907254--3/13/2006--SAUL_CENTERS

related topics

{investment, property, distribution}

{loan, real, estate}

{tax, income, asset}

{debt, indebtedness, cash}

{acquisition, growth, future}

{stock, price, share}

{regulation, change, law}

{loss, insurance, financial}

{provision, law, control}

{regulation, government, change}

{cost, regulation, environmental}

Revenue from our properties may be reduced or limited if the retail operations of our tenants are not successful. Our ability to increase our net income depends on the success and continued presence of our shopping center anchor tenants and other significant tenants. We may experience difficulty or delay in renewing leases or re-leasing space. We have substantial relationships with members of The Saul Organization whose interests could conflict with 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. 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 development activities are inherently risky. Redevelopments and acquisitions may fail to perform as expected. Our ability to grow will be limited if we cannot obtain additional capital. Our performance and value are subject to general risks associated with the real estate industry. Many real estate costs are fixed, even if income from our properties decreases. Competition may limit our ability to purchase new properties and generate sufficient income from tenants. We may be unable to sell properties when appropriate because real estate investments are illiquid. Our insurance coverage on our properties may be inadequate. Environmental laws and regulations could reduce the value or profitability of our properties. The Americans with Disabilities Act of 1990 could require us to take remedial steps with respect to newly acquired properties. The revenues generated by our tenants could be negatively affected by various federal, state and local laws to which they are subject. Failure to qualify as a REIT for federal income tax purposes would cause us to be taxed as a corporation, which would substantially reduce funds available for payment of distributions. We may be required to incur additional debt to qualify as a REIT. The structure of our leases may jeopardize our ability to qualify as a REIT. To maintain our status as a REIT, we limit the amount of shares any one stockholder can own. The lower tax rate on dividends of regular corporations may cause investors to prefer to hold stock of regular corporations instead of-REITs. We cannot assure you we will continue to pay dividends at historical rates. Certain tax and anti-takeover provisions of our articles of incorporation and bylaws may inhibit a change of our control. We may amend or revise our business policies without your approval.

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907254--3/13/2006--SAUL_CENTERS_INC