SOURCE: Franklin Street Properties Corp.

August 04, 2009 16:00 ET

Franklin Street Properties Corp. Announces Second Quarter 2009 Results

WAKEFIELD, MA--(Marketwire - August 4, 2009) - Franklin Street Properties Corp. (the "Company" or "FSP") (NYSE Amex: FSP), an investment firm specializing in real estate, announced today Funds From Operations (FFO) of $17.4 million or $0.25 per share for the second quarter ended June 30, 2009, which was sequentially flat compared to the first quarter of 2009. The Company also announced Net Income of $4.9 million and Earnings Per Share (EPS) of $0.07 for the second quarter ended June 30, 2009.

The Company evaluates its performance based on Net Income, EPS, FFO, Gains on Sales (GOS) and FFO+GOS, and believes each is an important measure. A reconciliation of Net Income to FFO and FFO+GOS, which are non-GAAP financial measures, is provided on page 4 of this press release.

                 Three Months Ended June 30,     Six Months Ended June 30,
(in 000's       ----------------------------- ----------------------------
 except per                        Increase                      Increase
 share data)      2009     2008   (Decrease)    2009     2008   (Decrease)
                -------- -------- ----------  -------- -------- ----------

Net Income      $  4,865 $ 10,534 $   (5,669) $ 12,673 $ 17,920 $   (5,247)
                ======== ======== ==========  ======== ======== ==========

FFO             $ 17,409 $ 20,283 $   (2,874) $ 34,747 $ 35,920 $   (1,173)
GOS                    -        -          -         -        -          -
                -------- -------- ----------  -------- -------- ----------
FFO+GOS         $ 17,409 $ 20,283 $   (2,874) $ 34,747 $ 35,920 $   (1,173)
                ======== ======== ==========  ======== ======== ==========
Per Share Data:
EPS             $   0.07 $   0.15 $    (0.08) $   0.18 $   0.25 $    (0.07)
FFO             $   0.25 $   0.29 $    (0.04) $   0.49 $   0.51 $    (0.02)
GOS             $      - $      - $        -  $      - $      - $        -
FFO+GOS         $   0.25 $   0.29 $    (0.04) $   0.49 $   0.51 $    (0.02)

Weighted average
shares (diluted)  70,481   70,481          -    70,481   70,481          -
                -------- -------- ----------  -------- -------- ----------

Comparing results for the second quarter of 2009 to 2008, Net Income and EPS decreased $5.7 million or $0.08 per share; and FFO and FFO+GOS each decreased $2.9 million or $0.04 per share. The decrease in FFO was primarily from a decrease in investment banking FFO of $3.7 million and was partially offset by an increase in real estate FFO of $0.8 million. The decrease from investment banking was caused by lower sales of securities by our investment bank, which decreased $49.5 million to $375,000 for the second quarter of 2009 compared to the second quarter of 2008. Revenue from our investment bank is primarily based on the value of these securities sales. The increase in real estate FFO was primarily from contributions from two acquisitions made in December 2008. There was no GOS in the second quarter of 2009 or 2008.

Comparing results for the first half of 2009 to 2008, Net Income and EPS decreased $5.2 million or $0.07 per share; and FFO and FFO+GOS each decreased $1.2 million or $0.02 per share. The decrease in FFO was primarily from a decrease in investment banking FFO of $4.0 million and was partially offset by an increase in real estate FFO of $2.8 million. The decrease from investment banking was caused by lower sales of securities by our investment bank, which decreased $52.0 million to $550,000 for the six months ended June 30, 2009 compared to the six months ended June 30, 2008. Revenue from our investment bank is primarily based on the value of these securities sales. The increase in real estate FFO was primarily from contributions from two acquisitions made in December 2008. There was no GOS in the first half of 2009 or 2008.

George J. Carter, President and CEO, commented as follows:

"For the second quarter of 2009, FSP's profits as represented by FFO+GOS totaled approximately $17.4 million or $0.25 per share, sequentially flat compared to the first quarter of 2009. Dividend distributions declared for the second quarter of 2009, which are payable on August 20, 2009, will be approximately $13.4 million or $0.19 per share.

Significant portions of our real estate investment business, specifically property sales and investment banking, are transactional. Similar to the first quarter of 2009, neither of these business segments made a positive contribution to the second quarter results. Substantially all profits for the quarter were produced by our ongoing/recurring real estate operations.

Although FSP has certain properties in its portfolio that we would contemplate selling, we have not listed any property for sale because of current adverse market conditions. Rather than sell in this negative environment, FSP continues to postpone consideration of the sale of some properties until a more attractive environment establishes itself, particularly within the mortgage/debt markets. A time frame for improvement in these markets is hard to predict. However, we continue to constantly evaluate property disposition opportunities.

During the second quarter of 2009, our investment banking group raised $375,000 of equity capital, an insignificant contribution similar to the first quarter of 2009. Concern continues to surround the potential impact on commercial real estate emanating from the U.S. recession and financial/credit crisis, and our established investor clients continue to sit on the sidelines until a clearer sense of stability returns to the property markets before considering significant new investment purchases. The lack of equity raising activity resulted in our investment banking business segment operating at a loss for the second quarter totaling approximately $0.3 million, which is less than $0.01 per share. We anticipate business in this area to remain constrained as long as broader commercial real estate fundamentals continue to deteriorate.

While profits continued to suffer in the second quarter of 2009 from our transactional businesses, our real estate portfolio of 31 properties maintained an overall 92% occupancy and provided steady rental income. FFO for the second quarter of 2009 was $0.25 per share, all of which came from real estate operations net of the cost of maintaining our investment banking capability.

During the last week of the second quarter of 2009, FSP purchased two additional office properties for our portfolio. The total purchase price for the two assets was approximately $51.6 million. Both acquisitions are in areas of the country where FSP or its affiliates have been active owners and managers of office property. Both properties are newly constructed within the last three years and are 100% net leased to excellent credit tenants. Considering cap rate, price per square foot, replacement cost and other metrics, we believe these acquisitions represent outstanding values. The acquisition dates of the assets did not allow them to contribute meaningfully to our second quarter results, but both properties will be owned for the full third quarter. These two property acquisitions are our first in 2009 and along with our three property acquisitions made during 2008, are now fully contributing to FSP's rental revenue. Additionally, during the second quarter of 2009, FSP purchased approximately 27% of the preferred stock in FSP Grand Boulevard Corp. for a net cost of $15,049,125. FSP Grand Boulevard Corp. owns a 28-story, class-A, multi-tenant office tower containing approximately 532,000 square feet of rentable space and is located in the Crown Center section of downtown Kansas City, Missouri. Continued active property acquisition efforts are ongoing, and we would expect to acquire additional properties in 2009.

As the capital markets and U.S. economy work through the current recession and financial/credit crisis, we will continue to pursue additional commercial property investment opportunities. It will be FSP's objective to continue to grow our property portfolio and rental income business during this period of liquidity-constrained capital markets by using our balance sheet strength to help finance and fund new acquisitions. We continue to be very optimistic about FSP's position in the current commercial real estate investment market and the opportunities that are presenting themselves to acquire commercial properties at better pricing and value metrics than we have seen in the last several years."

Dividend Announcement

On July 17, 2009, we announced that the Board of Directors declared a regular quarterly dividend for the three months ended June 30, 2009 of $0.19 per share of common stock payable on August 20, 2009 to stockholders of record on July 31, 2009.

Real Estate Update

During June 2009 we acquired an office property in Chantilly, Virginia for approximately $29 million and an office property in Eden Prairie, Minnesota for approximately $22.6 million. Supplementary Schedules D & E provide property information for our continuing real estate portfolio of 31 properties and for three non-consolidated REITs that we have interests in as of June 30, 2009. The Company will also be filing a supplemental information package that will provide stockholders and the financial community with additional operating and financial data. The Company will file this supplemental information package with the SEC and make it available on its website at www.franklinstreetproperties.com.

A reconciliation of Net Income to FFO and FFO+GOS is shown below and definitions of FFO and FFO+GOS are provided on Supplementary Schedule H. We believe FFO is used broadly throughout the real estate investment trust (REIT) industry as a measurement of performance and is generally calculated in a similar manner to our calculation. We also believe that FFO+GOS is an important measure as it considers investment performance.

                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,
(In thousands, except per share     ------------------  ------------------
 amounts)                             2009      2008      2009      2008
                                    --------  --------  --------  --------

Net income                          $  4,865  $ 10,534  $ 12,673  $ 17,920
  (Gain) Loss on sale of properties        -         -         -         -
  GAAP (income) loss from
   non-consolidated REITs               (443)     (694)   (1,235)   (1,487)
  Distributions from non-consolidated
   REITs                               1,523     1,731     3,137     2,277
  Acquisition costs of new properties    248         -       248         -
  Depreciation of real estate &
   intangible amortization            11,216     8,712    19,924    17,210
                                    --------  --------  --------  --------
Funds From Operations (FFO)           17,409    20,283    34,747    35,920
  Plus gains on sales of properties        -         -         -         -
                                    --------  --------  --------  --------
FFO+GOS                             $ 17,409  $ 20,283  $ 34,747  $ 35,920
                                    ========  ========  ========  ========

Per Share Data
EPS                                 $   0.07  $   0.15  $   0.18  $   0.25
FFO                                 $   0.25  $   0.29  $   0.49  $   0.51
GOS                                 $      -  $      -  $      -  $      -
FFO+GOS                             $   0.25  $   0.29  $   0.49  $   0.51

Weighted average shares (basic and
 diluted)                             70,481    70,481    70,481    70,481
                                    ========  ========  ========  ========

Today's news release, along with other news about Franklin Street Properties Corp., is available on the Internet at www.franklinstreetproperties.com. We routinely post information that may be important to investors in the Investor Relations section of our website. We encourage investors to consult that section of our website regularly for important information about us and, if they are interested in automatically receiving news and information as soon as it is posted, to sign up for E-mail Alerts.

A conference call is scheduled for August 5, 2009 at 10:00 a.m. (ET) to discuss the second quarter 2009 results. The toll free number is 1-866-770-7051, passcode 12644681. Internationally, the call may be accessed by dialing 1-617-213-8064, passcode 12644681. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website, www.franklinstreetproperties.com at least ten minutes prior to the start of the call and follow the posted directions. The webcast will also be available via replay from the above location starting one hour after the call is finished.

About Franklin Street Properties Corp.

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on achieving current income and long-term growth through investments in commercial properties. FSP operates in two business segments: real estate operations and investment banking/investment services. The majority of FSP's property portfolio is suburban office buildings, with select investments in certain central business district properties. FSP's subsidiary, FSP Investments LLC (member, FINRA and SIPC), is a real estate investment banking firm and a registered broker/dealer. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. To learn more about FSP please visit our website at www.franklinstreetproperties.com.

Forward-Looking Statements

Statements made in this press release that state FSP's or management's intentions, beliefs, expectations, or predictions for the future may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release may also contain forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, economic conditions in the United States, disruptions in the debt markets, economic conditions in the markets in which we own properties, changes in the demand by investors for investment in Sponsored REITs (as defined in our Annual Report on Form 10-K for the year ended December 31, 2008), risks of a lessening of demand for the types of real estate owned by us, changes in government regulations, and expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments. See the "Risk Factors" set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008, as the same may be updated from time to time in subsequent filings with the United States Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We will not update any of the forward-looking statements after the date of this press release to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.

                           Franklin Street Properties Corp.
                                   Earnings Release
                              Supplementary information
                                   Table of Contents


       Franklin Street Properties Corp. Financial Results       A-C
       Real Estate Portfolio Summary Information                 D
       Portfolio and Other Supplementary Information             E
       Quarterly Information                                     F
       Largest 20 Tenants - FSP Owned Portfolio                  G
       Definition of Funds From Operations (FFO) and FFO+GOS     H



             Franklin Street Properties Corp. Financial Results
                         Supplementary Schedule A
                Condensed Consolidated Income Statements
                               (Unaudited)


                                         For the             For the
                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,
(in thousands, except per share     ------------------  ------------------
 amounts)                             2009      2008      2009      2008
                                    --------  --------  --------  --------

Revenue:
  Rental                            $ 29,254  $ 27,700  $ 59,072  $ 54,356
Related party revenue:
  Syndication fees                        29     3,257        39     3,462
  Transaction fees                       514     3,138       542     3,306
  Management fees and interest
   income from loans                     317       423       862       984
Other                                     18        19        36        39
                                    --------  --------  --------  --------
    Total revenue                     30,132    34,537    60,551    62,147
                                    --------  --------  --------  --------

Expenses:
  Real estate operating expenses       7,144     7,116    14,424    13,815
  Real estate taxes and insurance      4,686     4,505     9,515     8,784
  Depreciation and amortization       10,225     7,591    18,139    14,950
  Selling, general and
   administrative                      2,127     2,621     4,135     4,630
  Commissions                             40     1,654       170     1,812
  Interest                             1,599     1,051     3,176     2,243
                                    --------  --------  --------  --------

    Total expenses                    25,821    24,538    49,559    46,234
                                    --------  --------  --------  --------

Income before interest income,
 equity in earnings of
 non-consolidated REITs and taxes      4,311     9,999    10,992    15,913
Interest income                           36       176        72       479
Equity in earnings of
 non-consolidated REITs                  443       694     1,235     1,487
                                    --------  --------  --------  --------

Income before taxes                    4,790    10,869    12,299    17,879
Income tax expense (benefit)             (75)      335      (374)      (41)
                                    --------  --------  --------  --------


Net income                          $  4,865  $ 10,534  $ 12,673  $ 17,920
                                    ========  ========  ========  ========

Weighted average number of shares
 outstanding, basic and diluted       70,481    70,481    70,481    70,481
                                    ========  ========  ========  ========

Net income per share, basic and
 diluted                            $   0.07  $   0.15  $   0.18  $   0.25
                                    ========  ========  ========  ========



             Franklin Street Properties Corp. Financial Results
                        Supplementary Schedule B
                  Condensed Consolidated Balance Sheets
                              (Unaudited)


(in thousands, except share and par value
 amounts)                                           June 30,   December 31,
                                                  -----------  -----------
                                                      2009         2008
                                                  -----------  -----------
Assets:
Real estate assets, net                           $   869,557  $   844,058
Acquired real estate leases, less accumulated
 amortization of $32,930 and $29,200, respectively     38,996       28,518
Investment in non-consolidated REITs                   94,579       83,046
Assets held for syndication, net                            -       13,254
Cash and cash equivalents                              24,542       29,244
Restricted cash                                           335          336
Tenant rent receivables, less allowance for
 doubtful accounts of $620 and $509, respectively         720        1,329
Straight-line rent receivable, less allowance for
 doubtful accounts of $100 and $261, respectively       9,219        8,816
Prepaid expenses                                        2,267        2,206
Related party mortgage loan receivable                 12,115        1,125
Other assets                                            1,854        2,406
Office computers and furniture, net of
 accumulated depreciation of $1,160 and $1,108,
 respectively                                             417          281
Deferred leasing commissions, net of accumulated
 amortization of $4,221, and $3,416, respectively      10,895       10,814
                                                  -----------  -----------
     Total assets                                 $ 1,065,496  $ 1,025,433
                                                  ===========  ===========

Liabilities and Stockholders' Equity:
Liabilities:
  Bank note payable                               $   124,038  $    67,468
  Term loan payable                                    75,000       75,000
  Accounts payable and accrued expenses                21,252       22,297
  Accrued compensation                                    500        1,654
  Tenant security deposits                              1,765        1,874
  Other liabilities: derivative termination value       2,394        3,099
  Acquired unfavorable real estate leases, less
   accumulated amortization of $2,266, and $1,779,
   respectively                                         4,954        5,044
                                                  -----------  -----------
     Total liabilities                                229,903      176,436
                                                  -----------  -----------

Commitments and contingencies

Stockholders' Equity:
  Preferred stock, $.0001 par value, 20,000,000
   shares authorized, none issued or outstanding            -            -
  Common stock, $.0001 par value, 180,000,000
   shares authorized, 70,480,705 and 70,480,705
   shares issued and outstanding, respectively              7            7
  Additional paid-in capital                          889,019      889,019
  Accumulated other comprehensive loss                 (2,394)      (3,099)
  Accumulated distributions in excess of
   accumulated earnings                               (51,039)     (36,930)
                                                  -----------  -----------
     Total stockholders' equity                       835,593      848,997
                                                  -----------  -----------
     Total liabilities and stockholders' equity   $ 1,065,496  $ 1,025,433
                                                  ===========  ===========



              Franklin Street Properties Corp. Financial Results
                         Supplementary Schedule C
               Condensed Consolidated Statements of Cash Flows
                               (Unaudited)


                                                              For the
                                                         Six Months Ended
                                                              June 30,
                                                        ------------------
(in thousands)                                            2009      2008
                                                        --------  --------
Cash flows from operating activities:
  Net income                                            $ 12,673  $ 17,920
  Adjustments to reconcile net income to net cash
   provided by operating activities:
      Depreciation and amortization expense               18,276    14,973
      Amortization of above market lease                   1,780     2,259
      Equity in earnings of non-consolidated REITs        (1,235)   (1,487)
      Distributions from non-consolidated REITs            3,137     2,277
      Increase in bad debt reserve                           111        79
  Changes in operating assets and liabilities:
      Restricted cash                                          1         1
      Tenant rent receivables, net                           498       404
      Straight-line rents, net                              (444)     (507)
      Prepaid expenses and other assets, net                (943)      160
      Accounts payable, accrued expenses                     482    (2,002)
      Accrued compensation                                (1,154)      281
      Tenant security deposits                              (109)      (64)
  Payment of deferred leasing commissions                 (1,557)   (2,131)
                                                        --------  --------
          Net cash provided by operating activities       31,516    32,163
                                                        --------  --------
Cash flows from investing activities:
  Purchase of real estate assets and office computers
   and furniture, capitalized merger costs               (56,135)  (36,970)
  Changes in deposits on real estate assets                1,300         -
  Investment in non-consolidated REITs                   (13,198)      (10)
  Investment in related party mortgage loan receivable   (10,990)   (1,000)
  Investment in assets held for syndication               13,017    11,698
                                                        --------  --------
          Net cash used in investing activities          (66,006)  (26,282)
                                                        --------  --------
Cash flows from financing activities:
      Distributions to stockholders                      (26,782)  (43,698)
      Borrowings under bank note payable                  56,570    25,245
      Deferred financing costs                                 -       (30)
                                                        --------  --------
          Net cash provided by (used in) financing
           activities                                     29,788   (18,483)
                                                        --------  --------
Net decrease in cash and cash equivalents                 (4,702)  (12,602)
Cash and cash equivalents, beginning of period            29,244    46,988
                                                        --------  --------
Cash and cash equivalents, end of period                $ 24,542  $ 34,386
                                                        ========  ========



             Franklin Street Properties Corp. Earnings Release
                        Supplementary Schedule D
                 Real Estate Portfolio Summary Information
                       (Unaudited & Approximated)


         Commercial portfolio lease expirations (1)

                               Total             % of
         Year               Square Feet       Portfolio
         ----             ---------------  --------------
         2009                     688,524            12.1%
         2010                     751,156            13.2%
         2011                     370,196             6.5%
         2012                     735,399            13.0%
         2013                     347,286             6.1%
         2014                     557,128             9.8%
         Thereafter (2)         2,232,322            39.3%
                          ---------------  --------------
                                5,682,011           100.0%
                          ===============  ==============

(1) Percentages are determined based upon square footage of expiring
    commercial leases.
(2) Includes 468,000 square feet of current vacancies.



(In Thousands)                        As of June 30, 2009
                   -------------------------------------------------------
                      # of                   % of       Square    % of
State              Properties  Investment  Portfolio     Feet   Portfolio
-----              ----------- ----------- ----------  -------- ----------

Texas                   7      $   231,323      26.6%    1,489       26.2%
Colorado                4          129,691      14.9%      792       13.9%
Virginia                4          101,085      11.6%      680       12.0%
Georgia                 1           76,711       8.8%      387        6.8%
Missouri                3           73,170       8.4%      477        8.4%
Maryland                2           62,273       7.1%      424        7.5%
Florida                 1           48,685       5.6%      213        3.7%
Indiana                 1           36,990       4.2%      205        3.6%
Illinois                1           30,750       3.5%      177        3.1%
California              2           21,631       2.5%      182        3.2%
Michigan                1           14,981       1.7%      215        3.8%
Washington              1           14,920       1.7%      117        2.1%
Minnesota               1           14,459       1.7%      153        2.7%
North Carolina          2           14,281       1.6%      172        3.0%
                   ----------- ----------- ----------  -------- ----------
                       31      $   870,948     100.0%    5,682      100.0%
                   =========== =========== ==========  ======== ==========



Property by type:                     As of June 30, 2009
(dollars & square  -------------------------------------------------------
 feet in 000's)       # of                   % of       Square    % of
Type               Properties  Investment  Portfolio     Feet   Portfolio
----               ----------- ----------- ----------  -------- ----------
Office                 30      $   865,863      99.4%    5,583       98.3%
Industrial              1            5,085       0.6%       99        1.7%
                   ----------- ----------- ----------  -------- ----------
                       31      $   870,948     100.0%    5,682      100.0%
                   =========== =========== ==========  ======== ==========



             Franklin Street Properties Corp. Earnings Release
                         Supplementary Schedule E
               Portfolio and Other Supplementary Information
                        (Unaudited & Approximated)


               Capital Expenditures          Six Months Ended
               Owned Portfolio             --------------------
               (in thousands)              30-Jun-09  30-Jun-08
                                           ---------  ---------

               Tenant improvements         $   2,286  $   2,897
               Deferred leasing costs          1,557      2,130
               Building improvements             581        569
                                           ---------  ---------
                                           $   4,424  $   5,596
                                           =========  =========



Square foot & leased percentages                  June 30,    December 31,
                                                ------------  ------------
                                                    2009          2008
                                                ------------  ------------

Owned portfolio of commercial real estate
    Number of properties                                  31            29
    Square feet                                    5,682,011     5,417,515
    Leased percentage                                    92%           93%

Investments in non-consolidated commercial
 real estate
    Number of properties                                   3             2
    Square feet                                    1,994,686     1,461,224
    Leased percentage                                    78%           80%

Single Asset REITs (SARs) managed
    Number of properties                                   9            10
    Square feet*                                   2,154,079     2,684,561
    Leased percentage*                                   87%           92%

Total owned, investments & managed properties
    Number of properties*                                 43            41
    Square feet*                                   9,830,776     9,563,300
    Leased percentage*                                   88%           93%


*Excludes a property to be constructed with approximately 285,000 square
 feet.


The following table shows property information for our investments in
 non-consolidated REITs:

                                               Square  % Leased  % Interest
Single Asset REIT name       City     State     Feet   30-Jun-09    Held
----------------------    ----------- ----- ---------  --------- ----------
FSP 303 East Wacker Drive
 Corp.                    Chicago     IL      843,726     75.27%      43.7%
FSP Grand Boulevard Corp. Kansas City MO      532,453     88.64%      27.0%
FSP Phoenix Tower Corp.   Houston     TX      618,507     72.11%       4.6%
                                            ---------  ---------
                                            1,994,686     77.86%
                                            ---------  ---------



               Franklin Street Properties Corp. Earnings Release
                Supplementary Schedule F: Quarterly Information
                                 (Unaudited)


(in 000's)
                        Q1       Q1       Q2       Q3       Q4     Check
Revenue:               2009     2008     2008     2008     2008    Total
                     -------  -------  -------  -------  -------  --------
  Rental             $29,818  $26,656  $27,700  $27,927  $28,915  $111,198
  Related party
   revenue:
    Syndication fees      10      205    3,257      304        -     3,766
    Transaction fees      28      168    3,138      300       35     3,641
    Management fees
     and interest
     income from loans   545      561      423      380      375     1,739
Other                     18       20       19       13       20        72
                     -------  -------  -------  -------  -------  --------
     Total revenue    30,419   27,610   34,537   28,924   29,345   120,416
                     -------  -------  -------  -------  -------  --------

Expenses:
  Real estate
   operating expenses  7,280    6,698    7,116    7,159    8,026    28,999
  Real estate taxes
   and insurance       4,829    4,279    4,505    4,590    4,366    17,740
  Depreciation and
   amortization        7,914    7,359    7,591    7,666    7,744    30,360
  Selling, general
   and administrative  2,008    2,009    2,621    1,927    1,711     8,268
  Commissions            130      158    1,654      208      131     2,151
  Interest             1,577    1,192    1,051    1,108    1,570     4,921
                     -------  -------  -------  -------  -------  --------
     Total expenses   23,738   21,695   24,538   22,658   23,548    92,439
                     -------  -------  -------  -------  -------  --------

  Income before
   interest income,
   equity in earnings
   in non-consolidated
   REITs               6,681    5,915    9,999    6,266    5,797    27,977
  Interest income         36      303      176      177       89       745
  Equity in earnings
   in non-consolidated
   REITs                 792      793      694      680      580     2,747
                     -------  -------  -------  -------  -------  --------

  Income before
   taxes on income     7,509    7,011   10,869    7,123    6,466    31,469
  Taxes on income       (299)    (375)     335     (297)    (153)     (490)
                     -------  -------  -------  -------  -------  --------

  Income from
   continuing
   operations          7,808    7,386   10,534    7,420    6,619    31,959
  Income from
   discontinued
   operations              -        -        -        -        -         -
                     -------  -------  -------  -------  -------  --------

  Income before gain
   on sale of
   properties          7,808    7,386   10,534    7,420    6,619    31,959
  Gain on sale of
   assets                  -        -        -        -        -         -
                     -------  -------  -------  -------  -------  --------
  Net income         $ 7,808  $ 7,386  $10,534  $ 7,420  $ 6,619  $ 31,959
                     =======  =======  =======  =======  =======  ========


FFO and  FFO+GOS calculations:

Net income           $ 7,808  $ 7,386  $10,534  $ 7,420  $ 6,619  $ 31,959
                     -------  -------  -------  -------  -------  --------
  (Gain) Loss on
   sale of assets          -        -        -        -        -         -
  GAAP income from
   non-consolidated
   REITs                (792)    (793)    (694)    (680)    (580)   (2,747)
  Distributions from
   non-consolidated
   REITs               1,615      546    1,731    1,561    1,510     5,348
  Acquisition costs        -        -        -        -        -
  Depreciation &
   amortization        8,707    8,498    8,712    8,783    8,650    34,643
                     -------  -------  -------  -------  -------  --------
Funds From
 Operations (FFO)     17,338   15,637   20,283   17,084   16,199    69,203
  Plus gains on
   sales of assets         -        -        -        -        -         -
                     -------  -------  -------  -------  -------  --------
FFO+GOS              $17,338  $15,637  $20,283  $17,084  $16,199  $ 69,203
                     =======  =======  =======  =======  =======  ========



               Franklin Street Properties Corp. Earnings Release
                           Supplementary Schedule G
                   Largest 20 Tenants - FSP Owned Portfolio
                              As of June 30, 2009
                            (Unaudited & Estimated)


The following table includes the largest 20 tenants in FSP's owned
 portfolio based on square feet leased.

                                                                  % of
               Tenant                        Sq Ft   SIC Code   Portfolio
               ------                     ---------- ---------- ---------
Capital One Services, Inc.            (1)    297,789     61        5.2%
Citgo Petroleum Corporation                  248,399     29        4.4%
Tektronix Texas, LLC                         241,372     73        4.1%
Burger King Corporation                      212,619     58        3.7%
New Era of Networks, Inc. (Sybase)           199,077     73        3.5%
Citigroup Credit Services, Inc        (2)    176,848     61        3.1%
RGA Reinsurance Company                      171,120     63        3.0%
CH Robinson Worldwide, Inc.                  153,028     47        2.7%
International Business Machines Corp. (3)    138,033     35        2.4%
Geisecke & Devrient                          135,888     73        2.4%
Murphy Exploration & Production
 Company                                     133,786     13        2.3%
CACI Technologies, Inc.                      132,896     73        2.3%
Monsanto                                     127,778     28        2.2%
Northrop Grumman Information
 Technology, Inc.                            111,469     73        2.0%
Maines Paper & Food Service, Inc.             98,745     51        1.7%
Amdocs, Inc.                                  91,928     73        1.6%
County of Santa Clara                         90,467     81        1.6%
Ober Kaler Grimes & Shriver                   88,736     91        1.6%
Technip-Coflexip USA Holdings, Inc            86,059     13        1.5%
Vail Corp d/b/a Vail Resorts                  83,620     79        1.5%
                                          ----------            ---------
Total                                      3,019,657              53.1%
                                          ----------            ---------

(1) Capital One Services, Inc. ("CapOne") sublets all of the space to
    LandAmerica Financial Group, Inc. ("LandAm"). Both the direct lease
    with CapOne and the sublease with LandAm expire on October 31, 2009.
    On November 26, 2008, LandAm filed a voluntary motion for relief
    under Chapter 11 of the United States Bankruptcy Code. Significantly,
    our direct lease with CapOne remains in effect and CapOne continues to
    be financially obligated to us for all payments of rent due thereunder.

(2) The lease with Citicorp Credit Services, Inc. is guaranteed by
    Citigroup.

(3) On May 14, 2009 the Company signed a three-year lease commencing
    August 1, 2009 with IBM at its property located in Southfield, Michigan
    for 83,209 square feet of space. The tenant's prior lease for 138,033
    square feet expired on July 31, 2009.



             Franklin Street Properties Corp. Earnings Release
                        Supplementary Schedule H
               Definition of Funds From Operations ("FFO"),
                 and FFO plus Gains on Sales ("FFO+GOS")

The Company evaluates the performance of its reportable segments based on several measures including, Funds From Operations ("FFO") and FFO plus Gains on Sales ("FFO+GOS") as management believes they represent important measures of activity and are an important consideration in determining distributions paid to equity holders. The Company defines FFO as net income (computed in accordance with generally accepted accounting principles, or GAAP), excluding gains (or losses) from sales of property and acquisition costs of newly acquired properties that are not capitalized, plus depreciation and amortization, and after adjustments to exclude non-cash income (or losses) from non-consolidated or Sponsored REITs, plus distributions received from non-consolidated or Sponsored REITs. The Company defines FFO+GOS as FFO as defined above, plus gains (or losses) from sales of properties and provisions for assets held for sale, if applicable.

FFO and FFO+GOS should not be considered as alternatives to net income (determined in accordance with GAAP), as indicators of the Company's financial performance, nor as alternatives to cash flows from operating activities (determined in accordance with GAAP), nor as measures of the Company's liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company's needs. Other real estate companies may define these terms in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, FFO and FFO+GOS should be examined in connection with net income and cash flows from operating, investing and financing activities in the condensed consolidated financial statements.

Contact Information

  • Contact:
    John Demeritt
    877-686-9496