14 REPORT REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING  FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING Board of Directors and Stockholders Saul Centers, Inc. We have audited management’s Assessment of Effectiveness of Internal Control Over Financial Reporting included on page 13 of this Annual Report, that Saul Centers, Inc. maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Saul Centers, Inc.’s management is responsible  for maintaining effective internal control over  financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an  opinion on management’s assessment and an  opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.  generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have  a material effect on the financial statements. Because of its inherent limitations, internal control  over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation  of effectiveness to future periods are subject to the risk that controls may become inadequate because  of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, management’s assessment that Saul Centers, Inc. maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Saul Centers, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the COSO criteria. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing  such other procedures as we considered necessary  in the circumstances. We believe that our audit provides a reasonable basis for our opinion. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Saul Centers, Inc. as of December 31, 2004 and 2003, the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the three years  in the period ended December 31, 2004 of Saul Centers, Inc. and our report dated March 10, 2005 expressed an unqualified opinion thereon. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with  Ernst & Young LLP McLean, Virginia March 10, 2005