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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For The Quarterly Period Ended September 30, 2018

Commission File Number 1-12254

SAUL CENTERS, INC.

(Exact name of registrant as specified in its charter)



Maryland	52-1833074
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7501 Wisconsin Avenue, Bethesda, Maryland 20814

(Address of principal executive office) (Zip Code)

Registrant’s telephone number, including area code (301) 986-6200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. YES x NO o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES x NO o

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	x	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	o

		Emerging growth company	o

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 o NO x

Number of shares of common stock, par value $0.01 per share outstanding as of October 31, 2018: 22.6 million.

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SAUL CENTERS, INC.

Table of Contents



	Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

(a) Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017	3
(b) Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2017	4
(c) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2018 and 2017	5
(d) Consolidated Statement of Equity for the nine months ended September 30, 2018	6
(e) Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017	7
(f) Notes to Consolidated Financial Statements	8

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

(a) Critical Accounting Policies	25
(b) Results of Operations:
Three months ended September 30, 2018 compared to three months ended September 30, 2017	27
Nine months ended September 30, 2018 compared to nine months ended September 30, 2017	28
Same Property Revenue	29
Same Property Operating Income	29
(c) Liquidity and Capital Resources	31

Item 3. Quantitative and Qualitative Disclosures About Market Risk	39

Item 4. Controls and Procedures	39

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	40
Item 1A. Risk Factors	40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3. Defaults Upon Senior Securities	40
Item 4. Mine Safety Disclosures	40
Item 5. Other Information	40
Item 6. Exhibits	41
Signatures	42

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

(Unaudited)



(Dollars in thousands, except per share amounts)	September 30, 2018			December 31, 2017
Assets
Real estate investments
Land	$	484,428		$	450,256
Buildings and equipment	1,268,120			1,261,830
Construction in progress	161,625			91,114
	1,914,173			1,803,200
Accumulated depreciation	(516,568		)	(488,166		)
	1,397,605			1,315,034
Cash and cash equivalents	9,771			10,908
Accounts receivable and accrued income, net	55,541			54,057
Deferred leasing costs, net	28,057			27,255
Prepaid expenses, net	9,015			5,248
Other assets	6,149			9,950
Total assets	$	1,506,138		$	1,422,452
Liabilities
Notes payable	$	861,897		$	897,888
Revolving credit facility payable	75,200			60,734
Term loan facility payable	74,568			—
Construction loan payable	1,247			—
Dividends and distributions payable	18,722			18,520
Accounts payable, accrued expenses and other liabilities	31,958			23,123
Deferred income	25,747			29,084
Total liabilities	1,089,339			1,029,349
Equity
Preferred stock, 1,000,000 shares authorized:
Series C Cumulative Redeemable, 42,000 and 72,000 shares issued and outstanding, respectively	105,000			180,000
Series D Cumulative Redeemable, 30,000 and 0 shares issued and outstanding, respectively	75,000			—
Common stock, $0.01 par value, 40,000,000 shares authorized, 22,512,320 and 22,123,128 shares issued and outstanding, respectively	225			221
Additional paid-in capital	373,036			352,590
Distributions in excess of accumulated earnings	(205,872		)	(197,710		)
Accumulated other comprehensive loss	(156		)	(696		)
Total Saul Centers, Inc. equity	347,233			334,405
Noncontrolling interest	69,566			58,698
Total equity	416,799			393,103
Total liabilities and equity	$	1,506,138		$	1,422,452

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

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Saul Centers, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



(Dollars in thousands, except per share amounts)	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Property revenue
Base rent	$	46,189		$	45,385		$	137,999		$	135,436
Expense recoveries	9,209			9,447			26,582			26,378
Percentage rent	119			67			786			968
Other	1,494			1,329			4,263			7,797
Total property revenue	57,011			56,228			169,630			170,579
Property expenses
Property operating expenses	6,910			7,418			20,766			20,543
Provision for credit losses	101			52			530			602
Real estate taxes	6,937			6,834			20,559			20,124
Total property expenses	13,948			14,304			41,855			41,269
Property operating income	43,063			41,924			127,775			129,310

Other revenue	48			9			218			31
Other expenses
Interest expense and amortization of deferred debt costs	11,022			11,821			33,786			35,585
Depreciation and amortization of deferred leasing costs	11,256			11,363			33,956			34,396
General and administrative	4,141			4,363			13,208			13,178
Total other expenses	26,419			27,547			80,950			83,159
Operating income	16,692			14,386			47,043			46,182
Change in fair value of derivatives	10			(1		)	(2		)	(2		)
Gain on sale of property	—			—			509			—
Net Income	16,702			14,385			47,550			46,180
Noncontrolling interests
Income attributable to noncontrolling interests	(3,547		)	(2,902		)	(9,265		)	(9,483		)
Net income attributable to Saul Centers, Inc.	13,155			11,483			38,285			36,697
Extinguishment of issuance costs upon redemption of preferred shares	—			—			(2,328		)	—
Preferred stock dividends	(2,953		)	(3,093		)	(9,309		)	(9,281		)
Net income available to common stockholders	$	10,202		$	8,390		$	26,648		$	27,416
Per share net income available to common stockholders
Basic and diluted	$	0.45		$	0.38		$	1.19		$	1.25
Dividends declared per common share outstanding	$	0.52		$	0.51		$	1.56		$	1.53

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

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Saul Centers, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2018			2017			2018			2017
Net income	$	16,702		$	14,385		$	47,550		$	46,180
Other comprehensive income
Change in unrealized loss on cash flow hedge	173			171			727			503
Total comprehensive income	16,875			14,556			48,277			46,683
Comprehensive income attributable to noncontrolling interests	(3,592		)	(2,946		)	(9,453		)	(9,612		)
Total comprehensive income attributable to Saul Centers, Inc.	13,283			11,610			38,824			37,071
Extinguishment of issuance costs upon redemption of preferred shares	—			—			(2,328		)	—
Preferred stock dividends	(2,953		)	(3,093		)	(9,309		)	(9,281		)
Total comprehensive income available to common stockholders	$	10,330		$	8,517		$	27,187		$	27,790

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

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Saul Centers, Inc.

CONSOLIDATED STATEMENT OF EQUITY

(Unaudited)



(Dollars in thousands, except per share amounts)	Preferred Stock			Common Stock		Additional Paid-in Capital			Distributions in Excess of Accumulated Earnings			Accumulated Other Comprehensive (Loss)			Total Saul Centers, Inc.			Noncontrolling Interest			Total
Balance, December 31, 2017	$	180,000		$	221	$	352,590		$	(197,710	)	$	(696	)	$	334,405		$	58,698		$	393,103
Issuance of 30,000 shares of Series D Cumulative preferred stock	75,000			—		(2,631		)	—			—			72,369			—			72,369
Redemption of 30,000 shares of Series C Cumulative preferred stock	(75,000		)	—		2,311			(2,328		)	—			(75,017		)	—			(75,017		)
Issuance of common stock:
356,452 shares pursuant to dividend reinvestment plan	—			4		18,139			—			—			18,143			—			18,143
32,740 shares due to exercise of employee stock options, director share grant and issuance of directors’ deferred shares	—			—		2,627			—			—			2,627			—			2,627
Issuance of 270,246 partnership units	—			—		—			—			—			—			13,475			13,475
Net income	—			—		—			38,285			—			38,285			9,265			47,550
Change in unrealized loss on cash flow hedge	—			—		—			—			540			540			187			727
Preferred stock distributions:
Series C	—			—		—			(4,340		)	—			(4,340		)	—			(4,340		)
Series D	—			—		—			(2,016		)	—			(2,016		)	—			(2,016		)
Common stock distributions	—			—		—			(23,135		)	—			(23,135		)	(7,997		)	(31,132		)
Distributions payable on Series C preferred stock ($42.97/share)	—			—		—			(1,805		)	—			(1,805		)	—			(1,805		)
Distributions payable on Series D preferred stock ($38.28/share)	—			—		—			(1,148		)	—			(1,148		)	—			(1,148		)
Distributions payable common stock ($0.52/share) and distributions payable partnership units ($0.52/unit)	—			—		—			(11,675		)	—			(11,675		)	(4,062		)	(15,737		)
Balance, September 30, 2018	$	180,000		$	225	$	373,036		$	(205,872	)	$	(156	)	$	347,233		$	69,566		$	416,799

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

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Saul Centers, Inc.



CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Nine months ended September 30,
(Dollars in thousands)	2018			2017
Cash flows from operating activities:
Net income	$	47,550		$	46,180
Adjustments to reconcile net income to net cash provided by operating activities:
Change in fair value of derivatives	2			2
Gain on sale of property	(509		)	—
Depreciation and amortization of deferred leasing costs	33,956			34,396
Amortization of deferred debt costs	1,224			1,043
Compensation costs of stock grants and options	1,434			1,349
Provision for credit losses	530			602
Increase in accounts receivable and accrued income	(1,846		)	(2,901		)
Additions to deferred leasing costs	(4,195		)	(3,654		)
Increase in prepaid expenses	(3,767		)	(3,947		)
(Increase) decrease in other assets	1,171			(817		)
Increase in accounts payable, accrued expenses and other liabilities	2,681			2,991
Decrease in deferred income	(3,358		)	(801		)
Net cash provided by operating activities	74,873			74,443
Cash flows from investing activities:
Acquisitions of real estate investments (1)	(36,346		)	(79,499		)
Additions to real estate investments	(6,586		)	(12,389		)
Additions to development and redevelopment projects	(54,693		)	(14,286		)
Repayment of note receivable	1,326			—
Proceeds from sale of property (2)	—			6,688
Net cash used in investing activities	(96,299		)	(99,486		)
Cash flows from financing activities:
Proceeds from notes payable	—			40,000
Repayments on notes payable	(36,577		)	(20,303		)
Proceeds from term loan facility	75,000			—
Proceeds from revolving credit facility	102,000			55,000
Repayments on revolving credit facility	(86,000		)	(15,000		)
Proceeds from construction loan	2,949			1,437
Additions to deferred debt costs	(2,493		)	(2,069		)
Proceeds from the issuance of:
Common stock	19,336			15,303
Partnership units (1)	4,699			5,798
Series D preferred stock	72,369			—
Series C preferred stock redemption payment	(75,000		)	—
Preferred stock redemption costs	(13		)	—
Distributions to:
Series C preferred stockholders	(7,433		)	(9,281		)
Series D preferred stockholders	(2,016		)	—
Common stockholders	(34,613		)	(33,350		)
Noncontrolling interests	(11,919		)	(11,429		)
Net cash provided by financing activities	20,289			26,106
Net increase (decrease) in cash and cash equivalents	(1,137		)	1,063
Cash and cash equivalents, beginning of period	10,908			8,322
Cash and cash equivalents, end of period	$	9,771		$	9,385
Supplemental disclosure of cash flow information:
Cash paid for interest	$	32,697		$	34,394
Increase in accrued real estate investments and development costs	$	6,880		$	992

(1) The 2018 acquisition of real estate and proceeds from the issuance of partnership units each excludes $8,776 in connection with the acquisition of Ashbrook Marketplace in exchange for limited partnership units.

(2) Proceeds from sale of property excludes $1,275 of seller financing in connection with the sale of the Company's Great Eastern property.

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Notes to Consolidated Financial Statements (Unaudited)


1.	Organization, Formation and Structure

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.

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

The following table lists the significant properties acquired, in development and disposed since December 31, 2016.



Name of Property	Location	Type	Year of Acquisition/ Development/Disposition
Acquisitions
Burtonsville Town Square	Burtonsville, MD	Shopping Center	2017
7316 Wisconsin Avenue	Bethesda, MD	Mixed-Use	2018
Developments
750 N. Glebe Road	Arlington, VA	Mixed-Use	2017 - 2018
Ashbrook Marketplace	Ashburn, VA	Shopping Center	2018
Dispositions
Great Eastern	District Heights, MD	Shopping Center	2017

As of September 30, 2018, the Company’s properties (the “Current Portfolio Properties”) consisted of 49 shopping center properties (the “Shopping Centers”), seven mixed-use properties, which are comprised of office, retail and multi-family residential uses (the “Mixed-Use Properties”) and four (non-operating) development properties.


2.	Summary of Significant Accounting Policies

Nature of Operations

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

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, 2018, 32 of the Shopping Centers were anchored by a grocery store and offer primarily day-to-day necessities and services. Two tenants individually accounted for 2.5% or more of the Company’s total revenue for the nine months ended September 30, 2018. Giant Food, a tenant at ten Shopping Centers, and Capital One, a tenant at 18 properties, individually accounted for 4.8% and 2.7%, respectively, of the Company's total revenue for the nine months ended September 30, 2018.

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Notes to Consolidated Financial Statements (Unaudited)

Principles of Consolidation

The accompanying consolidated financial statements of the Company include the accounts of Saul Centers and its subsidiaries, including the Operating Partnership and Subsidiary Partnerships, which are majority owned by Saul Centers. Substantially all assets and liabilities of the Company as of September 30, 2018 and December 31, 2017, are comprised of the assets and liabilities of the Operating Partnership. The debt arrangements which are subject to recourse are described in Note 5. All significant intercompany balances and transactions have been eliminated in consolidation.

The Operating Partnership is a variable interest entity ("VIE") 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 74.1% of its net income. Because the Operating Partnership was previously consolidated into the financial statements of the Company, classification of it as a VIE had no impact on the consolidated financial statements of the Company.

Basis of Presentation

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 Saul Centers, Inc. 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 Saul Centers, Inc. for the year ended December 31, 2017, which are included in its Annual Report on Form 10-K. The results of operations for interim periods are not necessarily indicative of results to be expected for the year.

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. Actual results could differ from those estimates.

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. Receivables are reviewed monthly and reserves are established with a charge to current period operations when, in the opinion of management, collection of the receivable is doubtful. Accounts receivable in the accompanying financial statements are shown net of an allowance for doubtful accounts of approximately $0.6 million and $0.4 million at September 30, 2018 and December 31, 2017, respectively.

In addition to rents due currently, accounts receivable includes approximately $43.6 million and $44.1 million, at September 30, 2018 and December 31, 2017, respectively, net of allowance for doubtful accounts totaling $0.2 million and $0.2 million, respectively, representing minimum rental income accrued on a straight-line basis to be paid by tenants over the remaining term of their respective leases.

Assets Held for Sale

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


•	management commits to a plan to sell a property;


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


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


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


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


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

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Notes to Consolidated Financial Statements (Unaudited)

The Company must make a determination as to the point in time that it is probable that a sale will be consummated, which generally occurs when an executed sales contract has no contingencies and the prospective buyer has significant funds at risk to ensure performance. Upon designation as an asset held for sale, the Company records the carrying value of each property at the lower of its carrying value or its estimated fair value, less estimated costs to sell, and ceases depreciation. As of September 30, 2018, the Company had no assets designated as held-for-sale.

Cash and Cash Equivalents

Cash and cash equivalents include short-term investments. Short-term investments include money market accounts and other investments which generally mature within three months, measured from the acquisition date, and/or are readily convertible to cash.

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. Construction in progress as of September 30, 2018 and December 31, 2017, is composed of the following:



(in thousands)	September 30, 2018		December 31, 2017
Glebe Road	$	136,766	$	83,462
Ashbrook Marketplace	10,016		—
Other	14,843		7,652
Total	$	161,625	$	91,114

Deferred Debt Costs

Deferred debt costs consist of fees and costs incurred to obtain long-term financing, construction financing and the credit facility. These fees and costs are being amortized on a straight-line basis over the terms of the respective loans or agreements, which approximates the effective interest method. Deferred debt costs totaled $10.0 million and $6.9 million, net of accumulated amortization of $7.6 million and $8.2 million, at September 30, 2018 and December 31, 2017, respectively, and are reflected as a reduction of the related debt in the Consolidated Balance Sheets. At December 31, 2017, deferred debt costs totaling $1.8 million, related to the Glebe Road construction loan, which had no outstanding balance, are included in Other Assets in the Consolidated Balance Sheets.

Deferred Income

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

Deferred Leasing Costs

Deferred leasing costs consist of commissions paid to third-party leasing agents, internal costs such as employee compensation and payroll-related fringe benefits directly related to time spent performing leasing-related activities for successful commercial leases, amounts attributed to in-place leases associated with acquired properties and lease inducement costs. Leasing related activities include evaluating the prospective tenant’s financial condition, evaluating and recording guarantees, collateral and other security arrangements, negotiating lease terms, preparing lease documents and closing the transaction. Unamortized deferred 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 $28.1 million and $27.3 million, net of accumulated amortization of $36.1 million and $35.3 million, as of September 30, 2018 and December 31, 2017, respectively. Amortization expense, included in depreciation and amortization of deferred leasing costs in the consolidated statements of operations, totaled $4.3 million and $4.1 million for the nine months ended September 30, 2018 and 2017, respectively.

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Notes to Consolidated Financial Statements (Unaudited)

Derivative Financial Instruments

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

Derivative financial instruments expose us to credit risk in the event of non-performance by the counterparties under the terms of the derivative instrument. The Company minimizes its credit risk on these transactions by dealing with major, creditworthy financial institutions as determined by management, and therefore, it believes that the likelihood of realizing losses from counterparty non-performance is remote.

Income Taxes

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

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 such matters will not have a material adverse effect on its financial position or results of operations. Upon determination that a loss is probable to occur and can be reasonably estimated, 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.

Postemployment Benefits

From time to time, the Company may enter into an arrangement with an employee at the time of the employee’s separation from service whereby the employee will receive certain payments in exchange for certain releases, covenants not to compete, or other promises. If no future services are required in order for the employee to receive the payments, the Company estimates the amount of payments to be made over the life of the arrangement and records that amount as an expense as of the date of the arrangement with a corresponding liability representing the amount to be paid in the future.

Predevelopment Expenses

Predevelopment expenses represent certain costs incurred by the Company in connection with active development and redevelopment projects and include, for example, costs related to the early termination of tenant leases and demolition of existing structures.

Real Estate Investment Properties

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Notes to Consolidated Financial Statements (Unaudited)

renewal options. The fair value of below market lease intangibles is recorded as deferred income and accreted as additional revenue over the remaining contractual lease period and any renewal option periods included in the valuation analysis. The fair value of above market lease intangibles is recorded as a deferred asset and amortized as a reduction of revenue over the remaining contractual lease term. The Company determines the fair value of at-market in-place leases considering the cost of acquiring similar leases, the foregone rents associated with the lease-up period and carrying costs associated with the lease-up period. Intangible assets associated with at-market in-place leases are amortized as additional expense over the remaining contractual lease term. To the extent customer relationship intangibles are present in an acquisition, the fair values of the intangibles are amortized over the lives of the customer relationships. The Company has never recorded a customer relationship intangible asset. Effective with the adoption of ASU 2017-01 in January 2017, acquisition-related transaction costs are generally capitalized to the basis of the acquired asset.

If there is an event or change in circumstance that indicates a potential impairment in the value of a real estate investment property, the Company prepares an analysis to determine whether the carrying value of the real estate investment property exceeds its estimated fair value. The Company considers both quantitative and qualitative factors including recurring operating losses, significant decreases in occupancy, and significant adverse changes in legal factors and business climate. If impairment indicators are present, the Company compares the projected cash flows of the property over its remaining useful life, on an undiscounted basis, to the carrying value of that property. The Company assesses its undiscounted projected cash flows based upon estimated capitalization rates, historic operating results and market conditions that may affect the property. If the carrying value is greater than the undiscounted projected cash flows, the Company would recognize an impairment loss equivalent to an amount required to adjust the carrying amount to its then estimated fair value. The value of any property is sensitive to the actual results of any of the aforementioned estimated factors, either individually or taken as a whole. Should the actual results differ from management’s projections, the valuation could be negatively or positively affected. The Company did not recognize an impairment loss on any of its real estate during the nine months ended September 30, 2018 and 2017.

Interest, real estate taxes, development-related salary costs and other carrying costs are capitalized on projects under development and construction. Upon substantial completion of construction and the placement of the assets into service, rental income, real estate tax expense, property operating expenses (consisting of payroll, repairs and maintenance, utilities, insurance and other property related expenses) and depreciation are included in current operations and capitalization of interest ceases. Property operating expenses are charged to operations as incurred. Interest capitalized totaled $4.3 million and $2.5 million for the nine months ended September 30, 2018 and 2017, respectively. Commercial development projects are considered substantially complete and available for occupancy upon completion of tenant improvements, but no later than one year from the cessation of major construction activity. Multi-family residential development projects are considered substantially complete and available for occupancy upon receipt of the certificate of occupancy from the appropriate licensing authority. Substantially completed portions of a project are accounted for as separate projects.

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 $29.7 million and $30.3 million for the nine months ended September 30, 2018 and 2017, respectively. Repairs and maintenance expense totaled $8.7 million and $8.5 million for the nine months ended September 30, 2018 and 2017, respectively, and is included in property operating expenses in the Consolidated Statements of Operations.

Revenue Recognition

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

Stock-based Employee Compensation, Stock Plan and Deferred Compensation Plan for Directors

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 each award using the Black-Scholes model, a widely used method for valuing stock-based employee compensation, and the following assumptions: (1) Expected Volatility determined using the most recent trading

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Notes to Consolidated Financial Statements (Unaudited)

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 is 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 rates, 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.

The Company has a stock plan, which was originally approved in 2004, amended in 2008 and 2013 and which expires in 2023, for the purpose of attracting and retaining executive officers, directors and other key personnel (the “Stock Plan”). Pursuant to the Stock Plan, the Compensation Committee established a Deferred Compensation Plan for Directors for the benefit of its directors and their beneficiaries, which replaced a previous Deferred Compensation and Stock Plan for Directors. A director may make an annual election to defer all or part of his or her director’s fees and has the option to have the fees paid in cash, in shares of common stock or in a combination of cash and shares of common stock upon separation from the Board. If the director elects to have fees paid in stock, fees earned during a calendar quarter are aggregated and divided by the closing market price of the Company’s common stock on the first trading day of the following quarter to determine the number of shares to be credited to the director. During the nine months ended September 30, 2018, 6,686 shares were credited to director's deferred fee accounts and 77,464 shares were issued. As of September 30, 2018, the director's deferred fee accounts comprise 113,040 shares.

The Compensation Committee has also approved an annual award of shares of the Company’s common stock as additional compensation to each director serving on the Board of Directors as of the record date for the Annual Meeting of Stockholders. The shares are awarded as of each Annual Meeting of Stockholders, and their issuance may not be deferred.

Noncontrolling Interests

Saul Centers is the sole general partner of the Operating Partnership, owning a 74.1% common interest as of September 30, 2018. Noncontrolling interests in the Operating Partnership is comprised of limited partnership units owned by the Saul Organization. Noncontrolling interests reflected on the accompanying consolidated balance sheets is increased for earnings attributable to limited partnership interests and distributions reinvested in additional units, and is decreased for limited partner distributions. Noncontrolling interests reflected on the consolidated statements of operations represents earnings attributable to limited partnership interests.

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, the effect of dilutive options and the number of options which are not dilutive because the average price of the Company's common stock was less than the exercise prices. The treasury stock method was used to measure the effect of the dilution.



	Three months ended September 30,		Nine months ended September 30,
(In thousands)	2018	2017	2018	2017
Weighted average common stock outstanding-Basic	22,432	21,942	22,290	21,844
Effect of dilutive options	69	86	46	105
Weighted average common stock outstanding-Diluted	22,501	22,028	22,336	21,949
Non-dilutive options	443	—	508	—
Years non-dilutive options were issued	2016 and 2017	—	2015, 2016 and 2017	—

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 titled “Revenue from Contracts with Customers” and subsequently issued several related ASUs (collectively “ASU 2014-09”). ASU 2014-09 replaces most existing revenue recognition guidance and requires an entity to recognize the amount of revenue which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 is

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Notes to Consolidated Financial Statements (Unaudited)

effective for annual periods beginning after December 15, 2017, and interim periods within those years and must be applied retrospectively by either restating prior periods or by recognizing the cumulative effect as of the date of first application. The Company adopted ASU 2014-09 effective January 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 did not have an impact on the consolidated financial statements because the majority of the Company’s revenue consists of lease-related income from leasing arrangements, which is specifically excluded from ASU 2014-09. Other revenues, as a whole, are immaterial to total revenues. There was no change to previously reported amounts as a result of the adoption of ASU 2014-09.

In February 2016, the FASB issued ASU 2016-02, ‘‘Leases’’ (“ASU 2016-02”). ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, interim periods within those years, and requires a modified retrospective transition approach for all leases existing at the date of initial application, with an option to use certain practical expedients for those existing leases. Upon adoption of ASU 2016-02 effective January 1, 2019, we anticipate election of the practical expedient with respect to cost recoveries. We anticipate that the accounting for initial direct costs will impact the amount of those costs that are charged to expense and we continue to evaluate the impact on our consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses" ("ASU 2016-13"). ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of information to support credit loss estimates. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those years. We are evaluating the impact that ASU 2016-13 will have on our consolidated financial statements and related disclosures.

Reclassifications

Certain reclassifications have been made to the prior year financial statements to conform to the presentation used for the nine months ended September 30, 2018.


3.	Real Estate Transactions

Acquisitions

Burtonsville Town Square

In January 2017, the Company purchased for $76.4 million, including acquisition costs, Burtonsville Town Square located in Burtonsville, Maryland. The purchase was funded by a new $40.0 million mortgage loan and the revolving credit facility.

Olney Shopping Center

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

Ashbrook Marketplace

In May 2018, the Company acquired from the Trust, in exchange for 176,680 limited partnership units, approximately 13.7 acres of land located at the intersection of Ashburn Village Boulevard and Russell Branch Parkway in Loudoun County, Virginia. Based on the closing price of the Company's common stock, the land and the limited partnership units were recorded at a value of $8.8 million. Acquisition costs related to the transaction totaled approximately $0.2 million.

7316 Wisconsin Avenue

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. The property has mixed-use development potential of up to 325 apartment units and approximately 10,000 square feet of street level retail pursuant to the recently approved Bethesda Downtown Plan. The purchase price was funded through the Company's revolving credit facility.

Allocation of Purchase Price of Real Estate Acquired

The Company allocates the purchase price of real estate investment properties to various components, such as land, buildings and intangibles related to in-place leases and customer relationships, based on their relative fair values or fair values. See Note 2. Summary of Significant Accounting Policies-Real Estate Investment Properties.

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Notes to Consolidated Financial Statements (Unaudited)

During 2017, the Company purchased one property, Burtonsville Town Square, at a cost of $76.4 million, including acquisition costs. Of the total acquisition cost, $28.4 million was allocated to land, $45.8 million was allocated to buildings, $2.2 million was allocated to in-place leases, $0.6 million was allocated to above-market leases, and $(0.6) million was allocated to below market rent, based on their relative fair values.

During 2018, the Company purchased one property, 7316 Wisconsin Avenue, at a cost of $36.2 million, including acquisition costs. Of the total acquisition cost, $34.2 million was allocated to land, $1.0 million was allocated to buildings, $0.9 million was allocated to in-place leases, and $0.1 million was allocated to above-market leases, based on their relative fair values.

Dispositions

Great Eastern Shopping Center

In September 2017, the Company sold for $8.5 million Great Eastern Shopping Center located in District Heights, Maryland. The Company provided $1.28 million second trust financing to the buyer, which bore interest at a fixed rate of 6%. In May 2018, the buyer repaid the loan in full and the Company recognized a $0.5 million gain that was previously deferred.


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

As of September 30, 2018, the Saul Organization holds a 25.9% limited partnership interest in the Operating Partnership represented by approximately 7.8 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, 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, 2018, approximately 760,000 units were convertible into shares of Saul Centers common stock.

The impact of the Saul Organization’s approximately 25.9% limited partnership interest in the Operating Partnership is reflected as Noncontrolling Interests in the accompanying consolidated financial statements. Fully converted partnership units and diluted weighted average common stock outstanding for the three months ended September 30, 2018 and 2017, were approximately 30.3 million and 29.5 million, respectively, and for the nine months ended September 30, 2018 and 2017, were approximately 30.0 million and 29.4 million, respectively.


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

The principal amount of the Company’s outstanding debt totaled approximately $1.0 billion at September 30, 2018, of which approximately $870.9 million was fixed-rate debt and approximately $152.0 million was variable rate debt, including

$77.0 million outstanding under an unsecured revolving credit facility and $75.0 million outstanding under a term loan credit facility. The carrying value of the properties collateralizing the notes payable totaled approximately $965.6 million as of September 30, 2018.

On January 26, 2018, the Company replaced its credit facility. The new credit facility, which can be used for working capital, property acquisitions, development projects or letters of credit, totals $400.0 million, of which $325.0 million is a revolving credit facility and $75.0 million is a term loan. The revolving credit facility matures on January 26, 2022, and may be extended by the Company for one additional year, subject to satisfaction of certain conditions. The term loan matures on January 26, 2023, and may not be extended. In general, loan availability under the new credit facility is primarily determined by operating income from the Company’s existing unencumbered properties. Interest accrues at a rate of LIBOR plus a spread of 135 basis points to 195 basis points under the revolving credit facility, and 130 basis points to 190 basis points under the term loan, each as determined by certain leverage tests. As of September 30, 2018, the applicable spread for borrowings is 135 basis points under the revolving credit facility and 130 basis points under the term loan. Saul Centers and certain consolidated subsidiaries of the Operating Partnership have guaranteed the payment obligations of the Operating Partnership under the new credit facility. Letters of credit may be issued under the revolving credit facility. On September 30, 2018, based on the value of the Company’s unencumbered properties, approximately $161.1 million was available under the revolving credit facility, $77.0 million was outstanding and approximately $185,000 was committed for letters of credit.

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

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Notes to Consolidated Financial Statements (Unaudited)

On August 14, 2017, the Company closed on a $157.0 million construction-to-permanent loan, the proceeds of which will be used to partially fund the Glebe Road development project. The loan, which had an outstanding balance of $2.9 million at September 30, 2018, matures in 2035, bears interest at a fixed rate of 4.67%, requires interest only payments, which will be funded by the loan, until conversion to permanent. The conversion is expected in the fourth quarter of 2021, and thereafter, monthly principal and interest payments of $887,900 based on a 25-year amortization schedule will be required.

Effective September 1, 2017, the Company's construction-to-permanent loan secured by and used to partially finance the construction of Park Van Ness, converted to permanent financing. The loan matures in 2032, bears interest at a fixed rate of 4.88%, requires monthly principal and interest payments of $413,460 based on a 25-year amortization schedule and requires a final payment of $39.6 million at maturity.

On November 20, 2017, the Company closed on a 15-year, non-recourse $60.0 million mortgage loan secured by Washington Square. The loan matures in 2032, bears interest at a fixed rate of 3.75%, requires monthly principal and interest payments of $308,500 based on a 25-year amortization schedule and requires a final payment of $31.1 million. Proceeds were used to repay the remaining balance of $28.1 million on the existing mortgage and reduce the outstanding balance of the revolving credit facility.

Saul Centers is a guarantor of the credit facility, of which the Operating Partnership is the borrower. The Operating Partnership is the guarantor of (a) a portion of the Park Van Ness loan (approximately $10.0 million of the $70.1 million outstanding balance at September 30, 2018, which guarantee will be reduced to (i) $6.7 million on October 1, 2019, (ii) $3.3 million on October 1, 2020 and (iii) zero on October 1, 2021), and (b) a portion of the Kentlands Square II mortgage loan (approximately $9.2 million of the $35.6 million outstanding at September 30, 2018). All other notes payable are non-recourse.

At December 31, 2017, the principal amount of the Company’s outstanding debt totaled approximately $965.5 million, of which $890.4 million was fixed rate debt and $75.1 million was variable rate debt, including $61.0 million outstanding under an unsecured revolving credit facility. The carrying value of the properties collateralizing the notes payable totaled approximately $1.0 billion as of December 31, 2017.

At September 30, 2018, the scheduled maturities of debt, including scheduled principal amortization, for years ending December 31, were as follows:



(In thousands)	Balloon Payments			Scheduled Principal Amortization		Total
October 1 through December 31, 2018	$	—		$	7,688	$	7,688
2019	60,794			29,298		90,092
2020	61,163			26,772		87,935
2021	11,012			26,486		37,498
2022	113,502		(a)	26,990		140,492
2023	84,225			27,290		111,515
Thereafter	430,259			117,422		547,681
Principal amount	$	760,955		$	261,946	1,022,901
Unamortized deferred debt costs						9,989
Net						$	1,012,912

(a) Includes $77.0 million outstanding under the revolving credit facility.

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Notes to Consolidated Financial Statements (Unaudited)

Interest expense and amortization of deferred debt costs for the three and nine months ended September 30, 2018 and 2017, were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2018			2017			2018			2017
Interest incurred	$	12,361		$	12,370		$	36,863		$	37,037
Amortization of deferred debt costs	377			351			1,224			1,043
Capitalized interest	(1,716		)	(900		)	(4,301		)	(2,495		)
	$	11,022		$	11,821		$	33,786		$	35,585


6.	Equity

The consolidated statements of operations for the nine months ended September 30, 2018 and 2017, reflect noncontrolling interests of $9.3 million and $9.5 million, respectively, representing income attributable to the Saul Organization for each period.

On January 23, 2018, Saul Centers sold, in an underwritten public offering, 3.0 million depositary shares, each representing 1/100th of a share of 6.125% Series D Cumulative Redeemable Preferred Stock (the "Series D Stock"), providing net cash proceeds of approximately $72.6 million. The depositary shares may be redeemed at the Company’s option, in whole or in part, on or after January 23, 2023, at the $25.00 liquidation preference, plus accrued but unpaid dividends to but not including the redemption date. The depositary shares pay an annual dividend of $1.53125 per share, equivalent to 6.125% of the $25.00 liquidation preference. The Series D Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of the Company except in connection with certain changes in control or delisting events. Investors in the depositary shares generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not declared or consecutive) and in certain other events. On February 22, 2018, the proceeds from the offering, together with cash on hand, were used to redeem 3.0 million depositary shares, each representing 1/100th of a share of the Company’s 6.875% Series C Cumulative Redeemable Preferred Stock (the “Series C Stock”). Costs associated with the redemption were charged against Net income available to common stockholders.

At September 30, 2018, the Company had outstanding 4.2 million depositary shares, each representing 1/100th of a share of 6.875% Series C Stock. The depositary shares are redeemable at the Company’s option, in whole or in part, at the $25.00 liquidation preference plus accrued but unpaid dividends. The depositary shares pay an annual dividend of $1.71875 per share, equivalent to 6.875% of the $25.00 liquidation preference. The Series C Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of the Company except in connection with certain changes of control or delisting events. Investors in the depositary shares generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not declared or consecutive) and in certain other events.


7.	Related Party Transactions

The Chairman and Chief Executive Officer, the President, the Executive Vice President-Chief Legal and Administrative Officer and the Senior Vice President-Chief Accounting Officer 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 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 six percent of the employee’s cash compensation, subject to certain limits, were $264,900 and $270,600 for the nine months ended September 30, 2018 and 2017, 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

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Notes to Consolidated Financial Statements (Unaudited)

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, 2018 and 2017, the Company credited to employee accounts $161,500 and $154,300, respectively, which is the sum of accrued earnings and three times the amount deferred by 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 $2.6 million and $2.4 million, at September 30, 2018 and December 31, 2017, respectively, and is included in accounts payable, accrued expenses and other liabilities in the Consolidated Balance Sheets.

The Company has entered into a shared services agreement (the “Agreement”) with the Saul Organization 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. Billings by the Saul Organization for the Company’s share of these ancillary costs and expenses for the nine months ended September 30, 2018 and 2017, which included rental expense for the Company’s headquarters lease, totaled approximately $6.2 million and $5.4 million, net, 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, 2018 and December 31, 2017, accounts payable, accrued expenses and other liabilities included approximately $767,600 and $993,200, respectively, representing amounts due to the Saul Organization for the Company’s share of these ancillary costs and expenses.

The Company has entered into a shared third-party predevelopment cost agreement (the “Predevelopment Agreement”) with the Trust. The Predevelopment Agreement relates to the sharing of third-party predevelopment costs incurred in connection with the planning of the future redevelopment of certain adjacent real estate assets in the Twinbrook area of Rockville, Maryland. The costs will be shared on a pro rata basis based on the acreage owned by each entity and neither party is obligated to advance funds to the other.

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 intends to construct a shopping center and, upon stabilization, may be obligated to issue additional limited partnership units to the Trust.

The Company subleases its corporate headquarters space from a member of the Saul Organization. The lease commenced in March 2002, expires in 2022, 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 $590,000 and $578,200 for the nine months ended September 30, 2018 and 2017, respectively, and is included in general and administrative expense.

The B. F. Saul Insurance Agency of Maryland, Inc., a subsidiary of the B. F. Saul Company and a member of the Saul Organization, is a general insurance agency that receives commissions and fees in connection with the Company’s insurance program. Such commissions and fees amounted to $251,800 and $173,800 for the nine months ended September 30, 2018 and 2017, respectively.


8.	Stock Option Plans

In 2004, the Company has established a stock incentive plan (the "Plan"), as amended. Under the Plan, options were 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 following table summarizes the amount and activity of each grant with outstanding unexercised options, the total value and variables used in the computation and the amount expensed and included in general and administrative expense in the Consolidated Statements of Operations for the nine months ended September 30, 2018.

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Notes to Consolidated Financial Statements (Unaudited)



	Directors
Grant date	4/24/2009			5/7/2010			5/13/2011			5/4/2012			5/10/2013			5/9/2014			5/8/2015			5/6/2016			5/5/2017			5/11/2018			Subtotals
Total grant	32,500			32,500			32,500			35,000			35,000			30,000			35,000			32,500			27,500			27,500			320,000
Vested	32,500			32,500			32,500			35,000			35,000			30,000			35,000			32,500			27,500			27,500			320,000
Exercised	27,500			25,000			22,500			22,500			22,500			17,500			12,500			7,500			—			2,500			160,000
Forfeited	—			2,500			2,500			—			—			—			—			—			2,500			—			7,500
Exercisable at September 30, 2018	5,000			5,000			7,500			12,500			12,500			12,500			22,500			25,000			25,000			25,000			152,500
Remaining unexercised	5,000			5,000			7,500			12,500			12,500			12,500			22,500			25,000			25,000			25,000			152,500
Exercise price	$	32.68		$	38.76		$	41.82		$	39.29		$	44.42		$	47.03		$	51.07		$	57.74		$	59.41		$	49.46
Volatility	0.344			0.369			0.358			0.348			0.333			0.173			0.166			0.166			0.173			0.192
Expected life (years)	6.0			5.0			5.0			5.0			5.0			5.0			5.0			5.0			5.0			5.0
Assumed yield	4.54		%	4.23		%	4.16		%	4.61		%	4.53		%	4.48		%	4.54		%	3.75		%	3.45		%	3.70		%
Risk-free rate	2.19		%	2.17		%	1.86		%	0.78		%	0.82		%	1.63		%	1.50		%	1.23		%	1.89		%	2.84		%
Total value at grant date	$	222,950		$	287,950		$	297,375		$	257,250		$	278,250		$	109,500		$	125,300		$	151,125		$	165,550		$	169,400		$	2,064,650
Expensed in previous years	222,950			287,950			297,375			257,250			278,250			109,500			125,300			151,125			165,550			—			1,895,250
Expensed in 2018	—			—			—			—			—			—			—			—			—			169,400			169,400
Future expense	—			—			—			—			—			—			—			—			—			—			—
	Officers
Grant date	5/13/2011			5/4/2012			5/10/2013			5/9/2014			5/8/2015			5/6/2016			5/5/2017			5/11/2018			Subtotal						Grand Totals
Total grant	162,500			242,500			202,500			170,000			190,000			194,000			205,000			217,500			1,584,000						1,904,000
Vested	118,750			107,500			171,875			168,125			140,625			96,375			51,250			—			854,500						1,174,500
Exercised	103,750			92,455			129,375			46,126			20,625			3,750			—			—			396,081						556,081
Forfeited	43,750			135,000			30,625			1,875			3,125			1,875			—			—			216,250						223,750
Exercisable at September 30, 2018	15,000			15,045			42,500			121,999			120,000			92,625			51,250			—			458,419						610,919
Remaining unexercised	15,000			15,045			42,500			121,999			166,250			188,375			205,000			217,500			971,669						1,124,169
Exercise price	$	41.82		$	39.29		$	44.42		$	47.03		$	51.07		$	57.74		$	59.41		$	49.46
Volatility	0.330			0.315			0.304			0.306			0.298			0.185			0.170			0.177
Expected life (years)	8.0			8.0			8.0			7.0			7.0			7.0			7.0			7.0
Assumed yield	4.81		%	5.28		%	5.12		%	4.89		%	4.94		%	3.80		%	3.50		%	3.75		%
Risk-free rate	2.75		%	1.49		%	1.49		%	2.17		%	1.89		%	1.55		%	2.17		%	2.94		%
Gross value at grant date	$	1,366,625		$	1,518,050		$	1,401,300		$	1,349,800		$	1,584,600		$	1,136,840		$	1,324,300		$	1,313,700		$	10,995,215					$	13,059,865
Estimated forfeitures	367,937			845,100			211,925			14,887			141,780			86,628			91,642			83,157			1,843,056						1,843,056
Expensed in previous years	998,688			672,950			1,189,375			1,082,664			961,888			437,580			205,440			—			5,548,585						7,443,835
Expensed in 2018	—			—			—			252,249			270,531			196,911			231,120			128,180			1,078,991						1,248,391
Future expense	—			—			—			—			210,401			415,721			796,098			1,102,363			2,524,583						2,524,583
Weighted average term of remaining future expense (in years)	2.7

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Notes to Consolidated Financial Statements (Unaudited)

The table below summarizes the option activity for the nine months ended September 30, 2018:



	Number of Shares		Weighted Average Exercise Price per share		Aggregate Intrinsic Value
Outstanding at January 1	913,320		$	52.80	$	8,172,970
Granted	245,000		49.46		1,602,300
Exercised	(29,151	)	44.64		415,119
Expired/Forfeited	(5,000	)	54.78
Outstanding at September 30	1,124,169		52.28		5,341,971
Exercisable at September 30	610,919		50.72		3,691,508

The intrinsic value 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 for shares exercised during the period was calculated by using the closing share price on the date of exercise. At September 28, 2018, the final trading day of the third quarter, the closing share price of $56.00 was lower than the exercise price of the 213,375 and 230,000 outstanding options granted in 2016 and 2017, respectively. The weighted average remaining contractual life of the Company’s outstanding and exercisable options is 7.4 years and 6.4 years, respectively.


9.	Fair Value of Financial Instruments

The carrying values 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 interest rates of approximately 4.55% and 3.90%, would be approximately $891.9 million and $951.7 million, respectively, compared to the principal balance of $870.9 million and $890.4 million at September 30, 2018 and December 31, 2017, 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 swap 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 which 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. The swap agreement terminates on July 1, 2020. As of September 30, 2018, the fair value of the interest-rate swap was approximately $0.3 million and is included in Accounts payable, accrued expenses and other liabilities in the Consolidated Balance Sheets. The decrease in value from inception of the swap is reflected in Other Comprehensive Income in the Consolidated Statements of Comprehensive Income. Amounts recognized in earnings are included in Changes in Fair Value of Derivatives in the Consolidated Statements of Operations.



	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2018		2017			2018			2017
Change in fair value:
Recognized in earnings	$	10	$	(1	)	$	(2	)	$	(2	)
Recognized in other comprehensive income	173		171			727			503
	$	183	$	170		$	725		$	501


10.	Commitments and Contingencies

Neither the Company nor the 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.

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Notes to Consolidated Financial Statements (Unaudited)


11.	Business Segments

The Company has two 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 range 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 2018 presentation.



(In thousands)	Shopping Centers			Mixed-Use Properties			Corporate and Other			Consolidated Totals
Three months ended September 30, 2018
Real estate rental operations:
Revenue	$	41,161		$	15,850		$	—		$	57,011
Expenses	(8,644		)	(5,304		)	—			(13,948		)
Income from real estate	32,517			10,546			—			43,063
Other revenue	—			—			48			48
Interest expense and amortization of deferred debt costs	—			—			(11,022		)	(11,022		)
General and administrative	—			—			(4,141		)	(4,141		)
Depreciation and amortization of deferred leasing costs	(7,249		)	(4,007		)	—			(11,256		)
Change in fair value of derivatives	—			—			10			10
Net income (loss)	$	25,268		$	6,539		$	(15,105	)	$	16,702
Capital investment	$	15,145		$	44,161		$	—		$	59,306
Total assets	$	982,038		$	514,480		$	9,620		$	1,506,138

Three months ended September 30, 2017
Real estate rental operations:
Revenue	$	40,834		$	15,394		$	—		$	56,228
Expenses	(8,799		)	(5,505		)	—			(14,304		)
Income from real estate	32,035			9,889			—			41,924
Other revenue	—			—			9			9
Interest expense and amortization of deferred debt costs	—			—			(11,821		)	(11,821		)
General and administrative	—			—			(4,363		)	(4,363		)
Depreciation and amortization of deferred leasing costs	(7,457		)	(3,906		)	—			(11,363		)
Change in fair value of derivatives	—			—			(1		)	(1		)
Net income (loss)	$	24,578		$	5,983		$	(16,176	)	$	14,385
Capital investment	$	3,503		$	8,161		$	—		$	11,664
Total assets	$	983,369		$	431,182		$	9,177		$	1,423,728

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Notes to Consolidated Financial Statements (Unaudited)



(Dollars in thousands)	Shopping Centers			Mixed-Use Properties			Corporate and Other			Consolidated Totals
Nine months ended September 30, 2018
Real estate rental operations:
Revenue	$	122,982		$	46,648		$	—		$	169,630
Expenses	(26,143		)	(15,712		)	—			(41,855		)
Income from real estate	96,839			30,936			—			127,775
Other revenue	—			—			218			218
Interest expense and amortization of deferred debt costs	—			—			(33,786		)	(33,786		)
General and administrative	—			—			(13,208		)	(13,208		)
Depreciation and amortization of deferred leasing costs	(21,880		)	(12,076		)	—			(33,956		)
Gain on sale of property	509			—			—			509
Change in fair value of derivatives	—			—			(2		)	(2		)
Net income (loss)	$	75,468		$	18,860		$	(46,778	)	$	47,550
Capital investment	$	22,288		$	74,011		$	—		$	96,299
Total assets	$	982,038		$	514,480		$	9,620		$	1,506,138

Nine months ended September 30, 2017
Real estate rental operations:
Revenue	$	124,854		$	45,725		$	—		$	170,579
Expenses	(25,876		)	(15,393		)	—			(41,269		)
Income from real estate	98,978			30,332			—			129,310
Other revenue	—			—			31			31
Interest expense and amortization of deferred debt costs	—			—			(35,585		)	(35,585		)
General and administrative	—			—			(13,178		)	(13,178		)
Depreciation and amortization of deferred leasing costs	(22,649		)	(11,747		)	—			(34,396		)
Change in fair value of derivatives	—			—			(2		)	(2		)
Net income (loss)	$	76,329		$	18,585		$	(48,734	)	$	46,180
Capital investment	$	87,788		$	18,386		$	—		$	106,174
Total assets	$	983,369		$	431,182		$	9,177		$	1,423,728

12. Subsequent Events

The Company has reviewed operating activities for the period subsequent to September 30, 2018 and determined there are no subsequent events required to be disclosed.

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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, 2017. 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

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are generally characterized by terms such as “believe,” “expect” and “may.”

Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company’s actual results could differ materially from those given in the forward-looking statements as a result of changes in factors which include, among others, the following:


•	continuing risks related to the challenging domestic and global credit markets and their effect on discretionary spending;


•	risks that the Company’s tenants will not pay rent;


•	risks related to the Company’s reliance on shopping center “anchor” tenants and other significant tenants;


•	risks related to the Company’s substantial relationships with members of the Saul Organization;


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


•	risks related to the Company’s development activities;


•	risks that the Company’s growth will be limited if the Company cannot obtain additional capital;


•	risks that planned and additional acquisitions or redevelopments may not be consummated, or if they are consummated, that they will not 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 the Company’s status as a REIT for federal income tax purposes, such as the existence of complex regulations relating to the Company’s status as a REIT, the effect of future changes in REIT requirements as a result of new legislation and the adverse consequences of the failure to qualify as a REIT; and


•	such other risks as described in Part I, Item 1A of the Company’s Form 10-K for the year ended December 31, 2017.

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, 2018.

Overview

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

The Company’s primary operating strategy is to focus on its community and neighborhood shopping center business and its transit-centric, primarily residential mixed-use properties to achieve both cash flow growth and capital appreciation. Management believes there is potential for long-term growth in cash flow as existing leases for space in the Shopping Centers and Mixed-Use properties expire and are renewed, or newly-available or vacant space is leased. The Company intends to renegotiate leases where possible and seek new tenants for available space in order to optimize the mix of uses to improve foot traffic through the Shopping Centers. As leases expire, management expects to revise rental rates, lease terms and conditions, relocate existing tenants, reconfigure tenant spaces and introduce new tenants with the goals of increasing occupancy, improving overall retail sales, and ultimately increasing cash flow as economic conditions improve. In those circumstances in

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which leases are not otherwise expiring, or in connection with renovations or relocations, management selectively attempts to increase cash flow through a variety of means, including recapturing leases with below market rents and re-leasing at market rates, as well as replacing financially troubled tenants. When possible, management also will seek to include scheduled increases in base rent, as well as percentage rental provisions, in its leases.

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



	Nine months ended September 30,
	2018		2017		2016		2015		2014
Base rent	$	20.13	$	19.30	$	18.67	$	18.47	$	18.06
Effective rent	$	18.25	$	17.49	$	16.87	$	16.78	$	16.41

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

From 2014 through 2016, in separate transactions, the Company purchased four adjacent properties on North Glebe Road in Arlington, Virginia, for an aggregate $54.0 million. The Company is developing approximately 490 residential units and 60,000 square feet of retail space on 2.8 acres of land. Construction is complete on the three level below grade parking structure. Concrete work is proceeding up to and including the eleventh floor and pre-cast facade panels are being installed. The development is scheduled for substantial completion in early 2020. The total cost of the project, including acquisition of land, is expected to be approximately $275.0 million, a portion of which will be financed with a $157.0 million construction-to-permanent loan. Costs incurred through September 30, 2018 total approximately $136.8 million, of which $2.9 million has been financed by the loan. Leases have been executed for a 41,500 square foot Target and 9,000 square feet of retail shop space, resulting in approximately 84% of the planned retail space being leased.

Albertson's/Safeway, currently a tenant at seven of the Company's shopping centers, two of which locations are subleased to other grocers, closed two Safeway stores located at the Company's properties during the June 2016 quarter. The stores that closed were located in Broadlands Village, Loudoun County, Virginia and Briggs Chaney Plaza, Montgomery County, Maryland. The lease at Briggs Chaney remains in full force and effect and Albertson’s/Safeway has executed a sublease with a replacement grocer, Global Food, for that space and Global Food commenced operations in March 2017. In February 2017, the Company terminated the lease with Albertson's/Safeway at Broadlands and received a $3.6 million termination fee which was recognized as revenue in the first quarter. The termination fee revenue was partially offset by the loss of approximately $1.6 million of rental revenue over the course of 2017. The Company has executed a lease with Aldi Food Market for 20,000 square feet of this space, which opened in November 2017, and lease negotiations are in progress for substantially all of the remaining space. In August 2018, Safeway closed its store at Palm Springs Center in Florida. The lease was purchased by Publix, and the store is scheduled to re-open in November 2018.

In January 2017, the Company purchased for $76.4 million, including acquisition costs, Burtonsville Town Square, a 121,000 square foot shopping center located in Burtonsville, Maryland. Burtonsville Town Square is 100% leased and anchored by Giant Food and CVS Pharmacy. The purchase was funded with a new $40.0 million mortgage loan and through the revolving credit facility. The Company has substantially completed construction of the shell of a 16,000 square foot small shop expansion and construction of interior improvements is underway. Delivery of tenant spaces is projected in late 2018, with tenant openings scheduled for the first quarter of 2019. The total development cost is expected to be approximately $5.7 million. Leases have been executed for approximately 55% of the space and the Company has prospects for the remaining portion. In addition, a lease has been executed with Taco Bell who will construct a free-standing building on a pad site within the property.

During the three months ended June 30, 2017, the Company executed a termination agreement with Kmart at Kentlands Square II. Kmart closed its 104,000 square foot store at Kentlands in September 2017, and the Company gained possession on October 31, 2017. As a result of the termination, the mortgage loan agreement requires that Saul Centers guarantee approximately $9.2 million of that loan effective October 31, 2017 (the termination date), which will be reduced upon satisfaction of conditions stated in the loan documents. Annual revenue to the Company under the Kmart lease totaled

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approximately $1.3 million. In September 2018, the Company executed a lease with At Home for all of the space. Tenant construction is underway, and At Home is scheduled to open for business during the first quarter of 2019.

In September 2017, the Company sold for $8.5 million the 255,400 square foot Great Eastern Shopping Center located in District Heights, Maryland. The Company provided $1.28 million second trust financing to the buyer, which bore interest at a fixed rate of 6%. In May 2018, the buyer repaid the loan in full and the Company recognized a $0.5 million gain that was previously deferred.

In May 2018, the Company acquired from the Trust, in exchange for 176,680 limited partnership units, approximately 13.7 acres of land located at the intersection of Ashburn Village Boulevard and Russell Branch Parkway in Ashburn, Virginia. The Company has received site plan approval for an approximately 88,000 square foot neighborhood shopping center. A 29,000 square foot anchor grocery store lease has been executed with Lidl and, including an executed gas station pad lease and shop space leases, overall pre-leasing totals approximately 44% of the planned space. In addition, lease negotiations are in progress for approximately 12,000 square feet of the planned pad building and small shop space. Site work is projected to commence in November 2018, subject to the receipt of final building permits, with the shopping center opening scheduled for early 2020. After construction of the shopping center and upon stabilization, the Company may be obligated to issue additional limited partnership units to the Trust.

The recent period of economic expansion has now run in excess of five years. While economic conditions within the local Washington, DC metropolitan area have remained 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 a way to maximize our future performance. The Company’s overall leasing percentage, on a comparative same property basis, which excludes the impact of properties not in operation for the entirety of the comparable periods, was 95.2% at September 30, 2018, compared to 95.5% at September 30, 2017.

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, 2018, amortizing fixed-rate debt with staggered maturities from 2019 to 2035 represented approximately 85.1% of the Company’s notes payable, thus minimizing refinancing risk in any given year. As of September 30, 2018, the Company’s variable-rate debt consisted of $152.0 million outstanding under the credit facility. As of September 30, 2018, the Company has availability of approximately $161.1 million under its $325.0 million unsecured revolving credit facility.

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

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

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that the Company’s real estate assets have generally appreciated in value since their acquisition or development and, accordingly, the aggregate current value exceeds their aggregate net book value and also exceeds the value of the Company’s liabilities as reported in the financial statements. Because the financial statements are prepared in conformity with GAAP, they do not report the current value of the Company’s real estate investment properties.

The Company purchases real estate investment properties from time to time and records assets acquired and liabilities assumed, including land, buildings, and intangibles related to in-place leases and customer relationships, based on their relative fair values. The fair value of buildings generally is determined as if the buildings were vacant upon acquisition and subsequently leased at market rental rates and considers the present value of all cash flows expected to be generated by the property including an initial lease up period. The fair value of above and below market intangibles associated with in-place leases is determined by assessing the net effective rent and remaining term of the in-place lease relative to market terms for similar leases at acquisition taking into consideration the remaining contractual lease period, renewal periods, and the likelihood of the tenant exercising its renewal options. The fair value of below market lease intangibles is recorded as deferred income and accreted as additional lease revenue over the remaining contractual lease period and any renewal option periods included in the valuation analysis. The fair value of above market lease intangibles is recorded as a deferred asset and amortized as a reduction of revenue over the remaining contractual lease term. The fair value of at-market in-place leases is determined considering the cost of acquiring similar leases, the foregone rents associated with the lease-up period and carrying costs associated with the lease-up period. Intangible assets associated with at-market in-place leases are amortized as additional expense over the remaining contractual lease term. To the extent customer relationship intangibles are present in an acquisition, the fair value of the intangibles are amortized over the life of the customer relationship.

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

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

Interest, real estate taxes, development-related salary costs and other carrying costs are capitalized on projects under construction. Upon substantial completion of construction and the placement of assets into service, rental income, direct operating expenses, and depreciation associated with such properties are included in current operations and capitalization of interest ceases. Commercial development projects are substantially complete and available for occupancy upon completion of tenant improvements, but no later than one year from the cessation of major construction activity. Residential development projects are considered substantially complete and available for occupancy upon receipt of the certificate of occupancy from the appropriate licensing authority. Substantially completed portions of a project are accounted for as separate projects. Depreciation is calculated using the straight-line method and estimated useful lives 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.

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Deferred Leasing Costs

Certain initial direct costs incurred by the Company in negotiating and consummating successful Commercial leases are capitalized and amortized over the initial base term of the leases. Deferred leasing costs consist of commissions paid to third-party leasing agents as well as internal direct costs such as employee compensation and payroll-related fringe benefits directly related to time spent performing successful leasing-related activities. Such activities include evaluating prospective tenants’ financial condition, evaluating and recording guarantees, collateral and other security arrangements, negotiating lease terms, preparing lease documents and closing transactions. In addition, deferred leasing costs include amounts attributed to in-place leases associated with acquired properties.

Revenue Recognition

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

Allowance for Doubtful Accounts - Current and Deferred Receivables

Accounts receivable primarily represent amounts accrued and unpaid from tenants in accordance with the terms of the respective leases, subject to the Company’s revenue recognition policy. Receivables are reviewed monthly and reserves are established with a charge to current period operations when, in the opinion of management, collection of the receivable is doubtful. In addition to rents due currently, accounts receivable include amounts representing minimum rental income accrued on a straight-line basis to be paid by tenants over the remaining term of their respective leases. Reserves are established with a charge to income for tenants whose rent payment history or financial condition casts doubt upon the tenant’s ability to perform under its lease obligations.

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.

Results of Operations

Three months ended September 30, 2018 (the "2018 Quarter") compared to the three months ended September 30, 2017 (the "2017 Quarter")

Revenue



	Three months ended September 30,				2017 to 2018 Change
(Dollars in thousands)	2018		2017		Amount			Percent
Base rent	$	46,189	$	45,385	$	804		1.8	%
Expense recoveries	9,209		9,447		(238		)	(2.5	)%
Percentage rent	119		67		52			77.6	%
Other property revenue	1,494		1,329		165			12.4	%
Other revenue	48		9		39			433.3	%
Total revenue	$	57,059	$	56,237	$	822		1.5	%

Base rent includes $(0.2) million and $(0.1) million for the 2018 Quarter and 2017 Quarter, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $0.4 million and $0.4 million, for the 2018 Quarter and 2017 Quarter, respectively, to recognize income from the amortization of in-place leases acquired in connection with purchased real estate investment properties.

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Total revenue increased 1.5% in the 2018 Quarter compared to the 2017 Quarter primarily due to (a) a $0.58 per square foot increase in base rent ($1.2 million) partially offset by (b) a 105,100 square foot reduction in leased commercial space ($0.5 million).

Operating Expenses



	Three months ended September 30,				2017 to 2018 Change
(Dollars in thousands)	2018		2017		Amount			Percent
Property operating expenses	$	6,910	$	7,418	$	(508	)	(6.8	)%
Provision for credit losses	101		52		49			94.2	%
Real estate taxes	6,937		6,834		103			1.5	%
Interest expense and amortization of deferred debt costs	11,022		11,821		(799		)	(6.8	)%
Depreciation and amortization of deferred leasing costs	11,256		11,363		(107		)	(0.9	)%
General and administrative	4,141		4,363		(222		)	(5.1	)%
Total operating expenses	$	40,367	$	41,851	$	(1,484	)	(3.5	)%

Total operating expenses decreased 3.5% in the 2018 Quarter compared to the 2017 Quarter.

Property Operating Expenses. Property operating expenses decreased 6.8% in the 2018 Quarter primarily due to decreased repairs and maintenance costs throughout the portfolio ($0.3 million).

Provision for Credit Losses. The provision for credit losses for the 2018 Quarter represents 0.18% of the Company’s revenue, a decrease from 0.09% for the 2017 Quarter.

Real Estate Taxes. Real estate taxes increased 1.5% in the 2018 Quarter primarily due to small increases at several properties throughout the portfolio.

Interest Expense and Amortization of Deferred Debt Costs. Interest expense decreased 6.8% in the 2018 Quarter primarily due to higher capitalized interest ($0.8 million).

Depreciation and Amortization of Deferred Leasing Costs. Depreciation and amortization of deferred leasing costs decreased primarily due to the impact of fully depreciated assets ($0.2 million).

General and Administrative. General and administrative expenses decreased 5.1% primarily due to lower state income taxes ($0.1 million).

Nine months ended September 30, 2018 (the "2018 Period") compared to the nine months ended September 30, 2017 (the "2017 Period")

Revenue



	Nine Months Ended September 30,				2017 to 2018 Change
(Dollars in thousands)	2018		2017		Amount			Percent
Base rent	$	137,999	$	135,436	$	2,563		1.9	%
Expense recoveries	26,582		26,378		204			0.8	%
Percentage rent	786		968		(182		)	(18.8	)%
Other property revenue	4,263		7,797		(3,534		)	(45.3	)%
Other revenue	218		31		187			603.2	%
Total revenue	$	169,848	$	170,610	$	(762	)	(0.4	)%

Base rent includes $(0.6) million and $0.4 million for the 2018 Period and the 2017 Period, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $1.2 million and $1.3 million for the 2018 Period and the 2017

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Period, respectively, to recognize income from the amortization of in-place leases acquired in connection with purchased real estate investment properties.

Total revenue decreased 0.4% in the 2018 Period compared to the 2017 Period.

Base Rent. The $2.6 million increase in base rent in the 2018 Period compared to 2017 Period is primarily attributable to (a) an $0.83 per square foot increase in commercial base rent ($5.4 million) and (b) higher residential base rent ($0.8 million) partially offset by (c) a 235,435 square foot decrease in commercial leased space ($3.4 million).

Expense Recoveries. Expense recoveries increased 0.8% in the 2018 Period primarily due to an increase in property operating expenses.

Percentage Rent. Percentage rent decreased 18.8% primarily due to the timing of receipt of sales reports from various tenants.

Other Property Revenue. Other property revenue decreased $3.5 million in the 2018 Period compared to the 2017 Period due to lower termination fees.

Other Revenue. Other revenue increased $0.2 million primarily due to higher interest income.

Operating Expenses



	Nine Months Ended September 30,				2017 to 2018 Change
(Dollars in thousands)	2018		2017		Amount			Percent
Property operating expenses	$	20,766	$	20,543	$	223		1.1	%
Provision for credit losses	530		602		(72		)	(12.0	)%
Real estate taxes	20,559		20,124		435			2.2	%
Interest expense and amortization of deferred debt costs	33,786		35,585		(1,799		)	(5.1	)%
Depreciation and amortization of deferred leasing costs	33,956		34,396		(440		)	(1.3	)%
General and administrative	13,208		13,178		30			0.2	%
Total operating expenses	$	122,805	$	124,428	$	(1,623	)	(1.3	)%

Total operating expenses decreased 1.3% in the 2018 Period compared to the 2017 Period.

Property Operating Expenses. Property operating expenses increased 1.1% in the 2018 Period primarily due to higher repairs and maintenance expenses throughout the portfolio.

Provision for Credit Losses. The provision for credit losses for the 2018 Period represents 0.31% of the Company’s revenue, a decrease from 0.35% for the 2017 Period.

Real Estate Taxes. Real estate taxes increased 2.2% in the 2018 Period primarily due to small increases throughout the portfolio.

Interest and Amortization of Deferred Debt Costs. Interest and amortization of deferred debt costs decreased 5.1% to $33.8 million in the 2018 Period primarily due to increased capitalized interest ($1.8 million).

Depreciation and Amortization of Deferred Leasing Costs. The decrease in depreciation and amortization to $34.0 million in the 2018 Period from $34.4 million in the 2017 Period was primarily due to (a) the impact of fully depreciated assets ($1.4 million) partially offset by (b) the impact of assets placed in service ($1.1 million).

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.

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We define same property revenue as total property 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 property operating income plus or minus the operating income of properties which 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.

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 same property results for the three months ended September 30, 2018 and 2017 include 49 Shopping Centers and six Mixed-Used properties and for nine months ended September 30, 2018 and 2017 include 48 Shopping Centers and six Mixed-Use properties.

Same property revenue



(in thousands)	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Total property revenue	$	57,011		$	56,228		$	169,630		$	170,579
Less: Acquisitions, dispositions and development properties	(82		)	(199		)	(3,712		)	(4,285		)
Total same property revenue	$	56,929		$	56,029		$	165,918		$	166,294

Shopping Centers	$	41,161		$	40,635		$	119,352		$	120,569
Mixed-Use properties	15,768			15,394			46,566			45,725
Total same property revenue	$	56,929		$	56,029		$	165,918		$	166,294

Total Shopping Center revenue	$	41,161		$	40,834		$	122,982		$	124,854
Less: Shopping Center acquisitions, dispositions and development properties	—			(199		)	(3,630		)	(4,285		)
Total same Shopping Center revenue	$	41,161		$	40,635		$	119,352		$	120,569

Total Mixed-Use property revenue	$	15,850		$	15,394		$	46,648		$	45,725
Less: Mixed-Use acquisitions, dispositions and development properties	(82		)	—			(82		)	—
Total same Mixed-Use revenue	$	15,768		$	15,394		$	46,566		$	45,725

The $0.9 million increase in same property revenue for the 2018 Quarter compared to the 2017 Quarter, was primarily due to increased base rent.

The $0.4 million decrease in same property revenue for the 2018 Period, compared to the 2017 Period, was primarily due to (a) the net impact of terminating leases for the spaces previously occupied by Safeway at Broadlands and Kmart at Kentlands ($3.5 million) partially offset by (b) higher base rent ($3.0 million).

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Same property operating income



	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2018			2017			2018			2017
Property operating income	$	43,063		$	41,924		$	127,775		$	129,310
Less: Acquisitions, dispositions and development properties	(51		)	(107		)	(3,088		)	(3,111		)
Total same property operating income	$	43,012		$	41,817		$	124,687		$	126,199

Shopping Centers	$	32,517		$	31,928		$	93,802		$	95,867
Mixed-Use properties	10,495			9,889			30,885			30,332
Total same property operating income	$	43,012		$	41,817		$	124,687		$	126,199

Shopping Center operating income	$	32,517		$	32,035		$	96,839		$	98,978
Less: Shopping Center acquisitions, dispositions and development properties	—			(107		)	(3,037		)	(3,111		)
Total same Shopping Center operating income	$	32,517		$	31,928		$	93,802		$	95,867

Mixed-Use property operating income	$	10,546		$	9,889		$	30,936		$	30,332
Less: Mixed-Use acquisitions, dispositions and development properties	(51		)	—			(51		)	—
Total same Mixed-Use property operating income	$	10,495		$	9,889		$	30,885		$	30,332

The $1.2 million increase in same property operating income in the 2018 Quarter compared to the 2017 Quarter was primarily due to (a) an increase in base rent ($0.9 million) and (b) lower property operating expenses net of recoveries ($0.2 million).

The $1.5 million decrease in same property operating income for the 2018 Period compared to the 2017 Period was primarily due to (a) the net impact of terminating leases for the spaces previously occupied by Safeway at Broadlands and Kmart at Kentlands ($3.5 million), (b) higher real estate taxes ($0.5 million) and (c) higher provision for credit losses ($0.2 million) partially offset by (d) higher base rent ($3.0 million).

Liquidity and Capital Resources

Cash and cash equivalents totaled $9.8 million and $9.4 million at September 30, 2018 and 2017, respectively. The Company’s cash flow is affected by its operating, investing and financing activities, as described below.



	Nine Months Ended September 30,
(In thousands)	2018			2017
Net cash provided by operating activities	$	74,873		$	74,443
Net cash used in investing activities	(96,299		)	(99,486		)
Net cash provided by financing activities	20,289			26,106
Increase (decrease) in cash and cash equivalents	$	(1,137	)	$	1,063

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 $3.2 million decrease in cash used in investing activities is primarily due to lower acquisition expenditures ($43.2 million) partially offset by higher development expenditures ($40.4 million).

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Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2018 primarily reflects:


•	preferred stock redemption payments totaling $75.0 million;


•	repayment of notes payable totaling $36.6 million;


•	revolving credit facility principal payments of $86.0 million;


•	distributions to common stockholders totaling $34.6 million;


•	distributions to holders of convertible limited partnership units in the Operating Partnership totaling $11.9 million;


•	distributions to preferred stockholders totaling $9.4 million; and


•	additions to deferred debt costs totaling $2.5 million;

which was partially offset by:


•	proceeds from the term loan facility totaling $75.0 million;


•	advances from the revolving credit facility totaling $102.0 million;


•	proceeds from the issuance of limited partnership units in the Operating Partnership pursuant to our Dividend Reinvestment and Stock Purchase Plan ("DRIP") totaling $4.7 million;


•	proceeds from the issuance of Series D Stock totaling $72.4 million; and


•	proceeds from the issuance of common stock pursuant to our DRIP, directors’ Deferred Compensation Plan and the exercise of stock options totaling $19.3 million.

Net cash provided by financing activities for the nine months ended September 30, 2017 primarily reflects:


•	proceeds from notes payables totaling $40.0 million;


•	advances from the revolving credit facility totaling $55.0 million;


•	proceeds from the issuance of limited partnership units in the Operating Partnership pursuant to our DRIP totaling $5.8 million;


•	proceeds from the issuance of common stock pursuant to our DRIP, directors’ Deferred Compensation Plan and the exercise of stock options totaling $15.3 million; and


•	advances from the Park Van Ness construction loan totaling $1.4 million;

which was partially offset by:


•	revolving credit facility principal payments of $15.0 million;


•	repayment of notes payable totaling $20.3 million;


•	distributions to common stockholders totaling $33.4 million;


•	distributions to holders of convertible limited partnership units in the Operating Partnership totaling $11.4 million; and


•	distributions to preferred stockholders totaling $9.3 million.

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.

Long-term liquidity requirements consist primarily of obligations under our long-term debt and dividends paid to our preferred shareholders. We anticipate that long-term liquidity requirements will also include amounts required for property acquisitions and developments. The Company is developing a primarily residential project with street-level retail at 750 N. Glebe Road in Arlington, Virginia. The total cost of the project, including acquisition of land, is expected to be approximately $275.0 million. The Company had incurred costs totaling $136.8 million as of September 30, 2018. The remaining cost will be funded by a $157.0 million construction-to-permanent loan, which closed in 2017. The Company may also redevelop certain of the Current Portfolio Properties and may develop additional freestanding outparcels or expansions within certain of the Shopping Centers.

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Acquisition and development of properties are undertaken only after careful analysis and review, and management’s determination that such properties are expected to provide long-term earnings and cash flow growth. During the coming year, developments, expansions or acquisitions (if any) are expected to be funded with available cash, bank borrowings from the Company’s credit line, construction and permanent financing, proceeds from the operation of the Company’s dividend reinvestment plan or other external debt or equity capital resources available to the Company. Any future borrowings may be at the Saul Centers, Operating Partnership or Subsidiary Partnership level, and securities offerings may include (subject to certain limitations) the issuance of additional limited partnership interests in the Operating Partnership which can be converted into shares of Saul Centers common stock. The availability and terms of any such financing will depend upon market and other conditions.

As of September 30, 2018, the scheduled maturities of debt, including scheduled principal amortization, for years ending December 31, were as follows:



(In thousands)	Balloon Payments			Scheduled Principal Amortization		Total
October 1 through December 31, 2018	$	—		$	7,688	$	7,688
2019	60,794			29,298		90,092
2020	61,163			26,772		87,935
2021	11,012			26,486		37,498
2022	113,502		(a)	26,990		140,492
2023	84,225			27,290		111,515
Thereafter	430,259			117,422		547,681
Principal amount	$	760,955		$	261,946	1,022,901
Unamortized deferred debt expense						9,989
Net						$	1,012,912

(a) Includes $77.0 million outstanding under the revolving credit facility.

Management believes that the Company’s capital resources, which at September 30, 2018 included cash balances of approximately $9.8 million and borrowing availability of approximately $161.1 million on its unsecured revolving credit facility, will be sufficient to meet its liquidity needs for the foreseeable future.

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 303,252 and 177,335 shares under the DRIP at a weighted average discounted price of $50.78 and $59.14 per share, during the nine months ended September 30, 2018 and 2017, respectively. The Company issued 93,566 and 95,755 limited partnership units under the DRIP at a weighted average price of $50.61 and $60.55 per unit during the nine months ended September 30, 2018 and 2017, respectively. The Company also credited 5,298 and 5,685 shares to directors pursuant to the reinvestment of dividends specified by the Directors’ Deferred Compensation Plan at a weighted average discounted price of $50.49 and $59.80 per share, during the nine months ended September 30, 2018 and 2017, 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, 2018.

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

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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.

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:


•	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, 2018, the Company was in compliance with all such covenants.

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

Effective September 1, 2017, the Company's construction-to-permanent loan, secured by and used to partially finance the construction of Park Van Ness, converted to permanent financing. The loan matures in 2032, bears interest at a fixed rate of 4.88%, requires monthly principal and interest payments of $413,460 based on a 25-year amortization schedule and requires a final payment of $39.6 million at maturity.

On November 20, 2017, the Company closed on a 15-year, non-recourse $60.0 million mortgage loan secured by Washington Square. The loan matures in 2032, bears interest at a fixed rate of 3.75%, requires monthly principal and interest payments of $308,500 based on a 25-year amortization schedule and requires a final payment of $31.1 million. Proceeds were used to repay the remaining balance of approximately $28.1 million on the existing mortgage and reduce the outstanding balance of the revolving credit facility.

On October 3, 2018, the Company closed on a 15-year, non-recourse, $32.0 million mortgage loan secured by Broadlands. The loan matures in 2033, bears interest at a fixed rate of 4.41%, requires monthly principal and interest payments of $176,200 based on a 25-year amortization schedule and requires a final payment of $17.3 million at maturity. Proceeds were used to (a) repay the remaining balance of approximately $15.2 million on the existing mortgage, (b) repay in full $13.4 million outstanding under two other mortgages and (c) reduce the outstanding balance of the revolving credit facility.

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Preferred Stock

On January 23, 2018, the Company sold, in an underwritten public offering, 3.0 million depositary shares, each representing 1/100th of a share of 6.125% Series D Stock, providing net cash proceeds of approximately $72.6 million. The depositary shares may be redeemed at the Company’s option, in whole or in part, on or after January 23, 2023, at the $25.00 liquidation preference, plus accrued but unpaid dividends to but not including the redemption date. The depositary shares pay an annual dividend of $1.53125 per share, equivalent to 6.125% of the $25.00 liquidation preference. The Series D Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of the Company except in connection with certain changes in control or delisting events. Investors in the depositary shares generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not declared or consecutive) and in certain other events. On February 22, 2018, the proceeds from the offering, together with cash on hand, were used to redeem 3.0 million depositary shares, each representing 1/100th of a share of the Company’s 6.875% Series C Stock. Costs associated with the redemption were charged against Net income available to common stockholders.

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.

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Funds From Operations

Funds From Operations (FFO)¹ available to common stockholders and noncontrolling interests for the 2018 Period, totaled $69.4 million, a decrease of 2.7% compared to the 2017 Period. FFO for the 2018 Period decreased primarily due to (a) the net impact of terminating leases for the spaces previously occupied by Safeway at Broadlands and Kmart at Kentlands ($3.5 million) and (b) extinguishment of issuance costs upon redemption of preferred shares ($2.3 million), partially offset by (c) higher base rent ($2.6 million).

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,
(In thousands, except per share amounts)	2018			2017			2018			2017
Net income	$	16,702		$	14,385		$	47,550		$	46,180
Subtract:
Gain on sale of property	—			—			(509		)	—
Add:
Real estate depreciation and amortization	11,256			11,363			33,956			34,396
FFO	27,958			25,748			80,997			80,576
Subtract:
Preferred stock dividends	(2,953		)	(3,093		)	(9,309		)	(9,281		)
Extinguishment of issuance costs upon redemption of preferred shares	—			—			(2,328		)	—
FFO available to common stockholders and noncontrolling interests	$	25,005		$	22,655		$	69,360		$	71,295
Weighted average shares:
Diluted weighted average common stock	22,501			22,028			22,336			21,949
Convertible limited partnership units	7,808			7,521			7,700			7,491
Average shares and units used to compute FFO per share	30,309			29,549			30,036			29,440
FFO per share available to common stockholders and noncontrolling interests	$	0.83		$	0.77		$	2.31		$	2.42

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.

Acquisitions and Redevelopments

During the remainder of the year, the Company will continue its redevelopment activities at Glebe Road, 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 balance of the year, any developments, expansions or acquisitions are expected to be funded with bank borrowings from the Company’s credit line, construction financing, proceeds from the operation of the Company’s dividend reinvestment plan or other external capital resources available to the Company.

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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. The following describes the acquisition, development, redevelopment and renovation activities of the Company in 2017 and the nine months ended September 30, 2018.

750 N. Glebe Road

Ashbrook Marketplace

In May 2018, the Company acquired from the Trust, in exchange for 176,680 limited partnership units, approximately 13.7 acres of land located at the intersection of Ashburn Village Boulevard and Russell Branch Parkway in Ashburn, Virginia. The Company has received site plan approval for an approximately 88,000 square foot neighborhood shopping center. A 29,000 square foot anchor grocery store lease has been executed with Lidl and, including an executed gas station pad lease and shop space leases, overall pre-leasing totals approximately 44% of the planned space. In addition, lease negotiations are in progress for approximately 12,000 square feet of the planned pad building and small shop space. Site work is projected to commence in November 2018, subject to the receipt of final building permits, with the shopping center opening scheduled for early 2020. After construction of the shopping center and upon stabilization, the Company may be obligated to issue additional limited partnership units to the Trust.

Burtonsville Town Square

In January 2017, the Company purchased for $76.4 million, including acquisition costs, Burtonsville Town Square, a 121,000 square foot shopping center located in Burtonsville, Maryland. Burtonsville Town Square is 100% leased and anchored by Giant Food and CVS Pharmacy. The purchase was funded with a new $40.0 million mortgage loan and through the revolving credit facility. The mortgage bears interest at 3.39%, requires monthly principal and interest payments of $197,900 based upon a 25-year amortization schedule, and has a 15-year maturity. The Company has substantially completed construction of the shell of a 16,000 square foot small shop expansion and construction of interior improvements is underway. Delivery of tenant spaces is projected in late 2018, with tenant openings scheduled for the first quarter of 2019. The total development cost is expected to be approximately $5.7 million. Leases have been executed for approximately 55% of the space and the Company has prospects for the remaining portion. In addition, a lease has been executed with Taco Bell who will construct a free-standing building on a pad site within the property.

Olney Shopping Center

7316 Wisconsin Avenue

In September 2018, the Company purchased for $35.5 million, plus approximately $0.7 million of acquisition costs, a 69,600 square foot office building and the underlying ground located at 7316 Wisconsin Avenue in Bethesda, Maryland. The property has mixed-use development potential of up to 325 apartment units and approximately 10,000 square feet of street level retail pursuant to the approved Bethesda Downtown Plan. The purchase price was funded through the Company's revolving credit facility.

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Portfolio Leasing Status

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



	Total Properties		Total Square Footage		Percent Leased
	Shopping Centers	Mixed-Use	Shopping Centers	Mixed-Use	Shopping Centers		Mixed-Use
September 30, 2018	49	7	7,752,046	1,146,438	95.7	%	90.6	%
September 30, 2017	49	6	7,747,798	1,076,838	95.7	%	93.4	%

As of September 30, 2018, 95.0% of the Commercial portfolio was leased, compared to 95.5% at September 30, 2017. On a same property basis, 95.2% of the Commercial portfolio was leased, compared to 95.5% at September 30, 2017. As of September 30, 2018, the Residential portfolio was 95.7% leased compared to 95.0% at September 30, 2017.

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.



			Average Base Rent per Square Foot
Three months ended September 30,	Square Feet	Number of Leases	New/Renewed Leases		Expiring Leases
2018	297,013	48	$	18.07	$	18.44
2017	320,490	70	23.64		22.19

Additional information about the 2018 leasing activity is set forth below. The below information includes leases for space which had not been previously leased during the period of the Company's ownership, either a result of acquisition or development.



	New Leases			Renewed Leases
Number of leases	17			31
Square feet	149,706			147,307
Per square foot average annualized:
Base rent	$	13.61		$	22.61
Tenant improvements	(1.77		)	(0.14		)
Leasing costs	(0.41		)	(0.01		)
Rent concessions	(0.06		)	—
Effective rents	$	11.37		$	22.46

During the three months ended September 30, 2018, the Company entered into 190 new or renewed apartment leases. The average monthly rent per square foot decreased to $3.49 from $3.50. During the three months ended September 30, 2017, the Company entered into 141 new or renewed apartment leases. The average monthly rent per square foot for the 135 leases for units which were previously occupied decreased to $3.57 from $3.61.

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As of December 31, 2017, 972,950 square feet of Commercial space was subject to leases scheduled to expire in 2018. Of those leases, as of September 30, 2018, leases representing 174,895 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 Leases:	Total
Square feet	174,895
Average base rent per square foot	$	23.33
Estimated market base rent per square foot	$	22.84

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. Interest rate fluctuations are monitored by management as an integral part of the Company’s overall risk management program, which recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effect on the Company’s results of operations.

The Company may, where appropriate, employ derivative instruments, such as interest rate swaps, to mitigate the risk of interest rate fluctuations. The Company does not enter into derivatives or other financial instruments for trading or speculative purposes. On June 29, 2010, the Company entered into an interest rate swap agreement with a $45.6 million notional amount to manage the interest rate risk associated with $45.6 million of variable-rate debt. The swap agreement was effective July 1, 2010, terminates on July 1, 2020 and effectively fixes the interest rate on the debt at 5.83%. The fair value of the swap at September 30, 2018 was approximately $0.3 million and is reflected in accounts payable, accrued expenses and other liabilities in the consolidated balance sheet.

The Company is exposed to interest rate fluctuations which will affect the amount of interest expense of its variable rate debt and the fair value of its fixed rate debt. As of September 30, 2018, the Company had variable rate indebtedness totaling $152.0 million. If the interest rates on the Company’s variable rate debt instruments outstanding at September 30, 2018 had been one percentage point higher, our annual interest expense relating to these debt instruments would have increased by $1.5 million based on those balances. As of September 30, 2018, the Company had fixed-rate indebtedness totaling $870.9 million with a weighted average interest rate of 5.25%. If interest rates on the Company’s fixed-rate debt instruments at September 30, 2018 had been one percentage point higher, the fair value of those debt instruments on that date would have been approximately $43.4 million less than the carrying value.

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, Secretary and Treasurer, and its Senior Vice President-Chief Accounting Officer 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, Secretary and Treasurer, and its Senior Vice President-Chief Accounting Officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2018. Based on the foregoing, the Company’s Chairman and Chief Executive Officer, its Senior Vice President-Chief Financial Officer, Secretary and Treasurer and its Senior Vice President-Chief Accounting Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2018.

During the quarter ended September 30, 2018, 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.

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PART II. OTHER INFORMATION


Item 1.	Legal Proceedings

None


Item 1A.	Risk Factors

The Company has no material updates to the risk factors presented in Item 1A. Risk Factors in the 2017 Annual Report of the Company on Form 10-K.


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, 2018 dividend distribution acquired 153,456 shares of common stock at a price of $51.68 per share and

13,107 limited partnership units at a price of $52.60 per unit. The limited partnership units were sold under Section 4(a)(2) of the Securities Act of 1933.


Item 3.	Defaults Upon Senior Securities

None


Item 4.	Mine Safety Disclosures

Not Applicable


Item 5.	Other Information

None

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Item 6.	Exhibits



10.	(a)	The Fourteenth Amendment to the First Amended and Restated Agreement of Limited Partnership of the Saul Holdings Limited Partnership, filed as Exhibit 10.1 of the Current Report of the Company on Form 8-K dated January 23, 2018, is hereby incorporated by reference.

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

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

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 months and nine months ended September 30, 2018, formatted in Extensible Business Reporting Language (“XBRL”): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of changes in stockholders’ equity and comprehensive income, (iv) consolidated statements of cash flows, and (v) the notes to the consolidated financial statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	SAUL CENTERS, INC. (Registrant)

Date: November 1, 2018	/s/ J. Page Lansdale
	J. Page Lansdale, President and Chief Operating Officer

Date: November 1, 2018	/s/ Scott V. Schneider
	Scott V. Schneider Senior Vice President, Chief Financial Officer (principal financial officer)

Date: November 1, 2018	/s/ Joel A. Friedman
	Joel A. Friedman Senior Vice President, Chief Accounting Officer (principal accounting officer)

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Document and Entity Information - shares shares in Millions	9 Months Ended
Document and Entity Information - shares shares in Millions	Sep. 30, 2018	Oct. 31, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	SAUL CENTERS INC
Entity Central Index Key	0000907254
Trading Symbol	BFS
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		22.6

Consolidated Statement of Equity - 9 months ended Sep. 30, 2018 - USD ($) $ in Thousands	Total	Dividend Paid	Dividend Distributions Payable	Series C Cumulative Preferred Stock	Series C Cumulative Preferred Stock Dividend Paid	Series C Cumulative Preferred Stock Dividend Distributions Payable	Series D Cumulative Redeemable Preferred Stock	Series D Cumulative Redeemable Preferred Stock Dividend Paid	Series D Cumulative Redeemable Preferred Stock Dividend Distributions Payable	Total Saul Centers, Inc.	Total Saul Centers, Inc. Dividend Paid	Total Saul Centers, Inc. Dividend Distributions Payable	Total Saul Centers, Inc. Series C Cumulative Preferred Stock	Total Saul Centers, Inc. Series C Cumulative Preferred Stock Dividend Paid	Total Saul Centers, Inc. Series C Cumulative Preferred Stock Dividend Distributions Payable	Total Saul Centers, Inc. Series D Cumulative Redeemable Preferred Stock	Total Saul Centers, Inc. Series D Cumulative Redeemable Preferred Stock Dividend Paid	Total Saul Centers, Inc. Series D Cumulative Redeemable Preferred Stock Dividend Distributions Payable	Preferred Stock	Preferred Stock Series C Cumulative Preferred Stock	Preferred Stock Series D Cumulative Redeemable Preferred Stock	Common Stock	Additional Paid-in Capital	Additional Paid-in Capital Series C Cumulative Preferred Stock	Additional Paid-in Capital Series D Cumulative Redeemable Preferred Stock	Distributions in Excess of Accumulated Earnings	Distributions in Excess of Accumulated Earnings Dividend Paid	Distributions in Excess of Accumulated Earnings Dividend Distributions Payable	Distributions in Excess of Accumulated Earnings Series C Cumulative Preferred Stock	Distributions in Excess of Accumulated Earnings Series C Cumulative Preferred Stock Dividend Paid	Distributions in Excess of Accumulated Earnings Series C Cumulative Preferred Stock Dividend Distributions Payable	Distributions in Excess of Accumulated Earnings Series D Cumulative Redeemable Preferred Stock Dividend Paid	Distributions in Excess of Accumulated Earnings Series D Cumulative Redeemable Preferred Stock Dividend Distributions Payable	Accumulated Other Comprehensive (Loss)	Noncontrolling Interest	Noncontrolling Interest Dividend Paid	Noncontrolling Interest Dividend Distributions Payable
Beginning Balance at Dec. 31, 2017	$ 393,103									$ 334,405									$ 180,000			$ 221	$ 352,590			$ (197,710)								$ (696)	$ 58,698
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of 30,000 shares of Series D Cumulative preferred stock							$ 72,369									$ 72,369					$ 75,000				$ (2,631)
Redemption of 30,000 shares of Series C Cumulative preferred stock				$ (75,017)									$ (75,017)							$ (75,000)				$ 2,311					$ (2,328)
Issuance of common stock:
356,452 shares pursuant to dividend reinvestment plan	18,143									18,143												4	18,139
32,740 shares due to exercise of employee stock options, director share grant and issuance of directors’ deferred shares	2,627									2,627												0	2,627
Issuance of 270,246 partnership units	13,475																																		13,475
Net income	47,550									38,285																38,285									9,265
Change in unrealized loss on cash flow hedge	727									540																								540	187
Preferred stock distributions:
Preferred stock distributions					$ (4,340)	$ (1,805)		$ (2,016)	$ (1,148)					$ (4,340)	$ (1,805)		$ (2,016)	$ (1,148)												$ (4,340)	$ (1,805)	$ (2,016)	$ (1,148)
Common stock distributions		$ (31,132)									$ (23,135)																$ (23,135)									$ (7,997)
Common stock distributions payable			$ (15,737)									$ (11,675)																$ (11,675)									$ (4,062)
Ending Balance at Sep. 30, 2018	$ 416,799									$ 347,233									$ 180,000			$ 225	$ 373,036			$ (205,872)								$ (156)	$ 69,566

Consolidated Statement of Equity (Parenthetical)	9 Months Ended
Consolidated Statement of Equity (Parenthetical)	Sep. 30, 2018 $ / shares shares
Shares pursuant to dividend reinvestment plan (in shares) \| shares	356,452
Shares due to exercise of employee stock options and issuance of directors' deferred stock (in shares) \| shares	32,740
Issuance of partnership units pursuant to dividend reinvestment plan (in shares) \| shares	270,246
Distributions payable common stock, per share (in usd per share) \| $ / shares	$ 1.56
Dividend Distributions Payable
Distributions payable common stock, per share (in usd per share) \| $ / shares	0.52
Distributions partnership units, per unit (in usd per share) \| $ / shares	$ 0.52
Series C Cumulative Preferred Stock
Partial redemption of Series C Cumulative preferred stock (in shares) \| shares	30,000
Series C Cumulative Preferred Stock \| Dividend Distributions Payable
Distributions payable on Series C preferred stock, per share (in usd per share) \| $ / shares	$ 42.97
Series D Cumulative Redeemable Preferred Stock
Issuance of Series D Cumulative preferred stock (in shares) \| shares	30,000
Series D Cumulative Redeemable Preferred Stock \| Dividend Distributions Payable
Distributions payable on Series C preferred stock, per share (in usd per share) \| $ / shares	$ 38.28

Real Estate Transactions	9 Months Ended
Real Estate Transactions	Sep. 30, 2018
Business Combinations [Abstract]
Real Estate Transactions	Real Estate Transactions Acquisitions Burtonsville Town Square In January 2017, the Company purchased for $76.4 million, including acquisition costs, Burtonsville Town Square located in Burtonsville, Maryland. The purchase was funded by a new $40.0 million mortgage loan and the revolving credit facility. Olney Shopping Center In March 2017, the Company purchased for $3.1 million, including acquisition costs, the land underlying Olney Shopping Center. The land was previously leased by the Company with an annual rent of approximately $56,000. The purchase was funded by the revolving credit facility. Ashbrook Marketplace In May 2018, the Company acquired from the Trust, in exchange for 176,680 limited partnership units, approximately 13.7 acres of land located at the intersection of Ashburn Village Boulevard and Russell Branch Parkway in Loudoun County, Virginia. Based on the closing price of the Company's common stock, the land and the limited partnership units were recorded at a value of $8.8 million. Acquisition costs related to the transaction totaled approximately $0.2 million. 7316 Wisconsin Avenue 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. The property has mixed-use development potential of up to 325 apartment units and approximately 10,000 square feet of street level retail pursuant to the recently approved Bethesda Downtown Plan. The purchase price was funded through the Company's revolving credit facility. Allocation of Purchase Price of Real Estate Acquired The Company allocates the purchase price of real estate investment properties to various components, such as land, buildings and intangibles related to in-place leases and customer relationships, based on their relative fair values or fair values. See Note 2. Summary of Significant Accounting Policies-Real Estate Investment Properties. During 2017, the Company purchased one property, Burtonsville Town Square, at a cost of $76.4 million, including acquisition costs. Of the total acquisition cost, $28.4 million was allocated to land, $45.8 million was allocated to buildings, $2.2 million was allocated to in-place leases, $0.6 million was allocated to above-market leases, and $(0.6) million was allocated to below market rent, based on their relative fair values. During 2018, the Company purchased one property, 7316 Wisconsin Avenue, at a cost of $36.2 million, including acquisition costs. Of the total acquisition cost, $34.2 million was allocated to land, $1.0 million was allocated to buildings, $0.9 million was allocated to in-place leases, and $0.1 million was allocated to above-market leases, based on their relative fair values. Dispositions Great Eastern Shopping Center In September 2017, the Company sold for $8.5 million Great Eastern Shopping Center located in District Heights, Maryland. The Company provided $1.28 million second trust financing to the buyer, which bore interest at a fixed rate of 6%. In May 2018, the buyer repaid the loan in full and the Company recognized a $0.5 million gain that was previously deferred.

Noncontrolling Interests - Holders of Convertible Limited Partnership Units in the Operating Partnership	9 Months Ended
	Sep. 30, 2018
Noncontrolling Interest [Abstract]
Noncontrolling Interests - Holders of Convertible Limited Partnership Units in the Operating Partnership	Noncontrolling Interests - Holders of Convertible Limited Partnership Units in the Operating Partnership As of September 30, 2018, the Saul Organization holds a 25.9% limited partnership interest in the Operating Partnership represented by approximately 7.8 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, 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, 2018, approximately 760,000 units were convertible into shares of Saul Centers common stock. The impact of the Saul Organization’s approximately 25.9% limited partnership interest in the Operating Partnership is reflected as Noncontrolling Interests in the accompanying consolidated financial statements. Fully converted partnership units and diluted weighted average common stock outstanding for the three months ended September 30, 2018 and 2017, were approximately 30.3 million and 29.5 million, respectively, and for the nine months ended September 30, 2018 and 2017, were approximately 30.0 million and 29.4 million, respectively.


1.	I have reviewed this report on Form 10-Q of Saul Centers, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal period that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



																			Exhibit 99 (a)
Saul Centers, Inc.
Schedule of Current Portfolio Properties
September 30, 2018

						Leasable Area (Square Feet)	Year Acquired or Developed (Renovated)	Land Area (Acres)	Percentage Leased as of September 30,										(1)
		Property		Location		Leasable Area (Square Feet)	Year Acquired or Developed (Renovated)	Land Area (Acres)	2018		2017		2016		2015		2014		Anchor / Significant Tenants

Shopping Centers
	Ashburn Village			Ashburn, VA		221,596	1994-2006	26.4	99	%	93	%	91	%	95	%	94	%	Giant Food, Hallmark Cards, McDonald's, Burger King, Dunkin Donuts, Kinder Care
	Ashland Square Phase I			Dumfries, VA		23,120	2007	2.0	100	%	100	%	100	%	100	%	100	%	Capital One Bank, CVS Pharmacy, The All American Steakhouse
	Beacon Center			Alexandria, VA		356,971	1972 (1993/99/07)	32.3	100	%	100	%	100	%	100	%	100	%	Lowe's Home Improvement Center, Giant Food, Home Goods, Outback Steakhouse, Marshalls, Party Depot, Panera Bread, TGI Fridays, Starbucks, Famous Dave's, Chipotle, Capital One Bank
	BJ's Wholesale Club			Alexandria, VA		115,660	2008	9.6	100	%	100	%	100	%	100	%	100	%	BJ's Wholesale Club
	Boca Valley Plaza			Boca Raton, FL		121,269	2004	12.7	96	%	95	%	99	%	100	%	89	%	Publix, Wells Fargo, Palm Beach Fitness, Anthony's Clothing
	Boulevard			Fairfax, VA		49,140	1994 (1999/09)	5.0	100	%	100	%	100	%	100	%	95	%	Panera Bread, Party City, Petco, Capital One Bank
	Briggs Chaney MarketPlace			Silver Spring, MD		194,258	2004	18.2	92	%	98	%	100	%	99	%	99	%	Global Food, Ross Dress For Less, Family Dollar, Advance Auto Parts, McDonald's, Dunkin Donuts
	Broadlands Village			Ashburn, VA		176,673	2003/4/6	24.0	77	%	76	%	99	%	98	%	95	%	Aldi Grocery, The All American Steakhouse, Bonefish Grill, Dollar Tree, Starbucks, Minnieland Day Care, Capital One Bank
	Burtonsville Town Square			Burtonsville, MD		122,052	2017	26.3	100	%	100	%	N/A		N/A		N/A		Giant Food, Petco, Starbucks, Green Turtle, Capital One Bank, CVS Pharmacy, Roy Rogers, MR. TIRE
	Countryside Marketplace			Sterling, VA		138,204	2004	16.0	95	%	94	%	94	%	93	%	93	%	Safeway, CVS Pharmacy, Starbucks, McDonald's
	Cranberry Square			Westminster, MD		141,450	2011	18.9	100	%	100	%	100	%	97	%	98	%	Giant Food, Staples, Party City, Pier 1 Imports, Jos. A. Bank, Wendy's, Giant Gas Station
	Cruse MarketPlace			Cumming, GA		78,686	2004	10.6	89	%	89	%	92	%	92	%	88	%	Publix, Subway, Orange Theory, Anytime Fitness
	Flagship Center			Rockville, MD		21,500	1972, 1989	0.5	100	%	100	%	100	%	100	%	100	%	Capital One Bank, Bank of America
	French Market			Oklahoma City, OK		246,148	1974 (1984/98)	13.8	96	%	97	%	98	%	97	%	100	%	Burlington Coat Factory, Bed Bath & Beyond, Staples, Petco, The Tile Shop, Lakeshore Learning Center, Dollar Tree, Verizon, Raising Cane's
	Germantown			Germantown, MD		18,982	1992	2.7	100	%	100	%	100	%	100	%	81	%	CVS Pharmacy, Jiffy Lube
	The Glen			Woodbridge, VA		136,440	1994 (2005)	14.7	96	%	98	%	94	%	95	%	96	%	Safeway Marketplace, The All American Steakhouse, Panera Bread, Five Guys, Chipotle
	Great Falls Center			Great Falls, VA		91,666	2008	11.0	99	%	100	%	98	%	99	%	98	%	Safeway, CVS Pharmacy, Capital One Bank, Starbucks, Subway, Long & Foster
	Hampshire Langley			Takoma Park, MD		131,700	1972 (1979)	9.9	100	%	100	%	100	%	100	%	100	%	Mega Mart, Starbucks, Chuck E. Cheese's, Sardi's Chicken, Capital One Bank, Kool Smiles
	Hunt Club Corners			Apopka, FL		107,103	2006	13.9	93	%	93	%	93	%	94	%	94	%	Publix, Pet Supermarket, Sprint
	Jamestown Place			Altamonte Springs, FL		96,341	2005	10.9	93	%	95	%	95	%	90	%	88	%	Publix, Carrabas Italian Grill
	Kentlands Square I			Gaithersburg, MD		114,381	2002	11.5	98	%	98	%	100	%	100	%	100	%	Lowe's Home Improvement Center, Chipotle


	Saul Centers, Inc.
	Schedule of Current Portfolio Properties
	September 30, 2018

						Leasable Area (Square Feet)	Year Acquired or Developed (Renovated)	Land Area (Acres)	Percentage Leased as of September 30,										(1)
		Property		Location		Leasable Area (Square Feet)	Year Acquired or Developed (Renovated)	Land Area (Acres)	2018		2017		2016		2015		2014		Anchor / Significant Tenants

	Shopping Centers (continued)
	Kentlands Square II			Gaithersburg, MD		246,965	2011	23.4	98	%	99	%	100	%	99	%	99	%	Giant Food, At Home, Party City, Panera Bread, Not Your Average Joe's, Hallmark, Chick-Fil-A, Coal Fire Pizza, Tommy Joe's, Cava Mezza Grill, Zengo Cycle, Fleet Feet
	Kentlands Place			Gaithersburg, MD		40,697	2005	3.4	93	%	93	%	100	%	100	%	100	%	Elizabeth Arden's Red Door Salon, Bonefish Grill
	Lansdowne Town Center			Leesburg, VA		189,422	2006	23.4	91	%	96	%	85	%	97	%	94	%	Harris Teeter, CVS Pharmacy, Panera Bread, Starbucks, Capital One Bank, Ford's Fish Shack, Fusion Learning
	Leesburg Pike Plaza			Baileys Crossroads, VA		97,752	1966 (1982/95)	9.4	99	%	95	%	95	%	100	%	96	%	CVS Pharmacy, Party Depot, FedEx Office, Capital One Bank, Five Guys
	Lumberton Plaza			Lumberton, NJ		192,718	1975 (1992/96)	23.3	86	%	84	%	91	%	91	%	95	%	Aldi Grocery, Rite Aid, Virtua Health Center, Family Dollar, Retro Fitness, Big Lots, Pet Valu
	Metro Pike Center			Rockville, MD		67,488	2010	4.6	67	%	71	%	69	%	77	%	83	%	McDonald's, Dunkin Donuts, 7-Eleven, Palm Beach Tan
	Shops at Monocacy			Frederick, MD		109,144	2004	13.0	99	%	100	%	100	%	100	%	97	%	Giant Food, Giant Gas Station, Panera Bread, Five Guys, California Tortilla, Firehouse Subs, Comcast, Capital One Bank
	Northrock			Warrenton, VA		100,032	2009	15.4	99	%	99	%	95	%	94	%	91	%	Harris Teeter, Longhorn Steakhouse, Ledo's Pizza, Capital One Bank, Jos. A Bank, Novant Health
	Olde Forte Village			Ft. Washington, MD		143,577	2003	16.0	98	%	99	%	97	%	97	%	97	%	Safeway, Advance Auto Parts, Dollar Tree, McDonald's, Wendy's, Ledo's Pizza, Capital One Bank
	Olney			Olney, MD		53,765	1975 (1990)	3.7	96	%	94	%	91	%	96	%	94	%	Rite Aid, Olney Grill, Ledo's Pizza, Popeye's, Sardi's Fusion
	Orchard Park			Dunwoody, GA		87,365	2007	10.5	100	%	100	%	97	%	98	%	98	%	Kroger, Subway, Jett Ferry Dental
	Palm Springs Center			Altamonte Springs, FL		126,446	2005	12.0	100	%	100	%	100	%	98	%	98	%	Publix, Duffy's Sports Grill, Toojay's Deli, The Tile Shop, Rockler Tools, Humana Health, Sola Salons
	Ravenwood			Baltimore, MD		93,328	1972 (2006)	8.0	97	%	100	%	100	%	99	%	96	%	Giant Food, Starbucks, Sleepy's, Dominos, Bank of America
	11503 Rockville Pk / 5541 Nicholson Ln			Rockville, MD		40,249	2010 / 2012	3.0	61	%	61	%	63	%	63	%	63	%	Dr. Boyd's Pet Resort, Metropolitan Emergency Animal Clinic
	1500/1580/1582/1584 Rockville Pike			Rockville, MD		110,128	2012/2014	10.3	93	%	96	%	87	%	90	%	99	%	Party City, CVS Pharmacy, Sheffield Furniture
	Seabreeze Plaza			Palm Harbor, FL		146,673	2005	18.4	99	%	98	%	98	%	93	%	97	%	Publix, Earth Origins Health Food, Petco, Planet Fitness, Vision Works
	Marketplace at Sea Colony			Bethany Beach, DE		21,677	2008	5.1	100	%	100	%	100	%	95	%	95	%	Seacoast Realty, Armand's Pizza, Candy Kitchen, Summer Salts, Fin's Alehouse
	Seven Corners			Falls Church, VA		573,481	1973 (1994-7/07)	31.6	100	%	100	%	100	%	100	%	100	%	The Home Depot, Shoppers Food & Pharmacy, Michaels Arts & Crafts, Barnes & Noble, Ross Dress For Less, Ski Chalet, Off-Broadway Shoes, JoAnn Fabrics, Dress Barn, Starbucks, Dogfishhead Ale House, Red Robin Gourmet Burgers, Chipotle, Wendy's, Burlington Coat Factory, Capital One Bank
	Severna Park Marketplace			Severna Park, MD		254,011	2011	20.6	100	%	100	%	98	%	100	%	100	%	Giant Food, Kohl's, Office Depot, A.C. Moore, Goodyear, Chipotle, McDonald's, Jos. A. Bank, Sprint/Radio Shack, Five Guys, Unleashed (Petco), Mod Pizza, Jersey Mike's



	Saul Centers, Inc.
	Schedule of Current Portfolio Properties
	September 30, 2018

						Leasable Area (Square Feet)	Year Acquired or Developed (Renovated)	Land Area (Acres)	Percentage Leased as of September 30,										(1)
		Property		Location		Leasable Area (Square Feet)	Year Acquired or Developed (Renovated)	Land Area (Acres)	2018		2017		2016		2015		2014		Anchor / Significant Tenants

	Shopping Centers (continued)
	Shops at Fairfax			Fairfax, VA		68,762	1975 (1993/99)	6.7	100	%	97	%	97	%	100	%	96	%	Super H Mart, Subway
	Smallwood Village Center			Waldorf, MD		173,341	2006	25.1	78	%	83	%	69	%	69	%	72	%	Safeway, CVS Pharmacy, Family Dollar
	Southdale			Glen Burnie, MD		485,628	1972 (1986)	39.8	99	%	98	%	98	%	95	%	89	%	The Home Depot, Michaels Arts & Crafts, Marshalls, PetSmart, Value City Furniture, Athletic Warehouse, Starbucks, Gallo Clothing, Office Depot, The Tile Shop, Mercy Health Care, Massage Envy, Potbelly, Capital One Bank, Chipotle, Banfield Vets
	Southside Plaza			Richmond, VA		371,761	1972	32.8	92	%	91	%	91	%	98	%	98	%	Community Supermarket, Maxway, Citi Trends, City of Richmond, McDonald's, Burger King, Kool Smiles, Falla's
	South Dekalb Plaza			Atlanta, GA		163,418	1976	14.6	91	%	89	%	88	%	90	%	93	%	Maxway, Big Lots, Emory Clinic, Dollar Tree, Shoe Land
	Thruway			Winston-Salem, NC		366,693	1972 (1997)	31.5	96	%	96	%	98	%	96	%	96	%	Harris Teeter, Trader Joe's, Stein Mart, Talbots, Hanes Brands, Jos. A. Bank, Bonefish Grill, Chico's, Ann Taylor Loft, Rite Aid, FedEx Office, Plow & Hearth, New Balance, Aveda Salon, Carter's Kids, McDonald's, Chick-Fil-A, Wells Fargo Bank, Francesca's Collections, Great Outdoor Provision Company, White House / Black Market, Soma, J. Crew, Chop't, Lululemon
	Village Center			Centreville, VA		145,651	1990	17.2	98	%	98	%	95	%	94	%	98	%	Giant Food, Tuesday Morning, Starbucks, McDonald's, Pet Supplies Plus, Bikram Yoga, Capital One Bank
	Westview Village			Frederick, MD		97,858	2009	11.6	95	%	95	%	100	%	95	%	90	%	Silver Diner, Sleepy's, Music & Arts, Firehouse Subs, CiCi's Pizza, Café Rio, Five Guys, Regus, Krispy Kreme
	White Oak			Silver Spring, MD		480,676	1972 (1993)	27.9	99	%	99	%	100	%	99	%	100	%	Giant Food, Sears, Walgreens, Boston Market, Sarku
				Total Shopping Centers	(3)	7,752,046		753.2	95.7	%	95.7	%	95.8	%	96.1	%	95.6	%

Saul Centers, Inc.
Schedule of Current Portfolio Properties
September 30, 2018

						Leasable Area (Square Feet)	Year Acquired or Developed (Renovated)	Land Area (Acres)	Percentage Leased as of September 30,										(1)
		Property		Location		Leasable Area (Square Feet)	Year Acquired or Developed (Renovated)	Land Area (Acres)	2018		2017		2016		2015		2014		Anchor / Significant Tenants

Mixed-Use Properties
	Avenel Business Park			Gaithersburg, MD		390,683	1981-2000	37.1	84	%	86	%	85	%	85	%	90	%	General Services Administration, Gene Dx, Inc., American Type Culture Collection, Inc.
	Clarendon Center-North Block			Arlington, VA		108,386	2010	0.6	100	%	100	%	99	%	96	%	96	%	Pete's New Haven Pizza, AT&T Mobility, Dunkin Donuts, Airline Reporting Corporation
	Clarendon Center-South Block			Arlington, VA		104,894	2010	1.3	97	%	100	%	100	%	100	%	100	%	Trader Joe's, Circa, Burke & Herbert Bank, Bracket Room, South Block Blends, Winston Partners, Keppler Speakers Bureau, ECG Management Co., Leadership Institute, Capital One Bank
	Clarendon Center Residential-South Block (244 units)					188,671	2010		95	%	96	%	97	%	97	%	100	%
	Park Van Ness- Residential (271 units)			Washington, DC		214,600	2016	1.4	96	%	94	%	61	%	N/A		N/A
	Park Van Ness-Retail			Washington, DC		8,847	2016		100	%	100	%	100	%	N/A		N/A		Soapstone Market, Sfoglina Pasta House
	601 Pennsylvania Ave.			Washington, DC		227,651	1973 (1986)	1.0	98	%	100	%	99	%	98	%	95	%	National Gallery of Art, American Assn. of Health Plans, Credit Union National Assn., Southern Company, HQ Global, Capital Grille, Michael Best & Friedrich LLP
	Washington Square			Alexandria, VA		236,376	1975 (2000)	2.0	91	%	93	%	89	%	93	%	93	%	Freeman Expositions, Academy of Managed Care Pharmacy, Cooper Carry, National PACE Association, Marketing General, Alexandria Economic Development, Trader Joe's, FedEx Office, Talbots, Starbucks, Virginia ABC
	7316 Wisconsin Ave.			Bethesda, MD		69,601	2018	0.5	73	%	N/A		N/A		N/A		N/A
				Total Mixed-Use Properties	(3)	1,549,709		43.9	90.6	%	93.4	%	91.9	%	92.3	%	93.6	%	(2)

				Total Portfolio	(3)	9,301,755		797.1	95.0	%	95.5	%	95.3	%	95.6	%	95.4	%	(2)

Land and Development Parcels
	Ashbrook Marketplace			Ashburn, VA			2018	13.7	Site plan for an approximately 88,000 square foot neighborhood shopping center has been submitted for approval. Subject to receipt of final building permits, site work is projected to commence in late 2018.
	Ashland Square Phase II			Manassas, VA			2004	17.3	Marketing to grocers and other retail businesses, with a development timetable yet to be finalized.
	N. Glebe Road			Arlington, VA			2014-2016	2.8	Construction of a 490-unit residential project with 62,000 square feet of retail space is currently in process.
	New Market			New Market, MD			2005	35.5	Parcel will accommodate retail development in excess of 120,000 SF near I-70, east of Frederick, Maryland. A development timetable has not been determined.
				Total Development Properties				69.3

		(1	)	Percentage leased is a percentage of rentable square feet leased for commercial space and a percentage of units leased for apartments. Includes only operating properties owned as of September 30, 2018. As such, prior year totals do not agree to prior year tables.
		(2	)	Total percentage leased is for commercial space only.
		(3	)	Prior year leased percentages for Total Shopping Centers, Total Mixed-Use Properties and Total Portfolio have been recalculated to exclude the impact of properties sold or removed from service and, therefore, the percentages reported in this table may be different than the percentages previously reported.

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Real estate investments
Land	$ 484,428	$ 450,256
Buildings and equipment	1,268,120	1,261,830
Construction in progress	161,625	91,114
Real estate investments	1,914,173	1,803,200
Accumulated depreciation	(516,568)	(488,166)
Real estate investments, net	1,397,605	1,315,034
Cash and cash equivalents	9,771	10,908
Accounts receivable and accrued income, net	55,541	54,057
Deferred leasing costs, net	28,057	27,255
Prepaid expenses, net	9,015	5,248
Other assets	6,149	9,950
Total assets	1,506,138	1,422,452
Liabilities
Notes payable	861,897	897,888
Revolving credit facility payable	75,200	60,734
Term loan facility payable	74,568	0
Construction loan payable	1,247	0
Dividends and distributions payable	18,722	18,520
Accounts payable, accrued expenses and other liabilities	31,958	23,123
Deferred income	25,747	29,084
Total liabilities	1,089,339	1,029,349
Equity
Common stock, $0.01 par value, 40,000,000 shares authorized, 22,512,320 and 22,123,128 shares issued and outstanding, respectively	225	221
Additional paid-in capital	373,036	352,590
Distributions in excess of accumulated earnings	(205,872)	(197,710)
Accumulated other comprehensive loss	(156)	(696)
Total Saul Centers, Inc. equity	347,233	334,405
Noncontrolling interest	69,566	58,698
Total equity	416,799	393,103
Total liabilities and equity	1,506,138	1,422,452
Series C Cumulative Redeemable Preferred Stock
Equity
Preferred stock, 1,000,000 shares authorized: Series C Cumulative Redeemable, 42,000 and 72,000 shares issued and outstanding, Series D Cumulative Redeemable, 30,000 and 0 shares issued and outstanding respectively	105,000	$ 180,000
Series D Cumulative Redeemable Preferred Stock
Equity
Preferred stock, 1,000,000 shares authorized: Series C Cumulative Redeemable, 42,000 and 72,000 shares issued and outstanding, Series D Cumulative Redeemable, 30,000 and 0 shares issued and outstanding respectively	$ 75,000

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	22,512,320	22,123,128
Common stock, shares outstanding (in shares)	22,512,320	22,123,128
Series C Cumulative Preferred Stock
Cumulative redeemable preferred stock, shares issued (in shares)	42,000	72,000
Cumulative redeemable preferred stock, shares outstanding (in shares)	42,000	72,000
Series D Cumulative Redeemable Preferred Stock
Cumulative redeemable preferred stock, shares issued (in shares)	30,000	0
Cumulative redeemable preferred stock, shares outstanding (in shares)	30,000	0

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Property revenue
Base rent	$ 46,189	$ 45,385	$ 137,999	$ 135,436
Percentage rent	119	67	786	968
Total property revenue	57,011	56,228	169,630	170,579
Property expenses
Operating income	16,692	14,386	47,043	46,182
Other revenue	48	9	218	31
Other expenses
Interest expense and amortization of deferred debt costs	11,022	11,821	33,786	35,585
Depreciation and amortization of deferred leasing costs	11,256	11,363	33,956	34,396
General and administrative	4,141	4,363	13,208	13,178
Change in fair value of derivatives	10	(1)	(2)	(2)
Gain on sale of property	0	0	509	0
Net income (loss)	16,702	14,385	47,550	46,180
Noncontrolling interests
Income attributable to noncontrolling interests	(3,547)	(2,902)	(9,265)	(9,483)
Net income attributable to Saul Centers, Inc.	13,155	11,483	38,285	36,697
Extinguishment of issuance costs upon redemption of preferred shares	0	0	(2,328)	0
Preferred stock dividends	(2,953)	(3,093)	(9,309)	(9,281)
Net income available to common stockholders	$ 10,202	$ 8,390	$ 26,648	$ 27,416
Per share net income available to common stockholders
Basic and diluted (in usd per share)	$ 0.45	$ 0.38	$ 1.19	$ 1.25
Dividends declared per common share outstanding (in usd per share)	$ 0.52	$ 0.51	$ 1.56	$ 1.53
Property revenue, Expense recoveries
Property revenue
Expense recoveries	$ 9,209	$ 9,447	$ 26,582	$ 26,378
Property revenue, Other
Property revenue
Other	1,494	1,329	4,263	7,797
Property expenses
Property expenses
Property operating expenses	6,910	7,418	20,766	20,543
Provision for credit losses	101	52	530	602
Real estate taxes	6,937	6,834	20,559	20,124
Operating expenses	13,948	14,304	41,855	41,269
Operating income	43,063	41,924	127,775	129,310
Other expenses
Property expenses
Operating expenses	$ 26,419	$ 27,547	$ 80,950	$ 83,159

Equity	9 Months Ended
Equity	Sep. 30, 2018
Equity [Abstract]
Equity	Equity The consolidated statements of operations for the nine months ended September 30, 2018 and 2017, reflect noncontrolling interests of $9.3 million and $9.5 million, respectively, representing income attributable to the Saul Organization for each period. On January 23, 2018, Saul Centers sold, in an underwritten public offering, 3.0 million depositary shares, each representing 1/100th of a share of 6.125% Series D Cumulative Redeemable Preferred Stock (the "Series D Stock"), providing net cash proceeds of approximately $72.6 million. The depositary shares may be redeemed at the Company’s option, in whole or in part, on or after January 23, 2023, at the $25.00 liquidation preference, plus accrued but unpaid dividends to but not including the redemption date. The depositary shares pay an annual dividend of $1.53125 per share, equivalent to 6.125% of the $25.00 liquidation preference. The Series D Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of the Company except in connection with certain changes in control or delisting events. Investors in the depositary shares generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not declared or consecutive) and in certain other events. On February 22, 2018, the proceeds from the offering, together with cash on hand, were used to redeem 3.0 million depositary shares, each representing 1/100th of a share of the Company’s 6.875% Series C Cumulative Redeemable Preferred Stock (the “Series C Stock”). Costs associated with the redemption were charged against Net income available to common stockholders. At September 30, 2018, the Company had outstanding 4.2 million depositary shares, each representing 1/100th of a share of 6.875% Series C Stock. The depositary shares are redeemable at the Company’s option, in whole or in part, at the $25.00 liquidation preference plus accrued but unpaid dividends. The depositary shares pay an annual dividend of $1.71875 per share, equivalent to 6.875% of the $25.00 liquidation preference. The Series C Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of the Company except in connection with certain changes of control or delisting events. Investors in the depositary shares generally have no voting rights, but will have limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not declared or consecutive) and in certain other events.

Related Party Transactions	9 Months Ended
Related Party Transactions	Sep. 30, 2018
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions The Chairman and Chief Executive Officer, the President, the Executive Vice President-Chief Legal and Administrative Officer and the Senior Vice President-Chief Accounting Officer 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 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 six percent of the employee’s cash compensation, subject to certain limits, were $264,900 and $270,600 for the nine months ended September 30, 2018 and 2017, 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, 2018 and 2017, the Company credited to employee accounts $161,500 and $154,300, respectively, which is the sum of accrued earnings and three times the amount deferred by 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 $2.6 million and $2.4 million, at September 30, 2018 and December 31, 2017, respectively, and is included in accounts payable, accrued expenses and other liabilities in the Consolidated Balance Sheets. The Company has entered into a shared services agreement (the “Agreement”) with the Saul Organization 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. Billings by the Saul Organization for the Company’s share of these ancillary costs and expenses for the nine months ended September 30, 2018 and 2017, which included rental expense for the Company’s headquarters lease, totaled approximately $6.2 million and $5.4 million, net, 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, 2018 and December 31, 2017, accounts payable, accrued expenses and other liabilities included approximately $767,600 and $993,200, respectively, representing amounts due to the Saul Organization for the Company’s share of these ancillary costs and expenses. The Company has entered into a shared third-party predevelopment cost agreement (the “Predevelopment Agreement”) with the Trust. The Predevelopment Agreement relates to the sharing of third-party predevelopment costs incurred in connection with the planning of the future redevelopment of certain adjacent real estate assets in the Twinbrook area of Rockville, Maryland. The costs will be shared on a pro rata basis based on the acreage owned by each entity and neither party is obligated to advance funds to the other. 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 intends to construct a shopping center and, upon stabilization, may be obligated to issue additional limited partnership units to the Trust. The Company subleases its corporate headquarters space from a member of the Saul Organization. The lease commenced in March 2002, expires in 2022, 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 $590,000 and $578,200 for the nine months ended September 30, 2018 and 2017, respectively, and is included in general and administrative expense. The B. F. Saul Insurance Agency of Maryland, Inc., a subsidiary of the B. F. Saul Company and a member of the Saul Organization, is a general insurance agency that receives commissions and fees in connection with the Company’s insurance program. Such commissions and fees amounted to $251,800 and $173,800 for the nine months ended September 30, 2018 and 2017, respectively.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Neither the Company nor the 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.

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2018
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events The Company has reviewed operating activities for the period subsequent to September 30, 2018 and determined there are no subsequent events required to be disclosed.

Organization, Formation and Structure (Details)	Sep. 30, 2018 partnership property
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Distribution of REIT taxable income (excluding net capital gains) to its stockholders (percent)	90.00%
Number of partnerships \| partnership	2
Shopping Centers
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Number of real estate properties	49
Mixed-Use Properties
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Number of real estate properties	7
Non-operating Development Properties
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Number of real estate properties	4

Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands		3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($) tenant Property store shares	Sep. 30, 2018 USD ($) tenant Property store	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) tenant Property store shares	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Significant Accounting Policies [Line Items]
Number of tenants \| tenant	1	1		1
Number of shopping centers \| store	32	32		32
Percentage of ownership in operating partnership				74.10%
Allowance for doubtful accounts receivables	$ 600	$ 600		$ 600		$ 400
Accounts receivable, net representing rental income accrued	43,600	43,600		$ 43,600		44,100
Period expected for the sale of property to occur				1 year
Deferred debt costs	9,989	9,989		$ 9,989		6,900
Accumulated amortization, deferred debt costs	7,600	7,600		7,600		8,200
Deferred leasing costs, net	28,057	28,057		28,057		27,255
Accumulated amortization deferred leasing cost	$ 36,100	36,100		36,100		35,300
Amortization expense deferred leasing cost				4,300	$ 4,100
Interest capitalized		$ 1,716	$ 900	$ 4,301	2,495
Commercial development projects, availability for occupancy, maximum period after major construction activity				1 year
Depreciation expense				$ 29,700	30,300
Repairs and maintenance expense				$ 8,700	$ 8,500
Shares credited to directors' deferred fee accounts (in shares) \| shares	113,040			6,686
Shares due to exercise of employee stock options and issuance of directors' deferred stock (in shares) \| shares				32,740
Held-for-sale
Significant Accounting Policies [Line Items]
Number of real estate properties \| Property	0	0		0
Minimum
Significant Accounting Policies [Line Items]
Allowance for doubtful accounts receivables representing rental income accrued	$ 200	$ 200		$ 200		200
Minimum \| Building
Significant Accounting Policies [Line Items]
Estimated useful life (in years)				35 years
Maximum \| Building
Significant Accounting Policies [Line Items]
Estimated useful life (in years)				50 years
Maximum \| Building Improvements
Significant Accounting Policies [Line Items]
Estimated useful life (in years)				20 years
Giant Food
Significant Accounting Policies [Line Items]
Percentage of total revenue				4.80%
Number of shopping centers \| store				10
Capital One
Significant Accounting Policies [Line Items]
Percentage of total revenue				2.70%
Number of shopping centers \| store				18
Revenues
Significant Accounting Policies [Line Items]
Number of tenants \| tenant	2	2		2
Percentage of total revenue				2.50%
Glebe Road Construction Loan
Significant Accounting Policies [Line Items]
Accumulated amortization, deferred debt costs						$ 1,800
Common Stock
Significant Accounting Policies [Line Items]
Shares due to exercise of employee stock options and issuance of directors' deferred stock (in shares) \| shares				77,464

Summary of Significant Accounting Policies - Construction in Progress (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Construction in progress	$ 161,625	$ 91,114
Glebe Road
Property, Plant and Equipment [Line Items]
Construction in progress	136,766	83,462
Ashbrook Marketplace
Property, Plant and Equipment [Line Items]
Construction in progress	10,016	0
Other
Property, Plant and Equipment [Line Items]
Construction in progress	$ 14,843	$ 7,652

Real Estate Transactions - Narrative (Details) ft² in Thousands		1 Months Ended						9 Months Ended		12 Months Ended
	May 09, 2018 shares	Sep. 30, 2018 USD ($) ft² apartment	May 31, 2018 USD ($) a shares	Sep. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Jan. 31, 2017 USD ($)	Aug. 31, 2016 a	Sep. 30, 2018 USD ($) ft² property apartment	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($) property	Jan. 18, 2017 USD ($)
Business Acquisition [Line Items]
Payments to acquire real estate								$ 6,586,000	$ 12,389,000
Rent expense								$ 590,000	578,200
Number of properties purchased \| property								1		1
Great Eastern Shopping Center
Business Acquisition [Line Items]
Proceeds from sale of real estate				$ 8,500,000
Gains (losses) on sales of investment real estate			$ 500,000
Burtonsville Town Square
Business Acquisition [Line Items]
Payments to acquire real estate						$ 76,400,000				$ 76,400,000
Portion of purchase price allocated to land										28,400,000
Portion of purchase price allocated to buildings										45,800,000
Portion of purchase price allocated to below market leases										(600,000)
Olney
Business Acquisition [Line Items]
Payments to acquire real estate					$ 3,100,000
Rent expense					$ 56,000
Ashbrook Marketplace
Business Acquisition [Line Items]
Area of real estate acquired (in acres) \| a			13.7
Additions to real estate investments, noncash			$ 8,800,000					$ 8,776,000
Acquisition costs			$ 200,000
7316 Wisconsin Avenue
Business Acquisition [Line Items]
Payments to acquire real estate		$ 35,500,000						36,200,000
Portion of purchase price allocated to land		34,200,000						34,200,000
Portion of purchase price allocated to buildings		1,000,000						1,000,000
Property acquisition costs		$ 700,000						$ 700,000
7316 Wisconsin Avenue Retail Space
Business Acquisition [Line Items]
Area of real estate property (in square feet) \| ft²		10						10
Great Eastern Shopping Center
Business Acquisition [Line Items]
Second trust financing		$ 1,275,000		$ 1,280,000				$ 1,275,000	$ 1,280,000
Second trust financing, stated interest rate				6.00%
Leases, Acquired-in-Place \| Burtonsville Town Square
Business Acquisition [Line Items]
Portion of purchase price allocated to in-place leases and above market leases										2,200,000
Leases, Acquired-in-Place \| 7316 Wisconsin Avenue
Business Acquisition [Line Items]
Portion of purchase price allocated to in-place leases and above market leases		900,000						900,000
Above Market Leases \| Burtonsville Town Square
Business Acquisition [Line Items]
Portion of purchase price allocated to in-place leases and above market leases										$ 600,000
Above Market Leases \| 7316 Wisconsin Avenue
Business Acquisition [Line Items]
Portion of purchase price allocated to in-place leases and above market leases		$ 100,000						$ 100,000
BF Saul Real Estate Investment Trust \| Ashbrook Marketplace
Business Acquisition [Line Items]
Limited partnership units issued for purchase (in shares) \| shares	176,680		176,680
Area of real estate acquired (in acres) \| a							13.7
Burtonsville Fixed Rate Mortgage
Business Acquisition [Line Items]
Construction-to-permanent loan						$ 40,000,000.0					$ 40,000,000
Maximum \| 7316 Wisconsin Avenue
Business Acquisition [Line Items]
Number of units in real estate property \| apartment		325						325

Noncontrolling Interests - Holders of Convertible Limited Partnership Units in the Operating Partnership (Details) - Noncontrolling Interest shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018 shares	Sep. 30, 2017 shares	Sep. 30, 2018 shares	Sep. 30, 2017 shares
Noncontrolling Interest [Line Items]
Percentage of ownership interest of noncontrolling interest	25.90%		25.90%
Limited partnership units (in shares)	7,800		7,800
Limited partnership units, conversion ratio	1		1
Outstanding stock percent that should be acquired for rights to be exercised	39.90%		39.90%
Limited partnership units convertible into shares of common stock, eligible for conversion (in shares)	760		760
Fully converted partnership units and diluted weighted average shares outstanding (in shares)	30,300	29,500	30,000	29,400

Notes Payable, Revolving Credit Facility, Interest and Amortization of Deferred Debt Costs - Narrative (Details) - USD ($)					3 Months Ended	9 Months Ended
	Nov. 20, 2017	Sep. 01, 2017	Aug. 14, 2017	Jan. 18, 2017	Dec. 31, 2021	Sep. 30, 2018	Oct. 01, 2021	Oct. 01, 2020	Oct. 01, 2019	Jan. 26, 2018	Dec. 31, 2017	Jan. 31, 2017
Debt Instrument [Line Items]
Debt outstanding with fixed-rate						$ 870,901,000					$ 890,400,000
Principal amount						1,022,901,000					965,500,000
Debt outstanding with variable-rate						152,000,000					75,100,000
Outstanding line of credit						75,200,000					60,734,000
Carrying value of properties collateralizing mortgage notes						965,600,000					1,000,000,000
Final payment amount						760,955,000
Principal amount						1,012,912,000
Construction loan						861,897,000					897,888,000
Unsecured Revolving Credit Facility
Debt Instrument [Line Items]
Outstanding line of credit						77,000,000					$ 61,000,000
Line of credit facility, remaining borrowing capacity						161,100,000
Letter of Credit
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity						185,000
New Facility \| Line of Credit
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity										$ 400,000,000
New Facility \| Term Loan \| Line of Credit
Debt Instrument [Line Items]
Outstanding line of credit						$ 75,000,000
Line of credit facility, maximum borrowing capacity										75,000,000
New Facility \| Term Loan \| LIBOR
Debt Instrument [Line Items]
Interest rate spread on LIBOR (percentage)						1.30%
New Facility \| Term Loan \| LIBOR \| Minimum
Debt Instrument [Line Items]
Interest rate spread on LIBOR (percentage)						1.30%
New Facility \| Term Loan \| LIBOR \| Maximum
Debt Instrument [Line Items]
Interest rate spread on LIBOR (percentage)						1.90%
New Facility \| Revolving Line \| Line of Credit
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity										$ 325,000,000
New Facility \| Revolving Line \| LIBOR
Debt Instrument [Line Items]
Interest rate spread on LIBOR (percentage)						1.35%
New Facility \| Revolving Line \| LIBOR \| Minimum
Debt Instrument [Line Items]
Interest rate spread on LIBOR (percentage)						1.35%
New Facility \| Revolving Line \| LIBOR \| Maximum
Debt Instrument [Line Items]
Interest rate spread on LIBOR (percentage)						1.95%
Burtonsville Fixed Rate Mortgage
Debt Instrument [Line Items]
Debt instrument, term				15 years
Construction-to-permanent loan				$ 40,000,000								$ 40,000,000.0
Interest rate, stated percentage				3.39%
Periodic payment				$ 197,900
Amortization period				25 years
Final payment amount				$ 20,300,000
Glebe Road Construction Loan
Debt Instrument [Line Items]
Construction-to-permanent loan			$ 157,000,000.0
Interest rate, stated percentage			4.67%
Amortization period			25 years
Principal amount						$ 2,900,000
Park Van Ness Loan
Debt Instrument [Line Items]
Interest rate, stated percentage		4.88%
Periodic payment		$ 413,460
Amortization period		25 years
Final payment amount		$ 39,600,000
Guarantor obligations, maximum exposure						10,000,000
Construction loan						70,100,000
Washington Square 2017 Mortgage \| 3.75% due December 2032
Debt Instrument [Line Items]
Debt instrument, term	15 years
Construction-to-permanent loan	$ 60,000,000
Interest rate, stated percentage	3.75%
Periodic payment	$ 308,500
Amortization period	25 years
Final payment amount	$ 31,100,000
Kentlands Square II Bank Loan \| Fixed Rate Mortgage Notes Payable
Debt Instrument [Line Items]
Principal amount						35,600,000
Guarantor obligations, maximum exposure						$ 9,200,000
Forecast \| Glebe Road Construction Loan
Debt Instrument [Line Items]
Periodic payment					$ 887,900
Forecast \| Park Van Ness Loan
Debt Instrument [Line Items]
Guarantor obligations, maximum exposure							$ 0	$ 3,300,000	$ 6,700,000
Washington Square
Debt Instrument [Line Items]
Principal amount	$ 28,100,000

Notes Payable, Revolving Credit Facility, Interest and Amortization of Deferred Debt Costs - Scheduled Maturities of Debt, Including Scheduled Principal Amortization (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Balloon Payments
October 1 through December 31, 2018	$ 0
2019	60,794
2020	61,163
2021	11,012
2022	113,502
2023	84,225
Thereafter	430,259
Principal amount	760,955
Scheduled Principal Amortization
October 1 through December 31, 2018	7,688
2019	29,298
2020	26,772
2021	26,486
2022	26,990
2023	27,290
Thereafter	117,422
Principal amount	261,946
Total
October 1 through December 31, 2018	7,688
2019	90,092
2020	87,935
2021	37,498
2022	140,492
2023	111,515
Thereafter	547,681
Principal amount	1,022,901	$ 965,500
Unamortized deferred debt costs	9,989	6,900
Net	1,012,912
Debt Instrument [Line Items]
Outstanding line of credit	75,200	60,734
Unsecured Revolving Credit Facility
Debt Instrument [Line Items]
Outstanding line of credit	$ 77,000	$ 61,000

Equity (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions			3 Months Ended		9 Months Ended
	Feb. 22, 2018	Jan. 23, 2018	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Class of Stock [Line Items]
Income attributable to noncontrolling interests			$ (3,547)	$ (2,902)	$ (9,265)	$ (9,483)
Series C Cumulative Preferred Stock
Class of Stock [Line Items]
Depositary shares outstanding (in shares)			4.2		4.2
Depository shares to cumulative redeemable preferred stock ratio					1.00%
Cumulative redeemable preferred stock liquidation preference (in usd per share)			$ 25.00		$ 25.00
Annual dividend on depositary shares (in usd per share)					$ 1.71875
Percentage of redeemable preferred stock					6.875%
Depositary shares redeemed during period (in shares)	3.0
Series D Cumulative Redeemable Preferred Stock
Class of Stock [Line Items]
Depositary shares outstanding (in shares)		3.0
Net proceeds from shares sold		$ 72,600
Depository shares to cumulative redeemable preferred stock ratio					1.00%
Cumulative redeemable preferred stock liquidation preference (in usd per share)		$ 25.00
Annual dividend on depositary shares (in usd per share)		$ 1.53125
Percentage of redeemable preferred stock		6.125%

Related Party Transactions (Details)		1 Months Ended		9 Months Ended
Related Party Transactions (Details)	May 09, 2018 shares	May 31, 2018 a shares	Aug. 31, 2016 a	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Related Party Transaction [Line Items]
Company contribution to a multi employer 401K plan at discretionary amount of employee's cash compensation, maximum percentage				6.00%
Company contribution to a multi employer 401K plan at discretionary amount of employee's cash compensation, amount				$ 264,900	$ 270,600
Deferred compensation, employee contribution, percentage				2.00%
Deferred compensation, company contribution, amount				$ 161,500	$ 154,300
Deferred compensation, company contribution, percentage				3	3
Deferred compensation, cumulative unfunded liability				$ 2,600,000		$ 2,400,000
Ancillary costs and expenses				6,200,000	$ 5,400,000
Liability due to The Saul Organization for the Company's share of these ancillary costs and expenses				$ 767,600		$ 993,200
Percentage of annual increase in base rent				3.00%
Rent expense				$ 590,000	578,200
Insurance commissions and fees expense				$ 251,800	$ 173,800
Ashbrook Marketplace
Related Party Transaction [Line Items]
Area of real estate acquired (in acres) \| a		13.7
Ashbrook Marketplace \| BF Saul Real Estate Investment Trust
Related Party Transaction [Line Items]
Area of real estate acquired (in acres) \| a			13.7
Limited partnership units issued for purchase (in shares) \| shares	176,680	176,680

Stock Option Plans - Narrative (Details) - $ / shares	9 Months Ended
Stock Option Plans - Narrative (Details) - $ / shares	Sep. 30, 2018	Sep. 28, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option expiration period	10 years
Option vesting period	4 years
Closing share price (in usd per share)		$ 56.00
Granted (in shares)	1,124,169		913,320
Weighted average remaining contractual life of the Company's outstanding options	7 years 5 months 6 days
Weighted average remaining contractual life of the Company's exercisable options	6 years 4 months 23 days
2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	213,375
2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	230,000

Stock Option Plans - Stock Options Issued (Details)	9 Months Ended
Stock Option Plans - Stock Options Issued (Details)	Sep. 30, 2018 USD ($) $ / shares shares
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	1,904,000
Vested (in shares)	1,174,500
Exercised (in shares)	556,081
Forfeited (in shares)	223,750
Exercisable at end of period (in shares)	610,919
Remaining unexercised (in shares)	1,124,169
Exercise price (in usd per share) \| $ / shares	$ 44.64
Total value at grant date \| $	$ 13,059,865
Estimated forfeitures \| $	1,843,056
Expensed in previous years \| $	7,443,835
Expensed in 2018 \| $	1,248,391
Future expense \| $	$ 2,524,583
Weighted average term of remaining future expense (in years)	2 years 8 months 8 days
Directors
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	320,000
Vested (in shares)	320,000
Exercised (in shares)	160,000
Forfeited (in shares)	7,500
Exercisable at end of period (in shares)	152,500
Remaining unexercised (in shares)	152,500
Total value at grant date \| $	$ 2,064,650
Expensed in previous years \| $	1,895,250
Expensed in 2018 \| $	169,400
Future expense \| $	$ 0
Directors \| 4/24/2009
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	32,500
Vested (in shares)	32,500
Exercised (in shares)	27,500
Forfeited (in shares)	0
Exercisable at end of period (in shares)	5,000
Remaining unexercised (in shares)	5,000
Exercise price (in usd per share) \| $ / shares	$ 32.68
Volatility (percentage)	0.344
Expected life (years)	6 years
Assumed yield (percentage)	4.54%
Risk-free rate (percentage)	2.19%
Total value at grant date \| $	$ 222,950
Expensed in previous years \| $	222,950
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Directors \| 5/7/2010
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	32,500
Vested (in shares)	32,500
Exercised (in shares)	25,000
Forfeited (in shares)	2,500
Exercisable at end of period (in shares)	5,000
Remaining unexercised (in shares)	5,000
Exercise price (in usd per share) \| $ / shares	$ 38.76
Volatility (percentage)	0.369
Expected life (years)	5 years
Assumed yield (percentage)	4.23%
Risk-free rate (percentage)	2.17%
Total value at grant date \| $	$ 287,950
Expensed in previous years \| $	287,950
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Directors \| 5/13/2011
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	32,500
Vested (in shares)	32,500
Exercised (in shares)	22,500
Forfeited (in shares)	2,500
Exercisable at end of period (in shares)	7,500
Remaining unexercised (in shares)	7,500
Exercise price (in usd per share) \| $ / shares	$ 41.82
Volatility (percentage)	0.358
Expected life (years)	5 years
Assumed yield (percentage)	4.16%
Risk-free rate (percentage)	1.86%
Total value at grant date \| $	$ 297,375
Expensed in previous years \| $	297,375
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Directors \| 5/4/2012
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	35,000
Vested (in shares)	35,000
Exercised (in shares)	22,500
Forfeited (in shares)	0
Exercisable at end of period (in shares)	12,500
Remaining unexercised (in shares)	12,500
Exercise price (in usd per share) \| $ / shares	$ 39.29
Volatility (percentage)	0.348
Expected life (years)	5 years
Assumed yield (percentage)	4.61%
Risk-free rate (percentage)	0.78%
Total value at grant date \| $	$ 257,250
Expensed in previous years \| $	257,250
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Directors \| 5/10/2013
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	35,000
Vested (in shares)	35,000
Exercised (in shares)	22,500
Forfeited (in shares)	0
Exercisable at end of period (in shares)	12,500
Remaining unexercised (in shares)	12,500
Exercise price (in usd per share) \| $ / shares	$ 44.42
Volatility (percentage)	0.333
Expected life (years)	5 years
Assumed yield (percentage)	4.53%
Risk-free rate (percentage)	0.82%
Total value at grant date \| $	$ 278,250
Expensed in previous years \| $	278,250
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Directors \| 5/9/2014
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	30,000
Vested (in shares)	30,000
Exercised (in shares)	17,500
Forfeited (in shares)	0
Exercisable at end of period (in shares)	12,500
Remaining unexercised (in shares)	12,500
Exercise price (in usd per share) \| $ / shares	$ 47.03
Volatility (percentage)	0.173
Expected life (years)	5 years
Assumed yield (percentage)	4.48%
Risk-free rate (percentage)	1.63%
Total value at grant date \| $	$ 109,500
Expensed in previous years \| $	109,500
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Directors \| 5/8/2015
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	35,000
Vested (in shares)	35,000
Exercised (in shares)	12,500
Forfeited (in shares)	0
Exercisable at end of period (in shares)	22,500
Remaining unexercised (in shares)	22,500
Exercise price (in usd per share) \| $ / shares	$ 51.07
Volatility (percentage)	0.166
Expected life (years)	5 years
Assumed yield (percentage)	4.54%
Risk-free rate (percentage)	1.50%
Total value at grant date \| $	$ 125,300
Expensed in previous years \| $	125,300
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Directors \| 5/6/2016
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	32,500
Vested (in shares)	32,500
Exercised (in shares)	7,500
Forfeited (in shares)	0
Exercisable at end of period (in shares)	25,000
Remaining unexercised (in shares)	25,000
Exercise price (in usd per share) \| $ / shares	$ 57.74
Volatility (percentage)	0.166
Expected life (years)	5 years
Assumed yield (percentage)	3.75%
Risk-free rate (percentage)	1.23%
Total value at grant date \| $	$ 151,125
Expensed in previous years \| $	151,125
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Directors \| 5/5/2017
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	27,500
Vested (in shares)	27,500
Exercised (in shares)	0
Forfeited (in shares)	2,500
Exercisable at end of period (in shares)	25,000
Remaining unexercised (in shares)	25,000
Exercise price (in usd per share) \| $ / shares	$ 59.41
Volatility (percentage)	0.173
Expected life (years)	5 years
Assumed yield (percentage)	3.45%
Risk-free rate (percentage)	1.89%
Total value at grant date \| $	$ 165,550
Expensed in previous years \| $	165,550
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Directors \| 5/11/2018
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	27,500
Vested (in shares)	27,500
Exercised (in shares)	2,500
Forfeited (in shares)	0
Exercisable at end of period (in shares)	25,000
Remaining unexercised (in shares)	25,000
Exercise price (in usd per share) \| $ / shares	$ 49.46
Volatility (percentage)	0.192
Expected life (years)	5 years
Assumed yield (percentage)	3.70%
Risk-free rate (percentage)	2.84%
Total value at grant date \| $	$ 169,400
Expensed in previous years \| $	0
Expensed in 2018 \| $	169,400
Future expense \| $	$ 0
Officers
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	1,584,000
Vested (in shares)	854,500
Exercised (in shares)	396,081
Forfeited (in shares)	216,250
Exercisable at end of period (in shares)	458,419
Remaining unexercised (in shares)	971,669
Total value at grant date \| $	$ 10,995,215
Estimated forfeitures \| $	1,843,056
Expensed in previous years \| $	5,548,585
Expensed in 2018 \| $	1,078,991
Future expense \| $	$ 2,524,583
Officers \| 5/13/2011
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	162,500
Vested (in shares)	118,750
Exercised (in shares)	103,750
Forfeited (in shares)	43,750
Exercisable at end of period (in shares)	15,000
Remaining unexercised (in shares)	15,000
Exercise price (in usd per share) \| $ / shares	$ 41.82
Volatility (percentage)	0.330
Expected life (years)	8 years
Assumed yield (percentage)	4.81%
Risk-free rate (percentage)	2.75%
Total value at grant date \| $	$ 1,366,625
Estimated forfeitures \| $	367,937
Expensed in previous years \| $	998,688
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Officers \| 5/4/2012
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	242,500
Vested (in shares)	107,500
Exercised (in shares)	92,455
Forfeited (in shares)	135,000
Exercisable at end of period (in shares)	15,045
Remaining unexercised (in shares)	15,045
Exercise price (in usd per share) \| $ / shares	$ 39.29
Volatility (percentage)	0.315
Expected life (years)	8 years
Assumed yield (percentage)	5.28%
Risk-free rate (percentage)	1.49%
Total value at grant date \| $	$ 1,518,050
Estimated forfeitures \| $	845,100
Expensed in previous years \| $	672,950
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Officers \| 5/10/2013
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	202,500
Vested (in shares)	171,875
Exercised (in shares)	129,375
Forfeited (in shares)	30,625
Exercisable at end of period (in shares)	42,500
Remaining unexercised (in shares)	42,500
Exercise price (in usd per share) \| $ / shares	$ 44.42
Volatility (percentage)	0.304
Expected life (years)	8 years
Assumed yield (percentage)	5.12%
Risk-free rate (percentage)	1.49%
Total value at grant date \| $	$ 1,401,300
Estimated forfeitures \| $	211,925
Expensed in previous years \| $	1,189,375
Expensed in 2018 \| $	0
Future expense \| $	$ 0
Officers \| 5/9/2014
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	170,000
Vested (in shares)	168,125
Exercised (in shares)	46,126
Forfeited (in shares)	1,875
Exercisable at end of period (in shares)	121,999
Remaining unexercised (in shares)	121,999
Exercise price (in usd per share) \| $ / shares	$ 47.03
Volatility (percentage)	0.306
Expected life (years)	7 years
Assumed yield (percentage)	4.89%
Risk-free rate (percentage)	2.17%
Total value at grant date \| $	$ 1,349,800
Estimated forfeitures \| $	14,887
Expensed in previous years \| $	1,082,664
Expensed in 2018 \| $	252,249
Future expense \| $	$ 0
Officers \| 5/8/2015
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	190,000
Vested (in shares)	140,625
Exercised (in shares)	20,625
Forfeited (in shares)	3,125
Exercisable at end of period (in shares)	120,000
Remaining unexercised (in shares)	166,250
Exercise price (in usd per share) \| $ / shares	$ 51.07
Volatility (percentage)	0.298
Expected life (years)	7 years
Assumed yield (percentage)	4.94%
Risk-free rate (percentage)	1.89%
Total value at grant date \| $	$ 1,584,600
Estimated forfeitures \| $	141,780
Expensed in previous years \| $	961,888
Expensed in 2018 \| $	270,531
Future expense \| $	$ 210,401
Officers \| 5/6/2016
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	194,000
Vested (in shares)	96,375
Exercised (in shares)	3,750
Forfeited (in shares)	1,875
Exercisable at end of period (in shares)	92,625
Remaining unexercised (in shares)	188,375
Exercise price (in usd per share) \| $ / shares	$ 57.74
Volatility (percentage)	0.185
Expected life (years)	7 years
Assumed yield (percentage)	3.80%
Risk-free rate (percentage)	1.55%
Total value at grant date \| $	$ 1,136,840
Estimated forfeitures \| $	86,628
Expensed in previous years \| $	437,580
Expensed in 2018 \| $	196,911
Future expense \| $	$ 415,721
Officers \| 5/5/2017
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	205,000
Vested (in shares)	51,250
Exercised (in shares)	0
Forfeited (in shares)	0
Exercisable at end of period (in shares)	51,250
Remaining unexercised (in shares)	205,000
Exercise price (in usd per share) \| $ / shares	$ 59.41
Volatility (percentage)	0.170
Expected life (years)	7 years
Assumed yield (percentage)	3.50%
Risk-free rate (percentage)	2.17%
Total value at grant date \| $	$ 1,324,300
Estimated forfeitures \| $	91,642
Expensed in previous years \| $	205,440
Expensed in 2018 \| $	231,120
Future expense \| $	$ 796,098
Officers \| 5/11/2018
Share Based Compensation Arrangements By Share Based Payment Award Options [Line Items]
Total grant (in shares)	217,500
Vested (in shares)	0
Exercised (in shares)	0
Forfeited (in shares)	0
Exercisable at end of period (in shares)	0
Remaining unexercised (in shares)	217,500
Exercise price (in usd per share) \| $ / shares	$ 49.46
Volatility (percentage)	0.177
Expected life (years)	7 years
Assumed yield (percentage)	3.75%
Risk-free rate (percentage)	2.94%
Total value at grant date \| $	$ 1,313,700
Estimated forfeitures \| $	83,157
Expensed in previous years \| $	0
Expensed in 2018 \| $	128,180
Future expense \| $	$ 1,102,363

Stock Option Plans - Summary of Option Activity (Details)	9 Months Ended
	Sep. 30, 2018 USD ($) $ / shares shares
Number of Shares
Outstanding at beginning of period (in shares) \| shares	913,320
Granted (in shares) \| shares	245,000
Exercised (in shares) \| shares	(29,151)
Expired/Forfeited (in shares) \| shares	(5,000)
Outstanding at end of period (in shares) \| shares	1,124,169
Exercisable at end of period (in shares) \| shares	610,919
Weighted Average Exercise Price per share
Outstanding at beginning of period (in usd per share) \| $ / shares	$ 52.80
Granted (in usd per share) \| $ / shares	49.46
Exercised (in usd per share) \| $ / shares	44.64
Expired/Forfeited (in usd per share) \| $ / shares	54.78
Outstanding at end of period (in usd per share) \| $ / shares	52.28
Exercisable at end of period (in usd per share) \| $ / shares	$ 50.72
Aggregate Intrinsic Value
Outstanding at beginning of period \| $	$ 8,172,970
Granted \| $	1,602,300
Exercised \| $	415,119
Expired/Forfeited \| $
Outstanding at end of period \| $	5,341,971
Exercisable at end of period \| $	$ 3,691,508