SAUL CENTERS, INC.
For the period ended Mar 31, 2026. Filed May 7, 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.
Mar 31, 2026 · Filed May 7, 2026
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Item 2. Results of Operations:
Results of Operations
Three months ended March 31, 2026 (the "2026 Quarter") compared to the three months ended March 31, 2025 (the "2025 Quarter")
Net income for the 2026 Quarter decreased to $12.0 million from $12.8 million for the 2025 Quarter. The primary reason for the decline was the $4.8 million adverse impact of the initial operations of Hampden House. Exclusive of Hampden House, net income increased by $4.0 million primarily due to (a) higher residential base rent of $2.1 million, (b) higher commercial base rent of $1.5 million and (c) lower credit losses on operating lease receivables, net, of $0.3 million. Significant changes in revenue and expenses are discussed below.
Revenue
| Three Months Ended March 31, · 2025 to 2026 Change | ||||
|---|---|---|---|---|
| (In thousands) | 2026 | 2025 | Amount | Percent |
| Base rent | $62,455 | $57,554 | $4,901 | 8.5% |
| Expense recoveries | 12,819 | 11,898 | 921 | 7.7% |
| Percentage rent | 881 | 872 | 9 | 1.0% |
| Other property revenue | 837 | 610 | 227 | 37.2% |
| Credit losses on operating lease receivables, net | (170) | (387) | 217 | NM |
| Rental revenue | 76,822 | 70,547 | 6,275 | 8.9% |
| Other revenue | 1,437 | 1,309 | 128 | 9.8% |
| Total revenue | $78,259 | $71,856 | $6,403 | 8.9% |
NM = not meaningful
Total revenue increased $6.4 million, or 8.9%, in the 2026 Quarter compared to the 2025 Quarter primarily due to rents generated by Twinbrook Quarter Phase I of $2.8 million and Hampden House of $1.3 million.
Base Rent. Base rent includes $2.3 million and $2.2 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 $4.9 million, or 8.5%, in the 2026 Quarter compared to the 2025 Quarter primarily due to (a) higher residential base rent, exclusive of Hampden House, of $2.1 million, (b) higher commercial base rent, exclusive of Hampden House, of $1.5 million and (c) higher base rent related to Hampden House of $1.3 million.
Expense recoveries. Expense recoveries increased $0.9 million, or 7.7%, increase in the 2026 Quarter compared to the 2025 Quarter primarily due to an increase in recoverable property operating expenses.
Expenses
| Three Months Ended March 31, · 2025 to 2026 Change | ||||
|---|---|---|---|---|
| (In thousands) | 2026 | 2025 | Amount | Percent |
| Property operating expenses | $15,739 | $13,742 | $1,997 | 14.5% |
| Real estate taxes | 8,464 | 7,984 | 480 | 6.0% |
| Interest expense, net and amortization of deferred debt costs | 19,650 | 16,747 | 2,903 | 17.3% |
| Depreciation and amortization of deferred leasing costs | 15,916 | 14,523 | 1,393 | 9.6% |
| General and administrative | 6,447 | 6,012 | 435 | 7.2% |
| Total expenses | $66,216 | $59,008 | $7,208 | 12.2% |
Total expenses increased $7.2 million, or 12.2%, in the 2026 Quarter compared to the 2025 Quarter, as described below. The increase in total expenses is primarily due 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 $2.0 million, or 14.5%, in the 2026 Quarter compared to the 2025 Quarter primarily due to (a) the initial operations of Hampden House of $1.0 million, (b) higher insurance costs across the portfolio, exclusive of Hampden House, of $0.3 million, (c) higher utility costs across the portfolio, exclusive of Hampden House, of $0.3 million and (d) higher payroll costs across the portfolio, exclusive of Hampden House, of $0.2 million.
Real estate tax expense. Real estate tax expense increased $0.5 million, or 6.0%, 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 $2.9 million, or 17.3%, in the 2026 Quarter compared to the 2025 Quarter primarily due to (a) the initial operations of Hampden House of $4.5 million and (b) $0.4 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) higher capitalized interest, exclusive of Hampden House, of $1.8 million.
Depreciation and amortization of deferred leasing costs. Depreciation and amortization of deferred leasing costs increased $1.4 million, or 9.6%, 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.
General and administrative. General and administrative expense increased $0.4 million, or 7.2%, in the 2026 Quarter compared to the 2025 Quarter primarily due to higher employment costs of $0.2 million.
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