~~Olney Shopping Center~~

In March 2017, the Company purchased for $3.1 million, including acquisition costs, the land underlying Olney Shopping Center. The land was previously leased by the Company with an annual rent of approximately $56,000. The purchase price was funded by the revolving credit facility.

~~7316 Wisconsin Avenue~~

On January 12, 2018, the Company entered into an agreement to purchase for $35.5 million, plus approximately $0.7 million of acquisition costs, a 69,600 square foot office building and the underlying ground located at 7316 Wisconsin Avenue in Bethesda, Montgomery County, Maryland and has an earnest money deposit of $3.5 million at risk. The property has mixed-use development potential of up to 325 apartment units and approximately 10,000 square feet of street level retail pursuant to the recently approved Bethesda Downtown Plan. The purchase price will be funded through the Company's revolving credit facility. The Company anticipates closing the acquisition on or before January 12, 2019.

Item 1A. Risk Factors

RISK FACTORS

Carefully consider the following risks and all of the other information set forth in this Annual Report on Form 10-K, including the consolidated financial statements and the notes thereto. If any of the events or developments described below were actually to occur, the Company’s business, financial condition or results of operations could be adversely affected.

In this section, unless the context indicates otherwise, the terms “Company,” “we,” “us” and “our” refer to Saul Centers, Inc., and its subsidiaries, including the Operating Partnership.

~~Financial~~Risk Factors Related to our Real Estate Investments and ~~economic conditions may have an adverse impact on us, our tenants’ businesses and our results of operations.~~

Our business may be affected by market and economic challenges experienced by the U.S. economy or real estate industry as a whole, by the local economic conditions in the markets in which our properties are located, including the impact of high unemployment, volatility in the public equity and debt markets, and international economic conditions. A prolonged deterioration of economic and other market conditions, could adversely affect our business, financial condition, results of operations or real estate values, as well as the financial condition of our tenants and lenders, which may expose us to increased risks of default by these parties.

~~Potential consequences of a prolonged deterioration of economic and other market conditions include:~~

the financial condition of our tenants, many of which operate in the retail industry, may be adversely affected, which may result in tenant defaults under their leases due to bankruptcy, lack of liquidity, operational failures or for other reasons;

~~the ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and~~

~~refinance existing debt, reduce our returns from acquisition and development activities and increase our future interest expense;~~

~~reduced values of our properties may limit our ability to dispose of assets at attractive prices and may reduce the ability to refinance loans; and~~

~~one or more lenders under our credit facility could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.~~Operations

Revenue from our properties may be reduced or limited if the retail operations of our tenants are not successful.

Adverse changes in consumer spending or consumer preferences for particular goods, services or store based retailing could severely impact our tenants’ ability to pay rent. Revenue from our properties depends primarily on the ability of our tenants to pay the full amount of rent due under their leases on a timely basis. The amount of rent we receive from our tenants generally will depend in part on the success of our tenants’ retail operations, making us vulnerable to general economic downturns and other conditions affecting the retail industry. Some tenants may terminate their occupancy due to an inability to operate profitably for an extended period of time, impacting the Company’s ability to maintain occupancy levels.

Any reduction in our tenants’ ability to pay base rent or percentage rent may adversely affect our financial condition and results of operations. Small business tenants and anchor retailers which lease space in the Company’s properties may experience a deterioration in their sales or other revenue, or experience a constraint on the availability of credit necessary to fund operations, which in turn may adversely impact those tenants’ ability to pay contractual base rents and operating expense recoveries. Some of our leases provide for the payment, in addition to base rent, of additional rent above the base amount according to a specified percentage of the gross sales generated by the tenants. Decreasing sales revenue by retail tenants could adversely impact the Company’s receipt of percentage rents required to be paid by tenants under certain leases.

We may be unable to collect balances due from tenants that file for bankruptcy protection.

If a tenant or lease guarantor files for bankruptcy, we may not be able to collect all pre-petition amounts owed by that party. In addition, a tenant that files for bankruptcy protection may terminate our lease in which event we would have a general unsecured claim that would likely be for less than the full amount owed to us for the remainder of the lease term, which could adversely affect our financial condition and results of operations.

Our ability to increase our net income depends on the success and continued presence of our shopping center “anchor” tenants and other significant tenants.

Our net income could be adversely affected in the event of a downturn in the business, or the bankruptcy or insolvency, of any anchor store or anchor tenant. Our largest shopping center anchor tenant is Giant Food, which accounted for ~~4.7%~~5.1% of our total revenue for the year ended December 31, ~~2017.~~2022. The closing of one or more anchor stores prior to the expiration of the lease of that store or the termination of a lease by one or more of a property’s anchor tenants could adversely affect that property and result in lease terminations by, or reductions in rent from, other tenants whose leases may permit termination or rent reduction in those circumstances or whose own operations may suffer as a result. This could reduce our net income.

We may experience difficulty or delay in renewing leases or leasing vacant space.

We derive most of our revenue directly or indirectly from rent received from our tenants. We are subject to the risks that, upon expiration, leases for space in our properties may not be renewed, the space and other vacant space may not be re-leased, or the terms of renewal or re-lease, including the cost of required renovations or concessions to tenants, may be less favorable than previous lease terms. Constraints on the availability of credit to office and retail tenants, necessary to purchase and install improvements, fixtures and equipment, and fund start-up business expenses, could impact the Company’s ability to procure new tenants for spaces currently vacant in existing operating properties or properties under development. As a result, our results of operations and our net income could be reduced.

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Our development activities are inherently risky.

The ground-up development of improvements on real property, which is different from the renovation and redevelopment of existing improvements, presents substantial risks. In addition to the risks associated with real estate investment in general as described elsewhere, the risks associated with our remaining development activities include:

•significant time lag between commencement and completion subjects us to greater risks due to fluctuation in the general economy;

•failure or inability to obtain construction or permanent financing on favorable terms;

•expenditure of money and time on projects that may never be completed;

•inability to achieve projected rental rates or anticipated pace of lease-up;

•higher-than-estimated construction costs, including inflation of labor and material costs; and

•possible delay in completion of the project because of a number of factors, including weather, labor disruptions, supply-chain related delays, construction delays or delays in receipt of zoning or other regulatory approvals, or acts of God (such as fires, earthquakes or floods).

Developments, redevelopments and acquisitions may fail to perform as expected.

Our investment strategy includes the redevelopment and acquisition of community and neighborhood shopping centers that are anchored by supermarkets, drugstores or high volume, value-oriented retailers that provide consumer necessities. The redevelopment and acquisition of properties entails risks that include the following, any of which could adversely affect our results of operations and our ability to meet our obligations:

•our estimate of the costs to improve, reposition or redevelop a property may prove to be too low, and, as a result, the property may fail to achieve the returns we have projected, either temporarily or for a longer time;

•we may not be able to identify suitable properties to acquire or may be unable to complete the acquisition of the properties we identify;

•we may not be able to integrate new developments or acquisitions into our existing operations successfully;

•properties we redevelop or acquire may fail to achieve the occupancy or rental rates we project at the time we make the decision to invest, which may result in the properties’ failure to achieve the returns we projected;

•our pre-acquisition evaluation of the physical condition of each new investment may not detect certain defects or identify necessary repairs until after the property is acquired, which could significantly increase our total acquisition costs; and

•our investigation of a property or building prior to our acquisition, and any representations we may receive from the seller, may fail to reveal various liabilities, which could reduce the cash flow from the property or increase our acquisition cost.

Our performance and value are subject to general risks associated with the real estate industry.

Our economic performance and the value of our real estate assets, and, consequently, the value of our investments, are subject to the risk that if our properties do not generate revenue sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributions to our stockholders will be adversely affected. As a real estate company, we are susceptible to the following real estate industry risks:

•economic downturns in the areas where our properties are located;

•adverse changes in local real estate market conditions, such as oversupply or reduction in demand;

•changes in tenant preferences that reduce the attractiveness of our properties to tenants;

•zoning or regulatory restrictions;

•decreases in market rental rates;

•weather conditions that may increase energy costs and other operating expenses;

•costs associated with the need to periodically repair, renovate and re-lease space; and

•increases in the cost of adequate maintenance, insurance and other operating costs, including real estate taxes, associated with one or more properties, which may occur even when circumstances such as market factors and competition cause a reduction in revenue from one or more properties, although real estate taxes typically do not increase upon a reduction in such revenue.

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Geographic concentration of our portfolio may make us particularly susceptible to adverse economic developments in the real estate markets of those areas.

Over 85% of our property operating income is generated by properties in the metropolitan Washington, DC/Baltimore area. As a result, our financial condition, operating results and ability to make distributions could be materially and adversely impacted by significant adverse economic changes affecting the real estate markets in that area. In turn, our common stock is subject to greater risk vis-a-vis other enterprises whose portfolio contains greater geographic diversity.

Our results of operations may be negatively affected by adverse trends in the retail and office real estate sectors.

Tenants at our retail properties face continual competition in attracting customers from online merchants, retailers at other shopping centers, catalogue companies, television shopping networks, warehouse stores, large discounters, outlet malls, wholesale clubs, direct mail and telemarketers. Such competition could have a material adverse effect on our ability to lease space in our retail properties and on the rents we can charge or the concessions we grant. This in turn could materially and adversely affect our results of operations and cash flows, and could affect the realizable value of our assets upon sale. Further, as new technologies emerge, the relationships among customers, retailers, and shopping centers are evolving rapidly and it is critical we adapt to such new technologies and relationships on a timely basis. We may be unable to adapt quickly and effectively, which could adversely impact our financial performance.

Some businesses are rapidly evolving to make employee telecommuting, flexible work schedules, open workplaces and teleconferencing increasingly common. These practices enable businesses to reduce their space requirements. A continuation of the movement towards these practices could over time erode the overall demand for office space and, in turn, place downward pressure on occupancy, rental rates and property valuations, each of which could have an adverse effect on our financial position, results of operations, cash flows and ability to make distributions to our stockholders.

Many real estate costs are fixed, even if income from our properties decreases.

Our financial results depend primarily on leasing space in our properties to tenants on terms favorable to us. Costs associated with real estate investment, such as real estate taxes and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the investment. As a result, cash flow from the operations of our properties may be reduced if a tenant does not pay its rent or we are unable to rent our properties on favorable terms. Under those circumstances, we might not be able to enforce our rights as landlord without delays, and may incur substantial legal costs. Additionally, new properties that we may acquire or develop may not produce any significant revenue immediately, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with that property until the property is fully leased.

Competition may limit our ability to purchase new properties and generate sufficient income from tenants.

Numerous commercial developers and real estate companies compete with us in seeking tenants for properties and properties for acquisition. This competition may:

•reduce properties available for acquisition;

•increase the cost of properties available for acquisition;

•reduce rents payable to us;

•interfere with our ability to attract and retain tenants;

•lead to increased vacancy rates at our properties; and

•adversely affect our ability to minimize expenses of operation.

Retailers at our shopping center properties also face increasing competition from outlet stores, discount shopping clubs, and other forms of marketing of goods, such as direct mail, internet marketing and telemarketing. This competition may reduce percentage rents payable to us and may contribute to lease defaults and insolvency of tenants. If we are unable to continue to attract appropriate retail tenants to our properties, or to purchase new properties in our geographic markets, it could materially affect our ability to generate net income, service our debt and make distributions to our stockholders.

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We may be unable to sell properties when appropriate because real estate investments are illiquid.

Real estate investments generally cannot be sold quickly. In addition, there are some limitations under federal income tax laws applicable to real estate and in particular to REITs that may limit our ability to sell our assets. We may not be able to alter our portfolio promptly in response to changes in economic or other conditions. Our inability to respond quickly to adverse changes in the performance of our investments could have an adverse effect on our ability to meet our obligations and make distributions to our stockholders.

Risk Factors Related to our Funding Strategies and Capital Structure

We have substantial relationships with members of the Saul Organization whose interests could conflict with the interests of other stockholders.

Influence of Officers, Directors and Significant Stockholders.

~~Three of our executive officers,~~ Mr. B. F. Saul II, our Chief Executive Officer and Chairman of the Board, D. Todd Pearson, our President and Chief Operating Officer, ~~J. Page Lansdale,~~ and Christine Nicolaides Kearns, our Executive Vice President-Chief Legal and Administrative Officer, ~~Christine Nicolaides Kearns,~~ are members of the Saul Organization, and persons associated with the Saul Organization constitute five of the

11 eleven members of our Board of Directors. In addition, as of December 31, ~~2017,~~2022, Mr. B. F. Saul II had the potential to exercise control over ~~9,481,682~~10,739,407 shares of our common stock representing ~~43.2%~~44.9% of our issued and outstanding shares of common stock. Mr. B. F. Saul II also beneficially owned, as of December 31, ~~2017, 7,541,867~~2022, 8,827,873 units of the Operating Partnership. In general, these units are convertible into shares of our common stock on a one-for-one basis. The ownership limitation set forth in our articles of incorporation is 39.9% in value of our issued and outstanding equity securities (which includes both common and preferred stock). As of December 31, ~~2017,~~

2022, Mr. B. F. Saul II and members of the Saul Organization owned common stock representing approximately ~~38.1%~~39.0% in value of all our issued and outstanding equity securities. Members of the Saul Organization are permitted under our articles of incorporation to convert Operating Partnership units into shares of common stock or acquire additional shares of common stock until the Saul Organization’s actual ownership of common stock reaches 39.9% in value of our equity securities. As of December 31, ~~2017,~~2022, approximately ~~740,000~~411,000 of the ~~7,541,867~~8,827,873 units of the Operating Partnership would have been permitted to convert into additional shares of common stock, and would have resulted in Mr. B. F. Saul II and members of the Saul Organization owning common stock representing approximately 39.9% in value of all our issued and outstanding equity securities.

As a result of these relationships, members of the Saul Organization will be in a position to exercise significant influence over our affairs, which influence might not be consistent with the interests of ~~some, or a majority, of our~~other stockholders. Except as discussed below, we do not have any written policies or procedures for the review, approval or ratification of transactions with related persons.

Management Time.

Our Chief Executive Officer, President and Chief Operating Officer, Executive Vice President-Chief Legal and Administrative Officer and Senior Vice President-Chief Accounting Officer and Treasurer are also officers of various entities of the Saul Organization. Although we believe that these officers spend sufficient management time to meet their responsibilities as our officers, the amount of management time devoted to us will depend on our specific circumstances at any given point in time. As a result, in a given period, these officers may spend less than a majority of their management time on our matters. Over extended periods of time, we believe that our Chief Executive Officer will spend less than a majority of his management time on Company matters, while our President and Chief Operating Officer, Executive Vice President-Chief Legal and Administrative Officer and Senior Vice President-Chief Accounting Officer and Treasurer may or may not spend less than a majority of their time on our matters.

Exclusivity and Right of First Refusal Agreements.

We will acquire, develop, own and manage shopping center properties and will own and manage other commercial properties, and, subject to certain exclusivity agreements and rights of first refusal to which we are a party, the Saul Organization will continue to develop, acquire, own and manage commercial properties and own land suitable for development as, among other things, shopping centers and other commercial properties. Therefore, conflicts could develop in the allocation of acquisition and development opportunities with respect to commercial properties other than shopping centers and with respect to development sites, as well as potential tenants and other matters, between us and the Saul Organization. The agreement relating to exclusivity and the right of first refusal between us and the Saul

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Organization generally requires the Saul Organization to conduct its shopping center business exclusively through us and to grant us a right of first refusal to purchase commercial properties and development sites in certain market areas that become available to the Saul Organization. The Saul Organization has granted the right of first refusal to us, acting through our independent directors, in order to minimize potential conflicts with respect to commercial properties and development sites. We and the Saul Organization have entered

into this agreement in order to minimize conflicts with respect to shopping centers and certain of our commercial properties.

We own real estate assets in the Twinbrook area of Rockville, Maryland, which are adjacent to real estate assets owned by the B. F. Saul Real Estate Investment Trust (the “Trust”), a member of the Saul Organization. We have entered into an agreement with the Saul Trust, which originally expired on December 31, 2015, and which was extended to December 31, 2016, to share, on a pro rata basis, third-party predevelopment costs related See Note 9 to the ~~planning~~Consolidated Financial Statements for a discussion of the future development of the adjacent sites. On December 8, 2016, we entered into a replacement agreement with the Saul Trust which extended the expiration date to December 31, 2017 and provides for automatic twelve month renewals unless eitherrelated party ~~provides notice of termination. Conflicts with respect to payments and allocations of costs may arise under the agreement.~~transactions.

Shared Services.

We share with the Saul Organization certain ancillary functions, such as computer and payroll services, benefits administration and in-house legal services. The terms of all sharing arrangements, including payments related thereto, are reviewed periodically by our Audit Committee, which is comprised solely of independent directors. Included in our general and administrative expenses or capitalized to specific development projects, for the year ended December 31, ~~2017,~~2022, are charges totaling ~~$8.1~~$9.6 million, net, related to such shared services, which included rental payments for the Company’s headquarters lease, which were billed by the Saul Organization. Although we believe that the amounts allocated to us for such shared services represent a fair allocation between us and the Saul Organization, we have not obtained a third party appraisal of the value of these services.

The B. F. Saul Insurance Agency of Maryland, Inc., a subsidiary of the B. F. Saul Company and a member of the Saul Organization, is a general insurance agency that receives commissions and counter-signature fees in connection with our insurance program. Such commissions and fees amounted to approximately ~~$288,400~~$286,900 for the year ended December 31, ~~2017.~~2022.

Related Party Rents.

We sublease space for our corporate headquarters from a member of the Saul Organization, the building of which is owned by another member of the Saul Organization. The lease commenced in March 2002 and expires in February ~~2022.~~2027. The Company and the Saul Organization entered into a ~~Shared Services Agreement~~shared services agreement whereby each party pays a portion of the total rental payments based on a percentage proportionate to the number of employees employed by each party. The Company’s rent expense for the year ended December 31, ~~2017~~2022 was ~~$774,700.~~$824,300. Although the Company believes that this lease has terms comparable to what would have been obtained from a ~~third party~~third-party landlord, it did not seek bid proposals from any independent third parties when entering into its new corporate headquarters lease.

Conflicts Based on Individual Tax Considerations.

The tax basis of members of the Saul Organization in our portfolio properties which were contributed to certain partnerships at the time of our initial public offering in 1993 was substantially less than the fair market value thereof at the time of their contribution. In the event of our disposition of such properties, a disproportionately large share of the gain for federal income tax purposes would be allocated to members of the Saul Organization. In addition, future reductions of the level of our debt, or future releases of the guarantees or indemnities with respect thereto by members of the Saul Organization, would cause members of the Saul Organization to be considered, for federal income tax purposes, to have received constructive distributions. Depending on the overall level of debt and other factors, these distributions could be in excess of the Saul Organization’s ~~bases~~basis in their Partnership units, in which case such excess constructive distributions would be taxable.

Consequently, it is in the interests of the Saul Organization that we continue to hold the contributed portfolio properties, that a portion of our debt remains outstanding or is refinanced and that the Saul Organization guarantees and indemnities remain in place, in order to defer the taxable gain to members of the Saul Organization. Therefore, the Saul Organization may seek to cause us to retain the contributed portfolio properties, and to refrain from reducing our debt or releasing the Saul Organization guarantees and indemnities, even when such action may

not be in the interests of some, or a majority, of our stockholders. In order to minimize these conflicts, decisions as to sales of the portfolio properties, or any refinancing, repayment or release of guarantees and indemnities with respect to our debt, will be made by the independent directors.

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Ability to Block Certain Actions.

Under applicable law and the limited partnership agreement of the Operating Partnership, consent of the limited partners is required to permit certain actions, including the sale of all or substantially all of the Operating Partnership’s assets. Therefore, members of the Saul Organization, through their status as limited partners in the Operating Partnership, could prevent the taking of any such actions, even if they were in the interests of ~~some, or a majority, of our~~other stockholders.

The amount of debt we have and the restrictions imposed by that debt could adversely affect our business and financial condition.

As of December 31, ~~2017,~~2022, we had approximately ~~$965.5 million~~$1.2 billion of debt outstanding, ~~$890.4 million~~approximately $1.07 billion of which was ~~long-term~~ fixed-rate debt ~~secured by 37 of our properties~~ and ~~$75.1~~approximately $164.0 million of which was variable-rate debt ~~due~~outstanding under ~~one secured bank loan and~~ our ~~revolving credit facility.~~Credit Facility.

We currently have a general policy of limiting our borrowings to ~~50 percent~~50% of asset value, i.e., the value of our portfolio, as determined by our Board of Directors by reference to the aggregate annualized cash flow from our portfolio. Our organizational documents contain no limitation on the amount or percentage of indebtedness which we may incur. Therefore, the Board of Directors could alter or eliminate the current limitation on borrowing at any time. If our debt capitalization policy were changed, we could increase our leverage, resulting in an increase in debt service that could adversely affect our operating cash flow and our ability to make expected distributions to stockholders, and in an increased risk of default on our obligations.

We have established our debt capitalization policy relative to asset value, which is computed by reference to the aggregate annualized cash flow from the properties in our portfolio rather than relative to book value. We have used a measure tied to cash flow because we believe that the book value of our portfolio properties, which is the depreciated historical cost of the properties, does not accurately reflect our ability to borrow. Asset value, however, is somewhat more variable than book value, and may not at all times reflect the fair market value of the underlying properties.

The amount of our debt outstanding from time to time could have important consequences to our stockholders. For example, it could:

•require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, property acquisitions and other appropriate business opportunities that may arise in the future;

•limit our ability to obtain any additional financing we may need in the future for working capital, debt refinancing, capital expenditures, acquisitions, development or other general corporate purposes;

•make it difficult to satisfy our debt service requirements;

•limit our ability to make distributions on our outstanding common and preferred stock;

•require us to dedicate increased amounts of our cash flow from operations to payments on our variable rate, unhedged debt if interest rates rise;

•limit our flexibility in planning for, or reacting to, changes in our business and the factors that affect the profitability of our business, which may place us at a disadvantage compared to competitors with less debt or debt with less restrictive terms; and

Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance, our indebtedness will depend primarily on our future performance, which to a certain extent is subject to economic, financial, competitive and other factors described in this section. If we are unable to generate sufficient cash flow from our business in the future to service our debt or meet our other cash needs, we may be required to refinance all or a portion of our existing debt, sell assets or obtain additional financing to meet our debt obligations and other cash needs. Our ability to refinance, sell assets or obtain additional financing may not be possible on terms that we would find acceptable.

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We are obligated to comply with financial and other covenants in our debt that could restrict our operating activities, and the failure to comply could result in defaults that accelerate the payment under our debt.

Our secured debt generally contains customary covenants, including, among others, provisions:

•relating to the maintenance of the property securing the debt;

•restricting our ability to assign or further encumber the properties securing the debt; and

•restricting our ability to enter into certain new leases or to amend or modify certain existing leases without obtaining consent of the lenders.

Our unsecured debt generally contains various restrictive covenants. The covenants in our unsecured debt include, among others, provisions restricting our ability to:

•incur additional unsecured debt;

•guarantee additional debt;

•make certain distributions, investments and other restricted payments, including distribution payments on our outstanding stock;

•create certain liens;

•increase our overall secured and unsecured borrowing beyond certain levels; and

•consolidate, merge or sell all or substantially all of our assets.

Our ability to meet some of the covenants in our debt, including covenants related to the condition of the property or payment of real estate taxes, may be dependent on the performance by our tenants under their leases.

In addition, our ~~line of credit~~Credit Facility requires us and our subsidiaries to satisfy financial covenants. The material financial covenants require us, on a consolidated basis, to:

~~maintain tangible net worth, as defined in the loan agreement, of at least $542.1 million plus 80% of the Company’s net equity proceeds received after March 2014;~~

•limit the amount of debt as a percentage of gross asset value, as defined in the loan agreement, to less than 60% (leverage ratio);

•limit the amount of debt so that interest coverage will exceed 2.0x on a trailing four-quarter basis (interest expense coverage); and

•limit the amount of debt so that interest, scheduled principal amortization and preferred dividend coverage exceeds ~~1.3x~~1.4x on a trailing four-quarter basis (fixed charge coverage).

As of December 31, ~~2017,~~2022, we were in compliance with all such covenants. If we were to breach any of our debt covenants and did not cure the breach within any applicable cure period, our lenders could require us to repay the debt immediately, and, if the debt is secured, could immediately begin proceedings to take possession of the property securing the loan. Some of our debt arrangements are cross-defaulted, which means that the lenders under those debt arrangements can put us in default and require immediate repayment of their debt if we breach and fail to cure a covenant under certain of our other debt obligations. As a result, any default under our debt covenants could have an adverse effect on our financial condition, our results of operations, our ability to meet our obligations and the market value of our shares.

~~Our development activities are inherently risky.~~

The ~~ground-up development~~market value of ~~improvements~~our debt and equity securities is subject to various factors that may cause significant fluctuations or volatility.

As with other publicly traded securities, the market price of our debt and equity securities depends on ~~real property,~~various factors, which may change from time to time and/or may be unrelated to our financial condition, operating performance or prospects that may cause significant fluctuations or volatility in such prices. These factors include, among others:

•general economic and financial market conditions;

•level and trend of interest rates;

•our ability to access the capital markets to raise additional capital;

•the issuance of additional equity or debt securities;

•changes in our funds from operations (“FFO”) or earnings estimates;

•changes in our credit or analyst ratings;

•our financial condition and performance;

•market perception of our business compared to other REITs; and

•market perception of REITs, in general, compared to other investment alternatives.

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The phase-out of LIBOR could affect interest rates under our variable rate debt and interest rate swap arrangements.

The U.S. dollar London Interbank Offered Rate (“LIBOR”) was previously used as a reference rate for our Credit Facility. On July 27, 2017, the United Kingdom's Financial Conduct Authority announced it intended to stop compelling banks to submit rates for the calculation of LIBOR after 2021. On November 30, 2020, the ICE Benchmark Administration announced its plan to extend the date that most LIBOR values would cease being computed and published from December 31, 2021 to June 30, 2023. The Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR in derivatives and other financial contracts. However, SOFR and LIBOR differ in certain important respects. SOFR is a secured overnight rate, while LIBOR is an unsecured rate that represents interbank funding over different ~~from the renovation and redevelopment of existing improvements, presents substantial risks.~~maturities. In addition, ~~to the risks associated with real estate investment in general as described elsewhere, the risks associated with our remaining development activities include:~~

~~significant time lag between commencement~~because SOFR is a transaction-based rate, it is backward-looking, whereas LIBOR is forward-looking. Because of these and ~~completion subjects us to greater risks due to fluctuation~~other differences, there can be no assurance that SOFR will perform in the ~~general economy;~~

~~failure or inability to obtain construction or permanent financing on favorable terms;~~

~~expenditure~~same way as LIBOR would have done at any time, and there is no guarantee that it is a comparable substitute for LIBOR. At this time, we cannot predict the long term effect of ~~money and time on projects that may never be completed;~~

~~inability to achieve projected rental rates or anticipated pace of lease-up;~~

~~higher-than-estimated construction costs, including labor and material costs; and~~

~~possible delay in completion of the project because of a number of factors, including weather, labor disruptions, construction delays or delays in receipt of zoning~~any discontinuance, modification or other ~~regulatory approvals,~~reforms to LIBOR or ~~acts~~whether SOFR or another alternative reference rate will attain market traction as a LIBOR replacement. As of ~~God (such~~October 3, 2022, LIBOR was phased out as ~~fires, earthquakes or floods).~~

~~Redevelopments~~a reference rate under our Credit Facility and ~~acquisitions~~SOFR replaced it as the benchmark index. SOFR may ~~fail to perform as expected.~~

~~Our investment strategy includes the redevelopment~~result in higher interest charges than LIBOR and ~~acquisition of community and neighborhood shopping centers~~may result in increased volatility in markets for instruments that are anchored by supermarkets, drugstores or high volume, value-oriented retailers that provide consumer necessities. The redevelopment and acquisition of properties entails risks that include the following, anypreviously relied on LIBOR, all of which could ~~adversely affect~~negatively impact our ~~results of operations and our ability to meet our obligations:~~

our estimate of the costs to improve, reposition or redevelop a property may prove to be too low, and, as a result, the property may fail to achieve the returns we have projected, either temporarily or for a longer time;

~~we may not be able to identify suitable properties to acquire or may be unable to complete the acquisition of the properties we identify;~~

~~we may not be able to integrate new developments or acquisitions into our existing operations successfully;~~

properties we redevelop or acquire may fail to achieve the occupancy or rental rates we project at the time we make the decision to invest, which may result in the properties’ failure to achieve the returns we projected;

our pre-acquisition evaluation of the physical condition of each new investment may not detect certain defects or identify necessary repairs until after the property is acquired, which could significantly increase our total acquisition costs; and

~~our investigation of a property or building prior to our acquisition, and any representations we may receive from the seller, may fail to reveal various liabilities, which could reduce the~~ cash ~~flow from the property or increase our acquisition cost.~~flow.

Our ability to grow will be limited if we cannot obtain additional capital.

Our growth strategy includes the redevelopment of properties we already own and the acquisition of additional properties. Because we are required to distribute to our stockholders at least 90% of our taxable income each year to continue to qualify as a real estate investment trust, or REIT, for federal income tax purposes, in addition to our undistributed operating cash flow, we rely upon the availability of debt or equity capital to fund our growth, which financing may or may not be available on favorable terms or at all. The debt could include mortgage loans from third parties or the sale of debt securities. Equity capital could include our common stock or preferred stock. Additional financing, refinancing or other capital may not be available in the amounts we desire or on favorable terms. Our access to debt or equity capital depends on a number of factors, including the general state of the capital markets, the market’s perception of our growth potential, our ability to pay dividends, and our current and potential future earnings. Depending on the outcome of these factors, we could experience delay or difficulty in implementing our growth strategy on satisfactory terms, or be unable to implement this strategy.

~~Our performance and value are subject to general risks associated with the real estate industry.~~

Our economic performance and the value of our real estate assets, and, consequently, the value of our investments, are subject to the risk that if our properties do not generate revenue sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributionsRisk Factors Related to our ~~stockholders will be adversely affected. As a real estate company, we are susceptible to the following real estate industry risks:~~

~~economic downturns in the areas where our properties are located;~~

~~adverse changes in local real estate market conditions, such as oversupply or reduction in demand;~~

~~changes in tenant preferences that reduce the attractiveness of our properties to tenants;~~

~~zoning or regulatory restrictions;~~

~~decreases in market rental rates;~~

~~weather conditions that may increase energy costs~~REIT Status and ~~other operating expenses;~~

~~costs associated with the need to periodically repair, renovate~~Other Laws and ~~re-lease space; and~~

increases in the cost of adequate maintenance, insurance and other operating costs, including real estate taxes, associated with one or more properties, which may occur even when circumstances such as market factors and competition cause a reduction in revenue from one or more properties, although real estate taxes typically do not increase upon a reduction in such revenue.

~~Geographic concentration of our portfolio may make us particularly susceptible to adverse economic developments in the real estate markets of those areas.~~

Approximately 85% of our property operating income is generated by properties in the metropolitan Washington, DC/Baltimore area. As a result, our financial condition, operating results and ability to make distributions could be materially and adversely impacted by significant adverse economic changes affecting the real estate markets in that area. In turn, our common stock is subject to greater risk vis-a-vis other enterprises whose portfolio contains greater geographic diversity.

~~Adverse trends in the retail and office real estate sectors.~~

Tenants at our retail properties face continual competition in attracting customers from Internet shopping, retailers at other shopping centers, catalogue companies, online merchants, television shopping networks, warehouse stores, large discounters, outlet malls, wholesale clubs, direct mail and telemarketers. Such competition could have a material adverse effect on our ability to lease space in our retail properties and on the rents we can charge or the concessions we can grant. This in turn could materially and adversely affect our results of operations and cash flows, and could affect the realizable value of our assets upon sale. Further, as new technologies emerge, the relationships among customers, retailers, and shopping centers are evolving rapidly and it is critical we adapt to such new technologies and relationships on a timely basis. We may be unable to adapt quickly and effectively, which could adversely impact our financial performance.

~~Many real estate costs are fixed, even if income from our properties decreases.~~

in income from the investment. As a result, cash flow from the operations of our properties may be reduced if a tenant does not pay its rent or we are unable to rent our properties on favorable terms. Under those circumstances, we might not be able to enforce our rights as landlord without delays, and may incur substantial legal costs. Additionally, new properties that we may acquire or develop may not produce any significant revenue immediately, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with that property until the property is fully leased.

~~Competition may limit our ability to purchase new properties and generate sufficient income from tenants.~~

~~Numerous commercial developers and real estate companies compete with us in seeking tenants for properties and properties for acquisition. This competition may:~~

~~reduce properties available for acquisition;~~

~~increase the cost of properties available for acquisition;~~

~~reduce rents payable to us;~~

~~interfere with our ability to attract and retain tenants;~~

~~lead to increased vacancy rates at our properties; and~~

~~adversely affect our ability to minimize expenses of operation.~~

~~We may be unable to sell properties when appropriate because real estate investments are illiquid.~~

Real estate investments generally cannot be sold quickly. In addition, there are some limitations under federal income tax laws applicable to real estate and to REITs in particular that may limit our ability to sell our assets. We may not be able to alter our portfolio promptly in response to changes in economic or other conditions. Our inability to respond quickly to adverse changes in the performance of our investments could have an adverse effect on our ability to meet our obligations and make distributions to our stockholders.

~~Our insurance coverage on our properties may be inadequate.~~

We carry comprehensive insurance on all of our properties, including insurance for liability, earthquake, fire, flood, terrorism and rental loss. These policies contain coverage limitations. We believe this coverage is of the type and amount customarily obtained for or by an owner of real property assets. We intend to obtain similar insurance coverage on subsequently acquired properties.

As a consequence of the September 11, 2001 terrorist attacks and other significant losses incurred by the insurance industry, the availability of insurance coverage has decreased and the prices for insurance have increased. As a result, we may be unable to renew or duplicate our current insurance coverage in adequate amounts or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts and toxic mold, or, if offered, the expense of obtaining these types of insurance may not be justified. We therefore may cease to have insurance coverage against certain types of losses and/or there may be decreases in the limits of insurance available. If an uninsured loss or a loss in excess of our insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property, but still remain obligated for any mortgage debt or other financial obligations related to the property. Material losses in excess of insurance proceeds may occur in the future. Also, due to inflation, changes in codes and ordinances, environmental considerations and other factors, it may not be feasible to use insurance proceeds to replace a building after it has been damaged or destroyed. Events such as these could adversely affect our results of operations and our ability to meet our obligations, including distributions to our stockholders.

Regulations

Environmental laws and regulations could reduce the value or profitability of our properties.

All real property and the operations conducted on real property are subject to federal, state and local laws, ordinances and regulations relating to hazardous materials, environmental protection and human health and safety. Under various federal, state and local laws, ordinances and regulations, we and our tenants may be required to investigate and clean up certain hazardous or toxic substances released on or in properties we own or operate, and also may be required to pay other costs relating to hazardous or toxic substances. This liability may be imposed without regard to whether we or our tenants knew about the release of these types of substances or were responsible for their release. The presence of contamination or the failure to properly remediate contamination at any of our properties may adversely affect our ability to sell or lease those properties or to borrow using those properties as collateral. The costs or liabilities could exceed the value of the affected real estate. We are not aware of any environmental condition with respect to any of our properties that management believes would have a material adverse effect on our business, assets or results of operations taken as a whole. The uses of any of our properties prior to our acquisition of the property and the building materials used at the property are among the property-specific factors that will affect how the environmental laws are applied to our properties. If we are subject to any material environmental liabilities, the liabilities could adversely affect our results of operations and our ability to meet our obligations.

We cannot predict what other environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted or what environmental conditions may be found to exist on the properties in the future. Compliance with existing and new laws and regulations may require us or our tenants to spend funds to remedy environmental problems. Our tenants, like many of their competitors, have incurred, and will continue to incur, capital and operating expenditures and other costs associated with complying with these laws and regulations, which will adversely affect their potential profitability. Generally, our tenants must comply with environmental laws and meet remediation requirements. Our leases typically impose obligations on our tenants to

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indemnify us from any compliance costs we may incur as a result of the environmental conditions on the property caused by the tenant. If a tenant fails to or cannot comply, we could be forced to pay these costs. If not addressed, environmental conditions could impair our ability to sell or re-lease the affected properties in the future or result in lower sales prices or rent payments.

The Americans with Disabilities Act of 1990 (the “ADA”) could require us to take remedial steps with respect to newly acquired properties.

The properties, as commercial facilities, are required to comply with Title III of the ADA. Investigation of a property may reveal non-compliance with the ADA. The requirements of the ADA, or of other federal, state or local laws, also may change in the future and restrict further renovations of our properties with respect to access for disabled persons. Future compliance with the ADA may require expensive changes to the properties.

The revenue generated by our tenants could be negatively affected by various federal, state and local laws to which they are subject.

We and our tenants are subject to a wide range of federal, state and local laws and regulations, such as local licensing requirements, consumer protection laws and state and local fire, life-safety and similar requirements that affect the use of the properties. The leases typically require that each tenant comply with all regulations. Failure to comply could result in fines by governmental authorities, awards of damages to private litigants, or restrictions on the ability to conduct business on such properties. Non-compliance of this sort could reduce our revenue from a tenant, could require us to pay penalties or fines relating to any non-compliance, and could adversely affect our ability to sell or lease a property.

Failure to qualify as a REIT for federal income tax purposes would cause us to be taxed as a corporation, which would substantially reduce funds available for payment of distributions.

We believe that we are organized and qualified as a REIT, and currently intend to operate in a manner that will allow us to continue to qualify as a REIT for federal income tax purposes under the Code. However, the IRS could successfully assert that we are not qualified as such. In addition, we may not remain qualified as a REIT in the future. Qualification as a REIT involves the application of highly technical and complex Code provisions. The

complexity of these provisions and of the applicable income tax regulations that have been issued under the Code by the United States Department of Treasury is greater in the case of a REIT that holds its assets in partnership form. Certain facts and circumstances not entirely within our control may affect our ability to qualify as a REIT. For example, in order to qualify as a REIT, at least 95% of our gross income in any year must be derived from qualifying rents and other income. Satisfying this requirement could be difficult, for example, if defaults by tenants were to reduce the amount of income from qualifying rents. Also, we must make annual distributions to stockholders of at least 90% of our net taxable income (excluding capital gains). In addition, new legislation, new regulations, new administrative interpretations or new court decisions may significantly change the tax laws with respect to qualification as a REIT or the federal income tax consequences of such qualification. If we fail to qualify as a REIT:

•we would not be allowed a deduction for dividend distributions to stockholders in computing taxable income;

•we would be subject to federal income tax at regular corporate rates;

~~we could be subject to the federal alternative minimum tax;~~

•unless we are entitled to relief under specific statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified;

•we could be required to pay significant income taxes, which would substantially reduce the funds available for investment and for distribution to our stockholders for each year in which we failed to qualify; and

•we would no longer be required by law to make any distributions to our stockholders.

We believe that the Operating Partnership is treated as a partnership, and not as a corporation, for federal income tax purposes. If the IRS were to challenge successfully the status of the Operating Partnership as a partnership for federal income tax purposes:

•the Operating Partnership would be taxed as a corporation;

•we would cease to qualify as a REIT for federal income tax purposes; and

•the amount of cash available for distribution to our stockholders would be substantially reduced.

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We may be required to incur additional debt to qualify as a REIT.

As a REIT, we must make annual distributions to stockholders of at least 90% of our REIT taxable income. We are subject to income tax on amounts of undistributed REIT taxable income and net capital gain. In addition, we would be subject to a 4% excise tax if we fail to distribute sufficient income to meet a minimum distribution test based on our ordinary income, capital gain and aggregate undistributed income from prior years. We intend to make distributions to stockholders to comply with the Code’s distribution provisions and to avoid federal income and excise tax. We may need to borrow funds to meet our distribution requirements because:

•our income may not be matched by our related expenses at the time the income is considered received for purposes of determining taxable income; and

•non-deductible capital expenditures or debt service requirements may reduce available cash but not taxable income.

In these circumstances, we might have to borrow funds on unfavorable terms and even if our management believes the market conditions make borrowing financially unattractive.

Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could have a material adverse effect on us and our investors.

The rules dealing with U.S. federal ~~tax reform legislation now and~~income taxation are constantly under review by persons involved in the ~~future~~legislative process, and by the Internal Revenue Service (“IRS”) and the U.S. Department of the Treasury (“Treasury”). Changes to the tax laws or interpretations thereof by the IRS and the Treasury, with or without retroactive application, could materially and adversely affect ~~REITs, both positively~~us and ~~negatively,~~our investors. In particular, additional technical corrections legislation and implementing regulations may be enacted or promulgated in ~~ways that are difficult~~response to ~~anticipate.~~

~~The~~the Tax Cuts and Jobs Act of 2017 (the ~~“2017 Tax Act”~~“Act”), ~~signed into law on December 22, 2017, represents sweeping tax reform legislation that makes significant~~and substantive legislative changes to ~~corporate and individual tax rates and~~ the ~~calculation of taxes. While we currently do not expect the 2017 Tax~~ Act will have a significant direct impact on us, it may impact us indirectly as our tenants and the jurisdictions in which we do business, as well as the overall investment thesis for REITs, may be impacted both positively and negatively in ways that are ~~difficult to predict. Additionally, the overall impact of the 2017 Tax Act depends on future interpretations and regulations that may be~~

~~issued by federal tax authorities, as well as changes in state and local taxation in~~also possible. In response to the ~~2017 Tax~~COVID-19 pandemic, multiple pieces of legislation have already been enacted, including the 2020 CARES Act, and ~~it is possible that such future interpretations, regulations~~there have also been significant issuances of regulatory and other ~~changes~~guidance, and further legislative enactments and other IRS or Treasury action is possible. No prediction can be made as to the likelihood of passage of new tax legislation or other provisions, or the direct or indirect effect on us and our shareholders. Accordingly, such new legislation, Treasury regulations, administrative interpretations or court decisions could ~~adversely impact us.~~

~~The structure of our leases may jeopardize~~significantly and negatively affect our ability to qualify to be taxed as a ~~REIT.~~

IfREIT and/or the ~~IRS were to challenge successfully the characterization of one or more of our leases of properties as leases for~~U.S. federal income tax ~~purposes, the Operating Partnership would not be treated as the owner~~consequences to us and our investors of the related property or properties for federal income tax purposes. As a result, the Operating Partnership would lose tax depreciation and cost recovery deductions with respect to one or more of our properties, which in turn could cause us to fail to qualify as a REIT. Although we will use our best efforts to structure any leasing transaction for properties acquired in the future so the lease will be characterized as a lease and the Operating Partnership will be treated as the owner of the property for federal income tax purposes, we will not seek an advance ruling from the IRS and do not intend to seek an opinion of counsel that the Operating Partnership will be treated as the owner of any leased properties for federal income tax purposes. Thus, the IRS could successfully assert that future leases will not be treated as leases for federal income tax purposes, which could adversely affect our financial condition and results of operations.such qualification.

To maintain our status as a REIT, we limit the amount of shares any one stockholder can own.

The Code imposes certain limitations on the ownership of the stock of a REIT. For example, not more than 50% in value of our outstanding shares of capital stock may be owned, actually or constructively, by five or fewer individuals (as defined in the Code). To protect our REIT status, our articles of incorporation restrict beneficial and constructive ownership (defined by reference to various Code provisions) to no more than 2.5% in value of our issued and outstanding equity securities by any single stockholder with the exception of members of the Saul Organization, who are restricted to beneficial and constructive ownership of no more than 39.9% in value of our issued and outstanding equity securities.

The constructive ownership rules are complex. Shares of our capital stock owned, actually or constructively, by a group of related individuals and/or entities may be treated as constructively owned by one of those individuals or entities. As a result, ~~the acquisition of~~a single entity or individual could own less than 2.5% or 39.9% in value of our issued and outstanding equity securities ~~by an individual~~ and such ownership could potentially cause a group of related individuals and/or ~~entity could cause that individual or entity (or another)~~entities to own constructively more than 2.5% or 39.9% in value of the outstanding stock. If that happened, either the transfer or ownership would be void or the shares would be transferred to a charitable trust and then sold to someone who can own those shares without violating the respective ownership limit.

As of December 31, ~~2017,~~2022, Mr. B. F. Saul II and members of the Saul Organization owned common stock representing approximately ~~38.1%~~39.0% in value of all our issued and outstanding equity securities. In addition, members of the Saul Organization beneficially owned Operating Partnership units that are, in general, convertible into our common stock on a one-for-one basis. Members of the Saul Organization are permitted under our articles of incorporation to convert Operating Partnership units into shares of common stock or acquire additional shares of common stock until the Saul Organization’s actual ownership of common stock reaches 39.9% in value of our equity securities.

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The Board of Directors may waive these restrictions on a case-by-case basis. The Board has authorized the Company to grant waivers to look-through entities, such as mutual funds, in which shares of equity stock owned by the entity are treated as owned proportionally by individuals who are the beneficial owners of the entity. Even though these entities may own stock in excess of the 2.5% ownership limit, no individual beneficially or constructively would own more than 2.5%. The Board of Directors has agreed to waive the ownership limit with respect to certain mutual funds and similar investors. In addition, the Board of Directors has agreed to waive the ownership limit with respect to certain bank pledgees of shares of our common stock and units issued by the Operating Partnership and held by members of the Saul Organization.

The ownership restrictions may delay, defer or prevent a transaction or a change of our control that might involve a premium price for our equity stock or otherwise be in the stockholders’ best interest.

General Risk Factors

Financial and economic conditions may have an adverse impact on us, our tenants’ businesses and our results of operations.

Potential consequences of a prolonged deterioration of economic and other market conditions include:

•the financial condition of our tenants, many of which operate in the retail industry, may be adversely affected, which may result in tenant defaults under their leases due to bankruptcy, lack of liquidity, operational failures or for other reasons;

•the ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from acquisition and development activities and increase our future interest expense;

•reduced values of our properties may limit our ability to dispose of assets at attractive prices and may reduce the ability to refinance loans; and

•one or more lenders under our credit facility could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.

Loss of our key management could adversely affect performance and the value of our common shares.

We are dependent on the efforts of our key management. Although we believe qualified replacements could be found for any departures of key executives, the loss of their services could adversely affect our performance and the value of our common stock.

The outbreak of the novel coronavirus (“COVID-19”), or the future outbreak or pandemic of any other highly infectious or contagious diseases, could have a material and adverse effect on or cause disruption to our business or financial condition, results of operations, cash flows and the market value and trading price of our securities.

The COVID-19 pandemic (or a future pandemic) could have a material and adverse effect on or cause disruption to our business or financial condition, results of operations and cash flows due to, among other factors:

•a complete or partial closure of, or other operational issues at, our properties as a result of government or tenant action;

•declines in or instability of the economy or financial markets that may result in a recession or negatively impact consumer discretionary spending, which could adversely affect retailers and consumers;

•reduction of economic activity that severely impacts our tenants' business operations, financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, to default on their lease, or to otherwise seek modifications of such obligations;

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•inability to access debt and equity capital on favorable terms, if at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations, pursue acquisition and development opportunities, refinance existing debt, reduce our ability to make cash distributions to our stockholders and increase our future interest expense;

•a general decline in business activity and demand for real estate transactions could adversely affect our ability to successfully execute investment strategies or expand our property portfolio;

•a significant reduction in our cash flows could impact our ability to continue paying cash dividends to our common and preferred stockholders at expected levels or at all;

•the financial impact of COVID-19 (or a future pandemic) could negatively affect our future compliance with financial and other covenants of our credit facility and other debt instruments, and the failure to comply with such covenants could result in a default that accelerates the payment of such indebtedness;

•the continued service and availability of personnel, including our executive officers and Board of Directors, and our ability to recruit, attract and retain skilled personnel, to the extent our management, Board of Directors or personnel are impacted in significant numbers by the outbreak of pandemic or epidemic disease and are not available or allowed to conduct work, could negatively impact our business and operating results; and

•our ability to ensure business continuity in the event our continuity of operations plan is not effective or is improperly implemented or deployed during a disruption.

The extent to which COVID-19 (or a future pandemic) impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the actions taken to contain the outbreak or mitigate its impact, and the direct and indirect economic effects of the outbreak and containment measures, among others.

Our insurance coverage on our properties may be inadequate.

As a consequence of various terrorist attacks and other significant losses incurred by the insurance industry, the availability of insurance coverage has decreased and the prices for insurance have increased. As a result, we may be unable to renew or duplicate our current insurance coverage in adequate amounts or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts and toxic mold, or, if offered, the expense of obtaining these types of insurance may not be justified. We therefore may cease to have insurance coverage against certain types of losses and/or there may be decreases in the limits of insurance available. If an uninsured loss or a loss in excess of our insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property, but still remain obligated for any mortgage debt or other financial obligations related to the property. Material losses in excess of insurance proceeds may occur in the future. Also, due to inflation, changes in codes and ordinances, environmental considerations and other factors, it may not be feasible to use insurance proceeds to replace a building after it has been damaged or destroyed. Events such as these could adversely affect our results of operations and our ability to meet our obligations, including distributions to our stockholders.

Natural disasters and climate change could have an adverse impact on our cash flow and operating results.

Climate change may add to the unpredictability and frequency of natural disasters and severe weather conditions and create additional uncertainty as to future trends and exposures. Certain of our operations are located in areas that are subject to natural disasters and severe weather conditions such as hurricanes, droughts, snow storms, floods and fires. The impact of climate change or the occurrence of natural disasters can delay new development projects, increase investment costs to repair or replace damaged properties, increase operating costs, create additional investment costs to make improvements to existing properties to comply with climate change regulations, increase future property insurance costs, and negatively impact the tenant demand for space. If insurance is unavailable to us or is unavailable on acceptable terms, or if our insurance is not adequate to cover business interruption or losses from these events, our earnings, liquidity or capital resources could be adversely affected.

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We cannot assure you we will continue to pay dividends at historical rates.

Our ability to continue to pay dividends on our common stock at historical rates or to increase our common stock dividend rate will depend on a number of factors, including, among others, the following:

•our financial condition and results of future operations;

•the performance of lease terms by tenants;

•the terms of our loan covenants; and

•our ability to acquire, finance, develop or redevelop and lease additional properties at attractive rates.

If we do not maintain or increase the dividend rate on our common stock, it could have an adverse effect on the market price of our common stock and other securities. Payment of dividends on our common stock may be subject to payment in full of the dividends on any preferred stock or depositary shares and payment of interest on any debt securities we may offer.

Certain tax and anti-takeover provisions of our articles of incorporation and bylaws may inhibit a change of our control.

Certain provisions contained in our articles of incorporation and bylaws and the Maryland General Corporation Law may discourage a third party from making a tender offer or acquisition proposal to us. If this were to happen, it could delay, deter or prevent a change in control or the removal of existing management. These provisions also may delay or prevent the stockholders from receiving a premium for their stock over then-prevailing market prices. These provisions include:

•the REIT ownership limit described above;

•authorization of the issuance of our preferred stock with powers, preferences or rights to be determined by the Board of Directors;

•a staggered, fixed-size Board of Directors consisting of three classes of directors;

•special meetings of our stockholders may be called only by the Chairman of the Board, the president, by a majority of the directors or by stockholders possessing no less than 25% of all the votes entitled to be cast at the meeting;

•the Board of Directors, without a stockholder vote, can classify or reclassify unissued shares of preferred stock;

•a member of the Board of Directors may be removed only for cause upon the affirmative vote of 75% of the Board of Directors or 75% of the then-outstanding capital stock;

•advance notice requirements for proposals to be presented at stockholder meetings; and

•the terms of our articles of incorporation regarding business combinations and control share acquisitions.

~~We face~~Cybersecurity risks ~~relating to cybersecurity attacks that~~and cyber incidents could ~~cause loss of confidential information and other business disruptions.~~

We rely extensively on computer systems to process transactions and manage our business, and our business is at risk from and may be impacted by cybersecurity attacks. These could include attempts to gain unauthorized access to our data and computer systems. Attacks can be both individual and/or highly organized attempts organized by very sophisticated hacking organizations. We employ a number of measures to prevent, detect and mitigate these threats; however, there is no guarantee such efforts will be successful in preventing a cybersecurity attack. A cybersecurity attack could compromise the confidential information of our employees, tenants and vendors. A successful attack could disrupt and otherwise adversely affect our business, ~~operations.~~disrupt operations and expose us to liabilities to tenants, employees, capital providers and other third parties.

We use information technology and other computer resources to carry out important operational activities and to maintain our business records. As part of our normal business activities, we collect and store certain personal identifying and confidential information relating to our tenants, employees, vendors and suppliers, and maintain operational and financial information related to our business. We have implemented systems and processes intended to address ongoing and evolving cybersecurity risks, secure our information technology, applications and computer systems, and prevent unauthorized access to or loss of sensitive, confidential and personal data. Although we and our service providers employ what we believe are adequate security, disaster recovery and other preventative and corrective measures, our security measures, taken as a whole, may not be sufficient for all possible situations and may be vulnerable to, among other things, hacking, ransomware, employee error, system error, and faulty password management. Additionally, information technology security breaches may go undetected and persist as a latent threat to our security measures.

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Our ability to conduct our business may be impaired if our information technology resources, including our websites or e-mail systems, are compromised, degraded, damaged or fail, whether due to a virus or other harmful circumstance, intentional penetration or disruption of our information technology resources by a third party, natural disaster, hardware or software corruption or failure or error or poor product or vendor/developer selection (including a failure of security controls incorporated into or applied to such hardware or software), telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions, or lost connectivity to our networked resources. A significant and extended disruption could damage our reputation and cause us to lose tenants and revenues; result in the unintended and/or unauthorized public disclosure or the misappropriation of proprietary, personal identifying and confidential information; and require us to incur significant expenses to address and remediate or otherwise resolve these kinds of issues. The release of confidential information may also lead to litigation or other proceedings against us by affected individuals, business partners and/or regulators, and the outcome of such proceedings, which could include losses, penalties, fines, injunctions, expenses and charges recorded against our earnings and cause us reputational harm, could have a material and adverse effect on our business and consolidated financial statements. In addition, the costs of maintaining adequate protection against data security threats, based on considerations of their evolution, increasing sophistication, pervasiveness and frequency and/or government-mandated standards or obligations regarding protective efforts, could be material to our consolidated financial statements in a particular period or over various periods.

We may amend or revise our business policies without your approval.

Our Board of Directors may amend or revise our operating policies without stockholder approval. Our investment, financing and borrowing policies and policies with respect to all other activities, such as growth, debt,

capitalization and operations, are determined by the Board of Directors or those committees or officers to whom the Board of Directors has delegated that authority. The Board of Directors may amend or revise these policies at any time and from time to time at its discretion. A change in these policies could adversely affect our financial condition and results of operations, and the market price of our securities.

Item 1B. Unresolved Staff Comments

We have received no written comments from the Securities and Exchange Commission staff regarding our periodic or current reports in the 180 days preceding December 31, ~~2017~~2022 that remain unresolved.

Item 2. Properties

Overview

As of December 31, ~~2017,~~2022, the Company is the owner ~~developer~~ and operator and developer of a real estate portfolio composed of 5557 operating properties, totaling approximately ~~9.2~~9.8 million square feet of gross leasable area (“GLA”), and ~~three~~four development ~~parcels.~~properties. The properties are located primarily in the Washington, D.C./Baltimore, Maryland metropolitan area. The operating property portfolio is composed of 4950 neighborhood and community Shopping Centers, and ~~six~~seven predominantly Mixed-Use Properties totaling approximately ~~7.7~~7.9 million and ~~1.5~~1.9 million square feet of ~~commercial~~ GLA, respectively. ~~No single~~One property, Seven Corners, accounted for more than ~~6.5%~~5% of the total gross leasable area. A majority of the Shopping Centers are anchored by several major ~~tenants. Thirty-two~~tenants and offer primarily day-to-day necessities and services. Thirty-three of the Shopping Centers were anchored by a grocery ~~store and offer primarily day-to-day necessities and services. Two retail tenants,~~store. One tenant, Giant Food ~~(4.7%~~(5.1%), a tenant at ~~ten~~11 Shopping Centers, ~~and Capital One Bank (2.8%), a tenant at 18 properties,~~ individually accounted for 2.5% or more of the Company’s total revenue for the year ended December 31, ~~2017.~~

The following table sets forth average annualized base rent per square foot and average annualized effective rent per square foot for the Company's Commercial properties (all properties except for the Clarendon Center and Park Van Ness apartments). For purposes of this table, annualized effective rent is annualized base rent minus amortized tenant improvements and amortized leasing commissions.

Year ended December 31,
2017 2016 2015 2014 2013
Base rent $ 19.51
$ 18.73
$ 18.52
$ 18.07
$ 17.77
Effective rent $ 17.69
$ 16.95
$ 16.81
$ 16.45
$ 15.98

2022.

The Company expects to hold its properties as long-term investments and it has no maximum period for retention of any investment. It plans to selectively acquire additional income-producing properties and to expand, renovate, and improve its properties when circumstances warrant. See “Item 1. Business—Operating Strategies” and “Business—Capital Policies.”

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The Shopping Centers

Community and neighborhood shopping centers typically are anchored by one or more grocery stores, discount department stores or drug stores. These anchors offer day-to-day necessities rather than apparel and luxury goods and, therefore, generate consistent local traffic. By contrast, regional malls generally are larger and typically are anchored by one or more full-service department stores.

In general, the Shopping Centers are seasoned community and neighborhood shopping centers located in well established, highly developed, densely populated, middle and upper income areas. The ~~2017~~2022 average estimated population within a one- and three-mile radius of the Shopping Centers is approximately ~~16,000~~15,700 and ~~100,300,~~82,900, respectively. The ~~2017~~2022 average household income within ~~the~~a one- and three-mile radius of the Shopping Centers is approximately ~~$111,500~~$146,300 and ~~$114,400,~~$153,200, respectively, compared to a national average of ~~$80,700.~~$105,000. Because the Shopping Centers generally are located in highly developed areas, management believes that there is little likelihood that significant numbers of competing centers will be developed in the future.

The Shopping Center properties range in size from approximately 19,000 to 573,500 square feet of GLA, with six in excess of 300,000 square feet, and average approximately ~~158,200~~157,500 square feet. A majority of the Shopping Centers are anchored by several major tenants and other tenants offering primarily day-to-day necessities and services. Thirty-two of the Shopping Centers are anchored by a grocery store.

Lease Expirations of Shopping Center Properties

The following table sets forth, by year of expiration, the aggregate amount of base rent and leasable area for leases in place at the Shopping Centers that the Company owned as of December 31, ~~2017,~~2022, for each of the next ten years beginning with ~~2018,~~2023, assuming that none of the tenants exercise renewal options and excluding an aggregate of ~~442,303~~414,529 square feet of unleased space, which represented ~~5.7%~~5.3% of the GLA of the Shopping Centers as of December 31, ~~2017.~~2022.

Lease Expirations of Shopping Center Properties


Year of Lease Expiration	Leasable Area Represented by Expiring Leases		Percentage of Leasable Area Represented by Expiring Leases		Annual Base Rent Under Expiring Leases (1)		Percentage of Annual Base Rent Under Expiring Leases		Annual Base Rent per Square Foot		Year of Lease Expiration	Leasable Area Represented by Expiring Leases		Percentage of Leasable Area Represented by Expiring Leases		Annual Base Rent Under Expiring Leases (1)		Percentage of Annual Base Rent Under Expiring Leases		Annual Base Rent per Square Foot
2018	922,915	sf	11.9	%	$	15,331,391	11.9	%	$	16.61
2019	1,102,243		14.2	%	19,666,299		15.2	%	17.84
2020	905,736		11.7	%	16,814,589		13.0	%	18.56
2021	934,768		12.1	%	15,719,432		12.2	%	16.82
2022	976,150		12.6	%	18,175,083		14.1	%	18.62
2023	561,811		7.3	%	10,516,537		8.1	%	18.72		2023	924,693	sf	11.7	%	$	16,030,078	11.5	%	$	17.34
2024	375,296		4.8	%	7,559,612		5.9	%	20.14		2024	1,028,183		13.1	%	22,058,759		15.9	%	21.45
2025	194,336		2.5	%	4,700,141		3.6	%	24.19		2025	1,201,914		15.3	%	23,392,874		16.8	%	19.46
2026	262,059		3.4	%	5,018,603		3.9	%	19.15		2026	823,875		10.4	%	16,689,434		12.0	%	20.26
2027	181,289		2.3	%	4,478,599		3.5	%	24.70		2027	876,884		11.1	%	18,341,044		13.2	%	20.92
2028											2028	801,400		10.2	%	10,387,558		7.5	%	12.96
2029											2029	584,294		7.4	%	9,332,143		6.7	%	15.97
2030											2030	81,757		1.0	%	2,717,962		1.9	%	33.24
2031											2031	303,523		3.9	%	5,930,630		4.3	%	19.54
2032											2032	333,011		4.2	%	4,132,462		3.0	%	12.41
Thereafter	891,192		11.5	%	11,062,639		8.6	%	12.41		Thereafter	503,267		6.4	%	10,042,525		7.2	%	19.95
Total	7,307,795	sf	94.3	%	$	129,042,925	100.0	%	17.66		Total	7,462,801	sf	94.7	%	$	139,055,469	100.0	%	18.63

Table of Contents

Item 6. ~~Selected Financial Data~~[Reserved]

The selected financial data of the Company contained herein has been derived from the consolidated financial statements of the Company. The data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements included elsewhere in this report.

SELECTED FINANCIAL DATA
Years Ended December 31,
(In thousands, except per share data) 2017 2016 2015 2014 2013
Operating Data:
Total revenue $ 227,285
$ 217,070
$ 209,077
$ 207,092
$ 197,897
Total operating expenses 166,687
161,357
156,147
155,163
162,628
Operating income 60,598
55,713
52,930
51,929
35,269
Non-operating income:
Change in fair value of derivatives 70
(6 ) (10 ) (10 ) (7 )
Loss on early extinguishment of debt —
—
—
—
(497 )
Gains on sales of properties —
1,013
11
6,069
—
Gain on casualty settlements —
—
—
—
77
Net income 60,668
56,720
52,931
57,988
34,842
Income attributable to noncontrolling interests (12,411 ) (11,441 ) (10,463 ) (11,045 ) (3,970 )
Net income attributable to Saul Centers, Inc. 48,257
45,279
42,468
46,943
30,872
Preferred stock redemption —
—
—
(1,480 ) (5,228 )
Preferred dividends (12,375 ) (12,375 ) (12,375 ) (13,361 ) (13,983 )
Net income available to common stockholders $ 35,882
$ 32,904
$ 30,093
$ 32,102
$ 11,661
Per Share Data (diluted):
Net income available to common stockholders $ 1.63
$ 1.52
$ 1.42
$ 1.54
$ 0.57
Basic and Diluted Shares Outstanding:
Weighted average common shares - basic 21,901
21,505
21,127
20,772
20,364
Effect of dilutive options 107
110
69
49
37
Weighted average common shares - diluted 22,008
21,615
21,196
20,821
20,401
Weighted average convertible limited partnership units 7,503
7,375
7,253
7,156
6,929
Weighted average common shares and fully converted limited partnership units - diluted 29,511
28,990
28,449
27,977
27,330
Dividends Paid:
Cash dividends to common stockholders (1) $ 44,576
$ 39,472
$ 35,645
$ 32,346
$ 29,205
Cash dividends per share $ 2.04
$ 1.84
$ 1.69
$ 1.56
$ 1.44
Balance Sheet Data:
Real estate investments (net of accumulated depreciation) $ 1,315,034
$ 1,242,534
$ 1,197,340
$ 1,163,542
$ 1,094,776
Total assets 1,422,452
1,343,025
1,295,408
1,257,113
1,189,000
Total debt, including accrued interest 958,622
903,709
869,652
850,727
813,653
Preferred stock 180,000
180,000
180,000
180,000
180,000
Total equity 393,103
373,249
353,727
339,257
315,126

SELECTED FINANCIAL DATA
Years Ended December 31,
(In thousands, except per share data) 2017 2016 2015 2014 2013
Other Data
Cash flow provided by (used in):
Operating activities $ 103,450
$ 89,090
$ 88,896
$ 86,568
$ 73,527
Investing activities $ (113,306 ) $ (86,274 ) $ (69,587 ) $ (83,589 ) $ (26,034 )
Financing activities $ 12,442
$ (4,497 ) $ (21,434 ) $ (8,148 ) $ (42,329 )
Funds from operations (2):
Net income $ 60,668
$ 56,720
$ 52,931
$ 57,988
$ 34,842
Real property depreciation and amortization 45,694
44,417
43,270
41,203
49,130
Gain on property dispositions and casualty settlements —
(1,013 ) (11 ) (6,069 ) (77 )
Funds from operations 106,362
100,124
96,190
93,122
83,895
Preferred stock redemption —
—
—
(1,480 ) (5,228 )
Preferred dividends (12,375 ) (12,375 ) (12,375 ) (13,361 ) (13,983 )
Funds from operations available to common stockholders and noncontrolling interests $ 93,987
$ 87,749

$ 83,815

$ 78,281

$ 64,684


1)	~~During 2017, 2016, 2015, 2014, and 2013, shareholders reinvested $15.8 million, $10.3 million,~~

~~$10.6 million, $9.3 million and $20.7 million, respectively, in newly issued common stock through the Company’s dividend reinvestment plan.~~


2)	Funds from operations (FFO) is a non-GAAP financial measure and is defined in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Funds From Operations.”

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) begins with the Company’s primary business strategy to give the reader an overview of the goals of the Company’s business. This is followed by a discussion of the critical accounting policies that the Company believes are important to understanding the assumptions and judgments incorporated in the Company’s reported financial results. The next section ~~beginning on page 44,~~ discusses the Company’s results of operations for the past two years. Beginning on page ~~49,~~43, the Company provides an analysis of its liquidity and capital resources, including discussions of its cash flows, debt arrangements, sources of capital and financial commitments. ~~Finally, on~~On page ~~57,~~49, the Company discusses funds from operations, or FFO, which is a non-GAAP financial measure of performance of an equity REIT used by the REIT industry.

The ~~MD&A~~following discussion and analysis should be read in conjunction with the ~~other sections of~~Consolidated Financial Statements and related footnotes included elsewhere in this Annual Report on Form ~~10-K,~~10-K. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this report entitled "Forward-Looking Statements." Certain risks may cause our actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see "Item 1A. Risk Factors."

Impact of COVID-19

If the effects of COVID-19 result in deterioration of economic and market conditions, including supply chain issues, or if the Company’s expected holding period for assets changes, subsequent tests for impairment could result in impairment charges in the future. The Company can provide no assurance that material impairment charges with respect to the Company’s investment properties will not occur during future periods. As of December 31, 2022, we have not identified any impairment triggering events, including the ~~consolidated financial statements~~impact of COVID-19 and ~~notes thereto appearing~~corresponding tenant requests for rent relief. Therefore, under applicable GAAP guidance, no impairment charges have been recorded. However, we have yet to see the long-term effects of COVID-19 and the extent to which it may impact our tenants in ~~Item 8~~the future. Indications of ~~this report. Historical results set forth~~a tenant’s inability to continue as a going concern, changes in ~~Selected Financial Information,~~our view or strategy relative to a tenant’s business or industry as a result of COVID-19, or changes in our long-term hold strategies, could be indicative of an impairment triggering event. Accordingly, the ~~Consolidated Financial Statements~~Company will continue to monitor circumstances and ~~Supplemental Data included~~events in ~~Item 6~~future periods to determine whether impairment charges are warranted.

As of January 31, 2023, payments by tenants of contractual base rent and ~~Item 8~~operating expense and ~~this section should not~~real estate tax recoveries for the 2022 fourth quarter totaled approximately 98.6%.

The Company is and will continue to be ~~taken~~actively engaged in collection efforts related to uncollected rent, and the Company will continue to work with certain tenants who request rent deferrals, however, the Company can provide no assurance that such efforts or our efforts in future periods will be successful.

Deferral agreements executed with certain tenants as ~~indicative~~a result of business disruption that occurred at the onset of the COVID-19 pandemic generally deferred 30 to 90 days of rent, operating expense and real estate tax recovery payments until a later time in the lease term with repayment typically occurring over a 12-month period generally commencing in 2021. We continued to accrue rental revenue during the deferral period.

Table of Contents

The following is a summary of the Company’s executed rent deferral agreements and repayments as of January 31, 2023, with the exception of amounts due, which are as of December 31, 2022.


Rent Deferral Agreements
(Dollars in thousands)
										Collection Percentage (based on payments currently due)
Total Deferred Rent		Amount Due		Amount Written Off		Amount Unpaid		Amount Collected








$	9,366	$	8,353	$	318	$	33	$	8,002	96	%

The extent of the effects of COVID-19 on the Company’s business, results of operations, cash flows, and growth prospects is highly uncertain and will ultimately depend on future ~~operations.~~developments, none of which can be predicted with any certainty. See Item 1A. Risk Factors. Management and the Board of Directors will continue to actively monitor the effects of the COVID-19 pandemic, including governmental directives in the jurisdictions in which we operate and the recommendations of public health authorities, and will, as needed, take further measures to adapt the Company’s business in the best interests of our stockholders and personnel. The extent to which COVID-19 impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the actions taken to contain the outbreak or mitigate its impact, and the direct and indirect economic effects of the outbreak and containment measures, among others.

We anticipate that some tenants eventually will not be able to pay amounts due and we will incur losses against our rent receivables. The extent and timing of the recognition of such losses will depend on future developments, which are highly uncertain and cannot be predicted. Management considers reserves established as of December 31, 2022, against such potential losses to be reasonable and adequate. Rent collections during the fourth quarter and rent relief requests to-date may not be indicative of collections or requests in any future period.

Overview

The Company’s principal business activity is the ownership, management and development of income-producing properties. The Company’s long-term objectives are to increase cash flow from operations and to maximize capital appreciation of its real estate investments.

~~The Company’s~~ primary ~~operating~~ strategy is to continue to focus on diversification of its ~~community and neighborhood Shopping Center business and its transit-centric, primarily~~assets through development of transit-oriented, residential mixed-use ~~properties to achieve both cash flow growth and capital appreciation. Management believes there is potential for long term growth in cash flow as existing leases for space~~projects in the Washington, D.C. metropolitan area. The Company’s operating strategy also includes improvement of the operating performance of its assets, internal growth of its Shopping ~~Center~~Centers through the addition of pad sites, and ~~Mixed-Use Properties expire~~supplementing its development pipeline with selective redevelopment and renovations of its core Shopping Centers. The Company has a pipeline of entitled sites in its portfolio, some of which are ~~renewed, or newly available or vacant space is leased.~~ currently shopping center operating properties, for development of up to 3,700 apartment units and 975,000 square feet of retail and office space. All such sites are located adjacent to WMATA red line Metro stations in Montgomery County, Maryland.

The Company intends to ~~renegotiate leases where possible~~selectively add free-standing pad site buildings within its Shopping Center portfolio, and ~~seek new tenants for~~

available space in order to optimize the mix of uses to improve foot traffic through the Shopping Centers. As leases expire, management expects to revise rental rates, lease terms and conditions, relocate existing tenants, reconfigure tenant spaces and introduce newreplace underperforming tenants with the goals of increasing occupancy, improving overall retail sales, and ultimately increasing cash flow as economic conditions improve. In those circumstances in which leases are not otherwise expiring, management selectively attempts to increase cash flow through a variety of means, or in connection with renovations or relocations, recapturing leases with below market rents and re-leasing at market rates, as well as replacing financially troubled tenants. When possible, management also will seek to include scheduled increases in base rent, as well as percentage rental provisions, in its leases.

~~The Company’s redevelopment and renovation objective is to selectively and opportunistically redevelop and renovate its properties, by replacing below-market-rent leases with~~tenants that generate strong ~~traffic-generating~~traffic, including anchor stores such as supermarkets and drug stores, as well as other desirable local, regional and national tenants. The Company’s strategy remains focused on continuing the operating performance and internal growth of its existing Shopping Centers, while enhancing this growth with selective acquisitions, redevelopments and renovations.

In 2016, the Company completed development of Park Van Ness, a 271-unit residential project with approximately 9,000 square feet of street-level retail, below street-level structured parking, and amenities including a community room, landscaped courtyards, a fitness room, a wi-fi lounge/business center, and a rooftop pool and deck. The structure comprises 11 levels, five of which on the east side are below street level. Because of the change in grade from the street eastward to Rock Creek Park, apartments on all 11 levels have park or city views. The street level retail space is 100% leased to a grocery/gourmet food market and an upscale Italian restaurant. As of December 31, 2017, 260 apartments (95.9%) were leased. The total cost of the project, excluding predevelopment expense and land, which the Company has owned, was approximately $93.0 million, a portion of which was financed with a $71.6 million construction-to-permanent loan.

In 2014, in separate transactions, the Company purchased three properties, with approximately 57,400 square feet of retail space, for an aggregate $25.2 million. The three properties are adjacent to an existing property on the east side of Rockville Pike near the Twinbrook Metro station. Combined, the four properties total 10.3 acres and are zoned for up to 1.2 million square feet of rentable mixed-use space. The Company is actively engaged in a plan for redevelopment but has not committed to any timetable for commencement of construction.

The Company owns properties on the east and west sides of Rockville Pike near the White Flint Metro station which combined total 7.6 acres which are zoned for a development potential of up to 1.6 million square feet of mixed-use space. The Company is actively engaged in a plan for redevelopment but has not committed to any timetable for commencement of construction.

In January 2016, the Company terminated a 16,500 square foot lease at 11503 Rockville Pike and received a $3.0 million lease termination fee which was recognized as revenue in the first quarter. The space was previously occupied by an office supply store that had vacated in mid 2014 and the lease was scheduled to expire in 2019. The termination fee revenue was partially offset by the loss of approximately $1.1 million in rental revenue over the remainder of 2016. The Company executed leases with two replacement tenants, whose occupancy and rent commencement occurred in 2017. While the Company continues to plan for a mixed-use development at this site and its neighboring Metro Pike Center, the initial phases of this development are expected to be on the west side of Rockville Pike at Metro Pike Center.stores. The Company has ~~not committed to any timetable~~executed leases or leases are under negotiation for ~~commencement of construction.~~

From 2014 through 2016, in separate transactions, the Company purchased four adjacent properties on North Glebe Road in Arlington, Virginia, for an aggregate $54.0 million. The Company is developing approximately 490 residential units and 60,000 square feet of retail space, on 2.8 acres of land. Excavation, sheeting and shoring are substantially complete and construction is proceeding on the first three levels of the below grade parking structure. The development is scheduled for substantial completion in early 2020. The total cost of the project, including acquisition of land, is expected to be approximately $275.0 million. In 2017, the Company closed on a $157.0 million construction-to-permanent loan, the proceeds of which will be used to partially finance the project. Leases have been executed for a 41,500 square foot Target and 9,000 square feet of retail shop space, resulting in approximately 84% of the retail space being leased.

Albertson's/Safeway, a tenant at eight of the Company's shopping centers, closed two Safeway stores located at the Company's properties during the June 2016 quarter. The stores that closed were located in Broadlands Village, Loudoun County, Virginia and Briggs Chaney Plaza, Montgomery County, Maryland. The lease at Briggs Chaney remains in full force and effect and Albertson’s/Safeway has executed a sublease with a replacement grocer, Global Foods, for that space, which commenced operations in March 2017. The Company terminated the lease with Albertson's/Safeway at Broadlands and has executed a lease with Aldi Food Market for 20,000 square feet of this space which opened in November 2017. We continue to actively market the balance of the former Safeway space.seven more pad sites.

In ~~January 2017, the Company purchased for $76.4 million, including acquisition costs, Burtonsville Town Square,~~recent years, there has been a 121,000 square foot shopping center located in Burtonsville, Maryland. Burtonsville Town Square is 100% leased and anchored by Giant Food and CVS Pharmacy. The purchase was funded with a new $40.0 million mortgage loan and through the Company's credit line facility. The Company expects to begin construction on a 16,000 square foot small shop expansion in the Spring of 2018, with delivery projected in late 2018. The total development cost is expected to be approximately $5.7 million. Lease negotiations are in progress for over 50% of the space.

~~In light of the~~ limited amount of quality properties for sale and ~~the escalated~~ pricing of those properties ~~that the Company~~ has ~~been presented with or has inquired about over the past year,~~escalated. Accordingly, management believes acquisition opportunities for investment in existing and new ~~Shopping Center~~shopping center and ~~Mixed-Use Properties~~mixed-use properties in the near future is uncertain. ~~Because~~Nevertheless, because of ~~its~~the Company’s conservative capital structure, including its cash and capacity under its revolving credit facility, management believes that the Company is positioned to take advantage of additional investment opportunities as attractive properties are identified and market conditions improve. (See “Item 1. Business - Capital Policies”.). It is management’s view that several of the sub-markets in which the Company operates have, or are expected to have in the future, attractive supply/demand characteristics. The Company will continue to evaluate acquisition, development and redevelopment as integral parts of its overall business plan.

~~The recent period~~

Table of ~~economic expansion has now run in excess of five years. While~~Contents

Prior to the COVID-19 pandemic, economic conditions within the local Washington, DC metropolitan area ~~have~~had remained relatively ~~stable, issues~~stable. Issues facing the Federal government relating to taxation, spending and interest rate policy will likely continue to impact the office, retail and residential real estate markets over the coming years. Because the majority of the Company’s property operating income is produced by our ~~shopping centers,~~Shopping Centers, we continually monitor the implications of government policy changes, as well as shifts in consumer demand between on-line and in-store shopping, on future shopping center construction and retailer store expansion plans. Based on our observations, we continue to adapt our marketing and merchandising strategies in ~~a way~~ways to maximize our future performance. The Company's commercial leasing percentage, on a ~~comparable~~same property basis, which excludes the impact of properties not in operation for the entirety of the comparable periods, ~~declined~~increased to ~~94.2%~~93.2% at December 31, ~~2017,~~2022, from ~~95.5%~~92.0% at December 31, ~~2016.~~2021.

The Company maintains a ratio of total debt to total asset value of under 50%, which allows the Company to obtain additional secured borrowings if necessary. As of December 31, ~~2017, amortizing~~2022, including $100.0 million of hedged variable-rate debt, total fixed-rate ~~mortgage~~ debt with staggered maturities from ~~2019~~2023 to ~~2035~~2041 represented approximately ~~92.2%~~86.8% of the Company’s notes payable, thus minimizing refinancing risk. The Company’s unhedged variable-rate debt consists of ~~a $14.1 million bank term loan secured by the Metro Pike Center, which was repaid in full in January 2018, and $61.0~~$164.0 million outstanding under the ~~unsecured revolving line of credit.~~Credit Facility. As of December 31, ~~2017,~~2022, the Company has ~~loan~~ availability of approximately ~~$213.8~~$212.1 million under its ~~$275.0 million unsecured revolving line of credit.~~

~~The Operating Partnership entered into a~~ Credit Agreement dated January 26, 2018, by and among the Operating Partnership, as Borrower, Wells Fargo Bank, National Association, as Administrative Agent, Capital One, National Association, as Syndication Agent, Wells Fargo Securities, LLC and Capital One, National Association, as Joint Lead Arrangers, Wells Fargo Securities, LLC, as Sole Bookrunner and Wells Fargo Bank, National Association, Capital One, N.A., U.S. Bank National Association, TD Bank, N.A., Regions Bank and Associated Bank, National Association, as Lenders (the “New Credit Agreement”).

The New Credit Agreement replaces the Credit Agreement dated June 24, 2014, by and among the Operating Partnership, as Borrower, Wells Fargo Bank, National Association, as Administrative Agent, JP Morgan Chase Bank, N.A., as Syndication Agent, Wells Fargo Securities, LLC, as Sole Lead Arranger and Sole Bookrunner and Wells Fargo Bank, National Association, JP Morgan Chase Bank, N.A., Capital One, N.A. and Citizens Bank of Pennsylvania as Lenders (as amended, the “Original Agreement”). The Original Agreement consisted of a $275,000,000 unsecured revolving credit facility (the “Original Facility”) with a maturity date of June 23, 2018 and bore interest at a variable rate equal to one-month LIBOR plus a spread of 145 basis points to 200 basis points, as determined by certain leverage tests. As of the date the Original Facility was replaced, the applicable spread was 1.45%.

The New Credit Agreement consists of a $400,000,000 credit facility (the “New Facility”), of which $325,000,000 is a revolving credit facility (the “Revolving Line”) and $75,000,000 is a term loan (the “Term Loan”). The Revolving Line matures on January 26, 2022, which term may be extended by the Company for one additional year, subject to satisfaction of certain conditions. The Term Loan matures on January 26, 2023, and may not be extended.

In general, loan availability under the New Facility is primarily determined by operating income from the Company’s existing unencumbered properties. Interest accrues at a rate of LIBOR plus a spread of 135 basis points to 195 basis points under the Revolving Line, and 130 basis points to 190 basis points under the Term Loan, each as determined by certain leverage tests. As of January 26, 2018, the applicable spread for borrowings is 135 basis points under the Revolving Line and 130 basis points under the Term Loan.

~~The Company and certain subsidiaries of the Operating Partnership and the Company have guaranteed the payment obligations of the Partnership under the New~~ Facility.

Although it is management’s present intention to concentrate future acquisition and development activities on ~~community and neighborhood shopping centers and office~~transit-centric, primarily residential mixed-use properties in the Washington, D.C./Baltimore metropolitan area, the Company may, in the future, also acquire other types of real estate in other areas of the country as opportunities present themselves. ~~While the~~The Company ~~may~~plans to continue to diversify in terms of property types, locations, size and market, ~~the Company~~and it does not set any limit on the amount or percentage of ~~Company~~ assets that may be invested in any one property or any one geographic area.

The following table sets forth average annualized base rent per square foot and average annualized effective rent per square foot for the Company's commercial properties (all properties except for the apartments within The Waycroft, Clarendon Center and Park Van Ness properties). For purposes of this table, annualized effective rent is annualized base rent minus amortized tenant improvements and amortized leasing commissions.


	Commercial Rents
	Year ended December 31,
	2022		2021		2020
Base rent	$	20.55	$	20.63	$	19.97
Effective rent	$	18.95	$	18.91	$	18.25

Critical Accounting Policies

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which requires management to make certain estimates and assumptions that affect the reporting of financial position and results of operations. See Note 2 to the Consolidated Financial Statements in this report. The Company has identified the following policies that, due to estimates and assumptions inherent in those policies, involve a relatively high degree of judgment and complexity.

Real Estate Investments

Real estate investment properties are stated at historic cost less depreciation. Although the Company intends to own its real estate investment properties over a long term, from time to time it will evaluate its market position, market conditions, and other factors and may elect to sell properties that do not conform to the Company’s investment profile. Management believes that the Company’s real estate assets have generally appreciated in value since their acquisition or development and, accordingly, the aggregate current value exceeds their aggregate net book value and also exceeds the value of the Company’s liabilities as reported in the financial statements. Because the financial statements are prepared in conformity with GAAP, they do not report the current value of the Company’s real estate investment properties.

The Company purchases real estate investment properties from time to time and records assets acquired and liabilities assumed, including land, buildings, and intangibles related to in-place leases and customer relationships based on their relative fair values. The fair value

Table of ~~buildings generally is determined as if the buildings were vacant upon acquisition and subsequently leased at market rental rates and considers the present~~Contents

value of all cash flows expected to be generated by the property including an initial lease up period. The Company determines the fair value of above and below market intangibles associated with in-place leases by assessing the net effective rent and remaining term of the in-place lease relative to market terms for similar leases at acquisition taking into consideration the remaining contractual lease period, renewal periods, and the likelihood of the tenant exercising its renewal options. The fair value of a below market lease component is recorded as deferred income and accreted as additional lease revenue over the remaining contractual lease period. If the fair value of the below market lease intangible includes fair value associated with a renewal option, such amounts are not accreted until the renewal option is exercised. If the renewal option is not exercised the value is recognized at that time. The fair value of above market lease intangibles is recorded as a deferred asset and is amortized as a reduction of lease revenue over the remaining contractual lease term. The Company determines the fair value of at-market in-place leases considering the cost of acquiring similar leases, the foregone rents associated with the lease-up period and carrying costs associated with the lease-up period. Intangible assets associated with at-market in-place leases are amortized as additional expense over the remaining contractual lease term. To the extent customer relationship intangibles are present in an acquisition, the fair value of the intangibles are amortized over the life of the customer relationship. From time to time the Company may purchase a property for future development purposes. The property may be improved with an existing structure that would be demolished as part of the development. In such cases, the fair value of the building may be determined based only on existing leases and not include estimated cash flows related to future leases. Acquisition-related transaction costs are either (a) expensed as incurred when related to business combinations or (b) capitalized to land and/or building when related to asset acquisitions.

If there is an event or change in circumstance that indicates a potential impairment in the value of a real estate investment property, the Company prepares an analysis to determine whether the carrying value of the real estate investment property exceeds its estimated fair value. The Company considers both quantitative and qualitative factors in identifying impairment indicators including recurring operating losses, significant decreases in occupancy, and significant adverse changes in market conditions, legal factors and business climate. If impairment indicators are present, the Company compares the projected cash flows of the property over its remaining useful life, on an undiscounted basis, to the carrying value of that property. The Company assesses its undiscounted projected cash flows based upon estimated capitalization rates, historic operating results and market conditions that may affect the property. If the carrying value is greater than the undiscounted projected cash flows, the Company would recognize an impairment loss equivalent to an amount required to adjust the carrying amount to its then estimated fair value. The fair value of any property is sensitive to the actual results of any of the aforementioned estimated factors, either individually or taken as a whole. Should the actual results differ from management’s projections, the valuation could be negatively or positively affected.

~~When incurred, the Company capitalizes the cost of improvements that extend the useful life of property~~Accounts Receivable, Accrued Income, and equipment. All repair and maintenance expenditures are expensed when incurred. Leasehold improvements expenditures are capitalized when certain criteria are met, including when we supervise construction and will own the improvement. Tenant improvements we own are depreciated over the life of the respective lease or the estimated useful life of the improvements, whichever is shorter.

Interest, real estate taxes, development-related salary costs and other carrying costs are capitalized on projects under construction. Upon substantial completion of construction, the assets are placed in service, rental income, direct operating expenses, and depreciation associated with such properties are included in current operations. Commercial development projects are substantially complete and available for occupancy upon completion of tenant improvements, but no later than one year from the cessation of major construction activity. Residential development projects are considered substantially complete and available for occupancy upon receipt of the certificate of occupancy from the appropriate licensing authority. Substantially completed portions of a project are accounted for as separate projects. Depreciation is calculated using the straight-line method and estimated useful lives of generally between 35 and 50 years for base buildings, or a shorter period if management determines that the building has a shorter useful life, and up to 20 years for certain other improvements.

~~Deferred Leasing Costs~~

Certain initial direct costs incurred by the Company in negotiating and consummating successful commercial leases are capitalized and amortized over the term of the leases. Deferred leasing costs consist of

commissions paid to third-party leasing agents as well as internal direct costs such as employee compensation and payroll-related fringe benefits directly related to time spent performing successful leasing-related activities. Such activities include evaluating prospective tenants’ financial condition, evaluating and recording guarantees, collateral and other security arrangements, negotiating lease terms, preparing lease documents and closing transactions. In addition, deferred leasing costs include amounts attributed to in-place leases associated with acquisition properties.

~~Revenue Recognition~~

Rental and interest income are accrued as earned. Recognition of rental income commences when control of the space has been given to the tenant. When rental payments due under leases vary from a straight-line basis because of free rent periods or scheduled rent increases, income is recognized on a straight-line basis throughout the term of the lease. Expense recoveries represent a portion of property operating expenses billed to tenants, including common area maintenance, real estate taxes and other recoverable costs. Expense recoveries are recognized in the period when the expenses are incurred. Rental income based on a tenant’s revenue, known as percentage rent, is accrued when a tenant reports sales that exceed a specified breakpoint specified in the lease agreement.

Allowance for Doubtful Accounts ~~- Current and Deferred Receivables~~

Accounts receivable primarily represent amounts ~~accrued and unpaid~~currently due from tenants in accordance with the terms of the respective leases, subject to the Company’s revenue recognition policy. Receivables are reviewed monthly and reserves are established with a charge to current period operations when, in the opinion of management, collection of the receivable is doubtful. In addition to rents due currently, accounts receivable include amounts representing minimum rental income accrued on a straight-line basis to be paid by tenants over the remaining term of their respective leases. ~~Reserves~~Individual leases are ~~established with a charge to income~~assessed for ~~tenants whose rent payment history or financial condition casts doubt~~collectability and, upon the ~~tenant’s ability~~determination that the collection of rents is not probable, accrued rent and accounts receivable are charged off, and the charge off is reflected as an adjustment to ~~perform under its~~rental revenue. Revenue from leases where collection is not probable is recorded on a cash basis until collectability is determined to be probable. We also assess whether operating lease ~~obligations.~~receivables, at the portfolio level, are appropriately valued based upon an analysis of balances outstanding, effects of tenant bankruptcies, historical levels of bad debt and current economic trends. Additionally, because of the uncertainties related to the impact of the COVID-19 pandemic, our assessment also takes into consideration the types of business conducted by tenants and current discussions with the tenants, as well as recent rent collection experience. Evaluating and estimating uncollectable lease payments and related receivables requires a significant amount of judgment by management and is based on the best information available to management at the time of evaluation. Actual results could differ from these estimates.

Legal Contingencies

The Company is subject to various legal proceedings and claims that arise in the ordinary course of business, which are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, the Company believes the final outcome of current matters will not have a material adverse effect on its financial position or the results of operations. Upon determination that a loss is probable to occur, the estimated amount of the loss is recorded in the financial statements. Both the amount of the loss and the point at which its occurrence is considered probable can be difficult to determine.

Table of Contents

Results of Operations

The following is a discussion of the components of revenue and expense for the entire Company. This section generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed on February 24, 2022.


Revenue
(Dollars in thousands)	Year ended December 31,						Percentage Change
	2022		2021		2020		2022 from 2021		2021 from 2020
Base rent	$	201,182	$	197,930	$	188,636	1.6	%	4.9	%
Expense recoveries	36,025		34,500		34,678		4.4	%	(0.5)	%
Percentage rent	1,632		1,504		927		8.5	%	62.2	%
Other property revenue	1,910		1,393		1,252		37.1	%	11.3	%
Credit (losses) recoveries on operating lease receivables, net	88		(812)		(5,212)		NM		NM
Rental revenue	240,837		234,515		220,281		2.7	%	6.5	%
Other revenue	5,023		4,710		4,926		6.6	%	(4.4)	%
Total revenue	$	245,860	$	239,225	$	225,207	2.8	%	6.2	%

NM = Not Meaningful

Total revenue increased 2.8% in 2022 compared to 2021 as described below.

Base rent

The $3.3 million increase in base rent in 2022 compared to 2021 was primarily attributable to increased rental rates, lower vacancy and lower concessions at The Waycroft, which had a total impact of $2.8 million.

Expense recoveries

The $1.5 million increase in expense recoveries in 2022 compared to 2021 is primarily attributable to an increase in recoverable property operating expenses.

Other property revenue

The $0.5 million increase in 2022 compared to 2021 is primarily attributable to (a) higher late fees and interest charges of $0.3 million and (b) higher residential move-in fees of $0.1 million.

Credit (losses) recoveries on operating lease receivables, net

Credit (losses) recoveries on operating lease receivables, net during 2022 decreased $0.9 million from 2021. The decrease, which increases income, is primarily due to higher collections in 2022 of previously reserved lease receivables.

Other Revenue

Other revenue increased $0.3 million primarily due to (a) higher parking revenue of $0.6 million, partially offset by (b) lower lease termination fees of $0.3 million.

Table of Contents


Expenses
(Dollars in thousands)	Year ended December 31,						Percentage Change
	2022		2021		2020		2022 from 2021		2021 from 2020
Property operating expenses	$	35,934	$	32,881	$	28,857	9.3	%	13.9	%

Real estate taxes	28,588		28,747		29,560		(0.6)	%	(2.8)	%
Interest expense, net and amortization of deferred debt costs	43,937		45,424		46,519		(3.3)	%	(2.4)	%
Depreciation and amortization of deferred leasing costs	48,969		50,272		51,126		(2.6)	%	(1.7)	%
General and administrative	22,392		20,252		19,107		10.6	%	6.0	%


Loss on early extinguishment of debt	648		—		—		NM		NM
Total expenses	$	180,468	$	177,576	$	175,169	1.6	%	1.4	%

NM = Not Meaningful

Total expenses increased 1.6% in 2022 compared to 2021 as described below.

Property operating expenses

Property operating expenses increased $3.1 million in 2022 compared to 2021 primarily due to (a) increased repairs and maintenance costs across the portfolio of $1.7 million, (b) higher property employee costs of $0.4 million, (c) increased utilities across the portfolio of $0.3 million, (d) higher parking expenses in the Mixed-Use portfolio of $0.3 million, and (e) higher real estate tax appeal fees across the portfolio of $0.2 million.

Interest expense, net and amortization of deferred debt costs

Interest expense, net and amortization of deferred debt costs decreased $1.5 million in 2022 compared to 2021 primarily due to (a) higher capitalization of interest of $4.4 million related to Twinbrook and Hampden House, (b) lower interest incurred of $2.0 million due to a lower weighted average rate over the period, and (c) the extinguishment of the finance lease liability related to the land underlying the leasehold interest for Twinbrook of $0.4 million, partially offset by (d) higher interest incurred of $5.2 million due to higher average outstanding debt balances over the period.

Depreciation and amortization of deferred leasing costs

Depreciation and amortization of deferred leasing costs decreased $1.3 million in 2022 compared to 2021 primarily due to (a) lower depreciation expense of $0.8 million during the period and (b) lower amortization of deferred leasing costs of $0.5 million during the period.

General and administrative

General and administrative costs increased $2.1 million in 2022 compared to 2021 primarily due to (a) higher employee costs of $1.3 million and (b) higher loan administration costs of $0.7 million.

Loss on early extinguishment of debt

Loss on early extinguishment of debt increased $0.6 million due to the early refinance of loans at Great Falls Center and Village Center.

Table of Contents

Same property revenue and same property operating income

Same property revenue and same property operating income are non-GAAP financial measures of performance and improve the comparability of these measures by excluding the results of properties which were not in operation for the entirety of the comparable reporting periods.

We define same property revenue as total revenue minus the ~~sum of interest income and~~ revenue of properties not in operation for the entirety of the comparable reporting periods, and we define same property operating income as net income plus ~~the sum of~~(a) interest expense, net and amortization of deferred debt costs, (b) depreciation and amortization of deferred leasing costs, (c) general and administrative ~~expense,~~expenses, (d) change in fair value of derivatives, and (e) loss on the early extinguishment of debt ~~(if any), predevelopment expense and acquisition related costs,~~ minus ~~the sum of interest income, the change in the fair value of derivatives,~~(f) gains on sale of property ~~dispositions (if any)~~ and (g) the ~~results~~operating income of properties ~~which~~that were not in operation for the entirety of the comparable periods.

Other REITs may use different methodologies for calculating same property revenue and same property operating income. Accordingly, our same property revenue and same property operating income may not be comparable to those of other REITs.

Same property revenue and same property operating income are used by management to evaluate and compare the operating performance of our properties, and to determine trends in earnings, because these measures are not affected by the cost of our funding, the impact of depreciation and amortization expenses, gains or losses from the acquisition and sale of operating real estate assets, general and administrative expenses or other gains and losses that relate to ownership of our properties. We believe the exclusion of these items from revenue and operating income is useful because the resulting measures capture the actual revenue generated and actual expenses incurred by operating our properties.

Same property revenue and same property operating income are measures of the operating performance of our properties but do not measure our performance as a whole. Such measures are therefore not substitutes for total revenue, net income or operating income as computed in accordance with GAAP.

Table of Contents

The tables below provide reconciliations of ~~total~~property revenue and property operating income under GAAP to same property revenue and same property operating income for the indicated periods. ~~The~~No properties were excluded from same property results ~~include 48 Shopping Centers and five Mixed-Use properties~~ for ~~each period.~~

the 2022 Period.

Same property revenue


(in thousands)	Year ended December 31,
	2022		2021
Total revenue	$	245,860	$	239,225
Less: Acquisitions, dispositions and development properties	—		—
Total same property revenue	$	245,860	$	239,225

Shopping centers	$	172,055	$	169,681
Mixed-Use properties	73,805		69,544
Total same property revenue	$	245,860	$	239,225

Total Shopping Center revenue	$	172,055	$	169,681
Less: Shopping Center acquisitions, dispositions and development properties	—		—
Total same Shopping Center revenue	$	172,055	$	169,681

Total Mixed-Use property revenue	$	73,805	$	69,544
Less: Mixed-Use acquisitions, dispositions and development properties	—		—
Total same Mixed-Use revenue	$	73,805	$	69,544

(in thousands) Year ended December 31,
2017 2016
Total revenue $ 227,285
$ 217,070
Less: Interest income (80 ) (52 )
Less: Acquisitions, dispositions and development properties (13,746 ) (5,364 )
Total same property revenue $ 213,459
$ 211,654
Shopping centers $ 160,393
$ 158,044
Mixed-Use properties 53,066
53,610
Total same property revenue $ 213,459
$ 211,654

The ~~$1.8~~$6.6 million increase in same property revenue ~~for 2017~~in 2022 compared to ~~2016~~2021 was primarily due to (a) ~~a $0.21 per square foot increase in~~higher base rent ~~($1.8 million), exclusive~~of $3.4 million, (b) higher expense recoveries of $1.5 million, (c) lower credit losses on operating lease receivables of $0.7 million and (d) higher other property revenue of $0.5 million.

Mixed-Use same property revenue is composed of the ~~net impact~~following:


	Year Ended December 31,
(In thousands)	2022		2021
Office mixed-use properties (1)	$	37,845	$	37,561
Residential mixed-use properties (retail activity) (2)	3,984		3,530
Residential mixed-use properties (residential activity) (3)	31,976		28,453
Total Mixed-Use same property revenue	$	73,805	$	69,544

(1)Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square

(2)Includes The Waycroft and Park Van Ness

(3)Includes Clarendon South Block, The Waycroft and Park Van Ness

Table of a 2017 lease termination at Broadlands and a 2016 lease termination at 11503 Rockville Pike, (b) increased expense recovery income ($0.7 million), (c) the net impact of a 2017 lease termination at Broadlands and a 2016 lease termination at 11503 Rockville Pike ($0.1 million), partially offset by (d) lower other income ($0.7 million), exclusive of the termination fees at 11503 Rockville Pike and Broadlands, and (e) a 3,833 square foot decrease in leased space ($0.1 million), exclusive of the net impact of a 2017 lease termination at Broadlands and a 2016 lease termination at 11503 Rockville Pike.Contents

Same property operating income


	Year Ended December 31,
(In thousands)	2022		2021












Net income	$	65,392	$	61,649
Add: Interest expense, net and amortization of deferred debt costs	43,937		45,424
Add: Depreciation and amortization of deferred leasing costs	48,969		50,272
Add: General and administrative	22,392		20,252



Add: Loss on early extinguishment of debt	648		—
Property operating income	181,338		177,597
Less: Acquisitions, dispositions and development properties	—		—
Total same property operating income	$	181,338	$	177,597

Shopping Centers	$	135,160	$	133,897
Mixed-Use properties	46,178		43,700
Total same property operating income	$	181,338	$	177,597

Shopping Center operating income	$	135,160	$	133,897
Less: Shopping Center acquisitions, dispositions and development properties	—		—
Total same Shopping Center operating income	$	135,160	$	133,897

Mixed-Use property operating income	$	46,178	$	43,700
Less: Mixed-Use acquisitions, dispositions and development properties	—		—
Total same Mixed-Use property operating income	$	46,178	$	43,700

Year Ended December 31,
(In thousands) 2017 2016
Net income $ 60,668
$ 56,720
Add: Interest expense and amortization of deferred debt costs 47,225
45,683
Add: General and administrative 18,176
17,496
Add: Depreciation and amortization of deferred leasing costs 45,694
44,417
Add: Acquisition related costs —
60
Add: Change in fair value of derivatives (70 ) 6
Less: Gains on property dispositions —
(1,013 )
Less: Interest income (80 ) (52 )
Property operating income 171,613
163,317
Less: Acquisitions, dispositions & development property (8,978 ) (1,760 )
Total same property operating income $ 162,635
$ 161,557
Shopping centers $ 127,096
$ 124,470
Mixed-Use properties 35,539
37,087
Total same property operating income $ 162,635
$ 161,557

~~Same~~During the year ended 2022, Shopping Center same property operating income increased ~~$1.1 million for 2017 compared~~0.9% and Mixed-Use same property operating income increased 5.7%. Shopping Center same property operating income increased primarily due to ~~2016 due primarily to~~

~~(a) a $0.21 per square foot increase in~~higher base rent ~~($1.8 million), exclusive~~ of ~~the net impact of a 2017 lease termination at Broadlands and a 2016 lease termination at 11503 Rockville Pike, (b) increased expense recovery income ($0.7 million), (c) lower~~$1.2 million. Mixed-Use same property operating expenses ($0.4 million) and (d) the net impact of a 2017 lease termination at Broadlands and a 2016 lease termination at 11503 Rockville Pike ($0.1 million), partially offset by (e) higher real estate taxes ($1.5 million) and (f) lower other income ~~($0.7 million), exclusive of the termination fees at 11503 Rockville Pike and Broadlands.~~

~~The following is a discussion of the components of revenue and expense for the entire Company.~~

Revenue
(Dollars in thousands) Year ended December 31, Percentage Change
2017 2016 2015
2017 from
2016

2016 from
2015
Base rent $ 181,141
$ 172,381
$ 168,303
5.1 % 2.4 %
Expense recoveries 35,347
34,269
32,911
3.1 % 4.1 %
Percentage rent 1,458
1,379
1,608
5.7 % (14.2 )%
Other 9,339
9,041
6,255
3.3 % 44.5 %
Total revenue $ 227,285
$ 217,070
$ 209,077
4.7 % 3.8 %

Base rent includes $0.5 million, $1.8 million and $2.4 million, for the years 2017, 2016, and 2015, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $1.7 million, $1.8 million and $1.8 million, for the years 2017, 2016, and 2015, respectively, to recognize income from the amortization of in-place leases.

~~Total revenue~~ increased ~~4.7% in 2017 compared to 2016~~ primarily due to (a) ~~an $0.84 per square foot increase in~~higher base rent ~~($7.3 million), exclusive~~ of ~~the net impact of a 2017 lease termination at Broadlands and a 2016 lease termination at 11503 Rockville Pike, (b) higher residential base rent ($4.8 million), (c) higher expense~~

recoveries ($1.1 million), and (d) the net impact of a 2017 lease termination at Broadlands and a 2016 lease termination at 11503 Rockville Pike ($0.1 million) partially offset by (e) a 144,327 square foot decrease in leased space ($2.7 million), exclusive of the net impact of a 2017 lease termination at Broadlands and a 2016 lease termination at 11503 Rockville Pike and (f) lower other income ($0.3 million), exclusive of the termination fees at 11503 Rockville Pike and Broadlands. Total revenue increased 3.8% in 2016 compared to 2015 primarily due to (a) a $0.32 per square foot increase in base rent ($2.8 million) exclusive of the impact of a lease termination at 11503 Rockville Pike, (b) higher residential base rent ($2.3 million), (c) the impact of a lease termination at 11503 Rockville Pike ($1.9 million), and (d) higher expense recoveries ($1.4 million) partially offset by (e) a 4,185 square foot decrease in leased space ($0.1 million) exclusive of the impact of a lease termination at 11503 Rockville Pike. A discussion of the components of revenue follows.

~~Base rent~~

~~The $8.8~~$2.2 million ~~increase in base rent in 2017 compared to 2016 was attributable to (a) a $0.78 per square foot increase in base rent ($6.8 million)~~ and (b) higher ~~residential base rent ($4.8 million) partially offset by (c) a 144,327 square foot decrease in leased space ($2.7 million).~~parking income, net of expenses of $0.3 million.

Mixed-Use same property operating income is composed of the following:


	Year Ended December 31,
(In thousands)	2022		2021
Office mixed-use properties (1)	$	24,367	$	24,545
Residential mixed-use properties (retail activity) (2)	2,917		2,658
Residential mixed-use properties (residential activity) (3)	18,894		16,497
Total Mixed-Use same property operating income	$	46,178	$	43,700

(1)Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square

(2)Includes The ~~$4.1 million increase in base rent in 2016 compared to 2015 was attributable to (a) a $0.21 per square foot increase in base rent ($1.8 million)~~Waycroft and ~~(b) higher residential base rent ($2.3 million) partially offset by (c) a 4,185 square foot decrease in leased space ($0.1 million).~~

~~Expense recoveries~~

Expense recovery income increased $1.1 million in 2017 compared to 2016 primarily due to higher real estate tax expense. Expense recovery income increased $1.4 million in 2016 compared to 2015 primarily due to higher real estate tax expense.

~~Other revenue~~

Other revenue increased $0.3 million in 2017 compared to 2016. Other revenue increased $2.8 million in 2016 compared to 2015 due primarily to a $3.0 million lease termination fee at 11503 Rockville Pike.

Operating expenses
(Dollars in thousands) Year ended December 31, Percentage Change
2017 2016 2015
2017 from
2016

2016 from
2015
Property operating expenses $ 27,689
$ 27,527
$ 26,565
0.6 % 3.6 %
Provision for credit losses 906
1,494
915
(39.4 )% 63.3 %
Real estate taxes 26,997
24,680
23,663
9.4 % 4.3 %
Interest expense and amortization of deferred debt costs 47,225
45,683
45,165
3.4 % 1.1 %
Depreciation and amortization of deferred leasing costs 45,694
44,417
43,270
2.9 % 2.7 %
General and administrative 18,176
17,496
16,353
3.9 % 7.0 %
Acquisition related costs —
60
84
(100.0 )% (28.6 )%
Predevelopment expenses —
—
132
NA
(100.0 )%
Total operating expenses $ 166,687
$ 161,357
$ 156,147
3.3 % 3.3 %

~~Total operating expenses increased 3.3% in 2017 compared to 2016. Total operating expenses increased 3.3% in 2016 compared to 2015.~~

~~Property operating expenses~~

~~Property operating expenses increased $0.2 million in 2017 compared to 2016. Property operating expenses increased $1.0 million in 2016 compared to 2015.~~

~~Provision for credit losses~~

The provision for credit losses represents the Company’s estimate of amounts owed by tenants that may not be collectible and was 0.40%, 0.69%, and 0.44% for 2017, 2016, and 2015, respectively. The increase in 2016 relates primarily to a single shopping center tenant.

~~Real estate taxes~~

~~Real estate taxes increased $2.3 million in 2017 compared to 2016 primarily due to (a)~~ Park Van Ness ~~($0.7 million), (b) Burtonsville Town Square ($0.4 million)~~

(3)Includes Clarendon South Block, The Waycroft and ~~(c) small increases at various properties throughout the portfolio. Real estate taxes increased $1.0 million in 2016 compared to 2015 primarily due to (a)~~ Park Van Ness ~~($0.3 million) and (b) small increases throughout the remainder~~

Table of ~~the portfolio.~~Contents

~~Interest expense and amortization of deferred debt costs~~

~~Interest expense and amortization of deferred debt costs increased by~~ ~~$1.5 million~~ in 2017 compared to 2016 primarily due to (a) Burtonsville Town Square ($2.2 million) and (b) Park Van Ness ($0.7 million) partially offset by (c) higher capitalized interest ($1.0 million) and (d) lower average balances of mortgage debt throughout the portfolio ($0.4 million).

~~Depreciation and amortization~~

Depreciation and amortization of deferred leasing costs increased by $1.3 million in 2017 compared to 2016 primarily due to (a) Burtonsville Town Square ($1.4 million) and (b) Park Van Ness ($1.2 million) partially offset by (c) lower expense at North Glebe Road ($0.9 million) and (d) lower expense at 1500 Rockville Pike ($0.3 million). Depreciation and amortization of deferred leasing costs increased $1.1 million in 2016 compared to 2015 primarily due to (a) Park Van Ness ($1.8 million) partially offset by (b) lower expense at Germantown ($0.7 million).

~~General and administrative~~

~~General and administrative costs increased~~ ~~$0.7 million~~ in 2017 compared to 2016 primarily due to (a) increased salary and benefit expense ($0.6 million). General and administrative costs increased $1.1 million in 2016 compared to 2015 primarily due to (a) increased salary and benefit expense ($1.0 million) and (b) increased stock option expense ($0.2 million).

~~Acquisition related costs~~

Acquisition related costs in 2016 totaling approximately $0.1 million relate to the purchase of a retail pad site adjacent to the Company's existing Thruway Shopping Center. Acquisition related costs in 2015 totaling approximately $0.1 million relate to the purchase of 726 N. Glebe Road.

~~Predevelopment expenses~~

~~Predevelopment expenses include lease termination costs and demolition costs which are related to development projects and do not meet the criteria to be capitalized.~~

~~Gain on Sales of Properties~~

~~Gain on sale of property in 2016 resulted from the December 2016 sale of Crosstown Business Center.~~

Impact of Inflation

~~Inflation has remained relatively low during 2017 and 2016.~~ The impact of rising operating expenses due to inflation on the operating performance of the Company’s portfolio ~~would have been~~is partially mitigated by terms in substantially all of the Company’s leases, which contain provisions designed to increase revenues to offset the adverse impact of inflation on the Company’s results of operations. These provisions include upward periodic

adjustments in base rent due from tenants, usually based on a stipulated increase, and, to a lesser extent, on ~~a factor of~~ the change in the consumer price index, commonly referred to as the CPI.

In addition, substantially all of the Company’s properties are leased to tenants under long-term leases, which provide for reimbursement of operating expenses by tenants. These leases tend to reduce the Company’s exposure to rising property expenses due to inflation. Inflation and increased costs may have an adverse impact on the Company’s tenants if increases in their operating expenses exceed increases in their revenue.

Liquidity and Capital Resources

Cash and cash equivalents were ~~$10.9~~$13.3 million and ~~$8.3~~$14.6 million at December 31, ~~2017~~2022 and ~~2016,~~2021, respectively. The changes in cash and cash equivalents during the years ended December 31, ~~2017~~2022 and ~~2016~~2021 were attributable to operating, investing and financing activities, as described below.


(in thousands)	Year Ended December 31,
	2022		2021
Net cash provided by operating activities	$	121,151	$	118,427
Net cash used in investing activities	(116,888)		(55,918)
Net cash used in financing activities	(5,578)		(74,771)
Decrease in cash and cash equivalents	$	(1,315)	$	(12,262)

(in thousands) Year Ended December 31,
2017 2016
Net cash provided by operating activities $ 103,450
$ 89,090
Net cash used in investing activities (113,306 ) (86,274 )
Net cash used in financing activities 12,442
(4,497 )
Increase (decrease) in cash and cash equivalents $ 2,586
$ (1,681 )

Operating Activities

Net cash provided by operating activities ~~increased $14.4 million to $103.5 million for the year ended December 31, 2017 compared to $89.1 million for the year ended December 31, 2016. Net cash provided by operating activities~~ represents ~~in each year,~~ cash received primarily from rental ~~income,~~revenue, plus other ~~income,~~revenue, less property operating expenses, leasing costs, normal recurring general and administrative expenses and interest payments on ~~debt outstanding.~~outstanding debt.

Investing Activities

Net cash used in investing activities ~~increased $27.0 million to $113.3 million for the year ended December 31, 2017 from $86.3 million for the year ended December 31, 2016. Investing activities in 2017 primarily reflect~~includes property acquisitions, developments, redevelopments, tenant improvements and other property capital ~~expenditures ($17.7 million), the Company's development activities ($22.8 million) and the acquisition of various retail real estate assets ($79.5 million). Net~~expenditures. The $61.0 million increase in cash used in investing activities ~~increased~~ ~~$16.7~~is primarily due to (a) higher development expenditures of $75.2 million, to ~~$86.3~~ partially offset by (b) lower acquisitions of real estate investments of $9.0 million ~~for the year ended December 31, 2016 from~~ ~~$69.6 million~~ for the year ended December 31, 2015. Investing activities in 2016 primarily reflect (a) tenant improvements and capital expenditures ($15.6 million), (b) the Company's development activities ($27.2 million) and (c) ~~the acquisition of various retail~~lower additions to real estate ~~assets ($48.3 million).~~investments throughout the portfolio of $5.2 million.

Financing Activities

Net cash used in financing activities ~~was $12.4 million~~represents (a) cash received from loan proceeds and ~~$4.5 million for the years ended December 31, 2017~~issuance of common stock, preferred stock and ~~2016, respectively. Net~~limited partnership units minus (b) cash used ~~in financing activities in 2017 primarily reflects:~~

~~the repayment of mortgage notes payable totaling $55.7 million;~~

~~the repayment of amounts borrowed under the revolving credit facility totaling $51.0 million;~~

~~distributions~~ to ~~common stockholders totaling $44.6 million;~~

repay and curtail loans, redeem preferred stock and pay dividends and distributions to holders of ~~convertible~~common stock, preferred stock and limited partnership ~~units in~~units. See Note 5 to the ~~Operating Partnership totaling $15.3 million;~~

~~distributions made to preferred stockholders totaling $12.4 million; and~~

~~payments~~Consolidated Financial Statements for a discussion of ~~$2.6 million for~~ financing ~~costs of mortgage notes payable;~~

~~which was partially offset by:~~

~~proceeds of $63.0 million received from revolving credit facility draws;~~

~~proceeds of $6.7 million from the issuance of limited partnership units in the Operating Partnership under the dividend reinvestment program;~~

~~proceeds of $22.8 million from the issuance of common stock under the dividend reinvestment program, directors deferred plan and from the exercise of stock options; and~~

~~proceeds of~~ ~~$1.4 million~~ ~~received from construction loan draws.~~

~~Net cash used in financing activities for the year ended December 31, 2016 primarily reflects:~~

~~repayments of $57.5 million on the revolving credit facility;~~

~~the repayment of mortgage notes payable totaling $24.7 million;~~

~~distributions to common stockholders totaling $39.5 million;~~

~~distributions to holders of convertible limited partnership units in the Operating Partnership totaling~~ ~~$13.5 million~~;

~~distributions made to preferred stockholders totaling $12.4 million; and~~

~~payments of $0.1 million for financing costs of new mortgage loans;~~

~~which was partially offset by:~~

~~proceeds of $78.5 million received from revolving credit facility;~~

~~proceeds of $6.9 million from the issuance of limited partnership units in the Operating Partnership under the dividend reinvestment program;~~

~~proceeds of $21.6 million received from the issuance of common stock under the dividend reinvestment program and from the exercise of stock options; and~~

~~proceeds of~~ ~~$24.9 million~~ ~~from construction loan draws.~~

activity.

Liquidity Requirements

Short-term liquidity requirements consist primarily of normal recurring operating expenses and capital expenditures, debt service requirements (including debt service relating to additional and replacement debt), distributions to common and preferred stockholders, distributions to unit holders and amounts required for expansion and renovation of the Current Portfolio Properties and selective acquisition and development of additional

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properties. In order to qualify as a REIT for federal income tax purposes, the Company must distribute to its stockholders at least 90% of its “real estate investment trust taxable income,” as defined in the Code. The Company expects to meet these short-term liquidity requirements (other than amounts required for additional property acquisitions and developments) through cash provided from operations, available cash and its existing line of credit.

The Company is developing Twinbrook Quarter Phase I (“Phase I”) located in Rockville, Maryland. Phase I includes an 80,000 square foot Wegmans, approximately 25,000 square feet of small shop space, 450 apartments and a 230,000 square foot office building. The office tower portion of Phase I is not being constructed at this time. In connection with the development of the residential and retail portions of Phase I, we must also invest in infrastructure and other items that will support both Phase I and other portions of the development of Twinbrook Quarter. The total cost of the project is expected to be approximately $331.5 million, of which $271.4 million is related to the development of the residential and retail portions of Phase I and $60.1 million is related to infrastructure and other items. A portion of the project will be financed by a $145.0 million construction-to-permanent loan. Construction of the structure is ongoing. Concrete is being poured at the 12th level above ground, which is the final above ground level of the residential and retail portions of Phase I. Initial delivery of Phase I is anticipated in late 2024. The development potential of all phases of the entire 18.4 acre Twinbrook Quarter site totals 1,865 residential units, 473,000 square feet of retail space, and 431,000 square feet of office space.

The Company is developing Hampden House, a project located in downtown Bethesda, Maryland that will include up to 366 apartment units and 10,100 square feet of retail space. The total cost of the project is expected to be approximately $246.4 million, a portion of which will be financed by a $133.0 million construction-to-permanent loan. Excavation is complete and below grade construction of foundation systems is in progress. Construction is expected to be completed during 2025.

Long-term liquidity requirements consist primarily of obligations under our long-term debt and dividends paid to our preferred shareholders. ~~We anticipate~~The Company anticipates that long-term liquidity requirements will also include amounts required for property acquisitions and developments. The Company is developing a primarily residential project with street-level retail at 750 N. Glebe Road in Arlington, Virginia. The total cost of the project, including acquisition of land, is expected to be approximately $275.0 million. The Company had invested $83.5 million as of December 31, 2017, and expects to invest approximately $34.5 million during 2018, which will be funded by the revolving credit facility. The remaining cost will be funded by a $157.0 million construction-to-permanent loan, which closed in 2017. The Company may also redevelop certain of the Current Portfolio Properties and may develop additional freestanding outparcels or expansions within certain of the Shopping Centers.

Acquisition and development of properties are undertaken only after careful analysis and review, and management’s determination that such properties are expected to provide long-term earnings and cash flow growth. During the coming year, developments, expansions or acquisitions (if any) are expected to be funded with available cash,

bank borrowings from the Company’s credit line, construction and permanent financing, proceeds from the operation of the Company’s ~~dividend reinvestment plan~~Dividend Reinvestment Plan (“DRIP”) or other external debt or equity capital resources available to the Company. Any future borrowings may be at the Saul Centers, Operating Partnership or Subsidiary Partnership level, and securities offerings may include (subject to certain limitations) the issuance of additional limited partnership interests in the Operating Partnership which can be converted into shares of Saul Centers common stock. The availability and terms of any such financing will depend upon market and other conditions.

Contractual Payment Obligations

As of December 31, ~~2017,~~2022, the Company had unfunded contractual payment obligations oftotaling approximately ~~$228.8~~$258.9 million, excluding operating obligations, due within the next 12 months. The table below shows the total contractual payment obligations as of December 31, ~~2017.~~2022.

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	Payments Due By Period											Payments Due By Period
(Dollars in thousands)	One Year or Less		2 - 3 Years		4 - 5 Years		After 5 Years		Total		(Dollars in thousands)	One Year or Less		More Than One Year		Total
Notes Payable:											Notes Payable:
Interest	$	46,110	$	79,900	$	66,050	$	129,953	$	322,013	Interest	$	50,140	$	316,355	$	366,495
Scheduled Principal	30,160		56,015		53,415		145,038		284,628		Scheduled Principal	32,926		287,872		320,798
Balloon Payments	75,105		121,957		47,514		436,325		680,901		Balloon Payments	9,225		908,660		917,885
Subtotal	151,375		257,872		166,979		711,316		1,287,542		Subtotal	92,291		1,512,887		1,605,178

Corporate Headquarters Lease (1)	799		1,670		1,772		—		4,241		Corporate Headquarters Lease (1)	801		2,697		3,498
Development Obligations	70,000		81,869		—		—		151,869
Development and Predevelopment Obligations											Development and Predevelopment Obligations	152,299		31,293		183,592
Tenant Improvements	6,621		778		1,485		—		8,884		Tenant Improvements	13,550		107,631		121,181
Total Contractual Obligations	$	228,795	$	342,189	$	170,236	$	711,316	$	1,452,536	Total Contractual Obligations	$	258,941	$	1,654,508	$	1,913,449


~~(1)~~	(1)See Note 7 to Consolidated Financial Statements. Corporate Headquarters Lease amounts represent an allocation to the Company based upon employees’ time dedicated to ~~the Company’s business as specified in the Shared Services Agreement. Future amounts are subject to change as the number of employees employed by each of the parties to the lease fluctuates.~~

~~Management believes that~~ the Company’s ~~cash flow from operations and its capital resources, which at December 31, 2017, included cash balances~~business as specified in the Shared Services Agreement. Future amounts are subject to change as the number of ~~$10.9 million and borrowing availability of approximately $213.8 million on its revolving line of credit, will be sufficient to meet its contractual obligations for the foreseeable future.~~

~~Preferred Stock Issues~~

~~The Company has outstanding 7.2 million depositary shares,~~employees employed by each representing 1/100th of a share of 6.875% Series C Cumulative Redeemable Preferred Stock (the "Series C Stock"). The depositary shares may be redeemed at the Company’s option, in whole or in part, on or after February 12, 2018, at the $25.00 liquidation preference, plus accrued but unpaid dividends. The depositary shares pay an annual dividend of $1.71875 per share, equivalent to 6.875% of the ~~$25.00 liquidation preference. The Series C Stock has no stated maturity, is not subject~~parties to ~~any sinking fund or mandatory redemption and is not convertible into any other securities~~the lease fluctuates.

Table of the Company except in connection with certain changes of control or delisting events. Investors in the depositary shares generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not declared or consecutive) and in certain other events.Contents

On January 23, 2018, Saul Centers sold, in an underwritten public offering, 3.0 million depositary shares, each representing 1/100th of a share of 6.125% Series D Cumulative Redeemable Preferred Stock, providing net cash proceeds of approximately $72.6 million. The depositary shares may be redeemed at the Company’s option, in whole or in part, on or after January 23, 2023, at the $25.00 liquidation preference, plus accumulated divid

ends to but not including the redemption date. The depositary shares pay an annual dividend of $1.53125 per share, equivalent to 6.125% of the $25.00 liquidation preference. The Series D preferred stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of the Company except in connection with certain changes in control or delisting events. Investors in the depositary shares generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not declared or consecutive) and in certain other events. On February 22, 2018, the proceeds from the offering, together with cash on hand, were used to redeem 3.0 million depositary shares, each representing 1/100th of a share of the Company’s 6.875% Series C Cumulative Redeemable Preferred Stock.

Dividend Reinvestments

In December 1995, the Company established a Dividend Reinvestment Plan (the “Plan”) to allow its common stockholders and holders of limited partnership interests an opportunity to buy additional shares of common stock by reinvesting all or a portion of their dividends or distributions. The Plan provides for investing in newly issued shares of common stock at a 3% discount from market price without payment of any brokerage commissions, service charges or other expenses. All expenses of the Plan are paid by the Company. The Company issued ~~258,759~~138,142 and ~~178,787~~287,239 shares under the Plan at a weighted average discounted price of ~~$59.20~~$48.56 and ~~$55.19~~$39.17 per share during the years ended December 31, ~~2017~~2022 and ~~2016,~~2021, respectively. The Company issued ~~111,351~~26,659 and ~~124,758~~61,009 limited partnership units under the Plan at a weighted average price of ~~$60.48~~$49.81 and ~~$55.39~~$39.74 per unit during the years ended December 31, ~~2017~~2022 and ~~2015,~~2021, respectively. The Company also credited ~~7,252~~5,815 and ~~8,010~~6,376 shares to directors pursuant to the reinvestment of dividends specified by the Directors’ Deferred Compensation Plan at a weighted average discounted price of ~~$59.70~~$46.74 and ~~$55.42~~$39.31 per share, during the years ended December 31, ~~2017~~2022 and ~~2016,~~2021, respectively.

Capital Strategy and Financing Activity

As a general policy, the Company intends to maintain a ratio of its total debt to total asset value of 50% or less and to actively manage the Company’s leverage and debt expense on an ongoing basis in order to maintain prudent coverage of fixed charges. Asset value is the aggregate fair market value of the Current Portfolio Properties and any subsequently acquired properties as reasonably determined by management by reference to the properties’ aggregate cash flow. Given the Company’s current debt level, it is management’s belief that the ratio of the Company’s debt to total asset value was below 50% as of December 31, ~~2017.~~2022.

The organizational documents of the Company do not limit the absolute amount or percentage of indebtedness that it may incur. The Board of Directors may, from time to time, reevaluate the Company’s debt capitalization policy in light of current economic conditions, relative costs of capital, market values of the Company property portfolio, opportunities for acquisition, development or expansion, and such other factors as the Board of Directors then deems relevant. The Board of Directors may modify the Company’s debt capitalization policy based on such a reevaluation without shareholder approval and ~~consequently,~~ may increase or decrease the Company’s debt to total asset ratio above or below 50% or may waive the policy for certain periods of time. The Company ~~selectively~~ continues to refinance or renegotiate the terms of its outstanding debt in order to ~~achieve longer~~extend maturities and obtain generally more favorable loan terms, whenever management determines the financing environment is favorable.

The Company's financing activity is described within Note 5 to the Consolidated Financial Statements. The following is a summary of notes payable as of December 31, ~~2017~~2022 and ~~2016.~~

2021.

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Notes Payable	Year Ended December 31,					Interest		Scheduled	Notes Payable	Year Ended December 31,		Interest		Scheduled
(Dollars in thousands)	2017			2016		Rate*		Maturity*	(Dollars in thousands)	2022		2021				Rate*	Maturity*
Fixed rate mortgages:	—		(a)	$	29,428	6.01	%	Feb-2018
	30,201		(b)	32,036		5.88	%	Jan-2019
	9,783		(c)	10,372		5.76	%	May-2019
	13,529		(d)	14,335		5.62	%	Jul-2019
	13,543		(e)	14,325		5.79	%	Sep-2019
	12,029		(f)	12,725		5.22	%	Jan-2020
	9,948		(g)	10,277		5.60	%	May-2020
	8,244		(h)	8,697		5.30	%	Jun-2020
	37,998		(i)	39,213		5.83	%	Jul-2020
	7,325		(j)	7,685		5.81	%	Feb-2021
	5,649		(k)	5,808		6.01	%	Aug-2021
	32,673		(l)	33,571		5.62	%	Jun-2022
	9,999		(m)	10,253		6.08	%	Sep-2022
	10,877		(n)	11,129		6.43	%	Apr-2023
	12,577		(o)	13,401		6.28	%	Feb-2024
	15,452		(p)	15,917		7.35	%	Jun-2024
	13,438		(q)	13,832		7.60	%	Jun-2024
	23,873		(r)	24,504		7.02	%	Jul-2024
	28,115		(s)	28,945		7.45	%	Jul-2024
	28,025		(t)	28,822		7.30	%	Jan-2025
	14,537		(u)	14,961		6.18	%	Jan-2026
	105,817		(v)	109,144		5.31	%	Apr-2026
	32,016		(w)	33,097		4.30	%	Oct-2026
	36,507		(x)	37,701		4.53	%	Nov-2026
	17,086		(y)	17,630		4.70	%	Dec-2026
	64,472		(z)	66,210		5.84	%	May-2027
	15,859		(aa)	16,352		4.04	%	Apr-2028
	39,968		(bb)	41,753		3.51	%	Jun-2028
	16,055		(cc)	16,543		3.99	%	Sep-2028
	27,884		(dd)	28,679		3.69	%	Mar-2030
	14,950		(ee)	15,357		3.99	%	Apr-2030
	39,140		(ff)	—		3.39	%	Feb-2032
	71,211		(gg)	70,144		4.88	%	Sep-2032
	60,000		(hh)	—		3.75	%	Dec-2032
	11,613		(ii)	11,446		8.00	%	Apr-2034
Lansdowne Town Center									Lansdowne Town Center	$	—	$	28,533	5.62	%		Jun-2022
Orchard Park									Orchard Park	—		8,812		6.08	%		Sep-2022
BJ's Wholesale Club									BJ's Wholesale Club	9,345		9,692		6.43	%		Apr-2023
Great Falls Center									Great Falls Center	—		8,651		6.61	%		Feb-2024
Leesburg Pike Center									Leesburg Pike Center	12,543		13,213		7.35	%		Jun-2024
Village Center									Village Center	—		11,528		7.60	%		Jun-2024
White Oak									White Oak	19,985		20,874		6.89	%		Jul-2024
Avenel Business Park									Avenel Business Park	22,906		24,108		7.45	%		Jul-2024
Ashburn Village									Ashburn Village	23,039		24,186		7.30	%		Jan-2025
Ravenwood									Ravenwood	11,975		12,553		6.18	%		Jan-2026
Clarendon Center									Clarendon Center	86,264		90,600		5.31	%		Apr-2026
Severna Park Marketplace									Severna Park Marketplace	25,857		27,197		4.30	%		Oct-2026
Kentlands Square II									Kentlands Square II	29,658		31,155		4.53	%		Nov-2026
Cranberry Square									Cranberry Square	13,946		14,634		4.70	%		Dec-2026
Fixed-rate portion of Credit Facility									Fixed-rate portion of Credit Facility	100,000		—		4.38	%		Feb-2027
Seven Corners									Seven Corners	—		56,413		5.84	%		May-2027
Hampshire-Langley									Hampshire-Langley	12,231		12,868		4.04	%		Apr-2028
Beacon Center									Beacon Center	—		32,170		3.51	%		Jun-2028
Seabreeze Plaza									Seabreeze Plaza	13,302		13,897		3.99	%		Sep-2028
Great Falls Center									Great Falls Center	31,313		—		3.91	%		Sep-2029
Shops at Fairfax / Boulevard									Shops at Fairfax / Boulevard	23,443		24,398		3.69	%		Mar-2030
Northrock									Northrock	12,652		13,108		3.99	%		Apr-2030
Burtonsville Town Square									Burtonsville Town Square	33,439		34,558		3.39	%		Feb-2032
Park Van Ness									Park Van Ness	62,813		64,661		4.88	%		Sep-2032
Washington Square									Washington Square	52,030		53,745		3.75	%		Dec-2032
Broadlands Village									Broadlands Village	28,858		29,613		4.41	%		Nov-2033
The Glen									The Glen	20,827		21,393		4.69	%		Jan-2034
Olde Forte Village									Olde Forte Village	20,136		20,682		4.65	%		Feb-2034
Olney									Olney	12,476		12,299		8.00	%		Apr-2034
Shops at Monocacy									Shops at Monocacy	26,422		27,143		4.14	%		Dec-2034
Ashbrook Marketplace									Ashbrook Marketplace	20,807		21,329		3.80	%		Aug-2035
Kentlands									Kentlands	28,157		28,899		3.43	%		Aug-2035
The Waycroft									The Waycroft	152,679		156,116		4.67	%		Sep-2035
Village Center									Village Center	25,057		—		4.14	%		Aug-2037
Beacon Center / Seven Corners									Beacon Center / Seven Corners	142,522		—		5.05	%		Oct-2037
Total fixed rate	890,393			844,292		5.25	%	8.6 Years	Total fixed rate	1,074,682		949,028		4.77	%		8.77 years
Variable rate loans:									Variable rate loans:
	61,000		(jj)	49,000		LIBOR + 1.45	%	Jun-2018
	14,135		(kk)	14,482		LIBOR + 1.65	%	Feb-2018
Variable-rate portion of Credit Facility									Variable-rate portion of Credit Facility	164,000		206,000		SOFR + 1.50%			Aug-2025
Total variable rate	75,135			63,482		2.86	%	0.4 Years	Total variable rate	164,000		206,000		5.80	%		2.66 years
Total notes payable	$	965,528		$	907,774	5.07	%	7.9 Years	Total notes payable	$	1,238,682	$	1,155,028	4.91	%		7.96 years


*	~~Interest rate and scheduled maturity data presented as of December 31, 2017.~~ Totals computed using weighted averages.


~~(a)~~	The loan was collateralized by Washington Square and required equal monthly principal and interest payments of $264,000 based upon a 27.5-year amortization schedule and a final payment of $28.0 million at loan maturity. In 2017, the loan was repaid in full and replaced with a new $60.0 million loan. See (hh) below.


~~(b)~~	The loan is collateralized by three shopping centers, Broadlands Village, The Glen and Kentlands Square I, and requires equal monthly principal and interest payments of $306,000 based upon a 25-year amortization schedule and a final payment of $28.4 million at loan maturity. Principal of $1.8 million was amortized during 2017.


~~(c)~~	The loan is collateralized by Olde Forte Village and requires equal monthly principal and interest payments of $98,000 based upon a 25-year amortization schedule and a final payment of $9.0 million at loan maturity. Principal of $589,000 was amortized during 2017.


~~(d)~~	The loan is collateralized by Countryside and requires equal monthly principal and interest payments of $133,000 based upon a 25-year amortization schedule and a final payment of $12.3 million at loan maturity. Principal of $806,000 was amortized during 2017.


~~(e)~~	The loan is collateralized by Briggs Chaney MarketPlace and requires equal monthly principal and interest payments of $133,000 based upon a 25-year amortization schedule and a final payment of $12.2 million at loan maturity. Principal of $782,000 was amortized during 2017.


~~(f)~~	The loan is collateralized by Shops at Monocacy and requires equal monthly principal and interest payments of $112,000 based upon a 25-year amortization schedule and a final payment of $10.6 million at loan maturity. Principal of $696,000 was amortized during 2017.


~~(g)~~	The loan is collateralized by Boca Valley Plaza and requires equal monthly principal and interest payments of $75,000 based upon a 30-year amortization schedule and a final payment of $9.1 million at loan maturity. Principal of $329,000 was amortized during 2017.


~~(h)~~	The loan is collateralized by Palm Springs Center and requires equal monthly principal and interest payments of $75,000 based upon a 25-year amortization schedule and a final payment of $7.1 million at loan maturity. Principal of $453,000 was amortized during 2017.


~~(i)~~	The loan and a corresponding interest-rate swap closed on June 29, 2010 and are collateralized by Thruway. On a combined basis, the loan and the interest-rate swap require equal monthly principal and interest payments of $289,000 based upon a 25-year amortization schedule and a final payment of $34.8 million at loan maturity. Principal of $1.2 million was amortized during 2017.


~~(j)~~	The loan is collateralized by Jamestown Place and requires equal monthly principal and interest payments of $66,000 based upon a 25-year amortization schedule and a final payment of $6.1 million at loan maturity. Principal of $360,000 was amortized during 2017.


~~(k)~~	The loan is collateralized by Hunt Club Corners and requires equal monthly principal and interest payments of $42,000 based upon a 30-year amortization schedule and a final payment of $5.0 million, at loan maturity. Principal of $159,000 was amortized during 2017.


~~(l)~~	The loan is collateralized by Lansdowne Town Center and requires monthly principal and interest payments of $230,000 based on a 30-year amortization schedule and a final payment of $28.2 million at loan maturity. Principal of $898,000 was amortized during 2017.


~~(m)~~	The loan is collateralized by Orchard Park and requires equal monthly principal and interest payments of $73,000 based upon a 30-year amortization schedule and a final payment of $8.6 million at loan maturity. Principal of $254,000 was amortized during 2017.


~~(n)~~	The loan is collateralized by BJ’s Wholesale and requires equal monthly principal and interest payments of $80,000 based upon a 30-year amortization schedule and a final payment of $9.3 million at loan maturity. Principal of $252,000 was amortized during 2017.


~~(o)~~	The loan is collateralized by Great Falls shopping center. The loan consists of three notes which require equal monthly principal and interest payments of $138,000 based upon a weighted average 26-year amortization schedule and a final payment of $6.3 million at maturity. Principal of $824,000 was amortized during 2017.


~~(p)~~	The loan is collateralized by Leesburg Pike and requires equal monthly principal and interest payments of $135,000 based upon a 25-year amortization schedule and a final payment of $11.5 million at loan maturity. Principal of $465,000 was amortized during 2017.


~~(q)~~	The loan is collateralized by Village Center and requires equal monthly principal and interest payments of $119,000 based upon a 25-year amortization schedule and a final payment of $10.1 million at loan maturity. Principal of $394,000 was amortized during 2017.

~~(r)~~

The loan is collateralized by White Oak and requires equal monthly principal and interest payments of $193,000 based upon a 24.4 year weighted amortization schedule and a final payment of $18.5 million at loan maturity. The loan was previously collateralized by Van Ness Square. During 2012, the Company substituted White Oak as the collateral and borrowed an additional ~~$10.5 million. Principal of $631,000 was amortized during 2017.~~


~~(s)~~	The loan is collateralized by Avenel Business Park and requires equal monthly principal and interest payments of $246,000 based upon a 25-year amortization schedule and a final payment of $20.9 million at loan maturity. Principal of $830,000 was amortized during 2017.


~~(t)~~	The loan is collateralized by Ashburn Village and requires equal monthly principal and interest payments of $240,000 based upon a 25-year amortization schedule and a final payment of $20.5 million at loan maturity. Principal of $797,000 was amortized during 2017.


~~(u)~~	The loan is collateralized by Ravenwood and requires equal monthly principal and interest payments of $111,000 based upon a 25-year amortization schedule and a final payment of $10.1 million at loan maturity. Principal of $424,000 was amortized during 2017.


~~(v)~~	The loan is collateralized by Clarendon Center and requires equal monthly principal and interest payments of $753,000 based upon a 25-year amortization schedule and a final payment of $70.5 million at loan maturity. Principal of $3.3 million was amortized during 2017.


~~(w)~~	The loan is collateralized by Severna Park MarketPlace and requires equal monthly principal and interest payments of $207,000 based upon a 25-year amortization schedule and a final payment of $20.3 million at loan maturity. Principal of $1.1 million was amortized during 2017.


~~(x)~~	The loan is collateralized by Kentlands Square II and requires equal monthly principal and interest payments of $240,000 based upon a 25-year amortization schedule and a final payment of $23.1 million at loan maturity. Principal of $1.2 million was amortized during 2017.


~~(y)~~	The loan is collateralized by Cranberry Square and requires equal monthly principal and interest payments of $113,000 based upon a 25-year amortization schedule and a final payment of $10.9 million at loan maturity. Principal of $544,000 was amortized during 2017.


~~(z)~~	~~The loan in the original amount of~~ ~~$73.0 million~~ closed in May 2012, is collateralized by Seven Corners and requires equal monthly principal and interest payments of $463,200 based upon a 25-year amortization schedule and a final payment of $42.3 million at loan maturity. Principal of $1.7 million was amortized during 2017.


~~(aa)~~	The loan is collateralized by Hampshire Langley and requires equal monthly principal and interest payments of $95,400 based upon a 25-year amortization schedule and a final payment of $9.5 million at loan maturity. Principal of $493,000 was amortized in 2017.


~~(bb)~~	The loan is collateralized by Beacon Center and requires equal monthly principal and interest payments of $268,500 based upon a 20-year amortization schedule and a final payment of $17.1 million at loan maturity. Principal of $1.8 million was amortized in 2017.


~~(cc)~~	The loan is collateralized by Seabreeze Plaza and requires equal monthly principal and interest payments of $94,900 based upon a 25-year amortization schedule and a final payment of $9.5 million at loan maturity. Principal of $488,000 was amortized in 2017.


~~(dd)~~	The loan is collateralized by Shops at Fairfax and Boulevard shopping centers and requires equal monthly principal and interest payments totaling $153,300 based upon a 25-year amortization schedule and a final payment of $15.5 million at maturity. Principal of $795,000 was amortized in 2017.

~~(ee) The loan is collateralized by Northrock and requires equal monthly principal and interest payments totaling $84,400 based upon a 25-year amortization schedule and a final payment~~

Table of ~~$8.4 million at maturity. Principal of $407,000 was amortized in 2017.~~Contents

(ff) The loan is collateralized by Burtonsville Town Square and requires equal monthly principal and interest payments of $198,000 based on a 25-year amortization schedule and a final payment of $20.3 million at loan maturity. Principal of $860,000 was amortized in 2017.


~~(gg)~~	The loan is a $71.6 million construction-to-permanent facility that is collateralized by and financed a portion of the construction costs of Park Van Ness. During the construction period, interest was funded by the loan. Effective September 1, 2017, the loan converted to permanent financing and requires monthly principal and

~~interest payments totaling $413,500 based upon a 25-year amortization schedule. A final payment of $39.6 million will be due at maturity. Principal of $369,000 was amortized in 2017.~~


~~(hh)~~	The loan is collateralized by Washington Square and requires equal monthly principal and interest payments of $308,000 based upon a 25-year amortization schedule and a final payment of $31.1 million at loan maturity.

~~(ii)~~

The Company entered into a sale-leaseback transaction with its Olney property and is accounting for that transaction as a secured financing. The arrangement requires monthly payments of $60,400 which increase by 1.5% on May 1, 2015, and every May 1 thereafter. The arrangement provides for a final payment of $14.7 million and has an implicit interest rate of 8.0%. Negative amortization in 2017 totaled $167,000.

~~(jj)~~

The loan is a $275.0 million unsecured revolving credit facility. Interest accrues at a rate equal to the sum of one-month LIBOR plus a spread of 145 basis points. The line may be extended at the Company’s option for one year with payment of a fee of ~~0.15%. Monthly payments, if required, are interest only and vary depending upon the amount outstanding and the applicable interest rate for any given month.~~


~~(kk)~~	The loan is collateralized by Metro Pike Center and requires monthly principal and interest payments of approximately $48,000 and a final payment of $14.2 million at loan maturity. Principal of $347,000 was amortized during 2017.

The carrying value of properties collateralizing the mortgage notes payable totaled $1.0 billion and $957.2 million as of December 31, 2017 and 2016, respectively. The Company’s credit facility requires the Company and its subsidiaries to maintain certain financial covenants, which are summarized below. As of December 31, 2017, the Company was in compliance with all such covenants:

~~maintain tangible net worth, as defined in the loan agreement, of at least $542.1 million plus 80% of the Company’s net equity proceeds received after March 2014;~~

~~limit the amount of debt as a percentage of gross asset value, as defined in the loan agreement, to less than 60% (leverage ratio);~~

~~limit the amount of debt so that interest coverage will exceed 2.0x on a trailing four-quarter basis (interest expense coverage); and~~

~~limit the amount of debt so that interest, scheduled principal amortization and preferred dividend coverage exceeds 1.3x on a trailing four-quarter basis (fixed charge coverage).~~

~~2018 Financing Activity~~

On January 26, 2018, the Company replaced its credit facility. The new credit facility, which can be used for working capital, property acquisitions, development projects or letters of credit, totals $400,000,000 (the “New Facility”), of which $325,000,000 is a revolving credit facility (the “Revolving Line”) and $75,000,000 is a term loan (the “Term Loan”). The Revolving Line matures on January 26,February 23, 2022, which term may be extended by the Company for one additional year, subject to satisfaction of certain conditions. The Term Loan matures on January 26, 2023, and may not be extended. In general, loan availability under the New Facility is primarily determined by operating income from the Company’s existing unencumbered properties. Interest accrues at a rate of LIBOR plus a spread of 135 basis points to 195 basis points under the Revolving Line, and 130 basis points to 190 basis points under the Term Loan, each as determined by certain leverage tests. As of January 26, 2018, the applicable spread for borrowings is 135 basis points under the Revolving Line and 130 basis points under the Term Loan. Saul Centers and certain consolidated subsidiaries of the Operating Partnership have guaranteed the payment obligations of the Operating Partnership under the revolving credit facility.

~~2017 Financing Activity~~

~~On January 18, 2017,~~ the Company closed on a 15-year, non-recourse $40.0 million mortgage loan secured by Burtonsville Town Square. The loan matures in 2032, bears interest at a fixed rate of 3.39%, requires monthly principal and interest payments of $197,900 based on a 25-year amortization schedule and requires a final payment of $20.3 million million at maturity.

~~On August 14, 2017, the Company closed on a $157.0~~$133.0 million construction-to-permanent loan, the proceeds of which will be used to partially fund ~~the Glebe Road development project.~~Hampden House. The loan matures in ~~2035,~~2040, bears interest at a fixed rate of ~~4.67%~~3.90%, and requires interest only payments, which will be funded by the loan, until conversion to permanent. The conversion is expected in the ~~fourth~~first quarter of ~~2021,~~2026, and thereafter, monthly principal and interest payments ~~of $887,900~~ based on a 25-year amortization schedule will be required.

~~Effective September 1, 2017,~~On March 11, 2022, the ~~Company's $71.6~~Company repaid in full the remaining principal balance of $28.3 million ~~construction-to-permanent~~of the mortgage loan ~~which is fully drawn and~~ secured by Lansdowne Town Center, which was scheduled to mature in June 2022.

On June 7, 2022, the Company repaid in full the remaining principal balance of $8.6 million of the mortgage loan secured by Orchard Park, ~~Van Ness, converted~~which was scheduled to ~~permanent financing.~~mature in September 2022.

On August 4, 2022, the Company closed on a 15-year, non-recourse, $25.3 million mortgage secured by Village Center. The loan matures in ~~2032,~~2037, bears interest at a ~~fixed rate~~fixed-rate of ~~4.88%~~4.14%, requires monthly principal and interest payments of ~~$413,500~~$135,200 based on a 25-year amortization schedule and requires a final payment of ~~$39.6~~$13.4 million at maturity. Proceeds were used to repay the remaining balance of approximately $11.2 million on the existing mortgage and reduce the outstanding balance of the Credit Facility. A $0.4 million loss on early extinguishment of debt was recognized.

On ~~November 20, 2017,~~August 23, 2022, the Company entered into two floating-to-fixed interest rate swap agreements to manage the interest rate risk associated with $100.0 million of its variable-rate debt. Each swap agreement became effective October 3, 2022 and each has a $50.0 million notional amount. One agreement terminates on October 1, 2027 and effectively fixes SOFR at 2.96%. The other agreement terminates on October 1, 2030 and effectively fixes SOFR at 2.91%. Because the interest-rate swaps effectively fix SOFR for $100.0 million of variable-rate debt, unless otherwise indicated, $100.0 million of variable-rate debt will be treated as fixed-rate debt for disclosure purposes beginning September 30, 2022. The Company has designated the agreements as cash flow hedges for accounting purposes.

As of December 31, 2022, the fair value of the interest-rate swaps totaled approximately $4.0 million, which is included in Other assets in the Consolidated Balance Sheets. The increase in value from inception of the swaps is reflected in Other Comprehensive Income in the Consolidated Statements of Comprehensive Income.

On August 24, 2022, the Company closed on a ~~15-year,~~7-year, non-recourse, ~~$60.0~~$31.5 million mortgage ~~loan~~ secured by ~~Washington Square.~~Great Falls Center. The loan matures in ~~2032,~~2029, bears interest at a ~~fixed rate~~fixed-rate of ~~3.75%~~3.91%, requires monthly principal and interest payments of ~~$308,500~~$164,700 based on a 25-year amortization schedule and requires a final payment of ~~$31.1 million.~~$25.7 million at maturity. Proceeds were used to repay the remaining balance of approximately ~~$28.1~~$8.0 million on the existing mortgage and reduce the outstanding balance of the ~~revolving credit facility.~~

~~2016 Financing Activity~~

~~In November 2016, the existing loan secured by Beacon Center~~Credit Facility. A $0.2 million loss on early extinguishment of debt was increased by $11.25 million. The interest rate, amortization period and maturity date did not change; the required monthly payment was increased to $268,500. Proceeds were used to partially fund the purchase of the ground which underlies Beacon Center.

~~2015 Financing Activity~~recognized.

On ~~March 3, 2015,~~September 6, 2022, the Company closed on a 15-year, ~~$30.0~~non-recourse, $143.0 million ~~non-recourse~~ mortgage ~~loan~~ secured by ~~Boulevard~~Beacon Center and ~~Shops at Fairfax shopping centers in Fairfax, Virginia.~~Seven Corners Center. The loan matures in ~~2030,~~2037, bears interest at a ~~fixed rate~~fixed-rate of ~~3.69%~~5.05%, requires monthly principal and interest payments ~~totaling $153,300 based on a~~

~~25-year amortization schedule and a final payment~~ of $15.5 million at maturity. Proceeds of the loan were used to repay in full the existing 7.45% mortgage in the amount of $15.2 million, which was scheduled to mature in June 2015 and to pay down outstanding balances under the revolving credit facility.

On April 1, 2015, the Company closed on a 15-year, non-recourse $16.0 million mortgage loan secured by Northrock. The loan matures in 2030, bears interest at a fixed rate of 3.99%, requires monthly principal and interest payments totaling $84,400$840,100 based on a 25-year amortization schedule and requires a final payment of ~~$8.4~~$79.9 million at maturity. Proceeds ~~of the loan~~ were used to repay ~~in full~~ the ~~$14.5 million~~ remaining balance of ~~existing debt secured by Northrock.~~

~~Off-Balance Sheet Arrangements~~

~~The Company has no off-balance sheet arrangements that are reasonably likely to have a current or future material effect~~approximately $85.3 million on the ~~Company’s financial condition, revenue or expenses, results~~existing mortgages and reduce the outstanding balance of ~~operations, liquidity, capital expenditures or capital resources.~~the Credit Facility. This transaction was treated as a modification of the original debt agreement. A prepayment penalty of $5.9 million was incurred, which was deferred and will be amortized as interest expense over the life of the loan and is included as a reduction to notes payable, net in the Consolidated Balance Sheets.

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Funds From Operations

In ~~2017,~~2022, the Company reported Funds From Operations ~~("FFO"~~(“FFO”)¹ available to common stockholders and noncontrolling interests of ~~$94.0~~$103.2 million, a ~~7.1%~~2.4% increase from ~~2016~~2021 FFO available to common stockholders and noncontrolling interests of ~~$87.7~~$100.7 million. FFO available to common stockholders and noncontrolling interests increased primarily due to (a) higher base rent of $3.4 million, (b) lower interest expense, net and amortization of deferred debt costs of $1.5 million, primarily due to higher capitalized interest and (c) lower credit losses on operating lease receivables and corresponding reserves, collectively, of $0.7 million, partially offset by (d) higher general and administrative costs of $2.1 million and (e) lower recovery income, net of expenses of $1.4 million. The following table presents a reconciliation from net income to FFO available to common stockholders and noncontrolling interests for the periods indicated:


	Year ended December 31,
(Dollars in thousands)	2022		2021		2020
Net income	$	65,392	$	61,649	$	50,316
Subtract:
Gain on sale of property	—		—		(278)

Add:
Real estate depreciation and amortization	48,969		50,272		51,126
FFO	114,361		111,921		101,164
Subtract:
Preferred stock dividends	(11,194)		(11,194)		(11,194)

FFO available to common stockholders and noncontrolling interests	$	103,167	$	100,727	$	89,970
Weighted average shares and units:
Basic	33,256		32,029		31,266
Diluted (2)	33,972		33,098		31,267
Basic FFO per share available to common stockholders and noncontrolling interests	$	3.10	$	3.14	$	2.88
Diluted FFO per share available to common stockholders and noncontrolling interests.	$	3.04	$	3.04	$	2.88

Year ended December 31,
(Dollars in thousands) 2017 2016 2015 2014 2013
Net income $ 60,668
$ 56,720
$ 52,931
$ 57,988
$ 34,842
Subtract:
Gains on sales of properties —
(1,013 ) (11 ) (6,069 ) —
Gain on casualty settlement —
—
—
—
(77 )
Add:
Real estate depreciation and amortization 45,694
44,417
43,270
41,203
49,130
FFO 106,362
100,124
96,190
93,122
83,895
Subtract:
Preferred dividends (12,375 ) (12,375 ) (12,375 ) (13,361 ) (13,983 )
Preferred stock redemption —
—
—
(1,480 ) (5,228 )
FFO available to common stockholders and noncontrolling interests $ 93,987
$ 87,749
$ 83,815
$ 78,281
$ 64,684
Average shares and units used to compute FFO per share 29,511
28,990
28,449
27,977
27,330
FFO per share $ 3.18
$ 3.03
$ 2.95
$ 2.80
$ 2.37

¹(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.

(2)Beginning March 5, 2021, fully diluted shares and units includes 1,416,071 limited partnership units held in escrow related to the contribution of Twinbrook Quarter by 1592 Rockville Pike. Half of the units held in escrow were released on October 18, 2021. The remaining units held in escrow are scheduled to be released on October 18, 2023.

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Acquisitions ~~Redevelopments~~ and ~~Renovations~~Redevelopments

Management anticipates that during the coming year, the Company ~~will continue activities related to~~may redevelop certain of the ~~redevelopment of 750 N. Glebe Road~~Current Portfolio Properties and may develop additional freestanding outparcels or ~~expansions within certain of the Shopping Centers. Although not currently planned, it is possible that the Company may redevelop additional Current Portfolio Properties and may develop~~ expansions within certain of the Shopping Centers. Acquisition and development of properties are undertaken only after careful analysis and review, and management’s determination that such properties are expected to provide long-term earnings and cash flow growth. During the coming year, any developments, expansions or acquisitions are expected to be funded with bank borrowings from the Company’s credit line, construction financing, proceeds from the operation of the Company’s dividend reinvestment plan or other external capital resources available to the Company.

The Company has been selectively involved in acquisition, development, redevelopment and renovation activities. It continues to evaluate the acquisition of land parcels for retail and ~~office~~mixed-use development and acquisitions of operating properties for opportunities to enhance operating income and cash flow growth. The ~~following describes significant acquisitions, developments, redevelopments~~Company also continues to analyze redevelopment, renovation and ~~renovations which affected~~expansion opportunities within the ~~Company’s financial position and results of operations in 2017, 2016, and 2015.~~portfolio.

~~Westview Pad~~

~~In February 2015, the Company purchased for~~ ~~$0.9 million, including acquisition costs, a~~ ~~1.1~~ ~~acre retail pad site in Frederick, Maryland, which is contiguous with and an expansion of the Company's other Westview asset.~~

~~700, 726, 730, 750 N. Glebe Road~~

From 2014 through 2016, the Company purchased four adjacent properties for an aggregate $54.0 million located on N. Glebe Road in Arlington, Virginia. The Company is developing approximately 490 residential units and 60,000 square feet of retail space on 2.8 acres of land. Excavation, sheeting and shoring are substantially complete and construction is proceeding on the first three levels of the below grade parking structure. The development is scheduled for substantial completion in early 2020. The total cost of the project, including acquisition of land, is expected to be approximately $275.0 million. In 2017, the Company closed on a $157.0 million construction-to-permanent loan, the proceeds of which will be used to partially finance the project. The Company has executed a 41,500 square foot anchor-lease with Target and leases for an aggregate of 9,000 square feet of retail shop space, resulting in approximately 84% of the retail space being leased.

~~Park Van Ness~~

~~Thruway Pad~~

In August 2016, the Company purchased for $3.1 million, a retail pad site with an occupied 4,200 square foot bank building in Winston Salem, North Carolina, and incurred acquisition costs of $60,400. The property is contiguous with and an expansion of the Company's Thruway Shopping Center.

~~Ashbrook Marketplace~~

In August 2016, the Company entered into an agreement to acquire from B. F. Saul Real Estate Investment Trust (the “Trust”), for an initial purchase price of $8.8 million, approximately 14.3 acres of land located at the intersection of Ashburn Village Boulevard and Russell Branch Parkway in Loudoun County, Virginia. The land is zoned for up to 115,000 square feet of retail development. In order to allow the Company time to pre-lease and complete project plans and specifications, the parties have agreed to a closing date in the second quarter of 2018, at which time the Company will exchange limited partnership units for the land. The number of limited partnership units to be exchanged will be based on the initial purchase price and the average share value (as defined in the agreement) of the Company’s common stock at the time of the exchange. The Company intends to construct a shopping center and, upon stabilization, may be obligated to issue additional limited partnership units to the Trust.

~~Beacon Center~~

In the fourth quarter of 2016, the Company purchased for $22.7 million, including acquisition costs, the land underlying Beacon Center. The land was previously leased by the Company with an annual rent of approximately $60,000. The purchase price was funded in part by an $11.25 million increase to the existing mortgage collateralized by Beacon Center and in part by the Company’s revolving credit facility.

~~Southdale~~

In the fourth quarter of 2016, the Company purchased for $15.3 million, including acquisition costs, the land underlying Southdale. The land was previously leased by the Company with an annual rent of approximately $60,000. The purchase price was funded by the Company’s revolving credit facility.

~~Burtonsville Town Square~~

In January 2017, the Company purchased for $76.4 million, including acquisition costs, Burtonsville Town Square, a 121,000 square foot shopping center located in Burtonsville, Maryland. Burtonsville Town Square is 100% leased and anchored by Giant Food and CVS Pharmacy. The purchase was funded with a new $40.0 million mortgage loan and through the Company's credit line facility. The mortgage bears interest at 3.39%, requires monthly principal and interest payments of $197,900 based upon a 25-year amortization schedule, and has a 15-year maturity. The Company expects to begin construction on a 16,000 square foot small shop expansion in the Spring of 2018, with delivery projected in late 2018. The total development cost is expected to be approximately $5.7 million. Lease negotiations are in progress for over 50% of the space.

~~Olney Shopping Center~~

~~7316 Wisconsin Avenue~~

~~Property Sales~~

~~Crosstown Business Center~~

~~In December 2016, the Company sold for $5.4 million the 197,100 square foot Crosstown Business Center located in Tulsa, Oklahoma and recognized a $1.0 million gain.~~

~~Great Eastern Shopping Center~~

In September 2017, the Company sold for $8.5 million the 255,400 square foot Great Eastern Shopping Center located in District Heights, Maryland. The Company provided $1.28 million second trust financing to the buyer, which bears interest at a fixed rate of 6%, matures in March 2018 and can be extended for six months at the option of the buyer. A $0.5 million gain realized on the sale was deferred and will be recognized when the loan is repaid by the buyer.

Portfolio Leasing Status

The following chart sets forth certain information regarding commercial leases at our properties for the periods indicated.

Total Properties Total Square Footage Percentage Leased
As of December 31,
Shopping
Centers
Mixed-Use
Shopping
Centers
Mixed-Use
Shopping
Centers
Mixed-Use
2017 49
6
7,750,098
1,076,838
94.3 % 94.5 %
2016 49
6
7,882,054
1,076,208
96.0 % 91.0 %
2015 50
6
7,896,499
1,264,488
95.4 % 91.0 %

~~The residential components~~ This section generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions of ~~Clarendon Center~~2020 items and ~~Park Van Ness were 96.7%~~year-to-year comparisons between 2021 and ~~95.9% leased, respectively, at~~2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017. On a same property basis, which excludes the impact of properties not in operation for the entirety of the comparable periods, the Shopping Center leasing percentage decreased to 94.2%~~2021 filed on February 24, 2022.


	Total Properties		Total Square Footage		Percentage Leased
As of December 31,	Shopping Centers	Mixed-Use	Shopping Centers	Mixed-Use	Shopping Centers		Mixed-Use
2022	50	7	7,877,330	1,136,885	94.7	%	82.5	%
2021	50	7	7,874,130	1,136,937	93.4	%	82.3	%

~~from 96.1% and the Mixed-Use leasing percentage increased to 94.5% from 91.0%.~~ The overall ~~portfolio leasing percentage, on a comparative same property basis, decreased to 94.2% at December 31, 2017 from 95.5% at December 31, 2016.~~

~~The 2016 Mixed-Use leasing percentage includes the recently-developed Park Van Ness~~ commercial space and excludes Crosstown Business Center. The residential components of Clarendon Center and Park Van Ness were 97.1% and 72.7% leased at December 31, 2016. On a same property basis, which excludes the impact of properties not in operation for the entirety of the comparable periods, the Shopping Center leasing percentage increased to 96.0% from 95.4% and the Mixed-Use leasing percentage decreased to 90.9% from 92.2%. The overall portfolio leasing percentage, on a comparative same property basis, increased to ~~95.4%~~93.2% at December 31, ~~2016~~2022 from ~~95.0%~~92.0% at December 31, ~~2015.~~2021. Included in the 93.2% of space leased as of December 31, 2022, is approximately 241,000 square feet of space, representing 2.7% of total commercial square footage, that has not been occupied by the tenant. Collectively, these leases are expected to produce approximately $5.4 million of additional annualized base rent, an average of $22.41 per square foot, upon tenant occupancy and following any contractual rent concessions.

The ~~Clarendon Center~~Mixed-Use commercial leasing percentage is composed of commercial leases at office mixed-use properties and residential ~~component was 99.2% leased~~mixed-use properties. The leasing percentage at office mixed-use properties increased to 82.0% at December 31, ~~2015. On a same property basis, which excludes the impact of properties not in operation for the entirety of the comparable periods, the Shopping Center leasing percentage increased to 95.3%~~2022 from ~~95.0%. and the Mixed-Use leasing percentage increased to 91.0% from 90.8%. The overall portfolio leasing percentage, on a comparative same property basis, increased to 94.7%~~81.6% at December 31, ~~2015 from 94.4%~~2021. The retail leasing percentage at residential mixed-use properties decreased to 91.2% at December 31, ~~2014.~~2022 from 92.4% at December 31, 2021.

The following table shows selected data for leases executed in the indicated periods. The information is based on executed leases without adjustment for the timing of occupancy, tenant defaults, or landlord concessions. The base rent for an expiring lease is the annualized contractual base rent, on a cash basis, as of the expiration date of the lease. The base rent for a new or renewed lease is the annualized contractual base rent, on a cash basis, as of the expected rent commencement date. Because tenants that execute leases may not ultimately take possession of their space or pay all of their contractual rent, the changes presented in the table provide information only about trends in market rental rates. The actual changes in rental income received by the Company may be different.

Table of Contents

Base Rent per Square Foot
Year ended December 31, Square Feet
Number
of Leases

New/Renewed
Leases

Expiring
Leases
2017 1,315,192
280
$ 19.60
$ 19.45
2016 1,292,483
244
17.24
17.05
2015 1,583,310
259
15.15
14.82


Commercial Property Leasing Activity					Average Base Rent per Square Foot
Year ended December 31,	Square Feet		Number of Leases		New/Renewed Leases				Expiring Leases
	Shopping Centers	Mixed-Use	Shopping Centers	Mixed-Use	Shopping Centers		Mixed-Use		Shopping Centers		Mixed-Use
2022	1,274,191	86,713	304	17	$	22.50	$	28.04	$	21.37	$	29.66
2021	1,227,362	126,181	256	29	18.91		40.59		19.15		46.83

Additional information about commercial leasing activity during the three months ended December 31, ~~2017,~~2022, is set forth below. The below information includes leases for space which had not been previously leased during the period of the Company's ownership, either as a result of acquisition or development.

New
Leases

Renewed
Leases
Number of leases 20
42
Square feet 61,562
158,007
Per square foot average annualized:
Base rent $ 21.94
$ 21.99
Tenant improvements (3.95 ) (0.27 )
Leasing costs (0.63 ) (0.06 )
Rent concessions (0.50 ) (0.02 )
Effective rents $ 16.86
$ 21.64

During 2017, the Company entered into 475 new or renewed apartment leases, excluding new leases at Park Van Ness. The monthly rent per square foot for the 395 leases for units that were previously occupied decreased to $3.51 from $3.54. During 2016, the Company entered into 216 new or renewed apartment leases. The

monthly rent per square foot for these leases increased to $3.57 from $3.45. During 2015, the Company entered into 222 new or renewed apartment leases. The monthly rent per square foot for these leases was unchanged at $3.45.


	Commercial Property Leasing Activity
	New Leases		First Generation/Development Leases		Renewed Leases
Number of leases	19		1		65
Square feet	62,687		3,200		184,720
Per square foot average annualized:
Base rent	$	25.35	$	60.94	$	30.09
Tenant improvements	(4.32)		(12.50)		(0.16)
Leasing costs	(0.90)		(1.92)		(0.01)
Rent concessions	(0.31)		—		(0.02)
Effective rents	$	19.82	$	46.52	$	29.90

As of December 31, ~~2017, 972,950~~2022, 1,026,830 square feet of Commercial space was subject to leases scheduled to expire in ~~2018.~~2023. Below is information about existing and estimated market base rents per square foot for that space.


Expiring Commercial Property Leases:	Total
Square feet	1,026,830
Average base rent per square foot	$	18.53
Estimated market base rent per square foot	$	18.59

Expiring Leases: Total
Square feet 972,950
Average base rent per square foot $ 17.63
Estimated market base rent per square foot $ 17.66
The Residential portfolio was 97.2% leased at December 31, 2022, compared to 97.1% at December 31, 2021.


Residential Property Leasing Activity		Average Rent per Square Foot
Year ended December 31,	Number of leases	New/Renewed Leases		Expiring Leases
2022	1,005	$	3.44	$	3.22
2021	694	3.22		3.28

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to certain financial market risks, the most predominant being fluctuations in interest ~~rates.~~rates and inflation. Interest rate fluctuations are monitored by management as an integral part of the Company’s overall risk management program, which recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effect on the Company’s results of operations.

~~The Company may, where appropriate, employ derivative instruments, such as interest rate swaps, to mitigate the risk~~

Table of interest rate fluctuations. The Company does not enter into derivatives or other financial instruments for trading or speculative purposes. On June 29, 2010, the Company entered into an interest rate swap agreement with a $45.6 million notional amount to manage the interest rate risk associated with $45.6 million of variable-rate mortgage debt. The swap agreement was effective July 1, 2010, terminates on July 1, 2020 and effectively fixes the interest rate on the mortgage debt at 5.83%. The aggregate fair value of the swap at December 31, 2017 was approximately $1.1 million and is reflected in accounts payable, accrued expenses and other liabilities in the consolidated balance sheet.Contents

The Company is exposed to interest rate fluctuations ~~which~~that will affect the amount of interest expense of its ~~variable rate~~variable-rate debt and the fair value of its ~~fixed rate~~fixed-rate debt. As of December 31, ~~2017,~~2022, the Company had unhedged variable rate indebtedness totaling ~~$75.1~~$164.0 million. If the interest rates on the Company’s unhedged variable rate debt instruments outstanding at December 31, ~~2017~~2022 had been one ~~percent~~percentage point higher or lower, our annual interest expense relating to these debt instruments would have increased ~~by $751,400, based~~or decreased by $1.6 million based on those balances. As of December 31, ~~2017,~~2022, the Company had fixed-rate indebtedness totaling ~~$890.4 million~~$1.07 billion with a weighted average interest rate of ~~5.25%~~4.8%. If interest rates on the Company’s fixed-rate debt instruments at December 31, ~~2017~~2022 had been one ~~percent~~percentage point higher, the fair value of those debt instruments on that date would have decreased by ~~approximately $47.5~~$56.9 million. If interest rates on the Company’s fixed-rate debt instruments at December 31, 2022 had been one percentage point lower, the fair value of those debt instruments on that date would have increased by $62.4 million.

Inflation may impact the Company's results of operations by (a) increasing costs unreimbursed by tenants faster than rents increase and (b) adversely impacting consumer demand at our retail shopping centers, which, in turn, may results in (i) lower percentage rent and/or (ii) the inability of tenants to pay their rent. Inflation may also negatively impact the cost of development projects. While the Company has not been significantly impacted by any of these items in the current year, no assurances can be provided that inflationary pressures will not have a material adverse effect on the Company’s business in the future.

Item 8. Financial Statements and Supplementary Data

The financial statements of the Company and its consolidated subsidiaries are included in this report on the pages indicated, and are incorporated herein by reference:



Page
~~Page~~
F-~~F-1~~1			(a) Reports of Independent Registered Public Accounting Firm – ~~Ernst~~Deloitte & ~~Young LLP.~~Touche LLP (PCAOB ID Number 34).
F-~~F-3~~3			(b) Consolidated Balance Sheets - December 31, ~~2017~~2022 and ~~2016.~~2021.
F-~~F-4~~4			(c) Consolidated Statements of Operations - Years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015.~~2020.
F-~~F-5~~5			(d) Consolidated Statements of Comprehensive Income – Years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015.~~2020.
F-~~F-6~~6			(e) Consolidated Statements of Equity - Years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015.~~2020.
F-~~F-7~~7			(f) Consolidated Statements of Cash Flows - Years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015.~~2020.
F-~~F-8~~8			(g) Notes to Consolidated Financial Statements.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Quarterly Assessment.

The Company carried out an assessment as of December 31, ~~2017~~2022 of the effectiveness of the design and operation of its disclosure controls and procedures and its internal control over financial reporting. This assessment was done under the supervision and with the participation of management, including the Company’s Chairman and Chief Executive Officer, its Senior Vice President-Chief Financial Officer, ~~Secretary and Treasurer,~~ and its Senior Vice President-Chief Accounting Officer and Treasurer as appropriate. Rules adopted by the SEC require that the Company present the conclusions of the Company’s Chairman and Chief Executive Officer, and its Senior Vice President-Chief Financial Officer ~~Secretary and Treasurer~~ about the effectiveness of the Company’s disclosure controls and procedures and the conclusions of the Company’s management about the effectiveness of its internal control over financial reporting as of the end of the period covered by this Annual Report on Form 10-K.

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CEO and CFO Certifications.

Included as Exhibits 31 to this Annual Report on Form 10-K are forms of “Certification” of the Company’s Chairman and Chief Executive Officer, and its Senior Vice President-Chief Financial ~~Officer, Secretary and Treasurer.~~Officer. The forms of Certification are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002. This section of the Annual Report on Form 10-K that you are currently reading is the information concerning the assessment referred to in the Section 302 certifications and this information should be read in conjunction with the Section 302 certifications for a more complete understanding of the topics presented.

Disclosure Controls and Procedures and Internal Control over Financial Reporting.

Management is responsible for establishing and maintaining adequate disclosure controls and procedures and internal control over financial reporting. Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed to provide reasonable assurance that such information is accumulated and communicated to the Company’s management, including the Company’s Chairman and Chief Executive Officer, its Senior Vice President-Chief Financial Officer, ~~Secretary and Treasurer,~~ and its Senior Vice President-Chief Accounting Officer and Treasurer, as appropriate to allow timely decisions regarding required disclosure.

Internal control over financial reporting is a process designed by, or under the supervision of the Company’s Chairman and Chief Executive Officer, its Senior Vice President-Chief Financial Officer, ~~Secretary and Treasurer,~~ and its Senior Vice President-Chief Accounting Officer and Treasurer, and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U. S. GAAP and includes those policies and procedures that:

•pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets;

•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U. S. GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of management or the Company’s Board of Directors; and

•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material adverse effect on the Company’s financial statements.

Limitations on the Effectiveness of Controls.

Management, including the Company’s Chairman and Chief Executive Officer, its Senior Vice President-Chief Financial Officer, ~~Secretary and Treasurer,~~ and its Senior Vice President-Chief Accounting Officer and Treasurer, does not expect that the Company’s disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no assessment of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management’s override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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Scope of the Assessments.

The assessment by the Company’s Chairman and Chief Executive Officer, its Senior Vice President-Chief Financial Officer, ~~Secretary and Treasurer,~~ and its Senior Vice President-Chief Accounting Officer and Treasurer of the Company’s disclosure controls and procedures and the assessment by the Company’s management of the Company’s internal control over financial reporting included a review of procedures and discussions with the Company’s Disclosure Committee and others in the Company. In the course of the assessments, management sought to identify data errors, control problems or acts of fraud and to confirm that appropriate corrective action, including process improvements, were being undertaken. Management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013 Framework) to assess the effectiveness of the Company’s internal control over financial reporting. The evaluation of the Company’s disclosure controls and procedures and internal control over financial reporting is done on a quarterly basis so that the conclusions concerning the effectiveness of disclosure controls can be reported in the Company’s Quarterly Reports on Form 10-Q and Annual Report on Form 10-K.

The Company’s internal control over financial reporting is also evaluated on an ongoing basis by management, other personnel in the Company’s accounting department and the Company’s internal audit function. The effectiveness of the Company’s internal control over financial reporting is audited by the Company’s independent registered public accounting firm. We consider the results of these various assessment activities as we monitor the Company’s disclosure controls and procedures and internal control over financial reporting and when deciding to make modifications as necessary. Management’s intent in this regard is that the disclosure controls and procedures and the internal control over financial reporting will be maintained and updated (including improvements and corrections) as conditions warrant.

Assessment of Effectiveness of Disclosure Controls and Procedures

Based upon the assessments, the Company’s Chairman and Chief Executive Officer, its Senior Vice President-Chief Financial Officer, ~~Secretary and Treasurer,~~ and its Senior Vice President-Chief Accounting Officer and Treasurer have concluded that, as of December 31, ~~2017,~~2022, the Company’s disclosure controls and procedures were effective.

Assessment of Effectiveness of Internal Control Over Financial Reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013 Framework) to assess the effectiveness of the Company’s internal control over financial reporting. Based upon the assessments, the Company’s management has concluded that, as of December 31, ~~2017,~~2022, the Company’s internal control over financial reporting was effective.

The Company’s independent registered public accounting firm has issued a report on the effectiveness of the Company’s internal control over financial reporting, which appears on page F-2 of this Annual Report on Form 10‑K.

Changes in Internal Control Over Financial Reporting.

During the three months ended December 31, ~~2017,~~2022, there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information this Item requires is incorporated by reference to the information under the captions “The Board of Directors,” “Corporate Governance – Ethical Conduct Policy and Senior Financial Officer Code of Ethics,” ~~“Section~~“Delinquent Section 16(a) ~~Beneficial Ownership Reporting Compliance,~~Reports,” “Corporate Governance – Nominating and Corporate Governance Committee – Selection of Director Nominees,” and “Corporate Governance – Audit Committee” of the Company’s Proxy Statement to be filed with the SEC for its annual stockholders’ meeting to be held on May ~~11, 2018~~12, 2023 (the “Proxy Statement”).

Item 11. Executive Compensation

The information this Item requires is incorporated by reference to the information under the captions “Corporate Governance – Compensation of Directors,” “Report of the Compensation Committee,” and “Executive Compensation” of the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The information this Item requires is incorporated by reference to the information under the captions “Equity Compensation Plan Information” and “Security Ownership of Certain Beneficial Owners and Management” of the Proxy Statement.

Item 13. Certain Relationships and Related Transactions and Director Independence

The information this Item requires is incorporated by reference to the information under the captions “Certain Relationships and Transactions” and “Corporate Governance – Board of Directors” of the Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information this Item requires is incorporated by reference to the information contained in the Proxy Statement under the caption “Audit Committee Report – ~~2017~~2022 and ~~2016~~2021 Independent Registered Public Accounting Firm Fee Summary” of the Proxy Statement.

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PART IV

Item 15. Exhibits and Financial Statement Schedules



(a)	The following documents are filed as part of this report:

1.1		Financial Statements

		The following financial statements of the Company and their consolidated subsidiaries are incorporated by reference in Part II, Item 8.

	(a)	Reports of Independent Registered Public Accounting Firm – ~~Ernst~~Deloitte & ~~Young~~Touche LLP — PCAOB ID Number	34

	(b)	Consolidated Balance Sheets - December 31, ~~2017~~2022 and ~~2016~~2021

	(c)	Consolidated Statements of Operations - Years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015.~~2020.

	(d)	Consolidated Statements of Comprehensive Income – Years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015.~~2020.

	(e)	Consolidated Statements of Equity - Years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015.~~2020.

	(f)	Consolidated Statements of Cash Flows - Years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015.~~2020.

	(g)	Notes to Consolidated Financial Statements

2.		Financial Statement Schedule and Supplementary Data

	(a)	Selected Quarterly Financial Data for the Company are incorporated by reference in Part II, Item 8

	(b)	Schedule of the Company:

		Schedule III - Real Estate and Accumulated Depreciation

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

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		~~Exhibits~~
				Exhibits
3.
3.			(a)	First Amended and Restated Articles of Incorporation of Saul Centers, Inc. filed with the Maryland Department of Assessments and Taxation on August 23, 1994 and filed as Exhibit 3.(a) of the 1993 Annual Report of the Company on Form 10-K are hereby incorporated by reference. Articles of Amendment to the First Amended and Restated Articles of Incorporation of Saul Centers, Inc., filed with the Maryland Department of Assessments and Taxation on May 28, 2004 and filed as Exhibit 3.(a) of the June 30, 2004 Quarterly Report of the Company is hereby incorporated by reference.Articles of Amendment to the First Amended and Restated Articles of Incorporation of Saul Centers, Inc., filed with the Maryland Department of Assessments and Taxation on May 26, 2006 and filed as Exhibit 3.(a) of the Company’s Current Report on Form 8-K filed May 30, 2006 is hereby incorporated by reference.Articles of Amendment to the First Amended and Restated Articles of Incorporation of Saul Centers, Inc., filed with the Maryland State Department of Assessments and Taxation on May 14, 2013 and filed as Exhibit 3.(a) of the Company's Current Report on Form 8-K filed May 14, 2013, is hereby incorporated by reference.

			(b)	Second Amended and Restated Bylaws of Saul Centers, Inc. as in effect at and after ~~August 24, 1993 and as of August 26, 1993~~June 22, 2017 and filed as Exhibit 3.(b) ~~of the 1993 Annual Report of the Company on Form 10-K are hereby incorporated by reference.~~ ~~Amendment No. 1 to Amended and Restated Bylaws of Saul Centers, Inc. adopted November 29, 2007 and filed as Exhibit 3(b)~~ of the Company’s Current Report on Form 8-K filed ~~December 3, 2007~~June 28, 2017 is hereby incorporated by reference.

			(c)	Articles Supplementary to First Amended and Restated Articles of Incorporation of the Company, dated October 30, 2003, filed as Exhibit 2 to the Company’s Current Report on Form 8-A dated October 31, 2003, is hereby incorporated by reference.

	~~(d)~~	Articles Supplementary to First Amended and Restated Articles of Incorporation of the Company, as amended, dated March 26, 2008, filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed March 27, 2008, is hereby incorporated by reference.

	~~(e)~~	Articles Supplementary to First Amended and Restated Articles of Incorporation of the Company, dated February 6, 2013, filed as Exhibit 3.2 to Saul Centers’ Registration Statement on Form 8-A, filed February 7, 2013, is hereby incorporated by reference.

	~~(f)~~	Articles Supplementary to First Amended and Restated Articles of Incorporation of the Company, dated November 10, 2014, filed as Exhibit 3.2 of the Company's Current Report on Form 8-K, dated November 12, 2014, is hereby incorporated by reference.

	~~(g)~~	Articles Supplementary to First Amended and Restated Articles of Incorporation of the Company, dated January 19, 2018, filed as Exhibit 3.3 of the Company’s Registration Statement on Form 8-A filed January 23, 2018 is hereby incorporated by reference.

4.			~~(a)~~(d)	~~Deposit Agreement, dated February 6, 2013, among~~Articles Supplementary to First Amended and Restated Articles of Incorporation of the Company, Continental Stock Transfer & Trust Company, as Depositary, and the holders of depositary receipts, each representing 1/100th of a share of 6.875% Series C Cumulative Redeemable Preferred Stock of Saul Centers, Inc.dated September 12, 2019, filed as Exhibit ~~4.1 to Saul Centers’~~3.2 of the Company’s Registration Statement on Form 8-A ~~on February 7, 2013~~filed September 17, 2019 is hereby incorporated by reference.

4.			~~(b)~~(a)	Form specimen of receipt representing the depositary shares, each representing 1/100th of a share of 6.875% Series C Cumulative Redeemable Preferred Stock of Saul Centers, Inc. and included as part of Exhibit 4.2 to Saul Centers’ Registration Statement on Form 8-A on February 7, 2013 is hereby incorporated by reference.

	~~(c)~~	First Amendment to Deposit Agreement, dated November 12, 2014, among the Company, Continental Stock Transfer & Trust Company, as Depositary, and the holders of depositary receipts, each representing 1/100th of a share of 6.875% Series C Cumulative Redeemable Preferred Stock of Saul Centers, Inc. filed as Exhibit 4.2 to of the Company's Current Report on Form 8-K, dated November 12, 2014, is hereby incorporated by reference.

	~~(d)~~	Deposit Agreement, dated January 23, 2018, among the Company, Continental Stock Transfer & Trust Company, as Depositary, and the holders of depositary receipts, filed as Exhibit 4.2 of the Registrant’s Registration Statement on Form 8-A filed January 23, 2018 is hereby incorporated by reference.

			~~(e)~~(b)	Specimen certificate representing the 6.125% Series D Cumulative Redeemable Preferred Stock, par value $0.01 per share, of the Company, filed as Exhibit 4.4 of the Company’s Registration Statement on Form 8-A filed January 23, 2018 is hereby incorporated by reference.



~~10.~~	~~(a)~~(c)	Deposit Agreement, dated September 17, 2019, among the Company, Continental Stock Transfer & Trust Company, as Depositary, and the holders of depositary receipts, filed as Exhibit 4.1 of the Registrant’s Registration Statement on Form 8-A filed September 17, 2019 is hereby incorporated by reference.

	(d)	Specimen certificate representing the 6.000% Series E Cumulative Redeemable Preferred Stock, par value $0.01 per share, of the Company, filed as Exhibit 4.2 of the Company’s Registration Statement on Form 8-A filed September 17, 2019 is hereby incorporated by reference.

	(e)	Description of Registrant's Securities, filed as Exhibit 4.(h) of the 2019 Annual Report of the Company on Form 10-K is hereby incorporated by reference.

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10.	(a)	First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit No. 10.1 to Registration Statement No. 33-64562 is hereby incorporated by reference. The First Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership, the Second Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership, and the Third Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit 10.(a) of the 1995 Annual Report of the Company on Form 10-K is hereby incorporated by reference. The Fourth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit 10.(a) of the March 31, 1997 Quarterly Report of the Company is hereby incorporated by reference.The Fifth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit 4.(c) to Registration Statement No. 333-41436, is hereby incorporated by reference.The Sixth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit 10.(a) of the September 30, 2003 Quarterly Report of the Company on Form 10-Q is hereby incorporated by reference. The Seventh Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit 10.(a) of the December 31, 2003 Annual Report of the Company on Form 10-K is hereby incorporated by reference.The Eighth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit 10.(a) of the December 31, 2007 Annual Report of the Company on Form 10-K is hereby incorporated by reference.The Ninth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit 10.(a) of the March 31, 2008 Quarterly Report of the Company on Form 10-Q is hereby incorporated by reference. The Tenth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit 10.(a) of the March 31, 2008 Quarterly Report of the Company on Form 10-Q is hereby incorporated by reference.The Eleventh Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit 10.(a) of the September 30, 2011 Quarterly Report of the Company on Form 10-Q is hereby incorporated by reference.The Twelfth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit 10.1 of the Current Report of the Company on Form 8-K dated February 12, 2013 is hereby incorporated by reference.The Thirteenth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership filed as Exhibit 10.1 of the Current Report of the Company on Form 8-K dated November 12, 2014, is hereby incorporated by reference.The Fourteenth Amendment to the First Amended and Restated Agreement of Limited Partnership of the Saul Holdings Limited Partnership, filed as Exhibit 10.1 of the Current Report of the Company on Form 8-K dated January 23, 2018, is hereby incorporated by reference.The Fifteenth Amendment to the First Amended and Restated Agreement of Limited Partnership of the Saul Holdings Limited Partnership, filed as Exhibit 10.1 of the Current Report of the Company on Form 8-K dated May 14, 2018, is hereby incorporated by reference.The Sixteenth Amendment to the First Amended and Restated Agreement of Limited Partnership of the Saul Holdings Limited Partnership, filed as Exhibit 10.1 of the Current Report of the Company on Form 8-K dated September 17, 2019, is hereby incorporated by reference.The Seventeenth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership, filed as Exhibit 10.(a) of the June 30, 2021 Quarterly Report of the Company on Form 10-Q is hereby incorporated by reference. The Eighteenth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership, filed as Exhibit 10.(a) of the September 30, 2021 Quarterly Report of the Company on Form 10-Q is hereby incorporated by reference.

	(b)	First Amended and Restated Agreement of Limited Partnership of Saul Subsidiary I Limited Partnership and Amendment No. 1 thereto filed as Exhibit 10.2 to Registration Statement No. 33-64562 are hereby incorporated by reference. The Second Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Subsidiary I Limited Partnership, the Third Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Subsidiary I Limited Partnership and the Fourth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Subsidiary I Limited Partnership as filed as Exhibit 10.(b) of the 1997 Annual Report of the Company on Form 10-K are hereby incorporated by reference.

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			(c)			First Amended and Restated Agreement of Limited Partnership of Saul Subsidiary II Limited Partnership and Amendment No. 1 thereto filed as Exhibit 10.3 to Registration Statement No. 33-64562 are hereby incorporated by reference. The Second Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Subsidiary II Limited Partnership filed as Exhibit 10.(c) of the June 30, 2001 Quarterly Report of the Company is hereby incorporated by reference.The Third Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Subsidiary II Limited Partnership filed as exhibit 10.(c) of the 2006 Annual Report of the Company on Form 10-K are hereby incorporated by reference.The Fourth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Subsidiary II Limited Partnership as filed as Exhibit 10.(c) of the 2009 Annual Report of the Company on Form 10-K is hereby incorporated by reference.The Fifth Amendment to our First Amended and Restated Agreement of Limited Partnership of Saul Subsidiary II Limited Partnership filed as Exhibit 10.(c) of the September 30, 2016 Quarterly Report of the Company is hereby incorporated by reference.

			(d)			Property Conveyance Agreement filed as Exhibit 10.4 to Registration Statement No. 33- 64562 is hereby incorporated by reference.

			(e)			Management Functions Conveyance Agreement filed as Exhibit 10.5 to Registration Statement No. 33-64562 is hereby incorporated by reference.

			(f)			Registration Rights and Lock-Up Agreement filed as Exhibit 10.6 to Registration Statement No. 33-64562 is hereby incorporated by reference.



		(g)	Exclusivity and Right of First Refusal Agreement filed as Exhibit 10.7 to Registration Statement No. 33-64562 is hereby incorporated by reference.

		(h)	Agreement of Assumption dated as of August 26, 1993 executed by Saul Holdings Limited Partnership and filed as Exhibit 10.(i) of the 1993 Annual Report of the Company on Form 10-K is hereby incorporated by reference.

		(i)	Deferred Compensation Plan for Directors, dated as of April 23, 2004 and filed as Exhibit 10.(k) of the June 30, 2004 Quarterly Report of the Company is hereby incorporated by reference.*

		(j)	Amended and Restated Credit Agreement, dated as of June 24, 2014, by and among Saul Holdings Limited Partnership as Borrower; Wells Fargo Bank, National Association, as Administrative Agent and Sole Lead Arranger; JP Morgan Chase Bank, N.A., as Syndication Agent; and Wells Fargo Bank, National Association, JP Morgan Chase Bank, N.A., Capital One, N.A. and Citizens Bank of Pennsylvania as Lenders, as filed as Exhibit 10.1 of the Company's Current Report on Form 8-K, dated June 25, 2014, is hereby incorporated by reference.

~~(k)~~	Amended and Restated Guaranty, dated as of June 24, 2014, by and between Saul Centers, Inc., as Guarantor, and Wells Fargo Bank, National Association, as Administrative Agent and Sole Lead Arranger for itself and other financial institutions as Lenders, as filed as Exhibit 10.2 of the Company's Current Report on Form 8-K, dated June 25, 2014, is hereby incorporated by reference.

~~(l)~~	Credit Agreement dated January 26, 2018, by and among: the Saul Holdings Limited Partnership, as Borrower; Wells Fargo Bank, National Association, ~~(“Wells Fargo”),~~ as Administrative Agent; Capital One, National Association, ~~(“Capital One”),~~ as Syndication Agent; TD Bank, N.A. ~~(“TD Bank”)~~ and U.S. Bank National Association, ~~(“U.S. Bank”)~~, as Documentation Agents; and Wells Fargo, Capital One, TD Bank, U.S. Bank, Regions Bank and Associated Bank, National Association, ~~(“Associated Bank”),~~ as Lenders ~~(the “Agreement”)~~ and filed as Exhibit 10.1 of the Current Report of the Company on Form 8‑K dated January 26, 2018, is hereby incorporated by reference.

		~~(m)~~(k)	Guaranty dated January 26, 2018, by and between: Saul Centers, Inc.; Saul Subsidiary I Limited Partnership; Saul Subsidiary II Limited Partnership; Briggs Chaney Plaza, LLC; Kentlands Lot 1, LLC; 11503 Rockville Pike LLC; Rockville Pike Holdings LLC; 1500 Rockville Pike LLC; Smallwood Village Center LLC; Westview Village Center LLC; Avenel VI, Inc.; Metro Pike Center LLC; and Washington Square Center, LLC, as Guarantors; in favor of Wells Fargo Bank, National Association, as Administrative Agent for the lenders from time to time party to that certain Credit Agreement dated January 26, 2018 and filed as Exhibit 10.2 of the Current Report of the Company on Form 8 K dated January 26, 2018, is hereby incorporated by reference.

		~~(n)~~(l)	Credit Agreement dated August 31, 2021, by and among: the Partnership, as Borrower; Wells Fargo Bank, National Association, as Administrative Agent; Capital One, National Association, as Syndication Agent; TD Bank, N.A. and U.S. Bank National Association, as Documentation Agents; and Wells Fargo, Capital One, TD Bank, U.S. Bank, Regions Bank, PNC Bank and Associated Bank, National Association, as Lenders and filed as Exhibit 10.1 to the Current Report of the Company on Form 8-K dated September 1, 2021, is hereby incorporated by reference.

		(m)	Guaranty dated August 31, 2021, by and between: Saul Centers, Inc.; Saul Subsidiary I Limited Partnership; Saul Subsidiary II Limited Partnership; Briggs Chaney Plaza, LLC; Kentlands Lot 1, LLC; 11503 Rockville Pike LLC; Rockville Pike Holdings LLC; 1500 Rockville Pike LLC; Smallwood Village Center LLC; Westview Village Center LLC; Avenel VI, Inc.; Metro Pike Center LLC; and Washington Square Center LLC, as Guarantors; in favor of Wells Fargo Bank, National Association, as Administrative Agent for the lenders from time to time party to that certain Credit Agreement dated August 31, 2021 and filed as Exhibit 10.1 to the Current Report of the Company on Form 8-K dated September 1, 2021, is hereby incorporated by reference.

		(n)	First Amendment to Credit Agreement dated October 3, 2022, by and among: the Partnership, as Borrower; Wells Fargo Bank, National Association, as Administrative Agent; Capitol One, National Association, as Syndication Agent; TD Bank, N.A., U.S. Bank National Association, Regions Bank, PNC Bank, National Association, and Associated Bank, National Association, as Lenders and filed as Exhibit 10.1 of the September 30, 2022 Quarterly Report of the Company, is hereby incorporated by reference.

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		(o)	The Saul Centers, Inc. 2004 Stock Plan, as amended on April 25, 2008, ~~and~~ May 10, 2013 and ~~filed as Exhibit 10.(a) of the Company's Current Report on Form 8-K filed on~~ May ~~14, 2013,~~3, 2019, is hereby incorporated by reference.

		~~(o)~~(p)	Form of Director Stock Option Agreements, as filed as Exhibit 10.(j) of the September 30, 2004 Quarterly Report of the Company, is hereby incorporated by reference.*

		~~(p)~~(q)	Form of Officer Stock Option Grant Agreements, as filed as Exhibit 10.(k) of the September 30, 2004 Quarterly Report of the Company, is hereby incorporated by reference.*

		~~(q)~~(r)	Promissory Note, dated as of March 23, 2011, by Clarendon Center LLC to The Prudential Life Insurance Company of America as filed as Exhibit 10.(a) of the Company’s Current Report on Form 8-K dated April 28, 2011, is hereby incorporated by reference.

~~(r)~~	~~Deed of Trust, Security Agreement~~Amended and Fixture Filing, dated as of March 23, 2011, by Clarendon Center LLC to Lawyers Title Realty Services, Inc. as trustee for the benefit of The Prudential Insurance Company of America, as beneficiary, as filed as Exhibit 10.(b) of the Company’s Current Report on Form 8-K dated April 28, 2011, is hereby incorporated by reference.

~~(s)~~	Restated Shared Services Agreement dated as of January 1, 2018, between B. F. Saul Company and Saul Centers, Inc., filed as Exhibit 10.(s) of the 2017 Annual Report of the Company on Form 10-K is ~~filed herewith.~~hereby incorporated by reference.

		~~(t)~~(s)	Purchase Agreement, dated as of August 9, 2011, by and among the Company, Saul Holdings Limited Partnership and B. F. Saul Real Estate Investment Trust and filed as Exhibit 10.(r) of the September 30, 2011 Quarterly Report of the Company is hereby incorporated by reference.

		~~(u)~~(t)	~~Promissory Note, dated~~First Amendment to Amended and Restated Shared Services Agreement effective as of ~~August 14, 2017, by 750 North Glebe LLC to The Northwestern Mutual Life Insurance~~January 1, 2019 , between B. F. Saul Company asand Saul Centers, Inc. filed as Exhibit 10.~~(a)~~(1) of the ~~September~~June 30, ~~2017~~2019 Quarterly Report of the Company, is hereby incorporated by reference.



	~~(v)~~(u)	~~Deed of Trust and Security~~Contribution Agreement, dated as of ~~August 14, 2017,~~November 5, 2019, by ~~750 North Glebe~~and between Saul Holdings Limited Partnership and 1592 Rockville Pike LLC filed as Exhibit 10(u) of the December 31, 2020 Annual Report of the Company is hereby incorporated by reference.

	(v)	First Amendment to ~~Eric J. Ekeroth as trustee for~~ the ~~benefit of The Northwestern Mutual Life Insurance Company, as beneficiary,~~Contribution Agreement, entered into on March 5, 2021, by and between Saul Holdings Limited Partnership and 1592 Rockville Pike LLC, as filed as Exhibit 10.~~(b)~~(a) of the ~~September 30, 2017~~March 31, 2021 Quarterly Report of the Company is hereby incorporated by reference.

21.		Subsidiaries of Saul Centers, Inc. is filed herewith.

~~23.~~23.1		Consent of Independent Registered Public Accounting Firm is filed herewith.

24.		Power of Attorney (included on signature page).

31.		Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer and Chief Financial Officer are filed herewith.**

32.		Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer are filed herewith.**

101.		The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2022, formatted in Extensible Business Reporting Language (“XBRL”): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of changes in stockholders’ equity and comprehensive income, (iv) consolidated statements of cash flows, and (v) the notes to the consolidated financial statements.

104.1		Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

* - Management Contract of Compensatory Plan or Agreement

** - In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

Item 16. Form 10-K Summary

Not applicable.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	SAUL CENTERS, INC.
		(Registrant)

Date:	~~February 27, 2018~~March 2, 2023	/s/ B. Francis Saul II
		B. Francis Saul II
		Chairman of the Board of Directors &and Chief Executive Officer ~~(Principal~~ (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons in the capacities indicated. Each person whose signature appears below hereby constitutes and appoints each of B. Francis Saul II ~~J. Page Lansdale~~ and ~~Scott V. Schneider~~Carlos L. Heard as his attorney-in-fact and agent, with full power of substitution and resubstitution for him in any and all capacities, to sign any or all amendments to this Report and to file same, with exhibits thereto and other documents in connection therewith, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that such attorney-in-fact and agent or his substitutes may do or cause to be done by virtue hereof.



~~Date:~~		~~February 27, 2018~~		~~/s/ J. Page Lansdale~~
				~~J. Page Lansdale, President and Director~~
Date:		March 2, 2023
~~Date:~~	~~February 27, 2018~~		/s/ Philip D. Caraci
				Philip D. Caraci, Vice Chairman

Date:		~~February 27, 2018~~March 2, 2023		/s/ ~~Scott V. Schneider~~D. Todd Pearson
				~~Scott V. Schneider,~~D. Todd Pearson President and Chief Operating Officer

Date:		March 2, 2023		/s/ Carlos L. Heard
				Carlos L. Heard, Senior Vice President ~~Treasurer~~ and ~~Secretary~~Chief Financial Officer (Principal Financial Officer)

Date:		~~February 27, 2018~~March 2, 2023		/s/ Joel A. Friedman
				Joel A. Friedman, Senior Vice President-Chief Accounting Officer and Treasurer (Principal Accounting Officer)

Date:		~~February 27, 2018~~March 2, 2023		/s/ John E. Chapoton
				John E. Chapoton, Director

Date:		~~February 27, 2018~~March 2, 2023		/s/ G. Patrick Clancy, Jr.
				G. Patrick Clancy, Jr., Director



Date:	~~February 27, 2018~~March 2, 2023	/s/ ~~Philip C. Jackson Jr.~~J. Page Lansdale
		~~Philip C. Jackson Jr.,~~J. Page Lansdale, Director

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Date:		March 2, 2023	/s/ Willoughby B. Laycock
~~Date:~~		~~February 27, 2018~~	~~/s/ Patrick F. Noonan~~Willoughby B. Laycock, Director
			~~Patrick F. Noonan, Director~~
Date:		March 2, 2023
~~Date:~~	~~February 27, 2018~~	/s/ H. Gregory Platts
			H. Gregory Platts, Director

Date:		~~February 27, 2018~~March 2, 2023	/s/ Earl A. Powell III
			Earl A. Powell III, Director

Date:		March 2, 2023	/s/ Andrew M. Saul II
			Andrew M. Saul II Director

Date:		~~February 27, 2018~~March 2, 2023	/s/ Mark Sullivan III
			Mark Sullivan III, Director

Date:		~~February 27, 2018~~March 2, 2023
			John R. Whitmore, Director

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~~Report of Independent Registered Public Accounting Firm~~Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the ~~Stockholders~~stockholders and the Board of Directors of Saul Centers, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Saul Centers, Inc. and subsidiaries (the ~~Company)~~“Company”) as of December 31, ~~2017~~2022 and ~~2016,~~2021, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, ~~2017,~~2022, and the related notes and ~~financial statement~~the schedule listed in the Index at Item 15(a)2(b) (collectively referred to as the ~~“consolidated financial statements”~~"financial statements"). In our opinion, the ~~consolidated~~ financial statements present fairly, in all material respects, the financial position of the Company atas of December 31, ~~2017~~2022 and ~~2016,~~2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2017,~~2022, in conformity with ~~U.S.~~accounting principles generally accepted ~~accounting principles.~~in the United States of America.

We have also ~~have~~ audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the ~~Company’s~~Company's internal control over financial reporting as of December 31, ~~2017,~~2022, based on criteria established in Internal ~~Control-Integrated~~Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~(2013 framework),~~ and our report dated ~~February 27, 2018~~March 2, 2023, expressed an unqualified opinion ~~thereon.~~on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the ~~Company’s~~Company's management. Our responsibility is to express an opinion on the ~~Company’s~~Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ ~~Ernst~~Deloitte & ~~Young~~Touche LLP

McLean, Virginia

March 2, 2023

We have served as the ~~Company’s~~Company's auditor since ~~2002.~~2018.

F-1

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~~Tysons, Virginia~~

~~February 27, 2018~~

~~Report of Independent Registered Public Accounting Firm~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the ~~Stockholders~~stockholders and the Board of Directors of Saul Centers, Inc.

Opinion on Internal Control over Financial Reporting

We have audited ~~Saul Centers, Inc.’s~~the internal control over financial reporting of Saul Centers, Inc. and subsidiaries (the “Company”) as of December 31, ~~2017,~~2022, based on criteria established in Internal ~~Control-Integrated~~Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~(2013 framework), (the COSO criteria)~~(COSO). In our opinion, ~~Saul Centers, Inc. (the Company)~~the Company maintained, in all material respects, effective internal control over financial reporting as of

December 31, ~~2017,~~2022, based on ~~the COSO criteria.~~criteria established in Internal Control – Integrated Framework (2013)issued by COSO.

We have also ~~have~~ audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the ~~2017~~ consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated

~~February 27, 2018~~ March 2, 2023, expressed an unqualified opinion ~~thereon.~~on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Assessment of Effectiveness of Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control ~~Over~~over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ ~~Ernst~~Deloitte & ~~Young~~Touche LLP

~~Tysons,~~

McLean, Virginia

~~February 27, 2018~~March 2, 2023

F-2

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Saul Centers, Inc.

CONSOLIDATED BALANCE SHEETS


	December 31,							December 31,
(Dollars in thousands, except per share amounts)	2017			2016			(Dollars in thousands, except per share amounts)	2022		2021
Assets							Assets
Real estate investments							Real estate investments
Land	$	450,256		$	422,546		Land	$	511,529	$	511,529
Buildings and equipment	1,261,830			1,214,697			Buildings and equipment	1,576,924		1,566,686
Construction in progress	91,114			63,570			Construction in progress	319,683		205,911
	1,803,200			1,700,813				2,408,136		2,284,126
Accumulated depreciation	(488,166		)	(458,279		)	Accumulated depreciation	(688,475)		(650,113)
	1,315,034			1,242,534				1,719,661		1,634,013
Cash and cash equivalents	10,908			8,322			Cash and cash equivalents	13,279		14,594
Accounts receivable and accrued income, net	54,057			52,774			Accounts receivable and accrued income, net	56,323		58,659
Deferred leasing costs, net	27,255			25,983			Deferred leasing costs, net	22,388		24,005
Prepaid expenses, net	5,248			5,057

Other assets	9,950			8,355			Other assets	21,651		15,490
Total assets	$	1,422,452		$	1,343,025		Total assets	$	1,833,302	$	1,746,761
Liabilities							Liabilities
Mortgage notes payable	$	897,888		$	783,400		Mortgage notes payable	$	961,577	$	941,456
Revolving credit facility payable	60,734			48,217			Revolving credit facility payable	161,941		103,167
Construction loan payable	—			68,672
Dividends and distributions payable	18,520			17,953
Term loan facility payable							Term loan facility payable	99,382		99,233

Accounts payable, accrued expenses and other liabilities	23,123			20,838			Accounts payable, accrued expenses and other liabilities	42,978		25,558
Deferred income	29,084			30,696			Deferred income	23,169		25,188
Dividends and distributions payable							Dividends and distributions payable	22,453		21,672
Total liabilities	1,029,349			969,776			Total liabilities	1,311,500		1,216,274
Equity							Equity
Preferred stock, 1,000,000 shares authorized:							Preferred stock, 1,000,000 shares authorized:
Series C Cumulative Redeemable, 72,000 shares issued and outstanding	180,000			180,000
Common stock, $0.01 par value, 40,000,000 shares authorized, 22,123,128 and 21,704,359 shares issued and outstanding, respectively	221			217

Series D Cumulative Redeemable, 30,000 shares issued and outstanding							Series D Cumulative Redeemable, 30,000 shares issued and outstanding	75,000		75,000
Series E Cumulative Redeemable, 44,000 shares issued and outstanding							Series E Cumulative Redeemable, 44,000 shares issued and outstanding	110,000		110,000
Common stock, $0.01 par value, 40,000,000 shares authorized, 24,016,009 and 23,840,471 shares issued and outstanding, respectively							Common stock, $0.01 par value, 40,000,000 shares authorized, 24,016,009 and 23,840,471 shares issued and outstanding, respectively	240		238
Additional paid-in capital	352,590			328,171			Additional paid-in capital	446,301		436,609
Accumulated deficit	(197,710		)	(188,584		)
Accumulated other comprehensive loss	(696		)	(1,299		)
Partnership units in escrow							Partnership units in escrow	39,650		39,650
Distributions in excess of accumulated earnings							Distributions in excess of accumulated earnings	(273,559)		(256,448)
Accumulated other comprehensive income							Accumulated other comprehensive income	2,852		—
Total Saul Centers, Inc. equity	334,405			318,505			Total Saul Centers, Inc. equity	400,484		405,049
Noncontrolling interests	58,698			54,744			Noncontrolling interests	121,318		125,438
Total equity	393,103			373,249			Total equity	521,802		530,487
Total liabilities and equity	$	1,422,452		$	1,343,025		Total liabilities and equity	$	1,833,302	$	1,746,761

The Notes to Financial Statements are an integral part of these statements.

F-3

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Saul Centers, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

For The Year Ended December 31,
(Dollars in thousands, except per share amounts) 2017 2016 2015
Revenue
Base rent $ 181,141
$ 172,381
$ 168,303
Expense recoveries 35,347
34,269
32,911
Percentage rent 1,458
1,379
1,608
Other 9,339
9,041
6,255
Total revenue 227,285
217,070
209,077
Operating expenses
Property operating expenses 27,689
27,527
26,565
Provision for credit losses 906
1,494
915
Real estate taxes 26,997
24,680
23,663
Interest expense and amortization of deferred debt costs 47,225
45,683
45,165
Depreciation and amortization of deferred leasing costs 45,694
44,417
43,270
General and administrative 18,176
17,496
16,353
Acquisition related costs —
60
84
Predevelopment expenses —
—
132
Total operating expenses 166,687
161,357
156,147
Operating income 60,598
55,713
52,930
Change in fair value of derivatives 70
(6 ) (10 )
Gains on sales of properties —
1,013
11
Net Income 60,668
56,720
52,931
Income attributable to noncontrolling interests (12,411 ) (11,441 ) (10,463 )
Net income attributable to Saul Centers, Inc. 48,257
45,279
42,468
Preferred dividends (12,375 ) (12,375 ) (12,375 )
Net income available to common stockholders $ 35,882
$ 32,904
$ 30,093
Per share net income available to common stockholders
Basic $ 1.64
$ 1.53
$ 1.42
Diluted $ 1.63
$ 1.52
$ 1.42


	For The Year Ended December 31,
(Dollars in thousands, except per share amounts)	2022		2021		2020
Revenue
Rental revenue	$	240,837	$	234,515	$	220,281


Other	5,023		4,710		4,926
Total revenue	245,860		239,225		225,207
Expenses
Property operating expenses	35,934		32,881		28,857

Real estate taxes	28,588		28,747		29,560





Interest expense, net and amortization of deferred debt costs	43,937		45,424		46,519
Depreciation and amortization of deferred leasing costs	48,969		50,272		51,126
General and administrative	22,392		20,252		19,107


Loss on early extinguishment of debt	648		—		—
Total expenses	180,468		177,576		175,169


Gain on sale of property	—		—		278






Net Income	65,392		61,649		50,316
Noncontrolling interests


Income attributable to noncontrolling interests	(15,198)		(13,260)		(9,934)
Net income attributable to Saul Centers, Inc.	50,194		48,389		40,382

Preferred stock dividends	(11,194)		(11,194)		(11,194)


Net income available to common stockholders	$	39,000	$	37,195	$	29,188
Per share net income available to common stockholders


Basic and diluted	$	1.63	$	1.57	$	1.25

The Notes to Financial Statements are an integral part of these statements.

F-4

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Saul Centers, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	For The Year Ended December 31,										For The Year Ended December 31,
(Dollars in thousands)	2017			2016			2015			(Dollars in thousands)	2022		2021		2020
Net income	$	60,668		$	56,720		$	52,931		Net income	$	65,392	$	61,649	$	50,316
Other comprehensive income										Other comprehensive income
Unrealized gain on cash flow hedge	812			678			124
Change in unrealized gain on cash flow hedge										Change in unrealized gain on cash flow hedge	3,962		—		—
Total comprehensive income	61,480			57,398			53,055			Total comprehensive income	69,354		61,649		50,316
Comprehensive income attributable to noncontrolling interests	(12,620		)	(11,616		)	(10,495		)	Comprehensive income attributable to noncontrolling interests	(16,308)		(13,260)		(9,934)
Total comprehensive income attributable to Saul Centers, Inc.	48,860			45,782			42,560			Total comprehensive income attributable to Saul Centers, Inc.	53,046		48,389		40,382
Preferred dividends	(12,375		)	(12,375		)	(12,375		)
Preferred stock dividends										Preferred stock dividends	(11,194)		(11,194)		(11,194)

Total comprehensive income available to common stockholders	$	36,485		$	33,407		$	30,185		Total comprehensive income available to common stockholders	$	41,852	$	37,195	$	29,188

The Notes to Financial Statements are an integral part of these statements.

F-5

CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in thousands, except per share amounts)
Preferred
Stock

Common
Stock

Additional
Paid-in
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
(Loss)

Total Saul
Centers,
Inc.

Noncontrolling
Interests
Total
Balance, December 31, 2014 $ 180,000
$ 209
$ 287,995
$ (173,774 ) $ (1,894 ) $ 292,536
$ 46,721
$ 339,257
Issuance of common stock:
201,212 shares pursuant to dividend reinvestment plan —
3
10,647
—
—
10,650
—
10,650
117,886 shares due to exercise of employee stock options and issuance of directors' deferred stock —
1
6,366
—
—
6,367
—
6,367
Issuance of 107,037 partnership units pursuant to dividend reinvestment plan —
—
—
—
—
—
5,673
5,673
Net income —
—
—
42,468
—
42,468
10,463
52,931
Change in unrealized loss on cash flow hedge —
—
—
—
92
92
32
124
Series C preferred stock distributions —
—
—
(9,282 ) —
(9,282 ) —
(9,282 )
Common stock distributions —
—
—
(27,265 ) —
(27,265 ) (9,349 ) (36,614 )
Distributions payable on Series C preferred stock, $42.97 per share —
—
—
(3,093 ) —
(3,093 ) —
(3,093 )
Distributions payable common stock ($0.43/share) and partnership units ($0.43/unit) —
—
—
(9,145 ) —
(9,145 ) (3,141 ) (12,286 )
Balance, December 31, 2015 180,000
213
305,008
(180,091 ) (1,802 ) 303,328
50,399
353,727
Issuance of common stock:
186,797 shares pursuant to dividend reinvestment plan —
2
10,309
—
—
10,311
—
10,311
251,323 shares due to exercise of employee stock options and issuance of directors' deferred stock —
2
12,854
—
—
12,856
—
12,856
Issuance of 124,758 partnership units pursuant to dividend reinvestment plan —
—
—
—
—
—
6,910
6,910
Net income —
—
—
45,279
—
45,279
11,441
56,720
Change in unrealized loss on cash flow hedge —
—
—
—
503
503
175
678
Series C preferred stock distributions —
—
—
(9,282 ) —
(9,282 ) —
(9,282 )
Common stock distributions —
—
—
(30,328 ) —
(30,328 ) (10,392 ) (40,720 )
Distributions payable on Series C preferred stock, $42.97 per share —
—
—
(3,093 ) —
(3,093 ) —
(3,093 )
Distributions payable common stock ($0.51/share) and partnership units ($0.51/unit) —
—
—
(11,069 ) —
(11,069 ) (3,789 ) (14,858 )
CONSOLIDATED STATEMENTS OF EQUITY (continued)
(Dollars in thousands, except per share amounts)
Preferred
Stock

Common
Stock

Additional
Paid-in
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
(Loss)

Total Saul
Centers,
Inc.

Noncontrolling
Interests
Total
Balance, December 31, 2016 180,000
217
328,171
(188,584 ) (1,299 ) 318,505
54,744
373,249
Issuance of common stock:
266,011 shares pursuant to dividend reinvestment plan —
2
15,748
—
—
15,750
—
15,750
152,758 shares due to exercise of employee stock options and issuance of directors' deferred stock —
2
8,671
—
—
8,673
—
8,673
Issuance of 111,351 partnership units pursuant to dividend reinvestment plan —
—
—
—
—
—
6,735
6,735
Net income —
—
—
48,257
—
48,257
12,411
60,668
Change in unrealized loss on cash flow hedge —
—
—
—
603
603
209
812
Series C preferred stock distributions —
—
—
(9,282 ) —
(9,282 ) —
(9,282 )
Common stock distributions —
—
—
(33,490 ) —
(33,490 ) (11,479 ) (44,969 )
Distributions payable on Series C preferred stock, $42.97 per share —
—
—
(3,093 ) —
(3,093 ) —
(3,093 )
Distributions payable common stock ($0.52/share) and partnership units ($0.52/unit) —
—
—
(11,518 ) —
(11,518 ) (3,922 ) (15,440 )
Balance, December 31, 2017 $ 180,000
$ 221
$ 352,590
$ (197,710 ) $ (696 ) $ 334,405
$ 58,698
$ 393,103

Table of Contents


CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in thousands, except per share amounts)	Preferred Stock		Common Stock		Additional Paid-in Capital		Partnership Units in Escrow		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income		Total Saul Centers, Inc.		Noncontrolling Interests		Total

























































































































Balance, December 31, 2019	$	185,000	$	232	$	410,926	$	—	$	(221,177)	$	—	$	374,981	$	68,375	$	443,356


Issuance of common stock:
228,498 shares pursuant to dividend reinvestment plan	—		3		7,732		—		—		—		7,735		—		7,735
16,887 shares due to exercise of employee stock options and issuance of directors' deferred stock	—		—		1,967		—		—		—		1,967		—		1,967
Issuance of 51,579 partnership units	—		—		—		—		—		—		—		1,677		1,677
Net income	—		—		—		—		40,382		—		40,382		9,934		50,316

Preferred stock distributions:

Series D	—		—		—		—		(3,446)		—		(3,446)		—		(3,446)
Series E	—		—		—		—		(4,950)		—		(4,950)		—		(4,950)
Common stock distributions	—		—		—		—		(37,108)		—		(37,108)		(12,571)		(49,679)

Distributions payable on Series D preferred stock, $38.28 per share	—		—		—		—		(1,148)		—		(1,148)		—		(1,148)
Distributions payable on Series E preferred stock, $37.50 per share	—		—		—		—		(1,650)		—		(1,650)		—		(1,650)
Distributions payable common stock ($0.53/share) and partnership units ($0.53/unit)	—		—		—		—		(12,438)		—		(12,438)		(4,207)		(16,645)
Balance, December 31, 2020	185,000		235		420,625		—		(241,535)		—		364,325		63,208		427,533

CONSOLIDATED STATEMENTS OF EQUITY (continued)
(Dollars in thousands, except per share amounts)	Preferred Stock		Common Stock		Additional Paid-in Capital		Partnership Units in Escrow		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income		Total Saul Centers, Inc.		Noncontrolling Interests		Total
Issuance of common stock:
293,615 shares pursuant to dividend reinvestment plan	—		3		11,497		—		—		—		11,500		—		11,500
70,231 shares due to exercise of employee stock options and issuance of directors' deferred stock	—		—		4,487		—		—		—		4,487		—		4,487
Issuance of partnership units:
61,009 pursuant to dividend reinvestment plan	—		—		—		—		—		—		—		2,398		2,398
469,740 pursuant to the acquisition of Twinbrook leasehold interest	—		—		—		—		—		—		—		21,500		21,500
93,674 for the Ashbrook bonus value pursuant to the Ashbrook Contribution	—		—		—		—		—		—		—		4,320		4,320
1,416,071 restricted units pursuant to the Twinbrook Contribution Agreement	—		—		—		79,300		—		—		79,300		—		79,300
708,036 restricted units released from escrow pursuant to the Twinbrook Contribution Agreement	—		—		—		(39,650)		—		—		(39,650)		39,650		—
Net income	—		—		—		—		48,389		—		48,389		13,260		61,649

Preferred stock distributions:

Series D	—		—		—		—		(3,445)		—		(3,445)		—		(3,445)
Series E	—		—		—		—		(4,950)		—		(4,950)		—		(4,950)
Common stock distributions	—		—		—		—		(38,525)		—		(38,525)		(13,614)		(52,139)

Distributions payable on Series D preferred stock, $38.28 per share	—		—		—		—		(1,149)		—		(1,149)		—		(1,149)
Distributions payable on Series E preferred stock, $37.50 per share	—		—		—		—		(1,650)		—		(1,650)		—		(1,650)
Distributions payable common stock ($0.57/share) and partnership units ($0.57/unit)	—		—		—		—		(13,583)		—		(13,583)		(5,284)		(18,867)
Balance, December 31, 2021	185,000		238		436,609		39,650		(256,448)		—		405,049		125,438		530,487
CONSOLIDATED STATEMENTS OF EQUITY (continued)
(Dollars in thousands, except per share amounts)	Preferred Stock		Common Stock		Additional Paid-in Capital		Partnership Units in Escrow		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income		Total Saul Centers, Inc.		Noncontrolling Interests		Total
Issuance of common stock:
143,957 shares pursuant to dividend reinvestment plan	—		2		6,977		—		—		—		6,979		—		6,979
31,581 shares due to exercise of employee stock options and issuance of directors' deferred stock	—		—		2,715		—		—		—		2,715		—		2,715
Issuance of Partnership units
26,659 pursuant to dividend reinvestment plan	—		—		—		—		—		—		—		1,322		1,322




Net income	—		—		—		—		50,194		—		50,194		15,198		65,392
Change in unrealized gain on cash flow hedge	—		—		—		—		—		2,852		2,852		1,110		3,962
Preferred stock distributions:
Series D	—		—		—		—		(3,445)		—		(3,445)		—		(3,445)
Series E	—		—		—		—		(4,950)		—		(4,950)		—		(4,950)
Common stock distributions	—		—		—		—		(41,940)		—		(41,940)		(16,264)		(58,204)
Distributions payable on Series D preferred stock, $38.28 per share	—		—		—		—		(1,149)		—		(1,149)		—		(1,149)
Distributions payable on Series E preferred stock, $37.50 per share	—		—		—		—		(1,650)		—		(1,650)		—		(1,650)
Distributions payable common stock ($0.59/share) and partnership units ($0.59/unit)	—		—		—		—		(14,171)		—		(14,171)		(5,486)		(19,657)
Balance, December 31, 2022	$	185,000	$	240	$	446,301	$	39,650	$	(273,559)	$	2,852	$	400,484	$	121,318	$	521,802

The Notes to Financial Statements are an integral part of these statements.

F-6

Table of Contents

Saul Centers, Inc.


CONSOLIDATED STATEMENTS OF CASH FLOWS
	For The Year Ended December 31,
(Dollars in thousands)	2022		2021		2020
Cash flows from operating activities:
Net income	$	65,392	$	61,649	$	50,316
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on early extinguishment of debt	648		—		—

Gain on sale of property	—		—		(278)

Depreciation and amortization of deferred leasing costs	48,969		50,272		51,126
Amortization of deferred debt costs	1,985		1,710		1,570
Non cash compensation costs of stock grants and options	1,521		1,562		1,438
Credit losses (recoveries) on operating lease receivables	(88)		812		5,212
(Increase) decrease in accounts receivable and accrued income	2,424		5,446		(17,818)
Additions to deferred leasing costs	(2,716)		(1,814)		(8,050)

(Increase) decrease in other assets	4,511		(2,820)		5
Increase (decrease) in accounts payable, accrued expenses and other liabilities	524		(285)		861
Increase (decrease) in deferred income	(2,019)		1,895		(6,013)
Net cash provided by operating activities	121,151		118,427		78,369
Cash flows from investing activities:
Acquisitions of real estate investments (1) (2) (3)	—		(9,011)		—
Additions to real estate investments	(15,781)		(21,023)		(20,547)
Additions to development and redevelopment projects	(101,107)		(25,884)		(35,983)
Proceeds from sale of property	—		—		376

Net cash used in investing activities	(116,888)		(55,918)		(56,154)
Cash flows from financing activities:
Proceeds from mortgage notes payable	199,750		—		52,100
Repayments on mortgage notes payable	(174,096)		(42,641)		(45,654)
Proceeds from term loan facility	—		25,000		—
Proceeds from revolving credit facility	155,000		46,000		90,000
Repayments on revolving credit facility	(97,000)		(44,500)		(73,000)
Proceeds from construction loans payable	—		10,917		35,883

Payments of debt extinguishment costs	(593)		—		—
Additions to deferred debt costs	(9,869)		(6,393)		(1,206)
Proceeds from the issuance of:
Common stock	8,173		14,425		8,264
Partnership units (1) (2) (3)	1,322		2,398		1,677




Distributions to:

Series D preferred stockholders	(4,594)		(4,593)		(4,594)
Series E preferred stockholders	(6,600)		(6,600)		(6,600)
Common stockholders	(55,523)		(50,963)		(49,383)
Noncontrolling interests	(21,548)		(17,821)		(16,751)
Net cash used in financing activities	(5,578)		(74,771)		(9,264)
Net increase (decrease) in cash and cash equivalents	(1,315)		(12,262)		12,951
Cash and cash equivalents, beginning of year	14,594		26,856		13,905
Cash and cash equivalents, end of year	$	13,279	$	14,594	$	26,856
Supplemental disclosure of cash flow information:
Cash paid for interest	$	40,725	$	44,575	$	44,990
Accrued capital expenditures included in accounts payable, accrued expenses, and other liabilities	$	19,006	$	5,906	$	4,327

CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Year Ended December 31,
(Dollars in thousands) 2017 2016 2015
Cash flows from operating activities:
Net income $ 60,668
$ 56,720
$ 52,931
Adjustments to reconcile net income to net cash provided by operating activities:
Change in fair value of derivatives (70 ) 6
10
Gains on sales of properties —
(1,013 ) (11 )
Depreciation and amortization of deferred leasing costs 45,694
44,417
43,270
Amortization of deferred debt costs 1,392
1,343
1,433
Non cash compensation costs of stock grants and options 1,672
1,603
1,434
Provision for credit losses 906
1,494
915
Increase in accounts receivable and accrued income (1,643 ) (3,525 ) (5,216 )
Additions to deferred leasing costs (4,615 ) (4,633 ) (5,563 )
Increase in prepaid expenses (294 ) (399 ) (570 )
(Increase) decrease in other assets 1,374
(6,368 ) 1,544
Increase (decrease) in accounts payable, accrued expenses and other liabilities 1,125
921
(937 )
Decrease in deferred income (2,759 ) (1,476 ) (344 )
Net cash provided by operating activities 103,450
89,090
88,896
Cash flows from investing activities:
Acquisitions of real estate investments (79,499 ) (48,250 ) (4,894 )
Additions to real estate investments (17,653 ) (15,564 ) (18,855 )
Additions to development and redevelopment projects (22,842 ) (27,231 ) (45,870 )
Proceeds from sale of properties (1) 6,688
4,771
32
Net cash used in investing activities (113,306 ) (86,274 ) (69,587 )
Cash flows from financing activities:
Proceeds from mortgage notes payable 100,000
11,250
46,000
Repayments on mortgage notes payable (55,679 ) (24,653 ) (52,963 )
Proceeds from construction loans payable 1,437
24,937
39,817
Proceeds from revolving credit facility 63,000
78,500
20,000
Repayments on revolving credit facility (51,000 ) (57,500 ) (35,000 )
Additions to deferred debt costs (2,583 ) (125 ) (296 )
Proceeds from the issuance of:
Common stock 22,751
21,564
15,583
Partnership units 6,735
6,910
5,673
Distributions to:
Series C preferred stockholders (12,375 ) (12,375 ) (12,375 )
Common stockholders (44,576 ) (39,472 ) (35,645 )
Noncontrolling interests (15,268 ) (13,533 ) (12,228 )
Net cash provided by (used in) financing activities 12,442
(4,497 ) (21,434 )
Net increase (decrease) in cash and cash equivalents 2,586
(1,681 ) (2,125 )
Cash and cash equivalents, beginning of year 8,322
10,003
12,128
Cash and cash equivalents, end of year $ 10,908
$ 8,322
$ 10,003
Supplemental disclosure of cash flow information:
Cash paid for interest $ 45,713
$ 44,066
$ 43,799
Increase (decrease) in accrued real estate investments and development costs $ 2,097
$ (7,098 ) $ 5,201

(1) ~~Proceeds~~The 2021 acquisition of real estate and proceeds from ~~sales~~the issuance of ~~property~~partnership units each excludes ~~$1,275 of seller financing~~$79,300 in connection with the ~~sale~~contribution of Twinbrook Quarter by the B. F. Saul Real Estate Investment Trust in exchange for limited partnership units, half of which units remain in escrow.

(2)The 2021 acquisition of real estate and proceeds from the issuance of partnership units each excludes $21,500 in connection with the contribution of the ~~Company's~~Twinbrook Quarter leasehold interest in exchange for limited partnership units.

~~Great Eastern property.~~(3)The 2021 acquisition of real estate and proceeds from the issuance of partnership units each excludes $4,320 in connection with the issuance of additional limited partnership units to B. F. Saul Real Estate Investment Trust as additional consideration pursuant to the terms of the 2016 contribution agreement, as amended, related to Ashbrook Marketplace.

The Notes to Financial Statements are an integral part of these statements.

F-7

Table of Contents

SAUL CENTERS, INC.

Notes to Consolidated Financial Statements


1.	1. ORGANIZATION, ~~FORMATION, AND~~ BASIS OF PRESENTATION

~~Organization~~

Saul Centers, Inc. (“Saul Centers”) was incorporated under the Maryland General Corporation Law on June 10, 1993. Saul Centers operates as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). The Company is required to annually distribute at least 90% of its REIT taxable income (excluding net capital gains) to its stockholders and meet certain organizational and other requirements. Saul Centers has made and intends to continue to make regular quarterly distributions to its stockholders. Saul Centers, together with its wholly owned subsidiaries and the limited partnerships of which Saul Centers or one of its subsidiaries is the sole general partner, are referred to collectively as the “Company.” B. Francis Saul II serves as Chairman of the Board of Directors and Chief Executive Officer of Saul Centers.

~~Formation and Structure of Company~~

Saul Centers was formed to continue and expand the shopping center business previously owned and conducted by the B. F. Saul Real Estate Investment Trust (the ~~"Trust"~~"Saul Trust"), the B. F. Saul Company and certain other affiliated entities, each of which is controlled by B. Francis Saul II and his family members (collectively, the “Saul Organization”). On August 26, 1993, members of the Saul Organization transferred to Saul Holdings Limited Partnership, a newly formed Maryland limited partnership (the “Operating Partnership”), and two newly formed subsidiary limited partnerships (the “Subsidiary Partnerships,” and collectively with the Operating Partnership, the “Partnerships”), ~~shopping center~~Shopping Centers and ~~mixed-used properties,~~Mixed-Used Properties, and the management functions related to the transferred properties. Since its formation, the Company has developed and purchased additional properties.

~~The following table lists the significant properties acquired, developed and/or disposed of by the Company since January 1, 2015.~~



~~Name of Property~~	~~Location~~	~~Type~~	~~Year of~~ ~~Acquisition/~~ ~~Development/~~ ~~Disposal~~
~~Acquisitions~~
726 N. Glebe Road*	~~Arlington, Virginia~~	~~Shopping Center~~	~~September 2015~~
~~700 N. Glebe Road~~	~~Arlington, Virginia~~	~~Development~~	~~August 2016~~
~~Burtonsville Town Square~~	~~Burtonsville, Maryland~~	~~Shopping Center~~	~~January 2017~~
~~Developments~~
~~Park Van Ness~~	~~Washington, DC~~	~~Mixed-Use~~	~~2013-2016~~
~~750 N. Glebe Road~~	~~Arlington, Virginia~~	~~Mixed-Use~~	~~2017~~
~~Dispositions~~
~~Crosstown Business Center~~	~~Tulsa, Oklahoma~~	~~Mixed-Use~~	~~December 2016~~
~~Great Eastern~~	~~District Heights, Maryland~~	~~Shopping Center~~	~~September 2017~~

*As of August 2016, this property was removed from operations and reclassified to development.

As of December 31, 2017, the Company’s properties (the “Current Portfolio Properties”) consisted of 49 shopping center properties (the “Shopping Centers”), six mixed-use properties, which are comprised of office, retail and multi-family residential uses (the “Mixed-Use Properties”) and three (non-operating) development properties.

~~Basis of Presentation~~

The accompanying financial statements are presented on the historical cost basis of the Saul Organization because of affiliated ownership and common management and because the assets and liabilities were

~~F-8~~

~~Table of Contents~~

~~SAUL CENTERS, INC.~~

~~Notes to Consolidated Financial Statements~~

~~the subject of a business combination with the Operating Partnership, the Subsidiary Partnerships and Saul Centers, all newly formed entities with no prior operations.~~


2.	~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~Nature of Operations~~

The Company, which conducts all of its activities through its subsidiaries, the Operating Partnership and Subsidiary Partnerships, engages in the ownership, operation, management, leasing, acquisition, renovation, expansion, development and financing of community and neighborhood shopping centers and mixed-used properties, primarily in the Washington, DC/Baltimore metropolitan area.

Because the properties are located primarily in the Washington, DC/Baltimore metropolitan area, a disproportionate economic downturn in the local economy would have a greater negative impact on our overall financial performance than on the overall financial performance of a company with a portfolio that is more geographically diverse. A majority of the Shopping Centers are anchored by several major tenants. As of December 31, ~~2017, 32~~2022, 33 of the Shopping Centers were anchored by a grocery store and offer primarily day-to-day necessities and services. ~~Two~~One retail ~~tenants,~~tenant, Giant Food ~~(4.7%~~(5.1%), a tenant at ~~ten~~11 Shopping Centers, ~~and Capital One Bank (2.8%), a tenant at 18 properties,~~ individually accounted for 2.5% or more of the Company’s total revenue for the year ended December 31, ~~2017.~~2022.

~~Principles~~As of ~~Consolidation~~December 31, 2022, the Current Portfolio Properties consisted of 50 Shopping Centers, seven Mixed-Use Properties, and four (non-operating) development properties.

The accompanying consolidated financial statements of the Company include the accounts of Saul Centers and its subsidiaries, ~~and~~including the Operating Partnership and Subsidiary Partnerships, which are majority owned by Saul Centers. Substantially all assets and liabilities of the Company as of December 31, 2022 and December 31, 2021, are comprised of the assets and liabilities of the Operating Partnership. The debt arrangements which are subject to recourse are described in Note 5. All significant intercompany balances and transactions have been eliminated in consolidation.

The Operating Partnership is a variable interest entity ("VIE") of the Company because the limited partners do not have substantive kick-out or participating rights. The Company is the primary beneficiary of the Operating Partnership because it has the power to direct the activities of the Operating Partnership and the rights to absorb ~~74.4%~~72.0% of the net income of the Operating Partnership. Because the Operating Partnership ~~was already~~is consolidated into the financial statements of the Company, the identification of it as a VIE has no impact on the consolidated financial statements of the Company.

F-8

Table of Contents

SAUL CENTERS, INC.

Notes to Consolidated Financial Statements

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with ~~accounting principles generally accepted in the United States~~GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant estimates and assumptions relate to impairment of real estate properties and collectability of operating lease receivables. Actual results could differ from those estimates.

Real Estate Investment Properties

~~The~~Real estate investment properties are stated at historic cost less depreciation. Although the Company ~~purchases~~intends to own its real estate investment properties over a long term, from time to time it will evaluate its market position, market conditions, and ~~records~~other factors and may elect to sell properties that do not conform to the Company’s investment profile. Management believes that the Company’s real estate assets ~~acquired~~have generally appreciated in value since their acquisition or development and, ~~liabilities assumed, including land, buildings,~~accordingly, the aggregate current value exceeds their aggregate net book value and ~~intangibles related to in-place leases and customer relationships, based on their relative fair values. The fair value of buildings generally is determined as if~~also exceeds the buildings were vacant upon acquisition and then subsequently leased at market rental rates and considers the present value of all cash flows expected to be generated by the property including an initial lease up period. From time to time the Company may purchase a property for future development purposes. The property may be improved with an existing structure that would be demolished as part of the development. In such cases, the fair value of the ~~building may be determined based only on existing leases and not include estimated cash flows related to future leases. In certain circumstances, such~~Company’s liabilities as ~~if the building is vacant and the Company intends to demolish the building~~reported in the ~~near term,~~financial statements. Because the ~~entire purchase price will be allocated to land.~~

~~The Company determines~~financial statements are prepared in conformity with GAAP, they do not report the ~~fair~~current value of ~~above and below market intangibles associated with in-place leases by assessing~~ the net effective rent and remaining term of the lease relative to market terms for similar leases at acquisition taking into consideration the remaining contractual lease period, renewal periods, and the likelihood of the tenant exercising its renewal options. The fair value of a below market lease component is recorded as deferred income and accreted as additional lease revenue over the remaining contractual lease period. If the fair value of the

~~F-9~~

~~Table of Contents~~

~~SAUL CENTERS, INC.~~

~~Notes to Consolidated Financial Statements~~

below market lease intangible includes fair value associated with a renewal option, such amounts are not accreted until the renewal option is exercised. If the renewal option is not exercised the value is recognized at that time. The fair value of above market lease intangibles is recorded as a deferred asset and is amortized as a reduction of lease revenue over the remaining contractual lease term. The Company determines the fair value of at-market in-place leases considering the cost of acquiring similar leases, the foregone rents associated with the lease-up period and carrying costs associated with the lease-up period. Intangible assets associated with at-market in-place leases are amortized as additional expense over the remaining contractual lease term. To the extent customer relationship intangibles are present in an acquisition, the fair values of the intangibles are amortized over the lives of the customer relationships. The Company has never recorded a customer relationship intangible asset. Acquisition-related transaction costs are either (a) expensed as incurred when related to business combinations or (b) capitalized to land and/or building when related to asset acquisitions.Company’s real estate investment properties.

If there is an event or change in circumstance that indicates a potential impairment in the value of a real estate investment property, the Company prepares an analysis to determine whether the carrying value of the real estate investment property exceeds its estimated fair value. The Company considers both quantitative and qualitative factors including recurring operating losses, significant decreases in occupancy, and significant adverse changes in legal factors and business climate. If impairment indicators are present, the Company compares the projected cash flows of the property over its remaining useful life, on an undiscounted basis, to the carrying value of that property. The Company assesses its undiscounted projected cash flows based upon estimated capitalization rates, historic operating results and market conditions that may affect the property. If the carrying value is greater than the undiscounted projected cash flows, the Company would recognize an impairment loss equivalent to an amount required to adjust the carrying amount to its then estimated fair value. The fair value of any property is sensitive to the actual results of any of the aforementioned estimated factors, either individually or taken as a whole. Should the actual results differ from management’s projections, the valuation could be negatively or positively affected. The Company did not recognize an impairment loss on any of its real estate in ~~2017, 2016,~~2022, 2021, or ~~2015.~~

Interest, real estate taxes, development related salary costs and other carrying costs are capitalized on projects under development and construction. Once construction is substantially completed and the assets are placed in service, their rental income, real estate tax expense, property operating expenses (consisting of payroll, repairs and maintenance, utilities, insurance and other property related expenses) and depreciation are included in current operations. Property operating expenses are charged to operations as incurred. Interest expense capitalized totaled $3.5 million, $2.5 million, and $2.2 million during 2017, 2016, and 2015, respectively. Commercial development projects are considered substantially complete and available for occupancy upon completion of tenant improvements, but no later than one year from the cessation of major construction activity. Multi-family residential development projects are considered substantially complete and available for occupancy upon receipt of the certificate of occupancy from the appropriate licensing authority. Substantially completed portions of a project are accounted for as separate projects.2020.

Depreciation is calculated using the straight-line method and estimated useful lives of generally between 35 and 50 years for base buildings, or a shorter period if management determines that the building has a shorter useful life, and up to 20 years for certain other improvements that extend the useful lives. Leasehold improvements expenditures are capitalized when certain criteria are met, including when the Company supervises construction and will own the improvements. Tenant improvements are amortized, over the shorter of the lives of the related leases or the useful life of the improvement, using the straight-line method. Depreciation expense, which is included in Depreciation and amortization of deferred leasing costs in the Consolidated Statements of Operations, for the years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, was ~~$40.2~~$44.6 million, ~~$38.8~~$45.5 million, and ~~$37.7~~$45.9 million, respectively. Repairs and maintenance expense totaled ~~$11.6~~$15.2 million, ~~$11.8~~$13.5 million, and ~~$11.6~~$11.1 million for ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, respectively, and is included in property operating expenses in the accompanying consolidated financial statements.

~~Deferred Leasing Costs~~

~~Deferred leasing costs consist~~As of ~~commissions paid to third-party leasing agents, internal direct costs such as employee compensation~~December 31, 2022, we have not identified any impairment triggering events, including the impact of COVID-19 and ~~payroll-related fringe benefits directly related to time spent performing leasing-related activities~~corresponding tenant requests for successful commercial leases and amounts attributed to in place leases associated with acquired properties and are amortized, using the straight-line method, over the term of the lease or the remaining term of an

rent relief. Accordingly, under applicable GAAP guidance, no impairment charges were recorded.

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Notes to Consolidated Financial Statements

acquired lease. Leasing related activities include evaluating the prospective tenant’s financial condition, evaluating and recording guarantees, collateral and other security arrangements, negotiating lease terms, preparing lease documents and closing the transaction. Unamortized deferred costs are charged to expense if the applicable lease is terminated prior to expiration of the initial lease term. Collectively, deferred leasing costs totaled $27.3 million and $26.0 million, net of accumulated amortization of approximately $35.3 million and $30.4 million, as of December 31, 2017 and 2016, respectively. Amortization expense, which is included in Depreciation and amortization of deferred leasing costs in the Consolidated Statements of Operations, totaled approximately $5.5 million, $5.6 million, and $5.6 million, for the years ended December 31, 2017, 2016, and 2015, respectively.

~~Construction in Progress~~

Construction in progress includes preconstruction and development costs of active projects. Preconstruction costs include legal, zoning and permitting costs and other project carrying costs incurred prior to the commencement of construction. Development costs include direct construction costs and indirect costs incurred subsequent to the start of construction such as architectural, engineering, construction management and carrying costs consisting of interest, real estate taxes and insurance. The following table shows the components of construction in progress.

December 31,
(in thousands) 2017 2016

N. Glebe Road $ 83,462
$ 58,147
Other 7,652
5,423
Total $ 91,114
$ 63,570

~~Accounts Receivable and Accrued Income~~

Accounts receivable primarily represent amounts currently due from tenants in accordance with the terms of the respective leases. Receivables are reviewed monthly and reserves are established with a charge to current period operations when, in the opinion of management, collection of the receivable is doubtful. Accounts receivable in the accompanying consolidated financial statements are shown net of an allowance for doubtful accounts of $0.4 million and $2.0 million, at December 31, 2017 and 2016, respectively.

(In thousands) Year ended December 31,
2017 2016 2015
Beginning Balance $ 1,958
$ 1,263
$ 677
Provision for Credit Losses 906
1,494
915
Charge-offs (2,459 ) (799 ) (329 )
Ending Balance $ 405
$ 1,958
$ 1,263

In addition to rents due currently, accounts receivable also includes $44.1 million and $43.1 million, at December 31, 2017 and 2016, respectively, net of allowance for doubtful accounts totaling $0.2 million and $0.5 million, respectively, representing minimum rental income accrued on a straight-line basis to be paid by tenants over the remaining term of their respective leases.

Assets Held for Sale

The Company considers properties to be assets held for sale when all of the following criteria are met:

•management commits to a plan to sell a property;

•it is unlikely that the disposal plan will be significantly modified or discontinued;

•the property is available for immediate sale in its present condition;

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~~SAUL CENTERS, INC.~~

~~Notes to Consolidated Financial Statements~~

•actions required to complete the sale of the property have been initiated;

•sale of the property is probable and the Company expects the completed sale will occur within one year; and

•the property is actively being marketed for sale at a price that is reasonable given its current market value.

The Company must make a determination as to the point in time that it is probable that a sale will be consummated, which generally occurs when an executed sales contract has no contingencies and the prospective buyer has significant funds at risk to ensure performance. Upon designation as an asset held for sale, the Company records the carrying value of each property at the lower of its carrying value or its estimated fair value, less estimated costs to sell, and ceases depreciation. As of December 31, ~~2015,~~2022 and 2021, the Company had no assets designated as held for sale.

Revenue Recognition

We lease Shopping Centers and Mixed-Use Properties to lessees in exchange for monthly payments that cover rent, and where applicable, reimbursement for property taxes, insurance, and certain property operating expenses. Our leases were determined to be operating leases and generally range in term from one to 15 years.

Some of our leases have termination options and/or extension options. Termination options allow the lessee to terminate the lease prior to the end of the lease term, provided certain conditions are met. Termination options generally require advance notification from the lessee and payment of a termination fee. Termination fees are recognized as revenue over the modified lease term. Extension options are subject to terms and conditions stated in the lease.

Rental and interest income are accrued as earned. Recognition of rental income commences when control of the space has ~~classified~~been given to the tenant. When rental payments due under leases vary from a straight-line basis because of free rent periods or stepped increases, income is recognized on a straight-line basis. Expense recoveries represent a portion of property operating expenses billed to the tenants, including common area maintenance, real estate taxes and other recoverable costs. Upon adoption of ASU 2016-02, we made a policy election not to separate lease and nonlease components and have accounted for each lease component and the related nonlease components together as ~~held-for-sale one~~a single component. Expense recoveries are recognized in the period in which the expenses are incurred. Rental income based on a tenant’s revenue (“percentage rent”) is accrued when a tenant reports sales that exceed a specified breakpoint, pursuant to the terms of their respective leases.

Due to the business disruptions and challenges severely affecting the global economy caused by the novel strain of coronavirus (“COVID-19”) pandemic, some lessees have requested rent relief, including rent deferrals and other lease concessions. The lease modification guidance in ASU 2016-02 does not contemplate the rapid execution of concessions for multiple tenants in response to sudden liquidity constraints of lessees. In April 2020, the FASB staff issued a question and answer document that provided guidance allowing the Company to elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The Company has elected to apply such relief, which, in the case of rent deferrals, results in the accrual of rent due from tenants and defers the payment of that rent to a future date, and will monitor the collectability of rent receivables.

Accounts Receivable, Accrued Income, and Allowance for Doubtful Accounts

Accounts receivable are primarily comprised of rental and reimbursement billings due from tenants, and straight-line rent receivables representing the cumulative amount of adjustments necessary to present rental income on a straight-line basis. Individual leases are assessed for collectability and, upon the determination that the

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SAUL CENTERS, INC.

Notes to Consolidated Financial Statements

collection of rents is not probable, accrued rent and accounts receivable are charged off, and the charge off is reflected as an adjustment to rental revenue. Revenue from leases where collection is not probable is recorded on a cash basis until collectability is determined to be probable. We also assess whether operating lease receivables, at the portfolio level, are appropriately valued based upon an analysis of balances outstanding, effects of tenant bankruptcies, historical levels of bad debt and current economic trends. Additionally, because of the uncertainties related to the impact of the COVID-19 pandemic, our assessment also takes into consideration the types of business conducted by tenants and current discussions with the tenants, as well as recent rent collection experience. Evaluating and estimating uncollectable lease payments and related receivables requires a significant amount of judgment by management and is based on the best information available to management at the time of evaluation. For the year-ended December 31, 2022, we increased rental revenue by $461,400 due to payments from tenants of receivables that were previously reserved or charged off. Actual results could differ from these estimates.

At December 31, 2022 and December 31, 2021, accounts receivable was comprised of:


(In thousands)	December 31, 2022		December 31, 2021
Rents currently due	$	8,433	$	8,484
Deferred rents	1,042		2,872
Straight-line rent	45,815		46,681
Other receivables	2,706		3,704
Reserve for credit losses on operating lease receivables	(1,673)		(3,082)

Total	$	56,323	$	58,659

Deferred Leasing Costs

Deferred leasing costs primarily consist of initial direct costs incurred in connection with successful property ~~comprising 197,100 square feet~~leasing and amounts attributed to in place leases associated with acquired properties. Such amounts are capitalized and amortized, using the straight-line method, over the term of ~~gross leasable area. The book value~~the lease or the remaining term of ~~this property,~~an acquired lease. Initial direct costs primarily consist of leasing commissions, costs paid to external third-party brokers, and internal lease commissions that are incremental to obtaining a lease and would not have been incurred if the lease had not been obtained. Unamortized deferred costs are charged to expense if the applicable lease is terminated prior to expiration of the initial lease term. Collectively, deferred leasing costs totaled $22.4 million and $24.0 million, net of accumulated amortization of approximately $51.3 million and $48.7 million, as of December 31, 2022 and 2021, respectively. Amortization expense, which is included in ~~Other Assets, was $3.4~~Depreciation and amortization of deferred leasing costs in the Consolidated Statements of Operations, totaled approximately $4.3 million, ~~net of accumulated depreciation of $7.0~~$4.7 million, ~~which does not exceed its estimated fair value, less costs to sell,~~ and ~~liabilities were $0.2 million. The asset was sold in 2016.~~$5.2 million, for the years ended December 31, 2022, 2021, and 2020, respectively.

Cash and Cash Equivalents

Cash and cash equivalents include short-term investments. Short-term investments include money market accounts and other investments which generally mature within three months, measured from the acquisition date, and/or are readily convertible to cash. Substantially all of the Company’s cash balances at December 31, ~~2017~~2022 are held in ~~non-interest bearing~~ accounts at various banks. From time to time the Company may maintain deposits with financial institutions in amounts in excess of federally insured limits. The Company has not experienced any losses on such deposits and believes it is not exposed to any significant credit risk on those deposits.

~~Deferred Debt Costs~~

Deferred debt costs consist of fees and costs incurred to obtain long-term financing, construction financing and the revolving line of credit. These fees and costs are being amortized on a straight-line basis over the terms of the respective loans or agreements, which approximates the effective interest method. Deferred debt costs totaled $6.9 million and $7.5 million, net of accumulated amortization of $8.2 million and $7.3 million at December 31, 2017 and 2016, respectively, and are reflected as a reduction of the related debt in the Consolidated Balance Sheets. At December 31, 2017, deferred debt costs totaling $1.8 million, related to the Glebe Road construction loan, which has no outstanding balance, are included in Other Assets in the Consolidated Balance Sheets.

Deferred Income

Deferred income consists of payments received from tenants prior to the time they are earned and recognized by the Company as revenue, including tenant prepayment of rent for future periods, real estate taxes when the taxing jurisdiction has a fiscal year differing from the calendar year reimbursements specified in the lease agreement and tenant construction work provided by the Company. In addition, deferred income includes unamortized balances that represent the fair value of certain below market ~~leases.~~leases determined as of the date of acquisition.

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SAUL CENTERS, INC.

Notes to Consolidated Financial Statements

Derivative Financial Instruments

The Company may, when appropriate, employ derivative instruments, such as interest-rate swaps, to mitigate the risk of interest rate fluctuations. The Company does not enter into derivative or other financial instruments for trading or speculative purposes. Derivative financial instruments are carried at fair value as either assets or liabilities on the consolidated balance sheets. For those derivative instruments that qualify, the Company may designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge or a cash flow hedge. Derivative instruments that are designated as a hedge are evaluated to ensure they continue to qualify for hedge accounting. The effective portion of any gain or loss on the hedge instruments is reported as a component of accumulated other comprehensive income (loss) and recognized in earnings within the same line item associated with the forecasted transaction in the same period or periods during which the hedged transaction affects earnings. Any ineffective portion of the change in fair value of a derivative instrument is immediately recognized in earnings.

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~~SAUL CENTERS, INC.~~

~~Notes to Consolidated Financial Statements~~

For derivative instruments that do not meet the criteria for hedge accounting, or that qualify and are not designated, changes in fair value are immediately recognized in earnings.

~~Revenue Recognition~~

Rental and interest income are accrued as earned. Recognition of rental income commences when control of the space has been given to the tenant. When rental payments due under leases vary from a straight-line basis because of free rent periods or stepped increases, income is recognized on a straight-line basis. Expense recoveries represent a portion of property operating expenses billed to the tenants, including common area maintenance, real estate taxes and other recoverable costs. Expense recoveries are recognized in the period in which the expenses are incurred. Rental income based on a tenant’s revenue (“percentage rent”) is accrued when a tenant reports sales that exceed a specified breakpoint, pursuant to the terms of their respective leases.

Income Taxes

The Company made an election to be treated, and intends to continue operating so as to qualify, as a REIT under the Code, commencing with its taxable year ended December 31, 1993. A REIT generally will not be subject to federal income taxation, provided that distributions to its stockholders equal or exceed its REIT taxable income and complies with certain other requirements. Therefore, no provision has been made for federal income taxes in the accompanying consolidated financial statements.

As of December 31, ~~2017,~~2022, the Company had no material unrecognized tax benefits and there exist no potentially significant unrecognized tax benefits which are reasonably expected to occur within the next twelve months. The Company recognizes penalties and interest accrued related to unrecognized tax benefits, if any, as general and administrative expense. No penalties and interest have been accrued in years ~~2017, 2016,~~2022, 2021, and ~~2015.~~2020. The tax basis of the Company’s real estate investments was approximately ~~$1.32~~$1.61 billion and ~~$1.26~~$1.64 billion as of December 31, ~~2017~~2022 and ~~2016,~~2021, respectively. With few exceptions, the Company is no longer subject to U.S. federal, state, and local tax examinations by tax authorities for years before ~~2013.~~2019.

~~Stock Based Employee Compensation, Deferred Compensation and Stock Plan for Directors~~Legal Contingencies

The Company ~~uses~~is subject to various legal proceedings and claims that arise in the ~~fair value method~~ordinary course of business, which are generally covered by insurance. Upon determination that a loss is probable to ~~value~~occur and ~~account for employee stock options. The fair value of options granted is determined at~~can be reasonably estimated, the time of each award using the Black-Scholes model, a widely used method for valuing stock based employee compensation, and the following assumptions: (1) Expected Volatility determined using the most recent trading historyestimated amount of the ~~Company’s common stock (month-end closing prices) corresponding~~loss is recorded in the financial statements.

Recently Issued Accounting Standards

Recently issued accounting standards or pronouncements have been excluded because they are either not relevant to the ~~average~~Company or they are expected ~~term~~not to have a material impact on the Consolidated Financial Statements of the ~~options; (2) Average Expected Term of the options is based on~~Company.

Reclassifications

Certain reclassifications have been made to prior exercise history, scheduled vesting and the expiration date; (3) Expected Dividend Yield determined by management after considering the Company’s current and historic dividend yield rates, the Company’s yield in relationyears to ~~other retail REITs and the Company’s market yield at the grant date; and (4) a Risk-free Interest Rate based upon the market yields of US Treasury obligations with maturities corresponding~~conform to the average expected term of the options at the grant date. The Company amortizes the value of options granted ratably over the vesting period and includes the amounts as compensation in general and administrative expenses.

~~The Company has a stock plan, which was originally approved in 2004, amended in 2008 and 2013 and which expires in 2023,~~presentation used for the purpose of attracting and retaining executive officers, directors and other key personnel (the "Stock Plan"). Pursuant to the Stock Plan, the Compensation Committee established a Deferred Compensation Plan for Directors for the benefit of its directors and their beneficiaries, which replaced a previous Deferred Compensation and Stock Plan for Directors. A director may make an annual election to defer all or part of his or her director’s fees and has the option to have the fees paid in cash, in shares of common stock or in a combination of cash and shares of common stock upon separation from the Board. If the director elects to have fees paid in stock, fees earned during a calendar quarter are aggregated and divided by the common stock’s closing market price on the first trading day of the following quarter to determine the number of shares to be allocated to the director. As ofyear ended December 31, ~~2017, the directors’ deferred fee accounts comprise 183,818 shares.~~

The Compensation Committee has also approved an annual award of shares of the Company’s common stock as additional compensation to each director serving on the Board of Directors as of the record date for the

2022.

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SAUL CENTERS, INC.

Notes to Consolidated Financial Statements

3. REAL ESTATE

~~Annual Meeting~~

Construction in Progress

Construction in progress includes land, preconstruction and development costs of ~~Stockholders.~~active projects. Preconstruction costs include legal, zoning and permitting costs and other project carrying costs incurred prior to the commencement of construction. Development costs include direct construction costs and indirect costs incurred subsequent to the start of construction such as architectural, engineering, construction management and carrying costs consisting of interest, real estate taxes and insurance. The ~~shares~~following table shows the components of construction in progress.


	December 31,
(in thousands)	2022		2021

Twinbrook Quarter	$	227,672	$	138,069
Hampden House	80,704		56,898


Other	11,307		10,944
Total	$	319,683	$	205,911

Acquisitions

Twinbrook Quarter

On November 5, 2019, the Company entered into the Twinbrook Contribution Agreement to acquire from 1592 Rockville Pike, a wholly-owned subsidiary of the Saul Trust, approximately 6.8 acres of land and its leasehold interest in approximately 1.3 acres of contiguous land, together in each case with the improvements located thereon, located at the Twinbrook Metro Station in Rockville, Maryland in exchange for 1,416,071 limited partnership units in the Operating Partnership. The Contributed Property is immediately adjacent to approximately 10.3 acres owned by the Company. Title to the Contributed Property and the units were placed in escrow until certain conditions of the Twinbrook Contribution Agreement were satisfied.

The units issued to 1592 Rockville Pike will remain in escrow until the conditions of the Twinbrook Contribution Agreement, as amended, are ~~awarded~~satisfied. Half of the units held in escrow were released on October 18, 2021. The remaining units held in escrow are scheduled to be released on October 18, 2023.

On March 5, 2021, the Company entered into an amendment to the Twinbrook Contribution Agreement in which it and 1592 Rockville Pike agreed to release to the Company from escrow the deed and assignment of the leasehold interest of the Contributed Property, as of ~~each Annual Meeting~~that date. The Company also reimbursed 1592 Rockville Pike for certain expenses pursuant to the Twinbrook Contribution Agreement totaling $7.4 million. Acquisition costs totaled $1.2 million. The Company recorded a finance lease right-of-use asset of ~~Shareholders,~~$19.4 million and ~~their issuance may not be deferred. Each director~~corresponding lease liability of $19.4 million related to the leasehold interest assumed in the transaction. The incremental borrowing rate used to calculate the lease liability was ~~issued~~ ~~200~~ ~~shares~~5.63%.

On June 29, 2021, the third-party landlord under the ground lease contributed to the Company the fee simple interest in the land underlying the leasehold interest in exchange for ~~each~~469,740 limited partnership units in the Operating Partnership, representing an aggregate value of $21.5 million. Acquisition costs were paid in cash and totaled $0.7 million. Accordingly, the ~~years~~finance lease right-of-use asset and finance lease liability were extinguished. Amortization expense and interest expense related to the lease totaled $104,000 and $362,800, respectively, for the twelve months ended December 31, ~~2017, 2016,~~2021.

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SAUL CENTERS, INC.

Notes to Consolidated Financial Statements

Allocation of Purchase Price of Real Estate Acquired

The Company allocates the purchase price of real estate investment properties to various components, such as land, buildings and ~~2015.~~intangibles related to in-place leases and customer relationships, based on their relative fair values.

During 2021, the Company acquired properties that had an aggregate cost of $108.3 million, including acquisition costs. The ~~shares were valued at the closing stock price on the dates the shares were awarded and~~entire amount was allocated to land.

The gross carrying amount of lease intangible assets included in ~~general~~deferred leasing costs as of December 31, 2022 and ~~administrative expenses in the total amounts of $130,700, $150,100,~~2021 was $10.7 million and ~~$143,000,~~$11.0 million, respectively, and accumulated amortization was $9.2 million and $9.1 million, respectively. Amortization expense totaled $0.4 million, $0.5 million and $0.6 million, for the years ended December 31, ~~2017, 2016,~~2022, 2021, and ~~2015,~~2020, respectively. The gross carrying amount of below market lease intangible liabilities included in deferred income as of December 31, 2022 and 2021 was $23.3 million and $23.3 million, respectively, and accumulated amortization was $17.3 million and $16.0 million, respectively. Accretion income totaled $1.3 million, $1.4 million, and $1.4 million, for the years ended December 31, 2022, 2021, and 2020, respectively. The gross carrying amount of above market lease intangible assets included in accounts receivable as of December 31, 2022 and 2021 was $0.6 million and $0.6 million, respectively, and accumulated amortization was $194,800 and $161,800, respectively. Amortization expense totaled $32,900, $32,900 and $43,600, for the years ended December 31, 2022, 2021 and 2020, respectively. The remaining weighted-average amortization period as of December 31, 2022 is 4.6 years, 6.3 years, and 4.9 years for lease acquisition costs, above market leases and below market leases, respectively.

~~Noncontrolling Interest~~As of December 31, 2022, scheduled amortization of intangible assets and deferred income related to in place leases is as follows:


(In thousands)	Lease acquisition costs		Above market leases		Below market leases
2023	$	316	$	33	$	1,297
2024	199		33		878
2025	153		33		601
2026	131		33		509
2027	121		33		507
Thereafter	593		244		2,237
Total	$	1,513	$	409	$	6,029

4. NONCONTROLLING INTERESTS - HOLDERS OF CONVERTIBLE LIMITED PARTNERSHIP UNITS IN THE OPERATING PARTNERSHIP

Saul Centers is the sole general partner of the Operating Partnership, owning a ~~74.4%~~72.0% common interest as of December 31, ~~2017.~~2022. Noncontrolling interest in the Operating Partnership is comprised of limited partnership units owned by the Saul Organization. Noncontrolling interest reflected on the accompanying consolidated balance sheets is increased for earnings allocated to limited partnership interests and distributions reinvested in additional units, and is decreased for limited partner distributions. Noncontrolling interest reflected on the consolidated statements of operations represents earnings allocated to limited partnership interests held by the Saul Organization.

The Saul Organization holds a 26.6% limited partnership interest in the Operating Partnership represented by 8,827,873 limited partnership units, as of December 31, 2022. The units are convertible into shares of Saul Centers’ common stock, at the option of the unit holder, on a one-for-one basis provided that, in accordance with the Saul Centers, Inc. Articles of Incorporation, the rights may not be exercised at any time that the Saul Organization beneficially owns, directly or indirectly, in the aggregate more than 39.9% of the value of the outstanding common stock and preferred stock of Saul Centers (the “Equity Securities”). As of December 31, 2022, approximately 411,000 units were eligible for conversion.

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SAUL CENTERS, INC.

Notes to Consolidated Financial Statements

As of December 31, 2022, a third party investor holds a 1.4% limited partnership interest in the Operating Partnership represented by 469,740 convertible limited partnership units. At the option of the unit holder, these units are convertible into shares of Saul Centers’ common stock on a one-for-one basis; provided that, in lieu of the delivery of Saul Centers' common stock, Saul Centers may, in its sole discretion, deliver cash in an amount equal to the value of such Saul Centers' common stock.

The impact of the Saul Organization’s 26.6% limited partnership interest in the Operating Partnership is reflected as Noncontrolling Interests in the accompanying consolidated financial statements. Weighted average fully diluted partnership units and common stock outstanding for the years ended December 31, 2022, 2021, and 2020, were 34.0 million, 33.1 million, and 31.3 million, respectively.

The Company previously issued 708,035 limited partnership units related to the contribution of Twinbrook Quarter that are held in escrow and will be released on October 18, 2023. Until such time as the units are released from escrow, they are not eligible to receive distributions from the Operating Partnership.

5. NOTES PAYABLE, BANK CREDIT FACILITY, INTEREST EXPENSE AND AMORTIZATION OF DEFERRED DEBT COSTS

At December 31, 2022, the principal amount of outstanding debt totaled $1.2 billion, of which $1.07 billion was fixed rate debt and $164.0 million was variable rate debt. The principal amount of the Company’s outstanding debt totaled $1.2 billion at December 31, 2021, of which $949.0 million was fixed rate debt and $206.0 million was variable rate debt.

At December 31, 2022, the Company had a $525.0 million Credit Facility comprised of a $425.0 million revolving credit facility and a $100.0 million term loan. The revolving credit facility matures on August 29, 2025, which may be extended by the Company for one additional year, subject to satisfaction of certain conditions. The term loan matures on February 26, 2027, and may not be extended. Through October 2, 2022, interest accrued at LIBOR plus an applicable spread, which was determined by certain leverage tests. Effective October 3, 2022, in conjunction with the execution of the First Amendment to the Credit Facility, interest accrues at SOFR plus 10 basis points plus an applicable spread, which is determined by certain leverage tests. As of December 31, 2022, the applicable spread for borrowings was 140 basis points related to the revolving credit facility and 135 basis points related to the term loan. Letters of credit may be issued under the Credit Facility. On December 31, 2022, based on the value of the Company’s unencumbered properties, approximately $212.1 million was available under the Credit Facility, $264.0 million was outstanding and approximately $185,000 was committed for letters of credit.

On February 23, 2022, the Company closed on a $133.0 million construction-to-permanent loan, the proceeds of which will be used to partially fund Hampden House. The loan matures in 2040, bears interest at a fixed rate of 3.90%, and requires interest only payments, which will be funded by the loan, until conversion to permanent. The conversion is expected in the first quarter of 2026, and thereafter, monthly principal and interest payments based on a 25-year amortization schedule will be required.

On March 11, 2022, the Company repaid in full the remaining principal balance of $28.3 million of the mortgage loan secured by Lansdowne Town Center, which was scheduled to mature in June 2022.

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SAUL CENTERS, INC.

Notes to Consolidated Financial Statements

On June 7, 2022, the Company repaid in full the remaining principal balance of $8.6 million of the mortgage loan secured by Orchard Park, which was scheduled to mature in September 2022.

On August 4, 2022, the Company closed on a 15-year, non-recourse, $25.3 million mortgage secured by Village Center. The loan matures in 2037, bears interest at a fixed-rate of 4.14%, requires monthly principal and interest payments of $135,200 based on a 25-year amortization schedule and requires a final payment of $13.4 million at maturity. Proceeds were used to repay the remaining balance of approximately $11.2 million on the existing mortgage and reduce the outstanding balance of the Credit Facility. A $0.4 million loss on early extinguishment of debt was recognized.

On August 24, 2022, the Company closed on a 7-year, non-recourse, $31.5 million mortgage secured by Great Falls Center. The loan matures in 2029, bears interest at a fixed-rate of 3.91%, requires monthly principal and interest payments of $164,700 based on a 25-year amortization schedule and requires a final payment of $25.7 million at maturity. Proceeds were used to repay the remaining balance of approximately $8.0 million on the existing mortgage and reduce the outstanding balance of the Credit Facility. A $0.2 million loss on early extinguishment of debt was recognized.

On September 6, 2022, the Company closed on a 15-year, non-recourse, $143.0 million mortgage secured by Beacon Center and Seven Corners Center. The loan matures in 2037, bears interest at a fixed-rate of 5.05%, requires monthly principal and interest payments of $840,100 based on a 25-year amortization schedule and requires a final payment of $79.9 million at maturity. Proceeds were used to repay the remaining balance of approximately $85.3 million on the existing mortgages and reduce the outstanding balance of the Credit Facility. This transaction was treated as a modification of the original debt agreement. A prepayment penalty of $5.9 million was incurred, which was deferred and will be amortized as interest expense over the life of the loan and is included as a reduction to notes payable, net in the Consolidated Balance Sheets.

Saul Centers and certain consolidated subsidiaries of the Operating Partnership have guaranteed the payment obligations of the Operating Partnership under the Credit Facility. The Operating Partnership is the guarantor of (a) a portion of the Broadlands mortgage (approximately $3.6 million of the $28.9 million outstanding balance at December 31, 2022), (b) a portion of the Avenel Business Park mortgage (approximately $6.3 million of the $22.9 million outstanding balance at December 31, 2022), (c) a portion of The Waycroft mortgage (approximately $23.6 million of the $152.7 million outstanding balance at December 31, 2022), (d) the Ashbrook Marketplace mortgage (totaling $20.8 million at December 31, 2022), and (e) the mortgage secured by Kentlands Place, Kentlands Square I and Kentlands pad (totaling $28.2 million at December 31, 2022). All other notes payable are non-recourse.

On January 5, 2021, the Company repaid in full the remaining principal balance of $6.1 million of the mortgage loan secured by Jamestown Place, which was scheduled to mature in February 2021.

On June 11, 2021, the Company repaid in full the remaining principal balance of $5.0 million of the mortgage loan secured by Hunt Club Corners, which was scheduled to mature in August 2021.

On November 19, 2021, the Company closed on a $145.0 million construction-to-permanent loan, the proceeds of which will be used to partially fund Phase I of the Twinbrook Quarter development project. The loan matures in 2041, bears interest at a fixed rate of 3.83%, requires interest only payments, which will be funded by the loan, until conversion to permanent. The conversion is expected in the fourth quarter of 2026, and thereafter, monthly principal and interest payments based on a 25-year amortization schedule will be required.

The carrying value of the properties collateralizing the mortgage notes payable totaled $1.0 billion and $1.1 billion, as of December 31, 2022 and 2021, respectively. The Company’s Credit Facility requires the Company and its subsidiaries to maintain certain financial covenants, which are summarized below. The Company was in compliance as of December 31, 2022.

•limit the amount of debt as a percentage of gross asset value, as defined in the loan agreement, to less than 60% (leverage ratio);

•limit the amount of debt so that interest coverage will exceed 2.0 x on a trailing four-quarter basis (interest expense coverage); and

F-16

Table of Contents

SAUL CENTERS, INC.

Notes to Consolidated Financial Statements

•limit the amount of debt so that interest, scheduled principal amortization and preferred dividend coverage exceeds 1.4x on a trailing four-quarter basis (fixed charge coverage).

Mortgage notes payable totaling $2.0 million and $41.0 million, respectively, at each of December 31, 2022 and 2021, are guaranteed by members of the Saul Organization.

As of December 31, 2022, the scheduled maturities of all debt including scheduled principal amortization for years ended December 31 are as follows:


(in thousands)	Balloon Payments			Scheduled Principal Amortization		Total
2023	$	9,225		$	32,926	$	42,151
2024	50,117			33,566		83,683
2025	184,363		(a)	31,423		215,786
2026	134,088			28,062		162,150
2027	100,000		(b)	23,454		123,454
Thereafter	440,093			171,366		611,459
Principal amount	$	917,886		$	320,797	1,238,683
Unamortized deferred debt costs						15,783
Net						$	1,222,900

(a) Includes $164.0 million outstanding under the Credit Facility.
(b) Includes $100.0 million outstanding under the Credit Facility.

Deferred Debt Costs

Deferred debt costs consist of fees and costs incurred to obtain long-term financing, construction financing and the Credit Facility. These fees and costs are being amortized on a straight-line basis over the terms of the respective loans or agreements, which approximates the effective interest method. Deferred debt costs totaled $15.8 million and $11.2 million, net of accumulated amortization of $7.9 million and $7.7 million at December 31, 2022 and 2021, respectively, and are reflected as a reduction of the related debt in the Consolidated Balance Sheets.

The components of interest expense are set forth below.


(in thousands)	Year ended December 31,
	2022		2021		2020
Interest incurred	$	53,219	$	50,552	$	51,705
Amortization of deferred debt costs	1,985		1,710		1,570
Capitalized interest	(11,191)		(6,831)		(6,616)
Interest expense	44,013		45,431		46,659
Less: Interest income	76		7		140
Interest expense, net and amortization of deferred debt costs	$	43,937	$	45,424	$	46,519

Deferred debt costs capitalized during the years ended December 31, 2022, 2021 and 2020 totaled $9.9 million, $6.4 million and $1.2 million, respectively.

F-17

Table of Contents

SAUL CENTERS, INC.

Notes to Consolidated Financial Statements

6. LEASE AGREEMENTS

Lease income includes primarily base rent arising from noncancelable leases. Base rent (including straight-line rent) for the years ended December 31, 2022, 2021, and 2020, amounted to $201.2 million, $197.9 million, and $188.6 million, respectively. Future contractual payments under noncancelable leases for years ended December 31 (which exclude the effect of straight-line rents), are as follows:


(in thousands)
2023	$	168,994
2024	150,313
2025	126,360
2026	101,571
2027	82,878
Thereafter	318,265
	$	948,381

The majority of the leases provide for rental increases based on fixed annual increases or increases in the Consumer Price Index and expense recoveries based on increases in operating expenses. The expense recoveries generally are payable in equal installments throughout the year based on estimates, with adjustments made in the succeeding year. Expense recoveries for the years ended December 31, 2022, 2021, and 2020, amounted to $36.0 million, $34.5 million, and $34.7 million, respectively. In addition, certain retail leases provide for percentage rent based on sales in excess of the minimum specified in the tenant’s lease. Percentage rent amounted to $1.6 million, $1.5 million, and $0.9 million, for the years ended December 31, 2022, 2021, and 2020, respectively.

7. LONG-TERM LEASE OBLIGATIONS

At December 31, 2022 and 2021, no properties were situated upon land subject to noncancelable long- term leases.

Flagship Center consists of two developed out parcels that are part of a larger adjacent community shopping center formerly owned by the Saul Organization and sold to an affiliate of a tenant in 1991. The Company has a 90-year ground leasehold interest which commenced in September 1991 with a minimum rent of one dollar per year. Countryside shopping center was acquired in February 2004. Because of certain land use considerations, approximately 3.4% of the underlying land is held under a 99-year ground lease. The lease requires the Company to pay minimum rent of one dollar per year as well as its pro-rata share of the real estate taxes.

The Company’s corporate headquarters space is leased by a member of the Saul Organization. The lease commenced in March 2002 and expires in February 2027. The Company and the Saul Organization entered into a Shared Services Agreement whereby each party pays an allocation of total rental payments based on a percentage proportionate to the number of employees employed by each party. The Company’s rent expense for the years ended December 31, 2022, 2021, and 2020 was $824,300, $799,500, and $799,300, respectively. Expenses arising from the lease are included in general and administrative expense (see Note 9 – Related Party Transactions).

On January 1, 2019, in conjunction with the adoption of ASU 2016-02, a right of use asset and corresponding lease liability related to our headquarters lease were recorded in other assets and other liabilities, respectively. The lease commenced in March 2002 and expires on February 28, 2027. On February 28, 2022, the lease was extended for an additional period of 60 months. In conjunction with the lease extension, a right of use asset and corresponding lease liability was recognized of $3.8 million and $3.8 million, respectively. The right of use asset and corresponding lease liability totaled $3.2 million and $3.2 million, respectively, at December 31, 2022.

8. EQUITY AND NONCONTROLLING INTERESTS

The Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020 reflect noncontrolling interests of $15.2 million, $13.3 million, and $9.9 million, respectively, representing income attributable to limited partnership units not held by Saul Centers.

F-18

Table of Contents

SAUL CENTERS, INC.

Notes to Consolidated Financial Statements

At December 31, 2022, the Company had outstanding 3.0 million depositary shares, each representing 1/100th of a share of 6.125% Series D Cumulative Redeemable Preferred Stock (the "Series D Stock"). The depositary shares may be redeemed at the Company’s option, in whole or in part, on or after January 23, 2023, at the $25.00 liquidation preference, plus accrued but unpaid dividends to but not including the redemption date. The depositary shares pay an annual dividend of $1.53125 per share, equivalent to 6.125% of the $25.00 liquidation preference. The Series D Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of the Company except in connection with certain changes in control or delisting events. Investors in the depositary shares generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not declared or consecutive) and in certain other events.

At December 31, 2022, the Company had outstanding 4.4 million depositary shares, each representing 1/100th of a share of 6.000% Series E Cumulative Redeemable Preferred Stock (the “Series E Stock”). The depositary shares may be redeemed at the Company’s option, in whole or in part, on or after September 17, 2024, at the $25.00 liquidation preference, plus accrued but unpaid dividends to but not including the redemption date. The depositary shares pay an annual dividend of $1.50 per share, equivalent to 6.000% of the $25.00 liquidation preference. The Series E Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of the Company except in connection with certain changes in control or delisting events. Investors in the depositary shares generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not declared or consecutive) and in certain other events.

~~Per Share Data~~Allocation of Purchase Price of Real Estate Acquired

~~Per share data~~The Company allocates the purchase price of real estate investment properties to various components, such as land, buildings and intangibles related to in-place leases and customer relationships, based on their relative fair values.

During 2021, the Company acquired properties that had an aggregate cost of $108.3 million, including acquisition costs. The entire amount was allocated to land.

The gross carrying amount of lease intangible assets included in deferred leasing costs as of December 31, 2022 and 2021 was $10.7 million and $11.0 million, respectively, and accumulated amortization was $9.2 million and $9.1 million, respectively. Amortization expense totaled $0.4 million, $0.5 million and $0.6 million, for ~~net~~the years ended December 31, 2022, 2021, and 2020, respectively. The gross carrying amount of below market lease intangible liabilities included in deferred income ~~(basic~~as of December 31, 2022 and ~~diluted)~~2021 was $23.3 million and $23.3 million, respectively, and accumulated amortization was $17.3 million and $16.0 million, respectively. Accretion income totaled $1.3 million, $1.4 million, and $1.4 million, for the years ended December 31, 2022, 2021, and 2020, respectively. The gross carrying amount of above market lease intangible assets included in accounts receivable as of December 31, 2022 and 2021 was $0.6 million and $0.6 million, respectively, and accumulated amortization was $194,800 and $161,800, respectively. Amortization expense totaled $32,900, $32,900 and $43,600, for the years ended December 31, 2022, 2021 and 2020, respectively. The remaining weighted-average amortization period as of December 31, 2022 is ~~computed using weighted average shares~~4.6 years, 6.3 years, and 4.9 years for lease acquisition costs, above market leases and below market leases, respectively.

As of December 31, 2022, scheduled amortization of intangible assets and deferred income related to in place leases is as follows:


(In thousands)	Lease acquisition costs		Above market leases		Below market leases
2023	$	316	$	33	$	1,297
2024	199		33		878
2025	153		33		601
2026	131		33		509
2027	121		33		507
Thereafter	593		244		2,237
Total	$	1,513	$	409	$	6,029

4. NONCONTROLLING INTERESTS - HOLDERS OF CONVERTIBLE LIMITED PARTNERSHIP UNITS IN THE OPERATING PARTNERSHIP

Saul Centers is the sole general partner of the Operating Partnership, owning a 72.0% common ~~stock. Convertible~~interest as of December 31, 2022. Noncontrolling interest in the Operating Partnership is comprised of limited partnership units owned by the Saul Organization. Noncontrolling interest reflected on the accompanying consolidated balance sheets is increased for earnings allocated to limited partnership interests and ~~employee stock options are~~distributions reinvested in additional units, and is decreased for limited partner distributions. Noncontrolling interest reflected on the ~~Company’s potentially dilutive securities. For all periods presented,~~consolidated statements of operations represents earnings allocated to limited partnership interests held by the ~~convertible~~Saul Organization.

The Saul Organization holds a 26.6% limited partnership interest in the Operating Partnership represented by 8,827,873 limited partnership units, as of December 31, 2022. The units are ~~anti-dilutive. The treasury~~convertible into shares of Saul Centers’ common stock, ~~method was used to measure~~at the ~~effect~~option of the ~~dilution.~~

December 31,
(Shares in thousands) 2017 2016 2015
Weighted average common shares outstanding - Basic 21,901
21,505
21,127
Effect of dilutive options 107
110
69
Weighted average common shares outstanding - Diluted 22,008
21,615
21,196
Average share price $ 61.63
$ 58.96
$ 53.38
Non-dilutive options —
129
111
Years non-dilutive options were issued 2007, 2015, and 2016 2007 and 2015

~~Legal Contingencies~~

~~The Company is subject to various legal proceedings and claims~~unit holder, on a one-for-one basis provided that, ~~arise~~in accordance with the Saul Centers, Inc. Articles of Incorporation, the rights may not be exercised at any time that the Saul Organization beneficially owns, directly or indirectly, in the ~~ordinary course of business, which are generally covered by insurance. Upon determination that a loss is probable to occur and can be reasonably estimated, the estimated amount~~aggregate more than 39.9% of the ~~loss is recorded in the financial statements.~~

~~Recently Issued Accounting Standards~~

In May 2014, the FASB issued ASU No. 2014-09 titled “Revenue from Contracts with Customers” and subsequently issued several related ASUs (collectively “ASU 2014-09”). ASU 2014-09 will replace most existing revenue recognition guidance and will require an entity to recognize the amount of revenue which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 is effective for annual periods beginning after December 15, 2017, and interim periods within those years and early adoption is not permitted. ASU 2014-09 must be applied retrospectively by either restating prior periods or by recognizing the cumulative effect asvalue of the ~~first date~~outstanding common stock and preferred stock of ~~application. Management believes the majority~~Saul Centers (the “Equity Securities”). As of the Company's revenue falls outside of the scope of this guidance and does not anticipate any significant changes to the timing of the Company's revenue recognition. The Company intends to implement the standard retrospectively with the cumulative effect recognized in retained earnings at the date of adoption.December 31, 2022, approximately 411,000 units were eligible for conversion.

~~In February 2015, the FASB issued ASU No. 2015-02, “Consolidation” ("ASU 2015-02"). ASU 2015-02 modifies existing consolidation guidance for reporting organizations that are required to evaluate~~

F-14

Table of Contents

SAUL CENTERS, INC.

Notes to Consolidated Financial Statements

whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. ASU 2015-02 is effective for annual periods beginning afterAs of December ~~15, 2015, and interim periods within those years. The adoption of ASU 2015-02 effective January 1, 2016, resulted~~31, 2022, a third party investor holds a 1.4% limited partnership interest in the Operating Partnership ~~being classified as~~represented by 469,740 convertible limited partnership units. At the option of the unit holder, these units are convertible into shares of Saul Centers’ common stock on a ~~variable~~one-for-one basis; provided that, in lieu of the delivery of Saul Centers' common stock, Saul Centers may, in its sole discretion, deliver cash in an amount equal to the value of such Saul Centers' common stock.

The impact of the Saul Organization’s 26.6% limited partnership interest ~~entity. Because~~in the Operating Partnership is reflected as Noncontrolling Interests in the accompanying consolidated financial statements. Weighted average fully diluted partnership units and common stock outstanding for the years ended December 31, 2022, 2021, and 2020, were 34.0 million, 33.1 million, and 31.3 million, respectively.

5. NOTES PAYABLE, BANK CREDIT FACILITY, INTEREST EXPENSE AND AMORTIZATION OF DEFERRED DEBT COSTS

At December 31, 2022, the principal amount of outstanding debt totaled $1.2 billion, of which $1.07 billion was ~~already consolidated into~~fixed rate debt and $164.0 million was variable rate debt. The principal amount of the ~~financial statements, adoption~~Company’s outstanding debt totaled $1.2 billion at December 31, 2021, of which $949.0 million was fixed rate debt and $206.0 million was variable rate debt.

At December 31, 2022, the Company had ~~no impact~~a $525.0 million Credit Facility comprised of a $425.0 million revolving credit facility and a $100.0 million term loan. The revolving credit facility matures on August 29, 2025, which may be extended by the Company for one additional year, subject to satisfaction of certain conditions. The term loan matures on February 26, 2027, and may not be extended. Through October 2, 2022, interest accrued at LIBOR plus an applicable spread, which was determined by certain leverage tests. Effective October 3, 2022, in conjunction with the execution of the First Amendment to the Credit Facility, interest accrues at SOFR plus 10 basis points plus an applicable spread, which is determined by certain leverage tests. As of December 31, 2022, the applicable spread for borrowings was 140 basis points related to the revolving credit facility and 135 basis points related to the term loan. Letters of credit may be issued under the Credit Facility. On December 31, 2022, based on the ~~Company’s consolidated financial statements or disclosures.~~

In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest” (“ASU 2015-03”). ASU 2015-03 simplifies the presentation of debt issuance costs and will require an entity to deduct transaction costs from the carrying value of the ~~related financial liability~~Company’s unencumbered properties, approximately $212.1 million was available under the Credit Facility, $264.0 million was outstanding and ~~not record those transaction costs~~approximately $185,000 was committed for letters of credit.

On August 23, 2022, the Company entered into two floating-to-fixed interest rate swap agreements to manage the interest rate risk associated with $100.0 million of its variable-rate debt. Each swap agreement became effective October 3, 2022 and each has a $50.0 million notional amount. One agreement terminates on October 1, 2027 and effectively fixes SOFR at 2.96%. The other agreement terminates on October 1, 2030 and effectively fixes SOFR at 2.91%. Because the interest-rate swaps effectively fix SOFR for $100.0 million of variable-rate debt, unless otherwise indicated, $100.0 million of variable-rate debt will be treated as ~~a separate asset. Recognition and measurement guidance~~fixed-rate debt for ~~debt issuance costs are not affected by ASU 2015-03. ASU 2015-03 is effective for annual periods~~disclosure purposes beginning ~~after December 15, 2015, and interim periods within those years, and must be applied retrospectively by adjusting the balance sheet of each individual period presented.~~September 30, 2022. The Company ~~retrospectively adopted ASU 2015-03 effective January 1, 2016.~~ has designated the agreements as cash flow hedges for accounting purposes.

As ~~a result~~ of ~~the adoption of ASU 2015-03, the Company no longer reports its net deferred debt costs as an asset and instead reports those amounts as reduction of the carrying value of the associated debt.~~

In February 2016, the FASB issued ASU 2016-02, ‘‘Leases’’ (“ASU 2016-02”). ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, interim periods within those years, and requires a modified retrospective transition approach for all leases existing at the date of initial application, with an option to use certain practical expedients for those existing leases. We are evaluating the impact that ASU 2016-02 will have on our consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09, "Compensation-Stock Compensation" ("ASU 2016-09"). ASU 2016-09 simplifies the accounting for several aspects of share-based payments including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016 and interim periods within those years. The transition method varies based on the specific amendment. The adoption of ASU 2016-09 effective January 1, 2017, did not have a material impact on our consolidated financial statements or related disclosures.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses" ("ASU 2016-13"). ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of information to support credit loss estimates. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those years. We are evaluating the impact that ASU 2016-13 will have on our consolidated financial statements and related disclosures.

~~In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business" ("ASU 2017-01"). ASU 2017-01 provides that when substantially all of~~31, 2022, the fair value of the ~~gross~~interest-rate swaps totaled approximately $4.0 million, which is included in Other assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. ASU 2017-01 is effective prospectively for annual periods beginning after December 15, 2017, and interim periods within those years. Early application is permitted for transactions for which the acquisition date occurs before the effective date provided the transaction has not been reported in the ~~financial statements.~~Consolidated Balance Sheets. The increase in value from inception of the swaps is reflected in Other Comprehensive Income in the Consolidated Statements of Comprehensive Income.

On February 23, 2022, the Company ~~adopted ASU 2017-01 during~~closed on a $133.0 million construction-to-permanent loan, the proceeds of which will be used to partially fund Hampden House. The loan matures in 2040, bears interest at a fixed rate of 3.90%, and requires interest only payments, which will be funded by the loan, until conversion to permanent. The conversion is expected in the first quarter of ~~2017,~~2026, and thereafter, monthly principal and interest payments based on a 25-year amortization schedule will be required.

On March 11, 2022, the ~~effect~~Company repaid in full the remaining principal balance of $28.3 million of the mortgage loan secured by Lansdowne Town Center, which ~~for asset acquisitions,~~ was ~~(a) the capitalization of acquisition costs, instead of expense, and (b) recordation of acquired assets and assessment liabilities at relative fair value, instead of fair value.~~ scheduled to mature in June 2022.

~~Reclassifications~~

~~Certain reclassifications have been made to prior years to conform to the presentation used for year ended December 31, 2017.~~

F-15



Maryland			52-1833074
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)



Title of each class		Trading symbol:		Name of each exchange on which registered
Common Stock, Par Value $0.01 Per Share		BFS		New York Stock Exchange
Depositary Shares each representing 1/~~100~~^th ~~of a share of 6.875% Series C Cumulative Redeemable Preferred Stock, Par Value $0.01 Per Share~~		~~New York Stock Exchange~~
~~Depositary Shares each representing 1/100~~^th100th of a share of 6.125% Series D Cumulative Redeemable Preferred Stock, Par Value $0.01 Per Share	BFS/PRD		New York Stock Exchange
Depositary Shares each representing 1/100th of a share of 6.000% Series E Cumulative Redeemable Preferred Stock, Par Value $0.01 Per Share		BFS/PRE		New York Stock Exchange



Period	Share Price
	High		Low
October 1, 2017 – December 31, 2017	$	65.30	$	60.09
July 1, 2017 – September 30, 2017	$	62.76	$	57.58
April 1, 2017 – June 30, 2017	$	64.59	$	56.33
January 1, 2017 - March 31, 2017	$	66.80	$	60.57
October 1, 2016 – December 31, 2016	$	68.23	$	58.79
July 1, 2016 – September 30, 2016	$	68.58	$	61.28
April 1, 2016 – June 30, 2016	$	61.71	$	51.59
January 1, 2016 - March 31, 2016	$	53.50	$	47.77


	Period Ended
Index	12/31/2017	12/31/2018	12/31/2019	12/31/2020	12/31/2021	12/31/2022
Saul Centers, Inc. 1	$100.00	$79.52	$93.34	$59.67	$104.57	$84.32
S&P 500 2	$100.00	$95.62	$125.34	$148.85	$191.58	$156.85
Russell 2000 3	$100.00	$88.99	$111.70	$134.00	$153.85	$122.37
FTSE NAREIT Equity 4	$100.00	$95.38	$120.17	$110.56	$158.36	$119.83

1 Source: S&P Capital I.Q.
2 Source: Bloomberg
3 Source: FTSE Russell
4 Source: FTSE National Association of Real Estate Investment Trusts



	Period Ended
Index	12/31/2012		12/31/2013		12/31/2014		12/31/2015		12/31/2016		12/31/2017
Saul Centers, Inc. ¹		$100.00		$115.11		$142.46		$131.79		$176.88		$163.80
S&P 500 ²		$100.00		$132.39		$150.51		$152.59		$170.84		$208.14
Russell 2000 ³		$100.00		$138.82		$145.62		$139.19		$168.85		$225.23
NAREIT Equity ⁴		$100.00		$102.47		$133.35		$137.61		$149.33		$157.14

¹Source: S&P Capital I.Q.
²Source: Bloomberg
³Source: FTSE Russell
⁴Source: National Association of Real Estate Investment Trusts



x☒			ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



SAUL CENTERS, INC.
(Exact name of registrant as specified in its charter)


					Page Numbers
			PART I

				~~Page Numbers~~
Item 1.	~~PART I~~

~~Item 1.~~	Business	34

Item 1A.			Risk Factors		1410

Item 1B.			Unresolved Staff Comments		2723

Item 2.			Properties		2723

Item 3.			Legal Proceedings		3430

Item 4.			Mine Safety Disclosures		3430

			PART II

Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		3531

Item 6.			~~Selected Financial Data~~[Reserved]		3833

Item 7.			Management’s Discussion and Analysis of Financial Condition And Results of Operations		3933

Item 7A.			Quantitative and Qualitative Disclosures About Market Risk		6250

Item 8.			Financial Statements and Supplementary Data		6251

Item 9.			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		6351

Item 9A.			Controls and Procedures		6351

Item 9B.			Other Information		6553

			PART III

Item 10.			Directors, Executive Officers and Corporate Governance		6554

Item 11.			Executive Compensation		6554

Item 12.			Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters		6554

Item 13.			Certain Relationships and Related Transactions, and Director Independence		6554

Item 14.			Principal Accountant Fees and Services		6554

			PART IV

Item 15.			Exhibits and Financial Statement Schedules		6655

Item 16.			Form 10-K Summary		59

			FINANCIAL STATEMENT SCHEDULE

Schedule III.			Real Estate and Accumulated Depreciation		F-~~F-36~~28


~~(1)~~	~~Calculated using annualized contractual base rent payable as of December 31, 2017 for the expiring GLA, excluding expenses payable by or reimbursable from tenants.~~



Property	Location	Leasable Area (Square Feet)	Year Acquired or Developed (Renovated)	Land Area (Acres)	Percentage Leased as of December 31, (1)
					2022		2021		2020		2019		2018		Anchor / Significant Tenants
Shopping Centers
Ashbrook Marketplace	Ashburn, VA	85,819	2018 (2019)	13.7	100	%	100	%	100	%	92	%	N/A		Lidl, Planet Fitness, Starbucks, Dunkin Donuts, Valvoline, Cafe Rio, McAlisters Deli
Ashburn Village	Ashburn, VA	221,596	1994-2006	26.4	94	%	96	%	95	%	97	%	97	%	Giant Food, Hallmark, McDonald's, Burger King, Dunkin Donuts, Kinder Care, Blue Ridge Grill
Ashland Square Phase I	Dumfries, VA	23,120	2007	2.0	100	%	100	%	100	%	100	%	100	%	Capital One Bank, CVS Pharmacy, The All American Steakhouse
Beacon Center	Alexandria, VA	359,671	1972 (1993/99/07)	32.3	100	%	100	%	100	%	100	%	100	%	Lowe's Home Improvement Center, Giant Food, Home Goods, Outback Steakhouse, Marshalls, Party Depot, Panera Bread, TGI Fridays, Starbucks, Famous Dave's, Chipotle, Capital One Bank, Wendy's
BJ’s Wholesale Club	Alexandria, VA	115,660	2008	9.6	100	%	100	%	100	%	100	%	100	%	BJ's Wholesale Club
Boca Valley Plaza	Boca Raton, FL	121,365	2004	12.7	100	%	94	%	89	%	99	%	96	%	Publix, Palm Beach Fitness, Anima Domus
Boulevard	Fairfax, VA	49,140	1994 (1999/09)	5.0	100	%	96	%	97	%	100	%	100	%	Panera Bread, Party City, Petco, Capital One Bank
Briggs Chaney MarketPlace	Silver Spring, MD	194,258	2004	18.2	99	%	95	%	97	%	96	%	92	%	Global Food, Ross Dress For Less, Advance Auto Parts, McDonald's, Dunkin Donuts, Enterprise Rent-A-Car, Dollar Tree, Dollar General, Salon Plaza, Chipotle
Broadlands Village	Ashburn, VA	174,438	2003 (2004/06)	24.0	91	%	92	%	90	%	98	%	98	%	Aldi Grocery, The All American Steakhouse, Bonefish Grill, Dollar Tree, Starbucks, Minnieland Day Care, LA Fitness, Chase Bank
Burtonsville Town Square	Burtonsville, MD	139,928	2017	26.3	100	%	100	%	100	%	98	%	100	%	Giant Food, Petco, Starbucks, Greene Turtle, Capital One Bank, CVS Pharmacy, Roy Rogers, Mr. Tire, Taco Bell
Countryside Marketplace	Sterling, VA	138,804	2004	16.0	85	%	91	%	92	%	95	%	96	%	Lotte Plaza Market, CVS Pharmacy, Starbucks, McDonald's, 7-Eleven
Cranberry Square	Westminster, MD	141,450	2011	18.9	100	%	97	%	87	%	96	%	97	%	Giant Food, Giant Gas Station, Staples, Party City, Wendy's, Sola Salons, Ledo Pizza, Hallmark
Cruse MarketPlace	Cumming, GA	78,686	2004	10.6	93	%	94	%	92	%	94	%	96	%	Publix, Subway, Orange Theory, Anytime Fitness
Flagship Center	Rockville, MD	21,500	1972, 1989	0.5	100	%	100	%	100	%	100	%	100	%	Chase Bank, Bank of America
French Market	Oklahoma City, OK	246,148	1974 (1984/98)	13.8	75	%	75	%	78	%	97	%	96	%	Burlington Coat Factory, Bed Bath & Beyond, Staples, Petco, The Tile Shop, Lakeshore Learning Center, Dollar Tree, Verizon, Raising Cane's
Germantown	Germantown, MD	18,982	1992	2.7	100	%	100	%	100	%	100	%	100	%	CVS Pharmacy, Jiffy Lube
The Glen	Woodbridge, VA	136,440	1994 (2005)	14.7	99	%	93	%	98	%	97	%	96	%	Safeway, Panera Bread, Five Guys, Chipotle
Great Falls Center	Great Falls, VA	91,666	2008	11.0	100	%	98	%	100	%	98	%	100	%	Safeway, CVS Pharmacy, Trustar Bank, Starbucks, Subway, Long & Foster
Hampshire Langley	Takoma Park, MD	131,700	1972 (1979)	9.9	100	%	100	%	100	%	100	%	100	%	Mega Mart, Starbucks, Chuck E. Cheese's, Sardi's Chicken, Capital One Bank, Kool Smiles, Wells Fargo


~~(1)~~	Percentage leased is a percentage of rentable square feet leased for commercial space and a percentage of units leased for apartments. Includes only operating properties owned as of December 31, 2017. As such, prior year totals do not agree to prior year tables.


~~(2)~~	~~Total percentage leased is for commercial space only.~~


~~(3)~~	Prior year leased percentages for Total Shopping Centers, Total Mixed-Use Properties and Total Portfolio have been recalculated to exclude the impact of properties sold or removed from service and, therefore, the percentages reported in this table may be different than the percentages previously reported.



SELECTED FINANCIAL DATA
	Years Ended December 31,
(In thousands, except per share data)	2017			2016			2015			2014			2013
Operating Data:
Total revenue	$	227,285		$	217,070		$	209,077		$	207,092		$	197,897
Total operating expenses	166,687			161,357			156,147			155,163			162,628
Operating income	60,598			55,713			52,930			51,929			35,269
Non-operating income:
Change in fair value of derivatives	70			(6		)	(10		)	(10		)	(7		)
Loss on early extinguishment of debt	—			—			—			—			(497		)
Gains on sales of properties	—			1,013			11			6,069			—
Gain on casualty settlements	—			—			—			—			77
Net income	60,668			56,720			52,931			57,988			34,842
Income attributable to noncontrolling interests	(12,411		)	(11,441		)	(10,463		)	(11,045		)	(3,970		)
Net income attributable to Saul Centers, Inc.	48,257			45,279			42,468			46,943			30,872
Preferred stock redemption	—			—			—			(1,480		)	(5,228		)
Preferred dividends	(12,375		)	(12,375		)	(12,375		)	(13,361		)	(13,983		)
Net income available to common stockholders	$	35,882		$	32,904		$	30,093		$	32,102		$	11,661
Per Share Data (diluted):
Net income available to common stockholders	$	1.63		$	1.52		$	1.42		$	1.54		$	0.57
Basic and Diluted Shares Outstanding:
Weighted average common shares - basic	21,901			21,505			21,127			20,772			20,364
Effect of dilutive options	107			110			69			49			37
Weighted average common shares - diluted	22,008			21,615			21,196			20,821			20,401
Weighted average convertible limited partnership units	7,503			7,375			7,253			7,156			6,929
Weighted average common shares and fully converted limited partnership units - diluted	29,511			28,990			28,449			27,977			27,330
Dividends Paid:
Cash dividends to common stockholders (1)	$	44,576		$	39,472		$	35,645		$	32,346		$	29,205
Cash dividends per share	$	2.04		$	1.84		$	1.69		$	1.56		$	1.44
Balance Sheet Data:
Real estate investments (net of accumulated depreciation)	$	1,315,034		$	1,242,534		$	1,197,340		$	1,163,542		$	1,094,776
Total assets	1,422,452			1,343,025			1,295,408			1,257,113			1,189,000
Total debt, including accrued interest	958,622			903,709			869,652			850,727			813,653
Preferred stock	180,000			180,000			180,000			180,000			180,000
Total equity	393,103			373,249			353,727			339,257			315,126


FORM
~~FORM~~ 10-K



Operating expenses
(Dollars in thousands)	Year ended December 31,						Percentage Change
	2017		2016		2015		2017 from 2016		2016 from 2015
Property operating expenses	$	27,689	$	27,527	$	26,565	0.6	%	3.6	%
Provision for credit losses	906		1,494		915		(39.4	)%	63.3	%
Real estate taxes	26,997		24,680		23,663		9.4	%	4.3	%
Interest expense and amortization of deferred debt costs	47,225		45,683		45,165		3.4	%	1.1	%
Depreciation and amortization of deferred leasing costs	45,694		44,417		43,270		2.9	%	2.7	%
General and administrative	18,176		17,496		16,353		3.9	%	7.0	%
Acquisition related costs	—		60		84		(100.0	)%	(28.6	)%
Predevelopment expenses	—		—		132		NA		(100.0	)%
Total operating expenses	$	166,687	$	161,357	$	156,147	3.3	%	3.3	%



			Base Rent per Square Foot
Year ended December 31,	Square Feet	Number of Leases	New/Renewed Leases		Expiring Leases
2017	1,315,192	280	$	19.60	$	19.45
2016	1,292,483	244	17.24		17.05
2015	1,583,310	259	15.15		14.82



Expiring Leases:	Total
Square feet	972,950
Average base rent per square foot	$	17.63
Estimated market base rent per square foot	$	17.66



	December 31,
(Shares in thousands)	2017		2016		2015
Weighted average common shares outstanding - Basic	21,901		21,505		21,127
Effect of dilutive options	107		110		69
Weighted average common shares outstanding - Diluted	22,008		21,615		21,196
Average share price	$	61.63	$	58.96	$	53.38
Non-dilutive options	—		129		111
Years non-dilutive options were issued			2007, 2015, and 2016		2007 and 2015



(in thousands)	700 N. Glebe Road		Thruway Pad			Total
Land	$	7,236	$	2,196		$	9,432
Buildings	—		874			874
In-place Leases	—		93			93
Above Market Rent	—		—			—
Below Market Rent	—		(63		)	(63		)
Total Purchase Price	$	7,236	$	3,100		$	10,336


4.	~~NONCONTROLLING INTERESTS - HOLDERS OF CONVERTIBLE LIMITED PARTNERSHIP UNITS IN THE OPERATING PARTNERSHIP~~


5.	~~MORTGAGE NOTES PAYABLE, REVOLVING CREDIT FACILITY, INTEREST EXPENSE AND AMORTIZATION OF DEFERRED DEBT COSTS~~


*	Interest rate and scheduled maturity data presented as of December 31, 2017. Totals computed using weighted averages. Amounts shown are principal amounts and have not been reduced by any deferred debt issuance costs.


~~(ff)~~	The loan is collateralized by Burtonsville Town Square and requires equal monthly principal and interest payments of $198,000 based on a 25-year amortization schedule and a final payment of $20.3 million at loan maturity. Principal of $860,000 was amortized in 2017.



(in thousands)
2018	$	160,025
2019	141,097
2020	120,369
2021	100,766
2022	77,312
Thereafter	245,103
	$	844,672


	Directors									Officers
Grant date	May 13, 2022			May 7, 2021			April 24, 2020				May 13, 2022			May 7, 2021			April 24, 2020
Exercise price	$	47.90		$	43.89		$	50.00			$	47.90		$	43.89		$	50.00
Fair value per option	$	8.34		$	6.32		$	0.84			$	7.66		$	5.96		$	0.92
Volatility	30.00		%	29.70		%	25.80		%		27.10		%	27.50		%	24.00		%
Expected life (years)	5.0			5.0			5.0				7.0			7.0			7.0
Assumed yield	4.90%			4.96%			3.80%				4.93%			4.97%			3.85%
Risk-free rate	2.89%			0.77%			0.36%				2.95%			1.24%			0.51%



SAUL CENTERS, INC. Notes to Consolidated Financial Statements (Dollars in thousands, except per share data)
Stock options issued
	Directors
Grant date		4/25/2008			4/24/2009			5/7/2010			5/13/2011			5/4/2012			5/10/2013			5/9/2014			5/8/2015			5/6/2016			5/5/2017			Subtotals
Total grant		30,000			32,500			32,500			32,500			35,000			35,000			30,000			35,000			32,500			27,500			322,500
Vested		30,000			32,500			32,500			32,500			35,000			35,000			30,000			35,000			32,500			27,500			322,500
Exercised		20,000			27,500			25,000			22,500			22,500			22,500			17,500			12,500			7,500			—			177,500
Forfeited		7,500			—			2,500			2,500			—			—			—			—			—			—			12,500
Exercisable at December 31, 2017		2,500			5,000			5,000			7,500			12,500			12,500			12,500			22,500			25,000			27,500			132,500
Remaining unexercised		2,500			5,000			5,000			7,500			12,500			12,500			12,500			22,500			25,000			27,500			132,500
Exercise price		$	50.15		$	32.68		$	38.76		$	41.82		$	39.29		$	44.42		$	47.03		$	51.07		$	57.74		$	59.41
Volatility		0.237			0.344			0.369			0.358			0.348			0.333			0.173			0.166			0.166			0.173
Expected life (years)		7.0			6.0			5.0			5.0			5.0			5.0			5.0			5.0			5.0			5.0
Assumed yield		4.09		%	4.54		%	4.23		%	4.16		%	4.61		%	4.53		%	4.48		%	4.54		%	3.75		%	3.45		%
Risk-free rate		3.49		%	2.19		%	2.17		%	1.86		%	0.78		%	0.82		%	1.63		%	1.50		%	1.23		%	1.89		%
Total value at grant date		$	255		$	223		$	288		$	297		$	257		$	278		$	110		$	125		$	151		$	166		$	2,150
Expensed in previous years		255			223			288			297			257			278			110			—			—			—			1,708
Expensed in 2015		—			—			—			—			—			—			—			125			—			—			125
Expensed in 2016		—			—			—			—			—			—			—			—			151			—			151
Expensed in 2017		—			—			—			—			—			—			—			—			—			166			166
Future expense		—			—			—			—			—			—			—			—			—			—			—
		Officers
Grant date		5/13/2011			5/4/2012			5/10/2013			5/9/2014			5/8/2015			5/6/2016			5/5/2017			Subtotals									Grand Totals
Total grant		162,500			242,500			202,500			170,000			190,000			194,000			205,000			1,366,500									1,689,000
Vested		118,750			107,500			171,875			126,875			94,375			48,500			—			667,875									990,375
Exercised		96,100			91,830			116,500			41,250			20,000			3,750			—			369,430									546,930
Forfeited		43,750			135,000			30,625			1,875			3,125			1,875			—			216,250									228,750
Exercisable at December 31, 2017		22,650			15,670			55,375			85,625			74,375			44,750			—			298,445									430,945
Remaining unexercised		22,650			15,670			55,375			126,875			166,875			188,375			205,000			780,820									913,320
Exercise price		$	41.82		$	39.29		$	44.42		$	47.03		$	51.07		$	57.74		$	59.41
Volatility		0.330			0.315			0.304			0.306			0.298			0.185			0.170
Expected life (years)		8.0			8.0			8.0			7.0			7.0			7.0			7.0
Assumed yield		4.81		%	5.28		%	5.12		%	4.89		%	4.94		%	3.80		%	3.50		%
Risk-free rate		2.75		%	1.49		%	1.49		%	2.17		%	1.89		%	1.55		%	2.17		%
Gross value at grant date		$	1,366		$	1,518		$	1,401		$	1,350		$	1,585		$	1,137		$	1,324		$	9,681								$	11,831
Estimated forfeitures		368			845			212			169			142			86			92			1,914									1,914
Expensed in previous years		909			419			493			197			—			—			—			2,018									3,726
Expensed in 2015		89			157			269			296			240			—			—			1,051									1,176
Expensed in 2016		—			97			269			295			361			175			—			1,197									1,348
Expensed in 2017		—			—			158			295			361			263			205			1,282									1,448
Future expense		—			—			—			98			481			613			1,027			2,219									2,219
Weighted average term of remaining future expense		2.5			years



(In thousands)	The Effect of Hedge Accounting on Other Comprehensive Income (OCI)
	Amount of Gain (or Loss) Recognized in OCI				Location of Gain (or Loss) Reclassified from OCI into Income			Amount of Gain (or Loss) Reclassified from OCI into Income
	For the Years Ended December 31,
Derivative Instrument	2022		2021	2020	2022	2021	2020	2022		2021	2020
Interest rate swaps	$	4,139	$—	$—	Interest expense, net and amortization of deferred debt costs	N/A	N/A	$	177	N/A	N/A



	Total Distributions to						Dividend Reinvestments
(Dollars in thousands, except per share amounts)	Preferred Stockholders		Common Stockholders		Limited Partnership Unitholders		Common Stock Shares Issued	Discounted Share Price		Limited Partnership Units Issued	Average Unit Price
Distributions during 2017
October 31	$	3,094	$	11,221	$	3,838	82,991	$	59.33	15,596	$	60.08
July 31	3,094		11,160		3,830		85,731	57.40		16,021	58.13
April 30	3,094		11,119		3,810		51,003	59.64		40,623	59.96
January 31	3,093		11,076		3,790		46,286	61.85		39,111	62.15
Total 2017	$	12,375	$	44,576	$	15,268	266,011			111,351
Distributions during 2016
October 31	$	3,094	$	10,168	$	3,478	44,176	$	57.18	30,891	$	57.18
July 31	3,094		10,133		3,465		39,487	65.64		26,897	65.64
April 30	3,094		10,029		3,449		48,854	51.59		34,201	51.59
January 31	3,093		9,142		3,141		54,280	49.24		32,769	49.24
Total 2016	$	12,375	$	39,472	$	13,533	186,797			124,758
Distributions during 2015
October 31	$	3,094	$	9,106	$	3,129	47,313	$	55.73	28,936	$	55.73
July 31	3,094		9,081		3,115		56,003	50.30		32,041	50.30
April 30	3,094		9,055		3,104		54,921	50.21		25,264	50.21
January 31	3,093		8,403		2,880		42,975	56.74		20,796	56.74
Total 2015	$	12,375	$	35,645	$	12,228	201,212			107,037



(In thousands, except per share amounts)	2017
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
Revenue	$	58,466	$	55,907	$	56,237	$	56,675
Operating income before loss on early extinguishment of debt, gain on casualty settlement, and noncontrolling interests	17,374		14,422		14,386		14,416
Gain on sales of properties	—		—		—		—
Net income attributable to Saul Centers, Inc.	13,704		11,510		11,483		11,560
Net income available to common stockholders	10,610		8,416		8,390		8,466
Net income available to common stockholders per diluted share	0.49		0.38		0.38		0.38



SAUL CENTERS, INC. Notes to Consolidated Financial Statements
(In thousands)	Shopping			Mixed-Use			Corporate			Consolidated
As of or for the year ended December 31, 2017	Centers			Properties			and Other			Totals
Real estate rental operations:
Revenue	$	165,853		$	61,352		$	80		$	227,285
Expenses	(34,675		)	(20,917		)	—			(55,592		)
Income from real estate	131,178			40,435			80			171,693
Interest expense and amortization of deferred debt costs	—			—			(47,225		)	(47,225		)
General and administrative	—			—			(18,176		)	(18,176		)
Subtotal	131,178			40,435			(65,321		)	106,292
Depreciation and amortization of deferred leasing costs	(29,977		)	(15,717		)	—			(45,694		)
Change in fair value of derivatives	—			—			70			70
Net income (loss)	$	101,201		$	24,718		$	(65,251	)	$	60,668
Capital investment	$	90,896		$	29,098		$	—		$	119,994
Total assets	$	974,061		$	438,283		$	10,108		$	1,422,452

As of or for the year ended December 31, 2016
Real estate rental operations:
Revenue	$	160,179		$	56,840		$	51		$	217,070
Expenses	(34,931		)	(18,770		)	—			(53,701		)
Income from real estate	125,248			38,070			51			163,369
Interest expense and amortization of deferred debt costs	—			—			(45,683		)	(45,683		)
General and administrative	—			—			(17,496		)	(17,496		)
Subtotal	125,248			38,070			(63,128		)	100,190
Depreciation and amortization of deferred leasing costs	(29,964		)	(14,453		)	—			(44,417		)
Acquisition related costs	(60		)	—			—			(60		)
Change in fair value of derivatives	—			—			(6		)	(6		)
Gain on sale of property	—			1,013			—			1,013
Net income (loss)	$	95,224		$	24,630		$	(63,134	)	$	56,720
Capital investment	$	64,044		$	27,001		$	—		$	91,045
Total assets	$	976,545		$	358,419		$	8,061		$	1,343,025


SAUL CENTERS, INC. Real Estate and Accumulated Depreciation December 31, 2022 (Dollars in Thousands)
			Costs																		Buildings
			Capitalized		Basis at Close of Period																and
	Initial Basis		Subsequent to Acquisition		Land		Buildings and Improvements		Construction in Progress		Total		Accumulated Depreciation		Book Value		Related Debt (2)		Date of Construction	Date Acquired	Improvements Depreciable Lives in Years
Shopping Centers
Ashbrook Marketplace, Ashburn, VA	$	8,938	$	25,314	$	13,258	$	20,994	$	—	$	34,252	$	1,965	$	32,287	$	20,807	2019	05/18	50
Ashburn Village, Ashburn, VA	11,431		20,755		6,764		25,422		—		32,186		16,475		15,711		23,039		1994 & 2000-6	3/94	40
Ashland Square Phase I, Dumfries, VA	1,178		5,298		1,178		5,298		—		6,476		2,885		3,591		—		2007, 2013	12/04	20 & 50
Beacon Center, Alexandria, VA	24,161		18,514		22,691		19,984		—		42,675		16,754		25,921		54,816		1960 & 1974	1/72 , 11/16	40 & 50
BJ’s Wholesale Club, Alexandria, VA	22,623		—		22,623		—		—		22,623		—		22,623		9,345			3/08	—
Boca Valley Plaza, Boca Raton, FL	16,720		3,236		5,735		14,221		—		19,956		6,633		13,323		—			2/04	40
Boulevard, Fairfax, VA	4,883		4,753		3,687		5,949		—		9,636		3,907		5,729		9,846		1969, 1999 & 2009	4/94	40
Briggs Chaney MarketPlace, Silver Spring, MD	27,037		5,355		9,789		22,603		—		32,392		11,358		21,034		—			4/04	40
Broadlands Village, Ashburn, VA	5,316		35,915		5,300		35,925		6		41,231		15,774		25,457		28,858		2002-3, 2004 & 2006	3/02	40 & 50
Burtonsville Town Square, Burtonsville, MD	74,212		6,344		28,402		52,138		16		80,556		8,338		72,218		33,439		2010	1/17	20 & 45
Countryside Marketplace, Sterling, VA	28,912		4,314		7,666		25,560		—		33,226		12,981		20,245		—			2/04	40
Cranberry Square, Westminster, MD	31,578		1,922		6,700		26,800		—		33,500		7,556		25,944		13,946			9/11	40
Cruse MarketPlace, Cumming, GA	12,226		790		3,901		9,115		—		13,016		4,444		8,572		—			3/04	40
Flagship Center, Rockville, MD	160		409		169		400		—		569		65		504		—		1972	1/72	—
French Market, Oklahoma City, OK	5,781		16,907		1,118		21,570		—		22,688		14,378		8,310		—		1972 & 1998	3/74	50
Germantown, Germantown, MD	2,034		566		2,034		566		—		2,600		479		2,121		—		1990	8/93	40
The Glen, Woodbridge, VA	12,918		8,627		5,300		16,245		—		21,545		11,561		9,984		20,827		1993 & 2005	6/94	40
Great Falls Center, Great Falls, VA	41,750		3,368		14,766		30,352		—		45,118		12,114		33,004		31,313			3/08	40
Hampshire Langley, Takoma, MD	3,159		3,475		1,892		4,732		10		6,634		4,203		2,431		12,231		1960	1/72	40
Hunt Club Corners, Apopka, FL	12,584		4,653		4,822		12,415		—		17,237		6,208		11,029		—			6/06, 12/12	40
Jamestown Place, Altamonte Springs, FL	14,055		2,459		4,455		12,059		—		16,514		5,543		10,971		—			11/05	40
Kentlands Square I, Gaithersburg, MD	14,379		3,365		5,005		11,984		755		17,744		5,165		12,579		20,836		2002	9/02	40
Kentlands Square II, Gaithersburg, MD	76,723		3,323		23,133		56,631		282		80,046		18,095		61,951		29,658			9/11, 9/13	40
Kentlands Place, Gaithersburg, MD	1,425		7,639		1,425		7,639		—		9,064		4,806		4,258		7,321		2005	1/04	50
Lansdowne Town Center, Leesburg, VA	6,545		43,497		6,546		43,427		69		50,042		20,112		29,930		—		2006	11/02	50
Leesburg Pike Plaza, Baileys Crossroads, VA	2,418		6,402		1,132		7,688		—		8,820		6,487		2,333		12,543		1965	2/66	40
Lumberton Plaza, Lumberton, NJ	4,400		11,648		950		15,074		24		16,048		14,060		1,988		—		1975	12/75	40
Metro Pike Center, Rockville, MD	33,123		5,399		26,064		8,476		3,982		38,522		2,607		35,915		—			12/10	40
Shops at Monocacy, Frederick, MD	9,541		15,884		9,260		16,165		—		25,425		7,344		18,081		26,422		2003-4	11/03	50
Northrock, Warrenton, VA	12,686		15,429		12,686		15,423		6		28,115		6,310		21,805		12,652		2009	01/08	50
Olde Forte Village, Ft. Washington, MD	15,933		6,922		5,409		17,446		—		22,855		9,528		13,327		20,136		2003-4	07/03	40
Olney, Olney, MD	4,963		2,998		3,079		4,882		—		7,961		3,633		4,328		12,476		1972	11/75	40
Orchard Park, Dunwoody, GA	19,377		1,616		7,751		13,242		—		20,993		5,286		15,707		—			7/07	40
Palm Springs Center, Altamonte Springs, FL	18,365		2,324		5,739		14,948		2		20,689		6,957		13,732		—			3/05	40
Ravenwood, Baltimore, MD	1,245		4,446		703		4,988		—		5,691		3,641		2,050		11,975		1959 & 2006	1/72	40
11503 Rockville Pike/5541 Nicholson Lane, Rockville, MD	26,561		24		22,113		4,472		—		26,585		1,374		25,211		—			10/10, 12/12	40
1500/1580/1582 Rockville Pike, Rockville, MD	45,351		2,046		38,065		7,050		2,282		47,397		6,712		40,685		—			12/12, 1/14, 4/14	5, 10, 5
Seabreeze Plaza, Palm Harbor, FL	24,526		2,625		8,665		18,486		—		27,151		8,435		18,716		13,302			11/05	40
Market Place at Sea Colony, Bethany Beach, DE	2,920		339		1,147		2,112		—		3,259		792		2,467		—			3/08	40
Seven Corners, Falls Church, VA	4,848		46,510		4,929		46,429		—		51,358		34,249		17,109		87,706		1956 & 1997	7/73	40
Severna Park Marketplace, Severna Park, MD	63,254		1,094		12,700		51,549		99		64,348		14,526		49,822		25,857			9/11	40
Shops at Fairfax, Fairfax, VA	2,708		11,090		992		12,806		—		13,798		9,481		4,317		13,597		1975 & 1999	6/75	50
Smallwood Village Center, Waldorf, MD	17,819		8,461		6,402		19,878		—		26,280		11,167		15,113		—			1/06	40
Southdale, Glen Burnie, MD	18,895		25,810		15,255		29,205		245		44,705		24,221		20,484		—		1962 & 1986	1/72 , 11/16	40
Southside Plaza, Richmond, VA	6,728		11,891		1,878		16,741		—		18,619		13,781		4,838		—		1958	1/72	40
South Dekalb Plaza, Atlanta, GA	2,474		4,985		615		6,814		30		7,459		5,438		2,021		—		1970	2/76	40
Thruway, Winston-Salem, NC	7,848		28,207		7,692		28,345		18		36,055		20,927		15,128		—		1955 & 1965	5/72	40
Village Center, Centreville, VA	16,502		3,356		7,851		12,007		—		19,858		8,524		11,334		25,057		1990	8/93	40
Westview Village, Frederick, MD	6,047		25,658		6,047		25,658		—		31,705		12,147		19,558		—		2009	11/07 , 02/15	50
White Oak, Silver Spring, MD	6,277		6,299		4,649		7,723		204		12,576		6,615		5,961		19,985		1958 & 1967	1/72	40
Other Buildings / Improvements	—		183		—		182		1		183		156		27		—
Total Shopping Centers	835,537		482,444		420,132		889,818		8,031		1,317,981		456,197		861,784		597,990

Mixed-Use Properties
Avenel Business Park, Gaithersburg, MD	21,459		37,788		3,756		55,491		—		59,247		42,385		16,862		22,906		1984, 1986,1990, 1998 & 2000	12/84, 8/85, 2/86, 4/98 & 10/2000	35 & 40
Clarendon Center, Arlington, VA (1)	12,753		187,682		16,287		184,148		—		200,435		60,798		139,637		86,264		2010	7/73, 1/96 & 4/02	50
Park Van Ness, Washington, DC	2,242		91,855		2,242		91,855		—		94,097		18,384		75,713		62,813		2016	7/73, 2/11	50
601 Pennsylvania Ave., Washington, DC	5,479		69,446		5,667		69,258		—		74,925		59,832		15,093		—		1986	7/73	35
The Waycroft, Arlington, VA	52,067		228,070		53,618		226,519		—		280,137		18,241		261,896		152,679		2017	8/14, 12/14, 9/15, 8/16,	50
Washington Square, Alexandria, VA	2,034		58,345		544		59,835		—		60,379		32,638		27,741		52,030		1952 & 2000	7/73	50

Total Mixed-Use Properties	96,034		673,186		82,114		687,106		—		769,220		232,278		536,942		376,692

Development Land

Ashland Square Phase II, Manassas, VA	5,292		5,033		7,049		—		3,276		10,325		—		10,325		—			12/04
New Market, New Market, MD	2,088		146		2,234		—		—		2,234		—		2,234		—			9/05
Hampden House, Bethesda, MD	39,641		41,063		—		—		80,704		80,704		—		80,704		—			10/18, 12/18
Twinbrook, Rockville, MD	110,021		117,651		—		—		227,672		227,672		—		227,672		—			12/14, 03/21
Total Development Land	157,042		163,893		9,283		—		311,652		320,935		—		320,935		—
Total	$	1,088,613	$	1,319,523	$	511,529	$	1,576,924	$	319,683	$	2,408,136	$	688,475	$	1,719,661	$	974,682


~~(1)~~	~~Includes the North and South Blocks and Residential~~



Base building						Generally 35 - 50 years or a shorter period if management determines that
						the building has a shorter useful life.
Building components						Up to 20 years
Tenant improvements						The shorter of the term of the lease or the useful life
						of the improvements