Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock, par value $0.01 per share outstanding as of ~~October 31, 2021: 23.7 million.~~November 4, 2022: 23,895,185.

-2-

SAUL CENTERS, INC.

Table of Contents


			Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

(a) Consolidated Balance Sheets as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021			4
(b) Consolidated Statements of Operations for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021			5
(c) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021			6
~~(c)~~(d) Consolidated Statements of Equity for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021			67
~~(d)~~(e) Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021			1011
~~(e)~~(f) Notes to Consolidated Financial Statements			1112

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(a) Critical Accounting Policies			2826

(b) Results of Operations:
Three months ended September 30, ~~2021~~2022 compared to three months ended September 30, ~~2020~~2021			2928
Nine months ended September 30, ~~2021~~2022 compared to nine months ended September 30, ~~2020~~2021			3029
Same property revenue and same property operating income			3130

(c) Liquidity and Capital Resources			3432

Item 3. Quantitative and Qualitative Disclosures About Market Risk			38

Item 4. Controls and Procedures			3938

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			4039
Item 1A. Risk Factors			4039
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4139
Item 3. Defaults Upon Senior Securities			4139
Item 4. Mine Safety Disclosures			4139
Item 5. Other Information			4139
Item 6. Exhibits			4139
Signatures			4240

-3-

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(Dollars in thousands, except per share amounts)	(Dollars in thousands, except per share amounts)	September 30, 2021		December 31, 2020		(Dollars in thousands, except per share amounts)	September 30, 2022		December 31, 2021

Assets	Assets					Assets
Real estate investments	Real estate investments					Real estate investments
Land	Land	$	511,596	$	511,482	Land	$	511,529	$	511,529
Buildings and equipment	Buildings and equipment	1,563,059		1,543,837		Buildings and equipment	1,574,872		1,566,686
Construction in progress	Construction in progress	191,707		69,477		Construction in progress	285,810		205,911
		2,266,362		2,124,796			2,372,211		2,284,126
Accumulated depreciation	Accumulated depreciation	(639,241)		(607,706)		Accumulated depreciation	(679,121)		(650,113)
		1,627,121		1,517,090			1,693,090		1,634,013
Cash and cash equivalents	Cash and cash equivalents	11,917		26,856		Cash and cash equivalents	10,291		14,594
Accounts receivable and accrued income, net	Accounts receivable and accrued income, net	61,855		64,917		Accounts receivable and accrued income, net	58,682		58,659
Deferred leasing costs, net	Deferred leasing costs, net	24,638		26,872		Deferred leasing costs, net	22,221		24,005

Other assets	Other assets	13,969		9,837		Other assets	25,734		15,490
Total assets	Total assets	$	1,739,500	$	1,645,572	Total assets	$	1,810,018	$	1,746,761
Liabilities	Liabilities					Liabilities
Notes payable		$	794,586	$	827,603
Construction loan payable		147,112		144,607
Revolving credit facility payable		95,028		103,913
Term loan facility payable		99,209		74,791
Notes payable, net						Notes payable, net	$	969,109	$	941,456

Revolving credit facility payable, net						Revolving credit facility payable, net	125,747		103,167
Term loan facility payable, net						Term loan facility payable, net	99,344		99,233
Accounts payable, accrued expenses and other liabilities	Accounts payable, accrued expenses and other liabilities	27,199		24,384		Accounts payable, accrued expenses and other liabilities	39,169		25,558
Deferred income	Deferred income	26,216		23,293		Deferred income	25,887		25,188
Dividends and distributions payable	Dividends and distributions payable	20,543		19,448		Dividends and distributions payable	22,445		21,672

Total liabilities	Total liabilities	1,209,893		1,218,039		Total liabilities	1,281,701		1,216,274
Equity	Equity					Equity
Preferred stock, 1,000,000 shares authorized:	Preferred stock, 1,000,000 shares authorized:					Preferred stock, 1,000,000 shares authorized:

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 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		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, 23,713,961 and 23,476,626 shares issued and outstanding, respectively		237		235
Common stock, $0.01 par value, 42,000,000 shares authorized, 24,001,546 and 23,840,471 shares issued and outstanding, respectively						Common stock, $0.01 par value, 42,000,000 shares authorized, 24,001,546 and 23,840,471 shares issued and outstanding, respectively	240		238
Additional paid-in capital	Additional paid-in capital	430,537		420,625		Additional paid-in capital	445,456		436,609
Partnership units in escrow	Partnership units in escrow	79,300		—		Partnership units in escrow	39,650		39,650
Distributions in excess of accumulated earnings	Distributions in excess of accumulated earnings	(252,309)		(241,535)		Distributions in excess of accumulated earnings	(268,451)		(256,448)

Accumulated other comprehensive income						Accumulated other comprehensive income	3,063		—
Total Saul Centers, Inc. equity	Total Saul Centers, Inc. equity	442,765		364,325		Total Saul Centers, Inc. equity	404,958		405,049
Noncontrolling interests	Noncontrolling interests	86,842		63,208		Noncontrolling interests	123,359		125,438
Total equity	Total equity	529,607		427,533		Total equity	528,317		530,487
Total liabilities and equity	Total liabilities and equity	$	1,739,500	$	1,645,572	Total liabilities and equity	$	1,810,018	$	1,746,761

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

-4-

Saul Centers, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


(Dollars in thousands, except per share amounts)	(Dollars in thousands, except per share amounts)	Three Months Ended September 30,				Nine Months Ended September 30,				(Dollars in thousands, except per share amounts)	Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenue	Revenue									Revenue
Rental revenue	Rental revenue	$	59,058	$	55,749	$	175,634	$	163,167	Rental revenue	$	59,951	$	59,058	$	179,765	$	175,634
Other	Other	1,198		1,011		3,351		3,756		Other	1,136		1,198		3,759		3,351
Total revenue	Total revenue	60,256		56,760		178,985		166,923		Total revenue	61,087		60,256		183,524		178,985
Expenses	Expenses									Expenses
Property operating expenses	Property operating expenses	8,210		7,416		24,420		20,862		Property operating expenses	8,995		8,210		26,174		24,420
Real estate taxes	Real estate taxes	7,154		7,523		22,121		22,027		Real estate taxes	7,078		7,154		21,652		22,121
Interest expense, net and amortization of deferred debt costs	Interest expense, net and amortization of deferred debt costs	10,914		12,398		34,559		34,011		Interest expense, net and amortization of deferred debt costs	11,103		10,914		32,162		34,559
Depreciation and amortization of lease costs	Depreciation and amortization of lease costs	12,467		13,713		37,852		37,593		Depreciation and amortization of lease costs	12,195		12,467		36,899		37,852
General and administrative	General and administrative	4,626		4,107		14,234		13,790		General and administrative	5,555		4,626		15,988		14,234
Loss on early extinguishment of debt										Loss on early extinguishment of debt	648		—		648		—
Total expenses	Total expenses	43,371		45,157		133,186		128,283		Total expenses	45,574		43,371		133,523		133,186

Net Income	Net Income	16,885		11,603		45,799		38,640		Net Income	15,513		16,885		50,001		45,799
Noncontrolling interests	Noncontrolling interests									Noncontrolling interests
Income attributable to noncontrolling interests	Income attributable to noncontrolling interests	(3,747)		(2,236)		(9,653)		(7,681)		Income attributable to noncontrolling interests	(3,563)		(3,747)		(11,670)		(9,653)
Net income attributable to Saul Centers, Inc.	Net income attributable to Saul Centers, Inc.	13,138		9,367		36,146		30,959		Net income attributable to Saul Centers, Inc.	11,950		13,138		38,331		36,146

Preferred stock dividends	Preferred stock dividends	(2,798)		(2,798)		(8,395)		(8,394)		Preferred stock dividends	(2,798)		(2,798)		(8,395)		(8,395)
Net income available to common stockholders	Net income available to common stockholders	$	10,340	$	6,569	$	27,751	$	22,565	Net income available to common stockholders	$	9,152	$	10,340	$	29,936	$	27,751
Per share net income available to common stockholders	Per share net income available to common stockholders									Per share net income available to common stockholders

Basic and diluted	Basic and diluted	$	0.44	$	0.28	$	1.17	$	0.97	Basic and diluted	$	0.38	$	0.44	$	1.25	$	1.17

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

-5-

Saul Centers, Inc.

CONSOLIDATED STATEMENTS OF ~~EQUITY~~COMPREHENSIVE INCOME

(Unaudited)

(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 Total Saul
Centers, Inc. Noncontrolling
Interests Total
Balance at January 1, 2021 $ 185,000 $ 235 $ 420,625 $ — $ (241,535) $ 364,325 $ 63,208 $ 427,533
Issuance of shares of common stock:
96,268 shares pursuant to dividend reinvestment plan — 1 2,839 — — 2,840 — 2,840
910 shares due to exercise of stock options and issuance of directors’ deferred stock — — 323 — — 323 — 323
Issuance of 19,493 partnership units pursuant to dividend reinvestment plan — — — — — — 575 575
1,416,071 partnership units placed in escrow pursuant to Twinbrook contribution — — — 79,300 — 79,300 — 79,300
Net income — — — — 10,262 10,262 2,533 12,795
Distributions payable preferred stock:
Series D, $38.28 per share — — — — (1,148) (1,148) — (1,148)
Series E, $37.50 per share — — — — (1,650) (1,650) — (1,650)
Distributions payable common stock ($0.53/share) and distributions payable partnership units ($0.53/unit) — — — — (12,488) (12,488) (4,218) (16,706)
Balance, March 31, 2021 185,000 236 423,787 79,300 (246,559) 441,764 62,098 503,862
Issuance of shares of common stock:
68,206 shares pursuant to dividend reinvestment plan — — 2,855 — — 2,855 — 2,855
6,038 shares due to share grants, exercise of stock options and issuance of directors’ deferred stock — — 705 — — 705 — 705
Issuance of partnership units: — — — — — — — —
13,978 units pursuant to the dividend reinvestment plan — — — — — — 585 585
469,740 units pursuant to the contribution of Twinbrook leasehold interest — — — — — — 21,500 21,500
93,674 units pursuant to the contribution of Ashbrook Marketplace — — — — — — 4,320 4,320
Net income — — — — 12,746 12,746 3,373 16,119
Distributions payable preferred stock:
Series D, $38.28 per share — — — — (1,149) (1,149) — (1,149)
Series E, $37.50 per share — — — — (1,650) (1,650) — (1,650)
Distributions payable common stock ($0.55/share) and distributions payable partnership units ($0.55/unit) — — — — (13,000) (13,000) (4,694) (17,694)
Balance, June 30, 2021 185,000 236 427,347 79,300 (249,612) 442,271 87,182 529,453


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2022		2021		2022		2021
Net income	$	15,513	$	16,885	$	50,001	$	45,799
Other comprehensive income
Change in unrealized gain on cash flow hedge	4,256		—		4,256		—
Total comprehensive income	19,769		16,885		54,257		45,799
Comprehensive income attributable to noncontrolling interests	(4,756)		(3,747)		(12,863)		(9,653)
Total comprehensive income attributable to Saul Centers, Inc.	15,013		13,138		41,394		36,146

Preferred stock dividends	(2,798)		(2,798)		(8,395)		(8,395)
Total comprehensive income available to common stockholders	$	12,215	$	10,340	$	32,999	$	27,751

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

-6-

Saul Centers, Inc.

(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 Total Saul
Centers, Inc. Noncontrolling
Interests Total
Issuance of shares of common stock:
65,171 shares pursuant to dividend reinvestment plan — 1 2,896 — — 2,897 — 2,897
743 shares due to exercise of stock options and issuance of directors’ deferred stock — — 294 — — 294 — 294
Issuance of 13,841 partnership units pursuant to dividend reinvestment plan — — — — — — 615 615
Net income — — — — 13,138 13,138 3,747 16,885
Distributions payable preferred stock:
Series D, $38.28 per share — — — — (1,148) (1,148) — (1,148)
Series E, $37.50 per share — — — — (1,650) (1,650) — (1,650)
Distributions payable common stock ($0.55/share) and distributions payable partnership units ($0.55/unit) — — — — (13,037) (13,037) (4,702) (17,739)
Balance, September 30, 2021 $ 185,000 $ 237 $ 430,537 $ 79,300 $ (252,309) $ 442,765 $ 86,842 $ 529,607
CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


(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, January 1, 2022	$	185,000	$	238	$	436,609	$	39,650	$	(256,448)	$	—	$	405,049	$	125,438	$	530,487


Issuance of shares of common stock:
61,861 shares pursuant to dividend reinvestment plan	—		1		2,948		—		—		—		2,949		—		2,949
8,007 shares due to exercise of stock options and issuance of directors’ deferred stock	—		—		594		—		—		—		594		—		594
Issuance of 13,704 partnership units pursuant to dividend reinvestment plan	—		—		—		—		—		—		—		653		653

Net income	—		—		—		—		13,365		—		13,365		4,126		17,491





Distributions payable preferred stock:

Series D, $38.28 per share	—		—		—		—		(1,148)		—		(1,148)		—		(1,148)
Series E, $37.50 per share	—		—		—		—		(1,650)		—		(1,650)		—		(1,650)
Distributions payable common stock ($0.57/share) and distributions payable partnership units ($0.57/unit)	—		—		—		—		(13,625)		—		(13,625)		(5,292)		(18,917)
Balance, March 31, 2022	185,000		239		440,151		39,650		(259,506)		—		405,534		124,925		530,459

Issuance of shares of common stock:
57,821 shares pursuant to dividend reinvestment plan	—		1		2,948		—		—		—		2,949		—		2,949
19,618 shares due to share grants, exercise of stock options and issuance of directors’ deferred stock	—		—		1,397		—		—		—		1,397		—		1,397
Issuance of 12,955 partnership units pursuant to dividend reinvestment plan	—		—		—		—		—		—		—		669		669



Net income	—		—		—		—		13,016		—		13,016		3,981		16,997





Distributions payable preferred stock:
Series D, $38.28 per share	—		—		—		—		(1,148)		—		(1,148)		—		(1,148)
Series E, $37.50 per share	—		—		—		—		(1,650)		—		(1,650)		—		(1,650)
Distributions payable common stock ($0.59/share) and distributions payable partnership units ($0.59/unit)	—		—		—		—		(14,156)		—		(14,156)		(5,486)		(19,642)
Balance, June 30, 2022	185,000		240		444,496		39,650		(263,444)		—		405,942		124,089		530,031

-7-

Saul Centers, Inc.


CONSOLIDATED STATEMENTS OF EQUITY (continued) (Unaudited)
(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 shares of common stock:
10,577 shares pursuant to dividend reinvestment plan	—		—		537		—		—		—		537		—		537
3,191 shares due to exercise of stock options and issuance of directors’ deferred stock	—		—		423		—		—		—		423		—		423

Net income	—		—		—		—		11,950		—		11,950		3,563		15,513
Change in unrealized gain on cash flow hedge	—		—		—		—		—		3,063		3,063		1,193		4,256




Distributions payable preferred stock:

Series D, $38.28 per share	—		—		—		—		(1,148)		—		(1,148)		—		(1,148)
Series E, $37.50 per share	—		—		—		—		(1,650)		—		(1,650)		—		(1,650)
Distributions payable common stock ($0.59/share) and distributions payable partnership units ($0.59/unit)	—		—		—		—		(14,159)		—		(14,159)		(5,486)		(19,645)
Balance, September 30, 2022	$	185,000	$	240	$	445,456	$	39,650	$	(268,451)	$	3,063	$	404,958	$	123,359	$	528,317

(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 Total Saul
Centers, Inc. Noncontrolling
Interests Total
Balance at January 1, 2020 $ 185,000 $ 232 $ 410,926 $ — $ (221,177) $ 374,981 $ 68,375 $ 443,356
Issuance of shares of common stock:
83,978 shares pursuant to dividend reinvestment plan — 1 4,080 — — 4,081 — 4,081
11,745 shares due to exercise of stock options and issuance of directors’ deferred stock — — 956 — — 956 — 956
Issuance of 15,101 partnership units pursuant to dividend reinvestment plan — — — — — — 734 734
Net income — — — — 13,264 13,264 3,565 16,829
Distributions payable preferred stock:
Series D, $38.28 per share — — — — (1,148) (1,148) — (1,148)
Series E, $37.50 per share — — — — (1,650) (1,650) — (1,650)
Distributions payable common stock ($0.53/share) and distributions payable partnership units ($0.53/unit) — — — — (12,364) (12,364) (4,188) (16,552)
Balance, March 31, 2020 185,000 233 415,962 — (223,075) 378,120 68,486 446,606
Issuance of shares of common stock:
12,627 shares pursuant to dividend reinvestment plan — — 407 — — 407 — 407
3,109 shares due to share grants, exercise of stock options and issuance of directors’ deferred stock — — 424 — — 424 — 424
Net income — — — — 8,328 8,328 1,880 10,208
Distributions payable preferred stock:
Series D, $38.28 per share — — — — (1,148) (1,148) — (1,148)
Series E, $37.50 per share — — — — (1,650) (1,650) — (1,650)
Distributions payable common stock ($0.53/share) and distributions payable partnership units ($0.53/unit) — — — — (12,373) (12,373) (4,188) (16,561)
Balance, June 30, 2020 185,000 233 416,793 — (229,918) 372,108 66,178 438,286

-8-

Saul Centers, Inc.

(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 Total Saul
Centers, Inc. Noncontrolling
Interests Total
Issuance of shares of common stock:
14,525 shares pursuant to dividend reinvestment plan — 1 421 — — 422 — 422
984 shares due to exercise of stock options and issuance of directors’ deferred stock — — 290 — — 290 — 290
Issuance of 13,108 partnership units pursuant to dividend reinvestment plan — — — — — — 380 380
Net income — — — — 9,367 9,367 2,236 11,603
Distributions payable preferred stock:
Series D, $38.28 per share — — — — (1,148) (1,148) — (1,148)
Series E, $37.50 per share — — — — (1,650) (1,650) — (1,650)
Distributions payable common stock ($0.53/share) and distributions payable partnership units ($0.53/unit) — — — — (12,371) (12,371) (4,195) (16,566)
Balance, September 30, 2020 $ 185,000 $ 234 $ 417,504 $ — $ (235,720) $ 367,018 $ 64,599 $ 431,617
CONSOLIDATED STATEMENTS OF EQUITY (continued)

(Unaudited)


(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, January 1, 2021	$	185,000	$	235	$	420,625	$	—	$	(241,535)	$	—	$	364,325	$	63,208	$	427,533


Issuance of shares of common stock:
96,268 shares pursuant to dividend reinvestment plan	—		1		2,839		—		—		—		2,840		—		2,840
910 shares due to exercise of stock options and issuance of directors’ deferred stock	—		—		323		—		—		—		323		—		323
Issuance of 19,493 partnership units pursuant to dividend reinvestment plan	—		—		—		—		—		—		—		575		575
1,416,071 partnership units placed in escrow pursuant to Twinbrook contribution	—		—		—		79,300		—		—		79,300		—		79,300
Net income	—		—		—		—		10,262		—		10,262		2,533		12,795



Distributions payable preferred stock:

Series D, $38.28 per share	—		—		—		—		(1,148)		—		(1,148)		—		(1,148)
Series E, $37.50 per share	—		—		—		—		(1,650)		—		(1,650)		—		(1,650)
Distributions payable common stock ($0.53/share) and distributions payable partnership units ($0.53/unit)	—		—		—		—		(12,488)		—		(12,488)		(4,218)		(16,706)
Balance, March 31, 2021	185,000		236		423,787		79,300		(246,559)		—		441,764		62,098		503,862



Issuance of shares of common stock:
68,206 shares pursuant to dividend reinvestment plan	—		—		2,855		—		—		—		2,855		—		2,855
6,038 shares due to share grants, exercise of stock options and issuance of directors’ deferred stock	—		—		705		—		—		—		705		—		705
Issuance of partnership units:
13,978 units pursuant to the dividend reinvestment plan	—		—		—		—		—		—		—		585		585
469,740 units pursuant to the acquisition of Twinbrook leasehold interest	—		—		—		—		—		—		—		21,500		21,500
93,674 units pursuant to the contribution of Ashbrook Marketplace	—		—		—		—		—		—		—		4,320		4,320
Net income	—		—		—		—		12,746		—		12,746		3,373		16,119





Distributions payable preferred stock:

Series D, $38.28 per share	—		—		—		—		(1,149)		—		(1,149)		—		(1,149)
Series E, $37.50 per share	—		—		—		—		(1,650)		—		(1,650)		—		(1,650)
Distributions payable common stock ($0.55/share) and distributions payable partnership units ($0.55/unit)	—		—		—		—		(13,000)		—		(13,000)		(4,694)		(17,694)
Balance, June 30, 2021	185,000		236		427,347		79,300		(249,612)		—		442,271		87,182		529,453

-9-

Saul Centers, Inc.


CONSOLIDATED STATEMENTS OF EQUITY (continued) (Unaudited)
(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 shares of common stock:
65,171 shares pursuant to dividend reinvestment plan	—		1		2,896		—		—		—		2,897		—		2,897
743 shares due to exercise of stock options and issuance of directors’ deferred stock	—		—		294		—		—		—		294		—		294
Issuance of 13,841 partnership units pursuant to dividend reinvestment plan	—		—		—		—		—		—		—		615		615
Net income	—		—		—		—		13,138		—		13,138		3,747		16,885






Distributions payable preferred stock:

Series D, $38.28 per share	—		—		—		—		(1,148)		—		(1,148)		—		(1,148)
Series E, $37.50 per share	—		—		—		—		(1,650)		—		(1,650)		—		(1,650)
Distributions payable common stock ($0.55/share) and distributions payable partnership units ($0.55/unit)	—		—		—		—		(13,037)		—		(13,037)		(4,702)		(17,739)
Balance, September 30, 2021	$	185,000	$	237	$	430,537	$	79,300	$	(252,309)	$	—	$	442,765	$	86,842	$	529,607

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

~~-9-~~-10-

Saul Centers, Inc.


CONSOLIDATED STATEMENTS OF CASH FLOWS	CONSOLIDATED STATEMENTS OF CASH FLOWS					CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)	(Unaudited)					(Unaudited)
		Nine months ended September 30,					Nine Months Ended September 30,
(Dollars in thousands)	(Dollars in thousands)	2021		2020		(Dollars in thousands)	2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	45,799	$	38,640	Net income	$	50,001	$	45,799
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Loss on early extinguishment of debt						Loss on early extinguishment of debt	648		—

Depreciation and amortization of lease costs	Depreciation and amortization of lease costs	37,852		37,593		Depreciation and amortization of lease costs	36,899		37,852
Amortization of deferred debt costs	Amortization of deferred debt costs	1,237		1,163		Amortization of deferred debt costs	1,428		1,237
Compensation costs of stock and option grants	Compensation costs of stock and option grants	1,197		1,141		Compensation costs of stock and option grants	1,220		1,197
Credit losses on operating lease receivables		802		4,162
Credit losses on operating lease receivables, net						Credit losses on operating lease receivables, net	(20)		802
(Increase) decrease in accounts receivable and accrued income	(Increase) decrease in accounts receivable and accrued income	2,260		(17,552)		(Increase) decrease in accounts receivable and accrued income	(3)		2,260
Additions to deferred leasing costs	Additions to deferred leasing costs	(1,316)		(7,383)		Additions to deferred leasing costs	(1,417)		(1,316)

Increase in other assets	Increase in other assets	(4,124)		(2,286)		Increase in other assets	(1,531)		(4,124)
Increase in accounts payable, accrued expenses and other liabilities	Increase in accounts payable, accrued expenses and other liabilities	2,432		3,871		Increase in accounts payable, accrued expenses and other liabilities	4,085		2,389
Increase (decrease) in deferred income		2,923		(2,579)
Increase in deferred income						Increase in deferred income	699		2,923

Net cash provided by operating activities	Net cash provided by operating activities	89,062		56,770		Net cash provided by operating activities	92,009		89,019
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Acquisitions of real estate investments (1) (2) (3)	Acquisitions of real estate investments (1) (2) (3)	(9,011)		—		Acquisitions of real estate investments (1) (2) (3)	—		(9,011)
Additions to real estate investments	Additions to real estate investments	(14,593)		(13,665)		Additions to real estate investments	(12,215)		(12,455)
Additions to development and redevelopment projects	Additions to development and redevelopment projects	(15,227)		(34,698)		Additions to development and redevelopment projects	(72,294)		(17,322)

Net cash used in investing activities	Net cash used in investing activities	(38,831)		(48,363)		Net cash used in investing activities	(84,509)		(38,788)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from notes payable	Proceeds from notes payable	—		52,100		Proceeds from notes payable	199,750		—
Repayments on notes payable	Repayments on notes payable	(33,670)		(37,431)		Repayments on notes payable	(166,290)		(33,670)
Proceeds from term loan facility	Proceeds from term loan facility	25,000		—		Proceeds from term loan facility	—		25,000
Proceeds from revolving credit facility	Proceeds from revolving credit facility	36,000		90,000		Proceeds from revolving credit facility	119,000		36,000
Repayments on revolving credit facility	Repayments on revolving credit facility	(42,500)		(53,000)		Repayments on revolving credit facility	(97,000)		(42,500)
Proceeds from construction loan	Proceeds from construction loan	2,430		32,928		Proceeds from construction loan	—		2,430
Payments of debt extinguishment costs						Payments of debt extinguishment costs	(593)		—
Additions to deferred debt costs	Additions to deferred debt costs	(3,474)		(1,196)		Additions to deferred debt costs	(9,800)		(3,474)
Proceeds from the issuance of:	Proceeds from the issuance of:					Proceeds from the issuance of:
Common stock	Common stock	8,717		5,440		Common stock	7,629		8,717
Partnership units (1) (2) (3)	Partnership units (1) (2) (3)	1,775		1,114		Partnership units (1) (2) (3)	1,322		1,775

Distributions to:	Distributions to:					Distributions to:

Series D preferred stockholders	Series D preferred stockholders	(3,445)		(3,444)		Series D preferred stockholders	(3,445)		(3,445)
Series E preferred stockholders	Series E preferred stockholders	(4,950)		(4,950)		Series E preferred stockholders	(4,950)		(4,950)
Common stockholders	Common stockholders	(37,926)		(37,012)		Common stockholders	(41,364)		(37,926)
Noncontrolling interests	Noncontrolling interests	(13,127)		(12,556)		Noncontrolling interests	(16,062)		(13,127)
Net cash provided by (used in) financing activities		(65,170)		31,993
Net increase (decrease) in cash and cash equivalents		(14,939)		40,400
Net cash used in financing activities						Net cash used in financing activities	(11,803)		(65,170)
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(4,303)		(14,939)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	26,856		13,905		Cash and cash equivalents, beginning of period	14,594		26,856
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	11,917	$	54,305	Cash and cash equivalents, end of period	$	10,291	$	11,917
Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid for interest	Cash paid for interest	$	33,738	$	32,951	Cash paid for interest	$	30,295	$	33,738
Increase (decrease) in accrued real estate investments and development costs		$	504	$	(11,196)

Accrued capital expenditures included in accounts payable, accrued expenses, and other liabilities						Accrued capital expenditures included in accounts payable, accrued expenses, and other liabilities	$	13,955	$	3,780

(1) The 2021 acquisition of real estate and proceeds from the issuance of partnership units each excludes $79,300 in connection with the contribution of Twinbrook Quarter by the B. F. Saul Real Estate Investment Trust in exchange for limited partnership units ~~that are~~ held in escrow. ~~See Notes 3 and 4~~Half of the units held in escrow were released on October 18, 2021. The remaining units held in escrow are scheduled to ~~the Consolidated Financial Statements.~~be released on October 18, 2023.

(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 Twinbrook Quarter leasehold interest in exchange for limited partnership units. ~~See Notes 3 and 4 to the Consolidated Financial Statements.~~

(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. ~~See Note 7~~

The Notes to ~~the Consolidated~~ Financial ~~Statements.~~

Statements are an integral part of these statements.

~~-10-~~-11-

Notes to Consolidated Financial Statements (Unaudited)

1. Organization, Basis of Presentation

Saul Centers, Inc. (“Saul Centers”) was incorporated under the Maryland General Corporation Law on June 10, 1993, and 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.

The Company, which conducts all of its activities through its subsidiaries, Saul Holdings Limited Partnership, a Maryland limited partnership (the “Operating Partnership”) and two subsidiary limited partnerships (the “Subsidiary Partnerships,” and, collectively with the Operating Partnership, the “Partnerships”), engages in the ownership, operation, management, leasing, acquisition, renovation, expansion, development and financing of community and neighborhood shopping centers and mixed-use properties, primarily in the Washington, DC/Baltimore metropolitan area.

As of September 30, ~~2021,~~2022, the Company’s properties (the “Current Portfolio Properties”) consisted of 50 shopping center properties (the “Shopping Centers”), 7seven mixed-use properties, which are comprised of office, retail and multi-family residential uses (the “Mixed-Use Properties”) and 4four (non-operating) development properties.

Because the properties are located primarily in the Washington, DC/Baltimore metropolitan area, the Company is subject to a concentration of credit risk related to these properties. A majority of the Shopping Centers are anchored by one or more major tenants. As of September 30, ~~2021,~~2022, 33 of the Shopping Centers were anchored by a grocery store and offer primarily day-to-day necessities and services. Giant Food, a tenant at 11 Shopping Centers, individually accounted for ~~5.3%~~5.2% of the Company's total revenue for the nine months ended September 30, ~~2021.~~2022. No other tenant individually accounted for 2.5% or more of the Company’s total revenue, excluding lease termination fees, for the nine months ended September 30, ~~2021.~~2022.

The accompanying consolidated financial statements of the Company include the accounts of Saul Centers and its subsidiaries, including the Partnerships, which are majority owned by Saul Centers. Substantially all assets and liabilities of the Company as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, are comprised of the assets and liabilities of the Operating Partnership. Debt arrangements 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"~~(“VIE”) 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 its activities and the rights to absorb ~~73.4%~~72.0% of its net income. Because the Operating Partnership is consolidated into the financial statements of the Company, classification of it as a VIE has no impact on the consolidated financial statements of the Company.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments necessary for the fair presentation of the financial position and results of operations of the Company for the interim periods have been included. All such adjustments are of a normal recurring nature. These consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, ~~2020,~~2021, which are included in its Annual Report on Form 10-K. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to those instructions. The results of operations for interim periods are not necessarily indicative of results to be expected for the year.

~~-11-~~-12-

Notes to Consolidated Financial Statements (Unaudited)

2. Summary of Significant Accounting Policies

Our significant accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 have not changed significantly in amount or composition.

Use of Estimates

The preparation of financial statements in conformity with 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 collectability of operating lease receivables and impairment of real estate properties. Actual results could differ from those estimates.

Accounts Receivable, Accrued Income and Allowance for Doubtful Accounts

Accounts receivable ~~represents amounts~~are primarily comprised of rental and reimbursement billings due from tenants, ~~whether current or deferred, in accordance with~~and straight-line rent receivables representing the ~~terms~~cumulative amount of ~~their respective leases and base rent recognized~~adjustments necessary to present rental income on a straight-line basis. Individual leases are assessed for collectability and, upon the determination that the collection of rents is not probable, accrued rent and accounts receivable are charged off, ~~which~~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. Further, we assess whether operating lease receivables, at the portfolio level, are appropriately valued based upon an analysis of balances outstanding, historical bad debt levels and current economic trends. As of September 30, ~~2021, $4.6~~2022, of the $9.4 million of rents previously deferred, ~~have~~$8.0 million has come ~~due.~~due and $0.3 million has been written off. Of the amounts that have come due, ~~$4.5~~$7.6 million, or approximately 95%, has been paid.

At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, accounts receivable was comprised of:


(In thousands)	(In thousands)	September 30, 2021		December 31, 2020		(In thousands)	September 30, 2022		December 31, 2021
Rents currently due	Rents currently due	$	7,576	$	13,321	Rents currently due	$	7,204	$	8,484
Deferred rents	Deferred rents	5,388		8,205		Deferred rents	1,416		2,872
Straight-line rent	Straight-line rent	46,429		44,863		Straight-line rent	45,653		46,239
Other receivables	Other receivables	5,974		3,751		Other receivables	6,538		4,146
Allowance for doubtful accounts	Allowance for doubtful accounts	(3,512)		(5,223)		Allowance for doubtful accounts	(2,129)		(3,082)

Total	Total	$	61,855	$	64,917	Total	$	58,682	$	58,659

Reclassifications

Certain reclassifications have been made to the prior year financial statements to conform to the presentation used as of and for the nine months ended September 30, ~~2021.~~2022.

~~-12-~~-13-

Notes to Consolidated Financial Statements (Unaudited)

3. Real Estate

Construction In Progress

Construction in progress includes land, 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. ~~During the nine months ended September 30, 2021, assets totaling $8.7 million were placed in service in conjunction with the substantial completion of The Waycroft.~~

Construction in progress as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, is composed of the following:


(In thousands)	(In thousands)	September 30, 2021		December 31, 2020		(In thousands)	September 30, 2022		December 31, 2021
Twinbrook Quarter	Twinbrook Quarter	$	127,348	$	—	Twinbrook Quarter	$	203,815	$	138,069
Hampden House	Hampden House	53,619		50,723		Hampden House	70,912		56,898
The Waycroft		—		8,651
Ashbrook Marketplace		—		153

Other	Other	10,740		9,950		Other	11,083		10,944
Total	Total	$	191,707	$	69,477	Total	$	285,810	$	205,911

Leases

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 have been 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 and/or lessor 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/or lessor 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.

An operating lease right of use asset and corresponding lease liability related to our headquarters ~~lease~~sublease are reflected in other assets and other liabilities, respectively. The ~~lease~~sublease expires on February 28, ~~2022, with 1 option to renew for an additional five years.~~2027. The right of use asset and corresponding lease liability totaled ~~$321,900~~$3.4 million and ~~$334,500,~~$3.4 million, respectively, at September 30, ~~2021.~~2022.

Due to the business disruptions and challenges ~~severely~~ affecting the global economy caused by the novel strain of coronavirus (“COVID-19”) pandemic, many lessees ~~have~~ requested rent relief, including rent deferrals and other lease concessions. The lease modification guidance in Accounting Standards Update 2016-02, ~~"Accounting~~“Accounting for Leases"
("Leases” (“ASU ~~2016-02"~~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 staff of the Financial Accounting Standards Board 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~~tenants. The Company will continue to ~~a future date, and will~~ monitor the collectability of rent receivables.

Deferred Leasing Costs

Deferred leasing costs primarily consist of ~~commissions paid to third-party~~initial direct costs incurred in connection with successful property leasing and ~~internal leasing agents, internal costs such as payroll-related fringe benefits that are direct and incremental to successful commercial leases,~~ amounts attributed to in-place leases associated with acquired ~~properties~~properties. Such amounts are capitalized and amortized, using the straight-line method, over the term of the lease or the remaining term of an acquired lease. Initial direct costs primarily consist of leasing commissions, which are costs paid to third-party brokers and lease ~~inducement costs. Effective with the adoption of ASU 2016-02 on January 1, 2019, all costs incurred prior~~commissions paid to ~~the execution of~~certain employees that are incremental to obtaining a lease ~~are charged to expense~~ and would not ~~capitalized.~~have been incurred if the lease had not been obtained. Unamortized deferred ~~leasing~~ costs are charged to expense if the applicable lease is terminated prior to expiration of the initial lease term. ~~Deferred leasing costs are amortized over the term of the lease or remaining term of acquired leases.~~ Collectively, deferred leasing costs totaled ~~$24.6~~$22.2 million and ~~$26.9~~$24.0 million, net of accumulated amortization of ~~$47.7~~$50.8 million and ~~$44.5~~$48.7 million, as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Amortization expense, included in depreciation and amortization of lease costs in the Consolidated Statements of Operations, totaled $3.2 million and $3.6 million for the nine months ended September 30, 2022 and 2021, respectively.

~~-13-~~-14-

Notes to Consolidated Financial Statements (Unaudited)

~~lease costs in the Consolidated Statements of Operations, totaled $3.6 million and $4.0 million for the nine months ended September 30, 2021 and 2020, respectively.~~

Real Estate Investment Properties

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 improvement 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 improvements, using the straight-line method. Depreciation expense in the Consolidated Statements of Operations totaled ~~$34.2~~$33.7 million and ~~$33.6~~$34.2 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Repairs and maintenance expense totaled ~~$10.2~~$11.1 million and ~~$8.0~~$10.2 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and is included in property operating expenses in the Consolidated Statements of Operations.

As of September 30, ~~2021,~~2022, we have not identified any impairment triggering events, including the impact of COVID-19 and corresponding tenant requests for rent relief. Therefore, under applicable GAAP guidance, no impairment charges were recorded.

~~Acquisitions~~

On November 5, 2019, the Company entered into an agreement (the “Twinbrook Contribution Agreement”) to acquire from 1592 Rockville Pike LLC ("1592 Rockville Pike"), a wholly-owned subsidiary of the B. F. Saul Real Estate Investment Trust (the “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 (the “Contributed Property”). The Contributed Property is immediately adjacent to approximately 10.3 acres owned by the Company. In exchange for the Contributed Property, the Company will issue to 1592 Rockville Pike 1,416,071 limited partnership units in the Operating Partnership. 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 satisfied. Half of the units held in escrow were released on the 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 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 $19.4 million and 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 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 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 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 nine months ended September 30, 2021.

4. Noncontrolling Interests - Holders of Convertible Limited Partnership Units in the Operating Partnership

As of September 30, ~~2021,~~2022, 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”) held an aggregate ~~25.1%~~26.6% limited partnership interest in the Operating Partnership represented by approximately ~~8.1~~8.8 million convertible limited partnership units. These 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 Company’s Articles of Incorporation, the rights may not be exercised at any time that the Saul Organization beneficially owns or will own after the exercise, 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 September 30, ~~2021,~~2022, approximately ~~1.0 million~~748,000 units could be converted into shares of Saul Centers common stock.

~~-14-~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

As of September 30, ~~2021,~~2022, a third party investor holds a ~~1.5%~~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'~~Centers’ common stock, Saul Centers may, in its sole discretion, deliver cash in an amount equal to the value of such Saul ~~Centers'~~Centers’ common stock.

The impact of the aggregate ~~26.6%~~28.0% limited partnership interest in the Operating Partnership held by parties other than Saul Centers is reflected as Noncontrolling Interests in the accompanying consolidated financial statements. Weighted average fully diluted partnership units and common stock outstanding for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, was approximately ~~33.7~~34.0 million and ~~31.3~~33.7 million, respectively, and for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, was approximately ~~32.9~~34.0 million and ~~31.2~~32.9 million, respectively.

The ~~0.7 million~~Company previously issued 708,035 limited partnership units ~~remaining~~related to the contribution of Twinbrook Quarter that are held in escrow ~~after~~and will be released on October 18, ~~2021, in connection with~~2023. Until such time as the ~~Twinbrook Contribution Agreement~~units are released from escrow, they are not eligible to receive distributions from the Operating ~~Partnership until such time as they are released from escrow.~~Partnership.

5. Notes Payable, ~~Revolving~~Bank Credit Facility, Interest and Amortization of Deferred Debt Costs

~~The principal amount of the Company’s outstanding debt totaled approximately $1.1 billion at~~At September 30, 2021, of which approximately $949.5 million was fixed-rate debt and approximately $198.0 million was variable rate debt outstanding under the credit facility. The carrying value of the properties collateralizing the notes payable totaled approximately $1.1 billion as of September 30, 2021.

~~On August 31, 2021,~~2022, the Company ~~replaced its credit facility. The new~~had a $525.0 million senior unsecured credit facility ~~which can be used for working capital, property acquisitions, development projects or letters~~(the “Credit Facility”) comprised of ~~credit, totals $525.0 million (the “New Facility”), of which~~a $425.0 million ~~is a~~ revolving credit facility ~~(the “Revolving Line”)~~ and a $100.0 million ~~is a~~ term ~~loan (the “Term Loan”).~~loan. The ~~Revolving Line~~revolving credit facility matures on August 29, 2025, which ~~term~~ may be extended by the Company for one additional year, subject to satisfaction of certain conditions. The ~~Term Loan~~term loan matures on February 26, 2027, and may not be extended. ~~In general, loan availability under~~Through October 2, 2022, interest accrues at the ~~New Facility~~London Interbank Offered Rate (“LIBOR”) plus an applicable spread, which is ~~primarily~~ determined by ~~operating income from~~certain leverage tests. Effective October 3, 2022, in conjunction with the ~~Company’s existing unencumbered properties. Interest~~execution of the First Amendment to the Credit Facility, interest accrues at ~~a rate of LIBOR~~the Secured Overnight Financing Rate (“SOFR”) plus ~~a spread of 135~~10 basis points ~~to 195 basis points under the Revolving Line, and 130 basis points to 190 basis points under the Term Loan, each as~~plus an applicable spread, which is determined by certain leverage tests. As of September 30, ~~2021,~~2022, the applicable spread for borrowings iswas 140 basis points ~~under~~related to the ~~Revolving Line~~revolving credit facility and 135 basis points ~~under~~related to the ~~Term Loan. Saul Centers and certain consolidated subsidiaries of the Operating Partnership have guaranteed the payment obligations of the Operating Partnership under the New Facility.~~term loan. Letters of credit may be issued under the ~~revolving credit facility.~~Credit Facility. On September 30, ~~2021,~~2022, based on the value of the Company’s unencumbered properties, approximately ~~$228.2~~$248.8 million was available under the ~~Revolving Line, $98.0~~Credit Facility, $228.0 million was outstanding and approximately $185,000 was committed for letters of credit.

-15-

Notes to Consolidated Financial Statements (Unaudited)

On ~~January 5, 2021,~~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. The effective date of each swap agreement is 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 as of September 30, 2022. The Company has designated the agreements as cash flow hedges for accounting purposes.

As of September 30, 2022, the fair value of the interest-rate swaps totaled approximately $4.3 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 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 ~~$6.1~~$28.3 million of the mortgage loan secured by ~~Jamestown Place,~~Lansdowne Town Center, which was scheduled to mature in ~~February 2021.~~June 2022.

On June ~~11, 2021,~~7, 2022, the Company repaid in full the remaining principal balance of ~~$5.0~~$8.6 million of the mortgage loan secured by ~~Hunt Club Corners,~~Orchard Park, which was scheduled to mature in September 2022.

On August ~~2021.~~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 revolving credit facility. A loss on early extinguishment of debt of $0.4 million 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 revolving credit facility. A loss on early extinguishment of debt of $0.2 million 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 revolving credit facility. This transaction was treated as a modification of the original debt agreement. A prepayment penalty of $5.9 million was incurred, which will be deferred and 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.~~Credit Facility. The Operating Partnership is the guarantor of (a) a portion of the Park Van Ness mortgage (approximately $3.3 million of the $65.1 million outstanding balance at September 30, 2021, which guarantee will be reduced to zero on October 1, 2021), (b) a portion of the Broadlands mortgage (approximately $3.7 million of the ~~$29.9~~$29.1 million outstanding balance at September 30, ~~2021)~~2022), ~~(c)~~(b) a portion of the Avenel Business Park mortgage (approximately $6.3 million of the ~~$24.4~~$23.2 million outstanding balance at September 30, ~~2021)~~2022), ~~(d)~~(c) a portion of The Waycroft mortgage (approximately $23.6 million of the ~~$148.5~~$153.6 million outstanding balance at September 30, ~~2021)~~2022), ~~(e)~~(d) the Ashbrook Marketplace mortgage (totaling ~~$21.5~~$21.0 million at September 30, ~~2021)~~2022), and ~~(f)~~(e) the mortgage secured by Kentlands Place, Kentlands Square I and Kentlands Pad (totaling ~~$29.2~~$28.4 million at September 30, ~~2021)~~2022). All other notes payable are non-recourse.

~~At December 31, 2020, the~~The principal amount of the Company’s outstanding debt totaled approximately $1.2 billion at September 30, 2022, of which ~~$980.8 million~~approximately $1.1 billion was ~~fixed rate~~fixed-rate debt and ~~$179.5~~approximately $128.0 million was variable rate debt ~~including $104.5 million~~ outstanding under ~~an unsecured revolving credit facility.~~the Credit Facility. The carrying ~~value~~amount of the properties collateralizing the notes payable totaled approximately ~~$1.2~~$1.0 billion as of ~~December 31, 2020.~~September 30, 2022.

~~-15-~~-16-

Notes to Consolidated Financial Statements (Unaudited)

At December 31, 2021, the principal amount of the Company’s outstanding debt totaled approximately $1.2 billion, of which $949.0 million was fixed rate debt and $206.0 million was variable rate debt outstanding under the Credit Facility. The carrying amount of the properties collateralizing the notes payable totaled approximately $1.1 billion as of December 31, 2021.

At September 30, ~~2021,~~2022, the scheduled maturities of debt, including scheduled principal amortization, for years ending December 31, were as follows:


(In thousands)	(In thousands)	Balloon Payments			Scheduled Principal Amortization		Total		(In thousands)	Balloon Payments			Scheduled Principal Amortization		Total
October 1 through December 31, 2021		$	—		$	7,679	$	7,679
2022		36,502			31,016		67,518
October 1 through December 31, 2022									October 1 through December 31, 2022	$	—		$	8,050	$	8,050
2023	2023	9,225			31,479		40,704		2023	9,225			32,938		42,163
2024	2024	66,164			30,876		97,040		2024	50,117			33,575		83,692
2025	2025	118,363		(a)	27,860		146,223		2025	148,363		(a)	31,437		179,800
2026	2026	134,088			24,333		158,421		2026	134,088			28,076		162,164
2027									2027	100,000		(b)	23,469		123,469
Thereafter	Thereafter	537,673			92,253		629,926		Thereafter	440,093			171,057		611,150
Principal amount	Principal amount	$	902,015		$	245,496	1,147,511		Principal amount	$	881,886		$	328,602	1,210,488
Unamortized deferred debt costs	Unamortized deferred debt costs						11,576		Unamortized deferred debt costs						16,288
Net	Net						$	1,135,935	Net						$	1,194,200

(a) Includes ~~$98.0~~$128.0 million outstanding under the ~~Revolving Line.~~Credit Facility.

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

Deferred debt costs consist of fees and costs incurred to obtain long-term financing, construction financing and the ~~credit facility.~~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 ~~$11.6~~$16.3 million and ~~$9.3~~$11.2 million, net of accumulated amortization of ~~$7.2~~$7.4 million and ~~$8.7~~$7.7 million, at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and are reflected as a reduction of the related debt in the Consolidated Balance Sheets.

Interest expense, net and amortization of deferred debt costs for the three and nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	(In thousands)	2021		2020		2021		2020		(In thousands)	2022		2021		2022		2021
Interest incurred	Interest incurred	$	12,481	$	12,933	$	38,062	$	38,788	Interest incurred	$	13,627	$	12,481	$	38,408	$	38,062
Amortization of deferred debt costs	Amortization of deferred debt costs	425		402		1,237		1,163		Amortization of deferred debt costs	486		425		1,428		1,237
Capitalized interest	Capitalized interest	(1,991)		(909)		(4,734)		(5,813)		Capitalized interest	(3,002)		(1,991)		(7,663)		(4,734)
Interest expense	Interest expense	10,915		12,426		34,565		34,138		Interest expense	11,111		10,915		32,173		34,565
Less: Interest income	Less: Interest income	1		28		6		127		Less: Interest income	8		1		11		6
Interest expense, net and amortization of deferred debt costs	Interest expense, net and amortization of deferred debt costs	$	10,914	$	12,398	$	34,559	$	34,011	Interest expense, net and amortization of deferred debt costs	$	11,103	$	10,914	$	32,162	$	34,559

6. Equity

The consolidated statements of operations for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, reflect noncontrolling interests of ~~$9.7~~$11.7 million and ~~$7.7~~$9.7 million, respectively, representing income attributable to limited partnership units not held by Saul Centers.

At September 30, ~~2021,~~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~~“Series D ~~Stock"~~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

-17-

Notes to Consolidated Financial Statements (Unaudited)

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.

~~-16-~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

At September 30, ~~2021,~~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

Per share data for net income (basic and diluted) is computed using weighted average shares of common stock. Convertible limited partnership units and employee stock options are the Company’s potentially dilutive securities. For all periods presented, the convertible limited partnership units are non-dilutive. The following table sets forth, for the indicated periods, weighted averages of the number of common shares outstanding, basic and ~~dilutive,~~diluted, the effect of dilutive options and the number of options which are not dilutive because the average price of the ~~Company's~~Company’s common stock was less than the exercise prices. The treasury stock method was used to measure the effect of the dilution.


							Average Shares/Options Outstanding
		Three months ended September 30,		Nine months ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
(In thousands)	(In thousands)	2021	2020	2021	2020	(In thousands)	2022	2021	2022	2021
Weighted average common stock outstanding-Basic	Weighted average common stock outstanding-Basic	23,692	23,353	23,619	23,329	Weighted average common stock outstanding-Basic	23,997	23,692	23,948	23,619
Effect of dilutive options	Effect of dilutive options	4	—	2	1	Effect of dilutive options	2	4	11	2
Weighted average common stock outstanding-Diluted	Weighted average common stock outstanding-Diluted	23,696	23,353	23,621	23,330	Weighted average common stock outstanding-Diluted	23,999	23,696	23,959	23,621
Non-dilutive options	Non-dilutive options	1,350	1,516	1,474	1,418	Non-dilutive options	1,542	1,350	1,328	1,474
Years non-dilutive options were issued	Years non-dilutive options were issued	2014 through 2020	2011 through 2020	2011 and 2014 through 2020	2014 through 2020	Years non-dilutive options were issued	2014 through 2020 and 2022	2014 through 2020	2014 through 2020 and 2022	2011 and 2014 through 2020

7. Related Party Transactions

The Chairman and Chief Executive Officer, the President and Chief Operating Officer, the Executive Vice President-Chief Legal and Administrative Officer and the Senior Vice President-Chief Accounting Officer and Treasurer of the Company are also officers of various members of the Saul Organization and their management time is shared with the Saul Organization. Their annual compensation is fixed by the Compensation Committee of the Board of Directors, with the exception of the Senior Vice President-Chief Accounting Officer and Treasurer whose share of annual compensation allocated to the Company is determined by the shared services agreement (described below).

The Company participates in a multiemployer 401K plan with entities in the Saul Organization which covers those full-time employees who meet the requirements as specified in the plan. Company contributions, which are included in general and administrative expense or property operating expenses in the Consolidated Statements of Operations, at the discretionary amount of up to 6% of the employee’s cash compensation, subject to certain limits, were ~~$328,500~~$318,500 and ~~$255,200~~$328,500 for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. All amounts contributed by employees and the Company are fully vested.

The Company also participates in a multiemployer nonqualified deferred compensation plan with entities in the Saul Organization which covers those full-time employees who meet the requirements as specified in the plan. According to the plan, which can be modified or discontinued at any time, participating employees defer 2% of their compensation in excess of a specified amount. For the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, the Company credited to employee accounts ~~$120,800~~$211,900 and ~~$164,800,~~$120,800, respectively, which is the sum of accrued earnings and up to three times the amount deferred by

-18-

Notes to Consolidated Financial Statements (Unaudited)

employees and is included in general and administrative expense. All amounts contributed by employees and credited by the Company are fully vested. The cumulative unfunded liability under this plan was ~~$3.0~~$2.8 million and ~~$2.9~~$3.2 million, at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and is included in accounts payable, accrued expenses and other liabilities in the Consolidated Balance Sheets.

~~-17-~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

The Company and the Saul Organization are parties to a shared services agreement (the “Agreement”) that provides for the sharing of certain personnel and ancillary functions such as computer hardware, software, and support services and certain direct and indirect administrative personnel. The method for determining the cost of the shared services is provided for in the Agreement and is based upon head count, estimates of usage or estimates of time incurred, as applicable. The terms of the Agreement and the payments made thereunder are deemed reasonable by management and are reviewed annually by the Audit Committee of the Board of Directors, which consists entirely of independent directors. Net billings by the Saul Organization for the Company’s share of these ancillary costs and expenses for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, which included rental expense for the Company’s headquarters ~~lease,~~sublease, totaled approximately ~~$5.9~~$7.0 million and ~~$6.0~~$5.9 million, respectively. The amounts are generally expensed as incurred and are primarily reported as general and administrative expenses in the Consolidated Statements of Operations. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, accounts payable, accrued expenses and other liabilities included approximately ~~$883,900~~$1.0 million and ~~$782,700,~~$1.1 million, respectively, representing amounts due to the Saul Organization for the Company’s share of these ancillary costs and expenses.

On March 5, 2021, the Company acquired from 1592 Rockville Pike, 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. See Notes 3 and 4.

In August 2016, the Company entered into an agreement (the "Ashbrook Contribution Agreement") to acquire from the Trust approximately 13.7 acres of land located at the intersection of Ashburn Village Boulevard and Russell Branch Parkway in Ashburn, Virginia. The transaction closed on May 9, 2018, and the Company issued 176,680 limited partnership units to the Trust. The Company constructed a shopping center, Ashbrook Marketplace. On June 30, 2021, the Company issued 93,674 additional limited partnership units as additional consideration to the Trust in accordance with the Ashbrook Contribution Agreement, as amended.

The Company subleases its corporate headquarters space from a member of the Saul Organization. The ~~lease~~sublease commenced in March 2002, expires in ~~2022,~~2027, and provides for base rent increases of 3% per year, with payment of a pro-rata share of operating expenses over a base year amount. The Agreement requires each party to pay 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 its headquarters location was ~~$611,200~~$609,400 and ~~$609,200~~$611,200 for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and is included in general and administrative expense.

The B. F. Saul Insurance Agency, 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 fees in connection with the Company’s insurance program. Such commissions and fees amounted to ~~$280,700~~$262,000 and ~~$320,300~~$280,700 for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

8. Stock-based Employee Compensation, Stock Option Plans, and Deferred Compensation Plan for Directors

In 2004, the Company established a stock incentive plan (the ~~"Plan"~~“Plan”), as amended. Under the Plan, options are granted at an exercise price not less than the market value of the common stock on the date of grant and expire ten years from the date of grant. Officer options vest ratably over four years following the grant and are charged to expense using the straight-line method over the vesting period. Director options vest immediately and are charged to expense as of the date of grant.

The Company uses the fair value method to value and account for employee stock options. The fair value of options granted is determined at the time of the grant 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 history of the Company’s common stock (month-end closing prices) corresponding to the average expected term of the options; (2) Average Expected Term of the options based on 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, the Company’s yield in relation 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 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 expense in general and administrative expenses.

Pursuant to the Plan, the Compensation Committee established a Deferred Compensation Plan for Directors for the benefit of the Company’s directors and their beneficiaries, which replaced a previous Deferred Compensation and Stock Plan for Directors. Annually, directors are given the ability to make an election to defer all or part of their fees and have the option to have their 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 a director elects to have their fees paid in stock, fees earned during a calendar quarter are aggregated and divided by the closing market price of the Company’s common stock on the first trading day of the following

~~-18-~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

quarter to determine the number of shares to be credited to the director. During the nine months ended September 30, ~~2021, 7,429~~2022, 5,788 shares were credited to ~~director's~~director’s deferred fee accounts and ~~7,874~~7,738 shares were issued. As of September 30, ~~2021,~~2022, the director's deferred fee accounts comprise ~~118,183~~118,290 shares.

-19-

Notes to Consolidated Financial Statements (Unaudited)

Effective May ~~7, 2021,~~13, 2022, the Company granted ~~250,500~~248,000 options to its directors and certain officers. The following table summarizes the assumptions used in the valuation of the ~~2021~~2022 and ~~2020~~2021 option grants. During the nine months ended September 30, ~~2021,~~2022, stock option expense totaling $1.0 million was included in general and administrative expense in the Consolidated Statements of Operations. As of September 30, ~~2021,~~2022, the estimated future expense related to unvested stock options was ~~$2.0~~$2.4 million.


		Directors						Officers							Directors				Officers
Grant date	Grant date	April 24, 2020			May 7, 2021			April 24, 2020			May 7, 2021			Grant date	May 13, 2022		May 7, 2021		May 13, 2022		May 7, 2021
Exercise price		$	50.00		$	43.89		$	50.00		$	43.89
Exercise price per share														Exercise price per share	$	47.90	$	43.89	$	47.90	$	43.89
Fair value per option														Fair value per option	$	8.34	$	6.32	$	7.66	$	5.96
Volatility	Volatility	0.258			0.297			0.240			0.275			Volatility	30.00%		29.70%		27.10%		27.50%
Expected life (years)	Expected life (years)	5.0						7.0						Expected life (years)	5.0				7.0
Assumed yield	Assumed yield	3.80		%	4.96		%	3.85		%	4.97		%	Assumed yield	4.90%		4.96%		4.93%		4.97%
Risk-free rate	Risk-free rate	0.36		%	0.77		%	0.51		%	1.24		%	Risk-free rate	2.89%		0.77%		2.95%		1.24%

The table below summarizes the option activity for the nine months ended September 30, ~~2021:~~2022:


		Number of Shares	Weighted Average Exercise Price per share		Aggregate Intrinsic Value			Number of Shares	Weighted Average Exercise Price per share		Aggregate Intrinsic Value
Outstanding at January 1	Outstanding at January 1	1,502,670	$	52.86	$	—	Outstanding at January 1	1,601,250	$	51.73	$	4,886,106
Granted	Granted	250,500	43.89		—		Granted	248,000	47.90		—
Exercised	Exercised	(3,000)	41.82		3,450		Exercised	(26,875)	44.44		179,217
Expired/Forfeited	Expired/Forfeited	(87,000)	53.60		—		Expired/Forfeited	(19,000)	51.71		—
Outstanding at September 30	Outstanding at September 30	1,663,170	51.49		171,250		Outstanding at September 30	1,803,375	51.31		—
Exercisable at September 30	Exercisable at September 30	1,137,295	52.89		133,340		Exercisable at September 30	1,287,250	52.74		—

The intrinsic value of stock options outstanding or exercisable measures the price difference between the options’ exercise price and the closing share price quoted by the New York Stock Exchange as of the date of measurement. The intrinsic value of stock options exercised during the nine months ended September 30, 2022 and 2021 was calculated by using the transaction price on the date of exercise and totaled ~~$3,450. The intrinsic value of stock options exercised during the nine months ended September 30, 2020 totaled $85,268.~~$179,217 and $3,450, respectively. At September 30, ~~2021,~~2022, the final trading day of the ~~2021~~2022 third quarter, the closing share price of ~~$44.06~~$37.50 was lower than the exercise price of ~~1,397,625~~all 1.8 million outstanding options granted in 2013 through ~~2020.~~2022. The weighted average remaining contractual life of the Company’s outstanding and exercisable options is ~~6.3~~6.1 years and ~~5.3~~5.0 years, respectively.

9. Fair Value of Financial Instruments

The carrying ~~values~~amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reasonable estimates of their fair value. The aggregate fair value of the notes payable with fixed-rate payment terms was determined using Level 3 data in a discounted cash flow approach, which is based upon management’s estimate of borrowing rates and loan terms currently available to the Company for fixed-rate financing and, assuming long-term market interest rates of approximately ~~3.60%~~5.90% and ~~3.40%~~3.60%, would be approximately ~~$937.3~~$936.3 million and ~~$981.0~~$933.0 million, respectively, compared to the principal balance of ~~$949.5 million~~$1.1 billion and ~~$980.8~~$949.0 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. A change in any of the significant inputs may lead to a change in the Company’s fair value measurement of its debt.

The Company carries its interest-rate swaps at fair value. The Company has determined the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy with the exception of the impact of counter-party risk, which was determined using Level 3 inputs and is not significant. Derivative instruments are classified within Level 2 of the fair value hierarchy because their values are determined using third-party pricing models that contain inputs that are derived from observable market data. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measure of volatility, and correlations of such inputs. As of September 30, 2022, the fair value of the interest-rate swaps was approximately $4.3 million and 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.

-20-

Notes to Consolidated Financial Statements (Unaudited)

10. Commitments and Contingencies

Neither the Company nor the ~~current portfolio properties~~Current Portfolio Properties are subject to any material litigation, nor, to management’s knowledge, is any material litigation currently threatened against the Company, other than routine litigation and administrative proceedings arising in the ordinary course of business. Management believes that these items, individually or in the aggregate, will not have a material adverse impact on the Company or the ~~current portfolio properties.~~

~~-19-~~

~~Notes to Consolidated Financial Statements (Unaudited)~~Current Portfolio Properties.

11. Business Segments

The Company has 2two reportable business segments: Shopping Centers and Mixed-Use Properties. The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2). The Company evaluates performance based upon income and cash flows from real estate of the combined properties in each segment. All of our properties within each segment generate similar types of revenues and expenses related to tenant rent, reimbursements and operating expenses. Although services are provided to a variety of tenants, the types of services provided to them are similar within each segment. The properties in each portfolio have similar economic characteristics and the nature of the products and services provided to our tenants and the method to distribute such services are consistent throughout the portfolio. Certain reclassifications have been made to prior year information to conform to the ~~2021~~2022 presentation.


Financial Information By Segment										Financial Information By Segment
(In thousands)	(In thousands)	Shopping Centers		Mixed-Use Properties		Corporate and Other		Consolidated Totals		(In thousands)	Shopping Centers		Mixed-Use Properties		Corporate and Other		Consolidated Totals
Three months ended September 30, 2021
Three Months Ended September 30, 2022										Three Months Ended September 30, 2022
Real estate rental operations:	Real estate rental operations:									Real estate rental operations:
Revenue	Revenue	$	42,485	$	17,771	$	—	$	60,256	Revenue	$	42,478	$	18,609	$	—	$	61,087
Expenses	Expenses	(8,640)		(6,724)		—		(15,364)		Expenses	(8,826)		(7,247)		—		(16,073)
Income from real estate	Income from real estate	33,845		11,047		—		44,892		Income from real estate	33,652		11,362		—		45,014

Interest expense, net and amortization of deferred debt costs	Interest expense, net and amortization of deferred debt costs	—		—		(10,914)		(10,914)		Interest expense, net and amortization of deferred debt costs	—		—		(11,103)		(11,103)
Depreciation and amortization of lease costs	Depreciation and amortization of lease costs	(7,203)		(5,264)		—		(12,467)		Depreciation and amortization of lease costs	(7,073)		(5,122)		—		(12,195)
General and administrative	General and administrative	—		—		(4,626)		(4,626)		General and administrative	—		—		(5,555)		(5,555)

Loss on early extinguishment of debt										Loss on early extinguishment of debt	—		—		(648)		(648)
Net income (loss)	Net income (loss)	$	26,642	$	5,783	$	(15,540)	$	16,885	Net income (loss)	$	26,579	$	6,240	$	(17,306)	$	15,513
Capital investment	Capital investment	$	2,629	$	8,722	$	—	$	11,351	Capital investment	$	2,280	$	30,315	$	—	$	32,595
Total assets	Total assets	$	960,247	$	766,761	$	12,492	$	1,739,500	Total assets	$	936,285	$	855,797	$	17,936	$	1,810,018

Three months ended September 30, 2020
Three Months Ended September 30, 2021										Three Months Ended September 30, 2021
Real estate rental operations:	Real estate rental operations:									Real estate rental operations:
Revenue	Revenue	$	40,336	$	16,424	$	—	$	56,760	Revenue	$	42,485	$	17,771	$	—	$	60,256
Expenses	Expenses	(8,755)		(6,184)		—		(14,939)		Expenses	(8,640)		(6,724)		—		(15,364)
Income from real estate	Income from real estate	31,581		10,240		—		41,821		Income from real estate	33,845		11,047		—		44,892

Interest expense, net and amortization of deferred debt costs	Interest expense, net and amortization of deferred debt costs	—		—		(12,398)		(12,398)		Interest expense, net and amortization of deferred debt costs	—		—		(10,914)		(10,914)
Depreciation and amortization of lease costs	Depreciation and amortization of lease costs	(8,169)		(5,544)		—		(13,713)		Depreciation and amortization of lease costs	(7,203)		(5,264)		—		(12,467)
General and administrative	General and administrative	—		—		(4,107)		(4,107)		General and administrative	—		—		(4,626)		(4,626)

Net income (loss)	Net income (loss)	$	23,412	$	4,696	$	(16,505)	$	11,603	Net income (loss)	$	26,642	$	5,783	$	(15,540)	$	16,885
Capital investment	Capital investment	$	2,733	$	6,703	$	—	$	9,436	Capital investment	$	1,324	$	9,984	$	—	$	11,308
Total assets	Total assets	$	982,381	$	643,395	$	55,598	$	1,681,374	Total assets	$	960,247	$	766,761	$	12,492	$	1,739,500

~~-20-~~-21-

Notes to Consolidated Financial Statements (Unaudited)

(In thousands) Shopping
Centers Mixed-Use
Properties Corporate
and Other Consolidated
Totals
Nine Months Ended September 30, 2021
Real estate rental operations:
Revenue $ 126,935 $ 52,050 $ — $ 178,985
Expenses (27,087) (19,454) — (46,541)
Income from real estate 99,848 32,596 — 132,444
Interest expense, net and amortization of deferred debt costs — — (34,559) (34,559)
Depreciation and amortization of deferred leasing costs (21,639) (16,213) — (37,852)
General and administrative — — (14,234) (14,234)
Net income (loss) $ 78,209 $ 16,383 $ (48,793) $ 45,799
Capital investment $ 8,200 $ 30,631 $ — $ 38,831
Total assets $ 960,247 $ 766,761 $ 12,492 $ 1,739,500
Nine Months Ended September 30, 2020
Real estate rental operations:
Revenue $ 120,236 $ 46,687 $ — $ 166,923
Expenses (26,041) (16,848) — (42,889)
Income from real estate 94,195 29,839 — 124,034
Interest expense, net and amortization of deferred debt costs — — (34,011) (34,011)
Depreciation and amortization of deferred leasing costs (22,812) (14,781) — (37,593)
General and administrative — — (13,790) (13,790)
Net income (loss) $ 71,383 $ 15,058 $ (47,801) $ 38,640
Capital investment $ 11,622 $ 36,741 $ — $ 48,363
Total assets $ 982,381 $ 643,395 $ 55,598 $ 1,681,374

~~-21-~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

~~12. Impact of COVID-19~~

On March 11, 2020, the World Health Organization declared a novel strain of coronavirus ("COVID-19") a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. As a result, the COVID-19 pandemic is negatively affecting almost every industry directly or indirectly.

The actions taken by federal, state and local governments to mitigate the spread of COVID-19 by ordering closure of nonessential businesses and ordering residents to generally stay at home, and subsequent phased re-openings, resulted in many of our tenants announcing mandated or temporary closures of their operations and/or requesting adjustments to their lease terms. While most of our tenants have re-opened their businesses, there remains significant uncertainty around the long-term economic impact of the COVID-19 pandemic, which could have a material and adverse effect on or cause disruption to our business or financial condition, results from operations, cash flows and the market value and trading price of our securities.


(In thousands)	Shopping Centers		Mixed-Use Properties		Corporate and Other		Consolidated Totals
Nine Months Ended September 30, 2022
Real estate rental operations:
Revenue	$	128,615	$	54,909	$	—	$	183,524
Expenses	(27,102)		(20,724)		—		(47,826)
Income from real estate	101,513		34,185		—		135,698

Interest expense, net and amortization of deferred debt costs	—		—		(32,162)		(32,162)
Depreciation and amortization of deferred leasing costs	(21,300)		(15,599)		—		(36,899)
General and administrative	—		—		(15,988)		(15,988)
Loss on early extinguishment of debt	—		—		(648)		(648)






Net income (loss)	$	80,213	$	18,586	$	(48,798)	$	50,001
Capital investment	$	6,239	$	78,270	$	—	$	84,509
Total assets	$	936,285	$	855,797	$	17,936	$	1,810,018

Nine Months Ended September 30, 2021
Real estate rental operations:
Revenue	$	126,935	$	52,050	$	—	$	178,985
Expenses	(27,087)		(19,454)		—		(46,541)
Income from real estate	99,848		32,596		—		132,444

Interest expense, net and amortization of deferred debt costs	—		—		(34,559)		(34,559)
Depreciation and amortization of deferred leasing costs	(21,639)		(16,213)		—		(37,852)
General and administrative	—		—		(14,234)		(14,234)








Net income (loss)	$	78,209	$	16,383	$	(48,793)	$	45,799
Capital investment	$	6,895	$	31,893	$	—	$	38,788
Total assets	$	960,247	$	766,761	$	12,492	$	1,739,500

~~13.~~12. Subsequent Events

The Company has reviewed operating activities for the period subsequent to September 30, ~~2021,~~2022, and determined there are no subsequent events required to be disclosed.

-22-

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section should be read in conjunction with the consolidated financial statements of the Company and the accompanying notes in “Item 1. Financial Statements” of this report and the more detailed information contained in the Company’s Form 10-K for the year ended December 31, ~~2020.~~2021. Historical results and percentage relationships set forth in Item 1 and this section should not be taken as indicative of future operations of the Company. Capitalized terms used but not otherwise defined in this section have the meanings given to them in Item 1 of this Form 10-Q.

Forward-Looking Statements

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “plans,” “intends,” “estimates,” “anticipates,” “expects,” “believes” or similar expressions in this Form 10-Q. Although management believes that the expectations reflected in such forward-looking statements are based upon present expectations and reasonable assumptions, our actual results could differ materially from those set forth in the forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:

•challenging domestic and global credit markets and their effect on discretionary spending;

•the ability of our tenants to pay rent;

•our reliance on shopping center “anchor” tenants and other significant tenants;

•our substantial relationships with members of the Saul Organization;

•risks of financing, such as increases in interest rates, restrictions imposed by our debt, our ability to meet existing financial covenants and our ability to consummate planned and additional financings on acceptable terms;

•our development activities;

•our access to additional capital;

•our ability to successfully complete additional acquisitions, developments or redevelopments, or if they are completed, whether such acquisitions, developments or redevelopments perform as expected;

•risks generally incident to the ownership of real property, including adverse changes in economic conditions, changes in the investment climate for real estate, changes in real estate taxes and other operating expenses, adverse changes in governmental rules and fiscal policies, the relative illiquidity of real estate and environmental risks;

•risks related to our status as a REIT for federal income tax purposes, such as the existence of complex regulations relating to our status as a REIT, the effect of future changes to REIT requirements as a result of new legislation and the adverse consequences of the failure to qualify as a REIT; and

•an epidemic or pandemic (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may (as with COVID-19) precipitate or exacerbate one or more of the above-mentioned and/or other risks, and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period.

Additional information related to these risks and uncertainties are included in “Risk Factors” (Part I, Item 1A of this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, ~~2020)~~2021), “Quantitative and Qualitative Disclosures about Market Risk” (Part I, Item 3 of this Form 10-Q and Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2020)~~2021), and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” (Part I, Item 2 of this Form 10-Q).

-23-

Impact of COVID-19

On March 11, 2020, the World Health Organization declared a novel strain of coronavirus ("COVID-19") a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. ~~As a result, the COVID-19 pandemic is negatively affecting almost every industry directly or indirectly.~~

If the effects of COVID-19 result in continued 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 the remainder of ~~2021~~2022 or future periods. As of September 30, ~~2021,~~2022, we have not identified any impairment triggering events, including the impact of COVID-19 and 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 the future. Indications of a tenant’s inability to continue as a going concern, changes in 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 Company will continue to monitor circumstances and events in future periods to determine whether impairment charges are warranted.

While the Company’s grocery store, pharmacy, bank and home improvement store tenants have generally remained fully open, many restaurants have operated with reduced hours and/or limited indoor seating, supplemented with delivery and curbside pick-up, and most health, beauty supply and services, fitness centers, and other non-essential businesses have
re-opened, some with limited customer capacity. As of October 31, ~~2021,~~2022, payments by tenants of contractual base rent and operating expense and real estate tax recoveries for the 2022 third quarter totaled approximately ~~98% for the third quarter~~99%.The Company is generally not charging late fees or delinquent interest on past due payments and, in limited cases, rent deferral agreements have been negotiated to allow tenants temporary relief where needed. The deferral agreements, generally, permit tenants to defer 30 to 90 days of rent, operating expense and real estate tax recovery payments until a later time in their lease term with repayment typically occurring over a 12-month period generally commencing in 2021. We will continue to accrue rental revenue during the deferral period. However, 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 September 30, 2021, against such potential losses to be reasonable and adequate. Rent collections during the third quarter and rent relief requests to-date may not be indicative of collections or requests in any future period.

~~The following is a summary of the Company's executed rent deferral agreements and repayment dates as of October 31, 2021, with the exception of amounts due, which are as of September 30, 2021.~~

(In thousands)
Original Rent Due
By Quarter Original Rent
Amount Repayment
Year Repayment
Amount Amount
Due Amount
Collected Collection Percentage
(prior to deferral) (after deferral) (based on payments currently due)
2020 First Quarter $ 67 2020 $ 331 $ 331 $ 331 100 %
2020 Second Quarter 6,282 2021 5,533 4,301 4,136 96 %
2020 Third Quarter 1,487 2022 2,089
2020 Fourth Quarter 368 2023 628
2021 First Quarter 193 2024 165
2021 Second Quarter 216 2025 38
2021 Third Quarter 206 Thereafter 73
October 2021 38 Total $ 8,857 $ 4,632 $ 4,467 96 %
Total $ 8,857

~~-24-~~

While we expect collections of rent billings, including minimum rent, operating expense recoveries and real estate tax reimbursements, to remain below pre-pandemic levels in the near-term, when taking into account the amount of time elapsed since the due date of the payment, we continue to experience sequential improvement in our collection rates. The following table summarizes the Company's consolidated total collections of the first quarter, second quarter, third quarter and October 2021 rent billings as of November 1, 2021:

Retail Office Residential Total
2021 First Quarter 99 % 100 % 99 % 99 %
2021 Second Quarter 99 % 100 % 99 % 99 %
2021 Third Quarter 97 % 100 % 99 % 98 %
October 2021 95 % 99 % 99 % 96 %

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

Deferral agreements executed with certain tenants as a result of business disruption that occurred at the ~~event that~~onset of the COVID-19 pandemic generally deferred 30 to 90 days of rent, operating expense and ~~restrictions intended~~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 ~~prevent its spread continue for~~accrue rental revenue during the deferral period.

The following is a ~~prolonged period. The Company strongly encouraged small business tenants to apply for Paycheck Protection Program loans,~~summary of the Company’s executed rent deferral agreements and repayments as available, under the Coronavirus Aid, Relief, and Economic Security Act. The Company has information that many tenants applied for these loans and several tenants have communicated that loan proceeds were received and have subsequently remitted rental payments.

As of October 31, ~~2021,~~2022, with the ~~Company had $8.9 million~~exception of ~~cash and cash equivalents and borrowing availability~~amounts due, which are as of ~~approximately $220.2 million under its unsecured revolving credit facility.~~September 30, 2022.


Rent Deferral Agreements and Repayments
(In thousands)
														Collection Percentage (based on payments currently due)
Original Rent Due By Quarter	Original Rent Amount		Repayment Year	Repayment Amount		Amount Due		Amount Written Off		Amount Unpaid		Amount Collected
2020 First Quarter	$	67	2020	$	347	$	347	$	44	$	—	$	303	87	%
2020 Second Quarter	6,329		2021	5,734		5,734		206		11		5,516		96	%
2020 Third Quarter	1,518		2022	2,034		1,894		60		34		1,793		95	%
2020 Fourth Quarter	437		2023	757				4
2021 First Quarter	278		2024	309				4
2021 Second Quarter	309		2025	66
2021 Third Quarter	324		2026	27
2021 Fourth Quarter	81		Thereafter	92
2022 First Quarter	23		Total	$	9,366	$	7,975	$	318	$	45	$	7,612	95	%
2022 Second Quarter	—
2022 Third Quarter	—
October 2022	—
Total	$	9,366

-24-

The extent of the effects of COVID-19 on the Company’s business, results of operations, cash flows, and growth prospects ~~is highly~~remain uncertain and will ultimately depend on future developments, none of which can be predicted with any certainty. See Item 1A. Risk Factors. However, we believe the actions we have taken and are continuing to take have helped minimize interruptions to operations and will put the Company in the best position as the economic recovery continues. Management and the Board of Directors will continue to actively monitor the effects of the 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 continues to impact 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.

~~In accordance with state~~We anticipate that some tenants eventually will not be able to pay amounts due and ~~local health authority guidance~~we will incur losses against our rent receivables. The extent and ~~with safety protocols in place~~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 ~~recommended by the Centers for Disease Control~~of September 30, 2022, against such potential losses to be reasonable and Prevention, on June 1, 2021, the Company began transitioning employees from a remote working environment to working in the office. On November 1, 2021, the Company formally reopened, without occupancy restrictions, its corporate office in Bethesda, Maryland. The Company does not anticipate any adverse impact on its ability to continue to operate its businessadequate. Rent collections during the ~~transition back to the office.~~third quarter and rent relief requests to-date may not be indicative of collections or requests in any future period.

General

The following discussion is based primarily on the consolidated financial statements of the Company as of and for the three and nine months ended September 30, ~~2021.~~2022.

Overview

The Company’s primary strategy is to continue to focus on diversification of its assets through development of transit-oriented, residential mixed-use 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 Centers through the addition of pad sites, and 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 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 Washington Metropolitan Area Transit Authority (“WMATA”) red line Metro stations in Montgomery County, Maryland.

~~-25-~~

The Company intends to selectively add free-standing pad site buildings within its Shopping Center portfolio and replace underperforming tenants with tenants that generate strong traffic, including anchor stores such as supermarkets and drug stores. The Company has executed leases or leases are under negotiation for ten more pad sites.

In recent years, there has been a limited amount of quality properties for sale and pricing of those properties has escalated. Accordingly, management believes acquisition opportunities for investment in existing and new shopping center and mixed-use properties in the near future is uncertain. Nevertheless, because of 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.

Prior to the COVID-19 pandemic, economic conditions within the local Washington, DC metropolitan area were relatively 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, 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 ways to maximize our future performance. The ~~Company's~~Company’s commercial leasing percentage, on a same property basis, which excludes the impact of properties not in operation for the entirety of the comparable periods, ~~decreased~~increased to 93.0% at September 30, 2022, from 92.5% at September 30, ~~2021, from 94.0% at September 30, 2020.~~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 September 30, ~~2021, amortizing~~2022, including the $100.0 million hedged variable-rate debt,
total fixed-rate ~~mortgage~~ debt with staggered maturities from ~~2022~~2023 to ~~2035~~2041 represented approximately ~~82.7%~~89.4% of the Company’s notes payable, thus ~~minimizing~~mitigating refinancing risk. The Company’s unhedged variable-rate debt consists of ~~$198.0~~$128.0 million outstanding

-25-

under the ~~credit facility.~~Credit Facility. As of September 30, ~~2021,~~2022, the Company has availability of approximately ~~$228.2~~$248.8 million under its ~~$425.0 million unsecured revolving credit facility.~~Credit Facility.

Although ~~management intends~~it is management’s present intention to concentrate future acquisition and development activities on ~~transit-oriented, primarily~~
transit-centric, residential mixed-use properties and grocery-anchored shopping centers 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. The Company plans to continue to diversify in terms of property types, locations, size and market, and it does not set any limit on the amount or percentage of 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~~Company’s Commercial properties (all properties except for the apartments within The Waycroft, Clarendon Center and Park Van Ness ~~apartments)~~properties). For purposes of this table, annualized effective rent is annualized base rent minus amortized tenant improvements and amortized leasing commissions.


													Commercial Rents per Square Foot
		Nine months ended September 30,											Nine Months Ended September 30,
		2021		2020		2019		2018		2017			2022		2021
Base rent	Base rent	$	20.59	$	19.80	$	20.15	$	20.13	$	19.30	Base rent	$	20.52	$	20.59
Effective rent	Effective rent	$	18.87	$	18.09	$	18.27	$	18.25	$	17.49	Effective rent	$	18.91	$	18.87

~~-26-~~

Recent Developments

The Company completed construction of The Waycroft, a project with 491 apartment units and 60,000 square feet of retail space on 2.8 acres of land located on North Glebe Road in Arlington, Virginia, and apartment occupancy commenced in April 2020. The total cost of the project, including acquisition of land, is expected to be approximately $279.0 million. A portion of the cost was financed with a $157.0 million construction-to-permanent loan. Including approximately $19.1 million of capitalized interest, costs incurred through September 30, 2021 total approximately $277.9 million, of which $148.5 million has been financed by the loan. Leases have been executed for approximately 90% of the total planned retail space, including a 41,500 square foot Target and 12,600 square feet of retail shop space. Target began operating in August 2020 and 2,400 square feet of retail space became operational during the third quarter of 2020. As of September 30, 2021, the residential component of The Waycroft was 98.0% leased.

In August 2016, the Company entered into an agreement to acquire from the Trust approximately 13.7 acres of land located at the intersection of Ashburn Village Boulevard and Russell Branch Parkway in Ashburn, Virginia. The transaction closed on May 9, 2018, and the Company issued 176,680 limited partnership units to the Trust. The Company constructed a shopping center, Ashbrook Marketplace, which, as of September 30, 2021, is 100% leased. On June 30, 2021, the Company issued 93,674 additional limited partnership units as additional consideration to the Trust in accordance with the Ashbrook Contribution Agreement, as amended.

In September 2018, the Company purchased for $35.5 million, plus $0.7 million of acquisition costs, an office building and the underlying ground located at 7316 Wisconsin Avenue, in Bethesda, Maryland. In December 2018, the Company purchased for $4.5 million, including acquisition costs, an interest in an adjacent parcel of land and retail building. The purchase price was funded through the Company's revolving credit facility. The Company has completed development plans for the combined property, known as Hampden House, for the development of up to 366 apartment units and 10,100 square feet of retail space. In June 2020, the Montgomery County Planning Commission unanimously approved the Company's amended site plan. Design and construction documents are being prepared. Approval from the Washington Metropolitan Area Transit Authority was received in 2020 and the approval from Maryland Transit Administration is in process and is expected to be received by the fourth quarter of 2021. Effective September 1, 2019, the asset was removed from service and transferred to construction in progress. The Company is working with a lender that has offered to make a $133.0 million construction-to-permanent loan, the proceeds of which will be used to partially finance the project. The timing of construction of the project has not yet been determined. However, the Company anticipates that demolition of the existing vacant building will begin during the fourth quarter of 2021 to prepare the site for future development.

~~On November 5, 2019, the Company entered into the~~developing Twinbrook Contribution Agreement to acquire the Contributed Property from 1592 Rockville Pike. The Contributed Property is immediately adjacent to approximately 10.3 acres owned by the Company. In exchange for the Contributed Property, the Company will issue to 1592 Rockville Pike 1,416,071 limited partnership units in the Operating Partnership. Title to the Contributed Property and the units were placed in escrow pending satisfaction of certain conditions of the Twinbrook Contribution Agreement.

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 that date, and reimburse 1592 Rockville Pike for certain expenses pursuant to the Twinbrook Contribution Agreement. The units continued to remain in escrow pending satisfaction of the conditions of the Twinbrook Contribution Agreement, as amended.

The Company acquired title to the Contributed Property earlier than originally contemplated in order to have complete control over the final aspects of predevelopment, project bidding, contractor selection and lender discussions in support of Phase I. This control will also assure the preservation of the Wegmans lease and its value to this site and, as importantly, to the Company’s adjacent holdings.

On June 29, 2021, the third-party landlord under the ground lease contributed the fee simple interest in the land underlying the leasehold interest to the Company in exchange for 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.

The remaining conditions of the Twinbrook Contribution Agreement were satisfied during the third quarter of 2021, and, effective October 18, 2021, 708,036 units were released to 1592 Rockville Pike from escrow. The remaining 708,035 units continue to be held in escrow and will be released to 1592 Rockville Pike on October 18, 2023.

The full project plan for redevelopment of a major mixed-use project spanning both the Company’s property and the Contributed Property was finalized in 2019 and rights to develop the project extend for a thirty-year term to 2049. A site plan allowing for development of a plannedQuarter Phase I ~~within the Contributed Property, which~~(“Phase I”) located in Rockville, Maryland. Phase I includes an 80,000 square foot

~~-27-~~

~~Table~~ Wegmans, approximately 25,000 square feet of ~~Contents~~

~~Wegmans, adjacent~~ small shop space, 450 apartments and a 230,000 square foot office ~~building, was approved by~~building. The office tower portion of Phase I will not be constructed at this time. In connection with the ~~City of Rockville in August 2020. The approval~~development of the ~~site plan was unanimous, however, it was appealed~~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 ~~local resident. The Circuit Court for Montgomery County has issued a decision affirming~~$145.0 million construction-to-permanent loan. Below grade concrete and framing are complete. Concrete is being poured at the ~~City's approval~~fourth level above ground. Initial delivery of ~~the site plan and that decision is now final and unappealable. Demolition of the existing improvements within~~ Phase I ~~has been completed and site excavation~~ is anticipated in ~~process. The phasing of remaining improvements and the timing of construction will depend on removal of contingencies, building permit approval and market conditions.~~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. Demolition has been completed and excavation is in process. Construction is expected to be completed during 2025.

Critical Accounting Policies

The Company’s 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. If judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied resulting in a different presentation of the financial statements. The Company has identified the following policies that, due to estimates and assumptions inherent in these 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.

-26-

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~~amount of the real estate investment property exceeds its estimated fair value. The Company considers both quantitative and qualitative factors when 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~~amount 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~~amount 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.

Accounts Receivable, Accrued Income, and Allowance for Doubtful Accounts

Accounts receivable primarily represent amounts currently due from tenants in accordance with the terms of their respective leases. Individual leases are assessed for collectability and, upon the 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 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. Actual results could differ from these estimates.

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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.

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Results of Operations

Three months ended September 30, ~~2021~~2022 (the ~~"2021 Quarter"~~“2022 Quarter”) compared to the three months ended September 30, ~~2020~~2021 (the ~~"2020 Quarter"~~“2021 Quarter”)

Net income for the 2022 Quarter decreased to $15.5 million from $16.9 million for the 2021 Quarter. Significant changes in revenue and expenses are discussed below.

Revenue


		Three months ended September 30,				2020 to 2021 Change					Three Months Ended September 30,				2021 to 2022 Change
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Amount		Percent		(Dollars in thousands)	2022		2021		Amount		Percent
Base rent	Base rent	$	49,829	$	48,268	$	1,561	3.2	%	Base rent	$	50,233	$	49,829	$	404	0.8	%
Expense recoveries	Expense recoveries	8,488		8,973		(485)		(5.4)	%	Expense recoveries	8,930		8,488		442		5.2	%
Percentage rent	Percentage rent	208		60		148		246.7	%	Percentage rent	265		208		57		27.4	%
Other property revenue	Other property revenue	384		309		75		24.3	%	Other property revenue	454		384		70		18.2	%
Credit (losses) recoveries on operating lease receivables		149		(1,861)		2,010		(108.0)	%
Credit recoveries on operating lease receivables, net										Credit recoveries on operating lease receivables, net	69		149		(80)		(53.7)	%
Rental revenue	Rental revenue	59,058		55,749		3,309		5.9	%	Rental revenue	59,951		59,058		893		1.5	%
Other revenue	Other revenue	1,198		1,011		187		18.5	%	Other revenue	1,136		1,198		(62)		(5.2)	%
Total revenue	Total revenue	$	60,256	$	56,760	$	3,496	6.2	%	Total revenue	$	61,087	$	60,256	$	831	1.4	%

Base rent includes ~~$310,900~~$(0.4) million and ~~$1.2~~$0.3 million for the ~~2021~~2022 Quarter and ~~2020~~2021 Quarter, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes ~~$343,000 and $349,300,~~$0.3 million for the ~~2021~~2022 Quarter and ~~2020~~2021 Quarter ~~respectively,~~ to recognize income from the amortization of in-place leases acquired in connection with purchased real estate investment properties.

Total revenue increased ~~6.2%~~1.4% in the ~~2021~~2022 Quarter compared to the ~~2020~~2021 Quarter, as described below.

Base Rent. The ~~$1.6~~$0.4 million increase in base rent in the ~~2021~~2022 Quarter compared to the ~~2020~~2021 Quarter is primarily attributable to ~~the~~The Waycroft.

Expense recoveries. The $0.4 million increase in ~~occupancy at The Waycroft, which opened~~expense recoveries in ~~April 2020 ($2.1 million) partially offset by lower base rent at 601 Pennsylvania Avenue ($0.5 million).~~

~~Percentage Rent.~~ ~~The 246.7% increase in percentage rent in the 2021~~2022 Quarter compared to the ~~2020~~2021 Quarter is primarily attributable to an increase in recoverable property operating expenses.

Expenses


	Three Months Ended September 30,				2021 to 2022 Change
(Dollars in thousands)	2022		2021		Amount		Percent
Property operating expenses	$	8,995	$	8,210	$	785	9.6	%

Real estate taxes	7,078		7,154		(76)		(1.1)	%
Interest expense, net and amortization of deferred debt costs	11,103		10,914		189		1.7	%
Depreciation and amortization of lease costs	12,195		12,467		(272)		(2.2)	%
General and administrative	5,555		4,626		929		20.1	%


Loss on early extinguishment of debt	648		—		648		NM
Total expenses	$	45,574	$	43,371	$	2,203	5.1	%

NM - Not Meaningful

Total expenses increased ~~sales reported~~5.1% in the 2022 Quarter compared to the 2021 Quarter, as described below.

Property operating expenses. The $0.8 million increase in property operating expenses in the 2022 Quarter compared to the 2021 Quarter is primarily attributable to (a) higher repairs and maintenance expenses across the portfolio of $0.4 million, (b) increased payroll costs of $0.1 million and (c) increased parking expenses of $0.1 million.

General and Administrative. General and administrative expenses increased 20.1% in the 2022 Quarter primarily due to (a) fees paid to third-parties related to the early refinance of loans at Beacon Center and Seven Corners Center totaling $0.5 million and (b) increased salaries and benefits of $0.3 million.

-28-

Loss on early extinguishment of debt. Loss on early extinguishment of debt increased by ~~anchor tenants~~$0.6 million due to the early refinance of loans at ~~multiple Shopping Centers.~~Great Falls Center and Village Center.

Nine months ended September 30, 2022 (the “2022 Period”) compared to the nine months ended September 30, 2021 (the “2021 Period”)

Net income for the 2022 Period increased to $50.0 million from $45.8 million for the 2021 Period. Significant changes in revenue and expenses are discussed below.

Revenue


	Nine Months Ended September 30,				2021 to 2022 Change
(Dollars in thousands)	2022		2021		Amount		Percent
Base rent	$	150,070	$	147,877	$	2,193	1.5	%
Expense recoveries	26,723		26,235		488		1.9	%
Percentage rent	1,489		1,294		195		15.1	%
Other property revenue	1,463		1,030		433		42.0	%
Credit recoveries (losses) on operating lease receivables, net	20		(802)		822		NM
Rental revenue	179,765		175,634		4,131		2.4	%
Other revenue	3,759		3,351		408		12.2	%
Total revenue	$	183,524	$	178,985	$	4,539	2.5	%

NM - Not Meaningful

Base rent includes $(0.5) million and $1.8 million for the 2022 Period and the 2021 Period, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $1.0 million for the 2022 Period and 2021 Period to recognize income from the amortization of in-place leases acquired in connection with purchased real estate investment properties.

Total revenue increased 2.5% in the 2022 Period compared to the 2021 Period, as described below.

Base Rent. The $2.2 million increase in base rent in the 2022 Period compared to the 2021 Period is primarily attributable to The Waycroft.

Expense recoveries. The $0.5 million increase in the 2022 Period compared to the 2021 Period is primarily attributable to an increase in recoverable property operating expenses.

Other property revenue. The $0.4 million increase in the 2022 Period compared to the 2021 Period is primarily attributable to (a) higher late fee and interest charges of $0.2 million and (b) higher residential move-in fees of $0.1 million.

Credit Recoveries (Losses) ~~Recoveries~~ on Operating Lease ~~Receivables.~~Receivables, net. Credit ~~losses~~recoveries (losses) on operating lease receivables, net for the ~~2021 Quarter~~2022 Period decreased ~~$2.0~~$0.8 million from the ~~2020 Quarter.~~2021 Period. The decrease, which increases income, is primarily due to ~~net~~higher collections ~~across the portfolio as tenant operations have improved~~in 2022 of previously reserved rents.

Other Revenue. Other revenue increased $0.4 million primarily due to ~~restrictions related to COVID-19 being removed or lessened.~~(a) higher parking revenue of $0.6 million, partially offset by (b) lower lease termination fees of $0.2 million.

-29-

Expenses


		Three months ended September 30,				2020 to 2021 Change					Nine Months Ended September 30,				2021 to 2022 Change
(Dollars in thousands)	(Dollars in thousands)	2021		2020		Amount		Percent		(Dollars in thousands)	2022		2021		Amount		Percent
Property operating expenses	Property operating expenses	$	8,210	$	7,416	$	794	10.7	%	Property operating expenses	$	26,174	$	24,420	$	1,754	7.2	%

Real estate taxes	Real estate taxes	7,154		7,523		(369)		(4.9)	%	Real estate taxes	21,652		22,121		(469)		(2.1)	%
Interest expense, net and amortization of deferred debt costs	Interest expense, net and amortization of deferred debt costs	10,914		12,398		(1,484)		(12.0)	%	Interest expense, net and amortization of deferred debt costs	32,162		34,559		(2,397)		(6.9)	%
Depreciation and amortization of lease costs		12,467		13,713		(1,246)		(9.1)	%
Depreciation and amortization of deferred leasing costs										Depreciation and amortization of deferred leasing costs	36,899		37,852		(953)		(2.5)	%
General and administrative	General and administrative	4,626		4,107		519		12.6	%	General and administrative	15,988		14,234		1,754		12.3	%

Loss on early extinguishment of debt										Loss on early extinguishment of debt	648		—		648		NM
Total expenses	Total expenses	$	43,371	$	45,157	$	(1,786)	(4.0)	%	Total expenses	$	133,523	$	133,186	$	337	0.3	%

NM - Not Meaningful

Total expenses ~~decreased 4.0%~~increased 0.3% in the ~~2021 Quarter~~2022 Period compared to the ~~2020 Quarter,~~2021 Period, as described below.

Property Operating Expenses. Property operating expenses increased ~~10.7%~~7.2% in the ~~2021 Quarter~~ 2022 Period primarily due to (a) increased ~~expenses~~repair and maintenance costs throughout the portfolio ~~as a result~~ of ~~the deferral~~$0.8 million, (b) increased utility costs of ~~certain maintenance~~$0.2 million, (c) increased payroll costs ~~in 2020 ($0.7 million).~~

~~Real Estate Taxes. Real~~of $0.2 million, (d) increased parking costs of $0.2 million and (e) increased real estate ~~taxes decreased 4.9% in the 2021 Quarter primarily due to lower assessments at several properties throughout the portfolio.~~tax appeal fees of $0.2 million.

Interest Expense, net and Amortization of Deferred Debt Costs. Interest expense, net and amortization of deferred debt costs decreased ~~12.0%~~6.9% in the ~~2021 Quarter~~2022 Period primarily due to (a) higher capitalized interest ~~($1.1 million). The increase~~of $2.9 million, which was largely driven by the Twinbrook development ~~project.~~project and (b) lower interest incurred as a result of lower weighted average interest rates of $0.2 million, partially offset by (c) higher interest incurred as a result of higher average debt outstanding of $0.7 million.

General and Administrative.General and administrative expenses increased ~~12.6%~~12.3% in the ~~2021 Quarter primarily due to increased salaries and benefits ($0.3 million).~~

~~Nine months ended September 30, 2021 (the "2021 Period") compared to the nine months ended September 30, 2020 (the "2020 Period")~~

~~Revenue~~

Nine Months Ended
September 30, 2020 to 2021 Change
(Dollars in thousands) 2021 2020 Amount Percent
Base rent $ 147,877 $ 140,120 $ 7,757 5.5 %
Expense recoveries 26,235 25,775 460 1.8 %
Percentage rent 1,294 496 798 160.9 %
Other property revenue 1,030 938 92 9.8 %
Credit losses on operating lease receivables (802) (4,162) 3,360 (80.7) %
Rental revenue 175,634 163,167 12,467 7.6 %
Other revenue 3,351 3,756 (405) (10.8) %
Total revenue $ 178,985 $ 166,923 $ 12,062 7.2 %

~~Base rent includes $1.8 million and $987,100 for the 2021~~2022 Period and the 2020 Period, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $1.0 million and $1.1 million for the 2021 Period and the
2020 Period, respectively, to recognize income from the amortization of in-place leases acquired in connection with purchased real estate investment properties.

~~Total revenue increased 7.2% in the 2021 Period compared to the 2020 Period, as described below.~~

~~-30-~~

~~Base Rent.~~ The $7.8 million increase in base rent in the 2021 Period compared to 2020 Period is primarily attributable to (a) increased occupancy at The Waycroft, which opened in April 2020 ($8.3 million) and (b) increased occupancy at Ashbrook Marketplace, which opened in November 2019 ($1.0 million), partially offset by (c) lower rent at 601 Pennsylvania Avenue ($1.0 million) and (d) lower rent at Washington Square ($0.7 million).

~~Percentage Rent.~~ ~~The 160.9% increase in percentage rent in the 2021 Period compared to the 2020 Period is primarily attributable to increased sales reported by anchor and retail tenants at multiple Shopping Centers.~~

~~Credit Losses on Operating Lease Receivables.~~ Credit losses on operating lease receivables for the 2021 Period represents 0.4% of the Company’s revenue, a decrease from 2.5% for the 2020 Period. The decrease is primarily due to collections across the portfolio as tenant operations have improved due to restrictions related to COVID-19 being removed or lessened.

~~Other Revenue.~~ ~~Other revenue decreased $0.4 million primarily due to (a) lower lease termination fees ($0.8 million) partially offset by (b) higher parking revenue ($0.4 million).~~

~~Expenses~~

Nine Months Ended
September 30, 2020 to 2021 Change
(Dollars in thousands) 2021 2020 Amount Percent
Property operating expenses $ 24,420 $ 20,862 $ 3,558 17.1 %
Real estate taxes 22,121 22,027 94 0.4 %
Interest expense, net and amortization of deferred debt costs 34,559 34,011 548 1.6 %
Depreciation and amortization of deferred leasing costs 37,852 37,593 259 0.7 %
General and administrative 14,234 13,790 444 3.2 %
Total expenses $ 133,186 $ 128,283 $ 4,903 3.8 %

~~Total expenses increased 3.8% in the 2021 Period compared to the 2020 Period, as described below.~~

~~Property Operating Expenses.~~ ~~Property operating expenses increased 17.1% in the 2021 Period~~ primarily due to (a) increased ~~expenses at The Waycroft, which opened in April 2020 ($1.6 million),~~salaries and benefits of $0.8 million, (b) ~~increased expenses throughout the portfolio~~fees paid to third-parties related to ~~snow removal ($1.3 million),~~the early refinance of loans at Beacon Center and Seven Corners Center totaling $0.5 million, and (c) increased ~~expenses throughout~~recruiting costs of $0.3 million.

Loss on early extinguishment of debt. Loss on early extinguishment of debt increased by $0.6 million due to the ~~portfolio, exclusive~~early refinance of ~~The Waycroft ($0.7 million).~~loans at Great Falls Center and Village Center.

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 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 (a) interest expense, net and amortization of deferred debt costs, (b) depreciation and amortization of lease costs, (c) general and administrative expenses, ~~and~~ (d) change in fair value of derivatives, and (e) loss on the early extinguishment of debt minus ~~(e)~~(f) gains on property dispositions and ~~(f)~~(g) the 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 property revenue and property 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.

~~-31-~~-30-

The tables below provide reconciliations of total property revenue and property operating income under GAAP to same property revenue and operating income for the indicated periods. ~~The~~No properties were excluded for same property results for the ~~three months ended September 30, 2021 and 2020 include 50 Shopping Centers and seven Mixed-Use properties. The same property results for~~2022 Quarter or the ~~nine months ended September 30, 2021 and 2020 include 50 Shopping Centers and six Mixed-Use properties.~~2022 Period.

Same property revenue
(in thousands) Three months ended September 30, Nine months ended September 30,
2021 2020 2021 2020
Total revenue $ 60,256 $ 56,760 $ 178,985 $ 166,923
Less: Acquisitions, dispositions and development properties — — (11,309) (2,151)
Total same property revenue $ 60,256 $ 56,760 $ 167,676 $ 164,772
Shopping Centers $ 42,485 $ 40,336 $ 126,935 $ 120,236
Mixed-Use properties 17,771 16,424 40,741 44,536
Total same property revenue $ 60,256 $ 56,760 $ 167,676 $ 164,772
Total Shopping Center revenue $ 42,485 $ 40,336 $ 126,935 $ 120,236
Less: Shopping Center acquisitions, dispositions and development properties — — — —
Total same Shopping Center revenue $ 42,485 $ 40,336 $ 126,935 $ 120,236
Total Mixed-Use property revenue $ 17,771 $ 16,424 $ 52,050 $ 46,687
Less: Mixed-Use acquisitions, dispositions and development properties — — (11,309) (2,151)
Total same Mixed-Use revenue $ 17,771 $ 16,424 $ 40,741 $ 44,536


(in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Total revenue	$	61,087	$	60,256	$	183,524	$	178,985
Less: Acquisitions, dispositions and development properties	—		—		—		—
Total same property revenue	$	61,087	$	60,256	$	183,524	$	178,985

Shopping Centers	$	42,478	$	42,485	$	128,615	$	126,935
Mixed-Use properties	18,609		17,771		54,909		52,050
Total same property revenue	$	61,087	$	60,256	$	183,524	$	178,985

Total Shopping Center revenue	$	42,478	$	42,485	$	128,615	$	126,935
Less: Shopping Center acquisitions, dispositions and development properties	—		—		—		—
Total same Shopping Center revenue	$	42,478	$	42,485	$	128,615	$	126,935

Total Mixed-Use property revenue	$	18,609	$	17,771	$	54,909	$	52,050
Less: Mixed-Use acquisitions, dispositions and development properties	—		—		—		—
Total same Mixed-Use revenue	$	18,609	$	17,771	$	54,909	$	52,050

The ~~$3.5~~$0.8 million increase in same property revenue for the ~~2021~~2022 Quarter compared to the ~~2020~~2021 Quarter was primarily due to (a) ~~lower credit losses on operating lease receivables and corresponding reserves ($2.3 million), (b)~~ higher base rent ~~largely due to increased occupancy at The Waycroft ($1.3 million)~~of $0.4 million and ~~(c)~~(b) higher ~~parking income ($0.4 million), partially offset by (d) lower~~ expense recoveries ~~($0.5 million).~~of $0.4 million.

The ~~$2.9~~$4.5 million increase in same property revenue for the ~~2021~~2022 Period compared to the ~~2020~~2021 Period was primarily due to (a) higher base rent of $2.3 million, (b) lower credit losses on operating lease receivables, ~~and corresponding reserves ($4.9 million), (b)~~net of $0.7 million, (c) higher ~~percentage rent ($0.8 million) and (c)~~parking income of $0.6 million, (d) higher expense recoveries ~~($0.2 million), partially offset by~~of $0.5 million and (d) ~~lower base rent ($2.0 million) and (e) lower termination fees ($0.9 million).~~higher other property revenue of $0.4 million.

~~-32-~~-31-

Same property operating income


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	(In thousands)	2021		2020		2021		2020		(In thousands)	2022		2021		2022		2021

Net income	Net income	$	16,885	$	11,603	$	45,799	$	38,640	Net income	$	15,513	$	16,885	50,001		$	45,799
Add: Interest expense, net and amortization of deferred debt costs	Add: Interest expense, net and amortization of deferred debt costs	10,914		12,398		34,559		34,011		Add: Interest expense, net and amortization of deferred debt costs	11,103		10,914		32,162		34,559
Add: Depreciation and amortization of lease costs	Add: Depreciation and amortization of lease costs	12,467		13,713		37,852		37,593		Add: Depreciation and amortization of lease costs	12,195		12,467		36,899		37,852
Add: General and administrative	Add: General and administrative	4,626		4,107		14,234		13,790		Add: General and administrative	5,555		4,626		15,988		14,234

Add: Loss on early extinguishment of debt										Add: Loss on early extinguishment of debt	648		—		648		—

Property operating income	Property operating income	44,892		41,821		132,444		124,034		Property operating income	45,014		44,892		135,698		132,444
Less: Acquisitions, dispositions and development properties	Less: Acquisitions, dispositions and development properties	—		—		(6,655)		(71)		Less: Acquisitions, dispositions and development properties	—		—		—		—
Total same property operating income	Total same property operating income	$	44,892	$	41,821	$	125,789	$	123,963	Total same property operating income	$	45,014	$	44,892	$	135,698	$	132,444

Shopping Centers	Shopping Centers	$	33,845	$	31,581	$	99,848	$	94,195	Shopping Centers	$	33,652	$	33,845	$	101,513	$	99,848
Mixed-Use properties	Mixed-Use properties	11,047		10,240		25,941		29,768		Mixed-Use properties	11,362		11,047		34,185		32,596
Total same property operating income	Total same property operating income	$	44,892	$	41,821	$	125,789	$	123,963	Total same property operating income	$	45,014	$	44,892	$	135,698	$	132,444

Shopping Center operating income	Shopping Center operating income	$	33,845	$	31,581	$	99,848	$	94,195	Shopping Center operating income	$	33,652	$	33,845	$	101,513	$	99,848
Less: Shopping Center acquisitions, dispositions and development properties	Less: Shopping Center acquisitions, dispositions and development properties	—		—		—		—		Less: Shopping Center acquisitions, dispositions and development properties	—		—		—		—
Total same Shopping Center operating income	Total same Shopping Center operating income	$	33,845	$	31,581	$	99,848	$	94,195	Total same Shopping Center operating income	$	33,652	$	33,845	$	101,513	$	99,848

Mixed-Use property operating income	Mixed-Use property operating income	$	11,047	$	10,240	$	32,596	$	29,839	Mixed-Use property operating income	$	11,362	$	11,047	$	34,185	$	32,596
Less: Mixed-Use acquisitions, dispositions and development properties	Less: Mixed-Use acquisitions, dispositions and development properties	—		—		(6,655)		(71)		Less: Mixed-Use acquisitions, dispositions and development properties	—		—		—		—
Total same Mixed-Use property operating income	Total same Mixed-Use property operating income	$	11,047	10,240		$	25,941	$	29,768	Total same Mixed-Use property operating income	$	11,362	$	11,047	$	34,185	$	32,596

Same property operating income increased ~~$3.1~~$0.1 million, ~~(7.3%)~~or 0.3%, for the ~~2021~~2022 Quarter compared to the ~~2020~~2021 Quarter. Shopping Center same property operating income for the ~~2021~~2022 Quarter totaled ~~$33.8~~$33.7 million, a ~~$2.3~~$0.2 million ~~increase~~decrease from the ~~2020~~2021 Quarter. Mixed-Use same property operating income totaled ~~$11.0~~$11.4 million, a ~~$0.8~~$0.3 million increase from the ~~2020~~2021 Quarter. The increase in Shopping Center same property operating income was primarily the result of (a) lower credit losses on operating lease receivables and corresponding reserves (collectively, $2.0 million) and (b) higher base rent ($0.3 million). The increase in Mixed-Use same property operating income was primarily the result of (a) higher base rent ($1.0 million), (b) lower credit losses on operating lease receivables and corresponding reserves (collectively, $0.3 million) and (c) higher parking income, net of expenses ($0.3 million), partially offset by (d) lower expense recoveries, net of expenses ($0.7 million) and (e) lower lease termination fees ($0.2 million).

Same property operating income increased ~~$1.8~~$3.3 million, ~~(1.5%)~~or 2.5%, for the ~~2021~~2022 Period, compared to the ~~2020~~2021 Period. Shopping Center same property operating income increased ~~$5.7~~$1.7 million, ~~(6.0%)~~or 1.7%, and Mixed-Use same property operating income ~~decreased $3.8~~increased $1.6 million, ~~(12.9%)~~or 4.9%. Shopping Center same property operating income increased primarily due to (a) higher base rent of $0.8 million, (b) lower credit losses on operating lease receivables and corresponding reserves, ~~(collectively, $4.3 million), (b) higher base rent ($1.5 million)~~net of $0.6 million and (c) higher percentage rent ~~($0.6 million), partially offset by (d) lower expense recoveries, net~~ of ~~expenses ($0.5 million) and (e) lower termination fees ($0.2 million). Mixed-use~~$0.2 million. Mixed-Use same property operating income ~~decreased~~increased primarily due to (a) ~~lower~~higher base rent ~~($3.5 million),~~of $1.5 million, (b) ~~lower termination fees ($0.7 million) and (c) lower expense recoveries,~~higher parking income, net of expenses ~~($0.4 million), partially offset by~~of $0.4 million, (c) higher other property revenue of $0.2 million, (d) lower credit losses on operating lease receivables and corresponding reserves, ~~(collectively, $0.6 million).~~

~~-33-~~

~~Table~~net of ~~Contents~~$0.1 million, partially offset by (e) lower recovery income, net of expenses of $0.8 million.

Liquidity and Capital Resources

Cash and cash equivalents totaled ~~$11.9~~$10.3 million and ~~$54.3~~$11.9 million at September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The Company’s cash flow is affected by its operating, investing and financing activities, as described below.


		Nine Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Net cash provided by operating activities	Net cash provided by operating activities	$	89,062	$	56,770	Net cash provided by operating activities	$	92,009	$	89,019
Net cash used in investing activities	Net cash used in investing activities	(38,831)		(48,363)		Net cash used in investing activities	(84,509)		(38,788)
Net cash provided by (used in) financing activities		(65,170)		31,993
Net increase (decrease) in cash and cash equivalents		$	(14,939)	$	40,400
Net cash used in financing activities						Net cash used in financing activities	(11,803)		(65,170)
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	$	(4,303)	$	(14,939)

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Operating Activities

Net cash provided by operating activities represents cash received primarily from rental revenue, plus other revenue, less property operating expenses, leasing costs, normal recurring general and administrative expenses and interest payments on debt outstanding.

Investing Activities

Net cash used in investing activities includes property acquisitions, developments, redevelopments, tenant improvements and other property capital expenditures. The ~~$9.5~~$45.7 million ~~decrease~~increase in cash used in investing activities is primarily due to (a) ~~decreased~~increased development expenditures ~~($19.5 million),~~of $55.0 million, partially offset by (b) ~~increased~~decreased acquisitions of real estate investments ~~($9.0 million)~~of $9.0 million and (c) ~~increased~~decreased additions to real estate investments throughout the portfolio ~~($0.9 million).~~of $0.2 million.

Financing Activities

Net cash ~~provided by (used in)~~used in financing activities represents (a) ~~cash received from loan proceeds and issuance of common stock, preferred stock and limited partnership units minus (b)~~ cash used to repay and curtail loans, redeem preferred stock and pay dividends and distributions to holders of common stock, preferred stock and limited partnership units minus (b) cash received from loan proceeds and issuance of common stock, preferred stock and limited partnership units. See note 5 to the consolidated financial statements for a discussion of financing 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 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 will not be 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. Below grade concrete and framing are complete. Concrete is being poured at the fourth level above ground. 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.

Long-term liquidity requirements consist primarily of obligations under our long-term debt and dividends paid to our preferred shareholders. The Company anticipates that long-term liquidity requirements will also include amounts required for property acquisitions and developments. The Company is in the early stages of the development of Phase I of the Twinbrook Quarter, a project that includes an 80,000 square foot Wegmans, adjacent small shop space, 450 apartments and a 230,000 square foot office building in Rockville, Maryland. The Company is working with a lender that has offered to make a $145.0 million construction-to-permanent loan, the proceeds of which will be used to partially finance the project. The loan is expected to close in the fourth quarter of 2021, subject to customary loan closing conditions. Costs incurred are currently funded through working capital, including the Company's existing line of credit. The Company has completed development plans for the combined property, known as Hampden House, for the development of up to 366 apartment units and 10,100 square feet of retail space. The Company is working with a lender that has offered to make a $133.0 million construction-to-permanent loan, the proceeds of which will be used to partially finance the project. The timing of construction of the project has not yet been determined. However, the Company anticipates that demolition of the existing vacant building will begin during the fourth quarter of 2021 to prepare the site for future development.

The Company may also redevelop certain of the

~~-34-~~

Table of approximately $8.9 million and borrowing availability of approximately $220.2 million on its unsecured revolving credit facility, provide sufficient liquidity and flexibility to meet the needs of the Company's operations as the effects of the COVID-19 pandemic continue to evolve.Content s

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~~remainder of the year, developments, expansions or acquisitions (if any) are expected to be funded with available cash, bank borrowings from the Company’s ~~credit line,~~Credit Facility, 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.level. The availability and terms of any such financing will depend upon market and other conditions.

~~Management believes that the Company’s capital resources, which at October 31, 2021 included cash balances~~

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Dividend Reinvestments

The Company has a DRIP that allows 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 DRIP 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 DRIP are paid by the Company. The Company issued ~~224,706~~126,213 and ~~106,050~~224,706 shares under the DRIP at a weighted average discounted price of ~~$37.41~~$49.39 and ~~$44.62~~$37.41 per share, during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The Company issued ~~47,312~~26,659 and ~~28,209~~47,312 limited partnership units under the DRIP at a weighted average price of ~~$37.94~~$49.81 and ~~$40.14~~$37.94 per unit during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The Company also credited ~~4,939~~4,046 and ~~5,080~~4,939 shares to directors pursuant to the reinvestment of dividends specified by the Directors’ Deferred Compensation Plan at a weighted average discounted price of ~~$37.52~~$49.81 and ~~$34.76~~$37.52 per share, during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~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 September 30, ~~2021.~~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 strategy in light of current economic conditions, relative costs of capital, market values of the Company’s 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 maturities, and obtain generally more favorable loan terms, whenever management determines the financing environment is favorable.

At September 30, ~~2021,~~2022, the Company had a $525.0 million ~~credit facility~~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 accrues at a rate of LIBOR plus an applicable spread, which is 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 a rate of SOFR plus 10 basis points plus an applicable spread, which is determined by certain leverage tests. As of September 30, ~~2021,~~2022, the applicable spread for borrowings was 140 basis points ~~under~~related to the ~~Revolving Line~~revolving credit facility and 135 basis points ~~under~~related to the ~~Term Loan. Saul Centers and certain consolidated subsidiaries of the Operating Partnership have guaranteed the payment obligations of the Operating Partnership under the New Facility.~~term loan. Letters of credit may be issued under the ~~revolving credit facility. As of~~Credit Facility. On September 30, ~~2021,~~2022, based on the value of the Company’s unencumbered properties, approximately ~~$228.2~~$248.8 million was available under the ~~Revolving Line, $98.0~~Credit Facility, $228.0 million was outstanding and 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. The effective date of each swap agreement is 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 as of September 30, 2022. The Company has designated the agreements as cash flow hedges for accounting purposes.

During the third quarter of 2022, the Company completed early refinancings of four shopping centers, which provided $88.0 million of additional liquidity net of repayment of the existing mortgage loans, associated prepayment penalties and closing costs. The net proceeds from the refinancings were used to curtail the revolving portion of the Credit Facility. As a result of the early refinancings and the interest rate swaps, $128.0 million, or 10.6%, of our outstanding debt at September 30, 2022, was floating and unhedged.

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The facility requires the Company and its subsidiaries to maintain compliance with certain financial covenants. The material covenants require the Company, on a consolidated basis, to:

~~-35-~~

•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 1.4x on a trailing four-quarter basis (fixed charge coverage).

As of September 30, ~~2021,~~2022, the Company was in compliance with all such covenants. See note 5 to the consolidated financial statements for a discussion of all financing activity.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on the Company’s financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Funds From Operations

Funds From Operations (FFO)1 available to common stockholders and noncontrolling interests for the 2022 Quarter totaled $24.9 million, a decrease of 6.2% compared to the 2021 Quarter. FFO available to common stockholders and noncontrolling interests decreased primarily due to (a) higher general and administrative expenses of $0.9 million, or $0.03 per basic and diluted share, (b) loss on early extinguishment of debt of $0.6 million, or $0.02 per basic and diluted share, (c) lower recovery income, net of expenses of $0.3 million, or $0.01 per basic and diluted share, and (d) higher interest expense, net and amortization of deferred debt costs of $0.2 million, or $0.01 per basic and diluted share, partially offset by (e) higher base rent across the portfolio of $0.4 million, or $0.01 per basic and diluted share.

FFO available to common stockholders and noncontrolling interests for the 2022 Period totaled ~~$75.3~~$78.5 million, an increase of ~~10.9%~~4.3% compared to the ~~2020~~2021 Period. FFO available to common stockholders and noncontrolling interests increased primarily due to (a) lower interest expense, net and amortization of deferred debt costs of $2.4 million, or $0.07 per basic and diluted share, (b) higher base rent of $2.3 million, or $0.07 per basic and diluted share, (c) lower credit losses on operating lease receivables and corresponding reserves, ~~(collectively, $4.8 million), (b) increased occupancy at The Waycroft, which opened in April 2020 ($1.2 million), (c)~~net of $0.7 million, or $0.02 per basic and diluted share, partially offset by (d) higher ~~percentage rent (0.8 million),~~general and ~~(d) increased occupancy at Ashbrook Marketplace, which opened in November 2019 ($0.6 million).~~administrative expenses of $1.8 million, or $0.05 per basic and diluted share, and (e) loss on early extinguishment of debt of $0.6 million, or $0.02 per basic and diluted share.

The following table presents a reconciliation from net income to FFO available to common stockholders and noncontrolling interests for the periods indicated:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share amounts)	(In thousands, except per share amounts)	2021		2020		2021		2020		(In thousands, except per share amounts)	2022		2021		2022		2021
Net income	Net income	$	16,885	$	11,603	$	45,799	$	38,640	Net income	$	15,513	$	16,885	$	50,001	$	45,799

Add:	Add:									Add:

Real estate depreciation and amortization	Real estate depreciation and amortization	12,467		13,713		37,852		37,593		Real estate depreciation and amortization	12,195		12,467		36,899		37,852
FFO	FFO	29,352		25,316		83,651		76,233		FFO	27,708		29,352		86,900		83,651
Subtract:	Subtract:									Subtract:

Preferred stock dividends	Preferred stock dividends	(2,798)		(2,798)		(8,395)		(8,394)		Preferred stock dividends	(2,798)		(2,798)		(8,395)		(8,395)

FFO available to common stockholders and noncontrolling interests	FFO available to common stockholders and noncontrolling interests	$	26,554	$	22,518	$	75,256	$	67,839	FFO available to common stockholders and noncontrolling interests	$	24,910	$	26,554	$	78,505	$	75,256
Weighted average shares and units:	Weighted average shares and units:									Weighted average shares and units:
Basic	Basic	32,237		31,264		31,774		31,232		Basic	33,295		32,237		33,238		31,774
Diluted (2)	Diluted (2)	33,656		31,264		32,877		31,233		Diluted (2)	34,005		33,656		33,957		32,877
Basic FFO per share available to common stockholders and noncontrolling interests	Basic FFO per share available to common stockholders and noncontrolling interests	$	0.82	$	0.72	$	2.37	$	2.17	Basic FFO per share available to common stockholders and noncontrolling interests	$	0.75	$	0.82	$	2.36	$	2.37
Diluted FFO per share available to common stockholders and noncontrolling interests	Diluted FFO per share available to common stockholders and noncontrolling interests	$	0.79	$	0.72	$	2.29	$	2.17	Diluted FFO per share available to common stockholders and noncontrolling interests	$	0.73	$	0.79	$	2.31	$	2.29

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1 The National Association of Real Estate Investment Trusts ~~(NAREIT)~~(“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~~Nareit as net income, computed in accordance with GAAP, plus real estate depreciation and amortization, and excluding impairment charges on real estate assets and gains or losses from real estate 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 the Company believes occurs with its

~~-36-~~

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

Acquisitions and Redevelopments

Management anticipates that during the ~~coming~~remainder of the year, the Company will ~~complete~~continue the build out of the remaining retail spaces at The Waycroft. The Company may 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~~remainder of the year, any developments, expansions or acquisitions are expected to be funded with bank borrowings from the Company’s ~~credit line,~~Credit Facility, 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 mixed-use development and acquisitions of operating properties for opportunities to enhance operating income and cash flow growth. The Company also continues to analyze redevelopment, renovation and expansion opportunities within the portfolio.

Portfolio Leasing Status

The following chart sets forth certain information regarding Commercial leases at our properties.


		Total Properties		Total Square Footage		Percent Leased					Total Properties		Total Square Footage		Percent Leased
		Shopping Centers	Mixed-Use	Shopping Centers	Mixed-Use	Shopping Centers		Mixed-Use			Shopping Centers	Mixed-Use	Shopping Centers	Mixed-Use	Shopping Centers		Mixed-Use
September 30, 2022										September 30, 2022	50	7	7,874,130	1,136,885	94.5	%	83.1	%
September 30, 2021	September 30, 2021	50	7	7,872,002	1,136,937	93.6	%	85.0	%	September 30, 2021	50	7	7,872,002	1,136,937	93.6	%	85.0	%
September 30, 2020		50	7	7,876,842	1,136,937	94.5	%	90.3	%

As of September 30, ~~2021, 92.5%~~2022, 93.0% of the Commercial portfolio was leased, compared to ~~94.0%~~92.5% September 30, ~~2020.~~2021. On a same property basis, ~~92.5%~~93.0% of the Commercial portfolio was leased, compared to ~~94.0%~~92.5% at September 30, ~~2020. As~~2021. Included in the 93.0% of space leased as of September 30, ~~2021,~~2022, is approximately 331,000 square feet of space, representing 3.7% of total commercial square footage, that has not been occupied by the ~~Residential portfolio was 97.8% leased compared~~tenant. Collectively, these leases are expected to ~~73.9% at September 30, 2020. As~~produce approximately $5.8 million of ~~September 30, 2021, excluding The Waycroft, the Residential portfolio was 97.7% leased compared to 94.4% at September 30, 2020.~~additional annualized base rent, an average of $17.62 per square foot, upon tenant occupancy and following any contractual rent concessions.

-36-

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.

Commercial Property Leasing Activity Average Base Rent per Square Foot
Three months ended September 30, Square
Feet Number
of Leases New/Renewed
Leases Expiring
Leases
2021 242,172 59 $ 20.64 $ 20.95
2020 288,059 66 24.67 25.09

~~-37-~~


Commercial Property Leasing Activity					Average Base Rent per Square Foot
Three Months Ended September 30,	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	415,845	23,904	94	3	$	23.44	$	27.64	$	21.80	$	30.40
2021	231,008	11,164	55	4	19.15		51.45		19.19		57.36

Additional information about the leasing activity during the three months ended September 30, ~~2021~~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~~Company’s ownership, either a result of acquisition or development.

Commercial Property Leasing Activity
New
Leases First Generation/Development Leases Renewed
Leases
Number of leases 13 1 46
Square feet 37,545 1,739 204,627
Per square foot average annualized:
Base rent $ 22.82 $ 63.00 $ 20.24
Tenant improvements (2.64) — (0.32)
Leasing costs (0.77) — (0.04)
Rent concessions (0.67) — (0.11)
Effective rents $ 18.74 $ 63.00 $ 19.77

During the three months ended September 30, 2021, on a same property basis, the Company entered into 331 new or renewed apartment leases. The average monthly rent per square foot increased to $3.38 from $3.30. During the three months ended September 30, 2020, on a same property basis, the Company entered into 181 new or renewed apartment leases. The average monthly rent per square foot decreased to $3.34 from $3.55.


	Commercial Property Leasing Activity
	New Leases		First Generation/Development Leases		Renewed Leases
Number of leases	25		—		72
Square feet	98,427		—		341,322
Per square foot average annualized:
Base rent	$	27.09	$	—	$	22.69
Tenant improvements	(4.61)		—		(0.16)
Leasing costs	(1.05)		—		—
Rent concessions	(0.66)		—		—
Effective rents	$	20.77	$	—	$	22.53

As of December 31, ~~2020, 889,250~~2021, 843,842 square feet of Commercial space was subject to leases scheduled to expire in ~~2021.~~2022. Of those leases, as of September 30, ~~2021,~~2022, leases representing ~~406,442~~246,902 square feet of Commercial space have not yet renewed and are scheduled to expire over the next three months. Below is information about existing and estimated market base rents per square foot for that space.


Expiring Commercial Property Leases	Total
Square feet	~~406,442~~246,902
Average base rent per square foot	$	~~24.77~~28.54
Estimated market base rent per square foot	$	~~23.52~~28.02

As of September 30, 2022, the Residential portfolio was 97.2% leased compared to 97.8% at September 30, 2021.


Residential Property Leasing Activity		Average Rent per Square Foot
Three Months Ended September 30,	Number of leases	New/Renewed Leases		Expiring Leases
2022	338	$	3.49	$	3.22
2021	331	3.38		3.30

-37-

Item 3. 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 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 September 30, ~~2021,~~2022, the Company had unhedged variable rate indebtedness totaling ~~$198.0~~$128.0 million. If the interest rates on the Company’s unhedged variable rate debt instruments outstanding at September 30, ~~2021~~2022 had been one percentage point higher or lower, our annual interest expense relating to these debt instruments would have increased or decreased by ~~$2.0~~$1.3 million based on those balances. As of September 30, ~~2021,~~2022, the Company had fixed-rate indebtedness totaling ~~$949.5 million~~$1.1 billion with a weighted average interest rate of ~~4.93%~~4.77%. If interest rates on the Company’s fixed-rate debt instruments at September 30, ~~2021~~2022 had been one percentage point higher, the fair value of those debt instruments on that date would have been approximately ~~$48.6~~$58.5 million less than the carrying ~~value.~~amount. If interest rates on the Company’s fixed-rate debt instruments at September 30, 2022 had been one percentage point lower, the fair value of those debt instruments on that date would have been approximately $64.2 million more than the carrying amount.

~~-38-~~

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 4. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chairman and Chief Executive Officer, its Senior Vice President-Chief Financial Officer, and its Senior Vice President-Chief Accounting Officer and Treasurer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e) promulgated under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including its Chairman and Chief Executive Officer, its Senior Vice President-Chief Financial Officer, and its Senior Vice President-Chief Accounting Officer and Treasurer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, ~~2021.~~2022. Based on the foregoing, the Company’s Chairman and Chief Executive Officer, its Senior Vice President-Chief Financial Officer and its Senior Vice President-Chief Accounting Officer and Treasurer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of September 30, ~~2021.~~2022.

During the quarter ended September 30, ~~2021,~~2022, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

~~-39-~~-38-

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

~~Except as set forth below, the~~The Company has no material updates to the risk factors presented in Item 1A. Risk Factors in the ~~2020~~2021 Annual Report of the Company on Form 10-K.

The current 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~~.

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. As a result, the COVID-19 pandemic is negatively affecting almost every industry directly or indirectly. Many of our tenants have announced mandated or temporary closures of their operations and/or have requested adjustments to their lease terms during this pandemic. Experts predict that the COVID-19 pandemic will trigger a period of global economic slowdown or a global recession. COVID-19 (or a future pandemic) could have a material and adverse effect on or cause disruption to our business or financial condition, results from operations, cash flows and the market value and trading price of our securities 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;~~

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

•the reduction of economic activity 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;

•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 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 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. For example, as of September 30, 2021, approximately 21% of base rent is generated from tenants in lines of trade that have been impacted by mandated temporary closures or other social-distancing guidelines issued by federal, state and local governments including:

•~~beauty services and dry cleaners (6%);~~

•~~apparel and footwear (4%);~~

•~~full-service and limited-service restaurants (4%);~~

•~~specialty retail (3%);~~

•~~health and fitness (3%); and~~

•~~other (1%).~~

~~-40-~~

~~The Eighteenth Amendment to the First Amended and Restated Agreement of Limited Partnership of Saul Holdings Limited Partnership (filed herewith).~~

~~A prolonged imposition of, or in some cases a return to,~~ ~~mandated temporary closures or other social-distancing guidelines~~ may adversely impact the ability of these tenants to generate sufficient revenues, and may cause tenants to request additional rent deferrals, and in limited cases, default on their leases, or result in the bankruptcy or insolvency of tenants, which would diminish our ability to receive rental revenue that is owed under their leases. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 presents material uncertainty and risk with respect to our performance, business or financial condition, results from operations and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

B. Francis Saul II, the Company’s Chairman of the Board and Chief Executive Officer, his spouse and entities affiliated with Mr. Saul II, through participation in the Company’s Dividend Reinvestment and Stock Purchase Plan for the July 31, ~~2021~~2022 dividend distribution acquired ~~56,528~~2,525 shares of common stock at a price of ~~$44.44~~$50.80 per ~~share and 13,841 limited partnership units at a price of $44.92 per unit. The limited partnership units were sold pursuant to Section 4(a)(2) of the Securities Act of 1933.~~share.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None

Item 6. Exhibits

~~10.~~

~~(a)~~

~~31.~~

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

~~32.~~

Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer (filed herewith).*

~~99.~~

~~(a)~~

~~Schedule of Portfolio Properties (filed herewith).~~

~~101.~~

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2021, formatted in Extensible Business Reporting Language (“XBRL”): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of equity and comprehensive income, (iv) consolidated statements of cash flows, and

~~(v) the notes to the consolidated financial statements.~~

~~104.~~

~~Cover Page Interactive Data File (the Cover Page Interactive Data File is embedded within the Inline XBRL document).~~


10.	(1)	First Amendment to the Credit Agreement (filed herewith), by and among: the 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, PNC Bank and Associated Bank, National Association (“Associated Bank”), as Lenders (the “Agreement”), filed as Exhibit 10.1 of the Company's Report on Form 8-K filed August 31, 2021 is incorporated by reference.

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

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

99.	(a)	Schedule of Portfolio Properties (filed herewith).

101.		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2022, formatted in Inline Extensible Business Reporting Language (“Inline XBRL”): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of equity and comprehensive income, (iv) consolidated statements of cash flows, and (v) the notes to the consolidated financial statements.

104.		Cover Page Interactive Data File (the Cover Page Interactive Data File is embedded within the Inline XBRL document and included in Exhibit 101).

* In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed ~~"filed"~~“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.

~~-41-~~-39-