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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-71323
PROSPECTUS
Saul Centers, Inc.
8401 Connecticut Avenue
Chevy Chase, Maryland 20815
(301) 986-6207
Dividend Reinvestment and Stock Purchase Plan
1,000,000 Shares of Common Stock
$.01 Par Value Per Share
HOW TO ENROLL
. If you are a stockholder of Saul Centers, Inc. or a holder of limited
partnership interests in Saul Holdings Limited Partnership and you wish to
enroll in the Company's Dividend Reinvestment and Stock Purchase Plan, then
you should fill out the enrollment form accompanying this Prospectus.
. For more details, see Description of Plan in this Prospectus.
HIGHLIGHTS OF THE PLAN
. Any holder of record of common stock of the Company (Common Stock), or
holder of limited partnership interests in our operating partnership may
elect to participate in the Plan.
. The Plan provides a simple and convenient method for dividends and
partnership distributions to be automatically invested to purchase shares
of Common Stock.
. The purchase price of each share of Common Stock will be 97% of the closing
price of Common Stock on the New York Stock Exchange. (See the response to
question 13 -"What is the price of Common Stock that will be purchased for
a participant?" ).
. You may automatically reinvest all or a portion of your cash dividends or
partnership distributions to purchase shares of Common Stock.
. All cash dividends paid on the whole or fractional shares of Common Stock
obtained under the Plan will be reinvested automatically to purchase shares
of Common Stock.
Please retain this Prospectus for future reference.
Carefully consider the Risk Factors beginning on page 2 of this
Prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
The date of this Prospectus is January 28, 1999.
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THE COMPANY
Saul Centers, Inc., or the Company, is incorporated under the laws of
Maryland and conducts all of its activities through subsidiaries and limited
partnerships of which the Company or one of its subsidiaries is the sole general
partner. Our primary business is the ownership, operation, management, leasing,
acquisition, development and financing of community and neighborhood shopping
centers and, to a limited extent, other commercial properties, primarily in the
Mid-Atlantic region. As of December 31, 1998, these properties included 31
operating shopping centers and three primarily office buildings. For further
information about the operation of these properties and the Company, see our
most recent annual report and quarterly reports, incorporated by reference
elsewhere in this prospectus. We have elected to be taxed as a real estate
investment trust, or a REIT, for federal income tax purposes commencing with its
taxable period ended December 31, 1993, and we intend to continue operating so
as to qualify as a REIT.
RISK FACTORS
General Real Estate Investment Risks
General. Investments in our Company will be subject to the risks incident
to the ownership and operation of commercial real estate. These include the
risks normally associated with changes in general or local market conditions,
competition for tenants, changes in market rental rates, inability to collect
rent due to bankruptcy or insolvency of tenants or otherwise, and the need to
periodically renovate, repair and release space and to pay the related costs.
Lease Expiration and Re-Lease of Space. We will be subject to the risks
that, upon expiration, leases for space in our properties not be renewed, the
space may not be re-leased or the terms of renewal or re-lease (including the
cost of required renovations or concessions to tenants) may be less favorable
than current lease terms. Our operating cash flow would decrease if we were
unable to promptly re-lease all or a substantial portion of this space, if the
rental rates upon such re-lease were significantly lower than expected, or if
reserves for costs of re-leasing prove inadequate.
Dependence on Major Tenants. Giant Food leases 9.8 percent of the
aggregate gross leasable area of our shopping center properties, and, for the
year ended December 31, 1997, accounted for approximately 9.2 percent of the
aggregate base and percentage rent from our shopping center properties
(approximately 6.3 percent of the aggregate annual rental revenues from our
properties as a whole). In addition, for the year ended December 31, 1997, the
General Services Administration ("GSA") accounted for approximately 10.5% of the
aggregate annual rental revenues from our properties, as a whole, primarily from
office properties. The success of our properties depends, to a substantial
degree, upon the success of their anchors and the default or financial distress
of Giant Food, GSA, or any other anchor could cause substantial property
vacancies, which would reduce our operating cash flow until such properties are
re-leased.
Changes in Laws. Costs resulting from changes in real estate taxes
generally may be passed through to tenants and, to such extent, will not affect
us. Increases in income, service or
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transfer taxes, however, generally are not passed through to tenants under our
portfolio's leases and may adversely affect our operating cash flow and our
ability to make distributions to stockholders. Similarly, changes in laws
increasing the potential liability for environmental conditions existing on
properties or increasing the restrictions on discharges or other conditions may
result in significant unanticipated expenditures, which would adversely affect
our operating cash flow and our ability to make distributions to stockholders.
Investments in Mortgages. Although we currently have no plans to invest in
mortgages, we may, in the future, do so. If we were to invest in mortgages, we
would be subject to the risks of such investment, which include the risk that
borrowers may not be able to make debt service or principal payments when due,
that the value of mortgaged property may be less than the amount owed, and that
interest rates payable on the mortgages may be lower than our cost of funds.
Our operating cash flow and our ability to make distributions to our
stockholders could be adversely affected if we invest in mortgages and any of
the above occurs.
Risks of Real Estate Development. We intend to engage in selective
property development. We have engaged limited material new property development
activity during the last five years, although we have engaged in extensive
renovation and redevelopment of many of our shopping centers. Real estate
development generally involves significant risks in addition to those involved
in the ownership and operation of established properties, including the risks
that financing may not be available on favorable terms, that construction may
not be completed on schedule, resulting in increased debt service expense and
construction costs, that long-term financing may not be available on completion
of construction, and that properties may not be leased on profitable terms. Our
operating cash flow and our ability to make distributions to stockholders could
be adversely affected if we engage in real estate development, and if any of the
above occurs.
Possible Liability Relating to Environmental Matters. Under various
federal, state and local laws, ordinances and regulations, an owner or operator
of real property may become liable for the costs of removal or remediation of
certain hazardous or toxic substances on or in such property. Such liability
may be imposed without regard to whether the owner or operator knew of, or was
responsible for, the presence of such hazardous or toxic substances. The costs
of any required remediation or removal of such substances may be substantial and
the owner's liability as to any property is generally not limited under such
laws, ordinances and regulations and could exceed the value of the property
and/or the aggregate assets of the owner. The presence of, or the failure to
properly remediate, such substances, when released, may adversely affect the
owner's ability to sell the affected real estate or to borrow using such real
estate as collateral. We have not been notified by any governmental authority
of any non-compliance, liability or other claim in connection with any of our
portfolio properties and we are not aware of any other environmental condition
with respect to any of our portfolio properties that management believes would
have a material adverse effect on our business, assets or results of operations.
However, management is aware of the presence of minor amounts of asbestos
containing materials at many of our portfolio properties that management
believes generally are in good condition and do not currently constitute a
hazard. The presence of such asbestos containing materials is in compliance
with current law. We do not believe that these conditions involving asbestos
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containing materials, in the aggregate, are material. A substantial proportion
of our portfolio properties have been subjected to environmental assessments
within the last five years. The updates of the environmental assessments
describe the procedures performed and present the findings and recommendations,
if any, resulting therefrom. None of these environmental assessments or updates
has revealed any environmental liability that our management believes would have
a material adverse effect on our business, assets or results of operations, nor
is management aware of any such liability. No assurance, however, can be given
that these reports reveal all potential environmental liabilities, that no
environmental liabilities may have developed since such environmental
assessments were prepared, and that no prior owner created any material
environmental condition not known to us or the independent consultant preparing
such assessments or that future uses or conditions, including, without
limitation, changes in applicable environmental laws and regulations.
Uninsured Losses. We currently carry comprehensive liability, fire, flood,
extended coverage and rental loss insurance with respect to our portfolio
properties, with policy specification and insured limits customarily carried for
similar properties. There are, however, certain types of losses, as from wars
or earthquakes, that may be either uninsurable or not economically insurable.
Should an uninsured loss occur, we could lose both our capital invested in, and
anticipated profits from, any affected portfolio property.
Taxation of Saul Centers
Failure to Qualify as a REIT. We intend to operate so as to maintain
qualification as a REIT under the Internal Revenue Code, or the Code. A REIT
generally is not subject to federal income tax, provided it makes certain
distributions to its stockholders and meets certain organizational and other
requirements. Although we currently qualify as a REIT under the Code, no
assurance can be given that we will so qualify or that we will continue to
qualify in the future. No assurance can be given that legislation, new
regulations, administrative interpretations or court decisions will not
significantly change the tax laws or their application with respect to
qualification as a REIT or the federal income tax consequences of such
qualification.
If we fail to qualify as a REIT, we will be subject to federal income tax,
including any applicable alternative minimum tax, on our taxable income at
regular corporate rates. In addition, unless entitled to relief under certain
statutory provisions, we will be disqualified from treatment as a REIT for the
four taxable years following the year during which qualification is lost. The
additional tax liability resulting from the failure to so qualify would
significantly reduce funds available for distribution to our stockholders.
Other Tax Liabilities. Even if we qualify as a REIT for federal income tax
purposes, we will be subject to certain federal, state and local taxes.
No Limitation on Debt
We currently have a general policy of limiting our borrowings to 50 percent
of asset value, i.e., the value of our portfolio, as determined by our board of
directors (the 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. Therefore, the
Board of Directors could alter or eliminate the current
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limitation on borrowing at any time. If our debt capitalization policy were
changed, we could become more highly leveraged, resulting in an increase in debt
service that could adversely affect our operating cash flow and our ability to
make expected distributions to stockholders, and in an increased risk of default
on our obligations.
We have established our debt capitalization policy relative to asset value,
which is computed by reference to the aggregate annualized cash flow from the
properties in our portfolio rather than relative to book value, a ratio that is
frequently employed. 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 and to meet debt service requirements. 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. Although we will consider
factors other than asset value in making decisions regarding the incurrence of
debt (such as the purchase price of properties to be acquired with debt
financing, the estimated market value of properties upon refinancing, and the
ability of particular properties and our ability as a whole to generate cash
flow to cover expected debt service), there can be no assurance that the ratio
of debt to asset value, or to any other measure of asset value, will be
consistent with the expected level of distributions to stockholders.
Possible Conflicts of Interest
Relationship with The Saul Organization. We will acquire, develop, own and
manage shopping center properties and will own and manage other commercial
properties, and, subject to certain exclusivity agreements and rights of first
refusal with the Company, The Saul Organization (comprised of the B.F. Saul Real
Estate Investment Trust, the B.F. Saul Company, Chevy Chase Bank, F.S.B., and
other affiliated entities), will continue to develop, acquire, own and manage
commercial properties and own land suitable for development as, among other
things, shopping centers and other commercial properties. Therefore, conflicts
could develop in the allocation of acquisition and development opportunities
with respect to commercial properties other than shopping centers and with
respect to development sites, as well as potential tenants and other matters,
between us and The Saul Organization. The agreement relating to exclusivity and
the right of first refusal between us and The Saul Organization (known as the
Exclusivity Agreement and Right of First Refusal) generally require 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 that become available to The Saul Organization. The Saul
Organization has granted the right of first refusal to us, acting through our
independent Directors, in order to minimize potential conflicts with respect to
commercial properties and development sites. We and The Saul Organization have
entered into the Exclusivity Agreement in order to eliminate conflicts with
respect to shopping centers. We do not intend to purchase any additional
properties from Chevy Chase Bank, except to the extent that such purchases may
arise pursuant to the Exclusivity Agreement and Right of First Refusal.
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In addition, conflicts may arise between us and The Saul Organization in
enforcement of the agreements, including those relating to the transfer of
portfolio properties from The Saul Organization to us and to the transfer of
related management functions, being entered into in connection with the
formation and of the leases between us and Chevy Chase Bank. In order to
minimize these conflicts, matters and actions relating to these agreements and
leases will be considered and approved by the independent Directors.
Reliance on Senior Executives and Conflicts as to Management Time. Our
success will be largely dependent upon the efforts of a small number of senior
executives, including B. Francis Saul II. The loss of the services of one or
more of these key executives could have a materially adverse effect on the
Company. The Saul Organization will continue to engage in commercial real
estate activities. Three of our officers, one of whom is Mr. Saul, also are
affiliated with The Saul Organization and conflicts may develop as to the
allocation of their management time.
Conflicts Based on Individual Tax Considerations. The tax basis of members
of The Saul Organization in our portfolio properties which were contributed to
certain partnerships in our formation was substantially less than the fair
market value thereof at the time of their contribution. In the event of our
disposition of such properties, a disproportionately large share of the gain for
federal income tax purposes would be allocated to members of The Saul
Organization. In addition, any future reduction of the level of our debt after
the initial reduction, or any release of the guarantees or indemnities with
respect thereto by members of The Saul Organization, would cause members of The
Saul Organization to be considered, for federal income tax purposes, to have
taxable constructive distributions which could be in excess of their bases in
their Operating Partnership interests. Consequently, it is in the interests of
The Saul Organization that we continue to hold the contributed portfolio
properties, that a portion of our debt remain outstanding or be refinanced and
that The Saul Organization guarantees and indemnities remain in place, in order
to defer the taxable gain to members of The Saul Organization. Therefore, The
Saul Organization may seek to cause us to retain the contributed portfolio
properties, and to refrain from reducing our debt or releasing The Saul
Organization guarantees and indemnities, even when such action may be in the
interests of some, or a majority, of our stockholders. 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. Under applicable law and the operating
partnership agreement of Saul Holdings Limited Partnership, our operating
partnership, consent of the limited partners is required to permit certain
actions, including the sale of all or substantially all of the Operating
Partnership's assets. 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 some, or a
majority, of our stockholders.
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Influence of Officers, Directors and Significant Stockholders
Our officers of will include B. Francis Saul II and certain other officers
or directors of members of The Saul Organization. Persons associated with The
Saul Organization constitute five of the eleven members of our Board of
Directors. Thus, these stockholders will be in a position to exercise
significant influence over our affairs, which influence might not be consistent
with the interests of some, or a majority, of our stockholders.
Limitations on Acquisition and Change in Control
Our Articles of Incorporation and Bylaws contain a number of provisions,
and our Board of Directors has taken certain actions, that could impede a change
of our control. These provisions include the following:
Ownership Limit. Our ownership limits may have the effect of precluding
acquisition of control of the Company by a third party without consent of the
Board of Directors, even if a change in control were in the interest of some, or
a majority, of the stockholders.
Staggered Board. Our Board of Directors has three classes of directors.
The terms of the these classes will expire in 1999, 2000 and 2001, respectively.
Directors for each class will be chosen for three-year terms upon the expiration
of the current class' term, beginning in 1999. The staggered terms for
directors may adversely affect the stockholders' ability to change control of
the Company, even if a change in control were in the interest of some, or a
majority, of stockholders.
Preferred Stock. The Articles of Incorporation authorize the Board of
Directors to issue up to 1,000,000 shares of preferred stock and to establish
the preferences and rights of any preferred shares issued. The issuance of
preferred stock could have the effect of delaying or preventing a change of
control of the Company, even if a change in control were in the interest of
some, or a majority, of stockholders.
Statutory Provisions. Under the Maryland General Corporation Law, unless
exempted by action of the board of directors, certain "business combinations"
between a Maryland corporation and a stockholder holding 10 percent or more of
the corporation's voting securities, an Interested Stockholder, are subject to
certain conditions, including approval by a supermajority stockholder vote, and
may not occur for a period of five years after the stockholder becomes an
Interested Stockholder. The Board of Directors has exempted from these
statutory provisions any business combination with a member of The Saul
Organization or any person acting in concert therewith. Therefore, a business
combination with any person or group other than a member of The Saul
Organization or a group including such a member may be impeded or prohibited,
even if such a combination may be in the interest of some, or a majority, of our
stockholders.
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The Maryland General Corporation Law also provides that so-called "control
shares" may be voted only upon approval of two-thirds of the outstanding stock
of the corporation excluding the control shares and shares held by affiliates of
the corporation. Under certain circumstances, the corporation also may redeem
the control shares for cash and, in the event that control shares are permitted
to vote, the other stockholders of the corporation are entitled to appraisal
rights. The Board of Directors has exempted from these control share provisions
acquisitions involving The Saul Organization, directors, officers and our
employees and any person approved by the Board of Directors, in its discretion.
Therefore, a control share acquisition by any person not exempted by the Board
of Directors could be impeded, and the attempt of any such transaction could be
discouraged, even if it were in the best interest of some, or a majority, of our
stockholders.
Possible Adverse Consequences of Limits on Ownership of Shares
In order to maintain our qualification as a REIT, not more than 50 percent
in value of our outstanding equity securities may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities). We generally have restricted beneficial and constructive
ownership of more than 5 percent in value of the issued and outstanding equity
securities by any single stockholder with the exception of members of The Saul
Organization. The Board of Directors may waive the ownership limit if it is
satisfied, based upon the advice of tax counsel, that ownership in excess of
this limit will not jeopardize our status as a REIT. A purported transfer of
shares to a person who, as a result of the transfer, would violate the ownership
limit will be void. Shares acquired in violation of the ownership limit may be
redeemed by us for the lesser of the price paid or the average closing price of
the Common Stock for the ten trading days preceding redemption.
Changes in Policies
Our major policies, including our policies with respect to acquisitions,
financing, debt capitalization and distributions, have been determined by the
Board of Directors. Although it has no present intention to do so, the Board of
Directors may alter or revise these and other policies from time to time without
a vote of the stockholders. We cannot, however, change our policy of seeking to
maintain our qualification as a REIT without the approval of stockholders.
Accordingly, stockholders will have no control over changes in our policies
other than our policy of maintaining our qualification as a REIT.
DESCRIPTION OF PLAN
The Dividend Reinvestment and Stock Purchase Plan, or the Plan, of the
Company provides holders of record of the Company's Common Stock and the holders
of limited partnership interest in Saul Holdings Limited Partnership (a
Partnership Interest), the Maryland limited partnership of which the Company is
the general partner and through which the Company operates substantially all of
its assets and derives substantially all of its revenue, with a simple and
convenient method of investing in additional shares of Common Stock at a 3%
discount from market price without payment of any brokerage commission, service
charges or other expenses.
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Participants in the Plan may have cash dividends on some or all of the
Common Stock owned by them automatically invested in additional shares of Common
Stock, and some or all of the cash distributions received on a Partnership
Interest automatically invested in shares of Common Stock.
Under the Plan, First Chicago Trust Company of New York, or any successor
bank, trust company or other entity as may from time to time be designated by
the Company (the "Agent"), will buy newly issued Common Stock from the Company.
The purchase price of Common Stock will be 97% of the closing price on the New
York Stock Exchange (Consolidated Tape Transactions) for the Common Stock on the
investment date. The investment dates will coincide with the dividend payment
date on the Common Stock (each an "Investment Date"). The Company will receive
the proceeds of the sale of newly issued Common Stock
The following questions and answers constitute the Plan of the Company.
Purpose and Advantages
1. What is the purpose of the Plan?
The purpose of the Plan is to provide holders of record of the Company's
Common Stock ("Shareholders") and holders of record of a Partnership Interest
("Limited Partners") with a simple and convenient method of investing in shares
of Common Stock at a 3% discount from market price without payment of any
brokerage commission, service charges or other expenses.
2. How may eligible Shareholders and Limited Partners purchase Common Stock
under the Plan?
Holders of record of Common Stock may have all of the cash dividends on all
or part of their Common Stock automatically reinvested in additional shares of
Common Stock . Holders of record of a Partnership Interest may have all of the
cash distributions on all or part of their Partnership Interest automatically
invested in shares of Common Stock.
3. What are the advantages of the Plan?
Participants in the Plan may reinvest all or a portion of their cash
dividends and partnership distributions in shares of Common Stock at a discount
of 3% from the closing price of the shares on the Investment Date, as more fully
explained in the answer to Question 13. In addition, participants in the Plan
are not required to pay brokerage commissions or other expenses in connection
with the purchase of shares of Common Stock under the Plan. The Plan permits
fractional and whole shares of Common Stock to be purchased with the dividends
and partnership distributions, and dividends on all whole or fractional shares
of Common Stock credited to participants' accounts are automatically reinvested
in additional whole or fractional shares of Common Stock. Participants also
avoid the necessity of safekeeping certificates representing the shares of
Common Stock credited to their accounts, and have increased protection against
loss, theft or destruction of such certificates. Furthermore, underlying
certificates of shares of Common Stock may be deposited for safekeeping as more
fully explained in the answer to Question 18. A regular statement for each
account will provide a participant with a record of each transaction.
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Administration
4. Who administers the Plan?
First Chicago Trust Company of New York, as Agent for the participants,
administers the Plan, keeps records, sends statements of account to participants
and performs other duties relating to the Plan. All costs of administering the
Plan are paid by the Company. Common Stock purchased under the Plan is issued
in the name of the Agent or its nominee, as Agent for the participants in the
Plan. As record holder of the Common Stock held in participants' accounts under
the Plan, the Agent will receive dividends on all Common Stock held by it on the
dividend record date, will credit such dividends to the participants' accounts
on the basis of whole and fractional shares of Common Stock held in these
accounts, and will automatically reinvest such dividends in additional Common
Stock. The Agent makes all purchases of Common Stock under the Plan.
To receive more information about the Plan, please call the plan
administrator at 1-800-446-2617 and request to speak with a service
representative or write:
First Chicago Trust Company of New York
Attention: Dividend Reinvestment Department
P.O. Box 2598
Jersey City, New Jersey 07303-2598
If you are already a participant, be sure to include your account number(s)
in any correspondence.
Eligibility
5. Who is Eligible to become a participant?
Any holder of record of Common Stock and any holder of record of a
Partnership Interest is eligible to become a participant in the Plan. If a
beneficial owner has Common Stock registered in a name other than his or her
own, such as that of a broker, bank nominee or trustee, the beneficial owner may
be able to arrange for that entity to participate in the Plan on behalf of the
beneficial owner. Shareholders should consult directly with the entity holding
their Common Stock to determine if they can enroll in the Plan. If not, the
Shareholder should request his or her bank, broker or trustee to transfer some
or all of his or her Common Stock into the beneficial owner's own name in order
to participate in the Plan. Shareholders who are citizens or residents of a
country other than the United States, its territories and possessions, should
make certain that their participation does not violate local laws governing such
things as taxes, currency and exchange controls, stock registration, and foreign
investments.
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Participation by Shareholders and Limited Partners
6. How does an eligible Shareholder or Limited Partner become a participant?
A holder of record of either Common Stock or a Partnership Interest, or
both, may elect to become a participant in the Plan at any time. If you wish to
become a participant, all you need to do is complete the enclosed Authorization
Form and mail it in the postage pre-paid envelope, provided, to First Chicago
Trust Company of New York. (see Question 4 for address). If the Common Stock
or a Partnership Interest, as the case may be, is registered in more than one
name (e.g. joint tenants, trustees, etc.), all registered holders must sign the
Authorization Form. Authorization Forms may be obtained at any time by writing
to the Agent.
7. What does the Authorization Form provide?
By signing an Authorization Form, a Shareholder or Limited Partner may
become a participant, and by checking the appropriate boxes on the Authorization
Form the Shareholder or Limited Partner may choose among the following
investment options for that account:
For a Shareholder:
-- To reinvest automatically all of the cash dividends on all shares of
Common Stock registered in the participant's name in shares of Common
Stock; or
-- To reinvest automatically all of the cash dividends on some of the
shares of Common Stock registered in the participant's name in shares
of Common Stock.
For a Limited Partner:
-- To invest automatically all of the cash distributions on the
Partnership Interest registered in the participant's name in shares of
Common Stock; or
___ To invest automatically some of the cash distributions on the
Partnership Interest registered in the participant's name in shares of
Common Stock.
A participant may change his or her election by completing and signing a
new Authorization Form and returning it to the Agent. (See Question 4 for the
Agent's address.) Any change of election concerning the reinvestment of
dividends or partnership distributions must be received by the Agent on or prior
to the record date for a dividend payment date (see Question 8) in order for the
change to become effective with that payment. If a participant does not select
one of the two boxes on the Authorization Form, the participant will be deemed
to have selected to reinvest all cash dividends on all shares of Common Stock or
to invest all cash distributions on a Partnership Interest, as the case may be,
registered in the participant's name in shares of Common Stock. A participant
that holds both Common Stock and a Partnership Interest must
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submit separate Authorization Forms for each of their Common Stock dividends and
Partnership Interest cash distributions.
Regardless of which method of participation is selected, all cash dividends
paid on whole or fractional shares of Common Stock credited to a participant's
Plan account will be reinvested automatically.
8. When may an eligible Shareholder or Limited Partner join the Plan?
The Plan became effective December 8, 1995. The Plan applies to cash
dividends paid and partnership distributions of cash made after December 8,
1995. An eligible Shareholder or Limited Partner may sign and return an
Authorization Form to join the Plan at any time.
If the properly completed Authorization Form specifying "Full Dividend
Reinvestment" or "Full Distribution Investment", as the case may be, or "Partial
Dividend Reinvestment" or "Partial Distribution Investment", as the case may be,
is received by the Agent on or prior to the record date established for a
-----
particular distribution, reinvestment will begin with that payment or
distribution. If the Authorization Form is received after the record date
established for a particular payment, that dividend or partnership distribution
will be paid in cash, and participation in the Plan for the reinvestment of
dividends or investment of partnership distributions, as the case may be, will
not commence until the next dividend payment. The dividend record date normally
precedes the payment of dividends by approximately two to four weeks.
9. May I reinvest less than the full amount of my dividends or partnership
distributions?
By selecting the "Partial Dividend Reinvestment" or "Partial Distribution
Investment" option, as the case may be, on your Authorization Form, you may
direct the Agent to reinvest the dividends attributable to a lesser number of
shares of Common Stock than the full number of shares you hold, or to invest a
lesser amount of the cash distributions attributable to a Partnership Interest
than the full amount attributable to the Partnership Interest you hold. Cash
distributions will continue to be paid to you on the remaining shares of Common
Stock or on the remaining distribution attributable to your Partnership
Interest, as the case may be.
10. How and when can a participant change the amount of dividends to be
reinvested or partnership distributions to be invested?
A participant may change the dividend reinvestment or partnership
distribution investment option at any time by submitting a newly executed
Authorization Form to the Agent. (See Question 7.) Any change in the number of
shares of Common Stock or the amount of cash distributions in respect of a
Partnership Interest with respect to which the Agent is authorized to reinvest
cash dividends or partnership distributions must be received by the Agent on or
prior to the record date for a dividend payment to permit the new amount to
apply to that payment or distribution.
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Purchases
11. What is the source of the Common Stock purchased under the Plan?
Common Stock purchased for a participant's account under the Plan will be
purchased by the Agent from the Company out of its authorized but unissued
shares or treasury shares.
12. When will Common Stock be purchased for participants' accounts?
Purchases from the Company of authorized but unissued Common Stock will be
made on the Investment Date; Shareholders and Limited Partners participating in
the Plan will be deemed to have invested as of the Investment Date.
13. What is the price of the Common Stock that will be purchased for a
participant?
The purchase price of the shares of Common Stock purchased from the Company
as of any Investment Date will be 97% of the closing price of Common Stock on
the New York Stock Exchange (Consolidated Tape Transactions) on the Investment
Date. If no trading in the Common Stock occurs on the New York Stock Exchange
on the relevant Investment Date, the purchase price of such Common Stock will be
determined by the Board of Directors of the Company on the basis of such market
quotations as it deems appropriate.
14. How many shares of Common Stock will be purchased for a participant?
The number of shares of Common Stock to be purchased for a participant's
account as of any Investment Date will be equal to the total dollar amount to be
invested for the participant divided by the applicable purchase price, computed
to the third decimal place. The total dollar amount to be invested as of any
Investment Date will be the sum of (a) the cash dividends or partnership
distributions on all or a part of the Common Stock or Partnership Interest
registered in the participant's own name, according to the option chosen by the
participant (see Question 7), and (b) the dividends on all Common Stock
(including fractional shares) previously credited to the participant's Plan
account.
The amount to be invested will be reduced by any amount the Company is
required to deduct for federal tax withholding purposes. (See Question 33.)
Reports to Participants
15. What reports are sent to participants in the Plan?
After an investment is made under the Plan for a participant's account,
whether by reinvestment of dividends or by investments of partnership
distributions, the participant will be sent a statement which will provide a
record of the cost of the Common Stock purchased for that account, the number of
shares of Common Stock purchased, the date on which the Common Stock was
credited to the participant's account and the total number of shares of Common
Stock in that account. In addition, each Shareholder will be sent income tax
information for reporting dividends paid.
13
<PAGE>
Stock Certificates
16. Are certificates issued to participants for Common Stock purchased under
the Plan?
Common Stock purchased under the Plan is registered in the name of the
Agent or its nominee as agent for the participants in the Plan.
A certificate for any number of whole shares of Common Stock credited to a
participant's Plan account will be issued to the participant upon written
request to the Agent. Such requests will be handled by the Agent at no charge
to the participant. Any remaining whole shares of Common Stock and any
fractional shares of Common Stock will continue to be credited to the
participant's account.
Common Stock which is purchased for and credited to the account of a
participant under the Plan may not be pledged, sold or otherwise transferred. A
participant who wishes to pledge or transfer such Common Stock must request that
a certificate for such shares of Common Stock first be issued in the
participant's name.
17. What is the effect on a participant's Plan account if a participant
requests a certificate for whole shares of Common Stock held in its
account?
If a participant has authorized full dividend reinvestment, cash dividends
with respect to shares withdrawn from the participant's account will continue to
be reinvested. If, however, the participant has authorized only partial
dividend reinvestment, the Agent will continue to reinvest dividends on only the
number of shares specified by the participant on its Authorization From unless a
new Authorization Form specifying a different number of shares is delivered to
the Agent.
18. May Common Stock held in certificate form be deposited in a participant's
Plan account?
A participant may deposit with the Agent any Saul Centers Common Stock
certificates now or hereafter registered in his or her name for credit under the
Plan. There is no charge for this custodial service and, by making the deposit,
a participant will be relieved of the responsibility for loss, theft or
destruction of the certificate.
Certificates sent to the Agent should not be endorsed. The Agent provides
insurance coverage on certificates mailed by participants for safekeeping in
Plan accounts. To be eligible for certificate mailing insurance, certificates
must be mailed in brown, pre-addressed return envelopes supplied by the Agent.
Certificates mailed in this manner are insured for up to $25,000 current market
value provided they are mailed first class. The Agent will promptly send the
participant a statement confirming each deposit of certificates. The Agent must
be notified of any lost certificate claim within thirty (30) calendar days of
the date the certificates were mailed. To submit a claim, a stockholder must be
a current participant or the stockholder's loss must be incurred in connection
with becoming a participant. In the latter case, the claimant must enroll in
the Plan at the time the insurance claim is processed. The maximum insurance
protection provided is $25,000 and coverage is available only when the
certificate(s) are sent to the Agent in accordance with guidelines described
above. If your certificates have a market value of more
14
<PAGE>
than $25,000, please contact the Agent for additional instructions.
Insurance covers the replacement of shares of stock, but in no way protects
against any loss resulting from fluctuations in the value of such shares from
the time the stockholder mails the certificates until such time as replacement
can be effected.
If a participant does not use the brown pre-addressed envelope provided by
the Agent, certificates mailed should be insured for possible mail loss for 2%
of the market value (minimum insurance of $20.00) representing the participant's
replacement cost if the certificates are lost.
Withdrawal from the Plan
19. May a participant withdraw from the Plan?
Yes, by providing written notice to the Agent to terminate the account.
20. What happens when a participant terminates an account?
If a participant's notice of termination is received by the Agent prior to
the record date for the next dividend payment date, reinvestment of dividends or
the investment of partnership distributions, as the case may be, will cease as
of the date notice of termination is received by the Agent. If the notice of
termination is received by the Agent on or after the record date for a dividend
payment, the Agent in its sole discretion may either pay any such dividend or
distribution in cash or reinvest it in Common Stock on behalf of the terminating
participant. If such dividend or distribution is invested or reinvested, as the
case may be, in Common Stock, the Agent may sell the shares purchased and remit
the proceeds to the participant, less any brokerage commissions, any service fee
and any other costs of sale. When terminating an account, the participant may
request that a stock certificate be issued for all whole shares of Common Stock
held in the account. As soon as practicable after notice of termination is
received, the Agent will send to the participant (a) a certificate for all whole
shares of Common Stock held in the account and (b) a check representing the
value of any fractional share of Common Stock held in the account less any
brokerage commissions, any service fee and any other costs of sale. After an
account is terminated, all dividends for the terminated account will be paid to
the participant unless the participant re-elects to participate in the Plan.
When terminating an account, the participant may request that all shares of
Common Stock, both full and fractional, certified to the Plan account be sold or
that certain of the Common Stock shares be sold and a certificate be issued for
the remaining whole shares of Common Stock. The Agent will remit to the
participant the proceeds of any sale less any brokerage commissions, a service
fee and any other costs of sale. (See Question 22.)
15
<PAGE>
21. When may a Shareholder or Limited Partner re-elect to participate in the
Plan?
Generally, a Shareholder of record or a Limited Partner of record may re-
elect to participate at any time. However, the Agent reserves the right to
reject any Authorization Form on the grounds of excessive joining and
withdrawing. Such reservation is intended to minimize unnecessary
administrative expenses and to encourage use of the Plan as a long-term
Shareholder and Limited Partner investment service.
Sale of Common Shares
22. May a participant request that Common Stock held in a Plan account be sold?
Yes, a participant may request that all or any part of the Common Stock
held in a Plan account be sold either when an account is being terminated (see
Question 20) or without terminating the account. If all shares of Common Stock
(including any fractional share) held in a Plan account are sold, the account
will automatically be terminated, and the participant will have to complete and
file a new Authorization Form (see Questions 6 through 8) in order to
participate again in the Plan.
As promptly as practicable after receipt of a participant's written request
to sell Common Stock held in a Plan account, the Agent will place a sell order
through a broker or dealer designated by the Agent. The participant will
receive the proceeds of the same less any brokerage commissions, service fee and
any other costs of sale incurred by the Agent allocable to the sale of such
Common Stock.
23. What happens when a participant sells or transfers all the Shares of Common
Stock registered in the participant's name or the entire Partnership
Interest registered in the participant's name?
Even if a participant sells or transfers all the Shares of Common Stock or
the entire Partnership Interest registered in the participant's name, the Agent
will continue to reinvest dividends on share of Common Stock held in the
participant's Plan account until a written request for a withdrawal from the
Plan is received from the participant by the Agent.
Other Information
24. What happens if the Company issues a stock dividend or declares a stock
split?
In the event of a stock split or a stock dividend payable in Common Stock,
the Agent will receive and credit to the participant's Plan account the
applicable number of whole and/or fractional shares of Common Stock based both
on the number of shares of Common Stock held in the participant's Plan account
and, with respect to Shareholders participating in the Plan, the number of
shares of Common Stock registered in the participant's own name as of the record
date for the stock dividend or split.
25. What happens if the Company has a rights offering?
If the Company has a rights offering in which separately tradable and
exercisable rights are issued to registered holders of Common Stock, the rights
attributable to whole shares of Common Stock held in a participant's Plan
account will be transferred to the participant as
16
<PAGE>
promptly as practicable after the rights are issued. Rights attributable to
fractional shares of Common Stock will be reinvested in Common Stock.
26. How is a participant's Common Stock voted at shareholder meetings?
Participants will receive proxy materials from the Company for Common Stock
registered in the Agent's name under the Plan in the same manner as Common Stock
registered in a participant's own name, if any. Common Stock credited to a
participant's Plan account may also be voted in person at the meeting.
27. What happens if reinvestment of a participant's distributions would cause
the participant to exceed the ownership limit set forth in the Company's
charter?
The Company's Charter places certain restrictions upon the ownership,
directly or constructively, of the Common Stock, including the limitation of the
beneficial ownership of the Common Stock by any one person (including
attribution) to 5% of the outstanding shares of Common Stock (the "Ownership
Limit"). Any Shareholder or Limited Partner who believes that their
participation in this Plan might cause them to exceed the Ownership Limit should
contact Company counsel before participating in this Plan.
28. What is the responsibility of the Company and the Agent under the Plan?
The Company and the Agent, in administering the Plan, are not liable for
any act done in good faith or for any good faith omission to act, including,
without limitation, any claim of liability (a) arising out of failure to
terminate a participant's account upon such participant's death prior to receipt
by the Agent of notice in writing of such death, (b) with respect to the prices
and times at which Common Stock is purchased or sold for a participant, or (c)
with respect to any fluctuation in market value before or after any purchase or
sale of Common Stock.
All notices from the Agent to a participant will be addressed to the
participant's last known address. Participants should notify the Agent promptly
in writing of any change of address.
The Agent may resign as administrator of the Plan at any time, in which
case the Company will appoint a successor administrator. In addition, the
Company may replace the Agent with a successor administrator at any time.
29. May the Plan be amended, suspended or terminated?
While the Company expects to continue the Plan indefinitely, the Company
may amend, suspend or terminate the Plan at any time, but such action shall have
no retroactive effect that would prejudice the interests of the participants.
To the extent practicable, any such amendment, suspension or termination will be
announced to participants at least 30 days prior to its effective date.
30. What happens if the Plan is terminated?
Each participant will receive (a) a certificate for all whole shares of
Common Stock held in the participant's account and (b) a check representing the
value of any fractional share of
17
<PAGE>
Common Stock held in the participant's account less any brokerage commissions,
any service fee and any other costs of sale.
31. Who interprets and regulates the Plan?
The Company is authorized to issue such interpretations, adopt such
regulations and take such action as it may deem reasonably necessary to
effectuate the Plan. Any action to effectuate the Plan taken by the Company or
the Agent in the good faith exercise of their respective judgments will be
binding on participants.
32. What law governs the Plan?
The terms and conditions of the Plan and its operation shall be governed by
the laws of the State of Maryland.
33. What are the federal income tax consequences of participation in the Plan?
Participants should consult their personal tax advisors with specific
reference to their own tax situations and potential changes in the applicable
law as to all Federal, state, local, foreign and other tax matters in connection
with the reinvestment of dividends and purchases of Common Stock under the Plan,
the participant's tax basis and holding period for Common Stock acquired under
the Plan and the character, amount and tax treatment of any gain or loss
realized on the disposition of Common Stock. The income tax consequences for
participants who do not reside in the United States may vary from jurisdiction
to jurisdiction. The following is only a brief summary of some of the Federal
income tax considerations applicable to the Plan.
A Shareholder participating in the Plan will be treated for Federal income
tax purposes as having received a dividend equal to the sum of (a) the fair
market value of any Common Stock purchased under the Plan (including Common
Stock purchased through reinvestment of dividends on shares held in the
shareholder's Plan account), and (b) any cash distributions actually received by
the Shareholder with respect to their Common Stock not included in the Plan, to
the extent of the Shareholder's current and accumulated earnings and profits for
Federal income tax purposes. Distributions in excess of current and accumulated
earnings and profits will not be taxable to a Shareholder to the extent that
such distributions do not exceed the adjusted tax basis of the Shareholder's
shares. To the extent that such distributions exceed the adjusted tax basis of
a Shareholder's shares, they will be included in the Shareholder's income as
capital gain.
Participation by a Limited Partner in the Plan should not affect the tax
consequences of the Limited Partner's ownership of its Partnership Interest.
The tax basis of Common Stock purchased under the Plan by shareholders will
be its fair market value on the Investment Date. The tax basis of Common Stock
purchased by Limited Partners through reinvestment of distributions received
with respect to their Partnership Interests will be the price at which such
stock is purchased from the Company. A participant's holding period for Common
Stock purchased under the Plan generally will begin on the date following the
date on which the shares of Common Stock are credited to the participant's
account.
18
<PAGE>
In general, any dividend reinvested under the Plan is not subject to
Federal income tax withholding. The Company or the Agent may be required,
however, to deduct as "backup withholding" the appropriate percentage of all
dividends paid to any Shareholder, regardless of whether such dividends are
reinvested pursuant to the Plan. Similarly, the Agent may be required to deduct
backup withholding from all proceeds from sales of Common Stock held in a Plan
account. A participant is subject to backup withholding if: (a) the
participant has failed properly to furnish the Company and the Agent with his or
her correct tax identification number ("TIN"); (b) the Internal Revenue Service
or a broker notifies the Company or the Agent that the TIN furnished by the
participant is incorrect; (c) the Internal Revenue Service or a broker notifies
the Company or the Agent that backup withholding should be commenced because the
participant failed to report properly dividends paid to him or her; or (d) when
required to do so, the participant fails to certify, under penalties of perjury,
that the participant is not subject to backup withholding. Backup withholding
amounts will be withheld from dividends before such dividends are reinvested
under the Plan. Therefore, dividends to be reinvested under the Plan by
participants who are subject to backup withholding will be reduced by the backup
withholding amount.
A participant may recognize a gain or loss upon receipt of a cash payment
for a fractional share of Common Stock credited to a Plan account (see Question
20) or when the Common Stock held in that account is sold at the request of the
participant (see Question 22). A gain or loss may also be recognized upon a
participant's disposition of Common Stock received from the Plan. The amount of
any such gain or loss will be the difference between the amount received for the
whole or fractional shares of Common Stock and the tax basis of the Common
Stock. Generally, any gain or loss recognized on the disposition of Common
Stock acquired under the Plan will be treated for federal income tax purposes as
a capital gain or loss.
19
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith,
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Proxy statements, reports and other information concerning
the Company can be inspected and copies obtained, at prescribed rates, from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, and the Commission's Regional Offices in New York (7 World Trade
Center, Suite 1300, New York, New York 10048) and Chicago (Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661). The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding restraints that file electronically
with the Commission. The address of the Commission's Web site is
http://www.sec.gov. In addition, the Common Stock is listed on the New York
Stock Exchange and similar information concerning the Company can be inspected
and copies obtained at the New York Stock Exchange, 20 Broad Street, New York,
New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 under the Securities Act of 1933, as amended, relating to the securities
offered hereby. This Prospectus does not contain all of the information set
forth in the registration statement and exhibits thereto. The registration
statement and exhibits thereto may be inspected and copies obtained, at
prescribed rates, from the Commission at Room 1204, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Commission pursuant to the 1934
Act, are incorporated by reference in this Prospectus:
1. The Registration Statement on Form S-3 as filed by Saul Centers, Inc.
on December 11, 1995, as amended (Registration Statement No. 33-
80291).
2. The Company's Annual Report on form 10-K for the fiscal year ended
December 31, 1997.
3. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, June 30 and September 30, 1998.
4. The description of the Common Stock, par value $0.01, contained in the
Company's Registration Statement on Form S-11 (Registration No. 33-
4562) filed pursuant to the Securities Act of 1933 as incorporated by
reference in the Company's Registration Statement on Form 8-A filed
pursuant to the 1934 Act, including any amendments or reports filed to
update the description.
All documents filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
1934 Act after the date of this Prospectus and before termination of this
offering are incorporated by reference
20
<PAGE>
into this Prospectus from the date of filing of those documents. Anyone
receiving a copy of this Prospectus may obtain, without charge, a copy of any of
the documents incorporated by reference, except for the exhibits to the
documents. Mail your request to:
Henry Ravenel Jr., Vice President
8401 Connecticut Avenue
Chevy Chase, Maryland 20815
or call (301) 986-6207
USE OF PROCEEDS
The Company will receive proceeds from the sale of Common Stock purchased
by the Agent directly from the Company. The proceeds from the sale of Common
Stock offered pursuant to the Plan will be contributed to Saul Holdings Limited
Partnership and used for general partnership purposes. The Company has no basis
for estimating either the number of shares of Common Stock that will be sold
pursuant to the Plan or the prices at which such Common Stock will be sold.
EXPERTS
The consolidated financial statements and related financial statement
schedule included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 and incorporated by reference in this prospectus have been
audited by Arthur Andersen LLP, independent public accountants as indicated in
their report with respect thereto, and have been incorporated by reference
herein in reliance upon the authority of said firm as experts in giving said
reports.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Shaw, Pittman,
Potts & Trowbridge, Washington, D.C.
INDEMNIFICATION
As permitted by law, directors and officers of the Company are entitled to
indemnification under certain circumstances against liabilities and expenses
incurred in connection with legal proceedings in which they become involved as a
result of serving as such director or officer. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
21
<PAGE>
Saul Centers, Inc.
c/o First Chicago Trust Company of New York
P.O. Box 2598, Jersey City, NJ 07303-2598
Telephone (201) 324-0498
- --------------------------------------------------------------------------------
SAUL CENTERS, INC. COMMON STOCK
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
- --------------------------------------------------------------------------------
Authorization Form
------------------
Please enroll my account as follows:
Place an "X" in ONE box only, using black or blue ink. ([X])
[_] 1. FULL DIVIDEND REINVESTMENT - Reinvest any dividends that may become
---------------------------
payable to me on all Saul Centers, Inc. Common Stock now or hereafter
registered to me.
[_] 2. PARTIAL DIVIDEND REINVESTMENT - Reinvest any dividends that may
-----------------------------
become payable to me on the following shares of my Saul Centers, Inc.
Common Stock. [__________ Shs.*]
*Cannot be greater than the total number of shares of Common Stock
currently registered in your name.
Signature(s) of ________________________ Date:__________________
Registered Owner(s): ______________________ Date:__________________
1
<PAGE>
II. OPTIONS UNDER THE PLAN
Full Dividend Reinvestment - Reinvest any dividends that may become payable to
- --------------------------
me on all Saul Centers, Inc. Common Stock now or hereafter registered to me.
Partial Dividend Reinvestment - Reinvest dividends only on the number of shares
- -----------------------------
registered to me as indicated on the attached form.
Under each of the options above, dividends received on shares accumulated and
held under the Plan will be automatically reinvested.
If you do not check any box, you will be enrolled in FULL DIVIDEND REINVESTMENT,
line #1.
Your participation in the Plan is subject to the terms of the Prospectus
describing the Plan. You may terminate participation in the Plan at any time by
sending written instructions, signed by all registered owners, to the Plan
Agent, First Chicago Trust Company of New York, P.O. Box 2598, Jersey City, NJ
07303-2598.
If you have any questions, please call First Chicago at (201) 324-0498.
2
<PAGE>
SAUL CENTERS, INC.
DIVIDEND REINVESTMENT AND
STOCK PURCHASE PLAN
AUTHORIZATION FORM
STEP # 1: If you wish to enroll your partnership distribution in the
--------
Plan, you must check the box below and then proceed to Step 2. By checking the
box, you also consent to the statement in the paragraph below. If you do not
wish to enroll any distributions in the Plan, do not check the box and discard
this Authorization Form.
[_] Partnership Interest holders: I hereby enroll in the Plan the cash
distributions on my Partnership Interest as designated below.
Pursuant to the Dividend Reinvestment and Stock Purchase Plan of Saul
Centers, Inc. (the "Plan"), I hereby authorize Saul Centers, Inc. (the
"Company") as my agent to receive any cash partnership distributions that
hereafter become payable to me on the shares of Partnership Interest as
specifically designated below. I further authorize the Company to apply such
partnership distributions to the purchase of full shares and fractional
interests in shares of the Company's Common Stock or Partnership Interest, as
set forth below. Capitalized terms not otherwise defined in this form shall
have the same meaning as in the Plan.
STEP #2: If you have elected to enroll your Partnership Interest, please
-------
select one of the following boxes:
[_] Full Distribution Investment. I authorize the automatic investment of
----------------------------
all the cash distributions on the Partnership Interest registered in my name to
purchase Common Stock/Partnership Interests (select one).
[_] Partial Distribution Investment. I authorize the automatic investment
-------------------------------
____% of the cash distributions on the Partnership Interest registered in my
name to purchase Common Stock/Partnership Interests (select one).
I understand that, if I select one or both of the investment options, all
cash dividends/distributions paid on the whole or fractional shares of Common
Stock/Partnership Interests purchased pursuant to the Plan will be reinvested
automatically to purchase additional Common Stock/Partnership Interests.
I further understand that the purchases authorized above will be made under
the terms and conditions of the Plan and that I may revoke this authorization at
any time by notifying the Company, in writing, of my desire to terminate my
participation.
3
<PAGE>
RETURN THIS FORM IF YOU WISH TO PARTICIPATE IN THE PLAN
__________________________________ _______________________________
Please Print Name (s) as Shown on Signature (s)
Exhibit A to the Agreement of
Limited Partnership of Saul
Holdings Limited Partnership
__________________________________ _______________________________
Address Signature (s)
__________________________________ ________ _____________________
City State Zip Date Tax Identification Number
4
<PAGE>
No dealer, salesperson or other individual has been authorized to give any
information or make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer by the Company to sell, or a solicitation of an offer to
buy, the securities offered hereby in any jurisdiction where, or to any person
to whom, it is unlawful to make an offer or solicitation. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any circumstances,
create an implication that there has not been any change in the affairs of the
Company since the date hereof or that the information contained herein is
correct or complete as of any time subsequent to the date hereof.
__________________________
Dividend Reinvestment and Stock
Purchase Plan
Saul Centers, In
1, 000, 000 Shar
Common Stock
PROSPECTUS
__________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
How to Enroll 1
Highlights of the Plan 1
The Company 2
Risk Factors 2
Description of Plan 8
Available Information 20
Incorporation of Certain 20
Documents by Reference
Use of Proceeds 21
Experts 21
Legal Matters 21
Indemnification 21
</TABLE>
