Saul Centers, Inc. · NYSE:BFS
Saul Centers — Shareholder Meeting (2019)
30 slides from Saul Centers's shareholder meeting presentation, 2019
Slide 1: Annual Meeting slide show introduction
We have prepared a brief slide show to highlight our core portfolio operating performance, to review our capital accomplishments over the past year, and to update our on-going and future development activities. 1
Slide 2: Portfolio Composition
Portfolio Composition (measured by Property Operating Income) 24.4% Shopping Centers 2018 – 75.6% / 2009 – 76.8% 75.6% Office/Mixed-Use 14.7% Washington DC / Baltimore 2018 – 85.3% / 2009 – 82.1% 85.3% Other While overall portfolio size has grown, our property type and geographic focus have remained
Slide 3: Portfolio Growth
Portfolio Growth Operating properties - 29 to 56 (1994 – 2018) Leasable area - 5.3 million to 9.3 million square feet Property operating income – 5.9% compounded annual growth $160 $171.6 M Property Operating Income (in millions) $140 $120 $100 $80 $60 $40 $43.0 M $20 $- Year When we first went publ
Slide 4: Core Shopping Center Operations
Core Shopping Center Operations • As of March 31, 2019, over 75% of shopping center property operating income from grocery-anchored, service oriented neighborhood centers • Overall retail leasing percentage at 96% Our core shopping center business continues to be grocery- anchored, service oriented
Slide 5: Retail Leasing Percentage
Retail Leasing Percentage 100.0% 94.8% 95.4% 96.0% 95.2% 95.1% 96.0% 90.0% 80.0% 70.0% Average Leasing % 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2014 2015 2016 2017 2018 1st Q 2019 10 yr. Avg. = 94.3% Excludes impact of properties sold or removed from service Over the past five years, our retail le
Slide 6: Small Shop Leasing Percentage
Small Shop Leasing Percentage (in-line spaces < 10,000 SF) 100.0% 91.1% 91.2% 90.4% 91.0% 92.1% 92.6% 90.0% 80.0% Year-End Leasing % 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2014 2015 2016 2017 2018 1Q 2019 10 yr. Avg. = 88.9% Small shop leasing has averaged 91.2% for the last five years, comp
Slide 7: Tenant Renewal Percentage
Tenant Renewal Percentage 100% 90% 82% 79% 78% 80% 75% 74% 76% 70% Average Leasing % 60% 50% 40% 30% 20% 10% 0% 2014 2015 2016 2017 2018 Q1 2019 10 yr. Avg. = 73% A significant contributor to property operating income growth is the percentage of tenants renewing their leases. A higher renewal percen
Slide 8: Retail Rental Rate Change
Retail Rental Rate Change (Cash basis) 12.0% 9.0% 6.0% 3.9% 4.5% 3.0% 2.4% 3.0% 2.0% 1.3% 0.0% -3.0% -6.0% -9.0% -12.0% 2014 2015 2016 2017 2018 Q1 2019 10 yr. Avg. = 0.2% Also providing an enhancement to property operating income is the growth in rental rates. Over the past five years, retail rents
Slide 9: Property Operating Income (Retail same center)
Property Operating Income (Retail same center) 6.0% 5.4% 4.4% 3.0% 3.0% 2.1% 0.4% 0.0% -1.1% -3.0% 2014 2015 2016 2017 2018 Q1 2019 10 yr. Avg. = 0.7% Our retail same center property operating income has averaged 2.0% annual growth over the past five years. 9
Slide 10: Significant Tenant Concentration
Significant Tenant Concentration Tenant Name # Locations Retail SF % % of 2018 Total Revenue Giant Food 10 7.6% 4.7% Capital One Bank * 16 0.7% 2.0% Safeway ** 7 4.4% 1.8% CVS 9 1.4% 1.8% Home Depot 2 3.9% 1.5% Publix 6 3.9% 1.5% Harris Teeter 4 2.5% 1.4% Lowes Home Center 2 3.3% 1.4% BJ’s Wholesale
Slide 11: Repositioning Capital One Bank Branch Closings
Repositioning Capital One Bank Branch Closings • 7 branches totaling 22,000 total SF closed since 2016 • Re-tenanted at 5.1% higher rents We have all read a lot about store closures and competition from Amazon and others in the retail world. The next few slides talk about how we have been affected a
Slide 12: Grocery Store Re-leasing
Grocery Store Re-leasing • 4 grocery stores closed since 2016 • All 224,000 square feet have been re-tenanted at 11% higher rents Since early 2016, two of our Safeway stores closed, and during 2019, our leases with Super H at Fairfax and Shoppers Food Warehouse at Seven Corners are expiring. We have
Slide 13: Repositioning of Radio Shack Spaces
Repositioning of Radio Shack Spaces • 7 leases • 15,900 square feet After a 2015 Radio Shack bankruptcy filing, our seven locations were successfully repositioned. Radio Shack then represented less than 0.3% of our total base rent. Four of the seven leases were sold to a Sprint partnership and are s
Slide 14: Recent Shop Tenant Exposure
Recent Shop Tenant Exposure Payless Shoe Source Mattress Firm / Sleepy’s • 5 leases • 5 leases • 15,600 square feet • 21,670 square feet • 0.2% of 2018 total base rent • 0.3% of 2018 total base rent Similar situations currently exist with the 2018 Mattress Firm bankruptcy filing and the 2019 Payless
Slide 15: Office/Mixed-Use Portfolio
Office/Mixed-Use Portfolio Park Van Ness, Washington, DC Clarendon Center, Arlington, Virginia Park Van Ness, which delivered in 2016, is Saul Centers’ second urban Metro oriented development project, following our successful Clarendon Center which delivered in 2010. With the addition of our third m
Slide 16: Office / Mixed-Use Leasing Percentage
Office / Mixed-Use Leasing Percentage (commercial space only) 100.0% 93.5% 91.4% 91.0% 91.0% 93.0% 92.2% 90.0% 80.0% 70.0% Average Leasing % 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2014 2015 2016 2017 2018 Q1 2019 10 yr. Avg. = 89.7% Excludes impact of properties sold or removed from service The co
Slide 17: Residential Leasing Percentage
Residential Leasing Percentage (Stabilized Properties) 98.9% 97.8% 96.7% 96.7% 98.1% 100.0% 95.9% 90.0% 80.0% 70.0% Average Leasing % 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2014 * 2015 * 2016 * 2017 * 2018 Q1 2019 * Clarendon only. Park Van Ness was in lease-up during 2016, stabilizing in June 201
Slide 18: Funds From Operations (FFO) & Dividends
Funds From Operations (FFO) & Dividends $3.50 3.18 3.11 2.95 3.03 $3.00 2.80 $2.50 2.04 2.08 $2.00 1.84 1.69 1.56 $1.50 $1.00 0.84 0.53 $0.50 $0.00 2014 2015 2016 2017 * 2018 1st Q 2019 FFO / share Dividend / share * Net of extinguishment costs of redemption of preferred shares ($0.08 negative impac
Slide 19: Dividend Payout
Dividend as a % of FFO 100.0% 90.0% 80.0% 70.0% 64.2% 66.8% 60.7% 63.1% 60.0% 55.7% 57.0% Dividend Payout 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2014 2015 2016 2017 2018 Q1 2019 Our dividend payout ratio has averaged what we believe is a very conservative 60.9% over the past five years, with the most re
Slide 20: Recent Capital Transactions
Recent Capital Transactions Six shopping center mortgages totaling $61.2 million were to mature in 2019 • Two were paid off and remain unsecured • Three were refinanced = $37 million in net proceeds • One $12 million maturity remains We entered the fourth quarter of 2018 with six loans totaling $61.
Slide 21: Mortgage Debt Maturities
Mortgage Debt Maturities $300 $250 Balloon Payment due at Maturity $200 $170 $150 $136 In Millions $100 $62 $67 $50 $43 $37 $35 $21 $12 $11 $9 $0 $0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 & Year Debt Matures Beyond Excludes $157 M Glebe Rd. construction loan, $38.5M balance - $9
Slide 22: Prudent Capital Structure
Prudent Capital Structure • 91% fixed rate, non-recourse debt • Weighted average mortgage maturity – 8.8 years • Average secured debt interest rate – 5.14% • $180 million perpetual preferred stock • $400 million unsecured credit facility 91% of our debt is fixed-rate, non-recourse debt, with a weigh
Slide 23: Retail Development: Ashbrook Marketplace
Retail Development Ashbrook Marketplace Loudoun County, Virginia • 88,000 total leasable square feet • Opening early 2020 • 50% pre-leased • Anchored by Lidl (29,000 SF) Site work commenced on our Ashbrook Marketplace shopping center in Loudoun County, Virginia. Lidl will anchor the development, and
Slide 24: Mixed-Use Development N. Glebe Road
Mixed-Use Development 750 N. Glebe Road Arlington, Virginia • 491 luxury residential units • 60,000 SF street-level retail, which is 88% pre-leased • Opening Q1 2020 Rendering of proposed Glebe Road development We continue the development of 491 luxury residential units and 60,000 square feet of ret
Slide 25: Glebe Road Development
Glebe Road Development The exterior façade is well underway and is scheduled to be substantially completed by August 2019. Interior residential unit drywall and finishing is progressing on floors two through six. Sitework has just commenced, and the development is scheduled for initial occupancy in
Slide 26: Transit-Oriented Mixed-Use Development Pipeline
Transit-Oriented Mixed-Use Development Pipeline 18 acres at three Metro sites for up to: 2,700 apartment units 230,000 SF retail 375,000 SF office Red arrow indicates current development location Yellow arrows indicate future development locations. Green arrows indicate operating property locations
Slide 27: 7316 Wisconsin Avenue, Bethesda, Maryland
7316 Wisconsin Avenue Bethesda, Maryland • Development potential: • Up to 365 apartment units • 10,000 sf street level retail Our latest addition to the development pipeline came in 2018 when we purchased a 69,600 square foot office building at 7316 Wisconsin Avenue in Bethesda, Maryland. The approv
Slide 28: Capital Summary
Capital Summary $3,500 Total capitalization has grown from $500 million to $2.8 billion Leverage has decreased from 51% to 37% $3,000 $ 2.8 B Total return to shareholders = 10.1% compounded annually $2,500 compared to S&P 500 = 9.6% compounded annually $2,000 In Millions $1,500 56% 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
Slide 30: 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