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Saul Centers Updates on Rent Collection, Approves Dividend

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Saul Centers, Inc. (BFS - Free Report) recently announced that 73% of May 2020 total billings and 77% of April 2020 total billings have been paid by its tenants as of Jun 17, 2020. Moreover, the company noted that for the first 17 days of the current month, cash collections of June total billings are ahead of cash collections for the same period in May.

The coronavirus pandemic has been affecting demand for real estate. Also, the rent-paying capability of tenants has significantly suffered amid the macroeconomic uncertainties and job-market choppiness as well as adverse impact on business and consumer sentiment.

Saul Centers, with a portfolio comprising 50 shopping centers and seven mixed-use properties totaling 1,268 commercial tenants, also announced granting rent deferrals of approximately 4% of May total billings (or 14% of the total unpaid balance, including 6% with anchor tenants), and roughly 5% of April total billings (or 22% of the total unpaid balance, including 8% with anchor/national tenants).

However, the rent-collection update of Saul Centers, having 9 million square feet of shopping center and office space, and mixed-use properties containing 1,006 luxury apartment units or 0.8 million square feet, indicates that the company is benefiting from its portfolio’s tenant diversification. Rent collections have been strong in the residential (99% in May and 100% in April) and office (92% in both May and April) category. The same in retail was 66% in May and 71% in April.

Obviously the retail sector, which had already been battling store closures and bankruptcy woes, is likely to witness rent deferrals in the upcoming months due to the dwindling footfall at properties amid social-distancing mandates and higher e-commerce adoption. 

However, the company noted that of its 50 shopping centers, 42 are anchored by a grocery store, home improvement store, pharmacy or bank. All of these have remained open as these are considered as "essential business" and seem to be saving the grace for Saul Centers. Moreover, as per modified operating protocols in sync with state and local guidelines, 91% of the company’s shopping center tenants are open and operating, while 100% of its shopping centers are open.

Apart from providing rent-collection details, the company also announced a quarterly dividend of 53 cents per share on its common stock, unchanged sequentially and year on year. The dividend is payable on Jul 31, to holders of record on Jul 17, 2020.

Saul Centers also noted that it delivered a mixed-use project comprising 491 apartment units and 60,000 square feet of retail space — The Waycroft — on North Glebe Road, in Arlington, VA, in the first week of April. The company has executed 165 residential applications, amounting roughly 34% of the available units as of Jun 17. This project adds to the portfolio’s diversity as it nearly doubles the residential component of the company’s portfolio to more than 1,000 luxury residential units. It is anchored by a 41,500-square-foot Target store, presently under construction and slated to open this August.

Shares of this Zacks Rank #4 (Sell) company have edged down 0.8%, quarter to date, as against the 18.6% rally of its industry.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Alexander Baldwin Holdings, Inc.’s (ALEX - Free Report) Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has been unchanged at 83 cents over the past month. The company currently flaunts a Zacks Rank of 1.

City Office REIT, Inc.’s (CIO - Free Report) FFO per share estimate for the ongoing year has been unchanged at $1.11 over the past 30 days. The company currently sports a Zacks Rank of 1.

Gladstone Land Corporation’s (LAND - Free Report) FFO per share estimate for the current year has been unchanged at 68 cents over the past month. It currently carries a Zacks Rank of 2 (Buy).

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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