Saul Centers Acquires Assets

Saul Centers Inc. (BFS - Snapshot Report) recently announced the acquisition of three Giant food-anchored shopping centers in Washington, DC for $168.5 million. The acquired shopping centers are located in the Baltimore area, encompassing 635,000 square feet of space, of which 98% is currently leased.

The  acquisition was funded  through two secured-bridge loans worth $60.0 million; a $38.0 million loan secured by Severna Park; approximately $17.1 million in cash and borrowings from the company's line of credit and $55.8 million issuance  of new equity.

Saul Centers expects these acquisitions to be modestly accretive to its funds from operations (FFO) during 2012. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

The transaction is a strategic move on the company’s part to supplement its internal growth plans  going forward through selective development and acquisitions of new properties.

Bethesda, Maryland-based Saul Centers is an equity real estate investment trust (REIT) that currently operates and manages a real estate portfolio of 58 operating community and neighborhood shopping center and office/mixed-use properties totaling approximately 9.6 million square feet of leasable area.

Saul Centers currently retains a Zacks #5 Rank, which translates into a short-term Strong Sell rating. We are also maintaining our long-term Underperform recommendation on the stock. One of its competitors, Boston Properties Inc. (BXP - Analyst Report) has a Zacks #2 Rank, which translates into a short-term Buy rating.

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