Saul Centers, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

June 30,
 2018

December 31,
 2017

(Unaudited)

Assets

Real estate investments

  Land

$

450,256

$

450,256

  Buildings and equipment

1,263,865

1,261,830

  Construction in progress

139,285

91,114

1,853,406

1,803,200

  Accumulated depreciation

(507,084)

(488,166)

1,346,322

1,315,034

Cash and cash equivalents

6,425

10,908

Accounts receivable and accrued income, net

50,634

54,057

Deferred leasing costs, net

27,139

27,255

Prepaid expenses, net

1,669

5,248

Other assets

14,293

9,950

  Total assets

$

1,446,482

$

1,422,452

Liabilities

Notes payable

$

869,272

$

897,888

Revolving credit facility payable

23,065

60,734

Term loan facility payable

74,543

—

Dividends and distributions payable

18,599

18,520

Accounts payable, accrued expenses and other liabilities

29,078

23,123

Deferred income

25,594

29,084

Total liabilities

1,040,151

1,029,349

Equity

Preferred stock

180,000

180,000

Common stock

223

221

Additional paid-in capital

361,413

352,590

Distributions in excess of accumulated net income and accumulated

 other comprehensive loss

(204,689)

(198,406)

Total Saul Centers, Inc. equity

336,947

334,405

Noncontrolling interests

69,384

58,698

Total equity

406,331

393,103

Total liabilities and equity

$

1,446,482

$

1,422,452

Saul Centers, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017

Property revenue

(unaudited)

(unaudited)

Base rent

$

45,943

$

45,575

$

91,810

$

90,051

Expense recoveries

8,601

8,337

17,373

16,931

Percentage rent

249

519

667

901

Other property revenue

1,431

1,466

2,769

6,467

Total property revenue

56,224

55,897

112,619

114,350

Property expenses

Property operating expenses

6,732

6,473

13,856

13,125

Provision for credit losses

143

207

429

550

Real estate taxes

6,778

6,700

13,622

13,290

Total property expenses

13,653

13,380

27,907

26,965

Property operating income

42,571

42,517

84,712

87,385

Other revenue

69

10

170

23

Other expenses

Interest expense and amortization of deferred
debt costs

11,237

11,900

22,764

23,764

Depreciation and amortization of deferred leasing costs

11,351

11,691

22,700

23,033

General and administrative

4,647

4,514

9,068

8,815

Total other expenses

27,235

28,105

54,532

55,612

Operating income

15,405

14,422

30,350

31,796

Change in fair value of derivatives

(12)

(1)

(12)

(1)

Gain on sale of property

509

—

509

—

Net income

15,902

14,421

30,847

31,795

Income attributable to noncontrolling interests

(3,359)

(2,911)

(5,718)

(6,581)

Net income attributable to Saul Centers, Inc.

12,543

11,510

25,129

25,214

Extinguishment of issuance costs upon
redemption of preferred shares

—

—

(2,328)

—

Preferred stock dividends

(2,953)

(3,094)

(6,356)

(6,188)

Net income available to common stockholders

$

9,590

$

8,416

$

16,445

$

19,026

Per share net income available to common
stockholders

Basic and diluted

$

0.43

$

0.38

$

0.74

$

0.87

Weighted Average Common Stock:

Common stock

22,260

21,846

22,219

21,796

Effect of dilutive options

28

81

34

114

  Diluted weighted average common stock

22,288

21,927

22,253

21,910

Reconciliation of net income to FFO available to common stockholders and

noncontrolling interests (1)

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except per share amounts)

2018

2017

2018

2017

(unaudited)

(unaudited)

Net income

$

15,902

$

14,421

$

30,847

$

31,795

Subtract:

  Gain on sale of property

(509)

—

(509)

—

Add:

  Real estate depreciation and amortization

11,351

11,691

22,700

23,033

FFO

26,744

26,112

53,038

54,828

Subtract:

  Extinguishment of issuance costs upon redemption of 
  preferred shares

—

—

(2,328)

—

  Preferred stock dividends

(2,953)

(3,094)

(6,356)

(6,188)

  FFO available to common stockholders and
  noncontrolling interests

$

23,791

$

23,018

$

44,354

$

48,640

Weighted average shares:

Diluted weighted average common stock

22,288

21,927

22,253

21,910

Convertible limited partnership units

7,726

7,497

7,646

7,476

  Average shares and units used to compute FFO per share

30,014

29,424

29,899

29,386

  FFO per share available to common stockholders and
  noncontrolling interests

$

0.79

$

0.78

$

1.48

$

1.66

     The National Association of Real Estate Investment Trusts (NAREIT) developed FFO as a relative non-GAAP financial measure of performance of an equity REIT in order to 
     recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO is defined by NAREIT as net income, computed in 
     accordance with GAAP, plus real estate depreciation and amortization, and excluding impairment charges on real estate assets and gains or losses from property dispositions. 
     FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs, which is 
     disclosed in the Company's Consolidated Statements of Cash Flows for the applicable periods. There are no material legal or functional restrictions on the use of FFO. FFO 
     should not be considered as an alternative to net income, its most directly comparable GAAP measure, as an indicator of the Company's operating performance, or as an 
     alternative to cash flows as a measure of liquidity. Management considers FFO a meaningful supplemental measure of operating performance because it primarily excludes the 
     assumption that the value of the real estate assets diminishes predictably over time (i.e. depreciation), which is contrary to what the Company believes occurs with its 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.

Reconciliation of property revenue to same property revenue

(in thousands)

Three months ended June 30,

Six months ended June 30,

2018

2017

2018

2017

Total property revenue

$

56,224

$

55,897

$

112,619

$

114,350

Less: Acquisitions, dispositions and development properties

—

(344)

(2,421)

(2,934)

Total same property revenue

$

56,224

$

55,553

$

110,198

$

111,416

Shopping Centers

$

40,848

$

40,239

$

79,400

$

81,086

Mixed-Use properties

15,376

15,314

30,798

30,330

Total same property revenue

$

56,224

$

55,553

$

110,198

$

111,416

Total Shopping Center revenue

$

40,848

$

40,583

$

81,821

$

84,020

Less: Shopping Center acquisitions, dispositions and development
properties

—

(344)

(2,421)

(2,934)

Total same Shopping Center revenue

$

40,848

$

40,239

$

79,400

$

81,086

Total Mixed-Use property revenue

$

15,376

$

15,314

$

30,798

$

30,330

Less: Mixed-Use acquisitions, dispositions and development properties

—

—

—

—

Total same Mixed-Use property revenue

$

15,376

$

15,314

$

30,798

$

30,330

Reconciliation of property operating income to same property operating income

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2018

2017

2018

2017

(unaudited)

(unaudited)

Property operating income

$

42,571

$

42,517

$

84,712

$

87,385

Less: Acquisitions, dispositions and development properties

—

(73)

(2,024)

(2,047)

Total same property operating income

$

42,571

$

42,444

$

82,688

$

85,338

Shopping Centers

$

32,274

$

32,132

$

62,298

$

64,896

Mixed-Use properties

10,297

10,312

20,390

20,442

Total same property operating income

$

42,571

$

42,444

$

82,688

$

85,338

Shopping Center operating income

$

32,274

$

32,205

$

64,322

$

66,943

Less: Shopping Center acquisitions, dispositions and development
properties

—

(73)

(2,024)

(2,047)

Total same Shopping Center operating income

$

32,274

$

32,132

$

62,298

$

64,896

Mixed-Use operating income

$

10,297

$

10,312

$

20,390

$

20,442

Less: Mixed-Use Acquisitions, dispositions and development properties

—

—

—

—

Total same Mixed-Use property operating income

$

10,297

$

10,312

$

20,390

$

20,442