100% 100%
French Market Oklahoma City, OK 247,393 1974 (1984/98) 13.8 95% 76%
Germantown Germantown, MD 26,241 1992 2.7 97% 97%
Giant Baltimore, MD 70,040 1972 (1990) 5.0 100% 100%
The Glen Lake Ridge, VA 112,639 1994 14.7 97% 97%
Great Eastern District Heights, MD 254,398 1972 (1995) 23.9 100% 96%
Hampshire Langley Langley Park, MD 134,425 1972 (1979) 9.9 96% 100%
Leesburg Pike Baileys Crossroads, VA 97,880 1966 (1982/95) 9.4 100% 100%
Lexington Mall Lexington, KY 315,697 1974 30.0 81% 91%
Lumberton Lumberton, NJ 189,898 1975 (1992/96) 23.3 86% 91%
Olney Olney, MD 53,765 1975 (1990) 3.7 92% 94%
Ravenwood Baltimore, MD 87,750 1972 8.0 100% 100%
Seven Corners Falls Church, VA 560,998 1973 (1994-7) 31.6 100% 100%
Shops at Fairfax Fairfax, VA 68,743 1975 (1993/99) 6.7 100% 100%
Southdale Glen Burnie, MD 483,895 1972 (1986) 39.6 100% 99%
</TABLE>
Saul Centers, Inc
Schedule of Current Portfolio Properties
March 31, 2000
<TABLE>
<CAPTION>
Property Anchor / Significant Tenants
===================== =====================================================================
Shopping Centers (continued)
----------------------------
<S> <C> <C>
Ashburn Village Giant Food, Blockbuster
Ashburn Village II (a)
Beacon Center Lowe's, Giant Food, Office Depot, Outback Steakhouse, Marshalls,
Hollywood Video, Hancock Fabrics
Belvedere Food King, McCrory
Boulevard Danker Furniture, Petco, Party City
Clarendon
Clarendon Station
Flagship Center
French Market Burlington Coat Factory, Bed Bath & Beyond, Famous Footwear,
Lakeshore Learning Center, BridesMart, Staples
Germantown
Giant Giant Food
The Glen Safeway Marketplace, CVS Pharmacy
Great Eastern Giant Food, Pep Boys, Big Lots, Run N' Shoot
Hampshire Langley Safeway, McCrory
Leesburg Pike Zany Brainy, CVS Pharmacy, Hollywood Video
Lexington Mall Dillard's, Dawahares of Lexington, Rite Aid
Lumberton SuperFresh, Rite Aid, Blockbuster, Ace Hardware
Olney Rite Aid
Ravenwood Giant Food, Hollywood Video
Seven Corners Home Depot, Shoppers Club, Best Buy, Michaels,
Barnes & Noble, Ross Dress For Less, G Street Fabrics, Champs
Shops at Fairfax SuperFresh, Blockbuster
Southdale Giant Food, Circuit City, Kids R Us, Michaels, Marshalls,
PetSmart, Value City Furniture
</TABLE>
<PAGE>
Saul Centers, Inc
Schedule of Current Portfolio Properties
March 31, 2000
<TABLE>
<CAPTION>
Leasable Year
Area Developed Land
(Square or Acquired Area Percentage Leased
Property Location Feet) (Renovated) (Acres) Mar-00 Mar-99
===================== ===================== ============= =============== ========== ========== =========
Shopping Centers (continued)
----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Southside Plaza Richmond, VA 352,964 1972 32.8 88% 91%
South Dekalb Plaza Atlanta, GA 180,429 1976 14.6 83% 76%
Thruway Winston-Salem, NC 345,454 1972 (1997) 30.5 95% 94%
Village Center Centreville, VA 143,125 1990 17.2 98% 91%
West Park Oklahoma City, OK 76,610 1975 11.2 58% 46%
White Oak Silver Spring, MD 480,156 1972 (1993) 28.5 99% 100%
---------- ---------- --------- -------
Total Shopping Centers 4,930,641 419.6 94% 94%
---------- ---------- --------- -------
Office Properties
-----------------
Avenel Business Park Gaithersburg, MD 358,587 1981/85/89/98/99 33.4 96% 95%
601 Pennsylvania Ave Washington, DC 225,223 1973 (1986) 1.0 100% 97%
Van Ness Square Washington, DC 156,182 1973 (1990) 1.2 98% 96%
Washington Square (a) Alexandria, VA 235,000 1975 (2000) 2.0 11% n / a
---------- ---------- --------- -------
Total Office Properties 974,992 35.6 98% (c) 96%
---------- ---------- --------- -------
Industrial Property
-------------------
Crosstown (b) Tulsa, OK 197,135 1975 (2000) 21.5 15% 2%
---------- ---------- --------- -------
Total Portfolio 6,102,768 SF 476.7 92% (c) 92%
========== ========== ========= =======
</TABLE>
Saul Centers, Inc
Schedule of Current Portfolio Properties
March 31, 2000
<TABLE>
<CAPTION>
Property Anchor / Significant Tenants
===================== =====================================================================
Shopping Centers (continued)
----------------------------
<S> <C> <C>
Southside Plaza CVS Pharmacy, Community Pride Supermarket, Maxway
South Dekalb Plaza MacFrugals, Pep Boys, The Emory Clinic
Thruway Bed, Bath & Beyond, Stein Mart, Harris Teeter, Fresh Market,
Eckerd Drugs, Houlihan's, Borders Books, Zany Brainy, Blockbuster
Village Center Giant Food, Tuesday Morning
West Park Homeland Stores, Family Dollar
White Oak Giant Food, Sears, Rite Aid, Blockbuster
Office Properties
-----------------
Avenel Business Park Quanta Systems, General Services Administration, GeneLogic,
Ventana Medical, Paragea Communications, Boston Biomedica
601 Pennsylvania Ave General Services Administration, Alltel, American Arbitration,
Capital Grille
Van Ness Square United Mine Workers Pension Trust, Office Depot, Pier 1
Washington Square (a)
Industrial Property
-------------------
Crosstown (b) Compass Group, Roxtec
</TABLE>
(a) Under construction and not operational at March 31, 2000.
(b) Currently operational, but under development to convert former shopping
center to warehouse use.
(c) Washington Square, currently under construction and not operational,
is excluded from this average.
<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, 2000 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
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,738
<SECURITIES> 0
<RECEIVABLES> 6,493
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 371,735
<DEPRECIATION> 115,029
<TOTAL-ASSETS> 314,313
<CURRENT-LIABILITIES> 0
<BONDS> 319,183
0
0
<COMMON> 135
<OTHER-SE> (31,787)
<TOTAL-LIABILITY-AND-EQUITY> 314,313
<SALES> 0
<TOTAL-REVENUES> 19,407
<CGS> 0
<TOTAL-COSTS> 5,303
<OTHER-EXPENSES> 1,641
<LOSS-PROVISION> 121
<INTEREST-EXPENSE> 5,891
<INCOME-PRETAX> 5,533
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,533
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,516
<EPS-BASIC> 0.26
<EPS-DILUTED> 0.26
</TABLE>
