2005 Post 200
B.F. Saul Real Estate Investment Trust
7501 Wisconsin Ave.
Bethesda, Md. 20814
Industry: Real estate
Post 200 Category: Top Private Companies
Revenue: $1.12 Billion
Net Income/Loss: $76.70 Million
Earnings per share: $14.82
Stockholder equity: $241.60 Million
Auditor: Ernst & Young LLP
Assets: $13.73 Billion
Market capitalization: n/a
52-week high: n/a
52-week low: n/a
Chairman and CEO: B. Francis Saul II
EVP and CFO: Stephen R. Halpin Jr.
Local employees: n/a
Description: Despite its name, B.F. Saul Real Estate Investment Trust is not a real estate investment trust. It's a savings and loan holding company that owns 80 percent of Chevy Chase FSB, the largest bank based in the Washington area. REITs are specially chartered companies that qualify for federal tax breaks, but the company abandoned that status years ago. In addition to the bank, it owned 17 hotels in the Washington suburbs, 13 office projects and several parcels of land for development.
Developments: As the economy gained strength last year, performance improved at the properties owned by B.F. Saul Real Estate Investment Trust. Occupancy rates at the company's quarter-billion-dollar portfolio of hotels increased from 60 to 63 percent and room rates jumped by $12 a night, producing a 20 percent increase in revenue per room. The office buildings went from being 86 percent leased a year earlier to more than 90 percent full. With rival Riggs Bank mired in scandal and heading for a sale to out-of-town owners, Chevy Chase Bank increased its presence as the biggest of the locally owned banks, growing its assets by 13 percent to more than $13 billion at the end of its fiscal year and boosting operating earnings by 58 percent. Financial reports do not really reveal how profitable the operations are, because the company is organized in a way that enables it to use the real estate holdings to shelter the bank's income from taxes. Even though they produce a steady stream of cash, real estate investments often show a loss for tax purposes, after large deductions for depreciation on the property and mortgage interest costs. In this case, Chevy Chase Bank generated $231 million in operating profit last year, but after offsetting that against real estate losses, the holding company reported only $76.7 million in earnings. The company also has investments in Saul Holdings — one of the many privately owned ventures of Chairman B. Francis Saul II — and a stake in Saul Centers Inc., another publicly traded company (which actually is a real estate investment trust).