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Saul Centers, Inc. Reports First Quarter 2012 Earnings

BETHESDA, Md., May 1, 2012 /PRNewswire/ -- Saul Centers, Inc. (NYSE: BFS), an equity real estate investment trust (REIT), announced its operating results for the quarter ended March 31, 2012 ("2012 Quarter"). Total revenue for the 2012 Quarter increased to $47.1 million from $41.7 million for the three months ended March 31, 2011 ("2011 Quarter"). Operating income, which is net income available to common stockholders before income attributable to noncontrolling interests and preferred stock dividends, increased to $9.3 million for the 2012 Quarter from $8.3 million for the 2011 Quarter. Net income available to common stockholders was $4.1 million, or $0.21 per diluted share, for the 2012 Quarter compared to $3.5 million, or $0.19 per diluted share, for the 2011 Quarter. The revenue increase was primarily caused by $3.3 million of rents received from shopping centers acquired in 2011 and $2.5 million of revenue generated by the Clarendon Center development, offset in part by decreased revenue at properties impacted by reduced leasing levels. Operating income increased $0.7 million from the core properties and $0.4 million from the recently acquired shopping centers. In part, because rental income has not commenced for 28,000 square feet of leased office space, Clarendon Center had little impact on the quarterly change in operating income.

Same property revenue decreased 1.0% for the 2012 Quarter compared to the 2011 Quarter, but same property operating income increased 0.6%, due to lower property operating expenses. The same property comparisons exclude the operating results of properties not in operation for the entirety of the comparable reporting periods. Shopping center portfolio same property operating income decreased 0.5% and, primarily due to improved leasing at Washington Square, the mixed-use portfolio same property operating income increased 5.3%.

As of March 31, 2012, 90.9% of the commercial portfolio was leased (all properties except the apartments at Clarendon Center, which were 98% leased), compared to 89.6% at March 31, 2011. On a same property basis, 90.4% of the portfolio was leased compared to the prior year level of 90.2%. The 2012 leasing percentages were impacted by a net increase of approximately 33,000 square feet of space leased in the mixed-use portfolio caused by increases at Washington Square, offset in part by a net decrease of approximately 19,000 square feet of space leased in the shopping center portfolio.

Funds from operations (FFO) available to common shareholders (after deducting preferred stock dividends) increased 19.0% to $15.3 million in the 2012 Quarter from $12.9 million in the 2011 Quarter. On a diluted per share basis, FFO available to common shareholders increased 9.4% to $0.58 per share for the 2012 Quarter from $0.53 per share for the 2011 Quarter. FFO, a widely accepted non-GAAP financial measure of operating performance for REITs, is defined as net income plus real estate depreciation and amortization, and excluding gains and losses from property dispositions, impairment charges on depreciable real estate assets and extraordinary items. FFO increased in the 2012 Quarter primarily due to $1.7 million generated by the three recently acquired shopping center properties and $0.5 million generated by the recently completed Clarendon Center.

Saul Centers is a self-managed, self-administered equity REIT headquartered in Bethesda, Maryland. Saul Centers currently operates and manages a real estate portfolio of 58 community and neighborhood shopping center and mixed-use properties totaling approximately 9.6 million square feet of leasable area. Over 85% of the Company's property operating income is generated from properties in the metropolitan Washington, DC/Baltimore area.

                                                                        Saul Centers, Inc.
                                                                        ------------------
                                                               Condensed Consolidated Balance Sheets
                                                               -------------------------------------
                                                                         ($ in thousands)
                                                                          ---------------
                                                                                                      March 31,                      December 31,
                                                                                                      ---------                      ------------
                                                                                                                     2012                            2011
                                                                                                                     ----                            ----
          Assets                                                                          (Unaudited)
          ------                                                                          ----------
                          Real estate
                          investments
                         ------------
                                       Land                                                 $324,183                        $324,183
                                       ----                                                 --------                        --------
                                        Buildings and
                                        equipment                  1,094,078               1,092,533
                                       --------------              ---------               ---------
                                        Construction in
                                        progress                       1,263                   1,129
                                       ---------------                 -----                   -----
                                                                                                                1,419,524                       1,417,845
                                                                                                                ---------                       ---------
                                        Accumulated
                                        depreciation               (333,518)                (326,397)
                                       ------------                 --------                --------
                                                                                                                1,086,006                       1,091,448
                                                                                                                ---------                       ---------
                          Cash and cash
                          equivalents                      10,994                12,323
                         --------------                    ------                ------
                          Accounts receivable
                          and accrued income,
                          net                              37,763                39,094
                         --------------------              ------                ------
                          Deferred leasing
                          costs, net                       25,611                25,876
                         -----------------                 ------                ------
                          Prepaid expenses,
                          net                               3,257                 3,868
                         ------------------                 -----                 -----
                          Deferred debt costs,
                          net                               6,719                 7,090
                         --------------------               -----                 -----
                         Other assets                      15,126                12,870
                         ------------                      ------                ------
                                       Total assets                                       $1,185,476                      $1,192,569
                                       ------------                                       ==========                      ==========

          Liabilities
          -----------
                          Mortgage notes
                          payable                                              $818,295                         $823,871
                         ---------------                                       --------                         --------
                          Revolving credit
                          facility payable                  4,000                 8,000
                         -----------------                  -----                 -----
                          Dividends and
                          distributions
                          payable                          13,279                13,219
                         --------------                    ------                ------
                          Accounts payable,
                          accrued expenses
                          and other
                          liabilities                      23,544                22,992
                         ------------------                ------                ------
                         Deferred income                   30,762                31,281
                         ---------------                   ------                ------
                                        Total
                                        liabilities                  889,880                 899,363
                                       ------------                  -------                 -------

           Stockholders'
           equity
          --------------
                         Preferred stock                  179,328               179,328
                         ---------------                  -------               -------
                         Common stock                         195                   193
                         ------------                         ---                   ---
                          Additional paid-in
                          capital                         223,622               217,829
                         -------------------              -------               -------
                          Accumulated deficit
                          and other
                          comprehensive loss            (150,040)             (147,522)
                         --------------------            --------              --------
                                        Total Saul
                                        Centers, Inc.
                                        stockholders'
                                        equity                       253,105                 249,828
                                       --------------                -------                 -------
                          Noncontrolling
                          interest                         42,491                43,378
                         ---------------                   ------                ------
                                        Total
                                        stockholders'
                                        equity                       295,596                 293,206
                                       --------------                -------                 -------

     Total
                                        liabilities
                                        and
                                        stockholders'
                                        equity                                            $1,185,476                      $1,192,569
                                       --------------                                     ==========                      ==========


                                                                                                                                                                                                
                                                                                       Saul Centers, Inc.
                                                                                       ------------------
                                                                        Condensed Consolidated Statements of Operations
                                                                        -----------------------------------------------
                                                                            (In thousands, except per share amounts)
                                                                            ---------------------------------------
                                                                                                                                                                                                
                                                                                                                         Three Months Ended
                                                                                                                              March 31,
                                                                                                                        -------------------
                                                                                                                                        2012                            2011
                                                                                                                                        ----                            ----
                           Revenue                                                                                          (Unaudited)
                           -------                                                                                           ----------
                           Base rent                                     $37,588                    $32,697
                           ---------                                     -------                    -------
                           Expense recoveries                     7,709             7,426
                           ------------------                     -----             -----
                           Percentage rent                          406               375
                           ---------------                          ---               ---
                           Other                                  1,401             1,235
                           -----                                  -----             -----
                                               Total revenue              47,104            41,733
                                               -------------              ------            ------
                                                                                                                                                                                                
                           Operating expenses
                           ------------------
                           Property operating expenses             5,789             6,633
                           ---------------------------             -----             -----
                           Provision for credit losses               352               515
                           ---------------------------               ---               ---
                           Real estate taxes                      5,844             4,482
                           -----------------                      -----             -----
                            Interest expense and
                            amortization of deferred
                            debt costs.                          12,771            10,294
                           -------------------------             ------            ------
                            Depreciation and
                            amortization of deferred
                            leasing costs                         9,778             8,324
                           -------------------------              -----             -----
                           General and administrative             3,247             3,166
                           --------------------------             -----             -----
                                                Total operating
                                                expenses                  37,781            33,414
                                               ----------------            ------            ------
                           Operating income                               9,323             8,319
                           ----------------                               -----             -----
                            Change in fair value of
                            derivatives                              (3)               87
                           ------------------------                 ---               ---
                           Acquisition related costs                          -               (74)
                           -------------------------                        ---               ---
                           Net income                                     9,320             8,332
                           ----------                                     -----             -----
                            Income attributable to the
                            noncontrolling interests            (1,456)           (1,023)
                           ---------------------------            ------            ------
                            Net income attributable to Saul
                            Centers, Inc.                                 7,864             7,309
                           --------------------------------               -----             -----
                           Preferred dividends                  (3,785)           (3,785)
                           -------------------                   ------            ------
                            Net income available to common
                            stockholders                                          $4,079                     $3,524
                           -------------------------------                        ======                     ======
                                                                                                                                                                                                
                            Per share net income available
                            to common stockholders :
                           -------------------------------
                           Diluted                                         $0.21                      $0.19
                           -------                                         =====                      =====
                                                                                                                                                                                                
                            Weighted average common
                            stock :
                           ------------------------
                           Common stock                          19,403            18,659
                           ------------                          ------            ------
                           Effect of dilutive options                46                95
                           --------------------------               ---               ---
                            Diluted weighted average
                            common stock                         19,449            18,754
                           -------------------------             ======            ======
                                                                                                                                                                                                
                                                                                                                                                                                                
                                                                                                                                                                                                
                                                                                                                                                                                                
                                                                                                                                                                                                
                                                                                                                                                                                                
                                                                                                                                                                                                

                                                                         Saul Centers, Inc.
                                                                         ------------------
                                                                      Supplemental Information
                                                                      ------------------------
                                                              (In thousands, except per share amounts)
                                                              ---------------------------------------
                                                                                                                       Three Months Ended March 31,
                                                                                                                       ----------------------------
                                                                                                                                2012                    2011
                                                                                                                                ----                    ----
                      Reconciliation of net income
                      to FFO available to common
                      shareholders:                            (1)       (Unaudited)
                     -----------------------------            ---         ----------
                     Net income                                                                $9,320                                $8,332
                     ----------                                                                ------                                ------
                     Add:                Real property
                                         depreciation and
                                         amortization                 9,778             8,324
                                  ----  -----------------             -----             -----
                                        FFO                          19,098            16,656
                                        ---                          ------            ------
                     Less:              Preferred dividends           (3,785)           (3,785)
                     -----              -------------------            ------            ------
                                         FFO available to
                                         common shareholders                                      $15,313                               $12,871
                                        --------------------                                      =======                               =======
                                                                                                                                                                                
                      Weighted average
                      shares :
                     -----------------
                      Diluted weighted average
                      common stock                                  19,449            18,754
                     -------------------------                      ------            ------
                      Convertible limited
                      partnership units                              6,914             5,416
                     --------------------                            -----             -----
                      Diluted & converted
                      weighted average shares                       26,363            24,170
                     ------------------------                       ======            ======
                                                                                                                                                                                
                      Per share
                      amounts:
                     ----------
                      FFO available to common
                      shareholders (diluted).                                                   $0.58                                 $0.53
                     ------------------------                                                   =====                                 =====
                                                                                                                                                                                
                      Reconciliation of net income
                      to same property operating
                      income:
                     -----------------------------
                     Net income                                                                $9,320                                $8,332
                     ----------                                                                ------                                ------
                     Add:                Interest expense
                                         and amortization
                                         of deferred debt
                                         costs                       12,771            10,294
                                  ----  -----------------            ------            ------
                     Add:                Depreciation and
                                         amortization of
                                         deferred leasing
                                         costs                        9,778             8,324
                                  ----  -----------------             -----             -----
                     Add:                Acquisition related
                                         costs                                                    -                           74
                                  ----  -------------------                                       ---                          ---
                     Add:                General and
                                         administrative               3,247             3,166
                                  ----  ---------------               -----             -----
                     Add:                Change in fair
                                         value of
                                         derivatives                      3               (87)
                                  ----  ---------------                 ---               ---
                     Less:              Interest income                 (12)              (14)
                     -----              ---------------                 ---               ---
                                         Property operating
                                         income                      35,107            30,089
                                        -------------------            ------            ------
                     Less:               Acquisitions &
                                         developments               (5,559)              (722)
                                 -----  ---------------              ------              ----
                                         Total same property
                                         operating income.                                      $29,548                               $29,367
                                        --------------------                                      =======                               =======
                                                                                                                                                                                
                     Shopping centers                                                         $23,618                               $23,734
                     ----------------                                                         -------                               -------
                     Mixed-Use properties.                           5,930             5,633
                     ---------------------                           -----             -----
                                         Total same property
                                         operating income.                                      $29,548                               $29,367
                                        --------------------                                      =======                               =======
                                                                                                                                                                                
                                                                                                                                                                                

    (1) The National Association of
     Real Estate Investment Trusts
     (NAREIT) developed FFO as a
     relative non-GAAP financial
     measure of performance of an
     equity REIT in order to recognize
     that income-producing real
     estate historically has not
     depreciated on the basis
     determined under GAAP. FFO is
     defined by NAREIT as net income,
     computed in accordance with GAAP,
     plus real estate depreciation and
     amortization, and excluding
     extraordinary items, impairment
     charges on depreciable real
     estate assets and gains or losses
     from property dispositions. FFO
     does not represent cash generated
     from operating activities in
     accordance with GAAP and is not
     necessarily indicative of cash
     available to fund cash needs,
     which is disclosed in the
     Company's 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, its most directly
     comparable GAAP measure, as an
     indicator of the Company's
     operating performance, or as an
     alternative to cash flows as a
     measure of liquidity. Management
     considers FFO a meaningful
     supplemental measure of operating
     performance because it primarily
     excludes the assumption that the
     value of the real estate assets
     diminishes predictably over time
     (i.e. depreciation), which is
     contrary to what we believe
     occurs with our assets, and
     because industry analysts have
     accepted it as a performance
     measure. FFO may not be
     comparable to similarly titled
     measures employed by other REITs.

SOURCE Saul Centers, Inc.

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