Saul Centers, Inc. · NYSE:BFS
Saul Centers — Shareholder Meeting (2015)
26 slides from Saul Centers's shareholder meeting presentation, 2015
Slide 1: Introduction to 22 years as a public REIT
We have prepared a brief slide show to highlight the company’s performance over our 22 years as a public REIT, and to present a summary of recent activity in both our retail and mixed‐use portfolios. 1
Slide 2: Growth from 29 to 56 properties since 1993
Beginning in 1993, we were a company of 29 properties containing 5.3 million square feet of retail and office space. As a result of core property redevelopment, supplemented with acquisitions and new developments, we now have 56 properties with 9.3 million square feet. Property operating income of $
Slide 3: Capitalization, leverage and total return since 1993 IPO
We began in 1993 with a $500 million total capitalization, split evenly between debt and equity – 50% leveraged. As of March 2015, our total capitalization was $2.6 billion and, with $850 million of debt, our leverage has decreased to 32%. Throughout this period, a long‐term holder of our stock sinc
Slide 4: Consistent geographic and property type focus
While overall size has grown as just discussed, our geographic and property type focus has remained consistent. Over 76% of our 2014 property operating income is from our community and neighborhood shopping centers, compared to 73% at the outset. Approximately 85% of our 2014 property operating inco
Slide 5: Retail properties continue to display positive results
Our 50 retail properties continue to display positive results. 2014 was the third consecutive year of improved shopping center occupancy, positive rent growth on a same space basis, and increased same center property operating income. 5
Slide 6: Retail leasing percentage averaged 94.8%
Our retail leasing percentage averaged 94.8% for 2014 and the most recent quarter, continuing to rebound from an annual low of 92.4% in 2011. 6
Slide 7: Small shop leasing improvement
Recent retail leasing increases have largely been driven by small shop leasing percentage improvement. We define small shops as in‐line spaces less than 10,000 square feet. Shop leasing has improved to 91% in 2014 and the most recent quarter, still less than our high of 94% in 2006. With most mom &
Slide 8: Retail rental rate increases over expiring rents
On a same space basis, retail rental rate increases over expiring rents averaged approximately 10% during the four years leading up to the economic downturn. After 3 years of rental rate declines from 2009 to 2011, retail rents have since averaged 1.9% increases. These still low, yet positive, rent
Slide 9: Retail same center property operating income
Retail same center property operating income averaged 3.2% annually from 2005 to 2008. The economic downturn drove shopping center results negative for the next 3 years. Beginning in 2012, as leasing percentages and rental rates rebounded, same property operating income growth has averaged 3.7% annu
Slide 10: Diverse retail tenant base
A diverse retail tenant base minimizes exposure to any one tenant’s credit. Our top 10 retail tenants comprise only 18.1% of total company revenue. Only Giant Food and Safeway individually accounted for more than 2.5% of our total revenue last year. 10
Slide 11: Loudoun County and Florida shopping centers
The recent recession negatively impacted the operating results of our Loudoun County, Virginia and Florida shopping centers to a greater extent than other sub‐markets. Our 9 grocery anchored shopping centers in these markets total 1.3 million square feet of space, and produced $20 million, or 12.9%
Slide 12: Retail tenants in the news
A few comments about retail tenants in the news earlier this year. Radio Shack filed Chapter 11 bankruptcy in February. We have 6 Radio Shacks, with annual base rents representing 0.3% of total base rent. Four of these 6 leases were sold to a partnership which includes Sprint and General Wireless. T
Slide 13: Seven Corners shopping center
Seven Corners is our largest shopping center, as measured by both square footage and property operating income, and is 100% leased. In 2014 this center produced the top retail sales volume in our portfolio, over $180 million It is one of 3 of centers where tenants report sales in excess of $100 mill
Slide 14: Thruway shopping center
Thruway is our second largest shopping center in terms of property operating income. This center is the dominant center in Winston‐Salem, North Carolina and its customer draw has expanded since Trader Joe’s opened in 2012. Other significant tenants include Harris Teeter, Hanesbrands, SteinMart, Chic
Slide 15: Office/mixed-use portfolio
The office/mixed‐use space totals over 1.5 million square feet, and produces 25% of our total property operating income. Our recently developed Clarendon Center and 601 Pennsylvania Avenue are the company’s two largest income generators at approximately 70% of our office/mixed‐use property operating
Slide 16: Washington DC office market demand and leasing
Demand for office space in the metropolitan Washington, DC market continues to be lower than historic levels, with overall vacancy rates exceeding 16%. During 2010 and 2011 our office vacancy was near 16%, however, since then our leasing percentage has improved. The average percentage leased in our
Slide 17: Top office tenants
Our top 10 office tenants, representing 31% of our office square footage, produced 9.5% of 2014 company revenue. It is important to note that all but one of these tenants have lease expirations in 2018 or later. For the tenant lease expiring in 2015, we have executed a new lease for 10,000 of the 15
Slide 18: 601 Pennsylvania Avenue upgrade
We have recently completed a significant lobby, fitness center, and building common area upgrade at 601 Pennsylvania Avenue, which will maintain the building’s position as one of the premier East End office addresses. The building is 98.1% leased, and leases for 84% of the building have expirations
Slide 19: Park Van Ness development
This week we have substantially completed structural concrete work on the top floor of our Park Van Ness development, a 224,000 square foot apartment / retail building. The project is conveniently located on the east side of Connecticut Avenue overlooking Rock Creek Park, and is a short walk from th
Slide 20: Future development sites near Metro stations
Looking beyond the Park Van Ness development, we have assembled sites containing one and two‐story retail buildings adjacent to three Metro stations – Glebe Road in Northern Virginia and White Flint and Twinbrook in Montgomery County, Maryland. These 3 sites contain 22 acres, and have development po
Slide 21: FFO per share and dividend increases
FFO has continued to improve since 2011, reaching $2.80 per share in 2014. This is the company’s highest annual FFO, surpassing the $2.75 per share reported in 2007. We raised the dividend by 11% in April 2014, after four consecutive years without an increase. We again increased the dividend in Apri
Slide 22: Dividend payout ratio
Our dividend payout ratio has dropped over the past 3 years, from 70.9% of FFO in 2011, to 55.7% of FFO in 2014. Even with the 2 recent dividend increases, our ratio of dividends to first quarter 2015 FFO remains a very comfortable 60.6%. This conservative payout policy allows us to retain operating
Slide 23: Preferred stock issuance and credit line expansion
In 2 separate transactions in 2013 and late 2014, we issued $180 million of 6 7/8% Series C, perpetual preferred stock and redeemed all of our Series A & B preferred stock. These transactions resulted in a reduction of our preferred dividend rate from 8.4% to 6.875%, a savings of $2.8 million in pre
Slide 24: Fixed-rate non-recourse debt and maturity ladder
Over 95% of our total debt is fixed rate, non‐recourse debt. A favorable rate environment over the past 5 years has allowed us to reduce our weighted average interest rate to 5.5% from 6.7% at the beginning of 2010. Maturities are staggered through 2034 – the silver bars represents the current value
Slide 25: Closing remarks and questions
We remain committed to, and confident in, the long‐term performance of our core 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 questions) 25
Slide 26: 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-looki