SOURCE: Franklin Street Properties Corp.

October 30, 2012 14:37 ET

Franklin Street Properties Corp. Announces Third Quarter and Nine Month 2012 Results

WAKEFIELD, MA--(Marketwire - Oct 30, 2012) - Franklin Street Properties Corp. (the "Company", "FSP", "we" or "our") (NYSE MKT: FSP), an investment firm specializing in real estate, announced today Funds From Operations (FFO) of $19.9 million or $0.24 per share for the third quarter ended September 30, 2012; and FFO of $58.5 million or $0.71 per share for the nine months ended September 30, 2012. The Company also announced a net loss of $9.0 million or $0.11 per share for the third quarter and net income of $2.2 million or $0.03 per share for the nine months ended September 30, 2012. The net loss for the third quarter included a provision for a loss on the sale of a property of $14.3 million or $0.17 per share. The Company also provided an update on other activities. 

The Company evaluates its performance based on FFO, Net Income and EPS and believes each is an important measure. A reconciliation of Net Income to FFO, which is a non-GAAP financial measure, is provided on page 4 of this press release.

             
    Three Months Ended September 30,     Nine Months Ended September 30,  
(in 000's except per share data)   2012     2011   Increase
(Decrease)
    2012   2011   Increase
(Decrease)
 
                                           
Net Income (loss)   $ (8,998 )   $ 3,314   $ (12,312 )   $ 2,174   $ 38,462   $ (36,288 )
                                           
FFO   $ 19,913     $ 16,362   $ 3,551     $ 58,526   $ 52,752   $ 5,774  
Per Share Data:                                          
EPS   $ (0.11 )   $ 0.04   $ (0.15 )   $ 0.03   $ 0.47   $ (0.44 )
FFO   $ 0.24     $ 0.20   $ 0.04     $ 0.71   $ 0.65   $ 0.06  
                                           
                                           
Weighted average shares (diluted)     82,937       81,600     1,336       82,937     81,492     1,756  
                                           

Comparing results for the third quarter of 2012 to 2011, FFO increased $3.6 million or $0.04 per share for the third quarter of 2012 compared to the third quarter of 2011. The increase is primarily from the benefits of three property acquisitions made in late September 2011, October 2011 and July 2012 and increased interest income from secured real estate loans that benefitted the third quarter of 2012 compared to the third quarter of 2011. To a lesser extent, we had the benefit of increased leasing activity that increased occupancy in the real estate portfolio at September 30, 2012 to 89.9% compared to 89.7% at September 30, 2011. Net Income (loss) and EPS decreased $12.3 million or $0.15 per share. The decrease was primarily because the Company recorded a provision for a loss on a property held for sale. This decrease was partially offset by property acquisitions and increases to interest income from the secured real estate loans described above. 

Comparing results for the nine months ended September 30, 2012 to 2011, FFO increased $5.8 million or $0.06 per share for the nine months ended September 30, 2012 compared to the same period of 2011. The increase is primarily from property acquisitions and increases to interest income from secured real estate loans that benefitted the nine months ended September 30, 2012 compared to the same period in 2011 and was partially offset by the effect of our investment banking segment, which was discontinued during 2011. During the nine months ended September 30, 2011 results from our investment bank were about $3.3 million, which was not a factor during the nine months ended September 30, 2012. Net Income and EPS decreased $36.3 million or $0.44 per share. The decrease was primarily because the Company recorded a provision for a loss on a property held for sale; and from gains on sale of properties in January and June of 2011, which contributed $21.9 million or $0.27 per share to the first nine months of 2011. In addition, the decrease was affected by the discontinued operations of the investment bank described above and was partially offset by an increase from property acquisitions and increases to interest income from secured real estate loans, also described above. 

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

"For the third quarter of 2012, FSP's profits as represented by FFO totaled approximately $19.9 million or $0.24 per share, an increase of approximately $0.9 million or $0.01 per share compared to the second quarter of 2012. Dividend distributions declared for the third quarter of 2012, which are payable on November 15, 2012, will be approximately $15.8 million or $0.19 per share.

"Our directly-owned real estate portfolio of 37 properties, totaling approximately 7,439,195 square feet, was approximately 89.9% leased as of September 30, 2012, down from approximately 90.0% leased as of June 30, 2012. The drop in percentage of leased space of approximately 0.1% in the third quarter was due solely to the acquisition during the quarter of the 386,603 rentable square foot "value-add" suburban office building in Atlanta, Georgia known as "One Ravinia Drive". The property portfolio excluding One Ravinia Drive increased its occupancy during the quarter. The occupancy at One Ravinia Drive also increased from 82% at the time of acquisition to 84.5% as of the close of the quarter. Our property portfolio is primarily suburban office assets. Most of the rental/leasing markets where our properties are located remained stable during the third quarter, both in terms of occupancy and rental rate levels. Within this environment, we continue to make steady leasing progress and anticipate higher year-end occupancy. Our property portfolio has relatively modest lease expirations over the next two years and, along with our improving occupancy levels, continues to allow overall tenant improvement expenditures and leasing costs to moderate in relation to the level of rental revenues being achieved. 

"There were two real estate investments completed in the third quarter of 2012. On July 5, 2012, FSP made a $33 million two-year bridge loan on a suburban office property located in the I-10 energy corridor of Houston, Texas. The property is a 14-story, multi-tenant Class A office building containing approximately 325,796 rentable square feet. The property is owned by FSP Energy Tower I Corp., a single-asset REIT affiliate of FSP, and is approximately 100% leased. The loan is secured by a first mortgage on the property. On July 31, 2012, FSP purchased a Class A suburban office property in Atlanta, Georgia known as "One Ravinia Drive" for $52.8 million. The property is 17 stories, contains approximately 386,603 rentable square feet and was approximately 82% leased at the time of acquisition to numerous tenants. The property is located in the "Central Perimeter" submarket of Atlanta. FSP and its affiliates have been investing in the suburban Atlanta office market since 2003 and currently own three properties there totaling approximately 907,000 square feet. In addition, we expect to close on the acquisition of a Class A suburban office property in Houston, Texas known as "Westchase I & II" for $154.8 million on or about November 1, 2012. The property is a two-building office complex totaling approximately 629,022 rentable square feet located in Houston's Westchase District. Each building is 14 stories, and the entire property is approximately 95% leased to numerous tenants. FSP, its affiliates and predecessor have been investing in suburban Houston since 1993 and, with the addition of this asset, will own six properties totaling approximately 2,144,732 square feet in Houston. Additional potential real estate investment opportunities are actively being explored, and we would anticipate further real estate investments in the coming months. 

"There were no property sales in the third quarter of 2012, although we continuously review and evaluate our directly-owned portfolio of 37 properties for potentially advantageous disposition opportunities. However, we plan to sell our 214,697 square foot Southfield, Michigan (greater Detroit) property within the next year. In recent years we have tried different strategies to improve the property's performance but have been unsuccessful in those efforts. Consequently, we have taken a provision for a loss on its sale this quarter. We do not anticipate re-entering the greater Detroit property market. In addition, certain properties owned by some of our single-asset REIT affiliates, and in which FSP may have a financial interest, could become possible candidates for sale as they stabilize their occupancies, and the markets in which they are located become more attractive to potential acquirers. FSP Phoenix Tower Corp., a single asset REIT affiliate of FSP, owns a 34-story multi-tenant Class A office building containing approximately 623,944 square feet located in Houston, Texas that is currently being offered for sale. FSP has both an equity and first mortgage investment in FSP Phoenix Tower Corp. On July 27, 2012, FSP's $106.2 million two-year bridge loan to its single-asset REIT affiliate, FSP 50 South Tenth Street Corp., was repaid in full from the proceeds of an institutional third-party first mortgage loan secured by the Minneapolis, Minnesota CBD property.

"Importantly, on September 27, 2012, the Company completed a new $900 million credit facility with a group of banks. The new credit facility effectively:

1. expanded the size of our previous credit facility;
2. fixed the interest rate cost on a large portion of the new credit facility (that is currently outstanding) at an interest rate cost about equal to the cost of our previous credit facility's 30-day variable revolver rate;
3. lowered our current interest rate costs on the revolver-portion of the new credit facility below the interest rate costs of our previous credit facility; and
4. extended the maturity of our previous credit facility. 

"I would refer shareholders to our press release and Current Report on Form 8-K dated September 27, 2012 for additional information regarding this new credit facility. We expect to use this new credit facility to facilitate our continuing growth plans. We look forward to the balance of 2012 and beyond." 

Dividend Announcement

On October 12, 2012, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended September 30, 2012 of $0.19 per share of common stock payable on November 15, 2012 to stockholders of record on October 26, 2012. 

Real Estate Update

Supplementary schedules provide property information for our owned real estate portfolio and for three non-consolidated REITs that we had preferred stock interests in as of September 30, 2012. 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 is shown below and a definition of FFO is provided on Supplementary Schedule I. We believe FFO is used broadly throughout the real estate investment trust (REIT) industry as a measurement of performance. We have included the NAREIT FFO definition in our table and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do. Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that define FFO differently. 

             
Reconciliation of Net Income to FFO:   Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
(In thousands, except per share amounts)   2012     2011     2012     2011  
                                 
Net income (loss)   $ (8,998 )   $ 3,314     $ 2,174     $ 38,462  
  (Gain) on sale of properties and Provision for loss on property held for sale of $14,300 less applicable income tax     14,300       -       14,300       (21,939 )
  GAAP (income) loss from non-consolidated REITs     (176 )     (573 )     (1,061 )     (3,511 )
  Distributions from non-consolidated REITs     907       1,104       2,733       4,086  
  Depreciation & amortization     13,779       12,332       40,279       35,191  
NAREIT FFO     19,812       16,177       58,425       52,289  
  Acquisition costs of new properties     101       185       101       463  
Funds From Operations (FFO)   $ 19,913     $ 16,362     $ 58,526     $ 52,752  
                                 
Per Share Data                                
EPS   $ (0.11 )   $ 0.04     $ 0.03     $ 0.47  
FFO   $ 0.24     $ 0.20     $ 0.71     $ 0.65  
                                 
Weighted average shares (basic and diluted)     82,937       81,600       82,937       81,492  
                                 

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 October 31, 2012 at 10:00 a.m. (ET) to discuss the third quarter 2012 results. To access the call, please dial 1-877-317-6789. Internationally, the call may be accessed by dialing 1-412-317-6789. 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. The majority of FSP's property portfolio is suburban office buildings, with select investments in certain central business district properties. 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, risks of a lessening of demand for the types of real estate owned by us, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events 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, 2011, 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 - Prior Four Quarters F
Percentage of Leased Space G
Largest 20 Tenants - FSP Owned Portfolio H
Definition of Funds From Operations (FFO) I
   
   
   
Franklin Street Properties Corp. Financial Results
Supplementary Schedule A
Condensed Consolidated Income (Loss) Statements
(Unaudited)
 
    For the
Three Months Ended
September 30,
    For the
Nine Months Ended
September 30,
(in thousands, except per share amounts)   2012     2011     2012     2011
                               
Revenue:                              
  Rental   $ 38,251     $ 33,398     $ 110,124     $ 97,494
Related party revenue:                              
  Management fees and interest income from loans     3,485       1,037       9,146       2,995
Other     39       7       112       20
    Total revenue     41,775       34,442       119,382       100,509
                               
Expenses:                              
  Real estate operating expenses     9,639       8,889       26,940       25,590
  Real estate taxes and insurance     5,764       4,950       16,952       14,757
  Depreciation and amortization     13,572       12,183       39,647       34,671
  Selling, general and administrative     3,141       1,654       7,454       4,901
  Interest     4,187       3,419       11,901       9,405
                               
    Total expenses     36,303       31,095       102,894       89,324
                               
Income before interest income, equity in earnings of                              
non-consolidated REITs and taxes     5,472       3,347       16,488       11,185
Interest income     5       3       17       19
Equity in earnings of non-consolidated REITs     176       573       1,061       2,707
                               
Income before taxes on income     5,653       3,923       17,566       13,911
Taxes on income     80       67       236       185
                               
  Income from continuing operations     5,573       3,856       17,330       13,726
                               
  Discontinued operations:                              
  Income (loss) from discontinued operations, net of income tax     (271 )     (542 )     (856 )     2,797
  Gain on sale of properties and provision for loss on property held for sale of $14,300 less applicable income tax     (14,300 )     -       (14,300 )     21,939
  Total discontinued operations     (14,571 )     (542 )     (15,156 )     24,736
                               
Net income (loss)   $ (8,998 )   $ 3,314     $ 2,174     $ 38,462
                               
Weighted average number of shares outstanding, basic and diluted     82,937       81,600       82,937       81,492
                               
Earnings (loss) per share, basic and diluted, attributable to:                              
  Continuing operations   $ 0.07     $ 0.05     $ 0.21     $ 0.17
  Discontinued operations     (0.18 )     (0.01 )     (0.18 )   $ 0.30
Net income per share, basic and diluted   $ (0.11 )   $ 0.04     $ 0.03     $ 0.47
                               
                               
                               
Franklin Street Properties Corp. Financial Results  
Supplementary Schedule B  
Condensed Consolidated Balance Sheets  
(Unaudited)  
 
(in thousands, except share and par value amounts)
 
 
September 30,
2012
 
 
 
 
December 31,
2011
 
 
Assets:                
Real estate assets, net   $ 1,015,984     $ 991,225  
Acquired real estate leases, less accumulated amortization of $35,282 and $31,189, respectively    
92,717
     
91,613
 
Investment in non-consolidated REITs     85,927       87,598  
Assets held for sale     685       15,355  
Cash and cash equivalents     23,962       23,813  
Restricted cash     546       493  
Tenant rent receivables, less allowance for doubtful accounts of $1,340 and $1,235, respectively     1,182       1,460  
Straight-line rent receivable, less allowance for doubtful accounts of $135 and $135, respectively     34,190       28,502  
Prepaid expenses     2,336       1,223  
Related party mortgage loan receivables     108,236       140,516  
Other assets     7,939       4,070  
Office computers and furniture, net of accumulated depreciation of $547 and $428, respectively     528       468  
Deferred leasing commissions, net of accumulated amortization of $11,489 and $9,139, respectively     21,702       22,325  
    Total assets   $ 1,395,934     $ 1,408,661  
                 
Liabilities and Stockholders' Equity:                
Liabilities:                
  Bank note payable   $ 82,000     $ 449,000  
  Term loan payable     400,000       -  
  Accounts payable and accrued expenses     26,462       26,446  
  Accrued compensation     2,194       2,222  
  Tenant security deposits     2,281       2,008  
  Other liabilities: derivative liability     1,671       -  
  Acquired unfavorable real estate leases, less accumulated amortization of $4,568 and $3,759, respectively     6,730       7,618  
    Total liabilities     521,338       487,294  
                 
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, 82,937,405 and 82,937,405 shares issued and outstanding, respectively     8       8  
  Additional paid-in capital     1,042,876       1,042,876  
  Accumulated other comprehensive loss     (1,671 )     -  
  Accumulated distributions in excess of accumulated earnings     (166,617 )     (121,517 )
    Total stockholders' equity     874,596       921,367  
    Total liabilities and stockholders' equity   $ 1,395,934     $ 1,408,661  
                     
                     
                     
Franklin Street Properties Corp. Financial Results  
Supplementary Schedule C  
Condensed Consolidated Statements of Cash Flows  
(Unaudited)  
    For the
Nine Months Ended
September 30,
 
(in thousands)   2012     2011  
Cash flows from operating activities:                
  Net income   $ 2,174     $ 38,462  
  Adjustments to reconcile net income to net cash provided by operating activities:        
    Depreciation and amortization expense     41,846       36,563  
    Amortization of above market lease     56       (119 )
    (Gain) on sale of properties and provision for loss on property held for sale of $14,300 less applicable income tax     14,300       (21,939 )
    Equity in earnings of non-consolidated REITs     (1,061 )     (2,805 )
    Distributions from non-consolidated REITs     1,246       3,034  
    Increase (decrease) in bad debt reserve     105       (365 )
  Changes in operating assets and liabilities:                
    Restricted cash     (53 )     (57 )
    Tenant rent receivables, net     173       869  
    Straight-line rents, net     (3,498 )     (7,404 )
    Lease acquisition costs     (2,235 )     (55 )
    Prepaid expenses and other assets, net     (1,278 )     171  
    Accounts payable and accrued expenses     (25 )     4,131  
    Accrued compensation     (28 )     (420 )
    Tenant security deposits     273       523  
  Payment of deferred leasing commissions     (2,425 )     (6,710 )
      Net cash provided by operating activities     49,570       43,879  
Cash flows from investing activities:                
  Purchase of real estate assets, office computers and furniture     (49,209 )     (155,320 )
  Acquired real estate leases     (14,376 )     (58,955 )
  Investments in non-consolidated REITs     (1 )     (10 )
  Distributions in excess of earnings from non-consolidated REITs     1,487       1,052  
  Investment in related party mortgage loan receivable     (73,920 )     (4,232 )
  Repayment of related party mortgage loan receivable     106,200       -  
  Changes in deposits on real estate assets     -       200  
  Investment in assets held for syndication, net     -       (2,427 )
  Proceeds received on sales of real estate assets     -       96,790  
      Net cash used in investing activities     (29,819 )     (122,902 )
Cash flows from financing activities:                
  Distributions to stockholders     (47,274 )     (46,419 )
  Proceeds from equity offering, net     -       18,001  
  Proceeds from offering     -       (536 )
  Borrowings under bank note payable     160,000       375,000  
  Repayment of bank note payable     (527,000 )     (209,968 )
  Borrowing of term loan payable     400,000       (74,850 )
  Deferred financing costs     (5,328 )     (5,389 )
  Swap termination payment     -       (982 )
      Net cash used in financing activities     (19,602 )     54,857  
Net increase (decrease) in cash and cash equivalents     149       (24,166 )
Cash and cash equivalents, beginning of period     23,813       68,213  
Cash and cash equivalents, end of period   $ 23,962     $ 44,047  
                 
                 
                 
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  
2012   88,523   1.2 %
2013   423,414   5.9 %
2014   411,131   5.7 %
2015   835,285   11.6 %
2016   925,979   12.8 %
Thereafter (2)   4,540,166   62.8 %
    7,224,498   100.0 %
           
(1) Percentages are determined based upon square footage of expiring commercial leases and excludes the asset held for sale.
(2) Includes 623,131 square feet of current vacancies.
   
   
   
(dollars & square feet in thousands)   As of September 30, 2012 (a)  
    # of       % of     Square   % of  
State   Properties   Investment   Portfolio     Feet   Portfolio  
                           
Texas   10   $ 291,470   28.7 %   2,028   28.1 %
Colorado   4     123,182   12.1 %   790   10.9 %
Georgia   2     108,321   10.7 %   774   10.7 %
Virginia   4     100,190   9.9 %   684   9.5 %
Minnesota   2     39,417   3.9 %   626   8.7 %
Missouri   3     66,437   6.5 %   477   6.6 %
North Carolina   3     67,386   6.6 %   431   6.0 %
Illinois   2     49,901   4.9 %   372   5.2 %
Maryland   1     53,459   5.3 %   325   4.5 %
Florida   1     45,906   4.5 %   213   2.9 %
Indiana   1     34,775   3.4 %   205   2.8 %
California   2     21,581   2.1 %   182   2.5 %
Washington   1     13,959   1.4 %   117   1.6 %
    36   $ 1,015,984   100.0 %   7,224   100.0 %
                           
(a) Excludes asset held for sale.             
 
 
 
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule E
Portfolio and Other Supplementary Information
(Unaudited & Approximated)
 
Capital Expenditures                        
Owned Portfolio   Six Months Ended   Three Months Ended   Nine Months Ended
(in thousands)   30-Jun-12   30-Jun-11   30-Sep-12   30-Sep-11   30-Sep-12   30-Sep-11
                                     
Tenant improvements   $ 5,719   $ 5,721   $ 2,854   $ 5,093   $ 8,573   $ 10,814
Deferred leasing costs     3,539     5,386     1,104     1,322     4,643     6,708
Building improvements     1,749     1,325     711     754     2,460     2,079
    $ 11,007   $ 12,432   $ 4,669   $ 7,169   $ 15,676   $ 19,601
                                     
                                     
                                     
Square foot & leased percentages   September 30,     December 31,  
    2012     2011  
             
Owned portfolio of commercial real estate (a)            
  Number of properties   37     36  
  Square feet   7,439,195     7,052,068  
  Leased percentage   90 %   89 %
             
Investments in non-consolidated REITs            
  Number of properties   3     3  
  Square feet   2,016,260     2,001,542  
  Leased percentage   68 %   87 %
             
Single Asset REITs (SARs) managed            
  Number of properties   13     13  
  Square feet   3,322,589     3,322,639  
  Leased percentage   85 %   80 %
             
Total owned, investments & managed properties (a)            
  Number of properties   53     52  
  Square feet   12,778,044     12,376,249  
  Leased percentage   85 %   86 %
             
(a) Includes asset held for sale.            
             

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

                         
            Square   % Leased     % Interest  
Single Asset REIT name   City   State   Feet   30-Sep-12     Held  
FSP 303 East Wacker Drive Corp.   Chicago   IL   857,245   45.5 %   43.7 %
FSP Grand Boulevard Corp.   Kansas City   MO   535,071   79.4 %   27.0 %
FSP Phoenix Tower Corp.   Houston   TX   623,944   89.3 %   4.6 %
            2,016,260   68.0 %      
                         
                         
                         
Franklin Street Properties Corp. Earnings Release  
Supplementary Schedule F: Quarterly Information  
(Unaudited)  
(in thousands)                        
    Q3     Q4     Q1     Q2  
Revenue:   2011     2011     2012     2012  
  Rental   $ 33,398     $ 36,744     $ 36,303     $ 35,570  
  Related party revenue:                                
Management fees and interest income from loans     1,037       1,051       2,616       3,045  
  Other     7       29       34       39  
    Total revenues     34,442       37,824       38,953       38,654  
Expenses:                                
  Real estate operating expenses     8,889       9,486       8,697       8,604  
  Real estate taxes and insurance     4,950       5,357       5,696       5,493  
  Depreciation and amortization     12,183       12,951       13,071       13,004  
  Selling, general and administrative     1,654       2,012       2,077       2,236  
  Interest     3,419       3,261       3,677       4,037  
    Total expenses     31,095       33,067       33,218       33,374  
                                 
  Income before interest income, equity in earnings of non-consolidated REITs and taxes on income     3,347       4,757       5,735       5,280  
  Interest income     3       3       8       4  
  Equity in earnings of non-consolidated REITs     573       978       391       494  
                                 
  Income before taxes on income     3,923       5,738       6,134       5,778  
  Taxes on income     67       82       79       77  
                                 
  Income from continuing operations     3,856       5,656       6,055       5,701  
  Discontinued operations:                                
  Income from discontinued operations, net of tax     (542 )     (594 )     (317 )     (268 )
  Provision for loss on sale of property     -       -       -       -  
  Total discontinued operations     (542 )     (594 )     (317 )     (268 )
                                 
  Net income   $ 3,314     $ 5,062     $ 5,738     $ 5,433  
                                 
                                 
FFO calculations:                                
                                 
Net income   $ 3,314     $ 5,062     $ 5,738     $ 5,433  
  GAAP income from non-consolidated REITs     (573 )     (978 )     (391 )     (494 )
  Distributions from non-consolidated REITs     1,104       970       929       898  
  Acquisition costs     185       157       -       -  
  Depreciation of real estate & intangible amortization     12,332       13,248       13,295       13,203  
                                 
Funds From Operations (FFO)   $ 16,362     $ 18,459     $ 19,571     $ 19,040  
                                 
                                 
                                 
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule G
Percentage of Leased Space
(Unaudited & Estimated)
                             
 
 
 
 
 
 
 
 
 
 
 
Property Name
 
 
 
 
 
 
 
Location
 
 
 
 
 
 
Square
Feet
 
 
 
 
%
Leased (1)
as of
30-Jun-12
 
 
 
 
Second
Quarter
Average %
Leased (2)
 
 
 
 
%
Leased (1)
as of
30-Sep-12
 
 
 
 
Third
Quarter
Average %
Leased (2)
                             
1   PARK SENECA   Charlotte, NC   109,550   81.5%   80.9%   77.3%   78.2%
2   HILLVIEW CENTER   Milpitas, CA   36,288   100.0%   100.0%   100.0%   100.0%
3   SOUTHFIELD (3)   Southfield, MI   214,697   39.6%   38.5%   41.4%   40.5%
4   FOREST PARK   Charlotte, NC   62,212   100.0%   100.0%   100.0%   100.0%
5   CENTENNIAL   Colorado Springs, CO   110,405   85.4%   85.4%   85.4%   85.4%
6   MEADOW POINT   Chantilly, VA   138,537   100.0%   100.0%   100.0%   100.0%
7   TIMBERLAKE   Chesterfield, MO   232,766   93.2%   96.2%   97.0%   97.0%
8   FEDERAL WAY   Federal Way, WA   117,010   47.0%   47.0%   47.0%   47.0%
9   NORTHWEST POINT   Elk Grove Village, IL   176,848   100.0%   100.0%   100.0%   100.0%
10   TIMBERLAKE EAST   Chesterfield, MO   116,197   97.0%   89.6%   97.0%   97.0%
11   PARK TEN   Houston, TX   155,715   96.1%   91.1%   96.1%   96.1%
12   MONTAGUE   San Jose, CA   145,951   100.0%   100.0%   100.0%   100.0%
13   ADDISON   Addison, TX   293,787   95.8%   95.8%   98.4%   96.7%
14   COLLINS CROSSING   Richardson, TX   298,766   87.8%   87.8%   90.0%   88.5%
15   GREENWOOD PLAZA   Englewood, CO   197,527   48.9%   48.9%   48.9%   48.9%
16   RIVER CROSSING   Indianapolis, IN   205,059   96.1%   94.6%   97.0%   96.7%
17   LIBERTY PLAZA   Addison, TX   218,934   84.1%   78.9%   85.2%   85.2%
18   INNSBROOK   Glen Allen, VA   298,456   98.3%   98.3%   98.3%   98.3%
19   380 INTERLOCKEN   Broomfield, CO   240,184   89.5%   89.5%   89.5%   89.5%
20   BLUE LAGOON   Miami, FLA   212,619   100.0%   100.0%   100.0%   100.0%
21   ELDRIDGE GREEN   Houston, TX   248,399   100.0%   100.0%   100.0%   100.0%
22   WILLOW BEND   Plano, TX   117,050   77.8%   77.8%   77.8%   77.8%
23   ONE OVERTON PARK   Atlanta, GA   387,267   92.6%   92.3%   94.6%   94.6%
24   390 INTERLOCKEN   Broomfield, CO   241,516   97.2%   96.9%   97.2%   97.2%
25   EAST BALTIMORE   Baltimore, MD   325,445   58.2%   57.5%   57.2%   57.5%
26   PARK TEN PHASE II   Houston, TX   156,746   100.0%   100.0%   100.0%   100.0%
27   LAKESIDE CROSSING I   Maryland Heights, MO   127,778   100.0%   100.0%   100.0%   100.0%
28   LOUDOUN TECH   Dulles, VA   135,888   100.0%   100.0%   100.0%   100.0%
29   4807 STONECROFT   Chantilly, VA   111,469   100.0%   100.0%   100.0%   100.0%
30   EDEN BLUFF   Eden Prairie, MN   153,028   100.0%   100.0%   100.0%   100.0%
31   121 SOUTH EIGHTH ST   Minneapolis, MN   472,712   95.6%   94.4%   91.1%   92.6%
32   EMPEROR BOULEVARD   Durham, NC   259,531   100.0%   100.0%   100.0%   100.0%
33   LEGACY TENNYSON CTR   Plano, TX   202,600   100.0%   100.0%   100.0%   100.0%
34   ONE LEGACY   Plano, TX   214,110   100.0%   100.0%   100.0%   100.0%
35   909 DAVIS   Evanston, IL   195,245   94.8%   94.8%   97.9%   96.9%
36   1410 EAST RENNER   Richardson, TX   122,300   100.0%   100.0%   100.0%   100.0%
37   ONE RAVINIA DRIVE   Atlanta, GA   386,603   n/a   n/a   84.5%   84.0%
                             
    TOTAL WEIGHTED AVERAGE       7,439,195   90.0%   89.5%   89.9%   89.8%
 
(1) % Leased as of month's end includes all leases that expire on the last day of the quarter.
(2) Average quarterly percentage is the average of the end of the month leased percentage for each of the 3 months during the quarter.
(3) Asset held for sale at September 30, 2012
 
 
 
Franklin Street Properties Corp. Earnings Release  
Supplementary Schedule H  
Largest 20 Tenants - FSP Owned Portfolio  
(Unaudited & Estimated)  
   
The following table includes the largest 20 tenants in FSP's owned portfolio based on leased square feet:  
   
    As of September 30, 2012 (a)              
                % of  
    Tenant   Sq Ft   SIC Code   Portfolio  
1   TCF National Bank   268,252   60   3.7 %
2   Quintiles Transnational Corp   259,531   87   3.6 %
3   CITGO Petroleum Corporation   248,399   29   3.4 %
4   Burger King Corporation   212,619   58   2.9 %
5   Denbury Onshore LLC   202,600   13   2.8 %
6   RGA Reinsurance Company   197,354   63   2.7 %
7   SunTrust Bank   182,888   60   2.5 %
8   Citicorp Credit Services, Inc   176,848   61   2.5 %
9   C.H. Robinson Worldwide, Inc   153,028   47   2.1 %
10   T-Mobile South, LLC dba T-Mobile   151,792   48   2.1 %
11   Houghton Mifflin Harcourt Publishing Company   150,050   27   2.1 %
12   Murphy Exploration & Production Company   144,677   13   2.0 %
13   Giesecke & Devrient America, Inc.   135,888   73   1.9 %
14   Monsanto Company   127,778   28   1.8 %
15   AT&T Services, Inc.   122,300   48   1.7 %
16   Vail Holdings, Inc.   122,232   79   1.7 %
17   Northrop Grumman Systems Corporation   111,469   73   1.5 %
18   Argo Data Resource Corporation   109,990   73   1.5 %
19   Alliance Data Systems   96,749   73   1.3 %
20   Federal National Mortgage Association   92,358   61   1.3 %
    Total   3,266,802       45.1 %
                   
    (a) Based on rentable square footage              
    excluding asset held for sale.              
                   

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule I
Definition of Funds From Operations ("FFO"),

The Company evaluates performance based on Funds From Operations, which we refer to as FFO, as management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and acquisition costs of newly acquired properties that are not capitalized, plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, 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. 

FFO should not be considered as an alternative to net income (determined in accordance with GAAP), nor as an indicator of the Company's financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company's liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company's needs. 

Other real estate companies and the National Association of Real Estate Investment Trusts, or NAREIT, may define this term in a different manner. We have included the NAREIT FFO definition in our table and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do. 

We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements. 

Contact Information

  • Contact:
    John Demeritt
    (877) 686-9496