Item 1.01.
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Entry into a Material Definitive Agreement
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On December 19,
2007, Saul Holdings Limited Partnership, the operating partnership for Saul Centers, Inc., entered into a new $150,000,000 unsecured revolving credit facility, effective as of December 19, 2007 (the Facility), with a syndicate of
lenders led by U.S. Bank National Association. The Facility replaces the Companys existing unsecured revolving credit facility. U.S. Bank National Association acts as Administrative Agent and Sole Lead Arranger for the Facility, and Wells
Fargo Bank, National Association, acts as Syndication Agent. Saul Centers, Inc. and certain subsidiaries of Saul Holdings Limited Partnership have guaranteed the payment obligations of Saul Holdings Limited Partnership under the Facility. For
purposes of this Form 8-K, all references to the Company refer, collectively, to Saul Centers, Inc., together with Saul Holdings Limited Partnership and the wholly owned subsidiaries of Saul Holdings Limited Partnership.
The Facility provides for a $150,000,000 revolving credit facility maturing on December 19, 2010, which term may be extended by the Company for one additional year
subject to the Companys satisfaction of certain conditions. Until December 19, 2009, certain or all of the lenders may, upon request by the Company, increase the revolving credit facility line by $50,000,000. Letters of credit may be
issued under the revolving credit facility.
Currently, $150,000,000 is available for borrowing, of which approximately $8,200,000 is outstanding and the
balance of $141,800,000 is available for working capital and operating property acquisitions. In general, loan availability under the Facility is primarily determined by operating income from the Companys existing unencumbered properties. As
of November 30, 2007, the unencumbered properties supported availability of $98,000,000.
Interest accrues at a rate of LIBOR plus a spread of 1.400% to 1.600% (determined by certain leverage tests) or upon the banks reference rate at
the Companys option. An additional $52,000,000 is available based on the Companys consolidated operating income after debt service. On this portion of the Facility, interest accrues at a rate of LIBOR plus a spread of 1.700% to 2.250%
(determined by certain leverage tests) or upon the banks reference rate plus a spread of 0.575% at the Companys option.
The Facility requires
the Company and its subsidiaries to satisfy certain financial covenants. The material covenants require the Company, on a consolidated basis, to:
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limit the amount of debt so as to maintain a gross asset value in excess of liabilities of at least $600 million plus 90% of the Companys future net equity
proceeds;
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limit the amount of debt as a percentage of gross asset value (leverage ratio) to 60% or less;
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limit the amount of debt so that interest coverage is not less than 2.5 to 1 on a trailing 12-full calendar month basis;
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limit the amount of debt so that interest, scheduled principal amortization and preferred dividend coverage is not less than 1.6 to 1 on a trailing 12-full calendar
month basis; and
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limit the amount of variable rate debt and debt with initial loan terms of less than 5 years to no more than 40% of total debt.
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Each of U.S. Bank National Association, Wells Fargo Bank, National Association, Compass Bank and Sovereign Bank, is a lender under the Facility. Some of the lenders or
their affiliates from time to time have provided in the past and may provide in the future commercial lending services to the Company and its affiliates in the ordinary course of business.