News Column

SAUL CENTERS INC - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations

August 4, 2014

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, 2013. 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, 2013.

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, 2014. Recent Developments Effective as of May 9, 2014, Mr. J. Page Lansdale was promoted and named as President and Chief Operating Officer of the Company. Mr. Lansdale served as our Executive Vice President - Real Estate since September 4, 2012. Prior to that time, he served as a Senior Vice President of the Company since 2009. Beginning in 1990, Mr. Lansdale held various positions with Chevy Chase Bank, F.S.B., including most recently Senior Vice President of Corporate Real Estate from 2004 to 2009. Also effective as of May 9, 2014, Ms. Christine Nicolaides Kearns was hired as the Company's Executive Vice President and Chief Legal and Administrative Officer. Prior to joining the Company, Ms. Kearns was a Partner with the law firm Pillsbury Winthrop Shaw Pittman LLP for 20 years, most recently serving as the Managing Partner of the firm's Washington, DC office. -26-



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Mr. Lansdale and Ms. Kearns are also officers of other entities affiliated with the Company and controlled by B. Francis Saul II and his family members, which we refer to as the Saul Organization. The Company believes that these officers will spend sufficient management time to meet their responsibilities as its officers. The Operating Partnership entered into an Amended and Restated Credit Agreement dated June 24, 2014, by and among the Operating Partnership, as Borrower, Wells Fargo Bank, National Association, as Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, Wells Fargo Securities, LLC, as Sole Lead Arranger and Sole Bookrunner and Wells Fargo Bank, National Association, JP Morgan Chase Bank, N.A., Capital One, N.A., and Citizens Bank of Pennsylvania, as Lenders (the "New Credit Agreement"). The New Credit Agreement replaces the Credit Agreement dated May 21, 2012, by and among the Operating Partnership, as Borrower, Wells Fargo Bank, National Association, as Administrative Agent, JP Morgan Chase Bank, N.A., as Syndication Agent, Wells Fargo Securities, LLC, as Sole Lead Arranger and Sole Bookrunner and Wells Fargo Bank, National Association, JP Morgan Chase Bank, N.A., Capital One, N.A. and Citizens Bank of Pennsylvania as Lenders (as amended, the "Original Agreement"). The Original Agreement consisted of a $175,000,000 unsecured revolving credit facility (the "Original Facility") with a maturity date of May 20, 2016. As of the date the Original Facility was replaced, the applicable interest rate was 1.75% (LIBOR of 0.15% plus a spread of 1.60%). The New Credit Agreement consists of a $275,000,000 revolving credit facility (the "New Facility") maturing on June 23, 2018, which term may be extended by the Company for one additional year, subject to satisfaction of certain conditions. The Company and certain subsidiaries of the Operating Partnership and the Company have guaranteed the payment obligations of the Partnership under the New Facility. 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 to operate its 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 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 apartments). For purposes of this table, annualized effective rent is annualized base rent minus amortized tenant improvements and amortized leasing commissions. Six months ended June 30, 2014 2013 2012 2011 2010 Base rent $ 18.03$ 17.67$ 16.95$ 16.54$ 16.46 Effective rent $ 16.42$ 15.77$ 15.41$ 15.09$ 15.09 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. -27-



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During the first quarter of 2014, the Company completed the demolition of Van Ness Square and incurred approximately $503,000 of demolition costs. The Company is developing Park Van Ness, a 271-unit residential project with approximately 9,000 square feet of street-level retail, below street-level structured parking, and amenities including a community room, landscaped courtyards, a fitness room and a rooftop pool and deck. Construction is projected to be completed by late 2015. Excavation is substantially complete and sub-surface utility installation and pouring of building footings have commenced. The total cost of the project, excluding predevelopment expense and land, which the Company has owned, is expected to be approximately $93.0 million, a portion of which will be financed with a $71.6 million construction-to-permanent loan of which zero was outstanding at June 30, 2014. In April 2014, the Company purchased for $11.0 million a single-tenant retail property with a 40,700 square foot furniture store located at 1582 Rockville Pike in Rockville, Maryland, and concurrently sold to the same party, for $11.0 million, the 53,765 square foot Olney Center located in Olney, Maryland. 1582 Rockville Pike is contiguous with and an expansion of the Company's assets at 1500 and 1580 Rockville Pike. Simultaneously with the sale of the Olney Center, the Company entered into a lease of the property with the buyer and the Company continues to operate, lease and manage the property. The lease term is 20 years and the Company has the option to purchase the property for $14.6 million at the end of the lease term. The purchaser has the right to sell the property to the Company at any time from and after April 2016 at a price equal to $11.0 million increased by 1.5% annually beginning January 1, 2015 and continuing each January thereafter. The Company has accounted for this transaction as a secured financing. In April 2014, the Company sold for $7.5 million the 70,040 square foot Giant Center located in Milford Mill, Maryland and recognized a $6.1 million gain. As of March 31, 2014, the carrying amounts of the associated assets and liabilities were $0.5 million and $0.1 million, respectively. There was no debt on the property. The Company's tenants were further impacted by winter weather, as heavy snowfall in the Mid-Atlantic states during the first quarter of 2014 hindered the ability of customers to shop. The costs of removing snow from the Company's properties during the three months ended March 31, 2014, was approximately $2.0 million, approximately 60% of which will be billable to tenants. During the most recent downturn in the national real estate market, the effects on the office and retail markets in the metropolitan Washington, D.C. area, where the majority of the Company's properties are located, initially were less severe than in many other areas of the country. However, continued economic stress in the local economies where the Company's properties are located resulting from (a) issues facing the Federal government relating to spending cuts and budget policies (b) the severe winter weather conditions may lead to increased tenant bankruptcies, increased vacancies and decreased rental rates. While overall consumer confidence appears to have improved, retailers continue to be cautious about capital allocation when implementing store expansion. Vacancies continue to remain elevated in certain submarkets compared to pre-recession levels; however 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 94.2% at June 30, 2014, compared to 93.6% at June 30, 2013. 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 June 30, 2014, amortizing fixed-rate debt with staggered maturities from 2015 to 2028 represented approximately 96.4% of the Company's notes payable, thus minimizing refinancing risk. As of June 30, 2014, the Company's variable-rate debt consisted of a $14.7 million bank term loan secured by Northrock Shopping Center, and a $15.2 million bank term loan secured by Metro Pike Center. As of June 30, 2014, the Company has availability of approximately $274.4 million under its $275.0 million unsecured revolving line of credit. Although it is management's present intention to concentrate future acquisition and development activities on community and neighborhood shopping centers and 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. -28-



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Critical Accounting Policies The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), which requires management to make certain estimates and assumptions that affect the reporting of financial position and results of operations. If judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied resulting in a different presentation of the financial statements. The Company has identified the following policies that, due to estimates and assumptions inherent in these policies, involve a relatively high degree of judgment and complexity. Real Estate Investments Real estate investment properties are stated at historic cost less depreciation. Although the Company intends to own its real estate investment properties over a long term, from time to time it will evaluate its market position, market conditions, and other factors and may elect to sell properties that do not conform to the Company's investment profile. Management believes that the Company's real estate assets have generally appreciated in value since their acquisition or development and, accordingly, the aggregate current value exceeds their aggregate net book value and also exceeds the value of the Company's liabilities as reported in the financial statements. Because the financial statements are prepared in conformity with GAAP, they do not report the current value of the Company's real estate investment properties. 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 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 Company determines the fair value of above and below market intangibles associated with in-place leases 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 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 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 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 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 -29-



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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. 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 except when doubt exists as to collectability, in which case the accrual is discontinued. 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. Once it has been determined 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

Same property revenue and same property operating income are non-GAAP financial measures of performance and improve the comparability of these measures by excluding the results of properties which were not in operation for the entirety of the comparable reporting periods. We define same property revenue as total revenue minus the sum of interest income and revenue of properties not in operation for the entirety of the comparable reporting periods, and we define same property operating income as net income plus the sum of interest expense and amortization of deferred debt costs, depreciation and amortization, general and administrative expense, loss on the early extinguishment of debt (if any), predevelopment expense and acquisition related costs, minus the sum of interest income, the change in the fair value of derivatives, gains on property dispositions (if any) and the results 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 -30-



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operating real estate assets, general and administrative expenses or other gains and losses that relate to ownership of our properties. We believe the exclusion of these items from revenue and operating income is useful because the resulting measures capture the actual revenue generated and actual expenses incurred by operating our properties. Same property revenue and same property 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 revenue and operating income under GAAP to same property revenue and operating income for the indicated periods. The same property results include 49 Shopping Centers and 6 Mixed-Use properties for each period. Same property revenue (in thousands) Three months ended June 30, Six months ended June 30, 2014 2013 2014 2013 Total revenue $ 52,286$ 48,809$ 105,233$ 97,995 Less: Interest income (21 ) (13 ) (35 ) (44 ) Less: Acquisitions, dispositions and development properties (464 ) (247 ) (836 ) (859 )



Total same property revenue $ 51,801$ 48,549 $

104,362 $ 97,092 Shopping centers $ 38,592$ 35,575$ 78,039$ 71,443 Mixed-Use properties 13,209 12,974 26,323 25,648



Total same property revenue $ 51,801$ 48,549 $

104,362 $ 97,092

The $3.3 million increase in same property revenue for the 2014 quarter compared to the 2013 quarter was primarily due to (a) a bankruptcy settlement and collection related to a former tenant at Seven Corners ($1.6 million), (b) a 55,000 square foot increase in leased space ($240,000) and (c) a $0.57 per square foot increase in base rent ($1.2 million). The $7.3 million increase in same property revenue for the six months ended June 30, 2014 compared to the six months ended June 30, 2013 is due primarily to (a) a bankruptcy settlement and collection related to a former tenant at Seven Corners ($1.6 million), (b) the impact of a lease termination at Seven Corners ($1.2 million), (c) higher expense recoveries primarily as a result of snow removal ($1.4 million), (d) a 78,100 square foot increase in leased space ($690,000) and (e) a $0.36 per square foot increase in base rent ($1.5 million). -31-



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Same property operating income

Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2014 2013 2014 2013 Net income $ 20,487$ 7,762$ 33,198$ 11,160 Add: Interest expense and amortization of deferred debt costs 11,486 11,709 22,953 23,426 Add: Depreciation and amortization of deferred leasing costs 10,309 12,472 20,489 28,824 Add: General and administrative 4,023 3,925 8,703 7,329 Add: Predevelopment expenses - 1,233 503 3,582 Add: Acquisition related costs 216 - 379 - Add (Less): Change in fair value of derivatives 5 (51 ) 7 (61 ) Less: Gains on property dispositions (6,069 ) - (6,069 ) - Less: Interest income (21 ) (13 ) (35 ) (44 ) Property operating income 40,436 37,037 80,128 74,216 Less: Acquisitions, dispositions & development property 399 150 672 454 Total same property operating income $ 40,037$ 36,887$ 79,456$ 73,762 Shopping centers $ 30,655$ 27,783$ 60,711$ 55,933 Mixed-Use properties 9,382 9,104



18,745 17,829 Total same property operating income $ 40,037$ 36,887$ 79,456$ 73,762

Same property operating income increased $3.2 million for the 2014 quarter compared to the 2013 quarter due primarily to (a) the impact of a bankruptcy settlement and collection related to a former tenant at Seven Corners ($1.6 million), (b) a 55,000 square foot increase in leased space ($240,000) and (c) a $0.57 per square foot increase in base rent ($1.2 million). Same property operating income increased $5.7 million for the six months ended June 30, 2014 compared to the six months ended June 30, 2013 due primarily to (a) the impact of a lease termination at Seven Corners ($1.2 million), (b) the impact of a bankruptcy settlement and collection related to a former tenant at Seven Corners ($1.6 million), (c) a 78,100 square foot increase in leased space ($690,000) and (d) a $0.36 per square foot increase in base rent ($1.5 million). Three months ended June 30, 2014 compared to the three months ended June 30, 2013 Revenue Three Months Ended June 30, 2013 to 2014 Change (Dollars in thousands) 2014 2013 Amount Percent Base rent $ 41,038$ 39,553$ 1,485 3.8 % Expense recoveries 7,825 7,463 362 4.9 % Percentage rent 453 338 115 34.0 % Other 2,970 1,455 1,515 104.1 % Total revenue $ 52,286$ 48,809$ 3,477 7.1 % Base rent includes $552,700 and $695,000 for the three months ended June 30, 2014 and 2013, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $487,200 and $441,000, for the three months ended June 30, 2014 and 2013, respectively, to recognize income from the amortization of in-place leases acquired in connection with purchased real estate investment properties. Total revenue increased 7.1% in the three months ended June 30, 2014 ("2014 Quarter") compared to the three months ended June 30, 2013 ("2013 Quarter") primarily due to (a) the impact of a bankruptcy settlement and collection related to a former tenant at Seven Corners ($1.6 million), (b) a 55,000 square foot increase in leased space ($240,000) and (c) a $0.57 per square foot increase in base rent ($1.2 million). -32-



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Table of Contents Operating Expenses Three Months Ended June 30, 2013 to 2014 Change (Dollars in thousands) 2014 2013 Amount Percent Property operating expenses $ 6,138$ 6,041$ 97 1.6 % Provision for credit losses 107 285 (178 ) (62.5 )% Real estate taxes 5,584 5,433 151 2.8 % Interest expense and amortization of deferred debt costs 11,486 11,709 (223 ) (1.9 )% Depreciation and amortization of deferred leasing costs 10,309 12,472 (2,163 ) (17.3 )% General and administrative 4,023 3,925 98 2.5 % Acquisition related costs 216 - 216 - % Predevelopment expenses - 1,233 (1,233 ) (100.0 )% Total operating expenses $ 37,863$ 41,098$ (3,235 ) (7.9 )% Total operating expenses decreased 7.9% in the 2014 Quarter compared to the 2013 Quarter primarily due to $2.2 million of lower depreciation expense and $1.2 million of lower predevelopment expense, both of which related to the Company's redevelopment activities at Park Van Ness. Provision for credit losses. The provision for credit losses for the 2014 Quarter represents 0.20% of the Company's revenue, a decrease from 0.58% for the 2013 Quarter. Depreciation and amortization of deferred leasing costs. The decrease in depreciation and amortization to $10.3 million in the 2014 Quarter from $12.5 million in the 2013 Quarter was primarily due to $2.0 million of additional depreciation expense recorded in 2013 related to Park Van Ness. Predevelopment expenses. Predevelopment expenses represent costs incurred in connection with the redevelopment of Park Van Ness. Predevelopment expenses in the 2013 Quarter were comprised primarily of lease termination costs.



Six months ended June 30, 2014 compared to the six months ended June 30, 2013 Revenue

Six Months Ended June 30, 2013 to 2014 Change (Dollars in thousands) 2014 2013 Amount Percent Base rent $ 81,601$ 79,293$ 2,308 2.9 % Expense recoveries 16,614 15,077 1,537 10.2 % Percentage rent 905 938 (33 ) (3.5 )% Other 6,113 2,687 3,426 127.5 % Total revenue $ 105,233$ 97,995$ 7,238 7.4 % Base rent includes $0.8 million and $1.4 million for the six months ended June 30, 2014 and 2013, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $0.9 million and $0.9 million for the six months ended June 30, 2014 and 2013, respectively, to recognize income from the amortization of in-place leases acquired in connection with purchased real estate investment properties. Total revenue increased 7.4% in the six months ended June 30, 2014 ("2014 Period") compared to the six months ended June 30, 2013 ("2013 Period") primarily due to (a) increased base rent resulting from rent generated by the properties acquired in 2013 and 2014 ($500,000) and other base rent increases throughout the core portfolio ($2.2 million), (b) increased expense recoveries primarily related to snow removal, (c) the impact of a lease termination at Seven Corners ($1.2 million) and (d) the impact of a bankruptcy settlement and collection related to a former tenant at Seven Corners ($1.6 million), partially offset by (e) reduced base rent at Van Ness Square ($445,000). -33-



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Table of Contents Operating Expenses Six Months Ended June 30, 2013 to 2014 Change (Dollars in thousands) 2014 2013 Amount Percent Property operating expenses $ 13,723$ 11,990$ 1,733 14.5 % Provision for credit losses 310 549 (239 ) (43.5 )% Real estate taxes 11,037 11,196 (159 ) (1.4 )% Interest expense and amortization of deferred debt costs 22,953 23,426 (473 ) (2.0 )% Depreciation and amortization of deferred leasing costs 20,489 28,824 (8,335 ) (28.9 )% General and administrative 8,703 7,329 1,374 18.7 % Acquisition related costs 379 - 379 - % Predevelopment expenses 503 3,582 (3,079 ) (86.0 )% Total operating expenses $ 78,097$ 86,896$ (8,799 ) 10.1 % Total operating expenses decreased 10.1% in the 2014 Period compared to the 2013 Period primarily due to (a) $8.0 million of additional depreciation expense recorded in 2013 and (b) $3.1 million of lower predevelopment expense, both of which resulted from the Company's redevelopment activities at Van Ness Square, partially offset by (c) $1.7 million of increased snow removal costs. Property operating expenses. The increase in property operating expenses for the 2014 Period primarily reflects a $1.7 million increase in snow removal costs. Provision for credit losses. The provision for credit losses for the 2014 Period represents 0.29% of the Company's revenue, a decline from 0.56% for the 2013 Period. Interest expense and amortization of deferred debt. Interest expense decreased in the 2014 Period compared to the 2013 Period primarily because of a $209,000 increase in the amount of interest capitalized. Depreciation and amortization of deferred leasing costs. The decrease in depreciation and amortization to $20.5 million in the 2014 Period from $28.8 million in the 2013 Period was primarily due to $8.0 million of additional depreciation expense on the building at Van Ness Square as a result of the reduction of its estimated remaining useful life to four months effective January 1, 2013. General and administrative expense. The increase in general and administrative expense was primarily due to accrued severance costs totaling approximately $1.1 million. Predevelopment expenses. Predevelopment expenses represent costs incurred, in connection with the redevelopment of Van Ness Square. Predevelopment expenses in the 2014 Period were comprised primarily of demolition costs and in the 2013 Period were comprised primarily of lease termination costs. Liquidity and Capital Resources Cash and cash equivalents totaled $21.8 million and $12.9 million at June 30, 2014 and 2013, respectively. The Company's cash flow is affected by its operating, investing and financing activities, as described below. Six Months Ended June 30, (Dollars in thousands) 2014 2013



Net cash provided by operating activities $ 42,745$ 34,043 Net cash used in investing activities (15,211 ) (11,376 ) Net cash used in financing activities (23,002 ) (21,855 ) Increase in cash and cash equivalents $ 4,532$ 812

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Operating Activities Net cash provided by operating activities represents cash received primarily from rental income, plus other income, less property operating expenses, leasing costs, normal recurring general and administrative expenses and interest payments on debt outstanding. The $8.7 million increase in net cash provided by operating activities from 2013 to 2014 is primarily attributable to (a) increased property operating income ($3.1 million), exclusive of the following Seven Corners items, (b) the impact of a lease termination at Seven Corners ($1.2 million) and (c) the impact of a bankruptcy settlement and collection related to a former tenant at Seven Corners ($1.6 million). Investing Activities Net cash used in investing activities includes property acquisitions, developments, redevelopments, tenant improvements and other property capital expenditures. Tenant improvement and property capital expenditures totaled $7.0 million and $7.3 million for the six months ended June 30, 2014 and 2013, respectively. Financing Activities Net cash used in financing activities for the six months ended June 30, 2014 primarily reflects: the repayment of notes payable totaling $10.9 million;



revolving credit facility principal payments of $11.0 million;

distributions to common stockholders totaling $15.7 million;

distributions to holders of convertible limited partnership units in the

Operating Partnership totaling $5.7 million; and

distributions to preferred stockholders totaling $6.4 million,

which was partially offset by: advances of $11.0 million from the revolving credit facility;



proceeds of $8.9 million from the issuance of limited partnership units in

the Operating Partnership pursuant to our Dividend Reinvestment and Stock

Purchase Plan ("DRIP"); and

proceeds of $8.2 million from the issuance of common stock pursuant to our

DRIP, directors' Deferred Compensation Plan and the exercise of stock

options.

Net cash used in financing activities for the six months ended June 30, 2013 primarily reflects: revolving credit facility payments of $161.0 million;



repayment of notes payable totaling $47.2 million;

partial redemption of Series A Preferred Stock totaling $60.0 million;

redemption of Series B Preferred Stock totaling $79.3 million;

distributions to common stockholders totaling $14.5 million;

payments of $1.3 million for debt financing costs;

distributions to holders of convertible limited partnership units in the

Operating Partnership totaling $5.0 million; and

distributions made to preferred stockholders totaling $8.1 million;

which was partially offset by: proceeds of $83.6 million received from notes payable;



advances from the revolving credit facility totaling $123.0 million;

proceeds of $135.2 million from the issuance of Series C Preferred Stock; and

proceeds of $12.7 million from the issuance of common stock pursuant to our

DRIP, directors' Deferred Compensation Plan and the exercise of stock

options.

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 -35-



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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. The Company anticipates that long-term liquidity requirements will also include amounts required for property acquisitions and developments. The Company is developing Park Van Ness, a primarily residential project with street-level retail. The total cost of the project, excluding predevelopment expense and land costs, is expected to be approximately $93.0 million, a portion of which will be funded with a $71.6 million construction-to-permanent loan and the remainder will be funded with the Company's working capital, including its existing line of credit. 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 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 June 30, 2014, the scheduled maturities of debt, including scheduled principal amortization, for years ending December 31, were as follows: Scheduled Balloon Principal (In thousands) Payments Amortization Total



July 1 through December 31, 2014 $ - $ 11,223$ 11,223

2015 14,885 23,208 38,093 2016 28,879 23,496 52,375 2017 - 24,679 24,679 2018 27,748 24,821 52,569 2019 60,793 23,489 84,282 Thereafter 421,169 135,755 556,924 $ 553,474$ 266,671$ 820,145 Management believes that the Company's capital resources, which at June 30, 2014 included cash balances of approximately $21.8 million and borrowing availability of approximately $274.4 million on its unsecured revolving credit facility, will be sufficient to meet its liquidity needs for the foreseeable future. Dividend Reinvestments In December 1995, the Company established a 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 96,037 and 284,580 shares under the DRIP at a weighted average discounted price of $44.54 and $42.25 per share, during the six months ended June 30, 2014 and 2013, respectively. The Company issued 196,183 limited partnership units under the DRIP at a weighted average price of $45.25 per unit during the six months ended June 30, 2014. No limited partnership units were issued under the DRIP during 2013. The Company also credited 3,763 and 3,727 shares to directors pursuant to the reinvestment of dividends specified by the Directors' Deferred Compensation Plan at a weighted average discounted price of $44.61 and $42.25 per share, during the six months ended June 30, 2014 and 2013, 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 -36-



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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 June 30, 2014. The organizational documents of the Company do not limit the absolute amount or percentage of indebtedness that it may incur. The Board of Directors may, from time to time, reevaluate the Company's debt/capitalization strategy in light of current economic conditions, relative costs of capital, market values of the Company's property portfolio, opportunities for acquisition, development or expansion, and such other factors as the Board of Directors then deems relevant. The Board of Directors may modify the Company's debt/capitalization policy based on such a reevaluation without shareholder approval and consequently, may increase or decrease the Company's debt to total asset ratio above or below 50% or may waive the policy for certain periods of time. The Company selectively continues to refinance or renegotiate the terms of its outstanding debt in order to achieve longer maturities, and obtain generally more favorable loan terms, whenever management determines the financing environment is favorable. The Company maintains an unsecured revolving credit facility which was amended and restated in June 2014. The facility provides working capital and funds for acquisitions, certain developments, redevelopments and letters of credit, expires on June 23, 2018, and provides for an additional one-year extension at the Company's option, subject to the Company's satisfaction of certain conditions. As of June 30, 2014, no borrowings were outstanding, approximately $274.4 million was available under the line and approximately $628,000 was committed for letters of credit. The interest rate under the facility is variable and equals the sum of one-month LIBOR and a margin that is based on the Company's leverage ratio, and which can range from 145 basis points to 200 basis points. Based on the leverage ratio as of June 30, 2014, the margin was 145 basis points. 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: maintain tangible net worth, as defined in the loan agreement, of at least $542.1 million plus 80% of the Company's net equity proceeds received after March 2014; 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 1.3x on a trailing four-quarter basis (fixed charge coverage). As of June 30, 2014, the Company was in compliance with all such covenants. At June 30, 2014, the Company had a $71.6 million construction-to-permanent loan, with no amount outstanding, which is secured by and will be used to partially finance the construction of Park Van Ness. Saul Centers is a guarantor of the revolving credit facility, of which the Operating Partnership is the borrower. The Operating Partnership is the guarantor of (a) a portion of each of the Northrock bank term loan (approximately $7.5 million of the $14.7 million outstanding at June 30, 2014) and the Metro Pike Center bank loan (approximately $7.8 million of the $15.2 million outstanding at June 30, 2014) and (b) the $71.6 million Park Van Ness construction-to-permanent loan, which guarantee will be reduced and eventually eliminated subject to the achievement of certain leasing and cash flow levels. The fixed-rate notes payable are non-recourse. Preferred Stock In March 2013, the Company redeemed 60% of its then-outstanding 8% Series A Cumulative Redeemable Preferred Stock (the "Series A Stock") and all of its 9% Series B Cumulative Redeemable Preferred Stock. The Company has outstanding 1.6 million depositary shares, each representing 1/100th of a share of Series A Stock. The depositary shares may be redeemed at the Company's option, in whole or in part from time to time, at the $25.00 liquidation preference. The depositary shares pay an annual dividend of $2.00 per share, equivalent to 8% of the $25.00 liquidation preference. The Series A preferred 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. 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. -37-



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On February 12, 2013, the Company sold, in an underwritten public offering, 5.6 million depositary shares, each representing 1/100th of a share of 6.875% Series C Cumulative Redeemable Preferred Stock, providing net cash proceeds of approximately $135.2 million. The depositary shares may be redeemed at the Company's option, in whole or in part, at the $25.00 liquidation preference plus accrued but unpaid dividends on or after February 12, 2018. The depositary shares pay an annual dividend of $1.71875 per share, equivalent to 6.875% of the $25.00 liquidation preference. The first dividend was paid on April 15, 2013 and covered the period from February 12, 2013 through March 31, 2013. The Series C preferred 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. 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. -38-



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Funds From Operations Funds From Operations (FFO)1 available to common shareholders for the six months ended June 30, 2014, totaled $41.2 million, an increase of 51.6% compared to the six months ended June 30, 2013. The increase in FFO available to common shareholders for the six months ended June 30, 2014 was primarily due to (a) a charge against common equity in the 2013 Period resulting from the redemption of preferred stock ($5.2 million), (b) increased property operating income ($3.1 million) exclusive of the following Seven Corners items, (c) the impact of a lease termination at Seven Corners ($1.2 million), (d) the impact of a bankruptcy settlement and collection related to a former tenant at Seven Corners ($1.6 million), (e) lower predevelopment expenses related to Park Van Ness ($3.1 million) and (f) lower preferred stock dividends ($1.2 million), partially offset by higher general and administrative expenses ($1.4 million). The following table presents a reconciliation from net income to FFO available to common shareholders for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (In thousands, except per share amounts) 2014 2013 2014 2013 Net income $ 20,487$ 7,762$ 33,198$ 11,160 Subtract: Gain on sale of property (6,069 ) - (6,069 ) -



Add:

Real estate depreciation and amortization 10,309 12,472 20,489 28,824 FFO 24,727 20,234 47,618 39,984 Subtract: Preferred stock dividends (3,207 ) (3,207 ) (6,413 ) (7,571 ) Preferred stock redemption - - - (5,228 ) FFO available to common shareholders $ 21,520$ 17,027$ 41,205$ 27,185 Weighted average shares: Diluted weighted average common stock 20,743 20,323 20,702 20,251 Convertible limited partnership units 7,164 6,914 7,114 6,914 Average shares and units used to compute FFO per share 27,907 27,237 27,816 27,165 FFO per share available to common shareholders $ 0.77$ 0.63



$ 1.48$ 1.00

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 extraordinary items, 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. 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 activities related to the development of Park Van Ness, 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. -39-



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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 2013 and the six months ended June 30, 2014. Park Van Ness During the first quarter of 2014, the Company completed the demolition of Van Ness Square and incurred approximately $503,000 of demolition costs. The Company is developing Park Van Ness, a 271-unit residential project with approximately 9,000 square feet of street-level retail, below street-level structured parking, and amenities including a community room, landscaped courtyards, a fitness room and a rooftop pool and deck. Construction is projected to be completed by late 2015. Excavation is substantially complete and sub-surface utility installation and pouring of building footings have commenced. The total cost of the project, excluding predevelopment expense and land (which the Company has owned), is expected to be approximately $93.0 million, a portion of which will be financed with a $71.6 million construction-to-permanent loan. Kentlands Pad In August 2013, the Company purchased for $4.3 million, a retail pad with a 7,100 square foot restaurant building located in Gaithersburg, Maryland, which is contiguous with and an expansion of the Company's other Kentlands assets, and incurred acquisition costs of $99,000. The Company has leased the building to a restaurant which opened in the second quarter of 2014. Hunt Club Pad In December 2013, the Company purchased for $0.8 million, including acquisition costs, a retail pad with a 5,500 square foot vacant building located in Apopka, Florida, which is contiguous with and an expansion of the Company's other Hunt Club asset. 1580 and 1582 Rockville Pike In January 2014, the Company purchased for $8.0 million a single-tenant retail property with a 12,100 square foot CVS Pharmacy located at 1580 Rockville Pike in Rockville, Maryland, and incurred acquisition costs of $163,000. In April 2014, the Company purchased for $11.0 million a single-tenant retail property with a 40,700 square foot furniture store located at 1582 Rockville Pike in Rockville, Maryland, and incurred acquisition costs totaling approximately $0.2 million. Concurrently with the purchase, the Company sold to the same party, for $11.0 million, the 53,765 square foot Olney Center located in Olney, Maryland. The properties at 1580 and 1582 Rockville Pike are contiguous with and an expansion of the Company's assets at 1500 Rockville Pike. When combined with 1500 Rockville Pike, the three properties comprise 9.2 acres which are zoned for development potential of up to 1.1 million square feet of mixed-use space. The Company is actively engaged in a plan for redevelopment but has not committed to any timetable for commencement of construction. Olney Simultaneously with the sale of Olney Center, the Company entered into a lease of the property with the buyer and the Company continues to operate and manage the property. The lease term is 20 years and the Company has the option to purchase the property for $14.6 million at the end of the lease term. The purchaser has the right to sell the property to the Company at any time from and after April 2016 at a price equal to $11.0 million increased by 1.5% annually beginning January 1, 2015 and continuing each January thereafter. The Company has accounted for this transaction as a secured financing. Giant Center In April 2014, the Company sold for $7.5 million the 70,040 square foot Giant Center located in Milford Mill, Maryland and recognized a $6.1 million gain. As of March 31, 2014, the carrying amounts of the associated assets and liabilities were $0.5 million and $0.1 million, respectively. There was no debt on the property. -40-



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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 Shopping Shopping Centers Mixed-Use Centers Mixed-Use Centers Mixed-Use June 30, 2014 49 6 7,862,771 1,453,159 94.8 % 90.3 % June 30, 2013 50 6 7,878,300 1,452,700 94.3 % 89.0 % As of June 30, 2014, 94.2% of the Commercial portfolio was leased, an increase from 93.6% at June 30, 2013. On a same property basis, 94.2% of the Commercial portfolio was leased, an increase from 93.6% at June 30, 2013. As of June 30, 2014, the Clarendon Center apartments were 100.0% leased compared to 98.4% at June 30, 2013. 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 June Square Number New/Renewed Expiring 30, Feet of Leases Leases Leases 2014 327,288 82 $ 19.60 $ 19.60 2013 383,836 65 16.01 16.11 Additional information about the 2014 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 Renewed Leases Leases Number of leases 21 64 Square feet 52,692 283,460 Per square foot average annualized: Base rent $ 22.00$ 19.19 Tenant improvements (4.72 ) (0.12 ) Leasing costs (0.79 ) (0.04 ) Rent concessions (0.40 ) (0.10 ) Effective rents $ 16.09$ 18.93 During the three months ended June 30, 2014, the Company entered into 97 new or renewed apartment leases. The average monthly rent per square foot for these leases increased to $3.44 from $3.37. During the three months ended June 30, 2013, the Company entered into 98 new or renewed apartment leases. The average monthly rent per square foot for these leases increased to $3.37 from $3.23. -41-



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As of December 31, 2013, 911,638 square feet of Commercial space was subject to leases scheduled to expire in 2014. Of those leases, as of June 30, 2014, leases representing 468,891 square feet of Commercial space have not yet renewed and are scheduled to expire over the next six months. Below is information about existing and estimated market base rents per square foot for that space. Expiring Leases: Total Square feet 468,891 Average base rent per square foot $ 17.76



Estimated market base rent per square foot $ 18.25


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