SAUL CENTERS, INC. (BFS)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue rose 5.8% year over year to $70.8M, but GAAP net income fell to $14.2M with GAAP EPS to common of $0.33; FFO per share declined to $0.73, reflecting expense recognition at Twinbrook Quarter Phase I offset by gradually ramping occupancy .
• The initial operations of Twinbrook Quarter Phase I reduced Q2 net income by $5.4M (including $3.5M from lower capitalized interest) and cut net income to common by $2.9M ($0.12 per share), while Wegmans opened on June 25 and The Milton reached 86.1% leased/occupied by August 4, enabling revenue build into H2 .
• Same property revenue and NOI declined YoY in Q2 (-2.2% and -4.3%), driven mainly by unusually low lease termination fees versus prior year; shopping center same-property NOI fell to $35.3M .
• The company maintained its common dividend at $0.59/share for Q2 (paid July 31) and again for Q3 (paid Oct 31), signaling steady capital returns despite development-related expense headwinds .
• Street consensus from S&P Global was unavailable for Q2 2025 (EPS and revenue); estimates context is therefore limited to actuals and press release detail. Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

• Wegmans commenced operations at Twinbrook Quarter Phase I on June 25; residential leasing progressed to 389 of 452 units (86.1%) as of August 4, supporting revenue growth and future NOI cadence .
• Commercial and residential base rent increases (six-month view) offset part of development headwinds: +$4.3M commercial and +$0.7M residential excluding Twinbrook Quarter, evidencing underlying rent strength in the core portfolio .
• Residential same property revenue and NOI within mixed-use rose versus prior year, underscoring durable demand in urban multifamily assets (Q2 mixed-use residential revenue $9.459M; mixed-use residential NOI $5.762M) .

What Went Wrong

• Initial operations of Twinbrook Quarter Phase I materially pressured GAAP results (Q2 net income impact $5.4M; $3.5M due to reduction in capitalized interest), with same-property metrics also down given lower lease termination fees YoY .
• Interest expense remained elevated given financing environment and construction/term loans, rising to $16.8M in Q2 (vs $12.3M Q2 2024), constraining GAAP profitability and FFO momentum in the near term .
• Commercial occupancy dipped to 94.0% (vs 95.8% a year ago), reflecting churn and reduced termination fees; shopping center same-property NOI fell to $35.3M (-$2.1M YoY) .

Financial Results

Segment breakdown – Same Property Revenue ($USD Millions):

Segment breakdown – Same Property NOI ($USD Millions):

KPIs:

Versus estimates (S&P Global):

Guidance Changes

Management did not issue quantitative revenue/FFO/NOI/margin guidance in Q2 materials; dividend policy was reaffirmed .

Earnings Call Themes & Trends

Note: A Q2 2025 earnings call transcript was not available in our document repositories or public sources reviewed; themes reflect press releases/8-Ks.

Management Commentary

• “On June 25, 2025, Wegmans commenced operations, and as of August 4, 2025, 389 of the 452 (86.1%) residential units were leased and occupied,” highlighting the leasing progress and anchor opening at Twinbrook Quarter Phase I .
• “Net income for the 2025 Quarter was adversely impacted by $5.4 million, of which $3.5 million was a reduction in capitalized interest, due to the initial operations of Twinbrook Quarter Phase I,” clarifying the main driver of GAAP headwinds .
• “Exclusive of Twinbrook Quarter Phase I, net income increased by $0.9 million primarily due to (a) higher commercial base rent of $4.3 million and (b) higher residential base rent of $0.7 million,” indicating underlying growth in core operations (six-month view) .

Q&A Highlights

• A Q2 2025 earnings call transcript could not be located via company document repositories or common transcript aggregators; therefore, Q&A highlights and any guidance clarifications are unavailable based on our sources searched [ListDocuments earnings-call-transcript returned none; Internet review did not surface a transcript].

Estimates Context

• S&P Global consensus for Q2 2025 EPS and revenue was unavailable in our dataset; as such, beat/miss analysis versus Street is not possible beyond reporting actuals. Values retrieved from S&P Global.*
• In the absence of formal consensus, investors should focus on underlying drivers: development-induced expense recognition at Twinbrook, lower termination fees YoY, and improving rent/occupancy trends that support forward NOI/FFO once stabilization progresses .

Key Takeaways for Investors

• Near-term GAAP and FFO pressure from Twinbrook Phase I is transitory; occupancy ramp (Wegmans open; 86.1% residential) should progressively convert into revenue/NOI, narrowing the expense-recognition gap through H2/FY25 .
• Core portfolio rent growth remains solid (six-month base rent increases ex-Twinbrook), suggesting that excluding development effects, operational momentum is positive .
• Lower lease termination fees versus prior year are a notable headwind to same-property comps; investors should normalize for this as one-off volatility rather than structural weakness .
• Interest expense is elevated and a key drag; watch for capital structure actions, stabilization milestones, and rate environment shifts to alleviate FFO constraints .
• Dividend maintained at $0.59/share for Q2 and Q3 underscores confidence in cash distributions despite development ramp costs; payout stability is a support for income-focused holders .
• Commercial occupancy remains high but slightly below prior-year levels; leasing progress at Twinbrook and strong residential occupancy should help overall portfolio metrics trend steady-to-up once stabilization is achieved .
• Without Street consensus visibility for Q2 2025, trading setups should anchor on stabilization catalysts (leasing milestones, additional tenant openings) and updates in subsequent filings; monitor 10-Q and future releases for NOI uplift confirmations .