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What changed in SAUL CENTERS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SAUL CENTERS, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+248 added−274 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-02)

Top changes in SAUL CENTERS, INC.'s 2023 10-K

248 paragraphs added · 274 removed · 213 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

36 edited+9 added−5 removed41 unchanged
Biggest changeBusiness - Capital Policies”.) 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 acquisition, development and redevelopment as integral parts of its overall business plan.
Biggest changeManagement believes that the Company is positioned to take advantage of additional investment opportunities as attractive properties are identified and market conditions improve. (See “Item 1. Business - Capital Policies”.) 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.
Saul Real Estate Investment Trust (the “Saul Trust”), the B. F. Saul Company and certain other affiliated entities, each of which is controlled by B. Francis Saul II and his family members (collectively, the "Saul Organization”).
F. Saul Real Estate Investment Trust (the “Saul Trust”), the B. F. Saul Company and certain other affiliated entities, each of which is controlled by B. Francis Saul II and his family members (collectively, the “Saul Organization”).
All such sites are located proximate to Washington Metropolitan Area Transit Authority (“WMATA”) red line Metro stations in Montgomery County, Maryland. 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 supermarkets and drug stores.
All such sites are located proximate to Washington Metropolitan Area Transit Authority red line Metro stations in Montgomery County, Maryland. 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 supermarkets and drug stores.
Saul Centers, together with its wholly owned subsidiaries and the limited partnerships of which Saul Centers or one of its subsidiaries is the sole general partner, are referred to collectively as the “Company.” B. Francis Saul II serves as Chairman of the Board of Directors and Chief Executive Officer of Saul Centers.
Saul Centers, together with its wholly-owned subsidiaries and the limited partnerships of which Saul Centers or one of its subsidiaries is the sole general partner, are referred to collectively as the “Company.” B. Francis Saul II serves as Chairman of the Board of Directors (the “Board”) and Chief Executive Officer of Saul Centers.
Item 1. Business General Saul Centers, Inc. (“Saul Centers”) was incorporated under the Maryland General Corporation Law on June 10, 1993. Saul Centers operates as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”).
Item 1. Business General Saul Centers, Inc. (“Saul Centers”) was incorporated under the Maryland General Corporation Law on June 10, 1993, and operates as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”).
The Company also shares insurance administration expenses on a pro rata basis with the Saul Organization. Management believes that these arrangements result in lower costs than could be obtained by contracting with third parties.
The Company also shares certain insurance administration expenses on a pro rata basis with the Saul Organization. Management believes that these arrangements result in lower costs than could be obtained by contracting with third parties.
In evaluating a particular redevelopment, renovation, acquisition, or development, management will consider a variety of factors, including: (i) the location, size and accessibility of the property, with an emphasis on the Washington, D.C./Baltimore metropolitan area; (ii) the demographic characteristics of the community, as well as the local real estate market, including potential for growth and potential regulatory impediments to development; (iii) the purchase price; (iv) the non-financial terms of the transaction; (v) the “fit” of the property with the Company’s existing portfolio; (vi) the potential for, and current extent of, any environmental problems; (vii) the current and historical occupancy rates of the property or any comparable or competing properties in the same market; (viii) the quality of construction and design and the current physical condition of the property; (ix) the financial and other characteristics of existing tenants and the terms of existing leases; and (x) the potential for capital appreciation.
In evaluating a particular redevelopment, renovation, acquisition, or development, management will consider a variety of factors, including: (i) the location, size and accessibility of the property, with an emphasis on the Washington, DC/Baltimore metropolitan area; (ii) the demographic characteristics of the community, as well as the local real estate market, including potential for growth and potential regulatory impediments to development; (iii) the purchase price; (iv) the non-financial terms of the transaction; (v) the “fit” of the property with the Company’s existing portfolio; (vi) the potential for, and current extent of, any environmental problems; (vii) the current and historical occupancy rates of the property or any comparable or competing properties in the same market; (viii) the quality of construction and design and the current physical condition of the property; (ix) the financial and other characteristics of existing tenants and the terms of existing leases; and (x) the potential for capital appreciation.
Given the Company’s current debt level, it is management’s belief that the ratio of the Company’s debt to total asset value is below 50% as of December 31, 2022. The organizational documents of the Company do not limit the absolute amount or percentage of indebtedness that it may incur.
Given the Company’s current debt level, it is management’s belief that the ratio of the Company’s debt to total asset value is below 50% as of December 31, 2023. The organizational documents of the Company do not limit the absolute amount or percentage of indebtedness that it may incur.
As of December 31, 2022, the Company’s properties (the “Current Portfolio Properties”) consisted of 50 shopping center properties (the “Shopping Centers”), seven mixed-use properties, which are comprised of office, retail and multi-family residential uses (the “Mixed-Use Properties”) and four (non-operating) development properties.
As of December 31, 2023, the Company’s properties (the “Current Portfolio Properties”) consisted of 50 shopping center properties (the “Shopping Centers”), seven mixed-use properties, which are comprised of office, retail and multi-family residential uses (the “Mixed-Use Properties”) and four (non-operating) development properties.
Although it is management’s present intention to concentrate future acquisition and development activities on transit-centric, primarily residential mixed-use properties in the Washington, D.C./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.
Although it is management’s present intention to concentrate future acquisition and development activities on transit-centric, primarily residential mixed-use properties 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 Operating Partnership provides each property with a fully integrated property management capability, with approximately 70 full-time equivalent employees at its headquarters office and 59 full-time employees and nine part-time employees at its properties and with an extensive and mature network of relationships with tenants and potential tenants as well as with members of the brokerage and property owners’ communities.
The Operating Partnership provides each property with a fully integrated property management capability, with approximately 70 full-time equivalent employees at its headquarters office and 62 full-time employees and nine part-time employees at its properties and with an extensive network of relationships with tenants and potential tenants as well as with members of the brokerage and property owners’ communities.
Management believes that characteristics such as cleanliness, lighting and security are particularly important in community and neighborhood shopping centers, which are frequently visited by shoppers during hours outside of the normal work-day. Management believes that the Shopping Centers and Mixed-Use Properties generally are attractive and well maintained.
Management believes that characteristics such as cleanliness, lighting and security are particularly important in community and neighborhood shopping centers, which are frequently visited by shoppers during hours outside of the normal work-day. Management 5 Table of Contents believes that the Shopping Centers and Mixed-Use Properties generally are attractive and well maintained.
When possible, management also will seek to include scheduled increases in base rent, as well as percentage rental provisions, in its leases. 5 Table of Contents It is management’s intention to hold properties for long-term investment and to place strong emphasis on regular maintenance, periodic renovation and capital improvement.
When possible, management also will seek to include scheduled increases in base rent, as well as percentage rental provisions, in its leases. It is management’s intention to hold properties for long-term investment and to place strong emphasis on regular maintenance, periodic renovation and capital improvement.
Phase I includes an 80,000 square foot Wegmans, approximately 25,000 square feet of small shop space, 450 apartments and a 230,000 square foot office building. The office tower portion of Phase I is not being constructed at this time.
Phase I includes an 80,000 square foot Wegmans supermarket, approximately 25,000 square feet of small shop space, 450 apartment units and a 230,000 square foot office building. The office tower portion of Phase I is not being constructed at this time.
Human Capital As of December 31, 2022, the Company had approximately 70 full-time equivalent corporate employees and 59 full-time employees and nine part-time employees at its properties. None of our employees are represented by a collective bargaining unit.
Human Capital As of December 31, 2023, the Company had approximately 70 full-time equivalent corporate employees and 62 full-time employees and nine part-time employees at its properties. None of our employees are represented by a collective bargaining unit.
The terms of all sharing arrangements with the Saul Organization, including payments related thereto, are specified in a written agreement and are reviewed annually by the Audit Committee of the Company’s Board of Directors. 4 Table of Contents The Company subleases its corporate headquarters space from the Saul Organization at the Company’s share of the cost.
The terms of all sharing arrangements with the Saul Organization, including payments related thereto, are specified in a written agreement and are reviewed periodically by the Audit Committee of the Company’s Board of Directors. 4 Table of Contents The Company subleases its corporate headquarters space from the Saul Organization.
The Board of Directors may, from time to time, reevaluate the Company’s debt capitalization policy in light of current economic conditions, relative costs of capital, market values of the Company 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, from time to time, reevaluate the Company’s debt capitalization policy in light of current economic conditions, relative costs of capital, market values of the Company's property portfolio, opportunities for acquisition, development or expansion, financial covenants related to the Credit Facility, and such other factors as the Board of Directors then deems relevant.
The Company has not made any loans to third parties, although the Company may in the future make loans to third parties. In addition, the Company has policies relating to related party transactions discussed in “Item 1A.
The Company has not made any loans to third parties, although the Company may in 7 Table of Contents the future make loans to third parties. In addition, the Company has policies relating to related party transactions discussed in “Item 1A.
The Company has used a measure tied to cash flow because it believes that the book value of its portfolio properties, which is the depreciated historical cost of the properties, does not accurately reflect the Company’s ability to incur indebtedness.
The Company has used a measure tied to cash flow because it believes that the book value of its portfolio properties, which is the depreciated historical cost of the properties, does not accurately reflect the Company’s ability to incur indebtedness. Asset value, however, is somewhat more variable than book value.
Investment in Real Estate The Company has a pipeline of entitled sites in its portfolio, some of which are currently shopping center operating properties, for development of up to 3,700 apartment units and 975,000 square feet of retail and office space.
Including Twinbrook Quarter and Hampden House, the Company has a pipeline of entitled sites in its portfolio, some of which are currently shopping center operating properties, for development of up to 3,700 apartment units and 975,000 square feet of retail and office space.
Equity investments in acquired properties may be subject to existing mortgage financings and other indebtedness or to new indebtedness which may be incurred in connection with acquiring or refinancing these investments. 6 Table of Contents Investments in Real Estate Mortgages While the Company’s current portfolio and business objectives emphasize equity investments in transit-centric, residential mixed-use properties, neighborhood shopping centers, and other mixed-use properties, the Company may, at the discretion of the Board of Directors, invest in mortgages, participating or convertible mortgages, deeds of trust and other types of real estate interests consistent with its qualification as a REIT.
Investments in Real Estate Mortgages While the Company’s current portfolio and business objectives emphasize equity investments in transit-centric, residential mixed-use properties, neighborhood shopping centers, and other mixed-use properties, the Company may, at the discretion of the Board of Directors, invest in mortgages, participating or convertible 6 Table of Contents mortgages, deeds of trust and other types of real estate interests consistent with its qualification as a REIT.
We previously launched a program that we call LEAD that enhances our other training and education programs by providing our talented employees with the tools necessary to effectively lead and manage. We manage an internship program to support the development of future real estate professionals.
We previously launched a program that we call LEAD that enhances our other training and education programs by providing our talented employees with the tools necessary to effectively lead and manage.
The Company selectively refinances or renegotiates the terms of its outstanding debt in order to extend maturities and obtain generally more favorable loan terms, whenever management determines the financing environment is favorable. The Company intends to finance future acquisitions and developments and to make debt repayments by utilizing the sources of capital then deemed to be most advantageous.
The Company selectively refinances or renegotiates the terms of its outstanding debt in order to extend maturities and obtain additional liquidity. The Company intends to finance future acquisitions and developments and to make debt repayments by utilizing the sources of capital then deemed to be most advantageous.
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. Community and neighborhood shopping centers typically provide reliable cash flow and steady long-term growth potential.
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’s operating strategy also includes improvement of the operating performance and internal growth of its Shopping Centers and will supplement its development of residential mixed-used projects with selective redevelopment and renovations of its core Shopping Centers. Saul Centers was formed to continue and expand the shopping center business previously owned and conducted by the B. F.
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. Saul Centers was formed to continue and expand the shopping center business previously owned and conducted by the B.
Operating Strategy The Company’s primary strategy is to continue to focus on diversification of its assets through development of transit-centric, residential mixed-use projects in the Washington, D.C. metropolitan area.
Operating Strategy The Company’s primary strategy is to continue to focus on diversification of 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 metropolitan area.
The Company’s primary strategy is to continue to focus on diversification of its assets through development of transit-centric, residential mixed-use projects in the Washington, D.C. metropolitan area.
The Company’s primary strategy is to continue to focus on diversification of 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 metropolitan area.
Government Regulation Affecting Our Properties The Current Portfolio Properties are subject to various laws and regulations relating to environmental and pollution controls. The impact upon the Company from the application of such laws and regulations either prospectively or retrospectively is not expected to have a materially adverse effect on the Company’s property operations.
The impact upon the Company from the application of such laws and regulations either prospectively or retrospectively is not expected to have a materially adverse effect on the Company’s property operations.
Asset value, however, is somewhat more variable than book value, and may not at all times reflect the fair market value of the underlying properties.
Book value may not at all times reflect the fair market value of the underlying properties.
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.
All such sites are located proximate to Washington Metropolitan Area Transit Authority (“WMATA”) red line Metro stations in Montgomery County, Maryland. 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 total cost of the project is expected to be approximately $331.5 million, of which $271.4 million is related to the development of the residential and retail portions of Phase I and $60.1 million is related to infrastructure and other items. A portion of the project will be financed by a $145.0 million construction-to-permanent loan.
Excluding imputed capitalized interest, the total cost of the project is expected to be approximately $331.5 million, of which $271.4 million is related to the development of the residential and retail portions of Phase I and $60.1 million is related to infrastructure and other items. Of the expected $331.5 million total cost, $263.2 million has been invested to date.
Borrowings may be at the Operating Partnership or Subsidiary Partnerships level and securities offerings may include (subject to certain limitations) the issuance of Operating Partnership interests convertible into common stock or other equity securities. 7 Table of Contents Other Policies The Company has the authority to offer equity or debt securities in exchange for property and to repurchase or otherwise acquire its common stock or other securities in the open market or otherwise, and may engage in such activities in the future.
Other Policies The Company has the authority to offer equity or debt securities in exchange for property and to repurchase or otherwise acquire its common stock or other securities in the open market or otherwise, and may engage in such activities in the future.
The Company has executed leases or leases are under negotiation for seven more pad sites. In recent years, there has been a limited amount of quality properties for sale and pricing of those properties has escalated. Accordingly, management believes acquisition opportunities for investment in existing and new shopping center and mixed-use properties in the near future is uncertain.
The Company has two executed leases and three leases are under negotiation for a total of five more pad sites. In the current economic and capital markets environment, management believes acquisition opportunities for investment in existing and new shopping center and mixed-use properties in the near future is uncertain.
We annually hold several in-house training programs that focus on communication, self-awareness, delegation, feedback, accountability, team dynamics and other skills that provide our employees with personal growth opportunities. 8 Table of Contents We support the continuing education of our employees through (a) reimbursement of the cost of seeking undergraduate and graduate degrees at colleges and universities and (b) reimbursement of costs related to seminars, conferences and workshops.
We support the continuing education of our employees through (a) reimbursement of the cost of seeking undergraduate and graduate degrees at colleges and universities and (b) reimbursement of costs related to seminars, conferences and workshops.
The total cost of the project is expected to be approximately $246.4 million, a portion of which will be financed by a $133.0 million construction-to-permanent loan. Excavation is complete and below grade construction of foundation systems is in progress. Construction is expected to be completed during 2025. 9 Table of Contents
Excluding imputed capitalized interest, the total cost of the project is expected to be approximately $246.4 million, of which $133.0 million has been invested to date. A portion of the cost of the project is being financed by a $133.0 million construction-to-permanent loan.
The Company encourages employee wellness in every aspect of life, including physical fitness, mental well-being and social connectedness.
The Company encourages employee wellness in every aspect of life, including physical fitness, mental well-being and social connectedness. We annually hold several in-house training programs that focus on communication, self-awareness, delegation, feedback, accountability, team dynamics and other skills that provide our employees with personal growth opportunities.
Removed
Management actively manages its property portfolio by engaging in strategic leasing activities, tenant selection, lease negotiation and shopping center expansion and reconfiguration.
Added
Investment in Real Estate Including Twinbrook Quarter and Hampden House, the Company has a pipeline of entitled sites in its portfolio, some of which are currently Shopping Centers, for development of up to 3,700 apartment units and 975,000 square feet of retail and office space.
Removed
The Company seeks to optimize its retail tenant mix by selecting tenants for its Shopping Centers and Mixed-Use Properties that provide a broad spectrum of goods and services, consistent with the role of community and neighborhood shopping centers as the source for day-to-day necessities.
Added
The Company will continue to evaluate acquisition, development and redevelopment as integral parts of its overall business plan.
Removed
Management believes that such a synergistic tenanting approach results in increased cash flow from existing tenants by providing the Shopping Centers with consistent traffic and a desirable mix of shoppers, resulting in increased sales and, therefore, increased cash flows.
Added
Equity investments in acquired properties may be subject to existing mortgage financings and other indebtedness or to new indebtedness that may be incurred in connection with acquiring or refinancing these investments.
Removed
Nevertheless, because of the Company’s conservative capital structure, including its cash and capacity under its senior unsecured credit facility (the “Credit Facility”), management believes that the Company is positioned to take advantage of additional investment opportunities as attractive properties are identified and market conditions improve. (See “Item 1.
Added
Borrowings may be at the Operating Partnership, Subsidiary Partnerships or property level and securities offerings may include (subject to certain limitations) the issuance of Operating Partnership interests convertible into the Company's common stock or other equity securities.
Removed
Construction of the structure is ongoing. Concrete is being poured at the 12th level above ground, which is the final above ground level of the residential and retail portions of Phase I. Initial delivery of Phase I is anticipated in late 2024.
Added
We manage an internship program to support the development of future real estate professionals. 8 Table of Contents Government Regulation Affecting Our Properties The Current Portfolio Properties are subject to various laws and regulations relating to environmental and pollution controls.
Added
A portion of the cost of the project is being financed by a $145.0 million construction-to-permanent loan. During the second quarter of 2023, the Company commenced drawing on the loan and, as of December 31, 2023, the outstanding balance of the loan was $72.4 million, net of unamortized deferred debt costs.
Added
Sitework and ground floor retail façade work continues around all four sides of the building. Apartment unit construction is in process on levels two through 12 and work is in process on the lobbies and interior amenity spaces. Initial delivery of Phase I is anticipated in late 2024.
Added
During the fourth quarter of 2023, the Company commenced drawing on the loan and, as of December 31, 2023, the outstanding balance of the loan was $4.9 million, net of unamortized deferred debt costs. Above grade construction of the structure is on-going with framing and pouring of concrete being performed at the 23rd level above ground.
Added
Installation of the precast façade along with exterior metal and framing is in process. Construction is expected to be completed in late 2025. 9 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

71 edited+12 added−14 removed102 unchanged
Biggest changeRisk Factors Related to our Funding Strategies and Capital Structure We have substantial relationships with members of the Saul Organization whose interests could conflict with the interests of other stockholders. Influence of Officers, Directors and Significant Stockholders. Mr. B. F. Saul II, our Chief Executive Officer and Chairman of the Board, D.
Biggest changeInfluence of Officers, Directors and Significant Stockholders. Mr. B. F. Saul II, our Chief Executive Officer and Chairman of the Board, D. Todd Pearson, our President and Chief Operating Officer, Joel A. Friedman, our Executive Vice President, Chief Accounting Officer and Treasurer, and Bettina T.
The amount of rent we receive from our tenants generally will depend in part on the success of our tenants’ retail operations, making us vulnerable to general economic downturns and other conditions affecting the retail industry.
The amount of rent we receive from our retail tenants generally will depend in part on the success of our retail tenants’ operations, making us vulnerable to general economic downturns and other conditions affecting the retail industry.
Some of our leases provide for the payment, in addition to base rent, of additional rent above the base amount according to a specified percentage of the gross sales generated by the tenants. Decreasing sales revenue by retail tenants could adversely impact the Company’s receipt of percentage rents required to be paid by tenants under certain leases.
Some of our leases provide for the payment, in addition to base rent, of additional rent above the base amount according to a specified percentage of the gross sales generated by the retail tenants. Decreasing sales revenue by retail tenants could adversely impact the Company’s receipt of percentage rents required to be paid by tenants under certain leases.
Constraints on the availability of credit to office and retail tenants, necessary to purchase and install improvements, fixtures and equipment, and fund start-up business expenses, could impact the Company’s ability to procure new tenants for spaces currently vacant in existing operating properties or properties under development.
Constraints on the availability of credit to office and retail tenants, necessary to purchase and install improvements, fixtures and equipment, and fund start-up business expenses, could impact the Company’s ability to procure new office and retail tenants for spaces currently vacant in existing operating properties or properties under development.
Risk Factors Related to our Real Estate Investments and Operations Revenue from our properties may be reduced or limited if the retail operations of our tenants are not successful. Adverse changes in consumer spending or consumer preferences for particular goods, services or store based retailing could severely impact our tenants’ ability to pay rent.
Risk Factors Related to our Real Estate Investments and Operations Revenue from our properties may be reduced or limited if the operations of our retail tenants are not successful. Adverse changes in consumer spending or consumer preferences for particular goods, services or store based retailing could severely impact the ability of our retail tenants to pay rent.
Retailers at our shopping center properties also face increasing competition from outlet stores, discount shopping clubs, and other forms of marketing of goods, such as direct mail, internet marketing and telemarketing. This competition may reduce percentage rents payable to us and may contribute to lease defaults and insolvency of tenants.
Retailers at our shopping center properties also face increasing competition from online retailers, outlet stores, discount shopping clubs, and other forms of marketing of goods, such as direct mail, internet marketing and telemarketing. This competition may reduce percentage rents payable to us and may contribute to lease defaults and insolvency of tenants.
Our business may be affected by market and economic challenges experienced by the U.S. economy or real estate industry as a whole, by the local economic conditions in the markets in which our properties are located, including the impact of high unemployment, volatility in the public equity and debt markets, and international economic conditions.
Our business may be affected by market and economic challenges experienced by the U.S. economy or real estate industry as a whole, by the local economic conditions in the markets in which our properties are located, including the impact of high inflation, high unemployment, volatility in the public equity and debt markets, and international economic conditions.
Over extended periods of time, we believe that our Chief Executive Officer will spend less than a majority of his management time on Company matters, while our President and Chief Operating Officer, Executive Vice President-Chief Legal and Administrative Officer and Senior Vice President-Chief Accounting Officer and Treasurer may or may not spend less than a majority of their time on our matters.
Over extended periods of time, we believe that our Chief Executive Officer will spend less than a majority of his management time on Company matters, while our President and Chief Operating Officer, Executive Vice President-Chief Legal and Administrative Officer and Executive Vice President-Chief Accounting Officer and Treasurer may or may not spend less than a majority of their time on our matters.
The Board has authorized the Company to grant waivers to look-through entities, such as mutual funds, in which shares of equity stock owned by the entity are treated as owned proportionally by individuals who are the beneficial owners of the entity.
The Board of Directors has authorized the Company to grant waivers to look-through entities, such as mutual funds, in which shares of equity stock owned by the entity are treated as owned proportionally by individuals who are the beneficial owners of the entity.
In addition to the risks associated with real estate investment in general as described elsewhere, the risks associated with our remaining development activities include: • significant time lag between commencement and completion subjects us to greater risks due to fluctuation in the general economy; • failure or inability to obtain construction or permanent financing on favorable terms; • expenditure of money and time on projects that may never be completed; • inability to achieve projected rental rates or anticipated pace of lease-up; • higher-than-estimated construction costs, including inflation of labor and material costs; and • possible delay in completion of the project because of a number of factors, including weather, labor disruptions, supply-chain related delays, construction delays or delays in receipt of zoning or other regulatory approvals, or acts of God (such as fires, earthquakes or floods).
In addition to the risks associated with real estate investment in general as described elsewhere, the risks associated with our development activities include: • significant time lag between commencement and completion subjects us to greater risks due to fluctuations in the general economy; • failure or inability to obtain construction or permanent financing on favorable terms; • expenditure of money and time on projects that may never be completed; • inability to achieve projected rental rates or anticipated pace of lease-up; • higher-than-estimated construction costs, including inflation of labor and material costs; and • possible delay in completion of the project because of a number of factors, including weather, labor disruptions, supply-chain related delays, construction delays or delays in receipt of zoning or other regulatory approvals, or acts of God (such as fires, earthquakes or floods).
The COVID-19 pandemic (or a future pandemic) could have a material and adverse effect on or cause disruption to our business or financial condition, results of operations and cash flows due to, among other factors: • a complete or partial closure of, or other operational issues at, our properties as a result of government or tenant action; • declines in or instability of the economy or financial markets that may result in a recession or negatively impact consumer discretionary spending, which could adversely affect retailers and consumers; • reduction of economic activity that severely impacts our tenants' business operations, financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, to default on their lease, or to otherwise seek modifications of such obligations; 20 Table of Contents • inability to access debt and equity capital on favorable terms, if at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations, pursue acquisition and development opportunities, refinance existing debt, reduce our ability to make cash distributions to our stockholders and increase our future interest expense; • a general decline in business activity and demand for real estate transactions could adversely affect our ability to successfully execute investment strategies or expand our property portfolio; • a significant reduction in our cash flows could impact our ability to continue paying cash dividends to our common and preferred stockholders at expected levels or at all; • the financial impact of COVID-19 (or a future pandemic) could negatively affect our future compliance with financial and other covenants of our credit facility and other debt instruments, and the failure to comply with such covenants could result in a default that accelerates the payment of such indebtedness; • the continued service and availability of personnel, including our executive officers and Board of Directors, and our ability to recruit, attract and retain skilled personnel, to the extent our management, Board of Directors or personnel are impacted in significant numbers by the outbreak of pandemic or epidemic disease and are not available or allowed to conduct work, could negatively impact our business and operating results; and • our ability to ensure business continuity in the event our continuity of operations plan is not effective or is improperly implemented or deployed during a disruption.
A pandemic or public health emergency could have a material and adverse effect on or cause disruption to our business or financial condition, results of operations and cash flows due to, among other factors: • a complete or partial closure of, or other operational issues at, our properties as a result of government or tenant action; • declines in or instability of the economy or financial markets that may result in a recession or negatively impact consumer discretionary spending, which could adversely affect retailers and consumers; • reduction of economic activity that severely impacts our tenants' business operations, financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, to default on their lease, or to otherwise seek modifications of such obligations; • inability to access debt and equity capital on favorable terms, if at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations, pursue acquisition and development opportunities, refinance existing debt, reduce our ability to make cash distributions to our stockholders and increase our future interest expense; • a general decline in business activity and demand for real estate transactions could adversely affect our ability to successfully execute investment strategies or expand our property portfolio; • a significant reduction in our cash flows could impact our ability to continue paying cash dividends to our common and preferred stockholders at expected levels or at all; 21 Table of Contents • the financial impact of a pandemic or public health emergency could negatively affect our future compliance with financial and other covenants of our credit facility and other debt instruments, and the failure to comply with such covenants could result in a default that accelerates the payment of such indebtedness; • the continued service and availability of personnel, including our executive officers and Board of Directors, and our ability to recruit, attract and retain skilled personnel, to the extent our management, Board of Directors or personnel are impacted in significant numbers by the outbreak of pandemic or epidemic disease and are not available or allowed to conduct work, could negatively impact our business and operating results; and • our ability to ensure business continuity in the event our continuity of operations plan is not effective or is improperly implemented or deployed during a disruption.
Revenue from our properties depends primarily on the ability of our tenants to pay the full amount of rent due under their leases on a timely basis.
Revenue from our properties depends primarily on the ability of our retail tenants to pay the full amount of rent due under their leases on a timely basis.
Small business tenants and anchor retailers which lease space in the Company’s properties may experience a deterioration in their sales or other revenue, or experience a constraint on the availability of credit necessary to fund operations, which in turn may adversely impact those tenants’ ability to pay contractual base rents and operating expense recoveries.
Small business retail tenants and anchor retailers that lease space in the Company’s properties may experience a deterioration in their sales or other revenue, or experience a constraint on the availability of credit necessary to fund operations, which in turn may adversely impact those tenants’ ability to pay contractual base rents and operating expense recoveries.
In general, these units are convertible into shares of our common stock on a one-for-one basis. The ownership limitation set forth in our articles of incorporation is 39.9% in value of our issued and outstanding equity securities (which includes both common and preferred stock). As of December 31, 2022, Mr. B. F.
In general, these units are convertible into shares of our common stock on a one-for-one basis. The ownership limitation set forth in our articles of incorporation is 39.9% in value of our issued and outstanding equity securities (which includes both common and preferred stock). As of December 31, 2023, Mr. B. F.
We currently have a general policy of limiting our borrowings to 50% of asset value, i.e., the value of our portfolio, as determined by our Board of Directors by reference to the aggregate annualized cash flow from our portfolio. Our organizational documents contain no limitation on the amount or percentage of indebtedness which we may incur.
We currently have a general policy of limiting our borrowings to 50% of asset value, i.e., the value of our portfolio, as determined by our Board of Directors by reference to the aggregate annualized cash flow from our portfolio. Our organizational documents contain no limitation on the amount or percentage of indebtedness that we may incur.
Some tenants may terminate their occupancy due to an inability to operate profitably for an extended period of time, impacting the Company’s ability to maintain occupancy levels. Any reduction in our tenants’ ability to pay base rent or percentage rent may adversely affect our financial condition and results of operations.
Some retail tenants may terminate their occupancy due to an inability to operate profitably for an extended period of time, impacting the Company’s ability to maintain occupancy levels. Any reduction in the ability of our retail tenants to pay base rent or percentage rent may adversely affect our financial condition and results of operations.
Our ability to meet some of the covenants in our debt, including covenants related to the condition of the property or payment of real estate taxes, may be dependent on the performance by our tenants under their leases. In addition, our Credit Facility requires us and our subsidiaries to satisfy financial covenants.
Our ability to meet some of the covenants in our debt, including covenants related to the condition of the property or payment of real estate taxes, may be dependent on the performance by our tenants under their leases. In addition, our Credit Facility requires us to satisfy financial covenants.
If that happened, either the transfer or ownership would be void or the shares would be transferred to a charitable trust and then sold to someone who can own those shares without violating the respective ownership limit. As of December 31, 2022, Mr. B. F.
If that happened, either the transfer of ownership would be void or the shares would be transferred to a charitable trust and then sold to someone who can own those shares without violating the respective ownership limit. As of December 31, 2023, Mr. B. F.
Saul II and members of the Saul Organization owned common stock representing approximately 39.0% in value of all our issued and outstanding equity securities. In addition, members of the Saul Organization beneficially owned Operating Partnership units that are, in general, convertible into our common stock on a one-for-one basis.
Saul II and members of the Saul Organization owned common stock representing approximately 38.0% in value of all our issued and outstanding equity securities. In addition, members of the Saul Organization beneficially owned Operating Partnership units that are, in general, convertible into our common stock on a one-for-one basis.
The tax basis of members of the Saul Organization in our portfolio properties which were contributed to certain partnerships at the time of our initial public offering in 1993 was substantially less than the fair market value thereof at the time of their contribution.
The tax basis of members of the Saul Organization in our portfolio properties that were contributed to certain partnerships at the time of our initial public offering in 1993 was substantially less than the fair market value thereof at the time of their contribution.
Members of the Saul Organization are permitted under our articles of incorporation to convert Operating Partnership units into shares of common stock or acquire additional shares of common stock until the Saul Organization’s actual ownership of common stock reaches 39.9% in value of our equity securities. 19 Table of Contents The Board of Directors may waive these restrictions on a case-by-case basis.
Members of the Saul Organization are permitted under our articles of incorporation to convert Operating Partnership units into shares of common stock or acquire additional shares of common stock until the Saul Organization’s actual ownership of common stock reaches 39.9% in value of our equity securities. The Board of Directors may waive these restrictions on a case-by-case basis.
The ownership restrictions may delay, defer or prevent a transaction or a change of our control that might involve a premium price for our equity stock or otherwise be in the stockholders’ best interest. General Risk Factors Financial and economic conditions may have an adverse impact on us, our tenants’ businesses and our results of operations.
The ownership restrictions may delay, defer or prevent a transaction or a change of our control that might involve a premium price for our equity stock or otherwise be in the stockholders’ best interest. 20 Table of Contents General Risk Factors Financial and economic conditions may have an adverse impact on us, our tenants’ businesses and our results of operations.
Therefore, members of the Saul Organization, through their status as limited partners in the Operating Partnership, could prevent the taking of any such actions, even if they were in the interests of other stockholders. The amount of debt we have and the restrictions imposed by that debt could adversely affect our business and financial condition.
Therefore, members of the Saul Organization, through their status as limited partners in the Operating Partnership, could prevent the taking of any such actions, even if they were in the interests of other stockholders. 15 Table of Contents The amount of debt we have and the restrictions imposed by that debt could adversely affect our business and financial condition.
Further, as new technologies emerge, the relationships among customers, retailers, and shopping centers are evolving rapidly and it is critical we adapt to such new technologies and relationships on a timely basis. We may be unable to adapt quickly and effectively, which could adversely impact our financial performance.
Further, as new technologies emerge, the relationships among customers, retailers, and shopping centers evolve rapidly and it is critical we adapt to such new technologies and relationships on a timely basis. We may be unable to adapt quickly and effectively, which could adversely impact our financial performance.
The agreement relating to exclusivity and the right of first refusal between us and the Saul 13 Table of Contents Organization generally requires the Saul Organization to conduct its shopping center business exclusively through us and to grant us a right of first refusal to purchase commercial properties and development sites in certain market areas that become available to the Saul Organization.
The agreement relating to exclusivity and the right of first refusal between us and the Saul Organization generally requires the Saul Organization to conduct its shopping center business exclusively through us and to grant us a right of first refusal to purchase commercial properties and development sites in certain market areas that become available to the Saul Organization.
See Note 9 to the Consolidated Financial Statements for a discussion of related party transactions. Shared Services. We share with the Saul Organization certain ancillary functions, such as computer and payroll services, benefits administration and in-house legal services.
See Note 9 to the Consolidated Financial Statements for a discussion of related party transactions. 14 Table of Contents Shared Services. We share with the Saul Organization certain ancillary functions, such as computer and payroll services, benefits administration and in-house legal services.
In order to minimize these conflicts, decisions as to sales of the portfolio properties, or any refinancing, repayment or release of guarantees and indemnities with respect to our debt, will be made by the independent directors. 14 Table of Contents Ability to Block Certain Actions.
In order to minimize these conflicts, decisions as to sales of the portfolio properties, or any refinancing, repayment or release of guarantees and indemnities with respect to our debt, will be made by the independent directors. Ability to Block Certain Actions.
Additionally, new properties that we may acquire or develop may not produce any significant revenue immediately, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with that property until the property is fully leased. Competition may limit our ability to purchase new properties and generate sufficient income from tenants.
Additionally, new properties that we may acquire or develop may not immediately produce any significant revenue, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with that property until the property is fully leased. 12 Table of Contents Competition may limit our ability to purchase new properties and generate sufficient income from tenants.
In these circumstances, we might have to borrow funds on unfavorable terms and even if our management believes the market conditions make borrowing financially unattractive. Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could have a material adverse effect on us and our investors.
In these circumstances, we might have to borrow funds on unfavorable terms and even if our management believes the market conditions make borrowing financially unattractive. 19 Table of Contents Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could have a material adverse effect on us and our investors.
Saul II and members of the Saul Organization owned common stock representing approximately 39.0% in value of all our issued and outstanding equity securities.
Saul II and members of the Saul Organization owned common stock representing approximately 38.0% in value of all our issued and outstanding equity securities.
Our ability to refinance, sell assets or obtain additional financing may not be possible on terms that we would find acceptable. 15 Table of Contents We are obligated to comply with financial and other covenants in our debt that could restrict our operating activities, and the failure to comply could result in defaults that accelerate the payment under our debt.
Our ability to refinance, sell assets or obtain additional financing may not be possible on terms that we would find acceptable. We are obligated to comply with financial and other covenants in our debt that could restrict our operating activities, and the failure to comply could result in defaults that accelerate the payment under our debt.
Included in our general and administrative expenses or capitalized to specific development projects, for the year ended December 31, 2022, are charges totaling $9.6 million, net, related to such shared services, which included rental payments for the Company’s headquarters lease, which were billed by the Saul Organization.
Included in our general and administrative expenses or capitalized to specific development projects, for the year ended December 31, 2023, are charges totaling $10.6 million, net, related to such shared services, which included rental payments for the Company’s headquarters lease, which were billed by the Saul Organization.
As a real estate company, we are susceptible to the following real estate industry risks: • economic downturns in the areas where our properties are located; • adverse changes in local real estate market conditions, such as oversupply or reduction in demand; • changes in tenant preferences that reduce the attractiveness of our properties to tenants; • zoning or regulatory restrictions; • decreases in market rental rates; • weather conditions that may increase energy costs and other operating expenses; • costs associated with the need to periodically repair, renovate and re-lease space; and • increases in the cost of adequate maintenance, insurance and other operating costs, including real estate taxes, associated with one or more properties, which may occur even when circumstances such as market factors and competition cause a reduction in revenue from one or more properties, although real estate taxes typically do not increase upon a reduction in such revenue. 11 Table of Contents Geographic concentration of our portfolio may make us particularly susceptible to adverse economic developments in the real estate markets of those areas.
As a real estate company, we are susceptible to the following real estate industry risks: • economic downturns in the areas where our properties are located; • adverse changes in local real estate market conditions, such as oversupply or reduction in demand; • changes in tenant preferences that reduce the attractiveness of our properties to tenants; • zoning or regulatory restrictions; • decreases in market rental rates; • weather conditions that may increase energy costs and other operating expenses; • costs associated with the need to periodically repair, renovate and re-lease space; and 11 Table of Contents • increases in the cost of adequate maintenance, insurance and other operating costs, including real estate taxes, associated with one or more properties, which may occur even when circumstances such as market factors and competition cause a reduction in revenue from one or more properties, although real estate taxes typically do not increase upon a reduction in such revenue.
The Company and the Saul Organization entered into a shared services agreement whereby each party pays a portion of the total rental payments based on a percentage proportionate to the number of employees employed by each party. The Company’s rent expense for the year ended December 31, 2022 was $824,300.
The Company and the Saul Organization entered into a shared services agreement whereby each party pays a portion of the total rental payments based on a percentage proportionate to the number of employees employed by each party. The Company’s rent expense for the year ended December 31, 2023 was $871,300.
If insurance is unavailable to us or is unavailable on acceptable terms, or if our insurance is not adequate to cover business interruption or losses from these events, our earnings, liquidity or capital resources could be adversely affected. 21 Table of Contents We cannot assure you we will continue to pay dividends at historical rates.
If insurance is unavailable to us or is unavailable on acceptable terms, or if our insurance is not adequate to cover business interruption or losses from these events, our earnings, liquidity or capital resources could be adversely affected. We cannot assure you we will continue to pay dividends at historical rates.
This could reduce our net income. We may experience difficulty or delay in renewing leases or leasing vacant space. We derive most of our revenue directly or indirectly from rent received from our tenants.
This could reduce our net income. We may experience difficulty or delay in renewing leases or leasing vacant space. We derive most of our revenue directly or indirectly from rent received from our office and retail tenants.
The extent to which COVID-19 (or a future pandemic) impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the actions taken to contain the outbreak or mitigate its impact, and the direct and indirect economic effects of the outbreak and containment measures, among others.
The extent to which a pandemic or public health emergency impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the actions taken to contain the outbreak or mitigate its impact, and the direct and indirect economic effects of the outbreak and containment measures, among others.
Failure to comply could result in fines by governmental authorities, awards of damages to private litigants, or restrictions on the ability to conduct business on such properties.
Failure to comply could result in fines by governmental authorities, awards of damages to private litigants, or restrictions on the ability to 18 Table of Contents conduct business on such properties.
Management Time. Our Chief Executive Officer, President and Chief Operating Officer, Executive Vice President-Chief Legal and Administrative Officer and Senior Vice President-Chief Accounting Officer and Treasurer are also officers of various entities of the Saul Organization.
Our Chief Executive Officer, President and Chief Operating Officer, Executive Vice President-Chief Legal and Administrative Officer and Executive Vice President-Chief Accounting Officer and Treasurer are also officers of various entities of the Saul Organization.
Our secured debt generally contains customary covenants, including, among others, provisions: • relating to the maintenance of the property securing the debt; • restricting our ability to assign or further encumber the properties securing the debt; and • restricting our ability to enter into certain new leases or to amend or modify certain existing leases without obtaining consent of the lenders.
Our secured debt generally contains customary covenants, including, among others, provisions: • relating to the maintenance of the property securing the debt; • restricting our ability to assign or further encumber the properties securing the debt; and • restricting our ability to enter into certain new leases or to amend or modify certain existing leases without obtaining consent of the lenders. 16 Table of Contents Our unsecured debt generally contains various restrictive covenants.
As of December 31, 2022, we were in compliance with all such covenants.
As of December 31, 2023, we were in compliance with all such covenants.
Saul Company and a member of the Saul Organization, is a general insurance agency that receives commissions and counter-signature fees in connection with our insurance program. Such commissions and fees amounted to approximately $286,900 for the year ended December 31, 2022. Related Party Rents.
Saul Company and a member of the Saul Organization, is a general insurance agency that receives commissions and counter-signature fees in connection with our insurance program. Such commissions and fees amounted to approximately $562,800 for the year ended December 31, 2023. Related Party Rents.
We have used a measure tied to cash flow because we believe that the book value of our portfolio properties, which is the depreciated historical cost of the properties, does not accurately reflect our ability to borrow.
We have used a measure tied to cash flow because we believe that the book value of our portfolio properties, which is the depreciated historical cost of the properties, does not accurately reflect our ability to borrow. Asset value, however, is somewhat more variable than book value.
The outbreak of the novel coronavirus (“COVID-19”), or the future outbreak or pandemic of any other highly infectious or contagious diseases, could have a material and adverse effect on or cause disruption to our business or financial condition, results of operations, cash flows and the market value and trading price of our securities.
The outbreak or pandemic of any highly infectious or contagious diseases or other public emergencies, could have a material and adverse effect on or cause disruption to our business or financial condition, results of operations, cash flows and the market value and trading price of our securities.
Additionally, information technology security breaches may go undetected and persist as a latent threat to our security measures. 22 Table of Contents Our ability to conduct our business may be impaired if our information technology resources, including our websites or e-mail systems, are compromised, degraded, damaged or fail, whether due to a virus or other harmful circumstance, intentional penetration or disruption of our information technology resources by a third party, natural disaster, hardware or software corruption or failure or error or poor product or vendor/developer selection (including a failure of security controls incorporated into or applied to such hardware or software), telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions, or lost connectivity to our networked resources.
Our ability to conduct our business may be impaired if our information technology resources, including our websites or e-mail systems, are compromised, degraded, damaged or fail, whether due to a virus or other harmful circumstance, intentional penetration or disruption of our information technology resources by a third party, natural disaster, hardware or software corruption or failure or error or poor product or vendor/developer selection (including a failure of security controls incorporated into or applied to such hardware or software), telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions, or lost connectivity to our networked resources.
In addition, the costs of maintaining adequate protection against data security threats, based on considerations of their evolution, increasing sophistication, pervasiveness and frequency and/or government-mandated standards or obligations regarding protective efforts, could be material to our consolidated financial statements in a particular period or over various periods. We may amend or revise our business policies without your approval.
In addition, the costs of maintaining adequate protection against data security threats, based on considerations of their evolution, increasing sophistication, pervasiveness and frequency and/or government-mandated standards or obligations regarding protective efforts, could be material to our consolidated financial statements in a particular period or over various periods.
Our Board of Directors may amend or revise our operating policies without stockholder approval. Our investment, financing and borrowing policies and policies with respect to all other activities, such as growth, debt, capitalization and operations, are determined by the Board of Directors or those committees or officers to whom the Board of Directors has delegated that authority.
Our investment, financing and borrowing policies and policies with respect to all other activities, such as growth, debt, capitalization and operations, are determined by the Board of Directors or those committees or officers to whom the Board of Directors has delegated that authority.
As of December 31, 2022, approximately 411,000 of the 8,827,873 units of the Operating Partnership would have been permitted to convert into additional shares of common stock, and would have resulted in Mr. B. F. Saul II and members of the Saul Organization owning common stock representing approximately 39.9% in value of all our issued and outstanding equity securities.
As of December 31, 2023, approximately 854,000 of the 9,580,408 units of the Operating Partnership would have been permitted to convert into additional shares of common stock, and would have resulted in Mr. B. F. Saul II and members of the Saul Organization owning common stock representing approximately 39.9% in value of all our issued and outstanding equity securities.
If the IRS were to challenge successfully the status of the Operating Partnership as a partnership for federal income tax purposes: • the Operating Partnership would be taxed as a corporation; • we would cease to qualify as a REIT for federal income tax purposes; and • the amount of cash available for distribution to our stockholders would be substantially reduced. 18 Table of Contents We may be required to incur additional debt to qualify as a REIT.
If the IRS were to challenge successfully the status of the Operating Partnership as a partnership for federal income tax purposes: • the Operating Partnership would be taxed as a corporation; • we would cease to qualify as a REIT for federal income tax purposes; and • the amount of cash available for distribution to our stockholders would be substantially reduced.
As a REIT, we must make annual distributions to stockholders of at least 90% of our REIT taxable income. We are subject to income tax on amounts of undistributed REIT taxable income and net capital gain.
We may be required to incur additional debt to qualify as a REIT. As a REIT, we must make annual distributions to stockholders of at least 90% of our REIT taxable income. We are subject to income tax on amounts of undistributed REIT taxable income and net capital gain.
These factors include, among others: • general economic and financial market conditions; • level and trend of interest rates; • our ability to access the capital markets to raise additional capital; • the issuance of additional equity or debt securities; • changes in our funds from operations (“FFO”) or earnings estimates; • changes in our credit or analyst ratings; • our financial condition and performance; • market perception of our business compared to other REITs; and • market perception of REITs, in general, compared to other investment alternatives. 16 Table of Contents The phase-out of LIBOR could affect interest rates under our variable rate debt and interest rate swap arrangements.
These factors include, among others: • general economic and financial market conditions; • level and trend of interest rates; • our ability to access the capital markets to raise additional capital; • the issuance of additional equity or debt securities; • changes in our funds from operations (“FFO”) or earnings estimates; • changes in our credit or analyst ratings; • our financial condition and performance; • market perception of our business compared to other REITs; and • market perception of REITs, in general, compared to other investment alternatives.
Our largest shopping center anchor tenant is Giant Food, which accounted for 5.1% of our total revenue for the year ended December 31, 2022.
Our largest shopping center anchor tenant is Giant Food, which accounted for 4.9% of our total revenue for the year ended December 31, 2023.
Asset value, however, is somewhat more variable than book value, and may not at all times reflect the fair market value of the underlying properties. The amount of our debt outstanding from time to time could have important consequences to our stockholders.
Book value may not at all times reflect the fair market value of the underlying properties. The amount of our debt outstanding from time to time could have important consequences to our stockholders.
Generally, our tenants must comply with environmental laws and meet remediation requirements. Our leases typically impose obligations on our tenants to 17 Table of Contents indemnify us from any compliance costs we may incur as a result of the environmental conditions on the property caused by the tenant.
Generally, our tenants must comply with environmental laws and meet remediation requirements. Our leases typically impose obligations on our tenants to indemnify us from any compliance costs we may incur as a result of the environmental conditions on the property caused by the tenant. If a tenant fails to or cannot comply, we could be forced to pay these costs.
As of December 31, 2022, we had approximately $1.2 billion of debt outstanding, approximately $1.07 billion of which was fixed-rate debt and approximately $164.0 million of which was variable-rate debt outstanding under our Credit Facility.
As of December 31, 2023, we had approximately $1.4 billion of debt outstanding, approximately $1.13 billion of which was fixed-rate debt and approximately $276.0 million of which was variable-rate debt outstanding under our Credit Facility.
Our ability to continue to pay dividends on our common stock at historical rates or to increase our common stock dividend rate will depend on a number of factors, including, among others, the following: • our financial condition and results of future operations; • the performance of lease terms by tenants; • the terms of our loan covenants; and • our ability to acquire, finance, develop or redevelop and lease additional properties at attractive rates.
Our ability to continue to pay dividends on our common stock at historical rates or to increase our common stock dividend rate will depend on a number of factors, including, among others, the following: • our financial condition and results of future operations; • the performance of lease terms by tenants; • the terms of our loan covenants; and • our ability to acquire, finance, develop or redevelop and lease additional properties at attractive rates. 22 Table of Contents If we do not maintain or increase the dividend rate on our common stock, it could have an adverse effect on the market price of our common stock and other securities.
If we are unable to continue to attract appropriate retail tenants to our properties, or to purchase new properties in our geographic markets, it could materially affect our ability to generate net income, service our debt and make distributions to our stockholders. 12 Table of Contents We may be unable to sell properties when appropriate because real estate investments are illiquid.
If we are unable to continue to attract appropriate retail tenants to our properties, or to purchase new properties in our geographic markets, it could materially affect our ability to generate net income, service our debt and make distributions to our stockholders.
Costs associated with real estate investment, such as real estate taxes and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the investment.
Our financial results depend primarily on leasing space in our properties to tenants on terms favorable to us. Costs associated with real estate investment, such as real estate taxes and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the investment.
The revenue generated by our tenants could be negatively affected by various federal, state and local laws to which they are subject.
Future compliance with the ADA may require expensive changes to the properties. The revenue generated by our tenants could be negatively affected by various federal, state and local laws to which they are subject.
Saul II had the potential to exercise control over 10,739,407 shares of our common stock representing 44.9% of our issued and outstanding shares of common stock. Mr. B. F. Saul II also beneficially owned, as of December 31, 2022, 8,827,873 units of the Operating Partnership.
Saul II had the potential to exercise control over 10,814,706 shares of our common stock representing 45.1% of our issued and outstanding shares of common stock. Mr. B. F. Saul II also beneficially owned, as of December 31, 2023, 9,580,408 units of the Operating Partnership.
Tenants at our retail properties face continual competition in attracting customers from online merchants, retailers at other shopping centers, catalogue companies, television shopping networks, warehouse stores, large discounters, outlet malls, wholesale clubs, direct mail and telemarketers.
Our results of operations may be negatively affected by adverse trends in the retail, office and residential real estate sectors. Tenants at our retail properties face continual competition in attracting customers from online merchants, retailers at other shopping centers, catalogue companies, television shopping networks, warehouse stores, large discounters, outlet malls, wholesale clubs, direct mail and telemarketers.
Todd Pearson, our President and Chief Operating Officer, and Christine Nicolaides Kearns, our Executive Vice President-Chief Legal and Administrative Officer, are members of the Saul Organization, and persons associated with the Saul Organization constitute five of the eleven members of our Board of Directors. In addition, as of December 31, 2022, Mr. B. F.
Guevara, our Executive Vice President-Chief Legal and Administrative Officer, are officers of certain entities within the Saul Organization, and persons associated with the Saul Organization constitute five of the twelve members of our Board of Directors. In addition, as of December 31, 2023, Mr. B. F.
Real estate investments generally cannot be sold quickly. In addition, there are some limitations under federal income tax laws applicable to real estate and in particular to REITs that may limit our ability to sell our assets. We may not be able to alter our portfolio promptly in response to changes in economic or other conditions.
We may be unable to sell properties when appropriate because real estate investments are illiquid. Real estate investments generally cannot be sold quickly. In addition, there are some limitations under federal income tax laws applicable to real estate and in particular to REITs that may limit our ability to sell our assets.
The requirements of the ADA, or of other federal, state or local laws, also may change in the future and restrict further renovations of our properties with respect to access for disabled persons. Future compliance with the ADA may require expensive changes to the properties.
The properties, as commercial facilities, are required to comply with Title III of the ADA. Investigation of a property may reveal non-compliance with the ADA. The requirements of the ADA, or of other federal, state or local laws, also may change in the future and restrict further renovations of our properties with respect to access for disabled persons.
No prediction can be made as to the likelihood of passage of new tax legislation or other provisions, or the direct or indirect effect on us and our shareholders.
Changes to the tax laws or interpretations thereof by the IRS and the Treasury, with or without retroactive application, could materially and adversely affect us and our investors. No prediction can be made as to the likelihood of passage of new tax legislation or other provisions, or the direct or indirect effect on us and our shareholders.
Over 85% of our property operating income is generated by properties in the metropolitan Washington, DC/Baltimore area. As a result, our financial condition, operating results and ability to make distributions could be materially and adversely impacted by significant adverse economic changes affecting the real estate markets in that area.
As a result, our financial condition, operating results and ability to make distributions could be materially and adversely impacted by significant adverse economic changes affecting the real estate markets in that area. In turn, our common stock is subject to greater risk vis-à-vis other enterprises whose portfolio contains greater geographic diversity.
Developments, redevelopments and acquisitions may fail to perform as expected. Our investment strategy includes the redevelopment and acquisition of community and neighborhood shopping centers that are anchored by supermarkets, drugstores or high volume, value-oriented retailers that provide consumer necessities.
Our investment strategy includes the redevelopment and acquisition of (i) community and neighborhood shopping centers that are anchored by supermarkets, drugstores or high volume, value-oriented retailers that provide consumer necessities, and (ii) transit-oriented, mixed-use properties, which are comprised of office, retail and multi-family residential uses.
Our inability to respond quickly to adverse changes in the performance of our investments could have an adverse effect on our ability to meet our obligations and make distributions to our stockholders.
Our inability to respond quickly to adverse changes in the performance of our investments could have an adverse effect on our ability to meet our obligations and make distributions to our stockholders. 13 Table of Contents Risk Factors Related to our Funding Strategies and Capital Structure We have substantial relationships with members of the Saul Organization whose interests could conflict with the interests of other stockholders.
As a result of these relationships, members of the Saul Organization will be in a position to exercise significant influence over our affairs, which influence might not be consistent with the interests of other stockholders. Except as discussed below, we do not have any written policies or procedures for the review, approval or ratification of transactions with related persons.
As a result of these relationships, officers of the Saul Organization will be in a position to exercise significant influence over our affairs, which influence might not be consistent with the interests of other stockholders. All related party transactions are reviewed and approved by the Audit Committee in accordance with the Audit Committee charter.
If a tenant fails to or cannot comply, we could be forced to pay these costs. If not addressed, environmental conditions could impair our ability to sell or re-lease the affected properties in the future or result in lower sales prices or rent payments.
If not addressed, environmental conditions could impair our ability to sell or re-lease the affected properties in the future or result in lower sales prices or rent payments. The Americans with Disabilities Act of 1990 (the “ADA”) could require us to take remedial steps with respect to newly acquired properties.
SOFR may result in higher interest charges than LIBOR and may result in increased volatility in markets for instruments that previously relied on LIBOR, all of which could negatively impact our cash flow. Our ability to grow will be limited if we cannot obtain additional capital.
As a result, the amount of interest we may pay on our variable rate indebtedness is difficult to predict. Fluctuations in SOFR could require us to make higher than expected interest payments and, as a result, may reduce our net income. 17 Table of Contents Our ability to grow will be limited if we cannot obtain additional capital.
Removed
In turn, our common stock is subject to greater risk vis-a-vis other enterprises whose portfolio contains greater geographic diversity. Our results of operations may be negatively affected by adverse trends in the retail and office real estate sectors.
Added
As a result of these and other risks, our ground-up development projects may be unsuccessful and may have a negative impact on our results of operations and may reduce our net income. Redevelopments and acquisitions may fail to perform as expected.
Removed
Many real estate costs are fixed, even if income from our properties decreases. Our financial results depend primarily on leasing space in our properties to tenants on terms favorable to us.
Added
Geographic concentration of our portfolio may make us particularly susceptible to adverse economic developments in the real estate markets of those areas. Over 85% of our property operating income is generated by properties in the metropolitan Washington, DC/Baltimore area.
Removed
Our unsecured debt generally contains various restrictive covenants.
Added
Our residential properties face competition for residents from other existing or new multifamily properties, condominiums, single family homes and other living arrangements, whether owned or rental, that may attract residents from our properties or prospective residents that would otherwise choose to live with us.
Removed
The U.S. dollar London Interbank Offered Rate (“LIBOR”) was previously used as a reference rate for our Credit Facility. On July 27, 2017, the United Kingdom's Financial Conduct Authority announced it intended to stop compelling banks to submit rates for the calculation of LIBOR after 2021.
Added
As a result, we may not be able to renew existing resident leases or enter into new resident leases, or if we are able to renew or enter into new leases, they may be at rates or terms that are less favorable than our current rates or terms, resulting in a material impact on our results of operations.
Removed
On November 30, 2020, the ICE Benchmark Administration announced its plan to extend the date that most LIBOR values would cease being computed and published from December 31, 2021 to June 30, 2023.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeCheese's, Sardi's Chicken, Capital One Bank, Kool Smiles, Wells Fargo 26 Table of Contents Property Location Leasable Area (Square Feet) Year Acquired or Developed (Renovated) Land Area (Acres) Percentage Leased as of December 31, (1) 2022 2021 2020 2019 2018 Anchor / Significant Tenants Shopping Centers (Continued) Hunt Club Corners Apopka, FL 107,103 2006 13.9 98 % 99 % 100 % 100 % 97 % Publix, Pet Supermarket, Boost Mobile Jamestown Place Altamonte Springs, FL 96,201 2005 10.9 100 % 100 % 100 % 100 % 100 % Publix, Carrabas Italian Grill, Orlando Health Kentlands Square I Gaithersburg, MD 119,694 2002 11.5 100 % 100 % 100 % 100 % 98 % Lowe's Home Improvement Center, Chipotle, Starbucks, Shake Shack Kentlands Square II and Kentlands Pad Gaithersburg, MD 253,052 2011 23.4 96 % 97 % 97 % 99 % 99 % Giant Food, At Home, Party City, Panera Bread, Hallmark, Chick-Fil-A, Coal Fire Pizza, Cava Mezza Grill, Truist Bank, Hand & Stone Massage, Crumbl Cookie Kentlands Place Gaithersburg, MD 40,697 2005 3.4 78 % 86 % 75 % 93 % 93 % Bonefish Grill, Privai Spa Lansdowne Town Center Leesburg, VA 196,817 2006 23.3 91 % 90 % 91 % 90 % 96 % Harris Teeter, CVS Pharmacy, Panera Bread, Starbucks, Capital One Bank, Ford's Oyster House, Fusion Learning, Chick-Fil-A Leesburg Pike Plaza Baileys Crossroads, VA 97,752 1966 (1982/95) 9.4 100 % 93 % 93 % 90 % 100 % CVS Pharmacy, FedEx Office, Capital One Bank, Five Guys, Dollar Tree, Advanced Auto Lumberton Plaza Lumberton, NJ 192,718 1975 (1992/96) 23.3 66 % 66 % 68 % 68 % 70 % Aldi, Rite Aid, Family Dollar, Big Lots, Burger King, Big Rich Fitness, Enterprise Rent-A-Car Metro Pike Center Rockville, MD 67,488 2010 4.6 85 % 85 % 83 % 65 % 69 % McDonald's, Dunkin Donuts, 7-Eleven, Palm Beach Tan, Mattress Warehouse, Salvation Army Shops at Monocacy Frederick, MD 111,166 2004 13.0 100 % 98 % 100 % 99 % 99 % Giant Food, Panera Bread, Five Guys, California Tortilla, Firehouse Subs, Comcast Northrock Warrenton, VA 100,032 2009 15.4 96 % 94 % 99 % 100 % 100 % Harris Teeter, Longhorn Steakhouse, Ledo's Pizza, Capital One Bank, Novant Health Olde Forte Village Ft.
Biggest changeCheese, Sardi's Chicken, Capital One Bank, Kool Smiles, Wells Fargo Hunt Club Corners Apopka, FL 107,103 2006 13.9 98 % 98 % 99 % 100 % 100 % Publix, Pet Supermarket, Boost Mobile 28 Property Location Leasable Area (Square Feet) Year Acquired or Developed (Renovated) Land Area (Acres) Percentage Leased as of December 31, (1) 2023 2022 2021 2020 2019 Anchor / Significant Tenants as of December 31, 2023 Shopping Centers (Continued) Jamestown Place Altamonte Springs, FL 96,201 2005 10.9 100 % 100 % 100 % 100 % 100 % Publix, Carrabas Italian Grill, Orlando Health Kentlands Square I Gaithersburg, MD 119,694 2002 11.5 100 % 100 % 100 % 100 % 100 % Lowe's Home Improvement Center, Chipotle, Starbucks, Shake Shack Kentlands Square II and Kentlands Pad Gaithersburg, MD 253,052 2011 23.4 100 % 96 % 97 % 97 % 99 % Giant Food, At Home, Party City, Panera Bread, Hallmark, Chick-Fil-A, Coal Fire Pizza, Cava Mezza Grill, Truist Bank, Hand & Stone Massage, Crumbl Cookie, Quincy's Restaurant Kentlands Place Gaithersburg, MD 40,697 2005 3.4 79 % 78 % 86 % 75 % 93 % Bonefish Grill, F45 Training Lansdowne Town Center Leesburg, VA 196,817 2006 23.3 94 % 91 % 90 % 91 % 90 % Harris Teeter, CVS Pharmacy, Panera Bread, Starbucks, Ford's Oyster House, Fusion Learning, Chick-Fil-A, Chase Bank Leesburg Pike Plaza Baileys Crossroads, VA 97,752 1966 (1982/95) 9.4 100 % 100 % 93 % 93 % 90 % CVS Pharmacy, Capital One Bank, Five Guys, Dollar Tree, Advanced Auto Lumberton Plaza Lumberton, NJ 192,718 1975 (1992/96) 23.3 61 % 66 % 66 % 68 % 68 % Aldi, Family Dollar, Big Lots, Burger King, Big Rich Fitness, Enterprise Rent-A-Car Metro Pike Center Rockville, MD 67,488 2010 4.6 96 % 85 % 85 % 83 % 65 % McDonald's, Dunkin Donuts, 7-Eleven, Palm Beach Tan, Mattress Warehouse, Salvation Army, Dollar Tree Shops at Monocacy Frederick, MD 111,341 2004 13.0 98 % 100 % 98 % 100 % 99 % Giant Food, Panera Bread, Five Guys, California Tortilla, Firehouse Subs, Comcast, NTB Northrock Warrenton, VA 100,032 2009 15.4 94 % 96 % 94 % 99 % 100 % Harris Teeter, Longhorn Steakhouse, Ledo's Pizza, Capital One Bank, Novant Health Olde Forte Village Ft.
Washington, MD 143,577 2003 16.0 98 % 98 % 92 % 96 % 96 % Safeway, Advance Auto Parts, Dollar Tree, McDonald's, Wendy's, Ledo's Pizza, M&T Bank Olney Olney, MD 53,765 1975 (1990) 3.7 96 % 93 % 93 % 93 % 94 % Walgreens, Olney Grille, Ledo's Pizza, Popeye's, Sardi's Fusion Orchard Park Dunwoody, GA 87,365 2007 10.5 100 % 100 % 99 % 99 % 100 % Kroger, Subway, Jett Ferry Dental Palm Springs Center Altamonte Springs, FL 126,446 2005 12.0 97 % 98 % 100 % 100 % 100 % Publix, Duffy's Sports Grill, Toojay's Deli, The Tile Shop, Rockler Tools, Humana Health, Sola Salons Ravenwood Baltimore, MD 93,328 1972 (2006) 8.0 93 % 95 % 97 % 97 % 92 % Giant Food, Dominos, Bank of America 11503 Rockville Pike/5541 Nicholson Lane Rockville, MD 40,249 2010 / 2012 3.0 57 % 61 % 61 % 61 % 61 % Dr.
Washington, MD 143,577 2003 16.0 98 % 98 % 98 % 92 % 96 % Safeway, Advance Auto Parts, Dollar Tree, McDonald's, Wendy's, Ledo's Pizza, M&T Bank Olney Olney, MD 53,765 1975 (1990) 3.7 95 % 96 % 93 % 93 % 93 % Walgreens, Olney Grille, Ledo's Pizza, Popeye's, Sardi's Fusion Orchard Park Dunwoody, GA 87,365 2007 10.5 99 % 100 % 100 % 99 % 99 % Kroger, Jett Ferry Dental Palm Springs Center Altamonte Springs, FL 126,446 2005 12.0 98 % 97 % 98 % 100 % 100 % Publix, Duffy's Sports Grill, Toojay's Deli, The Tile Shop, Rockler Tools, Humana Health, Sola Salons Ravenwood Baltimore, MD 93,328 1972 (2006) 8.0 92 % 93 % 95 % 97 % 97 % Giant Food, Dominos, Bank of America 11503 Rockville Pike/5541 Nicholson Lane Rockville, MD 40,249 2010 / 2012 3.0 57 % 57 % 61 % 61 % 61 % Dr.
Because the Shopping Centers generally are located in highly developed areas, management believes that there is little likelihood that significant numbers of competing centers will be developed in the future. The Shopping Center properties range in size from approximately 19,000 to 573,500 square feet of GLA, with six in excess of 300,000 square feet, and average approximately 157,500 square feet.
Because the Shopping Centers generally are located in highly developed areas, management believes that there is little likelihood that significant numbers of competing centers will be developed in the future. The Shopping Center properties range in size from approximately 19,000 to 573,500 square feet of GLA, with six in excess of 300,000 square feet, and average approximately 157,600 square feet.
The operating property portfolio is composed of 50 neighborhood and community Shopping Centers, and seven predominantly Mixed-Use Properties totaling approximately 7.9 million and 1.9 million square feet of GLA, respectively. One property, Seven Corners, accounted for more than 5% of the total gross leasable area.
The operating property portfolio is composed of 50 neighborhood and community Shopping Centers, and seven Mixed-Use Properties totaling approximately 7.9 million and 1.9 million square feet of GLA, respectively. One property, Seven Corners Center, accounted for more than 5% of the total gross leasable area.
Tire, Taco Bell Countryside Marketplace Sterling, VA 138,804 2004 16.0 85 % 91 % 92 % 95 % 96 % Lotte Plaza Market, CVS Pharmacy, Starbucks, McDonald's, 7-Eleven Cranberry Square Westminster, MD 141,450 2011 18.9 100 % 97 % 87 % 96 % 97 % Giant Food, Giant Gas Station, Staples, Party City, Wendy's, Sola Salons, Ledo Pizza, Hallmark Cruse MarketPlace Cumming, GA 78,686 2004 10.6 93 % 94 % 92 % 94 % 96 % Publix, Subway, Orange Theory, Anytime Fitness Flagship Center Rockville, MD 21,500 1972, 1989 0.5 100 % 100 % 100 % 100 % 100 % Chase Bank, Bank of America French Market Oklahoma City, OK 246,148 1974 (1984/98) 13.8 75 % 75 % 78 % 97 % 96 % Burlington Coat Factory, Bed Bath & Beyond, Staples, Petco, The Tile Shop, Lakeshore Learning Center, Dollar Tree, Verizon, Raising Cane's Germantown Germantown, MD 18,982 1992 2.7 100 % 100 % 100 % 100 % 100 % CVS Pharmacy, Jiffy Lube The Glen Woodbridge, VA 136,440 1994 (2005) 14.7 99 % 93 % 98 % 97 % 96 % Safeway, Panera Bread, Five Guys, Chipotle Great Falls Center Great Falls, VA 91,666 2008 11.0 100 % 98 % 100 % 98 % 100 % Safeway, CVS Pharmacy, Trustar Bank, Starbucks, Subway, Long & Foster Hampshire Langley Takoma Park, MD 131,700 1972 (1979) 9.9 100 % 100 % 100 % 100 % 100 % Mega Mart, Starbucks, Chuck E.
Tire, Taco Bell Countryside Marketplace Sterling, VA 137,804 2004 16.0 92 % 85 % 91 % 92 % 95 % Lotte Plaza Market, CVS Pharmacy, Starbucks, McDonald's, 7-Eleven, VA ABC Cranberry Square Westminster, MD 141,450 2011 18.9 100 % 100 % 97 % 87 % 96 % Giant Food, Giant Gas Station, Staples, Party City, Wendy's, Sola Salons, Ledo Pizza, Hallmark Cruse MarketPlace Cumming, GA 78,686 2004 10.6 95 % 93 % 94 % 92 % 94 % Publix, Orange Theory, Anytime Fitness Flagship Center Rockville, MD 21,500 1972, 1989 0.5 100 % 100 % 100 % 100 % 100 % Chase Bank, Bank of America French Market Oklahoma City, OK 246,148 1974 (1984/98) 13.8 63 % 75 % 75 % 78 % 97 % Burlington Coat Factory, Staples, Petco, The Tile Shop, Lakeshore Learning Center, Dollar Tree, Verizon, Raising Cane's, Skechers Germantown Germantown, MD 18,982 1992 2.7 100 % 100 % 100 % 100 % 100 % CVS Pharmacy, Jiffy Lube The Glen Woodbridge, VA 136,440 1994 (2005) 14.7 100 % 99 % 93 % 98 % 97 % Safeway, Panera Bread, Five Guys, Chipotle Great Falls Center Great Falls, VA 91,666 2008 11.0 100 % 100 % 98 % 100 % 98 % Safeway, CVS Pharmacy, Trustar Bank, Starbucks, Subway Hampshire Langley Takoma Park, MD 131,700 1972 (1979) 9.9 100 % 100 % 100 % 100 % 100 % Mega Mart, Starbucks, Chuck E.
Annual base rent due under these leases is $20.2 million and $0.8 million for the years ending December 31, 2023 and 2024, respectively. 25 Table of Contents Current Portfolio Properties The following table sets forth, at the dates indicated, certain information regarding the Current Portfolio Properties: Property Location Leasable Area (Square Feet) Year Acquired or Developed (Renovated) Land Area (Acres) Percentage Leased as of December 31, (1) 2022 2021 2020 2019 2018 Anchor / Significant Tenants Shopping Centers Ashbrook Marketplace Ashburn, VA 85,819 2018 (2019) 13.7 100 % 100 % 100 % 92 % N/A Lidl, Planet Fitness, Starbucks, Dunkin Donuts, Valvoline, Cafe Rio, McAlisters Deli Ashburn Village Ashburn, VA 221,596 1994-2006 26.4 94 % 96 % 95 % 97 % 97 % Giant Food, Hallmark, McDonald's, Burger King, Dunkin Donuts, Kinder Care, Blue Ridge Grill Ashland Square Phase I Dumfries, VA 23,120 2007 2.0 100 % 100 % 100 % 100 % 100 % Capital One Bank, CVS Pharmacy, The All American Steakhouse Beacon Center Alexandria, VA 359,671 1972 (1993/99/07) 32.3 100 % 100 % 100 % 100 % 100 % Lowe's Home Improvement Center, Giant Food, Home Goods, Outback Steakhouse, Marshalls, Party Depot, Panera Bread, TGI Fridays, Starbucks, Famous Dave's, Chipotle, Capital One Bank, Wendy's BJ’s Wholesale Club Alexandria, VA 115,660 2008 9.6 100 % 100 % 100 % 100 % 100 % BJ's Wholesale Club Boca Valley Plaza Boca Raton, FL 121,365 2004 12.7 100 % 94 % 89 % 99 % 96 % Publix, Palm Beach Fitness, Anima Domus Boulevard Fairfax, VA 49,140 1994 (1999/09) 5.0 100 % 96 % 97 % 100 % 100 % Panera Bread, Party City, Petco, Capital One Bank Briggs Chaney MarketPlace Silver Spring, MD 194,258 2004 18.2 99 % 95 % 97 % 96 % 92 % Global Food, Ross Dress For Less, Advance Auto Parts, McDonald's, Dunkin Donuts, Enterprise Rent-A-Car, Dollar Tree, Dollar General, Salon Plaza, Chipotle Broadlands Village Ashburn, VA 174,438 2003 (2004/06) 24.0 91 % 92 % 90 % 98 % 98 % Aldi Grocery, The All American Steakhouse, Bonefish Grill, Dollar Tree, Starbucks, Minnieland Day Care, LA Fitness, Chase Bank Burtonsville Town Square Burtonsville, MD 139,928 2017 26.3 100 % 100 % 100 % 98 % 100 % Giant Food, Petco, Starbucks, Greene Turtle, Capital One Bank, CVS Pharmacy, Roy Rogers, Mr.
Annual base rent due under these leases is $19.8 million and $1.6 million for the years ending December 31, 2024 and 2025, respectively. 27 Current Portfolio Properties The following table sets forth, at the dates indicated, certain information regarding the Current Portfolio Properties: Property Location Leasable Area (Square Feet) Year Acquired or Developed (Renovated) Land Area (Acres) Percentage Leased as of December 31, (1) 2023 2022 2021 2020 2019 Anchor / Significant Tenants as of December 31, 2023 Shopping Centers Ashbrook Marketplace Ashburn, VA 85,819 2018 (2019) 13.7 100 % 100 % 100 % 100 % 92 % Lidl, Planet Fitness, Starbucks, Dunkin Donuts, Valvoline, Cafe Rio, McAlisters Deli, Apple Federal Credit Union Ashburn Village Ashburn, VA 221,596 1994-2006 26.4 96 % 94 % 96 % 95 % 97 % Giant Food, Hallmark, McDonald's, Burger King, Dunkin Donuts, Kinder Care, Blue Ridge Grill Ashland Square Phase I Dumfries, VA 23,120 2007 2.0 100 % 100 % 100 % 100 % 100 % Capital One Bank, CVS Pharmacy, The All American Steakhouse Beacon Center Alexandria, VA 359,671 1972 (1993/99/07) 32.3 99 % 100 % 100 % 100 % 100 % Lowe's Home Improvement Center, Giant Food, Home Goods, Outback Steakhouse, Marshalls, Party Depot, Panera Bread, TGI Fridays, Starbucks, Famous Dave's, Chipotle, Capital One Bank, Wendy's BJ’s Wholesale Club Alexandria, VA 115,660 2008 9.6 100 % 100 % 100 % 100 % 100 % BJ's Wholesale Club Boca Valley Plaza Boca Raton, FL 121,365 2004 12.7 100 % 100 % 94 % 89 % 99 % Publix, Palm Beach Fitness, Anima Domus, Foxtail Coffee Boulevard Fairfax, VA 49,140 1994 (1999/09) 5.0 100 % 100 % 96 % 97 % 100 % Panera Bread, Party City, Petco, Capital One Bank Briggs Chaney MarketPlace Silver Spring, MD 194,258 2004 18.2 98 % 99 % 95 % 97 % 96 % Global Food, Ross Dress For Less, Advance Auto Parts, McDonald's, Dunkin Donuts, Enterprise Rent-A-Car, Dollar Tree, Dollar General, Salon Plaza, Chipotle Broadlands Village Ashburn, VA 174,438 2003 (2004/06) 24.0 100 % 91 % 92 % 90 % 98 % Aldi Grocery, The All American Steakhouse, Bonefish Grill, Dollar Tree, Starbucks, Minnieland Day Care, LA Fitness, Chase Bank, X-Golf, Inova Go Health Burtonsville Town Square Burtonsville, MD (4) 139,928 2017 26.3 100 % 100 % 100 % 100 % 98 % Giant Food, Petco, Starbucks, Greene Turtle, Capital One Bank, CVS Pharmacy, Roy Rogers, Mr.
Clarendon Center-North Block Arlington, VA 108,386 2010 0.6 85 % 86 % 83 % 86 % 100 % AT&T Mobility, Chipotle, Airlines Reporting Corporation Clarendon Center-South Block Arlington, VA 104,894 2010 1.3 71 % 88 % 88 % 97 % 97 % Trader Joe's, Circa, Burke & Herbert Bank, South Block Blends, Keppler Speakers Bureau, Leadership Institute, Capital One Bank, Massage Envy Clarendon Center Residential-South Block (244 units) 188,671 2010 97 % 98 % 95 % 95 % 100 % Park Van Ness-Residential (271 units) Washington, DC 214,600 2016 1.4 97 % 96 % 95 % 97 % 97 % Park Van Ness-Retail Washington, DC 8,847 2016 32 % 100 % 100 % 100 % 100 % Sfoglina Pasta House 601 Pennsylvania Ave.
Clarendon Center-North Block Arlington, VA (4) 108,386 2010 0.6 89 % 85 % 86 % 83 % 86 % AT&T Mobility, Chipotle, Airlines Reporting Corporation Clarendon Center-South Block Arlington, VA (4) 104,894 2010 1.3 53 % 71 % 88 % 88 % 97 % Trader Joe's, Circa, Burke & Herbert Bank, South Block Blends, Keppler Speakers Bureau, Leadership Institute, Massage Envy Clarendon Center Residential-South Block (244 units) (4) 188,671 2010 98 % 97 % 98 % 95 % 95 % Park Van Ness-Residential (271 units) Washington, DC (4) 214,600 2016 1.4 97 % 97 % 96 % 95 % 97 % Park Van Ness-Retail Washington, DC (4) 8,847 2016 76 % 32 % 100 % 100 % 100 % Sfoglina Pasta House, Rosedale 601 Pennsylvania Ave.
The Mixed-Use Properties represent three distinct styles of facilities, are located in differing commercial environments with distinctive demographic characteristics, and are geographically removed from one another. Accordingly, management believes that the Washington, D.C. area Mixed-Use Properties compete for tenants in different commercial and geographic sub-markets of the metropolitan Washington, D.C. market and do not compete with one another.
The Mixed-Use Properties represent three distinct styles of facilities, are located in differing commercial environments with distinctive demographic characteristics, and are geographically removed from one another. Accordingly, management believes that the Mixed-Use Properties compete for tenants in different commercial and geographic sub-markets of the metropolitan Washington, DC market and do not compete with one another.
Business—Operating Strategies” and “Business—Capital Policies.” 23 Table of Contents The Shopping Centers Community and neighborhood shopping centers typically are anchored by one or more grocery stores, discount department stores or drug stores. These anchors offer day-to-day necessities rather than apparel and luxury goods and, therefore, generate consistent local traffic.
Business—Operating Strategies” and “Business—Capital Policies.” The Shopping Centers Community and neighborhood shopping centers typically are anchored by one or more grocery stores, discount department stores or drug stores. These anchors offer day-to-day necessities rather than apparel and luxury goods and, therefore, generate consistent local traffic.
Item 2. Properties Overview As of December 31, 2022, the Company is the owner and operator and developer of a real estate portfolio composed of 57 operating properties, totaling approximately 9.8 million square feet of gross leasable area (“GLA”), and four development properties. The properties are located primarily in the Washington, D.C./Baltimore, Maryland metropolitan area.
Item 2. Properties Overview As of December 31, 2023, the Company is the owner and operator and developer of a real estate portfolio composed of 57 operating properties, totaling approximately 9.8 million square feet of gross leasable area (“GLA”), and four development properties. The properties are located primarily in the Washington, DC/Baltimore, Maryland metropolitan area.
A majority of the Shopping Centers are anchored by several major tenants and offer primarily day-to-day necessities and services. Thirty-three of the Shopping Centers were anchored by a grocery store. One tenant, Giant Food (5.1%), a tenant at 11 Shopping Centers, individually accounted for 2.5% or more of the Company’s total revenue for the year ended December 31, 2022.
A majority of the Shopping Centers are anchored by several major tenants and offer primarily day-to-day necessities and services. Thirty-three of the 24 Shopping Centers were anchored by a grocery store. One tenant, Giant Food (4.9%), a tenant at 11 Shopping Centers, individually accounted for 2.5% or more of the Company’s total revenue for the year ended December 31, 2023.
Lease Expirations of Mixed-Use Properties 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 that the Company owned as of December 31, 2022, for each of the next ten years beginning with 2023, assuming that none of the tenants exercise renewal options and excluding an aggregate of 198,548 square feet of unleased office and retail space, which represented 17.5% of the GLA of the commercial space within the Mixed-Use Properties as of December 31, 2022.
Lease Expirations of Mixed-Use Properties 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 that the Company owned as of December 31, 2023, for each of the next ten years beginning with 2024, assuming that none of the tenants exercise renewal options and excluding an aggregate of 159,185 square feet of unleased office and retail space, which represented 14.0% of the GLA of the commercial space within the Mixed-Use Properties as of December 31, 2023.
Washington, DC 227,651 1973 (1986) 1.0 76 % 78 % 90 % 94 % 98 % National Gallery of Art, American Assn. of Health Plans, Southern Company, Regus, Capital Grille Washington Square Alexandria, VA 236,376 1975 (2000) 2.0 78 % 71 % 80 % 90 % 91 % Academy of Managed Care Pharmacy, Cooper Carry, National PACE Association, International Information Systems Security Certification Consortium, Trader Joe's, FedEx Office, Talbots The Waycroft-Residential (491 units) Arlington, VA 404,709 2020 2.8 98 % 97 % 76 % N/A N/A The Waycroft-Retail Arlington, VA 60,048 2020 100 % 91 % 90 % N/A N/A Target, Enterprise Rent-A-Car, Silver Diner, Salon Lofts Total Mixed Use Properties (3) 1,944,865 46.2 82.5 % (2) 82.3 % (2) 88.4 % (2) 91.6 % (2) 93.6 % (2) Total Portfolio (3) 9,822,195 812.9 93.2 % (2) 92.0 % (2) 92.5 % (2) 95.0 % (2) 95.7 % (2) Property Location Leasable Area (Square Feet) Year Acquired or Developed (Renovated) Land Area (Acres) Development Activity Land and Development Properties Hampden House Bethesda, MD 2018 0.6 Excavation is complete and below grade construction of foundation systems is in progress.
Washington, DC 227,651 1973 (1986) 1.0 82 % 76 % 78 % 90 % 94 % National Gallery of Art, American Assn. of Health Plans, Southern Company, Regus, Capital Grille Washington Square Alexandria, VA 236,376 1975 (2000) 2.0 84 % 78 % 71 % 80 % 90 % Academy of Managed Care Pharmacy, Cooper Carry, National PACE Association, International Information Systems Security Certification Consortium, Trader Joe's, FedEx Office, Talbots The Waycroft-Residential (491 units) Arlington, VA (4) 404,709 2020 2.8 98 % 98 % 97 % 76 % N/A The Waycroft-Retail Arlington, VA (4) 60,048 2020 100 % 100 % 91 % 90 % N/A Target, Enterprise Rent-A-Car, Silver Diner, Salon Lofts Total Mixed Use Properties (1) (3) 1,944,865 46.2 86.0 % (2) 82.5 % (2) 82.3 % (2) 88.4 % (2) 91.6 % (2) Total Portfolio (1) (3) 9,822,953 812.9 94.2 % (2) 93.2 % (2) 92.0 % (2) 92.5 % (2) 95.0 % (2) Property Location Leasable Area (Square Feet) Year Acquired or Developed (Renovated) Land Area (Acres) Development Activity Land and Development Properties Hampden House Bethesda, MD 2018 0.6 Above grade construction of the structure is on-going with framing and pouring of concrete being performed at the 23rd level above ground.
Morgan Chase, Five Below Severna Park Marketplace Severna Park, MD 254,011 2011 20.6 95 % 89 % 89 % 100 % 100 % Giant Food, Kohl's, Office Depot, Goodyear, Chipotle, McDonald's, Five Guys, Unleashed (Petco), Jersey Mike's, Bath & Body Works, Wells Fargo, MOD Pizza Shops at Fairfax Fairfax, VA 68,762 1975 (1993/99) 6.7 100 % 98 % 97 % 98 % 100 % 99 Ranch Smallwood Village Center Waldorf, MD 173,341 2006 25.1 90 % 79 % 75 % 77 % 79 % Safeway, CVS Pharmacy, Family Dollar Southdale Glen Burnie, MD 485,628 1972 (1986) 39.8 100 % 94 % 94 % 97 % 100 % The Home Depot, Michaels Arts & Crafts, Marshalls, PetSmart, Value City Furniture, Athletic Warehouse, Starbucks, Gallo Clothing, Office Depot, The Tile Shop, Mercy Health Care, Massage Envy, Potbelly, Capital One Bank, Chipotle, Banfield Pet Hospital, Glory Days Grill, Bank of America, Grocery Outlet Southside Plaza Richmond, VA 371,761 1972 32.8 95 % 98 % 96 % 92 % 89 % Super Fresh, Citi Trends, City of Richmond, McDonald's, Burger King, Kool Smiles, Crafty Crab, Roses South Dekalb Plaza Atlanta, GA 163,418 1976 14.6 94 % 94 % 87 % 87 % 93 % Big Lots, Emory Clinic, Roses, Deal $, Humana Oak Street Health Thruway Winston-Salem, NC 365,816 1972 (1997) 31.5 90 % 81 % 80 % 94 % 96 % Harris Teeter, Trader Joe's, Talbots, Hanes Brands, Jos.
Morgan Chase, Five Below, Raising Canes Severna Park Marketplace Severna Park, MD 254,011 2011 20.6 93 % 95 % 89 % 89 % 100 % Giant Food, Kohl's, Office Depot, Goodyear, Chipotle, McDonald's, Five Guys, Unleashed (Petco), Jersey Mike's, Bath & Body Works, Wells Fargo, MOD Pizza 29 Property Location Leasable Area (Square Feet) Year Acquired or Developed (Renovated) Land Area (Acres) Percentage Leased as of December 31, (1) 2023 2022 2021 2020 2019 Anchor / Significant Tenants as of December 31, 2023 Shopping Centers (Continued) Shops at Fairfax Fairfax, VA 68,762 1975 (1993/99) 6.7 100 % 100 % 98 % 97 % 98 % 99 Ranch Smallwood Village Center Waldorf, MD 173,341 2006 25.1 90 % 90 % 79 % 75 % 77 % Safeway, CVS Pharmacy, Family Dollar Southdale Glen Burnie, MD 485,628 1972 (1986) 39.8 99 % 100 % 94 % 94 % 97 % The Home Depot, Michaels Arts & Crafts, Marshalls, PetSmart, Value City Furniture, Athletic Warehouse, Starbucks, Gallo Clothing, Office Depot, The Tile Shop, Mercy Health Care, Massage Envy, Potbelly, Capital One Bank, Chipotle, Banfield Pet Hospital, Glory Days Grill, Bank of America, Grocery Outlet Southside Plaza Richmond, VA 371,761 1972 32.8 96 % 95 % 98 % 96 % 92 % Super Fresh, Citi Trends, City of Richmond, McDonald's, Burger King, Kool Smiles, Crafty Crab, Roses South Dekalb Plaza Atlanta, GA 163,418 1976 14.6 94 % 94 % 94 % 87 % 87 % Big Lots, Emory Clinic, Roses, Deal $, Humana Oak Street Health Thruway Winston-Salem, NC 367,399 1972 (1997) 31.5 97 % 90 % 81 % 80 % 94 % Harris Teeter, Trader Joe's, Talbots, Hanes Brands, Jos.
Crew, Chop't, Lululemon, Orange Theory, Athleta, Sephora, O2 Fitness Village Center Centreville, VA 145,651 1990 17.2 89 % 88 % 88 % 98 % 98 % Giant Food, Starbucks, McDonald's, Pet Supplies Plus, Bikram Yoga, Capital One Bank, Truist Bank Westview Village Frederick, MD 103,186 2009 11.6 99 % 89 % 92 % 97 % 99 % Silver Diner, Sleepy's, Music & Arts, Firehouse Subs, CiCi's Pizza, Café Rio, Five Guys, Regus, Krispy Kreme, Wendy's, State Employees Credit Union (SECU) White Oak Silver Spring, MD 480,676 1972 (1993) 27.9 100 % 100 % 100 % 100 % 99 % Giant Food, Sears, Walgreens, Sarku Japan Total Shopping Centers (3) 7,877,330 766.7 94.7 % 93.4 % 93.1 % 95.5 % 96.0 % 28 Table of Contents Property Location Leasable Area (Square Feet) Year Acquired or Developed (Renovated) Land Area (Acres) Percentage Leased as of December 31, (1) 2022 2021 2020 2019 2018 Anchor / Significant Tenants Mixed-Use Properties Avenel Business Park Gaithersburg, MD 390,683 1981-2000 37.1 90 % 87 % 93 % 91 % 90 % General Services Administration, Gene Dx, Inc., American Type Culture Collection, Inc.
Crew, Chop't, Lululemon, Orange Theory, Athleta, Sephora, O2 Fitness, Hallmark, Sleep Number, The Good Feet Store, Hand & Stone Massage, Golf Galaxy Village Center Centreville, VA 145,651 1990 17.2 86 % 89 % 88 % 88 % 98 % Giant Food, Starbucks, McDonald's, Pet Supplies Plus, Bikram Yoga, Truist Bank Westview Village Frederick, MD 103,186 2009 11.6 99 % 99 % 89 % 92 % 97 % Silver Diner, Sleepy's, Music & Arts, Firehouse Subs, CiCi's Pizza, Café Rio, Five Guys, Regus, Krispy Kreme, Wendy's, State Employees Credit Union (SECU), GNC, Moby Dick's House of Kabobs White Oak Silver Spring, MD 480,676 1972 (1993) 27.9 100 % 100 % 100 % 100 % 100 % Giant Food, Sears, Walgreens, Sarku Japan Total Shopping Centers (1) 7,878,088 766.7 95.3 % 94.7 % 93.4 % 93.1 % 95.5 % 30 Property Location Leasable Area (Square Feet) Year Acquired or Developed (Renovated) Land Area (Acres) Percentage Leased as of December 31, (1) 2023 2022 2021 2020 2019 Anchor / Significant Tenants as of December 31, 2023 Mixed-Use Properties Avenel Business Park Gaithersburg, MD 390,683 1981-2000 37.1 96 % 90 % 87 % 93 % 91 % General Services Administration, Gene Dx, Inc., American Type Culture Collection, Inc.
(3) For the purposes of the property count listed elsewhere in this document, residential and commercial are combined. The residential units at Clarendon South, Park Van Ness and The Waycroft are all part of the same building as the commercial tenants at those locations. 29 Table of Contents
(3) For the purposes of the property count listed elsewhere in this document, residential and commercial are combined. The residential units at Clarendon South, Park Van Ness and The Waycroft are all part of the same building as the commercial tenants at those locations. (4) Property is LEED certified. 31
Lease Expirations of Shopping Center Properties 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 that the Company owned as of December 31, 2022, for each of the next ten years beginning with 2023, assuming that none of the tenants exercise renewal options and excluding an aggregate of 414,529 square feet of unleased space, which represented 5.3% of the GLA of the Shopping Centers as of December 31, 2022.
Lease Expirations of Shopping Center Properties 25 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 December 31, 2023, for each of the next ten years beginning with 2024, assuming that none of the tenants exercise renewal options and excluding an aggregate of 367,748 square feet of unleased space, which represented 4.7% of the GLA of the Shopping Centers as of December 31, 2023.
The 2022 average estimated population within a one- and three-mile radius of the Shopping Centers is approximately 15,700 and 82,900, respectively. The 2022 average household income within a one- and three-mile radius of the Shopping Centers is approximately $146,300 and $153,200, respectively, compared to a national average of $105,000.
The 2023 average estimated population within a one- and three-mile radius of the Shopping Centers is approximately 15,600 and 82,400, respectively. The 2023 average household income within a one- and three-mile radius of the Shopping Centers is approximately $146,700 and $153,600, respectively, compared to a national average of $107,000.
Boyd's Pet Resort, Metropolitan Emergency Animal Clinic 1500/1580/1582 Rockville Pike Rockville, MD 105,428 2012/2014 10.2 98 % 100 % 100 % 97 % 97 % Party City, CVS Pharmacy, Persiano Furniture Gallery Seabreeze Plaza Palm Harbor, FL 146,673 2005 18.4 96 % 94 % 96 % 99 % 99 % Publix, Petco, Planet Fitness, Vision Works, Clinical Care Medical Center Marketplace at Sea Colony Bethany Beach, DE 21,677 2008 5.1 100 % 100 % 100 % 100 % 100 % Armand's Pizza, Candy Kitchen, Summer Salts, Fin's Alehouse, Vacasa 27 Table of Contents Property Location Leasable Area (Square Feet) Year Acquired or Developed (Renovated) Land Area (Acres) Percentage Leased as of December 31, (1) 2022 2021 2020 2019 2018 Anchor / Significant Tenants Shopping Centers (Continued) Seven Corners Falls Church, VA 573,481 1973 (1994-7/07) 31.6 98 % 98 % 99 % 99 % 100 % The Home Depot, Giant Food, Michaels Arts & Crafts, Barnes & Noble, Ross Dress For Less, Ski Chalet, Off-Broadway Shoes, JoAnn Fabrics, Starbucks, Red Robin Gourmet Burgers, Chipotle, Wendy's, Burlington Coat Factory, Mattress Warehouse, J.
Boyd's Pet Resort, Metropolitan Emergency Animal Clinic 1500/1580/1582 Rockville Pike Rockville, MD 105,428 2012/2014 10.2 100 % 98 % 100 % 100 % 97 % Party City, CVS Pharmacy Seabreeze Plaza Palm Harbor, FL 146,673 2005 18.4 97 % 96 % 94 % 96 % 99 % Publix, Petco, Planet Fitness, Vision Works Marketplace at Sea Colony Bethany Beach, DE 21,677 2008 5.1 100 % 100 % 100 % 100 % 100 % Armand's Pizza, Candy Kitchen, Summer Salts, Fin's Alehouse, Vacasa Seven Corners Falls Church, VA 573,481 1973 (1994-7/07) 31.6 99 % 98 % 98 % 99 % 99 % The Home Depot, Giant Food, Michaels Arts & Crafts, Barnes & Noble, Ross Dress For Less, Ski Chalet, Off-Broadway Shoes, JoAnn Fabrics, Starbucks, Red Robin Gourmet Burgers, Chipotle, Wendy's, Burlington Coat Factory, Mattress Warehouse, J.
As of December 31, 2022, the Company had 967 apartment leases, 859 of which will expire in 2023 and 108 of which will expire in 2024.
As of December 31, 2023, the Company had 971 apartment leases, 865 of which will expire in 2024 and 106 of which will expire in 2025.
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 2023 924,693 sf 11.7 % $ 16,030,078 11.5 % $ 17.34 2024 1,028,183 13.1 % 22,058,759 15.9 % 21.45 2025 1,201,914 15.3 % 23,392,874 16.8 % 19.46 2026 823,875 10.4 % 16,689,434 12.0 % 20.26 2027 876,884 11.1 % 18,341,044 13.2 % 20.92 2028 801,400 10.2 % 10,387,558 7.5 % 12.96 2029 584,294 7.4 % 9,332,143 6.7 % 15.97 2030 81,757 1.0 % 2,717,962 1.9 % 33.24 2031 303,523 3.9 % 5,930,630 4.3 % 19.54 2032 333,011 4.2 % 4,132,462 3.0 % 12.41 Thereafter 503,267 6.4 % 10,042,525 7.2 % 19.95 Total 7,462,801 sf 94.7 % $ 139,055,469 100.0 % 18.63 (1) Calculated using annualized contractual base rent payable as of December 31, 2022 for the expiring GLA, excluding expenses payable by or reimbursable from tenants. 24 Table of Contents The Mixed-Use Properties All of the Mixed-Use Properties are located in the Washington, D.C. metropolitan area and contain an aggregate GLA of approximately 1.9 million square feet, comprised of 1.0 million and 0.1 million square feet of office and retail space, respectively, and 1,006 apartments.
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 2024 691,813 sf 8.8 % $ 15,002,459 10.5 % $ 21.69 2025 1,227,851 15.6 % 23,483,122 16.4 % 19.13 2026 839,596 10.7 % 16,997,338 11.9 % 20.24 2027 847,518 10.7 % 19,139,901 13.3 % 22.58 2028 1,378,077 17.5 % 21,674,487 15.1 % 15.73 2029 990,264 12.6 % 15,790,165 11.0 % 15.95 2030 125,392 1.6 % 3,641,017 2.5 % 29.04 2031 316,925 4.0 % 6,412,712 4.5 % 20.23 2032 270,697 3.4 % 3,907,299 2.7 % 14.43 2033 214,324 2.7 % 5,036,197 3.5 % 23.50 Thereafter 607,883 7.7 % 12,312,654 8.6 % 20.25 Total 7,510,340 sf 95.3 % $ 143,397,351 100.0 % $ 19.09 (1) Calculated using annualized contractual base rent payable as of December 31, 2023 for the expiring GLA, excluding expenses payable by or reimbursable from tenants. 26 The Mixed-Use Properties All of the Mixed-Use Properties are located in the Washington, DC metropolitan area and contain an aggregate GLA of approximately 1.9 million square feet, composed of 1.0 million and 0.1 million square feet of office and retail space, respectively, and 1,006 apartments.
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 2023 102,137 sf 9.0 % $ 3,000,706 8.9 % $ 29.38 2024 110,253 9.7 % 5,246,508 15.6 % 47.59 2025 60,155 5.3 % 2,253,269 6.7 % 37.46 2026 77,759 6.8 % 3,210,681 9.6 % 41.29 2027 85,272 7.5 % 2,087,726 6.2 % 24.48 2028 47,824 4.2 % 1,265,751 3.8 % 26.47 2029 33,621 3.0 % 794,741 2.4 % 23.64 2030 40,911 3.6 % 1,948,237 5.8 % 47.62 2031 151,256 13.3 % 2,737,879 8.1 % 18.10 2032 10,815 0.9 % 236,944 0.7 % 21.91 Thereafter 218,334 19.2 % 10,834,706 32.2 % 49.62 Total 938,337 sf 82.5 % $ 33,617,148 100.0 % 35.83 (1) Calculated using annualized contractual base rent payable as of December 31, 2022, for the expiring GLA, excluding expenses payable by or reimbursable from tenants.
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 2024 62,105 sf 5.5 % $ 1,500,549 4.4 % $ 24.16 2025 111,517 9.8 % 5,632,633 16.4 % 50.51 2026 96,495 8.5 % 3,527,545 10.3 % 36.56 2027 86,970 7.6 % 2,436,236 7.1 % 28.01 2028 59,989 5.3 % 1,762,315 5.1 % 29.38 2029 45,509 4.0 % 1,150,840 3.4 % 25.29 2030 58,487 5.1 % 1,990,645 5.8 % 34.04 2031 163,974 14.4 % 3,092,649 9.0 % 18.86 2032 15,382 1.4 % 379,117 1.1 % 24.65 2033 76,776 6.8 % 3,746,704 10.9 % 48.80 Thereafter 200,496 17.6 % 9,092,102 26.5 % 45.35 Total 977,700 sf 86.0 % $ 34,311,335 100.0 % $ 35.09 (1) Calculated using annualized contractual base rent payable as of December 31, 2023, for the expiring GLA, excluding expenses payable by or reimbursable from tenants.
Removed
Twinbrook Quarter Rockville, MD 2021 8.2 Construction of the structure is ongoing. Concrete is being poured at the 12th level above ground, which is the final above ground level of the residential and retail portions of Phase I.
Added
Installation of the precast façade along with exterior metal and framing is in process. Twinbrook Quarter Rockville, MD 2021 8.2 Sitework and ground floor retail façade work continues around all four sides of the building. Apartment unit construction is in process on levels 2 through 12 and work is in process on the lobbies and interior amenity spaces.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeIn the opinion of management, litigation that is currently pending should not have a material adverse impact on the financial condition or future operations of the Company. Item 4. Mine Safety Disclosures Not applicable. 30 Table of Contents PART II
Biggest changeIn the opinion of management, litigation that is currently pending should not have a material adverse impact on the financial condition or future operations of the Company. Item 4. Mine Safety Disclosures Not applicable. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+2 added−2 removed5 unchanged
Biggest changeFrancis Saul II, the Company’s Chairman of the Board and Chief Executive Officer and (b) his spouse, acquired an aggregate of 3,287 shares of common stock at an average price of $39.70 per share, in respect of the October 31, 2022 dividend distribution.
Biggest changeSaul Company, acquired an aggregate of 5,062 shares of common stock and 44,500 limited partnership units at an average price of $33.78 per share/unit, in respect of the October 31, 2023 dividend distribution.
The Company distributed more than the required amount in 2022 and 2021. See Notes to Consolidated Financial Statements, No. 13, “Distributions.” The Company may or may not elect to distribute in excess of 90% of REIT taxable income in future years.
The Company distributed more than the required amount in 2023 and 2022. See Notes to Consolidated Financial Statements, No. 13, “Distributions.” The Company may or may not elect to distribute in excess of 90% of REIT taxable income in future years.
No shares were acquired pursuant to a publicly announced plan or program. 31 Table of Contents Performance Graph Rules promulgated under the Exchange Act require the Company to present a graph comparing the cumulative total stockholder return on its Common Stock with the cumulative total stockholder return of (i) a broad equity market index, and (ii) a published industry index or peer group.
No shares were acquired pursuant to a publicly announced plan or program. 33 Performance Graph Rules promulgated under the Exchange Act require the Company to present a graph comparing the cumulative total stockholder return on its Common Stock with the cumulative total stockholder return of (i) a broad equity market index, and (ii) a published industry index or peer group.
We are obligated to pay regular quarterly distributions to holders of preferred depositary shares, prior to distributions on the common stock. Acquisition of Equity Securities by the Saul Organization Through participation in the Company’s Dividend Reinvestment Plan, during the quarter ended December 31, 2022, (a) B.
We are obligated to pay regular quarterly distributions to holders of preferred depositary shares, prior to distributions on the common stock. Acquisition of Equity Securities by the Saul Organization Through participation in the Company’s Dividend Reinvestment and Stock Purchase Plan, during the quarter ended December 31, 2023, (a) B.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of Saul Centers common stock are listed on the New York Stock Exchange under the symbol “BFS.” Holders The approximate number of holders of record of the common stock was 146 as of February 23, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of Saul Centers common stock are listed on the New York Stock Exchange under the symbol “BFS.” Holders The approximate number of holders of record of the common stock was 149 as of February 22, 2024.
Removed
The graph assumes the investment of $100 on December 31, 2017.
Added
Francis Saul II, the Company’s Chairman of the Board and Chief Executive Officer, (b) his spouse, (c) B. F. Saul Company, which Mr. B. F. Saul II serves as Chairman, and (d) B. F. Saul Property Company, Van Ness Square Corporation, and Westminster Investing, LLC, which are related parties of B. F.
Removed
Period Ended Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Saul Centers, Inc. 1 $100.00 $79.52 $93.34 $59.67 $104.57 $84.32 S&P 500 2 $100.00 $95.62 $125.34 $148.85 $191.58 $156.85 Russell 2000 3 $100.00 $88.99 $111.70 $134.00 $153.85 $122.37 FTSE NAREIT Equity 4 $100.00 $95.38 $120.17 $110.56 $158.36 $119.83 1 Source: S&P Capital I.Q. 2 Source: Bloomberg 3 Source: FTSE Russell 4 Source: FTSE National Association of Real Estate Investment Trusts 32 Table of Contents Item 6. [Reserved]
Added
The graph assumes the investment of $100 on December 31, 2018. Period Ended Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Saul Centers, Inc. $100.00 $117.38 $75.04 $131.51 $106.04 $108.97 S&P 500 $100.00 $131.09 $155.68 $200.37 $164.05 $207.01 Russell 2000 $100.00 $125.52 $150.58 $172.90 $137.52 $160.68 FTSE NAREIT Equity $100.00 $126.00 $115.92 $166.04 $125.64 $139.81 Source: Bloomberg Item 6. [Reserved] 34

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

73 edited+11 added−39 removed37 unchanged
Biggest changeThe following is a summary of notes payable as of December 31, 2022 and 2021. 45 Table of Contents Notes Payable Year Ended December 31, Interest Scheduled (Dollars in thousands) 2022 2021 Rate* Maturity* Lansdowne Town Center $ — $ 28,533 5.62 % Jun-2022 Orchard Park — 8,812 6.08 % Sep-2022 BJ's Wholesale Club 9,345 9,692 6.43 % Apr-2023 Great Falls Center — 8,651 6.61 % Feb-2024 Leesburg Pike Center 12,543 13,213 7.35 % Jun-2024 Village Center — 11,528 7.60 % Jun-2024 White Oak 19,985 20,874 6.89 % Jul-2024 Avenel Business Park 22,906 24,108 7.45 % Jul-2024 Ashburn Village 23,039 24,186 7.30 % Jan-2025 Ravenwood 11,975 12,553 6.18 % Jan-2026 Clarendon Center 86,264 90,600 5.31 % Apr-2026 Severna Park Marketplace 25,857 27,197 4.30 % Oct-2026 Kentlands Square II 29,658 31,155 4.53 % Nov-2026 Cranberry Square 13,946 14,634 4.70 % Dec-2026 Fixed-rate portion of Credit Facility 100,000 — 4.38 % Feb-2027 Seven Corners — 56,413 5.84 % May-2027 Hampshire-Langley 12,231 12,868 4.04 % Apr-2028 Beacon Center — 32,170 3.51 % Jun-2028 Seabreeze Plaza 13,302 13,897 3.99 % Sep-2028 Great Falls Center 31,313 — 3.91 % Sep-2029 Shops at Fairfax / Boulevard 23,443 24,398 3.69 % Mar-2030 Northrock 12,652 13,108 3.99 % Apr-2030 Burtonsville Town Square 33,439 34,558 3.39 % Feb-2032 Park Van Ness 62,813 64,661 4.88 % Sep-2032 Washington Square 52,030 53,745 3.75 % Dec-2032 Broadlands Village 28,858 29,613 4.41 % Nov-2033 The Glen 20,827 21,393 4.69 % Jan-2034 Olde Forte Village 20,136 20,682 4.65 % Feb-2034 Olney 12,476 12,299 8.00 % Apr-2034 Shops at Monocacy 26,422 27,143 4.14 % Dec-2034 Ashbrook Marketplace 20,807 21,329 3.80 % Aug-2035 Kentlands 28,157 28,899 3.43 % Aug-2035 The Waycroft 152,679 156,116 4.67 % Sep-2035 Village Center 25,057 — 4.14 % Aug-2037 Beacon Center / Seven Corners 142,522 — 5.05 % Oct-2037 Total fixed rate 1,074,682 949,028 4.77 % 8.77 years Variable rate loans: Variable-rate portion of Credit Facility 164,000 206,000 SOFR + 1.50% Aug-2025 Total variable rate 164,000 206,000 5.80 % 2.66 years Total notes payable $ 1,238,682 $ 1,155,028 4.91 % 7.96 years * Totals computed using weighted averages. 46 Table of Contents On February 23, 2022, the Company closed on a $133.0 million construction-to-permanent loan, the proceeds of which will be used to partially fund Hampden House.
Biggest changeThe following is a summary of notes payable as of December 31, 2023 and 2022. 45 Notes Payable Year Ended December 31, Interest Scheduled (Dollars in thousands) 2023 2022 Rate* Maturity* BJ's Wholesale Club $ — $ 9,345 6.43 % Apr-2023 Leesburg Pike Center 11,822 12,543 7.35 % Jun-2024 White Oak 19,031 19,985 6.88 % Jul-2024 Avenel Business Park 21,611 22,906 7.45 % Jul-2024 Ashburn Village 21,805 23,039 7.30 % Jan-2025 Ravenwood 11,361 11,975 6.18 % Jan-2026 Clarendon Center 81,693 86,264 5.31 % Apr-2026 Severna Park Marketplace 24,458 25,857 4.30 % Oct-2026 Kentlands Square II 28,093 29,658 4.53 % Nov-2026 Cranberry Square 13,224 13,946 4.70 % Dec-2026 Fixed-rate portion of Credit Facility 100,000 100,000 4.38 % Feb-2027 Hampshire-Langley 11,569 12,231 4.04 % Apr-2028 Seabreeze Plaza 12,683 13,302 3.99 % Sep-2028 Great Falls Center 30,547 31,313 3.91 % Sep-2029 Shops at Fairfax / Boulevard 22,452 23,443 3.69 % Mar-2030 Northrock 12,135 12,652 3.99 % Apr-2030 Burtonsville Town Square 32,178 33,439 3.39 % Feb-2032 Park Van Ness 60,874 62,813 4.88 % Sep-2032 Washington Square 50,249 52,030 3.75 % Dec-2032 BJ's Wholesale Club 15,099 — 6.07 % Mar-2033 Broadlands Village 27,999 28,858 4.41 % Nov-2033 The Glen 20,234 20,827 4.69 % Jan-2034 Olde Forte Village 19,563 20,136 4.65 % Feb-2034 Olney 12,655 12,476 8.00 % Apr-2034 Shops at Monocacy 25,670 26,422 4.14 % Dec-2034 Ashbrook Marketplace 20,216 20,807 3.80 % Aug-2035 Kentlands 27,321 28,157 3.43 % Aug-2035 The Waycroft 149,078 152,679 4.67 % Sep-2035 Village Center 24,460 25,057 4.14 % Aug-2037 Beacon Center / Seven Corners 139,570 142,522 5.05 % Oct-2037 Hampden House 7,726 — 3.90 % Mar-2040 Twinbrook 74,909 — 3.83 % Dec-2041 Total fixed rate 1,130,285 1,074,682 4.70 % 8.62 years Variable rate loans: Variable-rate portion of Credit Facility** 276,000 164,000 SOFR + 1.40% Aug-2025 Total variable rate** 276,000 164,000 6.88 % 1.70 years Total notes payable $ 1,406,285 $ 1,238,682 5.13 % 7.26 years * Totals computed using weighted averages. ** The interest rate incurred on our variable rate debt changes monthly and is based on the 1-month Term SOFR rate plus a 0.10% SOFR credit spread plus the applicable margin on the Credit Facility, which was 1.40% as of December 31, 2023. 46 Funds From Operations In 2023, the Company reported Funds From Operations (“FFO”) 1 available to common stockholders and noncontrolling interests of $106.3 million, a 3.0% increase from 2022 FFO available to common stockholders and noncontrolling interests of $103.2 million.
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.
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.
Individual leases are assessed for collectability 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 collectability is determined to be probable.
Individual leases are assessed for collectability 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 36 cash basis until collectability is determined to be probable.
Because the majority of the Company’s property operating income is produced by our Shopping Centers, we continually monitor the implications of government policy changes, as well as shifts in consumer demand between on-line and in-store shopping, on future shopping center construction and retailer store expansion plans.
Because the majority of the Company’s property operating income is produced by our Shopping Centers, we continually monitor the implications of government policy changes, as well as shifts in consumer demand between on-line and in-store shopping, on future shopping center construction and retailer store expansion and closure plans.
The Company considers both quantitative and qualitative factors in identifying impairment indicators including recurring operating losses, significant decreases in occupancy, and significant adverse changes in market conditions, legal factors and business climate.
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 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 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.
Financing Activities Net cash used in financing activities represents (a) cash received from loan proceeds and issuance of common stock, preferred stock and limited partnership units minus (b) 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.
Financing Activities Net cash provided by (used in) financing activities represents (a) cash received from loan proceeds and issuance of common stock, preferred stock and limited partnership units minus (b) 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.
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 (“DRIP”) or other external debt or equity capital resources available to the Company.
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 and Share Purchase Plan or other external debt or equity capital resources available to the Company.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) begins with the Company’s primary business strategy to give the reader an overview of the goals of the Company’s business.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations begins with the Company’s primary business strategy to give the reader an overview of the goals of the Company’s business.
The Company will continue to evaluate acquisition, development and redevelopment as integral parts of its overall business plan. 34 Table of Contents Prior to the COVID-19 pandemic, economic conditions within the local Washington, DC metropolitan area had remained relatively stable.
The Company will continue to evaluate acquisition, development and redevelopment as integral parts of its overall business plan. Prior to the COVID-19 pandemic, economic conditions within the local Washington, DC metropolitan area had remained relatively stable.
Beginning on page 43, the Company provides an analysis of its liquidity and capital resources, including discussions of its cash flows, debt arrangements, sources of capital and financial commitments. On page 49, the Company discusses funds from operations, or FFO, which is a non-GAAP financial measure of performance of an equity REIT used by the REIT industry.
Beginning on page 42, the Company provides an analysis of its liquidity and capital resources, including discussions of its cash flows, debt arrangements, sources of capital and financial commitments. On page 47, the Company discusses funds from operations, or FFO, which is a non-GAAP financial measure of performance of an equity REIT used by the REIT industry.
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 apartments within The Waycroft, Clarendon Center and Park Van Ness properties).
Portfolio Leasing Status 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 apartments within The Waycroft, Clarendon Center and Park Van Ness properties).
Both the amount of the loss and the point at which its occurrence is considered probable can be difficult to determine. 36 Table of Contents Results of Operations The following is a discussion of the components of revenue and expense for the entire Company. This section generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
Both the amount of the loss and the point at which its occurrence is considered probable can be difficult to determine. Results of Operations The following is a discussion of the components of revenue and expense for the entire Company. This section generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed on February 24, 2022.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on March 2, 2023.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed on February 24, 2022.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on March 2, 2023.
Collectively, these leases are expected to produce approximately $5.4 million of additional annualized base rent, an average of $22.41 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.
Collectively, these leases are expected to produce approximately $4.1 million of additional annualized base rent, an average of $26.20 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.
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.
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.
Mixed-Use same property operating income is composed of the following: Year Ended December 31, (In thousands) 2022 2021 Office mixed-use properties (1) $ 24,367 $ 24,545 Residential mixed-use properties (retail activity) (2) 2,917 2,658 Residential mixed-use properties (residential activity) (3) 18,894 16,497 Total Mixed-Use same property operating income $ 46,178 $ 43,700 (1) Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square (2) Includes The Waycroft and Park Van Ness (3) Includes Clarendon South Block, The Waycroft and Park Van Ness 41 Table of Contents 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 leases, which contain provisions designed to increase revenues to offset the adverse impact of inflation on the Company’s results of operations.
Mixed-Use same property operating income is composed of the following: Year Ended December 31, (In thousands) 2023 2022 Office mixed-use properties (1) $ 24,508 $ 24,367 Residential mixed-use properties (retail activity) (2) 3,346 2,917 Residential mixed-use properties (residential activity) (3) 21,348 18,894 Total Mixed-Use same property operating income $ 49,202 $ 46,178 (1) Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square (2) Includes The Waycroft and Park Van Ness (3) Includes Clarendon South Block, The Waycroft and Park Van Ness 41 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, which contain provisions designed to increase revenues to offset the adverse impact of inflation on the Company’s results of operations.
In addition, substantially all of the Company’s properties are leased to 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.
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.
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.
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.
See Note 2 to the Consolidated Financial Statements in this report. The Company has identified the following policies that, due to estimates and assumptions inherent in those policies, involve a relatively high degree of judgment and complexity. Real Estate Investments Real estate investment properties are stated at historic cost less depreciation.
The Company has identified the following policies that, due to estimates and assumptions inherent in those policies, involve a relatively high degree of judgment and complexity. Real Estate Investments Real estate investment properties are stated at historic cost less depreciation.
Such measures are therefore not substitutes for total revenue, net income or operating income as computed in accordance with GAAP. 39 Table of Contents The tables below provide reconciliations of property revenue and property operating income under GAAP to same property revenue and same property operating income for the indicated periods.
Such measures are therefore not substitutes for total revenue, net income or operating income as computed in accordance with GAAP. 39 The tables below provide reconciliations of property revenue and property operating income under GAAP to same property revenue and same property operating income for the indicated periods. No properties were excluded from same property results.
The remaining units held in escrow are scheduled to be released on October 18, 2023. 48 Table of Contents Acquisitions and Redevelopments Management anticipates that during the coming year, the Company may redevelop certain of the Current Portfolio Properties and may develop additional freestanding outparcels or expansions within certain of the Shopping Centers.
The remaining units held in escrow were released on October 18, 2023. 47 Acquisitions and Redevelopments Management anticipates that during the coming year, the Company may redevelop certain of the Current Portfolio Properties and may develop additional freestanding outparcels or expansions within certain of the Shopping Centers.
Total Properties Total Square Footage Percentage Leased As of December 31, Shopping Centers Mixed-Use Shopping Centers Mixed-Use Shopping Centers Mixed-Use 2022 50 7 7,877,330 1,136,885 94.7 % 82.5 % 2021 50 7 7,874,130 1,136,937 93.4 % 82.3 % The overall commercial portfolio leasing percentage, on a comparative same property basis, increased to 93.2% at December 31, 2022 from 92.0% at December 31, 2021.
Total Properties Total Square Footage Percentage Leased As of December 31, Shopping Centers Mixed-Use Shopping Centers Mixed-Use Shopping Centers Mixed-Use 2023 50 7 7,878,088 1,136,885 95.3 % 86.0 % 2022 50 7 7,877,330 1,136,885 94.7 % 82.5 % The overall commercial portfolio leasing percentage, on a comparative same property basis, increased to 94.2% at December 31, 2023 from 93.2% at December 31, 2022.
Although it is management’s present intention to concentrate future acquisition and development activities on transit-centric, primarily residential mixed-use properties in the Washington, D.C./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.
Although it is management’s present intention to concentrate future acquisition 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 availability and terms of any such financing will depend upon market and other conditions. Contractual Payment Obligations As of December 31, 2022, the Company had unfunded contractual payment obligations totaling approximately $258.9 million, excluding operating obligations, due within the next 12 months.
The availability and terms of any such financing will depend upon market and other conditions. 43 Contractual Payment Obligations As of December 31, 2023, the Company had unfunded contractual payment obligations totaling approximately $278.9 million, excluding operating obligations, due within the next 12 months. The table below shows the total contractual payment obligations as of December 31, 2023.
The following table presents a reconciliation from net income to FFO available to common stockholders and noncontrolling interests for the periods indicated: Year ended December 31, (Dollars in thousands) 2022 2021 2020 Net income $ 65,392 $ 61,649 $ 50,316 Subtract: Gain on sale of property — — (278) Add: Real estate depreciation and amortization 48,969 50,272 51,126 FFO 114,361 111,921 101,164 Subtract: Preferred stock dividends (11,194) (11,194) (11,194) FFO available to common stockholders and noncontrolling interests $ 103,167 $ 100,727 $ 89,970 Weighted average shares and units: Basic 33,256 32,029 31,266 Diluted (2) 33,972 33,098 31,267 Basic FFO per share available to common stockholders and noncontrolling interests $ 3.10 $ 3.14 $ 2.88 Diluted FFO per share available to common stockholders and noncontrolling interests. $ 3.04 $ 3.04 $ 2.88 (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.
The following table presents a reconciliation from net income to FFO available to common stockholders and noncontrolling interests for the periods indicated: Year ended December 31, (Dollars in thousands) 2023 2022 2021 Net income $ 69,026 $ 65,392 $ 61,649 Add: Real estate depreciation and amortization 48,430 48,969 50,272 FFO 117,456 114,361 111,921 Subtract: Preferred stock dividends (11,194) (11,194) (11,194) FFO available to common stockholders and noncontrolling interests $ 106,262 $ 103,167 $ 100,727 Weighted average shares and units: Basic 33,474 33,256 32,029 Diluted (2) 34,066 33,972 33,098 Basic FFO per share available to common stockholders and noncontrolling interests $ 3.17 $ 3.10 $ 3.14 Diluted FFO per share available to common stockholders and noncontrolling interests. $ 3.12 $ 3.04 $ 3.04 (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.
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 42 Table of Contents properties.
See Note 5 to the Consolidated Financial Statements for a discussion of financing activity. 42 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.
Residential Property Leasing Activity Average Rent per Square Foot Year ended December 31, Number of leases New/Renewed Leases Expiring Leases 2022 1,005 $ 3.44 $ 3.22 2021 694 3.22 3.28
Residential Property Leasing Activity Average Rent per Square Foot Year ended December 31, Number of leases New/Renewed Leases Expiring Leases 2023 929 $ 3.53 $ 3.43 2022 1,005 $ 3.44 $ 3.22 49
The Company issued 26,659 and 61,009 limited partnership units under the Plan at a weighted average price of $49.81 and $39.74 per unit during the years ended December 31, 2022 and 2021, respectively.
The Company issued 44,500 and 26,659 limited partnership units under the Plan at a weighted average price of $33.83 and $49.81 per unit during the years ended December 31, 2023 and 2022, respectively.
(in thousands) Year Ended December 31, 2022 2021 Net cash provided by operating activities $ 121,151 $ 118,427 Net cash used in investing activities (116,888) (55,918) Net cash used in financing activities (5,578) (74,771) Decrease in cash and cash equivalents $ (1,315) $ (12,262) 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.
(in thousands) Year Ended December 31, 2023 2022 Net cash provided by operating activities $ 117,727 $ 121,151 Net cash used in investing activities (203,681) (116,888) Net cash provided by (used in) financing activities 81,082 (5,578) Decrease in cash and cash equivalents $ (4,872) $ (1,315) 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.
The Company issued 138,142 and 287,239 shares under the Plan at a weighted average discounted price of $48.56 and $39.17 per share during the years ended December 31, 2022 and 2021, respectively.
The Company issued 53,716 and 138,142 shares under the Plan at a weighted average discounted price of $36.46 and $48.56 per share during the years ended December 31, 2023 and 2022, respectively.
Below is information about existing and estimated market base rents per square foot for that space. Expiring Commercial Property Leases: Total Square feet 1,026,830 Average base rent per square foot $ 18.53 Estimated market base rent per square foot $ 18.59 The Residential portfolio was 97.2% leased at December 31, 2022, compared to 97.1% at December 31, 2021.
Below is information about existing and estimated market base rents per square foot for that space. Expiring Commercial Property Leases: Total Square feet 713,271 Average base rent per square foot $ 23.32 Estimated market base rent per square foot $ 23.56 The Residential portfolio was 98.0% leased at December 31, 2023, compared to 97.2% at December 31, 2022.
The loan matures in 2037, bears interest at a fixed-rate of 4.14%, requires monthly principal and interest payments of $135,200 based on a 25-year amortization schedule and requires a final payment of $13.4 million at maturity.
The loan matures in 2033, bears interest at a fixed-rate of 6.07%, requires monthly principal and interest payments of $99,200 based on a 25-year amortization schedule and requires a final principal payment of $11.7 million at maturity.
FFO available to common stockholders and noncontrolling interests increased primarily due to (a) higher base rent of $3.4 million, (b) lower interest expense, net and amortization of deferred debt costs of $1.5 million, primarily due to higher capitalized interest and (c) lower credit losses on operating lease receivables and corresponding reserves, collectively, of $0.7 million, partially offset by (d) higher general and administrative costs of $2.1 million and (e) lower recovery income, net of expenses of $1.4 million.
FFO available to common stockholders and noncontrolling interests increased primarily due to (a) higher base rent of $7.3 million and (b) higher termination fees of $2.7 million, partially offset by (c) higher interest expense, net and amortization of deferred debt costs of $5.2 million and (d) lower expense recovery income, net of expenses, of $1.5 million.
Included in the 93.2% of space leased as of December 31, 2022, is approximately 241,000 square feet of space, representing 2.7% of total commercial square footage, that has not been occupied by the tenant.
Included in the 94.2% of space leased as of December 31, 2023, is approximately 157,355 square feet of space, representing 1.75% of total commercial square footage, that has not been occupied by the tenant.
Future amounts are subject to change as the number of employees employed by each of the parties to the lease fluctuates. 44 Table of Contents Dividend Reinvestments In December 1995, the Company established a Dividend Reinvestment Plan (the “Plan”) 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.
Dividend Reinvestments In December 1995, the Company established a Dividend Reinvestment and Stock Purchase Plan (the “Plan”) 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.
Overview The Company’s primary strategy is to continue to focus on diversification of its assets through development of transit-oriented, residential mixed-use projects in the Washington, D.C. metropolitan area.
Risk Factors." Overview The Company’s primary strategy is to continue to focus on diversification of 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 metropolitan area.
Shopping Center same property operating income increased primarily due to higher base rent of $1.2 million. Mixed-Use same property operating income increased primarily due to (a) higher base rent of $2.2 million and (b) higher parking income, net of expenses of $0.3 million.
Shopping Center same property operating income increased primarily due to (a) higher base rent of $4.2 million and (b) higher termination fees of $2.3 million, partially offset by (c) lower expense recoveries, net of expenses of $0.7 million. Mixed-Use same property operating income increased primarily due to higher base rent of $3.1 million.
Mixed-Use same property revenue is composed of the following: Year Ended December 31, (In thousands) 2022 2021 Office mixed-use properties (1) $ 37,845 $ 37,561 Residential mixed-use properties (retail activity) (2) 3,984 3,530 Residential mixed-use properties (residential activity) (3) 31,976 28,453 Total Mixed-Use same property revenue $ 73,805 $ 69,544 (1) Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square (2) Includes The Waycroft and Park Van Ness (3) Includes Clarendon South Block, The Waycroft and Park Van Ness 40 Table of Contents Same property operating income Year Ended December 31, (In thousands) 2022 2021 Net income $ 65,392 $ 61,649 Add: Interest expense, net and amortization of deferred debt costs 43,937 45,424 Add: Depreciation and amortization of deferred leasing costs 48,969 50,272 Add: General and administrative 22,392 20,252 Add: Loss on early extinguishment of debt 648 — Property operating income 181,338 177,597 Less: Acquisitions, dispositions and development properties — — Total same property operating income $ 181,338 $ 177,597 Shopping Centers $ 135,160 $ 133,897 Mixed-Use properties 46,178 43,700 Total same property operating income $ 181,338 $ 177,597 Shopping Center operating income $ 135,160 $ 133,897 Less: Shopping Center acquisitions, dispositions and development properties — — Total same Shopping Center operating income $ 135,160 $ 133,897 Mixed-Use property operating income $ 46,178 $ 43,700 Less: Mixed-Use acquisitions, dispositions and development properties — — Total same Mixed-Use property operating income $ 46,178 $ 43,700 During the year ended 2022, Shopping Center same property operating income increased 0.9% and Mixed-Use same property operating income increased 5.7%.
Mixed-Use same property revenue is composed of the following: Year Ended December 31, (In thousands) 2023 2022 Office mixed-use properties (1) $ 38,514 $ 37,845 Residential mixed-use properties (retail activity) (2) 4,583 3,984 Residential mixed-use properties (residential activity) (3) 34,760 31,976 Total Mixed-Use same property revenue $ 77,857 $ 73,805 (1) Includes Avenel Business Park, Clarendon Center – North and South Blocks, 601 Pennsylvania Avenue and Washington Square (2) Includes The Waycroft and Park Van Ness (3) Includes Clarendon South Block, The Waycroft and Park Van Ness 40 Same property operating income Year Ended December 31, (In thousands) 2023 2022 Net income $ 69,026 $ 65,392 Add: Interest expense, net and amortization of deferred debt costs 49,153 43,937 Add: Depreciation and amortization of deferred leasing costs 48,430 48,969 Add: General and administrative 23,459 22,392 Add: Loss on early extinguishment of debt — 648 Property operating income 190,068 181,338 Less: Acquisitions, dispositions and development properties — — Total same property operating income $ 190,068 181,338 Shopping Centers $ 140,866 $ 135,160 Mixed-Use properties 49,202 46,178 Total same property operating income $ 190,068 $ 181,338 Shopping Center operating income $ 140,866 $ 135,160 Less: Shopping Center acquisitions, dispositions and development properties — — Total same Shopping Center operating income $ 140,866 $ 135,160 Mixed-Use property operating income $ 49,202 $ 46,178 Less: Mixed-Use acquisitions, dispositions and development properties — — Total same Mixed-Use property operating income $ 49,202 $ 46,178 During the year ended 2023, Shopping Center same property operating income increased 4.2% and Mixed-Use same property operating income increased 6.5%.
Revenue (Dollars in thousands) Year ended December 31, Percentage Change 2022 2021 2020 2022 from 2021 2021 from 2020 Base rent $ 201,182 $ 197,930 $ 188,636 1.6 % 4.9 % Expense recoveries 36,025 34,500 34,678 4.4 % (0.5) % Percentage rent 1,632 1,504 927 8.5 % 62.2 % Other property revenue 1,910 1,393 1,252 37.1 % 11.3 % Credit (losses) recoveries on operating lease receivables, net 88 (812) (5,212) NM NM Rental revenue 240,837 234,515 220,281 2.7 % 6.5 % Other revenue 5,023 4,710 4,926 6.6 % (4.4) % Total revenue $ 245,860 $ 239,225 $ 225,207 2.8 % 6.2 % NM = Not Meaningful Total revenue increased 2.8% in 2022 compared to 2021 as described below.
Revenue (Dollars in thousands) Year ended December 31, Percentage Change 2023 2022 2021 2023 from 2022 2022 from 2021 Base rent $ 208,295 $ 201,182 $ 197,930 3.5 % 1.6 % Expense recoveries 37,094 36,025 34,500 3.0 % 4.4 % Percentage rent 1,790 1,632 1,504 9.7 % 8.5 % Other property revenue 2,412 1,910 1,393 26.3 % 37.1 % Credit (losses) recoveries on operating lease receivables, net (534) 88 (812) NM NM Rental revenue 249,057 240,837 234,515 3.4 % 2.7 % Other revenue 8,150 5,023 4,710 62.3 % 6.6 % Total revenue $ 257,207 $ 245,860 $ 239,225 4.6 % 2.8 % NM = Not Meaningful Total revenue increased 4.6% in 2023 compared to 2022 as described below. 37 Base rent The $7.1 million increase in base rent in 2023 compared to 2022 was primarily attributable to (a) higher commercial base rent of $4.3 million and (b) higher residential rent of $2.8 million.
Other Revenue Other revenue increased $0.3 million primarily due to (a) higher parking revenue of $0.6 million, partially offset by (b) lower lease termination fees of $0.3 million. 37 Table of Contents Expenses (Dollars in thousands) Year ended December 31, Percentage Change 2022 2021 2020 2022 from 2021 2021 from 2020 Property operating expenses $ 35,934 $ 32,881 $ 28,857 9.3 % 13.9 % Real estate taxes 28,588 28,747 29,560 (0.6) % (2.8) % Interest expense, net and amortization of deferred debt costs 43,937 45,424 46,519 (3.3) % (2.4) % Depreciation and amortization of deferred leasing costs 48,969 50,272 51,126 (2.6) % (1.7) % General and administrative 22,392 20,252 19,107 10.6 % 6.0 % Loss on early extinguishment of debt 648 — — NM NM Total expenses $ 180,468 $ 177,576 $ 175,169 1.6 % 1.4 % NM = Not Meaningful Total expenses increased 1.6% in 2022 compared to 2021 as described below.
Expenses (Dollars in thousands) Year ended December 31, Percentage Change 2023 2022 2021 2023 from 2022 2022 from 2021 Property operating expenses $ 37,489 $ 35,934 $ 32,881 4.3 % 9.3 % Real estate taxes 29,650 28,588 28,747 3.7 % (0.6) % Interest expense, net and amortization of deferred debt costs 49,153 43,937 45,424 11.9 % (3.3) % Depreciation and amortization of deferred leasing costs 48,430 48,969 50,272 (1.1) % (2.6) % General and administrative 23,459 22,392 20,252 4.8 % 10.6 % Loss on early extinguishment of debt — 648 — NM NM Total expenses $ 188,181 $ 180,468 $ 177,576 4.3 % 1.6 % NM = Not Meaningful Total expenses increased 4.3% in 2023 compared to 2022 as described below.
Corporate Headquarters Lease amounts represent an allocation to the Company based upon employees’ time dedicated to the Company’s business as specified in the Shared Services Agreement.
Corporate Headquarters Lease amounts represent an allocation to the Company based upon employees’ time dedicated to the Company’s business as specified in the Shared Services Agreement. Future amounts are subject to change as the number of employees employed by each of the parties to the lease fluctuates.
The changes in cash and cash equivalents during the years ended December 31, 2022 and 2021 were attributable to operating, investing and financing activities, as described below.
Liquidity and Capital Resources Cash and cash equivalents were $8.4 million and $13.3 million at December 31, 2023 and 2022, respectively. The changes in cash and cash equivalents during the years ended December 31, 2023 and 2022 were attributable to operating, investing and financing activities, as described below.
Property operating expenses Property operating expenses increased $3.1 million in 2022 compared to 2021 primarily due to (a) increased repairs and maintenance costs across the portfolio of $1.7 million, (b) higher property employee costs of $0.4 million, (c) increased utilities across the portfolio of $0.3 million, (d) higher parking expenses in the Mixed-Use portfolio of $0.3 million, and (e) higher real estate tax appeal fees across the portfolio of $0.2 million.
Property operating expenses Property operating expenses increased $1.6 million in 2023 compared to 2022 primarily due to (a) increased insurance premiums across the portfolio of $0.6 million, (b) higher property employee compensation and benefits of $0.4 million, (c) increased repairs and maintenance across the portfolio of $0.3 million, and (d) higher parking expenses in the Mixed-Use portfolio of $0.1 million.
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. 35 Table of Contents 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.
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 amount of the real estate investment property exceeds its estimated fair value.
Asset value is the aggregate fair market value of the Current Portfolio Properties and any subsequently acquired properties as reasonably determined by management by reference to the properties’ aggregate cash flow. Given the Company’s current debt level, it is management’s belief that the ratio of the Company’s debt to total asset value was below 50% as of December 31, 2022.
Asset value is the aggregate fair market value of the Current Portfolio Properties and any subsequently acquired properties as reasonably determined by management by reference to the properties’ aggregate cash flow.
Same property revenue (in thousands) Year ended December 31, 2022 2021 Total revenue $ 245,860 $ 239,225 Less: Acquisitions, dispositions and development properties — — Total same property revenue $ 245,860 $ 239,225 Shopping centers $ 172,055 $ 169,681 Mixed-Use properties 73,805 69,544 Total same property revenue $ 245,860 $ 239,225 Total Shopping Center revenue $ 172,055 $ 169,681 Less: Shopping Center acquisitions, dispositions and development properties — — Total same Shopping Center revenue $ 172,055 $ 169,681 Total Mixed-Use property revenue $ 73,805 $ 69,544 Less: Mixed-Use acquisitions, dispositions and development properties — — Total same Mixed-Use revenue $ 73,805 $ 69,544 The $6.6 million increase in same property revenue in 2022 compared to 2021 was primarily due to (a) higher base rent of $3.4 million, (b) higher expense recoveries of $1.5 million, (c) lower credit losses on operating lease receivables of $0.7 million and (d) higher other property revenue of $0.5 million.
Same property revenue (in thousands) Year ended December 31, 2023 2022 Total revenue $ 257,207 $ 245,860 Less: Acquisitions, dispositions and development properties — — Total same property revenue $ 257,207 $ 245,860 Shopping Centers $ 179,350 $ 172,055 Mixed-Use properties 77,857 73,805 Total same property revenue $ 257,207 $ 245,860 Total Shopping Center revenue $ 179,350 $ 172,055 Less: Shopping Center acquisitions, dispositions and development properties — — Total same Shopping Center revenue $ 179,350 $ 172,055 Total Mixed-Use property revenue $ 77,857 $ 73,805 Less: Mixed-Use acquisitions, dispositions and development properties — — Total same Mixed-Use revenue $ 77,857 $ 73,805 The $11.3 million increase in same property revenue in 2023 compared to 2022 was primarily due to (a) higher base rent of $7.3 million, (b) higher termination fees of $2.7 million, and (c) higher expense recoveries of $1.1 million.
The Company has a pipeline of entitled sites in its portfolio, some of which are currently shopping center operating properties, for development of up to 3,700 apartment units and 975,000 square feet of retail and office space. All such sites are located adjacent to WMATA red line Metro stations in Montgomery County, Maryland.
Including Twinbrook Quarter and Hampden House, the Company has a pipeline of entitled sites in its portfolio, some of which are currently Shopping Centers, for development of up to 3,700 apartment units and 975,000 square feet of retail and office space.
Loss on early extinguishment of debt Loss on early extinguishment of debt increased $0.6 million due to the early refinance of loans at Great Falls Center and Village Center. 38 Table of Contents Same property revenue and same property operating income Same property revenue and same property operating income are non-GAAP financial measures of performance and improve the comparability of these measures by excluding the results of properties which were not in operation for the entirety of the comparable reporting periods.
Same property revenue and same property operating income Same property revenue and same property operating income are non-GAAP financial measures of performance and improve the comparability of these measures by excluding the results of properties which were not in operation for the entirety of the comparable reporting periods.
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.
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.
The total cost of the project is expected to be approximately $331.5 million, of which $271.4 million is related to the development of the residential and retail portions of Phase I and $60.1 million is related to infrastructure and other items. A portion of the project will be financed by a $145.0 million construction-to-permanent loan.
Excluding imputed capitalized interest, the total cost of the project is expected to be approximately $331.5 million, of which $271.4 million is related to the development of the residential and retail portions of Phase I and $60.1 million is related to infrastructure and other items. Of the expected $331.5 million total cost, $263.2 million has been invested to date.
Portfolio Leasing Status The following chart sets forth certain information regarding commercial leases at our properties for the periods indicated. This section generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
Commercial Rents Year ended December 31, 2023 2022 2021 Base rent $ 20.79 $ 20.55 $ 20.63 Effective rent $ 19.24 $ 18.95 $ 18.91 The following chart sets forth certain information regarding commercial leases at our properties for the periods indicated. This section generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
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 supermarkets and drug stores. The Company has executed leases or leases are under negotiation for seven more pad sites.
All such sites are located proximate to Washington Metropolitan Area Transit Authority red line Metro stations in Montgomery County, Maryland. 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 supermarkets and drug stores.
The actual changes in rental income received by the Company may be different. 49 Table of Contents Commercial Property Leasing Activity Average Base Rent per Square Foot Year ended December 31, Square Feet Number of Leases New/Renewed Leases Expiring Leases Shopping Centers Mixed-Use Shopping Centers Mixed-Use Shopping Centers Mixed-Use Shopping Centers Mixed-Use 2022 1,274,191 86,713 304 17 $ 22.50 $ 28.04 $ 21.37 $ 29.66 2021 1,227,362 126,181 256 29 18.91 40.59 19.15 46.83 Additional information about commercial leasing activity during the three months ended December 31, 2022, is set forth below.
Commercial Property Leasing Activity Average Base Rent per Square Foot Year ended December 31, Square Feet Number of Leases New/Renewed Leases Expiring Leases Shopping Centers Mixed-Use Shopping Centers Mixed-Use Shopping Centers Mixed-Use Shopping Centers Mixed-Use 2023 1,554,663 229,956 282 35 $ 20.38 $ 36.70 $ 19.35 $ 38.68 2022 1,274,191 86,713 304 17 22.50 28.04 21.37 29.66 Additional information about commercial leasing activity during the three months ended December 31, 2023, is set forth below.
Commercial Rents Year ended December 31, 2022 2021 2020 Base rent $ 20.55 $ 20.63 $ 19.97 Effective rent $ 18.95 $ 18.91 $ 18.25 Critical Accounting Policies The Company’s consolidated 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.
Critical Accounting Policies The Company’s consolidated 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. See Note 2 to the Consolidated Financial Statements in this report.
Expense recoveries The $1.5 million increase in expense recoveries in 2022 compared to 2021 is primarily attributable to an increase in recoverable property operating expenses. Other property revenue The $0.5 million increase in 2022 compared to 2021 is primarily attributable to (a) higher late fees and interest charges of $0.3 million and (b) higher residential move-in fees of $0.1 million.
Expense recoveries The $1.1 million increase in expense recoveries in 2023 compared to 2022 is primarily attributable to an increase in recoverable property operating expenses. Other property revenue The $0.5 million increase in 2023 compared to 2022 is primarily attributable to higher miscellaneous income received in the Shopping Center portfolio.
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 December 31, 2022, including $100.0 million of hedged variable-rate debt, total fixed-rate debt with staggered maturities from 2023 to 2041 represented approximately 86.8% of the Company’s notes payable, thus minimizing refinancing risk.
As of December 31, 2023, including $100.0 million of hedged variable-rate debt, total fixed-rate debt with staggered maturities from 2024 to 2041 represented approximately 80.4% of the Company’s notes payable, thus minimizing refinancing risk. The Company’s unhedged variable-rate debt consists of $276.0 million outstanding under the Credit Facility.
The leasing percentage at office mixed-use properties increased to 82.0% at December 31, 2022 from 81.6% at December 31, 2021. The retail leasing percentage at residential mixed-use properties decreased to 91.2% at December 31, 2022 from 92.4% at December 31, 2021. The following table shows selected data for leases executed in the indicated periods.
The retail leasing percentage at residential mixed-use properties increased to 97.0% at December 31, 2023 from 91.2% at December 31, 2022. 48 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.
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.
The Company also credited 7,643 and 5,815 shares to directors pursuant to the reinvestment of dividends specified by the Directors’ Deferred Compensation Plan at a weighted average discounted price of $36.50 and $46.74 per share, during the years ended December 31, 2023 and 2022, respectively. 44 Capital Strategy and Financing Activity As a general policy, the Company intends to maintain a ratio of its 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.
The total cost of the project is expected to be approximately $246.4 million, a portion of which will be financed by a $133.0 million construction-to-permanent loan. Excavation is complete and below grade construction of foundation systems is in progress. Construction is expected to be completed during 2025.
Excluding imputed capitalized interest, the total cost of the project is expected to be approximately $246.4 million, of which $133.0 million has been invested to date. A portion of the cost of the project is being financed by a $133.0 million construction-to-permanent loan.
The $61.0 million increase in cash used in investing activities is primarily due to (a) higher development expenditures of $75.2 million, partially offset by (b) lower acquisitions of real estate investments of $9.0 million and (c) lower additions to real estate investments throughout the portfolio of $5.2 million.
Investing Activities Net cash used in investing activities includes property acquisitions, developments, redevelopments, tenant improvements and other property capital expenditures. The $86.8 million increase in cash used in investing activities is primarily due to (a) higher development expenditures of $76.4 million and (b) higher additions to real estate investments throughout the portfolio of $10.4 million.
Business - Capital Policies”.) 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.
Management believes it will continue to be challenging to identify acquisition opportunities for investment in existing and new shopping center 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.
Credit (losses) recoveries on operating lease receivables, net Credit (losses) recoveries on operating lease receivables, net during 2022 decreased $0.9 million from 2021. The decrease, which increases income, is primarily due to higher collections in 2022 of previously reserved lease receivables.
Credit (losses) recoveries on operating lease receivables, net Credit (losses) recoveries on operating lease receivables, net was a loss of $0.5 million during 2023. The loss is primarily due to higher lease receivable reserves in 2023.
General and administrative General and administrative costs increased $2.1 million in 2022 compared to 2021 primarily due to (a) higher employee costs of $1.3 million and (b) higher loan administration costs of $0.7 million.
Other Revenue Other revenue increased $3.1 million primarily due to (a) higher termination fees of $2.7 million and (b) higher parking revenue of $0.4 million.
The Company’s unhedged variable-rate debt consists of $164.0 million outstanding under the Credit Facility. As of December 31, 2022, the Company has availability of approximately $212.1 million under its Credit Facility.
As of December 31, 2023, the Company has availability of approximately $137.9 million under its Credit Facility.
The Company continues to refinance or renegotiate the terms of its outstanding debt in order to extend maturities and obtain generally more favorable loan terms, whenever management determines the financing environment is favorable. The Company's financing activity is described within Note 5 to the Consolidated Financial Statements.
The Company continues to refinance or renegotiate the terms of its outstanding debt in order to extend maturities and obtain generally more favorable loan terms, whenever management determines the financing environment is favorable. On March 8, 2023, the Company closed on a 10-year, non-recourse, $15.3 million mortgage secured by BJ’s Wholesale Club in Alexandria, Virginia.
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.
Installation of the precast façade along with exterior metal and framing is in process. Construction is expected to be completed in late 2025. 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.
Commercial Property Leasing Activity New Leases First Generation/Development Leases Renewed Leases Number of leases 19 1 65 Square feet 62,687 3,200 184,720 Per square foot average annualized: Base rent $ 25.35 $ 60.94 $ 30.09 Tenant improvements (4.32) (12.50) (0.16) Leasing costs (0.90) (1.92) (0.01) Rent concessions (0.31) — (0.02) Effective rents $ 19.82 $ 46.52 $ 29.90 As of December 31, 2022, 1,026,830 square feet of Commercial space was subject to leases scheduled to expire in 2023.
Commercial Property Leasing Activity New Leases First Generation/Development Leases Renewed Leases Number of leases 16 — 46 Square feet 37,161 — 283,639 Per square foot average annualized: Base rent $ 44.71 $ — $ 28.93 Tenant improvements (2.96) — (0.53) Leasing costs (1.95) — (0.55) Rent concessions (2.98) — (0.05) Effective rents $ 36.82 $ — $ 27.80 As of December 31, 2023, 713,271 square feet of Commercial space was subject to leases scheduled to expire in 2024.
Based on our observations, we continue to adapt our marketing and merchandising strategies in ways to 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 93.2% at December 31, 2022, from 92.0% at December 31, 2021.
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 94.2% at December 31, 2023, from 93.2% at December 31, 2022. 35 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.
Interest expense, net and amortization of deferred debt costs Interest expense, net and amortization of deferred debt costs decreased $1.5 million in 2022 compared to 2021 primarily due to (a) higher capitalization of interest of $4.4 million related to Twinbrook and Hampden House, (b) lower interest incurred of $2.0 million due to a lower weighted average rate over the period, and (c) the extinguishment of the finance lease liability related to the land underlying the leasehold interest for Twinbrook of $0.4 million, partially offset by (d) higher interest incurred of $5.2 million due to higher average outstanding debt balances over the period.
Real estate taxes Real estate taxes increased $1.1 million in 2023 compared to 2022 primarily due to higher tax assessments across the Shopping Center portfolio of $1.0 million. 38 Interest expense, net and amortization of deferred debt costs Interest expense, net and amortization of deferred debt costs increased $5.2 million in 2023 compared to 2022 primarily due to (a) higher interest incurred as a result of higher average interest rates of $7.5 million, (b) higher interest incurred as a result of higher average outstanding debt of $5.9 million, partially offset by (c) higher capitalized interest of $8.3 million related to Twinbrook Quarter Phase I and Hampden House.
The organizational documents of the Company do not limit the absolute amount or percentage of indebtedness that it may incur.
Given the Company’s current debt level, it is management’s belief that the ratio of the Company’s debt to total estimated asset value was below 50% as of December 31, 2023. The organizational documents of the Company do not limit the absolute amount or percentage of indebtedness that it may incur.
Proceeds were used to repay the remaining balance of approximately $11.2 million on the existing mortgage and reduce the outstanding balance of the Credit Facility. A $0.4 million loss on early extinguishment of debt was recognized.
Proceeds were used to repay the remaining balance of approximately $9.3 million on the existing mortgage and reduce the outstanding balance of the Credit Facility. The Company's 2022 financing activity is described within Note 5 to the Consolidated Financial Statements.
Removed
Risk Factors." Impact of COVID-19 If the effects of COVID-19 result in deterioration of economic and market conditions, including supply chain issues, or if the Company’s expected holding period for assets changes, subsequent tests for impairment could result in impairment charges in the future.
Added
The Company has two executed leases and three leases are under negotiation for a total of five more pad sites. In recent years, there has been a limited amount of quality properties for sale.
Removed
The Company can provide no assurance that material impairment charges with respect to the Company’s investment properties will not occur during future periods. As of December 31, 2022, we have not identified any impairment triggering events, including the impact of COVID-19 and corresponding tenant requests for rent relief. Therefore, under applicable GAAP guidance, no impairment charges have been recorded.
Added
Based on our observations, we continue to adapt our marketing and merchandising strategies in ways to maximize our future performance.
Removed
However, we have yet to see the long-term effects of COVID-19 and the extent to which it may impact our tenants in the future.
Added
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.
Removed
Indications of a tenant’s inability to continue as a going concern, changes in our view or strategy relative to a tenant’s business or industry as a result of COVID-19, or changes in our long-term hold strategies, could be indicative of an impairment triggering event.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest rate fluctuations are monitored by management as an integral part of the Company’s overall risk management program, which recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effect on the Company’s results of operations. 50 Table of Contents The Company is exposed to interest rate fluctuations that will affect the amount of interest expense of its variable-rate debt and the fair value of its fixed-rate debt.
Biggest changeInterest rate fluctuations are monitored by management as an integral part of the Company’s overall risk management program, which recognizes the unpredictability of financial markets and seeks to reduce the potentially adverse effect on the Company’s results of operations.
If the interest rates on the Company’s unhedged variable rate debt instruments outstanding at December 31, 2022 had been one percentage point higher or lower, our annual interest expense relating to these debt instruments would have increased or decreased b y $1.6 million b ased on those balances.
If the interest rates on the Company’s unhedged variable rate debt instruments outstanding at December 31, 2023 had been one percentage point higher or lower, our annual interest expense relating to these debt instruments would have increased or decreased b y $2.8 million b ased on those balances.
If interest rates on the Company’s fixed-rate debt instruments at December 31, 2022 had been one percentage point lower, the fair value of those debt instruments on that date would have increased by $62.4 million.
If interest rates on the Company’s fixed-rate debt instruments at December 31, 2023 had been one percentage point lower, the fair value of those debt instruments on that date would have increased by $56.3 million.
As of December 31, 2022, the Company had fixed-rate indebtedness totaling $1.07 billion with a weighted average interest rate of 4.8%. If interest rates on the Company’s fixed-rate debt instruments at December 31, 2022 had been one percentage point higher, the fair value of those debt instruments on that date would have decreased by $56.9 million.
As of December 31, 2023, the Company had fixed-rate indebtedness totaling $1.13 billion with a weighted average interest rate of 4.7%. If interest rates on the Company’s fixed-rate debt instruments at December 31, 2023 had been one percentage point higher, the fair value of those debt instruments on that date would have decreased by $51.6 million.
As of December 31, 2022, the Company had unhedged variable rate indebtedness totaling $164.0 million.
The Company is exposed to interest rate fluctuations that will affect the amount of interest expense of its variable-rate debt and the fair value of its fixed-rate debt. As of December 31, 2023, the Company had unhedged variable rate indebtedness totaling $276.0 million.

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