SAUL CENTERS, INC.
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 5, 2026
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Item 2. Results of Operations:
Three months ended September 30, 2026 (the "2026 Quarter") compared to the three months ended September 30, 2025 (the "2025 Quarter")
Net income for the 2026 Quarter decreased to $12.6 million from $14.0 million for the 2025 Quarter. The primary reason for the decline in net income was the $3.7 million adverse impact of the initial operations of Hampden House. Exclusive of Hampden House, net income increased by $2.3 million primarily due to higher commercial base rent of $2.0 million.
Revenue
| Three Months Ended September 30, · 2025 to 2026 Change | ||||
|---|---|---|---|---|
| Better (Worse) | ||||
| (In thousands) | 2026 | 2025 | Amount | Percent |
| Base rent | $64,164 | $59,250 | $4,914 | 8.3% |
| Expense recoveries | 12,185 | 11,151 | 1,034 | 9.3% |
| Percentage rent | 222 | 302 | (80) | (26.5)% |
| Other property revenue | 454 | 383 | 71 | 18.5% |
| Credit losses on operating lease receivables, net | (72) | (407) | 335 | 82.3% |
| Rental revenue | 76,953 | 70,679 | 6,274 | 8.9% |
| Other revenue | 1,464 | 1,325 | 139 | 10.5% |
| Total revenue | $78,417 | $72,004 | $6,413 | 8.9% |
Total revenue increased $6.4 million, or 8.9%, in the 2026 Quarter compared to the 2025 Quarter.
Base rent. Base rent includes $2.6 million and $1.9 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 for each of the 2026 Quarter and 2025 Quarter, to recognize income from the accretion of discounts related to in-place leases acquired in connection with purchased real estate investment properties. Base rent increased $4.9 million, or 8.3%, in the 2026 Quarter compared to the 2025 Quarter primarily due to (a) the initial operations of Hampden House of $2.3 million, (b) higher commercial base rent of $2.0 million and (c) higher residential base rent of $0.6 million.
Expense recoveries. Expense recoveries increased $1.0 million, or 9.3%, in the 2026 Quarter compared to the 2025 Quarter primarily due to an increase in recoverable property operating expenses.
Expenses
| Three Months Ended September 30, · 2025 to 2026 Change | ||||
|---|---|---|---|---|
| (In thousands) | 2026 | 2025 | Amount | Percent |
| Property operating expenses | $13,926 | $12,024 | $1,902 | 15.8% |
| Real estate taxes | 8,716 | 8,154 | 562 | 6.9% |
| Interest expense, net | 20,266 | 17,066 | 3,200 | 18.8% |
| Depreciation and amortization | 16,148 | 14,106 | 2,042 | 14.5% |
| General and administrative | 6,772 | 6,658 | 114 | 1.7% |
| Total expenses | $65,828 | $58,008 | $7,820 | 13.5% |
Total expenses increased $7.8 million, or 13.5%, in the 2026 Quarter compared to the 2025 Quarter. 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 $1.9 million, or 15.8%, in the 2026 Quarter compared to the 2025 Quarter primarily due to the initial operations of Hampden House of $1.0 million. Exclusive of Hampden House, property operating expenses increased $0.9 million primarily due to (a) higher repairs and maintenance costs across the portfolio of $0.4 million and (b) higher insurance costs across the portfolio of $0.3 million.
Real estate taxes. Real estate taxes increased $0.6 million, or 6.9%, 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. Interest expense, net increased $3.2 million, or 18.8%, in the 2026 Quarter compared to the 2025 Quarter primarily due to the initial operations of Hampden House of $2.9 million.
Depreciation and amortization. Depreciation and amortization increased $2.0 million, or 14.5%, 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.
Nine months ended September 30, 2026 (the "2026 Period") compared to the nine months ended September 30, 2025 (the "2025 Period")
Net income for the 2026 Period decreased to $36.2 million from $41.0 million for the 2025 Period. The primary reason for the decline was the $12.5 million adverse impact of the initial operations of Hampden House. Exclusive of Hampden House, net income increased by $7.7 million primarily due to (a) higher commercial base rent of $4.8 million and (b) higher residential base rent of $4.1 million partially offset by (c) higher general and administrative costs of $0.9 million. Significant changes in revenue and expenses are discussed below.
Revenue
| Nine Months Ended September 30, · 2025 to 2026 Change | ||||
|---|---|---|---|---|
| Better (Worse) | ||||
| (In thousands) | 2026 | 2025 | Amount | Percent |
| Base rent | $189,738 | $175,294 | $14,444 | 8.2% |
| Expense recoveries | 36,996 | 33,521 | 3,475 | 10.4% |
| Percentage rent | 1,559 | 1,644 | (85) | (5.2)% |
| Other property revenue | 1,500 | 1,206 | 294 | 24.4% |
| Credit losses on operating lease receivables, net | (640) | (1,013) | 373 | 36.8% |
| Rental revenue | 229,153 | 210,652 | 18,501 | 8.8% |
| Other revenue | 4,314 | 4,042 | 272 | 6.7% |
| Total revenue | $233,467 | $214,694 | $18,773 | 8.7% |
Total revenue increased $18.8 million, or 8.7%, in the 2026 Period compared to the 2025 Period.
Base rent. Base rent includes $7.2 million and $6.7 million for the 2026 Period and 2025 Period, respectively, to recognize base rent on a straight-line basis. In addition, base rent includes $0.4 million and $0.5 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 $14.4 million, or 8.2%, in the 2026 Period compared to the 2025 Period primarily due to the initial operations at Hampden House of $5.5 million and higher base rent at Twinbrook Quarter Phase I of $4.1 million. Exclusive of Twinbrook Quarter Phase I and Hampden House, base rent increased $4.8 million primarily due to (a) higher commercial base rent of $4.1 million and (b) higher residential base rent of $0.7 million.
Expense recoveries. Expense recoveries increased $3.5 million, or 10.4%, in the 2026 Period compared to the 2025 Period primarily due to an increase in recoverable property operating expenses.
Expenses
| Nine Months Ended September 30, · 2025 to 2026 Change | ||||
|---|---|---|---|---|
| (In thousands) | 2026 | 2025 | Amount | Percent |
| Property operating expenses | $43,217 | $37,190 | $6,027 | 16.2% |
| Real estate taxes | 25,991 | 24,154 | 1,837 | 7.6% |
| Interest expense, net | 59,950 | 50,633 | 9,317 | 18.4% |
| Depreciation and amortization | 48,102 | 42,727 | 5,375 | 12.6% |
| General and administrative | 20,029 | 19,085 | 944 | 4.9% |
| Total expenses | $197,289 | $173,789 | $23,500 | 13.5% |
Total expenses increased $23.5 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 $18.2 million of expenses during the 2026 Period.
Property operating expenses. Property operating expenses increased $6.0 million, or 16.2%, in the 2026 Period compared to the 2025 Period primarily due to the initial operations of Hampden House of $2.9 million. Exclusive of Hampden House, property operating expenses increased $3.1 million primarily due to (a) higher insurance costs across the portfolio of $0.9 million, (b) higher utility costs across the portfolio of $0.8 million, (c) higher repairs and maintenance costs across the portfolio of $0.7 million and (d) higher payroll costs across the portfolio of $0.3 million.
Real estate tax expense. Real estate tax expense increased $1.8 million, or 7.6%, in the 2026 Period compared to the 2025 Period primarily due to the initial operations of Hampden House of $1.8 million.
Interest expense, net. Interest expense, net, increased $9.3 million, or 18.4%, in the 2026 Period compared to the 2025 Period primarily due to (a) the initial operations of Hampden House of $8.6 million and (b) $1.0 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.
Depreciation and amortization. Depreciation and amortization increased $5.4 million, or 12.6%, in the 2026 Period compared to the 2025 Period primarily due to $4.8 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 $0.9 million, or 4.9%, in the 2026 Period compared to the 2025 Period primarily due to (a) higher costs related to grants made pursuant to the 2024 Stock Incentive Plan of $0.4 million and (b) higher employment costs of $0.4 million.
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