Saul Centers, Inc. · NYSE:BFS
Saul Centers — Shareholder Meeting (May 2018)
29 slides from Saul Centers's shareholder meeting presentation, May 11, 2018
Slide 1: Annual Meeting of Stockholders
Annual Meeting of Stockholders May 11, 2018 We have prepared a brief slide show to review the company’s recent significant capital markets transactions, on-going and future development activity, and to highlight our core portfolio operating performance and the resulting returns delivered to sharehol
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements within the meaning of the federal securities laws. These statements are generally characterized by terms such as "believe," "expect" and "may." Although we believe that the expectations reflected in such forward-looking
Slide 3: Q1 2018 Capital Transactions
Q1 2018 Capital Transactions • Replaced $275 million credit facility with a $400 million facility • Currently $218 million is available under line of credit • Term loan matures January 2023 • Revolving line of credit matures January 2022 • Partial redemption of 6.875% Series C Preferred Stock and re
Slide 4: Mortgage Debt Maturities
Mortgage Debt Maturities $300 Balloon Payment due at Maturity $250 $200 $150 $136 In Millions $129 $100 $61 $62 $67 $50 $37 $43 $35 $21 $11 $9 $0 $0 $0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 & Beyond Year Debt Matures Excludes $157 M Glebe Rd. Construction loan, $0 balance
Slide 5: Prudent Capital Structure
Prudent Capital Structure • 91% fixed rate, non-recourse debt • Weighted average mortgage maturity – 8.3 years • No 2018 maturities • Average debt interest rate – 5.26% • $180 million perpetual preferred stock Weighted average dividend yield 6.56% • $400 million unsecured credit facility $75 million
Slide 6: Transit-Oriented Mixed-Use Development Pipeline
Transit-Oriented Mixed-Use Development Pipeline 21 acres at four Metro sites for up to: 3,200 apartment units 290,000 SF retail 375,000 SF office 6 Red arrow indicates current development location Yellow arrows indicate future development locations. Green arrows indicate operating property locations
Slide 7: Park Van Ness
Park Van Ness Our 271 luxury apartments at Park Van Ness on Connecticut Avenue reached stabilized leasing of 91% in June 2017. Since then, the leasing percentage has averaged a very solid 96%. 7
Slide 8: Glebe Road Development
Glebe Road Development We broke ground at 750 N. Glebe Road in July 2017. This development includes approximately 490 luxury apartments over 60,000 square feet of street-level retail space on this 2.8 acre site, merely a few blocks from the Ballston Metro stop in Arlington, Virginia. As shown here,
Slide 9: Glebe Road Development
Glebe Road Development Rendering of proposed Glebe Road development This is a rendering of the completed development. Leases have been executed for a 41,500 square foot Target and 9,000 square feet of retail shop space, resulting in approximately 84% of the retail space being leased. The project’s t
Slide 10: 7316 Wisconsin Avenue, Bethesda
7316 Wisconsin Avenue, Bethesda • Currently a 69,600 sf office building • Development potential: • 325 apartment units • 10,000 sf street level retail Our latest addition to the development pipeline came in January 2018 when we entered into an agreement to purchase a 69,600 office building at 7316 W
Slide 11: Ashbrook Marketplace
Ashbrook Marketplace Development Schedule • Construction Start: Q4 2018 • Center Opening: Early 2020 • Anchored by Lidl (35,962 SF) • $34.5 million total development cost We recently acquired 13.7 acres of land located at the intersection of Ashburn Village Boulevard and Russell Branch Parkway in Lo
Slide 12: Portfolio Composition
Portfolio Composition (measured by Property Operating Income) 24% Shopping Centers 2017 – 76% / 1993 – 73% 76% Office/Mixed-Use 15% Washington DC / Baltimore 2017 – 85% / 1993 – 79% 85% Other While overall portfolio size has grown, our property type and geographic focus have remained consistent sinc
Slide 13: Portfolio Growth
Portfolio Growth Operating properties - 29 to 55 Leasable area - 5.3 million to 9.2 million square feet $171.6 M $160 Property operating income – 5.9% compounded annual growth Property Operating Income (in millions) $140 $120 $100 $80 $60 $40 $43.0 M $20 $- Year Beginning in 1993, we were a company
Slide 14: Core Shopping Center Operations
Core Shopping Center Operations • Over 75% of shopping center NOI from grocery-anchored, service oriented neighborhood centers • Overall retail leasing percentage at 94% Our core shopping center business continues to be grocery- anchored, service oriented neighborhood centers. Over 75% of our shoppi
Slide 15: Retail Leasing Percentage
Retail Leasing Percentage 100.0% 94.3% 94.8% 95.4% 96.0% 95.2% 94.2% 93.1% 92.4% 93.2% 90.0% 80.0% 70.0% Average Leasing % 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 1st Q 2018 Excludes impact of properties sold or removed from service Our retail leasing percent
Slide 16: Small Shop Leasing Percentage
Small Shop Leasing Percentage 100.0% 89.7% 91.1% 91.2% 90.4% 91.0% 91.5% 90.0% 86.9% 84.0% 83.7% 80.0% Year-End Leasing % 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 1Q 2018 We define small shops as in-line spaces of less than 10,000 square feet. Small shop
Slide 17: Tenant Renewal Percentage
Tenant Renewal Percentage 100% 90% 82.0% 78% 79% 80% 75% 74% 76% 70% 70% 67% Average Leasing % 60% 60% 50% 40% 30% 20% 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2018 Another important contributor to property operating income growth is the percentage of tenants renewing their leases. Higher r
Slide 18: Retail Rental Rate Change
Retail Rental Rate Change 12.0% 9.0% 6.0% 4.5% 3.9% 3.0% 2.7% 3.0% 1.6% 2.0% 0.1% 0.0% -3.0% -6.0% -6.8% -6.3% -9.0% -12.0% 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2018 A third contributor to improving property operating income is the growth in rental rates. Over the past 5 years, retail rents on
Slide 19: Property Operating Income (Retail same center)
Property Operating Income (Retail same center) 6.0% 5.4% 4.9% 3.6% 3.0% 3.0% 2.0% 1.6% 1.6% 0.0% -0.7% -3.0% -4.2% -6.0% 2010 2011 2012 2013 2014 2015 2016 * 2017 * Q1 2018 * • Excludes impact of Staples termination fee (2016) • Excludes impact of Safeway termination fee (2017/2018) Retail same prop
Slide 20: Top retail tenants
Tenant Name # Locations Retail SF % 2017 Total Revenue Giant Food 10 7.6% 4.7% Capital One Bank * 16 1.1% 2.7% Safeway ** 8 5.1% 2.1% CVS 9 1.4% 1.8% Harris Teeter 4 2.5% 1.4% Lowes Home Center 2 3.3% 1.3% Publix 5 3.1% 1.3% Home Depot 2 3.9% 1.5% Trader Joe’s 3 0.5% 0.8% Petco 5 0.7% 0.6% Totals 64
Slide 21: Challenges to Traditional Retail Environment
Challenges to Traditional Retail Environment • Internet retail sales putting pressure on traditional retail uses • (i.e. electronics, clothing, books, sporting goods, bank branches) • Service uses in well located centers, while not immune, remain in demand: • Food & Drug • Restaurants • Medical • Be
Slide 22: Retailers In The News
Retailers In The News % Total # of Locations in Current Company Retailer Portfolio Revenue Toys R’Us 0 Stores - H.H. Gregg 0 Stores - Eastern Mountain Sports 0 Stores - The Limited 0 Stores - Abercrombie & Fitch 0 Stores - Sports Authority 0 Stores - Pier 1 Imports 1 Store 0.1% Sears/Kmart 1 Store 0
Slide 23: Redevelopment and Expansion - Core Portfolio
Redevelopment and Expansion - Core Portfolio Burtonsville Town Square, Burtonsville, MD We recently commenced construction on a 16,000 square foot small shop expansion of Burtonsville Town Square. The expansion is estimated to cost approximately $5.7 million. Delivery is projected in late 2018, and
Slide 24: Office/Mixed-Use Portfolio
Office/Mixed-Use Portfolio Park Van Ness, Washington, DC 24 Clarendon Center, Arlington, Virginia Park Van Ness is Saul Centers’ second major urban Metro oriented development project, following our successful Clarendon Center which delivered in 2010. With the addition of Park Van Ness, this portion
Slide 25: Office / Mixed-Use Leasing Percentage
Office / Mixed-Use Leasing Percentage (commercial space only) 100.0% 93.5% 93.0% 91.4% 91.0% 91.0% 88.1% 89.2% 90.0% 84.2% 84.4% 80.0% 70.0% Average Leasing % 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2018 Excludes impact of properties sold or removed from s
Slide 26: Funds From Operations (FFO) & Dividends
Funds From Operations (FFO) & Dividends $3.50 3.18 3.03 2.95 $3.00 2.80 $2.50 2.37 2.26 2.12 2.03 2.04 $2.00 1.84 1.69 1.56 1.44 1.44 1.44 1.44 $1.50 $1.00 0.77 0.52 $0.50 $0.00 2010 2011 2012 2013 2014 2015 2016 2017 * 1st Q 2018 FFO / share Dividend / share * Excl. extinguishment cost of redemptio
Slide 27: Dividend Payout
Dividend as a % of FFO 100.0% 90.0% 80.0% 70.9% 67.9% 67.5% 70.0% 63.7% 64.2% 60.8% 60.7% 60.0% 55.7% 57.0% Dividend Payout 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 * Q1 2018 * Excl. extinguishment cost of redemption of preferred shares Our dividend payout ratio has
Slide 28: Capital Summary
Capital Summary $3,500 Total capitalization has grown from $500 million to $2.6 billion $ 2.6 B $3,000 Leverage has decreased from 51% to 36% $2,500 Total return to shareholders = 10.4% compounded annually Compared to S&P 500 – 9.6% compounded annually $2,000 57% $1,500 In Millions 7% $1,000 $ 0.5 B
Slide 29: Annual Meeting of Stockholders
Annual Meeting of Stockholders We remain committed to, and confident in, the long-term growth prospects for our retail and mixed-use properties. Our balance sheet is strong, and we are prepared for new opportunities moving forward. I now welcome any questions you may have. Adjournment (after questio