Saul Centers : Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

About this update from Saul Centers, Inc.

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 2025 10-K. Historical results and percentage relationships set forth in Item 1 and this section should not be taken as indicative of future operations and financial results of the Company. Capitalized terms used but not otherwise defined in this section have the meanings given to them in Item 1 of this Quarterly Report on Form 10-Q (this "Report"). Forward-Looking Statements Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements are not guarantees of performance. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "plans," "intends," "estimates," "anticipates," "expects," "believes" or similar expressions in this Report. Although management believes that the expectations reflected in such forward-looking statements are based upon present expectations and reasonable assumptions, our actual results could differ materially from those set forth in the forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements: • macroeconomic conditions, including geopolitical instability (such as the ongoing conflicts in the Middle East and Ukraine), and changes in tariff and trade policy, which may lead to a disruption of, or lack of access to, sources of funding and rising inflation; • the ability of our tenants to pay rent; • our reliance on shopping center "anchor" tenants and other significant tenants; • our substantial relationships with members of the Saul Organization; • financing risks, such as increases in interest rates, restrictions imposed by our debt, our ability to meet existing financial covenants and our ability to consummate planned and additional financings on acceptable terms or at all; • our development activities; • our access to capital; • our ability to successfully complete acquisitions, developments or redevelopments, or if they are consummated, whether such acquisitions, developments or redevelopments perform as expected; • adverse trends in the retail, office and residential real estate sectors; • risks relating to cybersecurity and potential future uses of artificial intelligence, including disruption to our business and operations, reputational risk, regulatory risk, and exposure to liabilities from tenants, employees, capital providers, and other third parties; • 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; and • risks related to our status as a REIT for federal income tax purposes, such as the existence of complex regulations relating to our status as a REIT, the effect of future changes to REIT requirements as a result of new legislation and the adverse consequences of any failure to qualify as a REIT. Additional information related to these risks and uncertainties is included in "Risk Factors" (Part I, Item 1A of our 2025 10-K), "Quantitative and Qualitative Disclosures about Market Risk" (Part I, Item 3 of this Report and Part II, Item 7A of our 2025 10-K), and "Management's Discussion and Analysis of Financial Conditions and Results of Operations" (Part I, Item 2 of this Report). General The following discussion is based primarily on the consolidated financial statements of the Company as of and for the three and six months ended June 30, 2026. Overview The Company's primary strategy is to continue to diversify its assets through development of transit-oriented, residential mixed-use projects and expansion of and additions to its grocery-anchored Shopping Centers in the Washington, DC/Baltimore metropolitan area. The Company's operating strategy also includes improvement of the operating performance of its assets, internal growth of its Shopping Centers through the addition of pad sites, and supplementing its development pipeline with selective redevelopment and renovations of its core Shopping Centers. The Company has a pipeline of entitled sites in its portfolio, some of which are currently Shopping Centers, for development of up to 2,800 apartment units and 860,000 square feet of retail and office space. All such sites are located proximate to Washington Metropolitan Area Transit Authority red line Metro stations in Montgomery County, Maryland. In addition, the Company recently entered into a lease with Publix to develop a new grocery store at Ashland Square, in Prince William County, Virginia. When complete, Ashland Square is expected to ultimately comprise approximately 124,000 square feet of retail space including the 50,325 square foot Publix, three existing pad sites, four additional pad sites and approximately 30,000 square feet of small shop space. The Company intends to selectively add free-standing pad site buildings within its Shopping Center portfolio and replace underperforming tenants with tenants that generate strong traffic, including anchor stores such as grocery stores. The Company has executed leases or has leases under negotiation for eight more pad sites. There can be no assurance that any such leases will be executed on the anticipated terms or timing, or at all. In recent years, there has been a limited amount of quality properties for sale. Management believes it will continue to be challenging to identify acquisition opportunities for investment in existing and new shopping centers and mixed-use properties into the near future. It is management's view that several of the sub-markets in which the Company operates have, or are expected to have in the future, attractive supply/demand characteristics. The Company will continue to evaluate acquisitions, and development and redevelopment opportunities as integral parts of its overall business plan. Although it is management's present intention to concentrate future acquisitions and development activities on transit-oriented, residential mixed-use properties and grocery-anchored shopping centers in the Washington, DC/Baltimore metropolitan area, the Company may, in the future, also acquire other types of real estate in other areas of the country as opportunities present themselves. The Company plans to continue to diversify in terms of property types, locations, size and market, and it does not set any limit on the amount or percentage of assets that may be invested in any one property or any one geographical area. Actions taken by the Federal government will likely continue to impact the office, retail and residential real estate markets in the Washington, DC/Baltimore metropolitan area over the coming years. Because the majority of the Company's property net operating income is produced by our Shopping Centers, we continually monitor the implications of government policy changes, as well as shifts in consumer demand between on-line and in-store shopping, on future shopping center construction and retailer store expansion and closure plans. Based on our observations, we continue to adapt our marketing and merchandising strategies in ways that we believe maximize our future performance. The Company's commercial leasing percentage, on a same property basis, which excludes the impact of properties not in operation for the entirety of the comparable periods, increased to 94.7% at June 30, 2026, from 94.0% at June 30, 2025. The Company maintains a ratio of total debt to estimated total asset market value of under 50%, which positions us to obtain additional secured borrowings if necessary. As of June 30, 2026, including the $100.0 million hedged variable-rate debt, total fixed-rate debt, with staggered maturities from 2026 to 2041, represented approximately 92.1% of the Company's notes payable, thus mitigating refinancing risk. The Company's unhedged variable-rate debt consists of $129.0 million outstanding under the Credit Facility. Including fixed and variable rate debt, the Company's outstanding debt totaled approximately $1.63 billion with a weighted average remaining term of 9.6 years as of June 30, 2026. As of June 30, 2026, the Company has availability of approximately $158.1 million under the Credit Facility. Recent Developments The Company is developing Twinbrook Quarter Phase I located in Rockville, Maryland. It includes 452 apartment units, an 81,000 square foot Wegmans supermarket, approximately 25,000 square feet of small shop space, and a 230,000 square foot office building. The office tower portion is not being constructed at this time. In connection with the development of the residential and retail portions of Twinbrook Quarter Phase I, we also invested in infrastructure and other items that will support both Twinbrook Quarter Phase I and other portions of the development of Twinbrook Quarter. Excluding imputed capitalized interest, the remaining investment to complete Twinbrook Quarter Phase I is not expected to exceed $5.0 million. A portion of the cost of the project is being financed by a $145.0 million construction-to-permanent loan. As of June 30, 2026, the outstanding balance of the loan was $141.2 million, net of unamortized deferred debt costs. The Milton at Twinbrook Quarter opened and residential tenants began moving in on October 1, 2024. As of August 3, 2026, 431 of the 452 (95.4%) residential units were leased and occupied. Of the approximately 106,000 square feet of ground floor retail, 101,400 square feet (95.7%) have been leased. The Wegmans supermarket at Twinbrook Quarter opened for business on June 25, 2025. As of August 3, 2026, including the Wegmans supermarket, approximately 95,100 square feet of the retail space is open and the remaining leased retail space is expected to open at various times during 2026 as tenants complete their buildouts. The development potential of all phases of the entire 18.4 acre Twinbrook Quarter site totals 1,865 residential units, 473,000 square feet of retail space, and 431,000 square feet of office space. The Company is also developing Hampden House, a project located in downtown Bethesda, Maryland, which includes 366 apartment units and approximately 10,100 square feet of retail space. Excluding imputed capitalized interest, the remaining investment to complete the project is not expected to exceed $4.2 million. A portion of the cost of the project is being financed by a $133.0 million construction-to-permanent loan. As of June 30, 2026, the outstanding balance of the loan was $130.6 million, net of unamortized deferred debt costs. Hampden House opened and residential tenants began moving in on October 1, 2025. As of August 3, 2026, 235 of the 366 (64.2%) residential units are leased and occupied. Visual Comfort & Co. opened for business on March 9, 2026 and The Food Market opened for business on June 27, 2026. As of August 3, 2026, approximately 8,600 square feet of the 10,100 (85.1%) square feet of retail space have been leased. During 2025, the Company entered into a lease with Publix for a new grocery store, which we will construct, at Ashland Square in Prince William County, Virginia. The Ashland Square property currently includes three pad sites with operating tenants. Construction of Ashland Square Phase II is underway. Two pad sites with executed leases are on track for delivery with construction expected to commence this summer. Site development work for the Publix and inline retail commenced in late June 2026 with clearing and initial grading. Vertical construction is expected to commence later this year. Construction is expected to be complete in 2028. Ashland Square Phase II leasing is progressing with executed leases for 82,000 square feet, or 65.7%, of the shopping center. When complete, Ashland Square is expected to ultimately comprise approximately 124,000 square feet of retail space including the 50,325 square foot Publix, the three existing pad sites, four additional pad sites and approximately 30,000 square feet of small shop space. Critical Accounting Estimates and Policies The Company's consolidated financial statements are prepared in accordance with GAAP, which requires management to make certain estimates and assumptions that affect the reporting of financial position and results of operations. If judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied resulting in a different presentation of the financial statements. The Company has identified the following items that, due to estimates and assumptions inherent in these items, involve a relatively high degree of judgment and complexity. Real Estate Investments Real estate investment properties are stated at historic cost less depreciation. Although the Company intends to own its real estate investment properties over a long term, from time to time it will evaluate its market position, market conditions, and other factors and may elect to sell properties that do not conform to the Company's investment profile. Management believes that the Company's real estate assets have generally appreciated in value since their acquisition or development and, accordingly, the aggregate current value exceeds their aggregate net book value and also exceeds the value of the Company's liabilities as reported in the financial statements. Because the financial statements are prepared in conformity with GAAP, they do not report the current fair value of the Company's real estate investment properties. If there is an event or change in circumstances that indicates a potential impairment in the value of a real estate investment property, the Company prepares an analysis to determine whether the carrying amount of the real estate investment property exceeds its estimated fair value. The Company considers both quantitative and qualitative factors when identifying impairment indicators, including recurring operating losses, significant decreases in occupancy, and significant adverse changes in market conditions, legal factors and business climate. If impairment indicators are present, the Company compares the projected cash flows of the property over its remaining useful life, on an undiscounted basis, to the carrying amount of that property. The Company assesses its undiscounted projected cash flows based upon estimated capitalization rates, historic operating results and market conditions that may affect the property. If the carrying amount is greater than the undiscounted projected cash flows, the Company would recognize an impairment loss equivalent to an amount required to adjust the carrying amount to its then estimated fair value. The fair value of any property is sensitive to the actual results of any of the aforementioned estimated factors, either individually or taken as a whole. Should the actual results differ from management's projections, the valuation could be negatively or positively affected. Accounts Receivable, Accrued Income, and Allowance for Doubtful Accounts Accounts receivable are primarily comprised of rental and reimbursement billings due from tenants, and straight-line rent receivables representing the cumulative amount of adjustments necessary to present rental income on a straight-line basis. Individual leases are assessed for collectibility and, upon the determination that the collection of rents is not probable, accrued rent and accounts receivable are charged off, and the charge-off is reflected as an adjustment to rental revenue. Revenue from leases where collection is not probable is recorded on a cash basis until collectibility is determined to be probable. We also assess whether operating lease receivables, at the portfolio level, are appropriately valued based upon an analysis of balances outstanding, effects of tenant bankruptcies, historical levels of bad debt and current economic trends. Evaluating and estimating uncollectible lease payments and related receivables requires a significant amount of judgment by management and is based on the best information available to management at the time of evaluation. Actual results could differ from these estimates. 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 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 June 30, 2026 (the "2026 Quarter") compared to the three months ended June 30, 2025 (the "2025 Quarter") Net income for the 2026 Quarter decreased to $11.5 million from $14.2 million for the 2025 Quarter. The primary reason for the decline in net income was the $4.0 million adverse impact of the initial operations of Hampden House. Exclusive of Hampden House, net income increased by $1.3 million primarily due to (a) higher residential base rent of $1.4 million and (b) higher commercial base rent of $1.2 million partially offset by (c) higher general and administrative costs of $0.4 million, (d) higher interest expense, net and amortization of deferred debt costs of $0.3 million and (e) higher depreciation and amortization of deferred leasing costs of $0.3 million. Significant changes in revenue and expenses are discussed below. Revenue Three Months Ended June 30, 2025 to 2026 Change Better (Worse) (In thousands) 2026 2025 Amount Percent Base rent $ 63,119 $ 58,490 $ 4,629 7.9 % Expense recoveries 11,674 10,276 1,398 13.6 % Percentage rent 456 470 (14) (3.0) % Other property revenue 527 409 118 28.9 % Credit losses on operating lease receivables, net (398) (219) (179) (81.7) % Rental revenue 75,378 69,426 5,952 8.6 % Other revenue 1,413 1,408 5 0.4 % Total revenue $ 76,791 $ 70,834 $ 5,957 8.4 % Total revenue increased $6.0 million, or 8.4%, in the 2026 Quarter compared to the 2025 Quarter. Base rent. Base rent includes $2.3 million and $2.6 million for the 2026 Quarter and 2025 Quarter, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $0.1 million and $0.2 million for the 2026 Quarter and 2025 Quarter, respectively, to recognize income from the accretion of discounts related to in-place leases acquired in connection with purchased real estate investment properties. Base rent increased $4.6 million, or 7.9%, in the 2026 Quarter compared to the 2025 Quarter primarily due to the initial operations of Hampden House of $2.0 million. Exclusive of Hampden House, base rent increased $2.6 million primarily due to (a) higher residential base rent of $1.4 million and (b) higher commercial base rent of $1.2 million. Expense recoveries . Expense recoveries increased $1.4 million, or 13.6%, in the 2026 Quarter compared to the 2025 Quarter primarily due to an increase in recoverable property operating expenses. Expenses Three Months Ended June 30, 2025 to 2026 Change (In thousands) 2026 2025 Amount Percent Property operating expenses $ 13,552 $ 11,424 $ 2,128 18.6 % Real estate taxes 8,811 8,016 795 9.9 % Interest expense, net and amortization of deferred debt costs 20,034 16,820 3,214 19.1 % Depreciation and amortization of deferred leasing costs 16,038 14,098 1,940 13.8 % General and administrative 6,810 6,415 395 6.2 % Total expenses $ 65,245 $ 56,773 $ 8,472 14.9 % Total expenses increased $8.5 million, or 14.9%, in the 2026 Quarter compared to the 2025 Quarter, as described below. The increase in total expenses is primarily attributable to the initial operations of Hampden House, which generated $6.1 million of expenses during the 2026 Quarter. Property operating expenses. Property operating expenses increased $2.1 million, or 18.6%, in the 2026 Quarter compared to the 2025 Quarter primarily due to the initial operations of Hampden House of $0.9 million. Exclusive of Hampden House, property operating expenses increased $1.2 million primarily due to (a) higher repairs and maintenance costs across the portfolio of $0.4 million, (b) higher insurance costs across the portfolio of $0.3 million and (c) higher utility costs across the portfolio of $0.3 million. Real estate taxes . Real estate taxes increased $0.8 million, or 9.9%, in the 2026 Quarter compared to the 2025 Quarter primarily due to the initial operations of Hampden House of $0.6 million. Interest expense, net and amortization of deferred debt costs. Interest expense, net and amortization of deferred debt costs increased $3.2 million, or 19.1%, in the 2026 Quarter compared to the 2025 Quarter primarily due to (a) the initial operations of Hampden House of $2.9 million and (b) $0.3 million of higher interest incurred as a result of higher average outstanding debt partially offset by (c) lower capitalized interest, exclusive of Hampden House, of $0.2 million. Depreciation and amortization of deferred leasing costs: Depreciation and amortization of deferred leasing costs increased $1.9 million, or 13.8%, in the 2026 Quarter compared to the 2025 Quarter primarily due to $1.6 million of depreciation expense related to Hampden House, which was not in service in the 2025 Quarter. Six months ended June 30, 2026 (the "2026 Period") compared to the six months ended June 30, 2025 (the "2025 Period") Net income for the 2026 Period decreased to $23.6 million from $27.0 million for the 2025 Period. The primary reason for the decline was the $8.8 million adverse impact of the initial operations of Hampden House. Exclusive of Hampden House, net income increased by $5.4 million primarily due to (a) higher residential base rent of $3.5 million and (b) higher commercial base rent of $2.8 million, partially offset by (c) higher general and administrative costs of $0.8 million. Significant changes in revenue and expenses are discussed below. Revenue Six Months Ended June 30, 2025 to 2026 Change Better (Worse) (In thousands) 2026 2025 Amount Percent Base rent $ 125,574 $ 116,044 $ 9,530 8.2 % Expense recoveries 24,811 22,369 2,442 10.9 % Percentage rent 1,337 1,342 (5) (0.4) % Other property revenue 1,046 824 222 26.9 % Credit losses on operating lease receivables, net (568) (606) 38 6.3 % Rental revenue 152,200 139,973 12,227 8.7 % Other revenue 2,850 2,717 133 4.9 % Total revenue $ 155,050 $ 142,690 $ 12,360 8.7 % Total revenue increased $12.4 million, or 8.7%, in the 2026 Period compared to the 2025 Period. Base rent. Base rent includes $4.6 million and $4.8 million for the 2026 Period and 2025 Period, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $0.2 million and $0.3 million for the 2026 Period and 2025 Period, respectively, to recognize income from the accretion of discounts related to in-place leases acquired in connection with purchased real estate investment properties. Base rent increased $9.5 million, or 8.2%, in the 2026 Period compared to the 2025 Period primarily due to higher base rent at Twinbrook Quarter Phase I of $3.5 million and the initial operations at Hampden House of $3.2 million. Exclusive of Twinbrook Quarter Phase I and Hampden House, base rent increased $2.8 million primarily due to (a) higher commercial base rent of $2.3 million and (b) higher residential base rent of $0.5 million. Expense recoveries. Expense recoveries increased $2.4 million, or 10.9%, in the 2026 Period compared to the 2025 Period primarily due to an increase in recoverable property operating expenses. Expenses Six Months Ended June 30, 2025 to 2026 Change (In thousands) 2026 2025 Amount Percent Property operating expenses $ 29,291 $ 25,166 $ 4,125 16.4 % Real estate taxes 17,275 16,000 1,275 8.0 % Interest expense, net and amortization of deferred debt costs 39,684 33,567 6,117 18.2 % Depreciation and amortization of deferred leasing costs 31,954 28,621 3,333 11.6 % General and administrative 13,257 12,427 830 6.7 % Total expenses $ 131,461 $ 115,781 $ 15,680 13.5 % Total expenses increased $15.7 million, or 13.5%, in the 2026 Period compared to the 2025 Period, as described below. The increase in total expenses is primarily due to the initial operations of Hampden House, which generated $12.1 million of expenses during the 2026 Period. Property operating expenses. Property operating expenses increased $4.1 million, or 16.4%, in the 2026 Period compared to the 2025 Period primarily due to the initial operations of Hampden House of $1.9 million. Exclusive of Hampden House, property operating expenses increased $2.2 million primarily due to (a) higher insurance costs across the portfolio of $0.6 million, (b) higher utility costs across the portfolio of $0.6 million, (c) higher payroll costs across the portfolio of $0.3 million, (d) higher repairs and maintenance costs across the portfolio of $0.3 million and (e) higher legal costs across the portfolio of $0.2 million. Real estate tax expense . Real estate tax expense increased $1.3 million, or 8.0%, in the 2026 Period compared to the 2025 Period primarily due to the initial operations of Hampden House of $1.3 million. Interest expense, net and amortization of deferred debt costs. Interest expense, net and amortization of deferred debt costs, increased $6.1 million, or 18.2%, in the 2026 Period compared to the 2025 Period primarily due to (a) the initial operations of Hampden House of $5.7 million and (b) $0.7 million of higher interest incurred as a result of higher average outstanding debt partially offset by (c) $0.4 million of lower interest incurred as a result of lower average interest rates and (d) lower capitalized interest, exclusive of Hampden House, of $0.3 million. Depreciation and amortization of deferred leasing costs. Depreciation and amortization of deferred leasing costs increased $3.3 million, or 11.6%, in the 2026 Period compared to the 2025 Period primarily due to $3.2 million of depreciation expense related to Hampden House, which was not in service in the 2025 Period. General and administrative . General and administrative expense increased $0.8 million, or 6.7%, in the 2026 Period compared to the 2025 Period primarily due to (a) higher employment costs of $0.4 million and (b) higher costs related to the 2024 Stock Incentive Plan grants of $0.3 million. Same property revenue and same property net operating income Same property revenue and same property net operating income are non-GAAP financial measures of performance intended to enhance period-to-period comparability by excluding the results of properties that were not in operation for the entirety of the comparable reporting periods. We define same property revenue as total revenue less straight-line base rent and amortization of above/below market lease premiums and discounts related to leases acquired in connection with purchased real estate investment properties minus the revenue of properties not in operation for the entirety of the comparable reporting periods, and we define same property net operating income as net income plus (a) interest expense, net and amortization of deferred debt costs, (b) depreciation and amortization of deferred leasing costs, (c) general and administrative expenses, (d) change in fair value of derivatives and (e) loss on the early extinguishment of debt minus (f) gains on property dispositions, (g) straight-line base rent, (h) amortization of above/below market lease premiums and discounts related to leases acquired in connection with purchased real estate investment properties and (i) the net operating income of properties that were not in operation for the entirety of the comparable periods. Other REITs may use different methodologies for calculating same property revenue and same property net operating income. Accordingly, our same property revenue and same property net operating income may not be comparable to those of other REITs. Same property revenue and same property net operating income are used by management to evaluate and compare the operating performance of our properties, and to determine trends in earnings, because these measures are not affected by the cost of our funding, the impact of depreciation and amortization expenses, gains or losses from the acquisition and sale of operating real estate assets, general and administrative expenses or other gains and losses that relate to ownership of our properties. We believe the exclusion of these items from property revenue and property net operating income is useful because the resulting measures capture the actual revenue generated and actual expenses incurred by operating our properties. Same property revenue and same property net operating income are measures of the operating performance of our properties and do not measure our performance as a whole. Such measures are therefore not substitutes for total property revenue, net income or property net operating income as computed in accordance with GAAP. The tables below provide reconciliations of revenue and net income under GAAP to same property revenue and same property net operating income for the indicated periods. One property, Hampden House, which commenced operations on October 1, 2025, was excluded from same property results. Same property revenue Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Total revenue $ 76,791 $ 70,834 $ 155,050 $ 142,690 Revenue adjustments (1) (2,435) (2,739) (4,842) (5,095) Acquisitions, dispositions and development properties (1,554) - (2,770) - Total same property revenue $ 72,802 $ 68,095 $ 147,438 $ 137,595 Shopping Centers $ 47,798 $ 45,578 $ 97,596 $ 93,576 Mixed-Use properties 25,004 22,517 49,842 44,019 Total same property revenue $ 72,802 $ 68,095 $ 147,438 $ 137,595 Total Shopping Center revenue $ 47,798 $ 45,578 $ 97,596 $ 93,576 Shopping Center acquisitions, dispositions and development properties - - - - Total Shopping Center same property revenue $ 47,798 $ 45,578 $ 97,596 $ 93,576 Total Mixed-Use property revenue $ 26,558 $ 22,517 $ 52,612 $ 44,019 Mixed-Use acquisitions, dispositions and development properties (1,554) - (2,770) - Total Mixed-Use same property revenue $ 25,004 $ 22,517 $ 49,842 $ 44,019 (1) Revenue adjustments are straight-line base rent and amortization of premiums and discounts related to above/below market leases. Same property revenue for the 2026 Quarter compared to the 2025 Quarter increased $4.7 million, or 6.9%. The increase was favorably impacted by $2.7 million due to the lease up of Twinbrook Quarter Phase I. Exclusive of Twinbrook Quarter Phase I, same property revenue increased $2.0 million primarily due to (a) higher commercial base rent of $1.3 million and (b) higher expense recoveries of $0.9 million. Same property revenue for the 2026 Period compared to the 2025 Period increased $9.8 million, or 7.2%. The increase was favorably impacted by $5.8 million due to the lease up of Twinbrook Quarter Phase I. Exclusive of Twinbrook Quarter Phase I, same property revenue increased $4.0 million primarily due to (a) higher commercial base rent of $2.1 million, (b) higher expense recoveries of $1.6 million and (c) higher residential base rent of $0.3 million. Mixed-Use same property revenue is composed of the following: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Residential Mixed-Use properties (residential activity) (1) $ 13,263 $ 11,529 $ 26,456 $ 22,125 Office Mixed-Use properties (2) 9,586 9,797 19,215 19,578 Residential Mixed-Use properties (retail activity) (3) 2,155 1,191 4,171 2,316 Total Mixed-Use same property revenue $ 25,004 $ 22,517 $ 49,842 $ 44,019 (1) Includes Clarendon South Block, The Waycroft, Park Van Ness and The Milton at Twinbrook Quarter. (2) Includes Avenel Business Park, Clarendon Center - North and South Blocks, 601 Pennsylvania Avenue and Washington Square. (3) Includes The Waycroft, Park Van Ness and Twinbrook Quarter Phase I. Same property net operating income Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Net income $ 11,546 $ 14,181 $ 23,589 $ 27,029 Interest expense, net and amortization of deferred debt costs 20,034 16,820 39,684 33,567 Depreciation and amortization of deferred leasing costs 16,038 14,098 31,954 28,621 General and administrative 6,810 6,415 13,257 12,427 Gain on disposition of property - (120) - (120) Revenue adjustments (1) (2,435) (2,739) (4,842) (5,095) Total property net operating income 51,993 48,655 103,642 96,429 Acquisitions, dispositions, and development properties 14 - 453 - Total same property net operating income $ 52,007 $ 48,655 $ 104,095 $ 96,429 Shopping Centers $ 36,555 $ 35,296 $ 73,033 $ 70,569 Mixed-Use properties 15,452 13,359 31,062 25,860 Total same property net operating income $ 52,007 $ 48,655 $ 104,095 $ 96,429 Shopping Center property net operating income $ 36,555 $ 35,296 $ 73,033 $ 70,569 Shopping Center acquisitions, dispositions and development properties - - - - Total Shopping Center same property net operating income $ 36,555 $ 35,296 $ 73,033 $ 70,569 Mixed-Use property net operating income $ 15,438 $ 13,359 $ 30,609 $ 25,860 Mixed-Use acquisitions, dispositions and development properties 14 - 453 - Total Mixed-Use same property net operating income $ 15,452 $ 13,359 $ 31,062 $ 25,860 (1) Revenue adjustments are straight-line base rent and amortization of premiums and discounts related to above/below market leases. Same property net operating income increased $3.4 million, or 6.9%, for the 2026 Quarter compared to the 2025 Quarter. The increase was favorably impacted by $2.5 million due to the lease up of Twinbrook Quarter Phase I. Exclusive of Twinbrook Quarter Phase I, same property net operating income increased $0.9 million primarily due to (a) higher commercial base rent of $1.3 million partially offset by (b) lower expense recoveries, net of expenses, of $0.4 million. Shopping Center same property net operating income for the 2026 Quarter totaled $36.6 million, an increase of $1.3 million, or 3.6%, compared to the 2025 Quarter. Shopping Center same property net operating income increased primarily due to higher base rent of $1.2 million. Mixed-Use same property net operating income for the 2026 Quarter totaled $15.5 million, an increase of $2.1 million compared to the 2025 Quarter primarily due to the lease up of Twinbrook Quarter Phase I of $2.5 million. Exclusive of Twinbrook Quarter Phase I, Mixed-Use same property net operating income decreased by $0.4 million primarily due to lower expense recoveries, net of expenses, of $0.3 million. Same property net operating income increased $7.7 million, or 7.9%, for the 2026 Period compared to the 2025 Period. The increase was favorably impacted by $5.6 million due to the lease up of Twinbrook Quarter Phase I. Exclusive of Twinbrook Quarter Phase I, same property net operating income increased $2.1 million, primarily due to higher commercial base rent of $2.1 million. Shopping Center same property net operating income for the 2026 Period totaled $73.0 million, an increase of $2.5 million, or 3.5%, compared to the 2025 Period. Shopping Center same property net operating income increased primarily due to (a) higher base rent of $2.1 million and (b) lower credit loss on operating lease receivables, net, of $0.5 million. Mixed-Use same property net operating income for the 2026 Period totaled $31.1 million, an increase of $5.2 million, or 20.1%, compared to the 2025 Period primarily due to the lease up of Twinbrook Quarter Phase I of $5.6 million. Exclusive of Twinbrook Quarter Phase I, Mixed-Use same property net operating income decreased by $0.4 million primarily due to higher credit losses on operating lease receivables, net, of $0.4 million. Mixed-Use same property net operating income is composed of the following: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Residential Mixed-Use properties (residential activity) (1) $ 8,086 $ 6,500 $ 16,104 $ 12,232 Office Mixed-Use properties (2) 5,963 6,208 12,103 12,326 Residential Mixed-Use properties (retail activity) (3) 1,403 651 2,855 1,302 Total Mixed-Use same property net operating income $ 15,452 $ 13,359 $ 31,062 $ 25,860 (1) Includes Clarendon South Block, The Waycroft, Park Van Ness and The Milton at Twinbrook Quarter. (2) Includes Avenel Business Park, Clarendon Center - North and South Blocks, 601 Pennsylvania Avenue and Washington Square. (3) Includes The Waycroft, Park Van Ness and Twinbrook Quarter Phase I. Impact of Inflation The impact of rising operating expenses due to inflation on the operating performance of the Company's portfolio is partially mitigated by terms in substantially all of the Company's retail and office leases that contain provisions designed to increase revenues to offset the adverse impact of inflation on the Company's results of operations. These provisions include upward periodic adjustments in base rent due from tenants, usually a stipulated increase, and, to a lesser extent, based on the change in the consumer price index, commonly referred to as the CPI. In addition, many of the Company's properties are leased to retail and office tenants under long-term leases, which provide for reimbursement of operating expenses by tenants. These leases tend to reduce the Company's exposure to rising property expenses due to inflation. Inflation and increased costs may have an adverse impact on the Company's retail and office tenants if increases in their operating expenses exceed increases in their revenue. In a highly inflationary environment, we may not be able to raise apartment rental rates at or above the rate of inflation, which could reduce our profit margins. Liquidity and Capital Resources Cash, cash equivalents and restricted cash totaled $20.2 million and $5.3 million at June 30, 2026 and 2025, respectively. The Company maintains cash balances at various financial institutions and, from time to time, those balances may exceed federally insured limits. The Company has not experienced any losses on such deposits and actively monitors its banking relationships to mitigate its exposure to significant credit risk on those deposits. The Company's cash flow is affected by its operating, investing and financing activities, as described below. Six Months Ended June 30, (In thousands) 2026 2025 Net cash provided by operating activities $ 60,060 $ 56,978 Net cash used in investing activities (16,056) (54,568) Net cash used in financing activities (32,553) (7,406) Net increase (decrease) in cash, cash equivalents and restricted cash $ 11,451 $ (4,996) 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 outstanding debt. Investing Activities Net cash used in investing activities includes property acquisitions, developments, redevelopments, tenant improvements and other property capital expenditures. The $38.5 million decrease in cash used in investing activities is primarily due to (a) decreased development expenditures of $27.1 million and (b) decreased additions to real estate investments throughout the portfolio of $11.5 million. Financing Activities Net cash used in financing activities represents (a) cash used to repay and curtail loans, redeem preferred stock and pay dividends and distributions to holders of common stock, preferred stock and limited partnership units minus (b) cash received from loan proceeds and issuance of common stock, preferred stock and limited partnership units. See Note 5 to the consolidated financial statements for a discussion of financing activity. Liquidity Requirements Short-term liquidity requirements consist primarily of normal recurring operating expenses and capital expenditures, debt service requirements (including debt service relating to additional and replacement debt), distributions to common and preferred stockholders, distributions to unit holders, and amounts required for expansion and renovation of the Current Portfolio Properties and selective acquisition and development of additional properties. 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 Credit Facility. The Company is developing Twinbrook Quarter Phase I located in Rockville, Maryland. It includes 452 apartment units, an 81,000 square foot Wegmans supermarket, approximately 25,000 square feet of small shop space, and a 230,000 square foot office building. The office tower portion is not being constructed at this time. In connection with the development of the residential and retail portions of Twinbrook Quarter Phase I, we also invested in infrastructure and other items that will support both Twinbrook Quarter Phase I and other portions of the development of Twinbrook Quarter. Excluding imputed capitalized interest, the remaining investment to complete Twinbrook Quarter Phase I is not expected to exceed $5.0 million. A portion of the cost of the project is being financed by a $145.0 million construction-to-permanent loan. As of June 30, 2026, the outstanding balance of the loan was $141.2 million, net of unamortized deferred debt costs. The Milton at Twinbrook Quarter opened and residential tenants began moving in on October 1, 2024. As of August 3, 2026, 431 of the 452 (95.4%) residential units were leased and occupied. Of the approximately 106,000 square feet of ground floor retail, 101,400 square feet (95.7%) have been leased. The Wegmans supermarket at Twinbrook Quarter opened for business on June 25, 2025. As of August 3, 2026, including the Wegmans supermarket, approximately 95,100 square feet of the retail space is open and the remaining leased retail space is expected to open at various times during 2026 as tenants complete their buildouts. The development potential of all phases of the entire 18.4 acre Twinbrook Quarter site totals 1,865 residential units, 473,000 square feet of retail space, and 431,000 square feet of office space. The Company is also developing Hampden House, a project located in downtown Bethesda, Maryland, which includes 366 apartment units and approximately 10,100 square feet of retail space. Excluding imputed capitalized interest, the remaining investment to complete the project is not expected to exceed $4.2 million. A portion of the cost of the project is being financed by a $133.0 million construction-to-permanent loan. As of June 30, 2026, the outstanding balance of the loan was $130.6 million, net of unamortized deferred debt costs. Hampden House opened and residential tenants began moving in on October 1, 2025. As of August 3, 2026, 235 of the 366 (64.2%) residential units are leased and occupied. Visual Comfort & Co. opened for business on March 9, 2026 and The Food Market opened for business on June 27, 2026. As of August 3, 2026, approximately 8,600 square feet of the 10,100 (85.1%) square feet of retail space have been leased. During 2025, the Company entered into a lease with Publix for a new grocery store, which we will construct, at Ashland Square in Prince William County, Virginia. The Ashland Square property currently includes three pad sites with operating tenants. Construction of Ashland Square Phase II is underway. Two pad sites with executed leases are on track for delivery with construction expected to commence this summer. Site development work for the Publix and inline retail commenced in late June 2026 with clearing and initial grading. Vertical construction is expected to commence later this year. Construction is expected to be complete in 2028. Ashland Square Phase II leasing is progressing with executed leases for 82,000 square feet, or 65.7%, of the shopping center. When complete, Ashland Square is expected to ultimately comprise approximately 124,000 square feet of retail space including the 50,325 square foot Publix, the three existing pad sites, four additional pad sites and approximately 30,000 square feet of small shop space. Long-term liquidity requirements consist primarily of obligations under our long-term debt and dividends paid to our preferred shareholders. The Company anticipates that long-term liquidity requirements will also include amounts required for property acquisitions and developments. The Company may also 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 remainder of the year, developments, expansions or acquisitions (if any) are expected to be funded with available cash, bank borrowings from the Credit Facility, construction and permanent financing, proceeds from the operation of the Company's DRIP (as defined below) 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. Dividend Reinvestments In December 1995, the Company established a Dividend Reinvestment and Stock Purchase Plan ("DRIP") to allow its common stockholders and holders of limited partnership interests an opportunity to buy additional shares of common stock by reinvesting all or a portion of their dividends or distributions. The DRIP provides for investing in newly issued shares of common stock at a 3% discount from market price without payment of any brokerage commissions, service charges or other expenses. All expenses of the DRIP are paid by the Company. The Company issued 81,377 and 31,717 shares under the DRIP at a weighted average discounted price of $32.00 and $33.30 per share during the six months ended June 30, 2026 and 2025, respectively. The Company issued 359,485 and 225,026 limited partnership units under the DRIP at a weighted average price of $32.10 and $32.37 per unit during the six months ended June 30, 2026 and 2025, respectively. The Company also credited 3,640 and 4,227 shares to directors pursuant to the reinvestment of dividends specified by the Directors' Deferred Compensation Plan at a weighted average discounted price of $31.99 and $33.26 per share, during the six months ended June 30, 2026 and 2025, respectively. Capital Strategy and Financing Activity As a general policy, the Company intends to maintain a ratio of total debt to total estimated asset value of 50% or less and to actively manage the Company's leverage and debt expense on an ongoing basis in order to maintain prudent coverage of fixed charges. Asset value is the aggregate fair market value of the Current Portfolio Properties and any subsequently acquired properties as reasonably determined by management by reference to each property's aggregate cash flow. Given the Company's current debt level, it is management's belief that the ratio of the Company's debt to estimated total asset value was below 50% as of June 30, 2026. The organizational documents of the Company do not limit the absolute amount or percentage of indebtedness that it may incur. The Board may, from time to time, reevaluate the Company's 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 then deems relevant. The Board may modify the Company's capitalization policy based on such a reevaluation without shareholder approval and may increase or decrease the Company's debt to total estimated asset market value ratio above or below 50% or may waive the policy for certain periods of time. At June 30, 2026, the Company had a $600.0 million Credit Facility comprised of a $460.0 million Revolving Credit Facility and a $140.0 million Term Loan. The Revolving Credit Facility matures on July 30, 2029 and can be extended for one additional year, subject to satisfaction of certain conditions. The Term Loan matures on July 28, 2028 and has two one-year extension options, subject to satisfaction of certain conditions. Interest accrues at SOFR plus an applicable spread, which is determined by certain leverage tests. As of June 30, 2026, the applicable spread for borrowings was 150 basis points for the Revolving Credit Facility and 145 basis points for the Term Loan. Letters of credit may be issued under the Credit Facility. On June 30, 2026, based on the value of the Company's unencumbered properties calculated in accordance with the terms of the Credit Facility, approximately $158.1 million was available and undrawn under the Credit Facility, $229.0 million was outstanding and approximately $464,000 was committed for letters of credit. Saul Centers and certain consolidated subsidiaries of the Operating Partnership have guaranteed the payment obligations of the Operating Partnership under the Credit Facility. The Credit Facility requires the Company and its subsidiaries to maintain compliance with certain financial covenants, including, 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 June 30, 2026, the Company was in compliance with all such covenants. See Note 5 to the consolidated financial statements for a discussion of all financing activity. On August 23, 2022, the Company entered into two floating-to-fixed interest rate swap agreements to manage the interest rate risk associated with $100.0 million of its variable-rate debt. Each swap agreement became effective October 3, 2022 and each has a $50.0 million notional amount. One agreement terminates on October 1, 2027 and effectively fixes SOFR at 2.96%. The other agreement terminates on October 1, 2030 and effectively fixes SOFR at 2.91%. Because the interest-rate swaps effectively fix SOFR for $100.0 million of variable-rate debt, unless otherwise indicated, $100.0 million of variable-rate debt is being treated as fixed-rate debt for disclosure purposes. The Company has designated the agreements as cash flow hedges for accounting purposes. The Company has a $145.0 million construction-to-permanent loan related to the residential and retail portions of Phase I of the Twinbrook Quarter development project. As of June 30, 2026, the balance of the loan was $141.2 million, net of unamortized deferred debt costs. The Company has a $133.0 million construction-to-permanent loan related to the Hampden House development project. As of June 30, 2026, the balance of the loan was $130.6 million, net of unamortized deferred debt costs. Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on the Company's financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. Funds From Operations We use certain non-GAAP measures, in addition to certain performance metrics determined under GAAP, because we believe these measures improve the understanding of the operating results. We believe these non-GAAP measures provide useful information to our Board, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, as well as for determining management incentive compensation and budgeting, forecasting and planning purposes. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP measures. Funds From Operations ("FFO") 1 available to common stockholders and noncontrolling interests (after deducting preferred stock dividends) for the 2026 Quarter totaled $24.8 million, a decrease of 2.3% compared to the 2025 Quarter. FFO available to common stockholders and noncontrolling interests was adversely impacted by $2.4 million, or $0.07 per basic and diluted share, due to the initial operations of Hampden House. Exclusive of Hampden House, FFO available to common stockholders and noncontrolling interests increased by $1.8 million primarily due to (a) higher residential base rent of $1.4 million and (b) higher commercial base rent of $1.2 million partially offset by (c) higher general and administrative costs of $0.4 million and (d) higher interest expense, net and amortization of deferred debt costs of $0.3 million. 1 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 depreciable 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. 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 we believe occurs with our 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. FFO available to common stockholders and noncontrolling interests (after deducting preferred stock dividends) for the 2026 Period totaled $49.9 million, unchanged from the 2025 Period. FFO available to common stockholders and noncontrolling interests was adversely impacted by $5.6 million, or $0.16 per basic and diluted share, due to the initial operations of Hampden House. Exclusive of Hampden House, FFO available to common stockholders and noncontrolling interests increased by $5.6 million primarily due to (a) higher residential base rent of $3.5 million and (b) higher commercial base rent of $2.8 million partially offset by (c) higher general and administrative costs of $0.8 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 June 30, Six Months Ended June 30, (In thousands, except per share amounts) 2026 2025 2026 2025 Net income $ 11,546 $ 14,181 $ 23,589 $ 27,029 Subtract: Gain on disposition of property - (120) - (120) Add: Real estate depreciation and amortization 16,038 14,098 31,954 28,621 FFO 27,584 28,159 55,543 55,530 Subtract: Preferred stock dividends (2,799) (2,799) (5,597) (5,597) FFO available to common stockholders and noncontrolling interests $ 24,785 $ 25,360 $ 49,946 $ 49,933 Weighted average shares and units: Basic 35,762 34,845 35,644 34,765 Diluted 35,816 34,866 35,691 34,786 Basic and diluted FFO per share available to common stockholders and noncontrolling interests $ 0.69 $ 0.73 $ 1.40 $ 1.44 Acquisitions and Redevelopments Management anticipates that during the remainder of the year the Company may redevelop certain of the Current Portfolio Properties and 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 remainder of the year, any developments, expansions or acquisitions are expected to be funded with bank borrowings from the Credit Facility, construction financing, proceeds from the operation of the Company's dividend reinvestment plan or other external capital resources available to the Company. The Company has been selectively involved in acquisition, development, redevelopment and renovation activities. It continues to evaluate the acquisition of land parcels for retail and mixed-use development and acquisitions of operating properties for opportunities to enhance operating income and cash flow growth. The Company also continues to analyze redevelopment, renovation and expansion opportunities within the portfolio. Restricted Stock Compensation On May 17, 2024, following shareholder approval, the Company established the Saul Centers, Inc. 2024 Stock Incentive Plan (the "Incentive Plan"), under which various equity incentives may be granted. Restricted stock awards to officers are divided equally between time-vested and performance-based awards, and restricted stock awards granted to non-employee directors vest on an annual basis over three years. For accounting purposes, performance-based awards are not treated as granted until the Board establishes the target for those awards. As of June 30, 2026, (a) no expense has been recognized and (b) no estimate of future expense has been made for the 106,700 performance-based restricted shares awarded to officers where the accounting grant date has not occurred. If those awards had been granted for accounting purposes as of June 30, 2026, the additional estimated future expense would have been approximately $3.6 million, calculated using the fair value method and based on the closing share price of $37.39 on June 30, 2026, the final trading day of the 2026 Period. Portfolio Leasing Status Commercial Properties 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 ("Commercial"), which includes all properties except for residential properties ("Residential"), which include apartments within Clarendon South Block, The Waycroft, Park Van Ness, The Milton at Twinbrook Quarter and Hampden House. For purposes of this table, annualized effective rent is annualized base rent minus amortized tenant improvements and amortized leasing commissions. Average Commercial Rents per Square Foot Six Months Ended June 30, 2025 to 2026 Change 2026 2025 Amount Percent Base rent $ 23.01 $ 22.34 $ 0.67 3.0 % Effective rent $ 21.25 $ 20.68 $ 0.57 2.8 % 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 June 30, 2026 50 9 7,814,783 1,252,860 95.7 % 88.6 % June 30, 2025 50 8 7,808,783 1,242,809 94.6 % 89.7 % As of June 30, 2026, 94.7% of the Commercial portfolio was leased, compared to 94.0% as of June 30, 2025. On a same property basis, which excludes Hampden House, 94.7% of the Commercial portfolio was leased as of June 30, 2026 compared to 94.0% as of June 30, 2025. Included in the 94.7% of space leased as of June 30, 2026, is approximately 135,591 square feet of space, representing 1.5% of total Commercial square footage, that has not yet been occupied by the respective tenants. Collectively, these leases are expected to produce approximately $4.1 million of additional annualized base rent, exclusive of straight-line base rent, an average of $30.50 per square foot, upon tenant occupancy and following any contractual rent concessions. The Mixed-Use Commercial leasing percentage is composed of commercial leases at office mixed-use properties and residential mixed-use properties. On a comparative same property basis, the leasing percentage at office mixed-use properties decreased to 87.2% as of June 30, 2026 from 88.7% as of June 30, 2025. On a comparative same property basis, which excludes Hampden House, the retail leasing percentage at residential mixed-use properties increased to 97.1% as of June 30, 2026 from 96.2% as of June 30, 2025. The following table shows selected data for leases executed in the indicated periods excluding first generation and/or development leases. The information is based on executed leases without adjustment for the timing of occupancy, tenant defaults, or landlord concessions. The base rent for an expiring lease is the annualized contractual base rent, on a cash basis, as of the expiration date of the lease. The base rent for a new or renewed lease is the annualized contractual base rent, on a cash basis, as of the expected rent commencement date. Because tenants that execute leases may not ultimately take possession of their space or pay all of their contractual rent, the changes presented in the table provide information only about trends in market rental rates. The actual changes in rental income received by the Company may be different. Commercial Property Leasing Activity Average Base Rent per Square Foot Square Feet Number of Leases New/Renewed Leases Expiring Leases Three Months Ended June 30, Shopping Centers Mixed-Use Shopping Centers Mixed-Use Shopping Centers Mixed-Use Shopping Centers Mixed-Use 2026 293,023 26,144 56 8 $ 21.77 $ 46.92 $ 20.95 $ 50.75 2025 417,072 59,749 64 10 $ 21.81 $ 47.62 $ 20.45 $ 45.96 Additional information about the commercial leasing activity during the three months ended June 30, 2026 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. Commercial Property Leasing Activity New Leases First Generation/Development Leases Renewed Leases Number of leases 15 - 49 Square feet 83,469 - 235,698 Per square foot average annualized: Base rent $ 21.75 $ - $ 24.57 Tenant improvements (2.01) - (0.52) Leasing costs (0.54) - (0.13) Rent concessions (0.58) - (0.13) Effective rents $ 18.62 $ - $ 23.79 The following table sets forth, by year of expiration, the aggregate amount of base rent and leasable area for leases in place at the Shopping Centers as of June 30, 2026, for each of the next ten years beginning with 2026, assuming that none of the tenants exercise renewal options and excluding an aggregate of 339,543 square feet of unleased space, which represented 4.3% of the gross leasable area ("GLA") of the Shopping Centers as of June 30, 2026. Lease Expirations of Shopping Center Properties Year of Lease Expiration Leasable Area Represented by Expiring Leases Percentage of Leasable Area Represented by Expiring Leases Annual Base Rent Under Expiring Leases (1) Percentage of Annual Base Rent Under Expiring Leases Annual Base Rent per Square Foot 2026 (2) 191,686 sf 2.4 % $ 4,171,553 2.7 % $ 21.76 2027 782,014 10.0 % 17,441,031 11.5 % 22.30 2028 1,426,011 18.3 % 23,175,397 15.2 % 16.25 2029 1,334,775 17.1 % 26,566,661 17.5 % 19.90 2030 796,863 10.2 % 18,385,893 12.1 % 23.07 2031 875,109 11.2 % 17,266,951 11.4 % 19.73 2032 390,482 5.0 % 7,513,594 4.9 % 19.24 2033 271,824 3.5 % 6,968,250 4.6 % 25.64 2034 229,026 2.9 % 5,299,612 3.5 % 23.14 2035 437,449 5.6 % 10,648,046 7.0 % 24.34 2036 403,811 5.2 % 6,858,364 4.5 % 16.98 Thereafter 336,190 4.3 % 7,739,020 5.1 % 23.02 Total 7,475,240 sf 95.7 % $ 152,034,372 100.0 % $ 20.34 (1) Calculated using annualized contractual base rent payable as of June 30, 2026 for the expiring GLA, excluding expenses payable by or reimbursable from tenants. (2) The estimated market base rent per square foot for 2026 expirations, including 51,336 square feet of leases that are month-to-month, is $22.58 per square foot. The following table sets forth, by year of expiration, the aggregate amount of base rent and leasable area for commercial leases in place at the Mixed-Use Properties as of June 30, 2026, for each of the next ten years beginning with 2026, assuming that none of the tenants exercise renewal options and excluding an aggregate of 143,433 square feet of unleased office and retail space, which represented 11.4% of the GLA of the commercial space within the Mixed-Use Properties as of June 30, 2026. Commercial Lease Expirations of Mixed-Use Properties Year of Lease Expiration Leasable Area Represented by Expiring Leases Percentage of Leasable Area Represented by Expiring Leases Annual Base Rent Under Expiring Leases (1) Percentage of Annual Base Rent Under Expiring Leases Annual Base Rent per Square Foot 2026 (2) 43,594 sf 3.5 % $ 1,172,946 3.1 % $ 26.91 2027 85,071 6.8 % 2,479,879 6.6 % 29.15 2028 79,935 6.4 % 2,175,490 5.8 % 27.22 2029 59,652 4.8 % 2,024,449 5.4 % 33.94 2030 93,495 7.5 % 4,129,884 11.1 % 44.17 2031 222,720 17.8 % 5,955,673 16.0 % 26.74 2032 32,083 2.5 % 1,063,609 2.9 % 33.15 2033 85,721 6.8 % 4,167,188 11.2 % 48.61 2034 62,711 5.0 % 2,808,397 7.5 % 44.78 2035 97,496 7.8 % 1,678,535 4.5 % 17.22 2036 123,562 9.9 % 7,049,808 18.9 % 57.05 Thereafter 123,387 9.8 % 2,631,138 7.0 % 21.32 Total 1,109,427 sf 88.6 % $ 37,336,996 100.0 % $ 33.65 (1) Calculated using annualized contractual base rent payable as of June 30, 2026, for the expiring GLA, excluding expenses payable by or reimbursable from tenants. (2) The estimated market base rent per square foot for 2026 expirations, including 3,595 square feet of leases that are month-to-month, is $25.56 per square foot. Residential Properties As of June 30, 2026, the Company had 1,569 apartment leases, 553 of which will expire in 2026, 992 of which will expire in 2027 and 24 of which will expire in 2028. Annual base rent due under these leases is $23.2 million, $17.5 million and $0.2 million for the years ending December 31, 2026, 2027 and 2028, respectively. On a same property basis, excluding Hampden House, the Residential portfolio was 97.3% leased at June 30, 2026 compared to 90.5% at June 30, 2025. The 6.8 percentage point increase is primarily due to increased occupancy at The Milton at Twinbrook Quarter, which was 96.7% leased at June 30, 2026 compared to 77.0% at June 30, 2025. Excluding The Milton at Twinbrook Quarter and Hampden House, the Residential portfolio was 97.6% leased at June 30, 2026 compared to 96.6% at June 30, 2025. Residential Same Property Leasing Activity Average Rent per Square Foot Three Months Ended June 30, Number of leases New/Renewed Leases Expiring Leases 2026 281 $ 3.71 $ 3.60 2025 254 3.77 3.55

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