<PAGE>

                                                                  Exhibit 10.(p)

                              AMENDED AND RESTATED
                                 PROMISSORY NOTE

     THIS AMENDED AND RESTATED PROMISSORY NOTE (the "Note") is made as of the
13th day of January, 2003, by and among SAUL HOLDINGS LIMITED PARTNERSHIP
("Borrower"), a Maryland limited partnership, and METROPOLITAN LIFE INSURANCE
COMPANY ("Holder"), a New York corporation.

                                    RECITALS

     A. Wells Fargo Bank, National Association, a national banking association
("Original Lender") made a loan to Borrower and Saul Centers, Inc., a Maryland
corporation ("Saul Inc."), which loan is evidenced by that certain Promissory
Note dated January 11, 1999 (the "$38MM Note"), in the original principal amount
of Thirty-Eight Million and 00/100 Dollars ($38,000,000.00), from Borrower and
Saul Inc., payable to Original Lender.

     B. The loan evidenced by the $38MM Note was increased to Forty-Two Million
and 00/100 Dollars ($42,000,000.00) and the $38MM Note was replaced by that
certain Replacement Promissory Note dated November 30, 1999 (the "Replacement
Note"), in the original principal amount of Forty-Two Million and 00/100 Dollars
($42,000,000.00), from Borrower and Saul Inc., payable to Original Lender. (The
$38MM Note, as increased and replaced by the Replacement Note, is hereinafter
referred to as the "Original Note").

     C. The Original Note is secured by, among other things, (a) that certain
Deed of Trust, Security Agreement and Assignment of Leases and Rents dated as of
January 11, 1999, and recorded among the Land Records (the "Land Records") of
the City of Alexandria, Virginia, in Deed Book 1679 at page 1307, as amended by
that certain First Amendment to Deed of Trust and Security Agreement and
Assignment of Leases and Rents and to Assignment of Leases and Rents dated as of
November 30, 1999, and recorded in the Land Records as Instrument #990027397 on
December 3, 1999 (the "First Amendment"), from Borrower and Saul Inc. to certain
trustees named therein for the benefit of Original Lender (the foregoing Deed of
Trust, Security Agreement and Assignment of Leases and Rents, as amended by the
First Amendment, is hereinafter referred to as the "Original Deed of Trust");
and (b) that certain Assignment of Leases and Rents dated as of January 11,
1999, and recorded among the Land Records in Deed Book 1679 at page 1363, as
amended by the First Amendment, from Borrower to Original Lender (the foregoing
Assignment of Leases and Rents, as amended by the First Amendment, is
hereinafter referred to as the "Original Assignment of Leases").

     D. As of January 1, 2003, the outstanding principal balance of the Original
Note is Thirty-Nine Million Three Hundred Seventy-Four Thousand Forty-One and
00/100 Dollars ($39,374,041.00).

                             WASHINGTON SQUARE NOTE

Law Offices
HOLLAND & KNIGHT LLP

                                       1

<PAGE>

                                                                  Exhibit 10.(p)

     E.  Original Lender has endorsed the Original Note without recourse to
Holder and assigned, among other things, the Original Deed of Trust and the
Original Assignment of Leases to Holder by that certain Assignment of Loan
Documents dated as of even date herewith and being recorded among the Land
Records prior to this Deed of Trust.

     F.  Holder has agreed to readvance the amortized principal of the Original
Note and to advance an additional Five Hundred Thousand and no/100 Dollars
($500,000.00) to Assignor for a total indebtedness of Forty-Two Million Five
Hundred Thousand and no/100 Dollars ($42,500,000.00).

     G.  Holder and Borrower have agreed to amend and restate the Original Note
in its entirety to, among other things, evidence an outstanding principal amount
of Forty-Two Million Five Hundred Thousand and no/100 Dollars ($42,500,000.00).

     NOW THEREFORE, in consideration of mutual promises herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Holder and Borrower hereby agree as follows:

     I.  Incorporation of Recitals. The foregoing recitals are incorporated
herein by this reference and made a part hereof.

     II. Amendment and Restatement of Original Note. From and after the date
hereof, the terms, covenants and conditions of the Original Note are hereby
amended and restated in their entirety as follows:

                      AMENDED AND RESTATED PROMISSORY NOTE

                                  DEFINED TERMS

Execution Date: January 13, 2003         City and State of Signing: Bethesda,
                                         Maryland

Loan Amount: $42,500,000.00              Interest Rate: 6.01% per annum

Borrower: SAUL HOLDINGS LIMITED PARTNERSHIP, a Maryland limited partnership

Borrower's Address: 7501 Wisconsin Avenue, Bethesda, Maryland 20814,
Attention: Senior VP, Chief Financial Officer

Holder:  METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation

                             WASHINGTON SQUARE NOTE

Law Offices
HOLLAND & KNIGHT LLP

                                       2

<PAGE>

Holder's Address:   Metropolitan Life Insurance Company
                    10 Park Avenue
                    Morristown, NJ 07960
                    Attention: Senior Vice-President
                    Real Estate Investments

                    and:

                    Metropolitan Life Insurance Company
                    10 Park Avenue
                    Morristown, NJ 07960
                    Attention: Associate General Counsel

<TABLE>
<S>                                                         <C>
---------------------------------------------------------------------------------------------------------------------
Maturity Date: the first day of the 180/th/ month           Advance Date: The date funds are disbursed to Borrower.
following the Advance Date.
---------------------------------------------------------------------------------------------------------------------
Interest Only Period: The period from the Advance Date      Principal and Interest Installment Date: The first day
and ending on the last day of the month in which the        of the second calendar month following the Advance
Advance Date occurs.                                        Date.
---------------------------------------------------------------------------------------------------------------------
Monthly Installment: Equal monthly installments of          Permitted Prepayment Period: During the 90-day period
principal and interest at the Interest Rate each in the     prior to the Maturity Date, Borrower may prepay the
amount of $263,535.84.                                      Loan without a Prepayment Fee on 30 days' prior written
                                                            notice. In addition, commencing on the first day of the
The Monthly Installment is based upon an amortization       72/nd/ month following the Advance Date, Borrower may
period of twenty seven and one-half years.                  prepay the Loan with a Prepayment Fee on 45 days' prior
                                                            written notice.
---------------------------------------------------------------------------------------------------------------------
</TABLE>

Liable Party:                Saul Centers, Inc., a Maryland corporation

Addresses of Liable Party:   7501 Wisconsin Avenue
                             Bethesda, Maryland 20814
                             Attention:  Senior VP, Chief Financial Officer

Late Charge:  An amount equal to four cents ($.04) for each dollar that is
overdue.

Default Rate: An annual rate equal to the Interest Rate plus four percent (4%).

                             WASHINGTON SQUARE NOTE

Law Offices
HOLLAND & KNIGHT LLP

                                       3

<PAGE>

                                                                  Exhibit 10.(p)

Note: This Amended and Restated Promissory Note and all renewals, amendments,
modifications, restatements and extensions thereof.

Deed of Trust: The Amended and Restated Deed of Trust, Security Agreement and
Fixture Filing, dated as of the Execution Date, granted by Borrower to certain
trustees for the benefit of Holder and all renewals, amendments, modifications,
restatements and extensions thereof.

Loan Documents: This Note, the Deed of Trust and any other documents related to
this Note and/or the Deed of Trust (except the Indemnity Agreement and the
Guaranty) and all renewals, amendments, modifications, restatements and
extensions of these documents.

Guaranty: Guaranty dated as of the Execution Date and executed by Liable Party
and all renewals, amendments, modifications, restatements and extensions
thereof.

Indemnity Agreement: Unsecured Indemnity Agreement dated as of the Execution
Date and executed by Borrower in favor of Holder together with all renewals,
amendments, modifications, restatements and extensions thereof.

The Indemnity Agreement and Guaranty are not Loan Documents and shall survive
repayment of the Loan or other termination of the Loan Documents.

     FOR VALUE RECEIVED, Borrower promises to pay to the order of Holder, at
Holder's Address or such other place as Holder may from time to time designate
in writing, the Loan Amount with interest payable in the manner described below,
in money of the United States of America that at the time of payment shall be
legal tender for payment of all obligations.

     Capitalized terms which are not defined in this Note shall have the
meanings set forth in the Deed of Trust.

          1.   Payment of Principal and Interest. Principal and interest under
this Note shall be payable as follows:

               (a) Interest on the funded portion of the Loan Amount shall
accrue from the Advance Date at the Interest Rate and shall be paid on the first
day of the first calendar month following the Advance Date;

               (b) Commencing on the Principal and Interest Installment Date and
on the first day of each calendar month thereafter, to and including the first
day of the calendar month immediately preceding the Maturity Date, Borrower
shall pay the Monthly Installment; and

               (c) On the Maturity Date, a final payment in the aggregate amount
of the unpaid principal sum evidenced by this Note, all accrued and unpaid
interest, and all other sums evidenced by this Note or secured by the Deed of
Trust and/or any other Loan Documents

                             WASHINGTON SQUARE NOTE

Law Offices
HOLLAND & KNIGHT LLP

                                       4

<PAGE>
                                                                  Exhibit 10.(p)

as well as any future advances under the Deed of Trust that may be made to or on
behalf of Borrower by Holder following the Advance Date (collectively, the
"Aggregate Indebtedness"), shall become immediately payable in full.

     Borrower acknowledges and agrees that a substantial portion of the original
Loan Amount shall be outstanding and due on the Maturity Date.

     Interest shall be calculated on the basis of a thirty (30) day month and a
three hundred sixty (360)-day year, except that (i) if the Advance Date occurs
on a date other than the first day of a calendar month, interest payable for the
period commencing on the Advance Date and ending on the last day of the month in
which the Advance Date occurs shall be calculated on the basis of the actual
number of days elapsed over a 365-day or 366-day year, as applicable, and (ii)
if the Maturity Date occurs on a date other than the last day of the month,
interest payable for the period commencing on the first day of the month in
which the Maturity Date occurs and ending on the Maturity Date shall be
calculated on the basis of the actual number of days elapsed over a 365-day or
366-day year, as applicable.

          2. Application of Payments. At the election of Holder, and to the
extent permitted by law, all payments shall be applied in the order selected by
Holder to any expenses, prepayment fees, late charges, escrow deposits and other
sums due and payable under the Loan Documents, and to unpaid interest at the
Interest Rate or at the Default Rate, as applicable. The balance of any payments
shall be applied to reduce the then unpaid Loan Amount.

          3. Security. The covenants of the Deed of Trust are incorporated by
reference into this Note. This Note shall evidence, and the Deed of Trust shall
secure, the Aggregate Indebtedness.

          4. Late Charge. If any payment of interest, any payment of a Monthly
Installment or any payment of a required escrow deposit is not paid within seven
(7) days of the due date, Holder shall have the option to charge Borrower the
Late Charge. The Late Charge is for the purpose of defraying the expenses
incurred in connection with handling and processing delinquent payments and is
payable in addition to any other remedy Holder may have. Unpaid Late Charges
shall become part of the Aggregate Indebtedness and shall be added to any
subsequent payments due under the Loan Documents. The Late Charge shall not be
applicable to the late payment of the Aggregate Indebtedness after the Maturity
Date or after acceleration of the Loan after the occurrence of an Event of
Default.

          5. Acceleration Upon Default. At the option of Holder, if Borrower
fails to pay any sum specified in this Note when due after giving effect to any
grace periods, or if an Event of Default occurs, the Aggregate Indebtedness, and
all other sums evidenced and/or secured by the Loan Documents, including without
limitation any applicable prepayment fees (collectively, the "Accelerated Loan
Amount") shall become immediately due and payable.

                             WASHINGTON SQUARE NOTE

Law Offices
HOLLAND & KNIGHT LLP

                                       5

<PAGE>

                                                                  Exhibit 10.(p)

          6.  Interest Upon Default. The Accelerated Loan Amount shall bear
interest at the Default Rate which shall never exceed the maximum rate of
interest permitted to be contracted for under the laws of the State. The Default
Rate shall commence upon the occurrence of an Event of Default and shall
continue until all defaults are cured.

          7.  Limitation on Interest. The agreements made by Borrower with
respect to this Note and the other Loan Documents are expressly limited so that
in no event shall the amount of interest received, charged or contracted for by
Holder exceed the highest lawful amount of interest permissible under the laws
applicable to the Loan. If at any time performance of any provision of this Note
or the other Loan Documents results in the highest lawful rate of interest
permissible under applicable laws being exceeded, then the amount of interest
received, charged or contracted for by Holder shall automatically and without
further action by any party be deemed to have been reduced to the highest lawful
amount of interest then permissible under applicable laws. If Holder shall ever
receive, charge or contract for, as interest, an amount which is unlawful, at
Holder's election, the amount of unlawful interest shall be refunded to Borrower
(if actually paid) or applied to reduce the then unpaid Loan Amount. To the
fullest extent permitted by applicable laws, any amounts contracted for, charged
or received under the Loan Documents included for the purpose of determining
whether the Interest Rate would exceed the highest lawful rate shall be
calculated by allocating and spreading such interest to and over the full stated
term of this Note.

          8.  Prepayment. Borrower shall not have the right to prepay all or any
portion of the Loan Amount at any time during the term of this Note except as
expressly set forth in the Defined Terms. If Borrower provides notice of its
intention to prepay, the Accelerated Loan Amount shall become due and payable on
the date specified in the prepayment notice. Notwithstanding the foregoing,
Borrower shall have the one-time option to withdraw its prepayment notice
provided Borrower notifies Holder in writing of its intention to withdraw such
prepayment notice no later than five (5) business days prior to date specified
in said prepayment notice. In addition, Borrower shall have the one-time option
to extend the prepayment date specified in Borrower's prepayment notice by up to
five (5) business days provided Borrower notifies Holder in writing of its
intention to extend the prepayment date (and indicates the new prepayment date)
no later than five (5) business days prior to the prepayment date specified in
Borrower's initial prepayment notice.

          9.  Prepayment Fee.

          (a) Any tender of payment by Borrower or any other person or entity of
the Aggregate Indebtedness, other than as expressly provided in the Loan
Documents, shall constitute a prohibited prepayment. If a prepayment of all or
any part of the Aggregate Indebtedness is made following (i) an Event of Default
and an acceleration of the Maturity Date, or (ii) in connection with a purchase
of the Property or a repayment of the Aggregate

                             WASHINGTON SQUARE NOTE

Law Offices
HOLLAND & KNIGHT LLP

                                       6

<PAGE>

                                                                  Exhibit 10.(p)

Indebtedness at any time before, during or after, a judicial or non-judicial
foreclosure or sale of the Property, then to compensate Holder for the loss of
the investment, Borrower shall pay an amount equal to the Prepayment Fee (as
hereinafter defined).

              (b)    The "Prepayment Fee" shall be the greater of (A) the
Prepayment Ratio (as hereinafter defined) multiplied by the difference between
(x) and (y), where (x) is the present value of all remaining payments of
principal and interest including the outstanding principal due on the Maturity
Date, discounted at the rate which, when compounded monthly, is equivalent to
the Treasury Rate, plus twenty-five (25) basis points, compounded semi-annually,
and (y) is the amount of the principal being prepaid, or (B) one percent (1%) of
the amount of the Loan being prepaid.

              (c)    The "Treasury Rate" shall be the annualized yield on
securities issued by the United States Treasury having a maturity equal to the
remaining stated term of this Note, as quoted in the Federal Reserve Statistical
Release [H. 15 (519)] under the heading "U.S. Government Securities - Treasury
Constant Maturities" for the date on which prepayment is being made. If this
rate is not available as of the date of prepayment, the Treasury Rate shall be
determined by interpolating between the yield on securities of the next longer
and next shorter maturity. If the Treasury Rate is no longer published, Holder
shall select a comparable rate. Holder will, upon request, provide an estimate
of the amount of the Prepayment Fee two weeks before the date of the scheduled
prepayment.

              (d)    The "Prepayment Ratio" shall be a fraction, the numerator
of which shall be the amount of principal being prepaid, and the denominator of
which shall be the principal then outstanding.

              10.    Waiver of Right to Prepay Note Without Prepayment Fee.
Borrower acknowledges that Holder has relied upon the anticipated investment
return under this Note in entering into transactions with, and in making
commitments to, third parties and that the tender of any prohibited prepayment,
shall, to the extent permitted by law, include the Prepayment Fee. Borrower
agrees that the Prepayment Fee represents the reasonable estimate of Holder and
Borrower of a fair average compensation for the loss that may be sustained by
Holder as a result of a prohibited prepayment of this Note and it shall be paid
without prejudice to the right of Holder to collect any other amounts provided
to be paid under the Loan Documents.

                             WASHINGTON SQUARE NOTE
Law Offices
HOLLAND & KNIGHT LLP

                                       7

<PAGE>

                                                                  Exhibit 10.(p)

              BORROWER EXPRESSLY (A) WAIVES ANY RIGHTS IT MAY HAVE UNDER
APPLICABLE STATE LAW TO PREPAY THIS NOTE, IN WHOLE OR IN PART, WITHOUT FEE OR
PENALTY, UPON ACCELERATION OF THE MATURITY DATE OF THIS NOTE, AND (B) AGREES
THAT IF, FOR ANY REASON, A PREPAYMENT OF THIS NOTE IS MADE, UPON OR FOLLOWING
ANY ACCELERATION OF THE MATURITY DATE OF THIS NOTE BY HOLDER ON ACCOUNT OF ANY
DEFAULT BY BORROWER UNDER ANY LOAN DOCUMENT, INCLUDING BUT NOT LIMITED TO ANY
TRANSFER, FURTHER ENCUMBRANCE OR DISPOSITION WHICH IS PROHIBITED OR RESTRICTED
BY THE DEED OF TRUST, THEN BORROWER SHALL BE OBLIGATED TO PAY CONCURRENTLY THE
PREPAYMENT FEE SPECIFIED IN SECTION 9. BY EXECUTING THIS NOTE, BORROWER AGREES
THAT HOLDER'S AGREEMENT TO MAKE THE LOAN AT THE INTEREST RATE AND FOR THE TERM
SET FORTH IN THIS NOTE CONSTITUTES ADEQUATE CONSIDERATION FOR THIS WAIVER AND
AGREEMENT.

              11.    Liability of Borrower. Upon the occurrence of an Event of
Default, except as provided in this Section 11, Holder will look solely to the
Property and the security under the Loan Documents for the repayment of the Loan
and will not enforce a deficiency judgment against Borrower. However, nothing
contained in this Section 11 shall limit the rights of Holder to proceed against
Borrower, the general partner of Borrower and/or the Liable Party, if any, (i)
to enforce any leases entered into by Borrower or its affiliates as tenant,
guarantees, or other agreements entered into by Borrower in a capacity other
than as borrower or any policies of insurance, (ii) to recover damages for
fraud, material misrepresentation, material breach of warranty or waste; (iii)
to recover any Condemnation Proceeds or Insurance Proceeds or other similar
funds which have been misapplied by Borrower or which, under the terms of the
Loan Documents, should have been paid to Holder; (iv) to recover any unapplied
tenant security deposits, tenant letters of credit or other deposits or fees
paid to Borrower that are part of the collateral for the Loan or prepaid rents
for a period of more than 30 days which have not been delivered to Holder; (v)
to recover Rents and Profits received by Borrower after the first day of the
month in which an Event of Default occurs and prior to the date Holder acquires
title to the Property which have not been applied to the Loan or in accordance
with the Loan Documents to operating and maintenance expenses of the Property;
(vi) to recover damages, costs and expenses payable by Borrower pursuant to the
provisions of this Deed of Trust pertaining to Hazardous Materials or payable by
Borrower or the Liable Party pursuant to the Indemnity Agreement; (vii) to
recover all amounts due and payable pursuant to Sections 11.06 and 11.07 of the
Deed of Trust; (viii) to recover any amount expended by Holder in connection
with the foreclosure of the Deed of Trust where the Borrower or the Liable Party
(and anyone on their behalf) have hindered or delayed Holder's exercise of its
rights; and/or (ix) to recover damages arising from Borrower's failure to comply
with the provisions of the Deed of Trust pertaining to ERISA.

                             WASHINGTON SQUARE NOTE
Law Offices
HOLLAND & KNIGHT LLP

                                       8

<PAGE>

                                                                  Exhibit 10.(p)

       The limitation of liability set forth in this Section 11 shall not apply
and the Loan shall be fully recourse in the event that Borrower (i) commences a
voluntary bankruptcy or insolvency proceeding or an involuntary bankruptcy or
insolvency proceeding is commenced against Borrower and is not dismissed within
one hundred twenty (120) days of filing, or (ii) causes or permits a Transfer in
violation of the provisions of Article X of the Deed of Trust, or (iii) incurs
or permits the incurring of any financing in violation of the provisions of
Section 10.02 of the Deed of Trust, except as otherwise approved by Holder in
writing. In addition, this agreement shall not waive any rights which Holder
would have under any provisions of Title 11 of the United States Code (together
with any successor statutes, the "Bankruptcy Code") to file a claim for the full
amount of the Aggregate Indebtedness or to require that the Property shall
continue to secure all of the Aggregate Indebtedness.

              12.    Waiver by Borrower. Borrower and others who may become
liable for the payment of all or any part of this Note, and each of them, waive
diligence, demand, presentment for payment, notice of nonpayment, protest,
notice of dishonor and notice of protest, notice of intent to accelerate and
notice of acceleration and specifically consent to and waive notice of any
amendments, modifications, renewals or extensions of this Note, including the
granting of extension of time for payment, whether made to or in favor of
Borrower or any other person or persons.

              13.    Exercise of Rights. No single or partial exercise by
Holder, or delay or omission in the exercise by Holder, of any right or remedy
under the Loan Documents shall waive or limit the exercise of any such right or
remedy. Holder shall at all times have the right to proceed against any portion
of or interest in the Property in the manner that Holder may deem appropriate,
without waiving any other rights or remedies. The release of any party under
this Note shall not operate to release any other party which is liable under
this Note and/or under the other Loan Documents or under the Indemnity
Agreement.

              14.    No Amendments. This Note may not be modified or amended
except in a writing executed by Borrower and Holder. No waivers shall be
effective unless they are set forth in a writing signed by the party which is
waiving a right. This Note and the other Loan Documents are the final expression
of the lending relationship between Borrower and Holder.

              15.    Governing Law. This Note shall in all respects be governed
by, and construed and enforced in accordance with, the laws of the State without
regard to conflict of laws principles.

              16.    Construction. The words "Borrower" and "Holder" shall be
deemed to include their respective heirs, representatives, successors and
assigns, and shall denote the singular and/or plural, and the masculine and/or
feminine, and natural and/or artificial persons, as appropriate. The provisions
of this Note shall remain in full force and effect notwithstanding any changes
in the shareholders, partners or members of Borrower. If more than one party
constitutes

                             WASHINGTON SQUARE NOTE
Law Offices
HOLLAND & KNIGHT LLP

                                       9

<PAGE>

                                                                  Exhibit 10.(p)

Borrower, the obligations of each party shall be joint and several. The captions
in this Note are inserted only for convenience of reference and do not expand,
limit or define the scope or intent of any section of this Note.

              17.    Notices. All notices, demands, requests and consents
permitted or required under this Note shall be given in the manner prescribed in
the Deed of Trust.

              18.    Time of the Essence. Time shall be of the essence with
respect to all of Borrower's obligations under this Note.

              19.    Severability. If any provision of this Note should be held
unenforceable or void, then that provision shall be deemed separable from the
remaining provisions and shall not affect the validity of this Note.

       III.   Ratification of Indebtedness. Borrower hereby ratifies and
confirms that the Original Note, amended and restated hereby, evidences a
principal indebtedness of FORTY-TWO Million FIVE HUNDRED Thousand And 00/100
Dollars ($42,500,000.00) and that said principal indebtedness is due, owing, and
payable by Borrower in accordance with the terms and provisions set forth above
without setoff, defense or counterclaim.

       IV.    Security. The Original Note, as modified and restated hereby, is
secured by, among other things, (a) the Original Deed of Trust, as amended and
restated by that certain Amended and Restated Deed of Trust, Security Agreement
and Fixture Filing dated as of even date herewith ("Amended and Restated Deed of
Trust"), and being recorded in the Land Records in conjunction with the
execution of this Note; and (b) that Original Assignment of Leases, as amended
and restated by that certain Amended and Restated Assignment of Leases and Rents
dated as of even date herewith, and being recorded in the Land Records in
conjunction with the execution of this Note. Borrower hereby represents and
warrants to Holder that there are no offsets, defenses or counterclaims to the
Original Note or the Note, or the Original Deed of Trust, as amended by the
Amended and Restated Deed of Trust.

       V.     No Substitution or Novation. Nothing in this Note shall be
construed as a substitution or novation of the Borrower's indebtedness to Holder
evidenced by the Original Note, which shall remain in full force and effect, as
hereby modified and restated. This Note shall be attached to and become a part
of the Original Note.

       VI.    Saul Centers, Inc. as Co-Maker. By its acceptance hereof, Holder
acknowledges that Saul Inc., although a co-maker of the Original Note, is not a
co-maker of this Note; however, in consideration therefore, Saul Inc. has
executed and delivered the Guaranty Agreement dated as of even date herewith for
the benefit of Holder.

       VII.   Successors and Assigns. This Note binds the parties hereto and
their heirs, successors and assigns.

                             WASHINGTON SQUARE NOTE
Law Offices
HOLLAND & KNIGHT LLP

                                       10

<PAGE>

                                                                  Exhibit 10.(p)

       VIII.  Headings. The headings used herein are for purposes of convenience
only and should not be used in construing provisions hereof.

       IX.    Rules of Construction. Holder and Borrower acknowledge that each
party and its counsel has reviewed this Note, and the parties hereby agree that
this Note shall not be construed more strictly against Holder as the drafter
thereof.

       X.     Governing Law. This Note shall in all respects be governed by, and
construed and enforced in accordance with, the laws of the State without regard
to conflict of laws principles.


                   [Balance of Page Intentionally Left Blank]
                        [Signature Appears on Next Page]

                             WASHINGTON SQUARE NOTE
Law Offices
HOLLAND & KNIGHT LLP

                                       11

<PAGE>

                                                                  Exhibit 10.(p)

       IN WITNESS WHEREOF, Borrower and Holder have executed this Amended and
Restated Note under seal as of the Execution Date.

                                       BORROWER:

                                       SAUL HOLDINGS LIMITED PARTNERSHIP,
                                       a Maryland limited partnership


WITNESS/ATTEST:                        By:  Saul Centers, Inc.,
                                            a Maryland corporation
                                            General Partner

__________________________                  By  _________________________ (seal)
Name:                                           Name:
                                                Title:

[Corporate Seal]


WITNESS/ATTEST:                        HOLDER:

                                       METROPOLITAN LIFE INSURANCE
                                       COMPANY, a New York corporation

__________________________             By:  ______________________________
Name:                                       Name:
                                            Title:

[Corporate Seal]

                             WASHINGTON SQUARE NOTE

Law Offices
HOLLAND & KNIGHT LLP