PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for the period ended September 30, 2022 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $1.81 billion, driven by construction, while liabilities also increased Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,810,018** | **$1,746,761** | | Real estate investments, net | $1,693,090 | $1,634,013 | | Construction in progress | $285,810 | $205,911 | | Cash and cash equivalents | $10,291 | $14,594 | | **Total Liabilities** | **$1,281,701** | **$1,216,274** | | Notes payable, net | $969,109 | $941,456 | | **Total Equity** | **$528,317** | **$530,487** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q3 net income declined year-over-year, while nine-month net income increased Key Operating Results (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$61,087** | **$60,256** | **$183,524** | **$178,985** | | **Total Expenses** | $45,574 | $43,371 | $133,523 | $133,186 | | **Net Income** | **$15,513** | **$16,885** | **$50,001** | **$45,799** | | Net income available to common stockholders | $9,152 | $10,340 | $29,936 | $27,751 | | **Basic and Diluted EPS** | **$0.38** | **$0.44** | **$1.25** | **$1.17** | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow slightly increased, while investing cash outflow grew significantly due to development spending Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $92,009 | $89,019 | | Net cash used in investing activities | ($84,509) | ($38,788) | | Net cash used in financing activities | ($11,803) | ($65,170) | | **Net decrease in cash** | **($4,303)** | **($14,939)** | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's REIT structure, portfolio composition, and significant debt facilities - The company operates as a REIT and as of September 30, 2022, owned **50 shopping centers and seven mixed-use properties**, primarily located in the Washington, DC/Baltimore metropolitan area[29](index=29&type=chunk) - Giant Food is a key tenant, accounting for **5.2% of the company's total revenue** for the nine months ended September 30, 2022[30](index=30&type=chunk) - The company has two reportable business segments: Shopping Centers and Mixed-Use Properties. For the nine months of 2022, Shopping Centers generated **$128.6M in revenue**, while Mixed-Use Properties generated **$54.9M**[91](index=91&type=chunk)[93](index=93&type=chunk) - As of September 30, 2022, the company had a **$525.0 million senior unsecured credit facility**, comprising a $425.0 million revolving facility and a $100.0 million term loan[53](index=53&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, strategic development projects, liquidity, and key performance metrics like FFO [Overview and Strategy](index=25&type=section&id=Overview%20and%20Strategy) The company's strategy centers on developing transit-oriented mixed-use projects and maintaining a conservative capital structure - The company's strategy focuses on diversifying assets through the development of **transit-oriented, residential mixed-use projects** in the Washington, D.C. metropolitan area[107](index=107&type=chunk) Major Development Projects | Project | Description | Expected Cost | Status | | :--- | :--- | :--- | :--- | | **Twinbrook Quarter Phase I** | 450 apartments, 80k sq ft Wegmans, 25k sq ft retail | ~$331.5M | Initial delivery anticipated late 2024 | | **Hampden House** | 366 apartment units, 10.1k sq ft retail | ~$246.4M | Construction expected to complete during 2025 | [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Nine-month net income rose on revenue growth and lower interest expense, despite a decline in Q3 profitability Q3 2022 vs. Q3 2021 Performance (in thousands) | Metric | Q3 2022 | Q3 2021 | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$61,087** | **$60,256** | **1.4%** | | **Total Expenses** | **$45,574** | **$43,371** | **5.1%** | Nine Months 2022 vs. 2021 Performance (in thousands) | Metric | Nine Months 2022 | Nine Months 2021 | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$183,524** | **$178,985** | **2.5%** | | **Total Expenses** | **$133,523** | **$133,186** | **0.3%** | - Interest expense for the nine-month period **decreased by 6.9%** primarily due to **$2.9 million in higher capitalized interest** related to development projects like Twinbrook[138](index=138&type=chunk) [Same Property Analysis](index=30&type=section&id=Same%20property%20revenue%20and%20same%20property%20operating%20income) Same property operating income grew for the nine-month period, driven by both shopping center and mixed-use segments Same Property Operating Income Growth (YoY) | Period | Total | Shopping Centers | Mixed-Use Properties | | :--- | :--- | :--- | :--- | | **Q3 2022** | 0.3% | (0.6%) | 2.8% | | **Nine Months 2022** | 2.5% | 1.7% | 4.9% | - The increase in nine-month same property operating income was primarily due to **higher base rent, lower credit losses, and higher parking income**[151](index=151&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position, enhanced by recent refinancing activities - As of September 30, 2022, the company had **$10.3 million in cash** and cash equivalents and approximately **$248.8 million available** under its Credit Facility[152](index=152&type=chunk)[112](index=112&type=chunk) - During Q3 2022, the company completed early refinancings of four shopping centers, which provided **$88.0 million of additional liquidity** net of repayments and costs[166](index=166&type=chunk) - The company's capital strategy is to maintain a total debt to total asset value ratio of **50% or less**, which management believes was met as of September 30, 2022[163](index=163&type=chunk) [Funds From Operations (FFO)](index=35&type=section&id=Funds%20From%20Operations) FFO per share decreased in Q3 but increased for the nine-month period year-over-year FFO Reconciliation and Per Share Data (in thousands, except per share) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $15,513 | $16,885 | $50,001 | $45,799 | | Real estate depreciation | $12,195 | $12,467 | $36,899 | $37,852 | | **FFO** | **$27,708** | **$29,352** | **$86,900** | **$83,651** | | **Diluted FFO per share** | **$0.73** | **$0.79** | **$2.31** | **$2.29** | [Portfolio Leasing Status](index=36&type=section&id=Portfolio%20Leasing%20Status) The commercial portfolio's lease rate improved year-over-year, with residential leasing remaining strong Portfolio Lease Percentage | Portfolio | Sep 30, 2022 | Sep 30, 2021 | | :--- | :--- | :--- | | **Commercial (Total)** | **93.0%** | **92.5%** | | Shopping Centers | 94.5% | 93.6% | | Mixed-Use | 83.1% | 85.0% | | **Residential** | **97.2%** | **97.8%** | - For new commercial leases signed in Q3 2022, the average annualized base rent was **$27.09 per square foot**[180](index=180&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks stem from interest rate fluctuations on its variable-rate debt and inflation - The company is exposed to market risks from **interest rate fluctuations and inflation**[183](index=183&type=chunk) - As of September 30, 2022, the company had **$128.0 million of unhedged variable-rate debt**. A 1% change in interest rates would alter annual interest expense by **$1.3 million**[184](index=184&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective - Management concluded that the company's **disclosure controls and procedures were effective** as of September 30, 2022[187](index=187&type=chunk) - **No material changes** in the company's internal control over financial reporting were identified during the quarter[188](index=188&type=chunk) PART II. OTHER INFORMATION [Other Information Summary](index=39&type=section&id=Other%20Information%20Summary) This section notes no material updates to risks or legal proceedings and discloses a stock acquisition by the CEO - The company reports **no material updates** to legal proceedings or risk factors from its 2021 Form 10-K[190](index=190&type=chunk) - The Chairman and CEO, B. Francis Saul II, acquired **2,525 shares of common stock** at $50.80 per share through the Dividend Reinvestment Plan[192](index=192&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-12254 SAUL CENTERS, INC. (Exact name of registrant as specified in its charter) Maryland 52-1833074 (State or oth ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-12254 SAUL CENTERS, INC. (Exact name of registrant as specified in its charter) Maryland 52-1833074 (State or ot ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-12254 SAUL CENTERS, INC. (Exact name of registrant as specified in its charter) Maryland 52-1833074 (State o ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-12254 SAUL CENTERS, INC. (Exact name of registrant as specified in its charter) Maryland 52-1833074 (State or oth ...

Financial Performance - The Company reported a 3.1% increase in total revenue for the three months ended March 31, 2021, totaling $58.724 million compared to $56.943 million in the same period of 2020[127]. - Net income for the three months ended March 31, 2021, was $12,795,000, a decrease of 23.8% from $16,829,000 in 2020[160]. - Funds From Operations (FFO) for the 2021 Quarter totaled $22.7 million, a decrease of 10.1% compared to the 2020 Quarter[159]. - Same property revenue for the three months ended March 31, 2021, was $55.551 million, a decrease of 2.5% from $56.943 million in 2020[140]. - Same property operating income for the same period was $40.533 million, down 5.2% from $42.754 million in 2020[142]. Leasing and Rent Collection - The company reported a 96% collection rate for the first quarter of 2021, with 95% for retail, 97% for office, and 99% for residential tenants[93]. - The company's commercial leasing percentage decreased to 92.2% as of March 31, 2021, down from 96.3% a year earlier[105]. - Rent deferral agreements executed for the first quarter of 2021 comprised approximately 0.2% of total billings, with none involving anchor/national tenants[96]. - The average monthly rent per square foot for new or renewed apartment leases decreased to $3.18 from $3.53 during the three months ended March 31, 2021[171]. - The average base rent for expiring leases was $23.89 per square foot, while the estimated market base rent was $22.68 per square foot[173]. Development and Acquisition - The company has a pipeline for the development of up to 3,700 apartment units and 975,000 square feet of retail and office space adjacent to red line Metro stations in Montgomery County, Maryland[102]. - The Company completed The Waycroft project, consisting of 491 apartment units and 60,000 square feet of retail space, with a total cost of approximately $279.0 million[111]. - The Twinbrook Quarter site has a development potential of 1,865 residential units and 473,000 square feet of retail space, with site plan approval received in August 2020[118]. - The company acquired an office building and land for $35.5 million and $4.5 million, respectively, funded through its revolving credit facility[113]. - The redevelopment plan for Hampden House includes up to 366 apartment units and 10,300 square feet of retail space, with construction timing dependent on market conditions and permit approvals[113]. Financial Position and Liquidity - As of April 30, 2021, the company had $10.0 million in cash and cash equivalents, with approximately $212.8 million available under its unsecured revolving credit facility[97]. - As of March 31, 2021, the Company maintained a total debt to total asset ratio of under 50%, with $179.0 million in variable-rate debt outstanding under the credit facility[106]. - The Company has a $400 million credit facility, with approximately $220.8 million available under the revolving credit facility as of March 31, 2021[154]. - Management believes that the company's capital resources, including approximately $10.0 million in cash and $212.8 million in borrowing availability, provide sufficient liquidity to meet operational needs[150]. - The Company anticipates funding future developments and acquisitions through available cash, bank borrowings, and proceeds from its dividend reinvestment plan[149]. Impact of COVID-19 - The company anticipates that some tenants may not be able to pay amounts due, leading to potential losses against rent receivables[93]. - The Company expects the volume of lease renewals and rental rates in 2021 to be negatively impacted by the effects of COVID-19[105]. - Credit losses on operating lease receivables increased by $1.1 million in the 2021 Quarter compared to the 2020 Quarter, primarily due to increased reserves related to COVID-19 impacts[130]. - The Company has not identified any impairment triggering events related to COVID-19 as of March 31, 2021, but will continue to monitor for potential future impacts[92]. - Rent collections for April 2021 were at 93%, with 91% for retail, 94% for office, and 99% for residential[96]. Expenses and Costs - Total expenses rose by 14.5% in the 2021 Quarter, amounting to $45.9 million, up from $40.1 million in the 2020 Quarter[130]. - Property operating expenses increased by 23.5% to $8.7 million in the 2021 Quarter, driven by higher snow removal costs and the completion of The Waycroft[131]. - Interest expense, net and amortization of deferred debt costs increased by 25.0% to $12.0 million, primarily due to lower capitalized interest following The Waycroft's opening[132]. - Real estate taxes increased by 9.5% to $7.829 million, mainly due to the substantial completion of The Waycroft[132]. - The Company experienced a significant increase in credit losses on operating lease receivables, reporting a loss of $1.211 million in the 2021 Quarter compared to $130,000 in the 2020 Quarter[127].

Financial Performance - Total revenue for the 2020 Quarter was $56.76 million, a decrease of 0.5% compared to $57.05 million in the 2019 Quarter[142]. - Total revenue decreased by 4.6% in the 2020 Period compared to the 2019 Period, totaling $166,923,000[150]. - Funds From Operations (FFO) available to common stockholders and noncontrolling interests for the 2020 Period totaled $67.8 million, a decrease of 9.8% compared to the 2019 Period[190]. - Net income for the three months ended September 30, 2020, was $11.6 million, down from $15.3 million in the same period of 2019[192]. - FFO for the three months ended September 30, 2020, was $25.3 million, compared to $27.3 million in the same period of 2019[192]. Tenant Payments and Rent Collection - As of November 3, 2020, approximately 83% of total billings for the second quarter and 91% for the third quarter have been paid by tenants[106][111]. - 90% of October 2020 total billings has been paid by tenants, with 88% for retail, 92% for office, and 99% for residential[110]. - 83% of 2020 second quarter total billings has been paid by tenants, with 79% for retail, 95% for office, and 100% for residential[111]. - 91% of 2020 third quarter total billings has been paid by tenants, with 89% for retail, 95% for office, and 100% for residential[111]. - The Company anticipates that some tenants may not be able to pay amounts due, leading to potential losses against rent receivables[106]. Development and Acquisition Activities - The Company has a development pipeline for up to 3,700 apartment units and 975,000 square feet of retail and office space, primarily located near Metro stations[117]. - The Company plans to focus future acquisition and development activities on transit-centric, primarily residential mixed-use properties in the Washington, D.C./Baltimore metropolitan area[123]. - The Company executed leases for approximately 90% of the planned retail space at The Waycroft, including a 41,500 square foot Target[125]. - The Company received unanimous approval for the Twinbrook Quarter development, which includes up to 460 residential units and 270,000 square feet of office space[133]. - The Company completed construction of a residential project at 750 N. Glebe Road in Arlington, Virginia, with a total cost of approximately $275.0 million, financed by a $157.0 million construction-to-permanent loan[178]. Financial Position and Liquidity - The Company had $40.6 million in cash and cash equivalents and approximately $200.3 million available under its unsecured revolving credit facility as of October 31, 2020[112]. - The company has approximately $200.3 million available under its $325.0 million unsecured revolving credit facility as of September 30, 2020[122]. - The company expects to meet short-term liquidity requirements through cash provided from operations and available cash, with a total cash balance of approximately $40.6 million as of October 31, 2020[180]. - The Company was in compliance with all financial covenants as of September 30, 2020, including a leverage ratio of less than 60%[186]. - The ratio of the Company's debt to total asset value was below 50% as of September 30, 2020, in line with its policy to maintain a ratio of total debt to total asset value of 50% or less[183]. Impact of COVID-19 - The Company continues to monitor the effects of COVID-19 on its operations and those of its tenants, with future developments remaining highly uncertain[113]. - Credit losses on operating lease receivables increased by $1.4 million in the 2020 Quarter, reflecting the impact of COVID-19 on tenant operations[141]. - Credit losses on operating lease receivables increased significantly to $4,162,000 in the 2020 Period, representing 2.49% of total revenue[153]. - Property operating expenses decreased by 7.9% to $20.9 million in the 2020 Period, primarily due to the deferral of nonessential property expenses related to COVID-19[157]. Leasing and Occupancy Rates - The company's commercial leasing percentage decreased to 93.9% as of September 30, 2020, down from 94.8% a year earlier[120]. - As of September 30, 2020, 94.0% of the Commercial portfolio was leased, down from 94.8% at September 30, 2019[196]. - The Residential portfolio was 73.9% leased as of September 30, 2020, compared to 97.9% at September 30, 2019, primarily due to the opening of The Waycroft[196]. - The Company has entered into 181 new or renewed apartment leases during the three months ended September 30, 2020, with an average monthly rent per square foot decreasing to $3.34 from $3.55[201]. Expenses and Cost Management - Total expenses increased by 8.2% in the 2020 Quarter compared to the 2019 Quarter, totaling $45,157,000[144]. - Total expenses for the 2020 Period increased by 2.0% compared to the 2019 Period, totaling $128,283,000[156]. - General and administrative expenses decreased by 6.2% to $13.8 million in the 2020 Period, due to reduced overhead expenses[160]. - Real estate taxes increased by 5.7% in the 2020 Quarter, reaching $7,523,000, mainly due to the substantial completion of The Waycroft[145]. - Interest expense, net and amortization of deferred debt costs rose by 20.1% in the 2020 Quarter, totaling $12,398,000, due to lower capitalized interest from The Waycroft opening[146].

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Saul Centers, Inc.'s unaudited consolidated financial statements, including Balance Sheets, Statements of Operations, Cash Flows, and detailed notes, highlighting the impact of COVID-19 [Consolidated Balance Sheets](index=4&type=section&id=(a)%20Consolidated%20Balance%20Sheets) As of June 30, 2020, total assets increased to $1.687 billion from $1.618 billion at year-end 2019, primarily due to an increase in cash and cash equivalents, while total liabilities rose to $1.248 billion from $1.175 billion, largely driven by increased borrowings on the revolving credit facility Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | **$1,686,636** | **$1,618,340** | | Cash and cash equivalents | $66,457 | $13,905 | | Real estate investments, net | $1,527,068 | $1,518,123 | | **Total Liabilities** | **$1,248,350** | **$1,174,984** | | Notes payable | $791,534 | $821,503 | | Revolving credit facility payable | $173,642 | $86,371 | | **Total Equity** | **$438,286** | **$443,356** | [Consolidated Statements of Operations](index=6&type=section&id=(b)%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2020, total revenue decreased to $53.2 million from $58.1 million, leading to a drop in net income to $10.2 million from $16.8 million, reflecting the impact of COVID-19 on rental revenue and an increase in credit losses Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Q2 2020 | Q2 2019 | Six Months 2020 | Six Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $53,220 | $58,141 | $110,163 | $117,891 | | Total Expenses | $43,012 | $41,391 | $83,126 | $84,064 | | Net Income | $10,208 | $16,750 | $27,037 | $33,827 | | Net income available to common stockholders | $5,530 | $10,279 | $15,996 | $20,773 | | Basic and diluted EPS | $0.24 | $0.45 | $0.69 | $0.91 | [Consolidated Statements of Cash Flows](index=10&type=section&id=(e)%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2020, net cash from operating activities decreased to $41.7 million from $63.8 million, mainly due to lower net income and unfavorable changes in accounts receivable, resulting in a net increase in cash of $52.6 million Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $41,749 | $63,832 | | Net cash used in investing activities | ($38,927) | ($68,599) | | Net cash provided by (used in) financing activities | $49,730 | ($549) | | **Net increase (decrease) in cash** | **$52,552** | **($5,316)** | [Notes to Consolidated Financial Statements](index=12&type=section&id=(f)%20Notes%20to%20Consolidated%20Financial%20Statements) These notes detail the company's REIT organization, property portfolio, accounting policies, COVID-19 impact on rent, development projects, debt structure, equity, related party transactions, and segment performance - The company operates as a **REIT**, engaging in ownership, operation, and development of **50 shopping centers** and **seven mixed-use properties**, primarily in the Washington, DC/Baltimore metropolitan area[23](index=23&type=chunk) - Due to the **COVID-19 pandemic**, the company has granted **rent deferrals** and other **lease concessions**, electing not to apply lease modification accounting for these concessions, instead accruing rent and monitoring collectability[37](index=37&type=chunk) - As of August 5, 2020, approximately **80%** of contractual base rent and recoveries for Q2 2020 had been paid, with executed rent deferral agreements representing an additional **8%** of total billings for the quarter[88](index=88&type=chunk)[89](index=89&type=chunk) Business Segment Revenue (in thousands) | Segment | Q2 2020 Revenue | Q2 2019 Revenue | H1 2020 Revenue | H1 2019 Revenue | | :--- | :--- | :--- | :--- | :--- | | Shopping Centers | $38,329 | $42,259 | $79,900 | $85,417 | | Mixed-Use Properties | $14,891 | $15,882 | $30,263 | $32,474 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant negative impact of COVID-19 on operations, detailing declines in revenue and FFO due to credit losses, and outlines the company's development strategy and liquidity position - The company's primary strategy is to **diversify assets** through the development of **transit-centric, residential mixed-use projects** in the Washington, D.C. area, such as **The Waycroft**, which was placed into service in April 2020[106](index=106&type=chunk) - As of August 5, 2020, rent collections for Q2 2020 stood at **80%** of total billings, with an additional **8%** covered by deferral agreements, and July 2020 collections were at **84%**[98](index=98&type=chunk)[100](index=100&type=chunk) Funds From Operations (FFO) Reconciliation (in thousands, except per share) | Metric | Q2 2020 | Q2 2019 | Six Months 2020 | Six Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $10,208 | $16,750 | $27,037 | $33,827 | | Real estate depreciation and amortization | $12,600 | $11,524 | $23,881 | $23,167 | | FFO | $22,808 | $28,274 | $50,918 | $56,994 | | **FFO per share** | **$0.64** | **$0.82** | **$1.45** | **$1.66** | [Critical Accounting Policies](index=30&type=section&id=(a)%20Critical%20Accounting%20Policies) Management identifies key accounting policies requiring significant judgment, including the valuation of real estate investments and impairment assessments, and the policy for recording legal contingencies - Real estate investments are stated at **historic cost**, with **impairment** assessed if events suggest the carrying value may not be recoverable, based on undiscounted projected cash flows[126](index=126&type=chunk)[127](index=127&type=chunk) - **Legal contingencies** are recorded as a loss when the loss is deemed **probable** and the amount can be reasonably estimated[128](index=128&type=chunk) [Results of Operations](index=31&type=section&id=(b)%20Results%20of%20Operations) Operating results declined significantly due to COVID-19, with Q2 2020 total revenue falling 8.5% year-over-year, driven by a $1.9 million increase in credit losses on operating leases, impacting same property revenue and operating income Revenue Comparison: Q2 2020 vs Q2 2019 (in thousands) | Revenue Component | Q2 2020 | Q2 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Base rent | $45,504 | $46,874 | ($1,370) | (2.9)% | | Credit losses | ($2,171) | ($318) | ($1,853) | 582.7% | | **Total revenue** | **$53,220** | **$58,141** | **($4,921)** | **(8.5)%** | Expense Comparison: Q2 2020 vs Q2 2019 (in thousands) | Expense Component | Q2 2020 | Q2 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Property operating expenses | $6,410 | $7,115 | ($705) | (9.9)% | | Interest expense, net | $12,019 | $10,793 | $1,226 | 11.4% | | **Total expenses** | **$43,012** | **$41,391** | **$1,621** | **3.9%** | - Same property revenue decreased by **$5.3 million** (**9.1%**) in Q2 2020 compared to Q2 2019, and by **$7.3 million** (**6.3%**) for the six-month period, primarily due to higher credit losses, lower expense recoveries, and reduced lease termination and parking income[155](index=155&type=chunk)[156](index=156&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=(c)%20Liquidity%20and%20Capital%20Resources) The company's liquidity position remains strong with $66.5 million in cash and $150.3 million available under its revolving credit facility, which management believes is sufficient to meet short-term and long-term requirements, while maintaining a debt-to-asset ratio below 50% - As of June 30, 2020, the company had **$66.5 million** in cash and cash equivalents and approximately **$150.3 million** available under its **$325.0 million** revolving credit facility[160](index=160&type=chunk)[174](index=174&type=chunk) - During the six months ended June 30, 2020, the company borrowed an additional **$71.0 million** under its revolving credit facility to enhance liquidity in response to the COVID-19 pandemic[51](index=51&type=chunk) - The company maintains a general policy to keep its total debt to total asset value ratio at **50% or less** and was in compliance with all debt covenants as of June 30, 2020[172](index=172&type=chunk)[176](index=176&type=chunk) - Subsequent to the quarter's end, in July 2020, the company closed on two non-recourse mortgage loans totaling **$52.1 million**, with proceeds used to pay down the revolving credit facility[176](index=176&type=chunk)[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuation, with $249.5 million in variable-rate debt, where a one-percentage-point increase in interest rates would increase annual interest expense by approximately $2.5 million - The company is exposed to interest rate risk on its **$249.5 million** of **variable-rate debt**[194](index=194&type=chunk) - A hypothetical **1% increase** in interest rates would increase annual interest expense by **$2.5 million** on the variable-rate debt outstanding at June 30, 2020[194](index=194&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2020, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2020[197](index=197&type=chunk) - **No material changes** were made to the company's internal control over financial reporting during the second quarter of 2020[197](index=197&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no material legal proceedings - **None**[199](index=199&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) The primary risk factor update highlights the material adverse effects of the COVID-19 pandemic, including potential business disruption, tenant solvency issues, and reduced cash flows, particularly impacting vulnerable tenant sectors - The **COVID-19 pandemic** is identified as a **significant risk factor** that could **materially and adversely affect** the company's business, financial condition, and results of operations[200](index=200&type=chunk)[201](index=201&type=chunk) - Approximately **39%** of the company's base rent is generated from tenants in industries significantly impacted by COVID-19 restrictions, including restaurants (**16%**), beauty services (**6%**), and apparel (**5%**)[202](index=202&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's Chairman, CEO, and President, B. Francis Saul II, and affiliated entities acquired 2,498 shares of common stock at $32.22 per share through the Dividend Reinvestment and Stock Purchase Plan for the April 30, 2020 dividend distribution - B. Francis Saul II and affiliated entities acquired **2,498 shares** of common stock via the Dividend Reinvestment Plan[204](index=204&type=chunk) [Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications, a schedule of portfolio properties, and financial statements formatted in XBRL - Filed exhibits include **CEO/CFO certifications**, a **schedule of portfolio properties**, and **XBRL data files**[206](index=206&type=chunk)[207](index=207&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) For the quarter ended March 31, 2020, Saul Centers reported total revenues of **$56.9 million**, a decrease from **$59.8 million** in the prior year's quarter, with net income remaining relatively stable at **$16.8 million** and total assets growing to **$1.64 billion** [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) | Indicator | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$1,644,840** | **$1,618,340** | | Real estate investments, net | $1,526,895 | $1,518,123 | | Cash and cash equivalents | $31,935 | $13,905 | | **Total Liabilities** | **$1,198,234** | **$1,174,984** | | Notes payable | $798,343 | $821,503 | | Revolving credit facility payable | $123,507 | $86,371 | | **Total Equity** | **$446,606** | **$443,356** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended Mar 31, 2020 (in thousands) | Three Months Ended Mar 31, 2019 (in thousands) | | :--- | :--- | :--- | | Total Revenue | $56,943 | $59,750 | | Total Expenses | $40,114 | $42,673 | | **Net Income** | **$16,829** | **$17,077** | | Net income available to common stockholders | $10,466 | $10,494 | | **Basic and Diluted EPS** | **$0.45** | **$0.46** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | Three Months Ended Mar 31, 2020 (in thousands) | Three Months Ended Mar 31, 2019 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,050 | $31,641 | | Net cash used in investing activities | ($21,588) | ($23,423) | | Net cash provided by (used in) financing activities | $13,568 | ($11,340) | | **Net increase (decrease) in cash** | **$18,030** | **($3,122)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's organization as a REIT focused on the Washington, DC/Baltimore area, with a portfolio of 50 shopping centers and six mixed-use properties, highlighting new accounting standards, the **$1.1 billion** total debt, and initial impacts of the COVID-19 pandemic, which prompted credit facility draws for liquidity - As of March 31, 2020, the company's portfolio consisted of **50 shopping center properties** and **six mixed-use properties**, primarily located in the Washington, DC/Baltimore metropolitan area[19](index=19&type=chunk) - The company's largest tenant, Giant Food, accounted for **4.9% of total revenue** for the three months ended March 31, 2020[20](index=20&type=chunk) - In response to the COVID-19 pandemic, the company has elected to apply FASB relief for lease concessions, allowing for the accrual of rent from tenants under deferral agreements[33](index=33&type=chunk) - Total outstanding debt was approximately **$1.1 billion** at March 31, 2020, of which **$928.9 million** was fixed-rate, and the company had approximately **$200.3 million** available under its revolving credit facility[43](index=43&type=chunk)[44](index=44&type=chunk) - Subsequent to the quarter's end, on April 1, 2020, the company borrowed an additional **$50.0 million** under its revolving credit facility to provide liquidity in response to the COVID-19 pandemic[78](index=78&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant negative impact of the COVID-19 pandemic, noting that **32%** of April 2020 rent remained unpaid as of early May, leading to a **4.7%** YoY revenue decrease and a decline in FFO per share to **$0.81**, while the company focuses on development and believes it has sufficient liquidity [Impact of COVID-19](index=21&type=section&id=Impact%20of%20COVID-19) - As of May 5, 2020, approximately **32%** of the contractual base rent and operating expense recoveries for April 2020 remained unpaid[86](index=86&type=chunk) - The company is negotiating rent deferral agreements, generally permitting tenants to defer **30 to 90 days** of payments until a later time, with repayment typically occurring over a **12-month period** starting in 2021[86](index=86&type=chunk) - To enhance liquidity, the company borrowed **$50.0 million** under its revolving credit facility on April 1, 2020, and as of April 30, 2020, it had **$61.9 million** in cash and **$150.3 million** in borrowing availability[88](index=88&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) | Revenue Component | Q1 2020 (in thousands) | Q1 2019 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Base rent | $46,348 | $46,610 | (0.6)% | | Expense recoveries | $8,616 | $9,811 | (12.2)% | | Other revenue | $1,528 | $2,947 | (48.2)% | | **Total revenue** | **$56,943** | **$59,750** | **(4.7)%** | | Expense Component | Q1 2020 (in thousands) | Q1 2019 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Property operating expenses | $7,036 | $8,001 | (12.1)% | | Interest expense, net | $9,594 | $11,067 | (13.3)% | | **Total expenses** | **$40,114** | **$42,673** | **(6.0)%** | - The decrease in property operating expenses was primarily due to lower snow removal costs (**$1.0 million**)[116](index=116&type=chunk) - The decrease in interest expense was mainly due to higher capitalized interest (**$1.6 million**) related to development projects[117](index=117&type=chunk) [Same property revenue and same property operating income](index=26&type=section&id=Same%20property%20revenue%20and%20same%20property%20operating%20income) - Same property revenue decreased by **$2.0 million (3.4%)** in Q1 2020 compared to Q1 2019, primarily due to decreased lease termination fees (**$0.7 million**) and decreased expense recoveries (**$1.2 million**)[124](index=124&type=chunk) - Same property operating income decreased by **$1.3 million (3.0%)** in Q1 2020 compared to Q1 2019, mainly due to lower termination fees (**$0.7 million**) and lower net expense recoveries (**$0.5 million**)[126](index=126&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) - In March and April 2020, the company drew an aggregate of **$71.0 million** from its revolving credit facility to increase liquidity in response to the COVID-19 pandemic[133](index=133&type=chunk) - As of March 31, 2020, the company had cash balances of approximately **$31.9 million** and borrowing availability of approximately **$200.3 million** on its unsecured revolving credit facility[137](index=137&type=chunk) - The company's capital strategy is to maintain a total debt to total asset value ratio of **50% or less**, which management believes was met as of March 31, 2020[141](index=141&type=chunk) [Funds From Operations (FFO)](index=30&type=section&id=Funds%20From%20Operations%20(FFO)) | FFO Metric | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | FFO available to common stockholders and noncontrolling interests (in thousands) | $25,312 | $25,767 | | FFO per share | $0.81 | $0.84 | - FFO decreased by **1.8%** compared to the 2019 quarter, primarily due to lower lease termination fees and lower base rent, partially offset by lower interest expense[146](index=146&type=chunk) [Portfolio Leasing Status](index=32&type=section&id=Portfolio%20Leasing%20Status) - As of March 31, 2020, the commercial portfolio was **95.3% leased**, compared to **95.2%** at March 31, 2019, and the residential portfolio was **96.7% leased**[154](index=154&type=chunk) | Leasing Activity (Q1 2020) | Square Feet | Number of Leases | Avg. New/Renewed Rent ($/sq.ft.) | Avg. Expiring Rent ($/sq.ft.) | | :--- | :--- | :--- | :--- | :--- | | Total | 427,692 | 64 | $34.41 | $35.54 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuation, with **$199.5 million** in variable-rate debt as of March 31, 2020, where a hypothetical one percentage point increase in interest rates would result in a **$2.0 million** increase in annual interest expense - The company's main financial market risk is from fluctuations in interest rates[163](index=163&type=chunk) - As of March 31, 2020, the company had **$199.5 million** in variable-rate debt, where a one percentage point increase in interest rates would increase annual interest expense by approximately **$2.0 million**[164](index=164&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of March 31, 2020, the company's management, including the CEO and CFO, concluded that the disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the first quarter of 2020 - The company's management concluded that disclosure controls and procedures were **effective** at a reasonable assurance level as of March 31, 2020[167](index=167&type=chunk) - No changes in the company's internal control over financial reporting occurred during the quarter ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, its internal controls[168](index=168&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no material legal proceedings - None[170](index=170&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company added a significant risk factor related to the COVID-19 pandemic, highlighting its potential for material adverse effects on business, financial condition, and cash flows, with approximately **33%** of base rent from tenant categories significantly impacted by government-mandated closures - A new risk factor was added detailing the potential **material and adverse effects** of the COVID-19 pandemic on the company's business, financial condition, and results of operations[171](index=171&type=chunk) - Key risks from the pandemic include tenant inability to meet lease obligations, potential defaults, and disruptions to capital markets[172](index=172&type=chunk) - Approximately **33%** of the company's base rent is generated from tenants in sectors significantly impacted by mandated closures, including restaurants (**13%**), beauty services (**6%**), and apparel (**6%**)[172](index=172&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported that its Chairman, B. Francis Saul II, and affiliated entities acquired **70,477** shares of common stock and **15,101** limited partnership units through the Dividend Reinvestment and Stock Purchase Plan for the January 31, 2020 dividend distribution - The company's Chairman, B. Francis Saul II, and affiliated entities acquired **70,477 shares** of common stock and **15,101 limited partnership units** via the Dividend Reinvestment Plan for the January 31, 2020 dividend[174](index=174&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications, a schedule of portfolio properties, and financial statements formatted in XBRL - Exhibits filed include CEO and CFO certifications, a schedule of portfolio properties, and financial statements in XBRL format[177](index=177&type=chunk)[178](index=178&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |------------------------------------------|------------------------------------------------------------------------------------------------------------------- ...