BFS 10-K & 10-Q changes, risk factors and insider trading

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

Adverse changes in consumer spending or consumer preferences for particular goods, services or store basedstore-based retailing could severelynegatively impact the ability of our retail tenants to pay rent. Revenue from our properties depends primarily on the ability of our retail tenants to pay the full amount of rent due under their leases on a timely basis.basis, Thewhich amount of rent we receive from our retail tenants generally will dependis in partturn dependent on the success of our retail tenants’their operations, making us vulnerable to general economic downturns and other conditions affecting the retail industry. Some of our leases provide for the payment of additional rent above the base amount based on a specified percentage of the gross sales generated by the retail tenants. As a result, declines in our retail tenants’ sales revenue could adversely impact the Company’s receipt of percentage rents required to be paid by tenants under certain leases. Some retail tenants may terminate their occupancyleases or vacate space due to an inability to operate profitably for an extended period of time, impacting the Company’s ability to maintain occupancy levels.

Any reduction in the ability of our retail tenants, particularly our anchor tenants, to pay base rent or percentage rent may adverselyhave affecta material adverse effect on our financial condition and results of operations. Small business retail tenants and anchor retailers that lease space in the Company’s properties may experience a deterioration in their sales or other revenue, or experience a constraint on the availability of credit necessary to fund operations, which in turn may adversely impact those tenants’ ability to pay contractual base rents and operating expense recoveries. Economic challenges that can adversely affect our retail tenants and anchor retailers include inflation, labor shortages, supply chain constraints, decreasing consumer confidence and discretionary spending, and increasing energy prices and interest rates. Some of our leases provide for the payment, in addition to base rent, of additional rent above the base amount according to a specified percentage of the gross sales generated by the retail tenants. Decreasing sales revenue by retail tenants could adversely impact the Company’s receipt of percentage rents required to be paid by tenants under certain leases.

Historically and from time to time, certain of our tenants have experienced financial difficulties and filed for bankruptcy protection, typically under the United StatesU.S. Bankruptcy Code. If a tenant or lease guarantor files for bankruptcy, we may not be able to collect all pre-petition amounts owed by that party. In addition, a tenant that files for bankruptcy protection may reject or terminate our leaselease, in which event we would have a general unsecured claim that would likely be for less than the full amount owed to us for the remainder of the lease term, which could adversely affect our financial condition and results of operations. In the event that a tenant with a significant number of leases in our shopping centers files for bankruptcy protection and rejects its leases, we may experience a significant reduction in our revenues and may not be able to collect all pre-petition amounts owed by such tenant.

A majority of our shopping center properties are anchored by severalone or more major tenantstenants, andmost of whom primarily offer primarily day-to-day necessities and services. Thirty-four of our properties are anchored by a grocery store. Our net income could be adversely affected in the event of a downturn in the business, or the bankruptcy or insolvency, of any anchor store or anchor tenant. Our largest shopping center anchor tenant by revenue is Giant Food, which accounted for 4.8%4.5% of our total revenue for the year ended December 31, 2024.2025. The closing of one or more anchor stores prior to the expiration of the applicable lease of that storeterm, or the termination of a lease by one or more of a property’s anchor tenants could adversely affect that property and result in lease terminations by, or reductions in rent from, other tenants whose leases may permit termination or rent reduction in those circumstances or whose own operations may suffer as a result. In the event that we are unable to re-lease space vacated by an anchor tenant, we may incur additional expenses into orderreconfigure toor re-model the space to be able to re-lease the space to one or more new anchor tenants or other tenants. This could reduce our net income.income and negatively impact our financial condition and results of operations.

We derive most of our revenue directly or indirectly from rent received from our office and retail tenants. We are subject to the risks that, upon expiration, leases for space in our properties may not be renewed, the space and other vacant space may not be re-leased, or the terms of renewal or re-lease, including the cost of required renovations or concessions to tenants, may be less favorable than previous lease terms. There can be no assurance that we will be able to retain tenants in any of our properties upon the expiration of their leases. See Item 2. Properties—Lease Expirations of Shopping Center Properties and Lease Expirations of Mixed-Use Properties for additional information regarding the scheduled lease expirations in our portfolio. Constraints on the availability of credit to office and retail tenants, necessary to purchase and install improvements, fixtures and equipment, and fund start-up business expenses,tenants could impact the Company’s ability to procure new office and retail tenants for spaces currently vacant in existing operating properties or properties under development. As a result, our results of operations and our net income could be reduced.

Our investmentprimary strategy includesis to diversify our assets through development of transit-oriented, residential mixed-use projects and expansion of and additions to our grocery-anchored Shopping Centers in the redevelopmentWashington, andDC/Baltimore acquisitionmetropolitan of (i) community and neighborhood shopping centers that are anchored by supermarkets, drugstores or high volume, value-oriented retailers that provide consumer necessities, and (ii) transit-oriented, mixed-use properties, which are comprised of office, retail and multi-family residential uses.area. The redevelopment and acquisition of properties entailsentail risks that include the following, any of which could adversely affect our results of operations and our ability to meet our obligations:

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

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

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

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

The short-term nature of apartment leases exposes us more quickly to the effects of declining market rents, potentially making our results of operations and cash flows more volatile .volatile.

Generally,The average remaining term of our residential apartment leases areis for twelve12 months or less. If the contractual terms of the renewal or releasingre-leasing are less favorable than current terms, then our results of operations and financial condition could be negatively affected. Given our generallyshorter-term shorter-termresidential lease structure, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms. In addition, operating expenses associated with each property, such as real estate taxes, insurance, utilities, maintenance costs and employee wages and benefits, may not decline as quickly as revenues, or at theall, same rate as revenues when circumstances might cause a reduction of thoseif revenues at our properties.properties decline.

Retailers are increasingly affected by e-commerce and changes in customer buying habits, which were further accelerated as a result of the COVID-19 pandemic.habits. While many of the retailers in our shopping centers sell goods or provide services that are unable to be performed online,online or sell goods, the continuing increase in e-commerce sales may cause retailers to adjust the size or number of retail locations in the future or close stores. Our grocery anchors are likewise increasingly incorporating online ordering, home delivery or curbside pickup into their business models, which could reduce foot traffic at our shopping centers and adversely affect our occupancy and rental rates. Changes in shopping trends as a result of the growth in e-commerce may also affect the profitability of retailers that do not adapt to changes in market conditions. If we are unable to anticipate and respond promptly to trends in the market, our occupancy levels and rental rates may decline, and our financial condition and results of operations may be adversely impacted.

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

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

Our real estate assets may bebecome subject to impairment charges.impaired.

Our real estate properties are carried at cost less accumulated depreciation, unless circumstances indicate that the carrying amount of these assets may not be recoverable. We are required to make subjective assessments as to whether there are impairments in the value of our real estate assets and other investments. A property’s value is considered to be impaired if the estimated aggregate future undiscounted property cash flows are less than the carrying amount of the property. In our estimate of cash flows, we consider factors such as trends and prospects and the effects of demand and competition on expected future operating income. If we are evaluating the potential sale of an asset or redevelopment alternatives, the undiscounted future cash flows weight potential estimated outcomes as of the balance sheet date based on current plans, intended holding periods and available market information. During the year ended December 31, 2024,2025, we incurred no impairmentimpairments charges,within our property portfolio, but there can be no assurance that we will not recordexperience impairment chargeswithin our property portfolio in the future related to our assets.future. Any future impairment could have a material adverse effect on our operating results in the period in which the chargeit is taken.recognized.

Mr. B. F. Saul II, our Chief Executive Officer and Chairman of the Board, D. Todd Pearson, our President and Chief Operating Officer, Joel A. Friedman, our Executive Vice President, Chief Accounting Officer and Treasurer, and Bettina T. Guevara, our Executive Vice President-Chief Legal and Administrative Officer, are officers of certain entities within the Saul Organization, and persons associated with the Saul Organization constitute five of the 1211 members of our Board of Directors. In addition, as of December 31, 2024,2025, Mr. B. F. Saul II had the potential to exercise control over 10,852,76610,887,456 shares of our common stock representing 45.2%45.0% of our issued and outstanding shares of common stock. Mr. B. F. Saul II also beneficially owned, as of December 31, 2024,2025, 10,011,90310,615,771 units of the Operating Partnership. In general, these units are convertible into shares of our common stock on a one-for-one basis. The ownership limitation set forth in our articles of incorporation with respect to the Saul Organization is 39.9% in value of our issued and outstanding equity securities (which includes both common and preferred stock,stock but not Operating Partnership units). As of December 31, 2024,2025, Mr. B. F. Saul II and members of the Saul Organization owned common stock representing approximately 38.6%37.1% in value of all our issued and outstanding equity securities. Members of the Saul Organization are permitted under our articles of incorporation to convert Operating Partnership units into shares of common stock or acquire additional shares of common stock until the Saul Organization’s actual ownership of common stock reaches 39.9% in value of our equity securities. As of December 31, 2024,2025, approximately 600,0001,349,000 of the 10,011,90310,615,771 units of the Operating Partnership would have been permitted to convert into additional shares of common stock, and would have resulted in Mr. B. F. Saul II and members of the Saul Organization owning common stock representing approximately 39.9% in value of all our issued and outstanding equity securities.

We share with the Saul Organization certain ancillary functions, such as computerinformation andtechnology, payroll services, human resources and benefits administrationadministration, accounting services, and in-house legal services. Included in our general and administrative expenses or capitalized to specific development projects, for the year ended December 31, 2024,2025, are charges totaling $11.4$12.0 million, net, related to such shared services, which included rental payments for the Company’s headquarters lease, which were billed by the Saul Organization. Although we believe that the amounts allocated to us for such shared services represent a fair allocation between us and the Saul Organization, we have not obtained a third partythird-party appraisal of the value of these services. See Item 13 for risk factor mitigants.

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

Consequently, it is in the interests of the Saul Organization that we continue to hold the contributed portfolio properties, that a portion of our debt remains outstanding or is refinanced and that the Saul Organization guarantees and indemnities remain in place, in order to defer the taxable gain to members of the Saul Organization. Therefore, the Saul Organization may seek to cause us to retain the contributed portfolio properties, and to refrain from reducing our debt or releasing the Saul Organization guarantees and indemnities, even when such action may not be in the interests of some, or a majority, of our stockholders. See Item 13 for risk factor mitigants.

As of December 31, 2024,2025, we had approximately $1.55$1.63 billion of debt outstanding, approximately $1.37$1.44 billion of which was fixed-rate debt and approximately $187.0$189.0 million of which was variable-rate debt outstanding under our New Credit Facility.

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

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

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

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

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

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

In addition, our New Credit Facility requires us to satisfy financial covenants. The material financial covenants require us, on a consolidated basis, to:

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

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

We cannot predict what other environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted or what environmental conditions may be found to exist on the properties in the future. Compliance with existing and new laws and regulations may require us or our tenants to spend funds to remedy environmental problems. Our tenants, like many of their competitors, have incurred, and will continue to incur, capital and operating expenditures and other costs associated with complying with these laws and regulations, which will adversely affect their potential profitability. Generally, our tenants mustare required to comply with environmental laws and meet remediation requirements. Our leases typically impose obligations on our tenants to indemnify us from any compliance costs we may incur as a result of the environmental conditions on the property caused by the tenant. If a tenant fails to or cannot comply, we could be forced to pay these costs. If not addressed, environmental conditions could impair our ability to sell or re-lease the affected properties in the future or result in lower sales prices or rent payments.

The Americans with Disabilities Act of 1990 (the “ADA”) or similar current or future legislation could require us to take remedial steps with respect to newly acquiredour properties.

All of our properties, as commercial facilities, are required to comply with Title III of the ADA. Compliance with the ADA requirements could require removal of access barriers, and non-compliance could result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. Investigation of a property may reveal non-compliance with the ADA. The requirements of the ADA, or of other federal, state or local laws, also may change in the future and restrict further renovations of our properties withto respect toensure access for disabled persons. Future compliance with the ADA may require expensive changes to the properties.

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

As an owner and operator of commercial properties, we are party to legal and regulatory proceedings from time to time that arise in the ordinary course of business. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such litigation or proceedings. WeAn unfavorable outcome could experienceresult anin a material adverse effect toon our financial condition and results of operations due to an unfavorable outcome.operations.

We believe that we are organized and qualified as a REIT, and currently intend to operate in a manner that will allow us to continue to qualify as a REIT for federal income tax purposes under the Code. However, the IRS could successfully assert that we are not qualified as such. In addition, we may not remain qualified as a REIT in the future. Qualification as a REIT involves the application of highly technical and complex Code provisions. The complexity of these provisions and of the applicable income tax regulations that have been issued under the Code by the United States Department of Treasury is greater in the case of a REIT that holds its assets in partnership form. Certain facts and circumstances not entirely within our control may affect our ability to qualify as a REIT. For example, in order to qualify as a REIT, at least 95% of our gross income in any year must be derived from qualifying rents and other income. Satisfying this requirement could be difficult, for example, if defaults by tenants were to reducereduced the amount of income from qualifying rents. Also, we must make annual distributions to stockholders of at least 90% of our net taxable income (excluding capital gains). In addition, new legislation, new regulations, new administrative interpretations or new court decisions may significantly change the tax laws with respect to qualification as a REIT or the federal income tax consequences of such qualification. If we fail to qualify as a REIT:

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

•we could be required to pay significant income taxes, which would substantially reduce the funds available for investment and for distribution to our stockholders for each year in which we failedare tonot qualifytaxed as a REIT; and

InTo preserve our qualification as a REIT in these circumstances, we might havechoose to borrow funds on unfavorable terms and even if our management believes the market conditions make borrowing financially unattractive.

The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process, and by the Internal Revenue Service (“IRS”) and the U.S. Department of the Treasury (“Treasury”). Changes to the tax laws or interpretations thereof by the IRS and the Treasury, with or without retroactive application, could materiallyhave anda adverselymaterial affectadverse effect on us and our investors. No prediction can be made as to the likelihood of passage of new tax legislation or other provisions, or the direct or indirect effect on us and our shareholders.investors. Accordingly, such new legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify to be taxed as a REIT and/or the U.S. federal income tax consequences to us and our investors of such qualification.qualification

•the financial condition of our tenants, many of which operate in the retail industry, may be adversely affected,affected which may result in tenant defaults under their leases due toby bankruptcy, lack of liquidity, operational failures or for other reasonsreasons, which may result in tenant defaults under their leases, including, but not limited to, defaults due to non-payment of rent to us;

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

The outbreak or pandemic of any highly infectious or contagious diseases or other public emergencies, could have a material and adverse effect on or cause disruption todisrupt our business orand financial condition, results of operations, cash flows and the market value and trading price of our securities.

A pandemic or public health emergency could have a material and adverse effect on or cause disruption todisrupt our business orand financial condition, results of operations and cash flows due to, among other factors:

•reductiondeclines in or instability of economicthe activityeconomy thator severelyfinancial impactsmarkets, which could adversely affect our tenants' business operations, financial condition and liquidity and may cause one or more of our tenantsthem 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;

•an 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,debt reduceon ourfavorable abilityterms toor makeat all, and may affect 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;

•the financial impact of a pandemic or public health emergency could negatively affect our future compliance with financial and other covenants ofunder 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 Company’sCompany's primary strategy is to continue to focus on diversification ofdiversify its assets through development of transit-oriented, residential mixed-use projects and expansion of and additions to its grocery-anchored shoppingShopping centersCenters in the Washington, DC/Baltimore metropolitan area. The Company’sCompany's operating strategy also includes improvement of the operating performance of its assets, internal growth of its Shopping Centers through the additionsaddition of pad sites, and supplementing its development pipeline with selective redevelopment and renovations of its core Shopping Centers. Including Twinbrook Quarter and Hampden House, theThe Company has a pipeline of entitled sites in its portfolio, some of which are currently Shopping Centers, for development of up to an additional 3,2002,500 apartment units and 870,000850,000 square feet of retail and office space. All such sites are located proximate to Washington Metropolitan Area Transit Authority red line Metro stations in Montgomery County, Maryland. In addition, the Company recently entered into a lease with Publix to develop a new grocery store at Ashland Square in Prince William County, Virginia. When complete, Ashland Square is expected to ultimately comprise approximately 124,000 square feet of retail space including the 50,325 square foot Publix, three existing pad sites, four additional pad sites and approximately 30,000 square feet of small shop space.

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 grocery stores. The Company has two executed leases and foursix leases are under negotiation for a total of sixeight more pad sites.

Actions taken by the Federal government will likely continue to impact the office, retail and residential real estate markets in the Washington, DC/Baltimore metropolitan area over the coming years. Because the majority of the Company’s property net 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 and closure plans. Based on our observations, we continue to adapt our marketing and merchandising strategies in ways to maximize our future performance. The 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, increaseddecreased to 94.6% at December 31, 2025, from 95.2% at December 31, 2024, from 94.1% at December 31, 2023.2024.

The Company maintains a ratio of total debt to total asset value of under 50%, which allows the Companyus to obtain additional secured borrowings if necessary. As of December 31, 2024,2025, including $100.0 million of hedged variable-rate debt, total fixed-rate debt with staggered maturities from 2026 to 2041 represented approximately 88.0%88.4% of the Company’s notes payable, thus minimizing refinancing risk. The Company’s unhedged variable-rate debt consists of $187.0$189.0 million outstanding under the New Credit Facility. As of December 31, 2024,2025, the Company has availability of approximately $134.5$96.2 million under its New Credit Facility.

Base rent: Base rent includes $9.5 million and $(7.8) million and $(0.6) million for 20242025 and 2023,2024, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $0.8$0.6 million and $1.3$0.8 million for 20242025 and 2023,2024, respectively, to recognize income from the amortizationaccretion of discounts related to in-place leases acquired in connection with purchased real estate investment properties. The $8.3$20.8 million increase in base rent in 20242025 compared to 20232024 was primarily attributable to (a) higher residential and commercial base rent related to Twinbrook Quarter Phase I of $11.0 million, (b) higher commercial base rent, exclusive of Twinbrook Quarter Phase I and Hampden House, of $7.7 million, (c) higher residential base rent, exclusive of Twinbrook Quarter Phase I and Hampden House, of $1.4 million and (d) higher residential and commercial base rent of $6.4Hampden million and (b) higher residential rentHouse of $1.9$0.7 million.

Credit (losses) recoveries on operating lease receivables, net: Credit (losses) recoveries on operating lease receivables, net was a loss of $0.9$1.7 million during 2024.2025. The loss is primarily due to higher reservereserves on lease receivables in 2024.2025.

Other Revenue: The $0.5$2.2 million decrease in other revenue was primarily due to (a) lower lease termination fees of $2.6 million partially offset by (b) higher parking revenue of $0.3$0.4 million.

Total expenses increased 7.0%19.6% in 20242025 compared to 20232024, asprimarily describeddue below.to the initial operations of Twinbrook Quarter Phase I and Hampden House.

Property operating expenses: Property operating expenses increased $4.2$10.3 million in 20242025 compared to 20232024 primarily due to (a) increasedthe initial operations of Twinbrook Quarter Phase I of $4.3 million, (b) higher repairs and maintenance expenseexpenses, across the portfolioexclusive of $3.3Twinbrook Quarter Phase I and Hampden House, of $3.6 million, of which $1.4$2.2 million was relatedrelates to snow removal costs, (bc) higher propertyutility employeeexpenses, compensationexclusive of Twinbrook Quarter Phase I and benefitsHampden House, of $0.4$1.0 million, (d) the initial operations of Hampden House of $0.9 million and (ce) increasedhigher utilitiesinsurance expensecosts, acrossexclusive theof portfolioTwinbrook Quarter Phase I and Hampden House of $0.3 million.

GeneralReal andestate administrativetaxes: GeneralReal andestate administrative coststaxes increased $1.6$2.1 million in 20242025 compared to 20232024, primarily due to (a) higherthe developmentinitial start-upoperations costs relating toof Twinbrook Quarter Phase 1I of $0.8$1.1 million,million and Hampden House of $0.6 million and (b) higher consultingtax feesassessments across the portfolio, exclusive of $0.4Twinbrook millionQuarter Phase I and (c)Hampden higher director fees of $0.4 million.House.

Same property revenue and same property net operating income Same property revenue and same property net operating income are non-GAAP financial measures of performance andintended improveto theenhance period-to-period comparability of these measures by excluding the results of properties whichthat were not in operation for the entirety of the comparable reporting periods.

We define same property revenue as total revenue less straight-line base rent and above/below market lease amortization of leases acquired in connection with purchased real estate investment properties minus the revenue of properties not in operation for the entirety of the comparable reporting periods, and we define same property net operating income as net income plus (a) interest expense, net and amortization of deferred debt costs, (b) depreciation and amortization of deferred leasing costs, (c) general and administrative expenses, (d) change in fair value of derivatives, and (e) loss on the early extinguishment of debt minus (f) gains on sale of property, (g) straight-line base rent and above/below market lease amortization of leases acquired in connection with purchased real estate investment properties and (h) the operating income of properties 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 net operating income. Accordingly, our same property revenue and same property net operating income may not be comparable to those of other REITs.

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

Same property revenue and same property net 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.

The tables below provide reconciliations of property revenue and property net operating income under GAAP to same property revenue and same property net operating income for the indicated periods. OneTwo property,properties, Twinbrook Quarter Phase I,I wasand Hampden House, were excluded from same property results.

The $10.0$1.7 million increase in same property revenue in 20242025 compared to 20232024 was primarily due to (a) higher commercial base rent of $5.5 million, (b) higher property operating expense recoveries of $3.7$3.1 million, (b) higher residential base rent of $1.3 million and (c) higher residentialcommercial base rent of $1.3 million partially offset by (d) lower lease terminations fees of $2.6 million (e) higher credit losses on lease operating receivablesreceivables, net, of $0.3$0.8 million and (f) lower other property revenue primarily attributable to insurance proceeds in the 2024 relating to lost rents because of a tenant that temporarily closed its operations of $0.5 million.

Same property net operating income

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

Net cash provided by (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. See Note 5 to the Consolidated Financial Statements for a discussion of financing activity.

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 toTo 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. The residential portion of Phase I was delivered on October 1, 2024 andIt includes 452 apartment units. The remaining portions of Phase I includeunits, an 80,00081,000 square foot Wegmans supermarket, approximately 25,000 square feet of small shop space, and a 230,000 square foot office building. The office tower portion of Phase I is not being constructed at this time. In connection with the development of the residential and retail portions of Twinbrook Quarter Phase I, we also invested in infrastructure and other items that will support both Twinbrook Quarter Phase I and other portions of the development of Twinbrook Quarter. Excluding imputed capitalized interest, the totalremaining costinvestment ofto thecomplete projectTwinbrook Quarter Phase I is not expected to beexceed approximately$9.9 $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. Of the expected $331.5 million total cost, $318.0 million has been invested to date.million. A portion of the cost of the project is being financed by a $145.0 million construction-to-permanent loan. During the second quarter of 2023, the Company commenced drawing on the loan and, asAs of December 31, 2024,2025, the outstanding balance of the loan was $127.3$139.3 million, net of unamortized deferred debt costs. Construction of the residential building is complete and The Milton at Twinbrook Quarter opened and residential tenants began moving in on October 1, 2024. As of February 24,23, 2025,2026, 202440 of the 452 (97.3%) residential units have beenwere leased and occupied. Of the approximately 105,000106,000 square feet of ground floor retail, the base building is complete and 96,600101,400 square feet (92.0%95.7%) has been leased. The Wegmans supermarket at Twinbrook Quarter opened for business on June 25, 2025. As of February 23, 2026, including the Wegmans supermarket, approximately 88,500 square feet of the retail space is open and the remaining leased retail space, including Wegmans,space is expected to open at various times over 2025 andduring 2026 as tenants complete their buildouts. 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 also developing Hampden House, a project located in downtown Bethesda, MarylandMaryland, thatwhich will include up toincludes 366 apartment units and 10,100 square feet of retail space. Excluding imputed capitalized interest, the totalremaining costinvestment ofto complete the project is not expected to beexceed approximately$6.8 $246.4 million, of which $200.5 million has been invested to date.million. A portion of the cost of the project is being financed by a $133.0 million construction-to-permanent loan. During the fourth quarter of 2023, the Company commenced drawing on the loan and, asAs of December 31, 2024,2025, the outstanding balance of the loan was $71.4$115.4 million, net of unamortized deferred debt costs. ExteriorHampden façadeHouse installation is nearing completion. Interior constructionopened and installationresidential tenants began moving in on October 1, 2025. As of unitFebruary finishes23, continues.2026, Delivery130 of the 366 (35.5%) residential units are leased and openingoccupied. isOf expectedthe approximately 10,100 square feet of ground floor retail, 8,600 square feet (85.1%) has been leased and tenant build-outs are in late 2025.progress.

(1)Includes $187.0$289.0 million outstanding under the New Credit Facility. See Note 5 to the ConsolidateConsolidated Financial Statements.

On December 18,15, 2024,2025, the Company closed on a 15-year,14-year, non-recourse, $50.0$15.0 million mortgage secured by Ashburn Village Shopping Center.Ravenwood. The loan matures in 2040, bears interest at a fixed-rate of 5.47%,5.58%, requires monthly principal and interest payments of $306,100$92,800 based on a 25-year amortization schedule and requires a final principal payment of $28.4$9.2 million at maturity. Proceeds were used to repay the remaining balance of approximately $20.5$10.0 million on the existing mortgage and reduce the outstanding balance of the Company’sNew Credit Facility.

** TheAt December 31, 2025, the interest rate incurred on our variable rate debt changes monthly and is based on the 1-month Term Secured Overnight Financing Rate (“SOFR”) rate plus a 0.10% SOFR credit spread plus the applicable margin on the Credit Facility, which was 1.40% as of December 31, 2024.spread.

In 2024, the Company reported Funds From Operations (“FFO”)1 available to common stockholders and noncontrolling interests of(after $106.8deducting preferred stock dividends) for 2025 totaled $96.7 million, a 0.5%9.5% increaseddecrease from 20232024 FFO available to common stockholders and noncontrolling interests of $106.3$106.8 million. FFO available to common stockholders and noncontrolling interests was adversely impacted by $11.2 million, or $0.32 per basic and diluted share, due to the initial operations of Twinbrook Quarter Phase I and Hampden House. Exclusive of Twinbrook Quarter Phase I and Hampden House, FFO available to common stockholders and noncontrolling interest increased by $1.2 million primarily due to (a) higher commercial base rent of $6.4$7.7 million and (b) higher residential rent of $1.3$1.4 million partially offset by (c) thelower initiallease operationstermination fees of Twinbrook$2.6 Quarter Phase I, which adversely impacted FFO by $5.0 millionmillion, (d) lower property operating expense recoveries, net of expenses of $2.5 million, (e) higher general and administrative costsexpenses of $1.2$1.5 million andmillion, (ef) higher credit losses on operating lease receivablesreceivables, net, of $0.8 million and (g) lower other property revenue of $0.5 million. The following table presents a reconciliation from net income to FFO available to common stockholders and noncontrolling interests for the periods indicated:

Management anticipates that during the coming year, 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 year, any developments, expansions or acquisitions are expected to be funded with bank borrowings from the Company’s creditNew 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.

On May 17, 2024, following shareholder approval, the Company established the Saul Centers, Inc. 2024 Stock Incentive Plan (the “Incentive Plan”), under which various equity incentives may be granted. On May 17,9, 2024,2025, the Company granted 117,00059,500 shares of restricted sharesstock to officers, dividedthat equallywill betweenvest time-vestedon andan performance-basedannual awards.basis Onover Mayfive 20,years, 2024,16,000 theshares Company granted 18,000of restricted sharesstock to non-employee directors, which will vest on an annual basis over three years.years, and 59,500 performance-based shares of restricted stock to officers, which will vest on the fifth anniversary of the grant date.

The Company uses the fair value method to value and account for restricted stock grants.awards. The fair value of granted restricted stock granted is determined at the time of the grant using a discounted cash flow analysis, and the following assumptions: (1) 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; (2) the closing price of the Company’s common stock on the date of the grant; (3) estimated forfeitures; and (4) a present value discount rate equal to the Expected Dividend Yield.

For the year ended December 31, 2024,2025, restricted stock compensation expense totaled $0.5$1.3 million, which was included in general and administrative expense in the Consolidated Statement of Operations. As of December 31, 2024,2025, the estimated future expense related to unvested restricted stock grantsawards that are granted for accounting purposes was approximately $3.2$5.5 million.

For accounting purposes, performance-based awards are not treated as granted until the Board establishes the target for those awards. As of December 31, 2024,2025, (a) no expense has been recognized and (b) no estimate of future expense has been made for the 35,10059,100 performance-based restricted sharesstock awarded to officers where the accounting grant date has not occurred. If those awards had been granted for accounting purposes as of December 31, 2024,2025, the additional estimated future expense would have been approximately $1.3$1.7 million, calculated using the fair value method and based on the closing share price of $38.80$31.53 on December 31, 2024,2025, the final trading day of 2024.2025.

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

The overall commercial portfolio leasingleased percentage, on a comparative same property basis, increaseddecreased to 94.6% at December 31, 2025 from 95.2% at December 31, 2024 from 94.1% at December 31, 2023.2024. Included in the 95.2%94.6% of space leased as of December 31, 2024,2025, is approximately 170,422197,718 square feet of space, representing 1.9%2.2% of total commercial square footage, that has not been occupied by the tenant. Collectively, these leases are expected to produce approximately $4.4$5.0 million of additional annualized base rent, an average of $25.63$25.50 per square foot, upon tenant occupancy and following any contractual rent concessions.

The Mixed-Use commercial leasingleased percentage is composed of commercial leases at office mixed-use properties and residential mixed-use properties. TheOn a comparable same property basis, excluding Hampden House, the Mixed-Use portfolio includes 68,895174,819 square feet of leasable retail space and 1,067,990 square feet of leasable office space.space at December 31, 2025. On a comparative same property basis,basis the leasingleased percentage at office mixed-use properties increased to 87.3% at December 31, 2025 from 86.9% at December 31, 2024 from 85.3% at December 31, 2023 and the retail leasingleased percentage at residential mixed-use properties wasincreased unchangedto at97.1% 97.0%from 93.9% at December 31, 20242025 and 2023.2024.

On a same property basis, excluding Thethe Miltonapartments at TwinbrookHampden Quarter,House, the Residential portfolio was 98.3%97.7% leased at December 31, 2024,2025, compared to 98.0%82.8% at December 31, 2023.2024.

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). 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 Report. 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:

•our access to additional capital;

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

The following discussion is based primarily on the consolidated financial statements of the Company as of and for the three and six months ended MarchJune 31,30, 2026.

Actions taken by the Federal government will likely continue to impact the office, retail and residential real estate markets in the Washington, DC/Baltimore metropolitan area over the coming years. Because the majority of the Company’s property net 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 and closure plans. Based on our observations, we continue to adapt our marketing and merchandising strategies in ways that we believe maximize our future performance. The 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, increased to 95.0%94.7% at MarchJune 31,30, 2026, from 93.9%94.0% at MarchJune 31,30, 2025.

The Company maintains a ratio of total debt to estimated total asset market value of under 50%, which positions us to obtain additional secured borrowings if necessary. As of MarchJune 31,30, 2026, including the $100.0 million hedged variable-rate debt, total fixed-rate debt, with staggered maturities from 2026 to 2041, represented approximately 88.8%92.1% of the Company's notes payable, thus mitigating refinancing risk. The Company's unhedged variable-rate debt consists of $182.0$129.0 million outstanding under the Credit Facility. Including fixed and variable rate debt, the Company's outstanding debt totaled approximately $1.62$1.63 billion with a weighted average remaining term of 8.69.6 years as of MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, the Company has availability of approximately $105.3$158.1 million under the Credit Facility.

The Company is developing Twinbrook Quarter Phase I located in Rockville, Maryland. It includes 452 apartment units, an 81,000 square foot Wegmans supermarket, approximately 25,000 square feet of small shop space, and a 230,000 square foot office building. The office tower portion is not being constructed at this time. In connection with the development of the residential and retail portions of Twinbrook Quarter Phase I, we also invested in infrastructure and other items that will support both Twinbrook Quarter Phase I and other portions of the development of Twinbrook Quarter. Excluding imputed capitalized interest, the remaining investment to complete Twinbrook Quarter Phase I is not expected to exceed $8.5$5.0 million. A portion of the cost of the project is being financed by a $145.0 million construction-to-permanent loan. As of MarchJune 31,30, 2026, the outstanding balance of the loan was $140.7$141.2 million, net of unamortized deferred debt costs. The Milton at Twinbrook Quarter opened and residential tenants began moving in on October 1, 2024. As of MayAugust 4,3, 2026, 443431 of the 452 (98.0%95.4%) residential units were leased and occupied. Of the approximately 106,000 square feet of ground floor retail, 101,400 square feet (95.7%) have been leased. The Wegmans supermarket at Twinbrook Quarter opened for business on June 25, 2025. As of MayAugust 4,3, 2026, including the Wegmans supermarket, approximately 88,50095,100 square feet of the retail space is open and the remaining leased retail space is expected to open at various times during 2026 as tenants complete their buildouts. 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 also developing Hampden House, a project located in downtown Bethesda, Maryland, which includes 366 apartment units and approximately 10,100 square feet of retail space. Excluding imputed capitalized interest, the remaining investment to complete the project is not expected to exceed $6.2$4.2 million. A portion of the cost of the project is being financed by a $133.0 million construction-to-permanent loan. As of MarchJune 31,30, 2026, the outstanding balance of the loan was $116.9$130.6 million, net of unamortized deferred debt costs. Hampden House opened and residential tenants began moving in on October 1, 2025. As of MayAugust 4,3, 2026, 167235 of the 366 (45.6%64.2%) residential units are leased and occupied. Visual Comfort & Co. opened for business on March 9, 2026 and The Food Market opened for business on June 27, 2026. As of MayAugust 4,3, 2026, including Visual Comfort & Co., approximately 8,600 square feet of the 10,100 (85.1%) square feet of retail space have been leased and the remaining tenant build-out is in progress.leased.

During 2025, the Company entered into a lease with Publix for a new grocery store, which we will construct, at Ashland Square in Prince William County, Virginia. The Ashland Square property currently includes three pad sites with operating tenants. WeConstruction haveof Ashland Square Phase II is underway. Two pad sites with executed leases atare on track for delivery with construction expected to commence this summer. Site development work for the Publix and inline retail commenced in late June 2026 with clearing and initial grading. Vertical construction is expected to commence later this year. Construction is expected to be complete in 2028. Ashland Square Phase II leasing is progressing with executed leases for two82,000 additionalsquare padfeet, sites.or 65.7%, of the shopping center. When complete, Ashland Square is expected to ultimately comprise approximately 124,000 square feet of retail space including the 50,325 square foot Publix, the three existing pad sites, four additional pad sites and approximately 30,000 square feet of small shop space.

Critical Accounting Estimates and Policies

The Company's consolidated financial statements are prepared in accordance with 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 policiesitems that, due to estimates and assumptions inherent in these policies,items, involve a relatively high degree of judgment and complexity.

Three months ended MarchJune 31,30, 2026 (the "2026 Quarter") compared to the three months ended MarchJune 31,30, 2025 (the "2025 Quarter") Net income for the 2026 Quarter decreased to $12.0$11.5 million from $12.8$14.2 million for the 2025 Quarter. The primary reason for the decline in net income was the $4.8$4.0 million adverse impact of the initial operations of Hampden House. Exclusive of Hampden House, net income increased by $4.0$1.3 million primarily due to (a) higher residential base rent of $2.1$1.4 million,million and (b) higher commercial base rent of $1.5$1.2 million partially offset by (c) higher general and administrative costs of $0.4 million, (d) higher interest expense, net and amortization of deferred debt costs of $0.3 million and (ce) lowerhigher creditdepreciation lossesand onamortization operatingof leasedeferred receivables,leasing net,costs of $0.3 million. Significant changes in revenue and expenses are discussed below.

Total revenue increased $6.4$6.0 million, or 8.9%,8.4%, in the 2026 Quarter compared to the 2025 Quarter primarily due to rents generated by Twinbrook Quarter Phase I of $2.8 million and Hampden House of $1.3 million.Quarter.

Base Rent.rent. Base rent includes $2.3 million and $2.2$2.6 million for the 2026 Quarter and 2025 Quarter, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $0.1 million and $0.2 million for the 2026 Quarter and 2025 Quarter, respectively, to recognize income from the accretion of discounts related to in-place leases acquired in connection with purchased real estate investment properties. Base rent increased $4.9$4.6 million, or 8.5%,7.9%, in the 2026 Quarter compared to the 2025 Quarter primarily due to the initial operations of Hampden House of $2.0 million. Exclusive of Hampden House, base rent increased $2.6 million primarily due to (a) higher residential base rent, exclusiverent of Hampden$1.4 House,million of $2.1 million,and (b) higher commercial base rent, exclusiverent of Hampden House, of $1.5 million and (c) higher base rent related to Hampden House of $1.3$1.2 million.

Expense recoveries. Expense recoveries increased $0.9$1.4 million, or 7.7%, increase13.6%, in the 2026 Quarter compared to the 2025 Quarter primarily due to an increase in recoverable property operating expenses.

Total expenses increased $7.2$8.5 million, or 12.2%,14.9%, in the 2026 Quarter compared to the 2025 Quarter, as described below. The increase in total expenses is primarily dueattributable to the initial operations of Hampden House, which generated $6.1 million of expenses during the 2026 Quarter.

Property operating expenses. Property operating expenses increased $2.0$2.1 million, or 14.5%,18.6%, in the 2026 Quarter compared to the 2025 Quarter primarily due to (a) the initial operations of Hampden House of $1.0$0.9 million. Exclusive of Hampden House, property operating expenses increased $1.2 million primarily due to (a) higher repairs and maintenance costs across the portfolio of $0.4 million, (b) higher insurance costs across the portfolio, exclusive of Hampden House,portfolio of $0.3 million,million and (c) higher utility costs across the portfolio, exclusive of Hampden House,portfolio of $0.3 million and (d) higher payroll costs across the portfolio, exclusive of Hampden House, of $0.2 million.

Real estate tax expense.taxes. Real estate tax expensetaxes increased $0.5$0.8 million, or 6.0%,9.9%, in the 2026 Quarter compared to the 2025 Quarter primarily due to the initial operations of Hampden House of $0.6 million.

Interest expense, net and amortization of deferred debt costs. Interest expense, net and amortization of deferred debt costs,costs increased $2.9$3.2 million, or 17.3%,19.1%, in the 2026 Quarter compared to the 2025 Quarter primarily due to (a) the initial operations of Hampden House of $4.5$2.9 million and (b) $0.4$0.3 million of higher interest incurred as a result of higher average outstanding debt,debt partially offset by (c) $0.4 million of lower interest incurred as a result of lower average interest rates and (d) higher capitalized interest, exclusive of Hampden House, of $1.8$0.2 million.

Depreciation and amortization of deferred leasing costs.costs: Depreciation and amortization of deferred leasing costs increased $1.4$1.9 million, or 9.6%,13.8%, in the 2026 Quarter compared to the 2025 Quarter primarily due to $1.6 million of depreciation expense related to Hampden House, which was not in service in the 2025 Quarter.

GeneralTotal and administrative. General and administrative expenserevenue increased $0.4$12.4 million, or 7.2%,8.7%, in the 2026 QuarterPeriod compared to the 2025 Quarter primarily due to higher employment costs of $0.2 million.Period.

The tables below provide reconciliations of property revenue and property net operating income under GAAP to same property revenue and same property net operating income for the indicated periods. One property, Hampden House, which commenced operations on October 1, 2025, was excluded from same property results.

(1)Revenue adjustments are straight-line base rent and amortization of premiums and discounts related to above/below market lease premiums and discounts.leases.

Same property revenue for the 2026 Quarter compared to the 2025 Quarter increased $4.7 million, or 6.9%. The increase was favorably impacted by $3.2$2.7 million due to the lease up of Twinbrook Quarter Phase I. Exclusive of Twinbrook Quarter Phase I, same property revenue increased $1.9$2.0 million primarily due to (a) higher commercial base rent of $0.8$1.3 million,million and (b) higher expense recoveries of $0.7 million and (c) lower credit losses on operating lease receivables, net, of $0.3$0.9 million.

(1)Revenue adjustments are straight-line base rent and amortization of premiums and discounts related to above/below market lease premiums and discounts.leases.

Same property net operating income increased $4.3$3.4 million, or 9.0%,6.9%, for the 2026 Quarter compared to the 2025 Quarter. The increase was favorably impacted by $2.5 million due to the lease up of Twinbrook Quarter Phase I. Exclusive of Twinbrook Quarter Phase I, same property net operating income increased $1.2$0.9 million, or 2.5%,million primarily due to (a) higher commercial base rent of $1.0$1.3 million andpartially offset by (b) lower creditexpense lossesrecoveries, on operating lease receivables, net,net of $0.3expenses, of $0.4 million.

Shopping Center same property net operating income for the 2026 Quarter totaled $36.5$36.6 million, an increase of $1.2$1.3 millionmillion, or 3.6%, compared to the 2025 Quarter. Shopping Center same property net operating income increased primarily due to (a) higher base rent of $0.9 million and (b) lower credit losses on operating lease receivables, net, of $0.4$1.2 million. Mixed-Use same property net operating income for the 2026 Quarter totaled $15.6$15.5 million, an increase of $3.1$2.1 million compared to the 2025 Quarter primarily due to the lease up of Twinbrook Quarter Phase I of $3.1$2.5 million. Exclusive of Twinbrook Quarter Phase I, Mixed-Use same property net operating income wasdecreased unchangedby at$0.4 $12.7million primarily due to lower expense recoveries, net of expenses, of $0.3 million.

Cash andCash, cash equivalents and restricted cash totaled $9.3$20.2 million and $6.5$5.3 million at MarchJune 31,30, 2026 and 2025, respectively. The Company maintains cash balances at various financial institutions and, from time to time, those balances may exceed federally insured limits. The Company has not experienced any losses on such deposits and actively monitors its banking relationships to mitigate its exposure to significant credit risk on those deposits. The Company's cash flow is affected by its operating, investing and financing activities, as described below.

The Company is developing Twinbrook Quarter Phase I located in Rockville, Maryland. It includes 452 apartment units, an 81,000 square foot Wegmans supermarket, approximately 25,000 square feet of small shop space, and a 230,000 square foot office building. The office tower portion is not being constructed at this time. In connection with the development of the residential and retail portions of Twinbrook Quarter Phase I, we also invested in infrastructure and other items that will support both Twinbrook Quarter Phase I and other portions of the development of Twinbrook Quarter. Excluding imputed capitalized interest, the remaining investment to complete Twinbrook Quarter Phase I is not expected to exceed $8.5$5.0 million. A portion of the cost of the project is being financed by a $145.0 million construction-to-permanent loan. As of MarchJune 31,30, 2026, the outstanding balance of the loan was $140.7$141.2 million, net of unamortized deferred debt costs. The Milton at Twinbrook Quarter opened and residential tenants began moving in on October 1, 2024. As of MayAugust 4,3, 2026, 443431 of the 452 (98.0%95.4%) residential units were leased and occupied. Of the approximately 106,000 square feet of ground floor retail, 101,400 square feet (95.7%) have been leased. The Wegmans supermarket at Twinbrook Quarter opened for business on June 25, 2025. As of MayAugust 4,3, 2026, including the Wegmans supermarket, approximately 88,50095,100 square feet of the retail space is open and the remaining leased retail space is expected to open at various times during 2026 as tenants complete their buildouts. 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 also developing Hampden House, a project located in downtown Bethesda, Maryland, which includes 366 apartment units and approximately 10,100 square feet of retail space. Excluding imputed capitalized interest, the remaining investment to complete the project is not expected to exceed $6.2$4.2 million. A portion of the cost of the project is being financed by a $133.0 million construction-to-permanent loan. As of MarchJune 31,30, 2026, the outstanding balance of the loan was $116.9$130.6 million, net of unamortized deferred debt costs. Hampden House opened and residential tenants began moving in on October 1, 2025. As of MayAugust 4,3, 2026, 167235 of the 366 (45.6%64.2%) residential units are leased and occupied. Visual Comfort & Co. opened for business on March 9, 2026 and The Food Market opened for business on June 27, 2026. As of MayAugust 4,3, 2026, including Visual Comfort & Co., approximately 8,600 square feet of the 10,100 (85.1%) square feet of retail space have been leased and the remaining tenant build-out is in progress.leased.

During 2025, the Company entered into a lease with Publix for a new grocery store, which we will construct, at Ashland Square in Prince William County, Virginia. The Ashland Square property currently includes three pad sites with operating tenants. WeConstruction haveof Ashland Square Phase II is underway. Two pad sites with executed leases atare on track for delivery with construction expected to commence this summer. Site development work for the Publix and inline retail commenced in late June 2026 with clearing and initial grading. Vertical construction is expected to commence later this year. Construction is expected to be complete in 2028. Ashland Square Phase II leasing is progressing with executed leases for two82,000 additionalsquare padfeet, sites.or 65.7%, of the shopping center. When complete, Ashland Square is expected to ultimately comprise approximately 124,000 square feet of retail space,space including the 50,325 square foot Publix, the three existing pad sites, four additional pad sites and approximately 30,000 square feet of small shop space.

In December 1995, the Company established a Dividend Reinvestment and Stock Purchase Plan ("DRIP”) to allow its common stockholders and holders of limited partnership interests an opportunity to buy additional shares of common stock by reinvesting all or a portion of their dividends or distributions. The 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 41,40881,377 and 14,94731,717 shares under the DRIP at a weighted average discounted price of $30.75$32.00 and $35.47$33.30 per share during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The Company issued 186,396359,485 and 45,326225,026 limited partnership units under the DRIP at a weighted average price of $30.86$32.10 and $35.94$32.37 per unit during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The Company also credited 1,8703,640 and 1,9574,227 shares to directors pursuant to the reinvestment of dividends specified by the Directors' Deferred Compensation Plan at a weighted average discounted price of $30.75$31.99 and $35.47$33.26 per share, during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

As a general policy, the Company intends to maintain a ratio of its total debt to total estimated 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 each property's aggregate cash flow. Given the Company's current debt level, it is management's belief that the ratio of the Company's debt to estimated total asset value was below 50% as of MarchJune 31,30, 2026.

At MarchJune 31,30, 2026, the Company had a $600.0 million Credit Facility comprised of a $460.0 million Revolving Credit Facility and a $140.0 million Term Loan. The Revolving Credit Facility matures on July 30, 2029 and can be extended for one additional year, subject to satisfaction of certain conditions. The Term Loan matures on July 28, 2028 and has two one-year extension options, subject to satisfaction of certain conditions. Interest accrues at SOFR plus an applicable spread, which is determined by certain leverage tests. As of MarchJune 31,30, 2026, the applicable spread for borrowings was 140150 basis points for the Revolving Credit Facility and 135145 basis points for the Term Loan. Letters of credit may be issued under the Credit Facility. On MarchJune 31,30, 2026, based on the value of the Company's unencumbered properties calculated in accordance with the terms of the Credit Facility, approximately $105.3$158.1 million was available and undrawn under the Credit Facility, $282.0$229.0 million was outstanding and approximately $185,000$464,000 was committed for letters of credit. Saul Centers and certain consolidated subsidiaries of the Operating Partnership have guaranteed the payment obligations of the Operating Partnership under the Credit Facility.

As of MarchJune 31,30, 2026, the Company was in compliance with all such covenants. See Note 5 to the consolidated financial statements for a discussion of all financing activity.

The Company has a $145.0 million construction-to-permanent loan related to the residential and retail portions of Phase I of the Twinbrook Quarter development project. As of MarchJune 31,30, 2026, the balance of the loan was $140.7$141.2 million, net of unamortized deferred debt costs.

The Company has a $133.0 million construction-to-permanent loan related to the Hampden House development project. As of MarchJune 31,30, 2026, the balance of the loan was $116.9$130.6 million, net of unamortized deferred debt costs.

Funds From Operations ("FFO")1 available to common stockholders and noncontrolling interests (after deducting preferred stock dividends) for the 2026 Quarter totaled $25.2$24.8 million, ana increasedecrease of 2.4%2.3% compared to the 2025 Quarter. FFO available to common stockholders and noncontrolling interests was adversely impacted by $3.2$2.4 million, or $0.09$0.07 per basic and diluted share, due to the initial operations of Hampden House. Exclusive of Hampden House, FFO available to common stockholders and noncontrolling interests increased by $3.8$1.8 million primarily due to (a) higher residential base rent of $2.1$1.4 million and (b) higher commercial base rent of $1.5$1.2 million partially offset by (c) higher general and administrative costs of $0.4 million and (d) higher interest expense, net and amortization of deferred debt costs of $0.3 million.