Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Dividend, Conference Call, Webcast, Stock Sale/Buyback

Franklin Street Properties Corp. Announces First Quarter 2022 Results


Franklin Street Properties Corp. (the "Company", "FSP", "we" or "our") (NYSE American: FSP), a real estate investment trust (REIT), announced its results for the first quarter ended March 31, 2022.

George J. Carter, Chairman and Chief Executive Officer, commented as follows:

"As the second quarter of 2022 begins, we continue to believe that the current price of our common stock does not accurately reflect the value of our underlying real estate assets. Our objectives for 2022 are twofold: We will seek to increase shareholder value (1) through the potential sale of select properties where we believe that short to intermediate term valuation potential has been reached and (2) by striving to increase occupancy in our continuing portfolio of real estate. We intend to use proceeds from any potential future property dispositions for debt reduction, repurchases of our common stock, any dividends required to meet REIT requirements, and other general corporate purposes.

"At this time, we are maintaining our previously announced property disposition guidance for full-year 2022 to be in the range of approximately $250 million to $350 million in aggregate gross proceeds. However, our disposition guidance is subject to change for a variety of reasons, including economic conditions, office market conditions and geopolitical events. We will update our disposition guidance quarterly in our earnings releases.

"We look forward to the balance of 2022 and beyond with anticipation and optimism."

Financial Highlights

Leasing Highlights

Investment Highlights

Stock Repurchases

Dividends

Non-GAAP Financial Information

A reconciliation of Net income to FFO, AFFO and Sequential Same Store NOI and our definitions of FFO, AFFO and Sequential Same Store NOI can be found on Supplementary Schedules H and I.

2022 Net Income, FFO and Disposition Guidance

At this time, due primarily to uncertainty surrounding the timing and amount of proceeds received from property dispositions, we are continuing suspension of Net Income and FFO guidance. However, we are maintaining our previously announced disposition guidance for full-year 2022, as we execute on our strategy to dispose of certain properties that we believe have met their short to intermediate term valuation objectives and whose value may not be accurately reflected in our share price. Anticipated dispositions in 2022 are estimated to result in aggregate gross proceeds in the range of approximately $250 million to $350 million. We intend to use the proceeds of any future dispositions for debt reduction, repurchases of our stock, any special distributions required to meet REIT requirements, and other general corporate purposes. This guidance reflects our current expectations of economic and market conditions and is subject to change. We will update our disposition guidance quarterly in our earnings releases. There can be no assurance that the Company's actual results will not differ materially from the estimates set forth above.

Real Estate Update

Supplementary schedules provide property information for the Company's owned and managed real estate portfolio as of March 31, 2022. The Company will also be filing an updated 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.fspreit.com.

Today's news release, along with other news about Franklin Street Properties Corp., is available on the Internet at www.fspreit.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.

Earnings Call

A conference call is scheduled for May 4, 2022 at 11:00 a.m. (ET) to discuss the first quarter 2022 results. To access the call, please dial 1-844-200-6205 and use access code 683292. Internationally, the call may be accessed by dialing 1-929-526-1599 and using access code 683292. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website (www.fspreit.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 infill and central business district (CBD) office properties in the U.S. Sunbelt and Mountain West, as well as select opportunistic markets. FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income. 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.fspreit.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, such as those relating to our ability to lease space in the future, expectations for dispositions, potential stock repurchases, the payment of special dividends and the repayment of debt in future periods, value creation/enhancement in future periods and expectations for growth and leasing activities in future periods that are based on current judgments and current knowledge of management and 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, adverse changes in general economic or local market conditions, including as a result of the COVID-19 pandemic and other potential infectious disease outbreaks and terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, increasing interest rates, 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, adverse changes in energy prices, which if sustained, could negatively impact occupancy and rental rates in the markets in which we own properties, including energy-influenced markets such as Dallas, Denver and Houston, any inability to dispose of real estate properties at pricing levels comparable to recent historical portfolio dispositions, and any delays in the timing of any such anticipated dispositions, 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, delays in construction schedules, unanticipated increases in construction costs, increases in the level of general and administrative costs as a percentage of revenues as revenues decrease as a result of property dispositions, 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, 2021, 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, acquisitions, dispositions, 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

Percentage of Leased Space

F

Largest 20 Tenants ? FSP Owned Portfolio

G

Reconciliation and Definitions of Funds From Operations (FFO) and Adjusted

 

Funds From Operations (AFFO)

H

Reconciliation and Definition of Sequential Same Store results to Property Net

 

Operating Income (NOI) and Net Loss

I

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

 

 

For the

 

 

 

Three Months Ended

 

 

 

March 31,

 

(in thousands, except per share amounts)

 

2022

 

2021

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Rental

 

$

41,797

 

 

$

58,623

 

 

Related party revenue:

 

 

 

 

 

 

 

Management fees and interest income from loans

 

 

460

 

 

 

410

 

 

Other

 

 

7

 

 

 

6

 

 

Total revenue

 

 

42,264

 

 

 

59,039

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Real estate operating expenses

 

 

12,834

 

 

 

15,939

 

 

Real estate taxes and insurance

 

 

8,719

 

 

 

12,366

 

 

Depreciation and amortization

 

 

15,670

 

 

 

24,381

 

 

General and administrative

 

 

3,784

 

 

 

4,146

 

 

Interest

 

 

5,366

 

 

 

8,600

 

 

Total expenses

 

 

46,373

 

 

 

65,432

 

 

 

 

 

 

 

 

 

 

Loss before taxes

 

 

(4,109

)

 

 

(6,393

)

 

Tax expense

 

 

49

 

 

 

67

 

 

Net loss

 

$

(4,158

)

 

$

(6,460

)

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding, basic and diluted

 

 

103,691

 

 

 

107,328

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.04

)

 

$

(0.06

)

 

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

 

 

March 31,

 

December 31,

 

(in thousands, except share and par value amounts)

 

2022

 

2021

 

Assets:

 

 

 

 

 

 

 

Real estate assets:

 

 

 

 

 

 

 

Land

 

$

146,844

 

 

$

146,844

 

 

Buildings and improvements

 

 

1,465,312

 

 

 

1,457,209

 

 

Fixtures and equipment

 

 

11,819

 

 

 

11,404

 

 

 

 

 

1,623,975

 

 

 

1,615,457

 

 

Less accumulated depreciation

 

 

436,627

 

 

 

424,487

 

 

Real estate assets, net

 

 

1,187,348

 

 

 

1,190,970

 

 

Acquired real estate leases, less accumulated amortization of $23,346 and $40,423, respectively

 

 

13,453

 

 

 

14,934

 

 

Cash, cash equivalents and restricted cash

 

 

10,983

 

 

 

40,751

 

 

Tenant rent receivables

 

 

2,041

 

 

 

1,954

 

 

Straight-line rent receivable

 

 

51,309

 

 

 

49,024

 

 

Prepaid expenses and other assets

 

 

7,403

 

 

 

4,031

 

 

Related party mortgage loan receivables

 

 

24,000

 

 

 

24,000

 

 

Office computers and furniture, net of accumulated depreciation of $1,065 and $1,198, respectively

 

 

204

 

 

 

198

 

 

Deferred leasing commissions, net of accumulated amortization of $21,207 and $21,099, respectively

 

 

40,379

 

 

 

38,311

 

 

Total assets

 

$

1,337,120

 

 

$

1,364,173

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Bank note payable

 

$

40,000

 

 

$

?

 

 

Term loans payable, less unamortized financing costs of $598 and $714, respectively

 

 

274,402

 

 

 

274,286

 

 

Series A & Series B Senior Notes, less unamortized financing costs of $617 and $658, respectively

 

 

199,383

 

 

 

199,342

 

 

Accounts payable and accrued expenses

 

 

44,700

 

 

 

89,493

 

 

Accrued compensation

 

 

1,206

 

 

 

4,704

 

 

Tenant security deposits

 

 

5,837

 

 

 

6,219

 

 

Lease liability

 

 

1,061

 

 

 

1,159

 

 

Other liabilities: derivative liabilities

 

 

195

 

 

 

5,239

 

 

Acquired unfavorable real estate leases, less accumulated amortization of $1,469 and $2,285, respectively

 

 

450

 

 

 

528

 

 

Total liabilities

 

 

567,234

 

 

 

580,970

 

 

 

 

 

 

 

 

 

 

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, 103,151,781 and 103,998,520 shares issued and outstanding, respectively

 

 

10

 

 

 

10

 

 

Additional paid-in capital

 

 

1,334,383

 

 

 

1,339,226

 

 

Accumulated other comprehensive loss

 

 

(195

)

 

 

(5,239

)

 

Accumulated distributions in excess of accumulated earnings

 

 

(564,312

)

 

 

(550,794

)

 

Total stockholders' equity

 

 

769,886

 

 

 

783,203

 

 

Total liabilities and stockholders' equity

 

$

1,337,120

 

 

$

1,364,173

 

 

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

 

 

For the

 

 

 

Year Ended

 

 

 

March 31,

 

(in thousands)

 

2022

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(4,158

)

 

$

(6,460

)

 

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

16,195

 

 

 

25,088

 

 

Amortization of above and below market leases

 

 

(9

)

 

 

(32

)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Tenant rent receivables

 

 

(87

)

 

 

3,319

 

 

Straight-line rents

 

 

(1,216

)

 

 

(1,904

)

 

Lease acquisition costs

 

 

(1,069

)

 

 

(50

)

 

Prepaid expenses and other assets

 

 

(1,274

)

 

 

(532

)

 

Accounts payable and accrued expenses

 

 

(10,568

)

 

 

(9,564

)

 

Accrued compensation

 

 

(3,498

)

 

 

(2,528

)

 

Tenant security deposits

 

 

(382

)

 

 

(636

)

 

Payment of deferred leasing commissions

 

 

(3,706

)

 

 

(5,056

)

 

Net cash provided by (used in) operating activities

 

 

(9,772

)

 

 

1,645

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Property improvements, fixtures and equipment

 

 

(9,952

)

 

 

(16,022

)

 

Net cash used in investing activities

 

 

(9,952

)

 

 

(16,022

)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Distributions to stockholders

 

 

(42,640

)

 

 

(9,660

)

 

Stock repurchases

 

 

(4,843

)

 

 

?

 

 

Borrowings under bank note payable

 

 

45,000

 

 

 

36,500

 

 

Repayments of bank note payable

 

 

(5,000

)

 

 

(12,500

)

 

Deferred financing costs

 

 

(2,561

)

 

 

?

 

 

Net cash provided by (used in) financing activities

 

 

(10,044

)

 

 

14,340

 

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(29,768

)

 

 

(37

)

 

Cash, cash equivalents and restricted cash, beginning of year

 

 

40,751

 

 

 

4,150

 

 

Cash, cash equivalents and restricted cash, end of period

$

10,983

$

4,113

 

 

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

 

2022

 

295,071

 

4.3

%

 

2023

 

353,081

 

 

5.1

%

 

2024

 

738,952

 

 

10.7

%

 

2025

 

488,593

 

 

7.1

%

 

2026

 

532,267

 

 

7.7

%

 

Thereafter (2)

 

4,507,645

 

 

65.1

%

 

 

 

6,915,609

 

 

100.0

%

 

____________________

(1)

Percentages are determined based upon total square footage.   

(2)

Includes 1,567,588 square feet of vacancies at our operating properties as of March 31, 2022.

(dollars & square feet in 000's)

 

As of March 31, 2022

 

 

 

 

 

 

 

 

% of

 

Square

 

% of

 

State

 

Properties

 

Investment

 

Portfolio

 

Feet

 

Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Colorado

 

6

 

$

534,996

 

45.1%

 

2,628

 

38.0%

 

Texas

 

9

 

 

332,906

 

28.0%

 

2,423

 

35.0%

 

Georgia

 

1

 

 

39,388

 

3.3%

 

160

 

2.3%

 

Minnesota

 

3

 

 

124,668

 

10.5%

 

758

 

11.0%

 

Virginia

 

1

 

 

33,298

 

2.8%

 

298

 

4.3%

 

Florida

 

1

 

 

68,501

 

5.8%

 

213

 

3.1%

 

Illinois

 

2

 

 

44,808

 

3.8%

 

372

 

5.4%

 

North Carolina

 

1

 

 

8,783

 

0.7%

 

64

 

0.9%

 

Total

 

24

 

$

1,187,348

 

100.0%

 

6,916

 

100.0%

 

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

Recurring Capital Expenditures

 

 

 

 

(in thousands)

 

For the Three Months Ended

 

 

 

31-Mar-22

 

Tenant improvements

 

$

1,877

 

Deferred leasing costs

 

 

3,032

 

 

Non-investment capex

 

 

5,065

 

 

 

 

$

9,974

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

Year Ended

 

 

 

31-Mar-21

 

30-Jun-21

 

30-Sep-21

 

31-Dec-21

 

31-Dec-21

 

Tenant improvements

 

$

4,491

 

$

4,277

 

$

3,952

 

$

1,881

 

$

14,601

 

Deferred leasing costs

 

 

2,597

 

 

1,922

 

 

2,371

 

 

1,319

 

 

8,209

 

Non-investment capex

 

 

5,336

 

 

3,793

 

 

4,528

 

 

4,672

 

 

18,329

 

 

 

$

12,424

 

$

9,992

 

$

10,851

 

$

7,872

 

$

41,139

 

 

 

 

 

 

 

Square foot & leased percentages

 

March 31,

 

December 31,

 

 

 

2022

 

2021

 

Owned or Operating Properties:

 

 

 

 

 

Number of properties

 

24

 

24

 

Square feet

 

6,915,609

 

6,911,225

 

Leased percentage

 

77.3%

 

78.4%

 

 

 

 

 

 

 

Managed Properties - Single Asset REITs (SARs):

 

 

 

 

 

Number of properties

 

2

 

2

 

Square feet

 

348,545

 

348,545

 

 

 

 

 

 

 

Total Owned or Operating and Managed Properties:

 

 

 

 

 

Number of properties

 

26

 

26

 

Square feet

 

7,264,154

 

7,259,770

 

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule F
Percentage of Leased Space
(Unaudited & Estimated)

 

 

 

 

 

 

 

 

 

 

Fourth

 

 

 

First

 

 

 

 

 

 

 

 

 

% Leased (1)

 

Quarter

 

% Leased (1)

 

Quarter

 

 

 

 

 

 

 

 

 

as of

 

Average %

 

as of

 

Average %

 

 

 

Property Name

 

Location

 

Square Feet

 

31-Dec-21

 

Leased (2)

 

31-Mar-22

 

Leased (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

FOREST PARK

 

Charlotte, NC

 

64,198

 

78.4%

 

78.4%

 

78.4%

 

78.4%

 

2

 

NORTHWEST POINT

 

Elk Grove Village, IL

 

177,095

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

3

 

PARK TEN

 

Houston, TX

 

157,609

 

72.0%

 

72.0%

 

72.0%

 

72.0%

 

4

 

PARK TEN PHASE II

 

Houston, TX

 

156,746

 

95.0%

 

95.0%

 

95.0%

 

95.0%

 

5

 

GREENWOOD PLAZA

 

Englewood, CO

 

196,236

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

6

 

ADDISON

 

Addison, TX

 

289,333

 

75.8%

 

75.8%

 

72.3%

 

73.7%

 

7

 

COLLINS CROSSING

 

Richardson, TX

 

300,887

 

84.4%

 

84.4%

 

96.1%

 

88.3%

 

8

 

INNSBROOK

 

Glen Allen, VA

 

298,183

 

57.2%

 

57.2%

 

47.8%

 

50.9%

 

9

 

LIBERTY PLAZA

 

Addison, TX

 

217,364

 

83.4%

 

78.9%

 

81.8%

 

79.2%

 

10

 

380 INTERLOCKEN

 

Broomfield, CO

 

240,359

 

60.5%

 

60.5%

 

60.5%

 

60.5%

 

11

 

390 INTERLOCKEN

 

Broomfield, CO

 

241,512

 

99.4%

 

99.4%

 

99.4%

 

99.4%

 

12

 

BLUE LAGOON

 

Miami, FL

 

213,182

 

73.6%

 

73.6%

 

98.5%

 

98.5%

 

13

 

ELDRIDGE GREEN

 

Houston, TX

 

248,399

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

14

 

121 SOUTH EIGHTH ST

 

Minneapolis, MN

 

298,121

 

90.2%

 

90.2%

 

89.9%

 

89.9%

 

15

 

801 MARQUETTE AVE

 

Minneapolis, MN

 

129,821

 

91.8%

 

91.8%

 

91.8%

 

91.8%

 

16

 

LEGACY TENNYSON CTR

 

Plano, TX

 

208,966

 

41.1%

 

41.1%

 

40.7%

 

40.8%

 

17

 

ONE LEGACY

 

Plano, TX

 

214,110

 

57.9%

 

57.9%

 

63.7%

 

59.9%

 

18

 

909 DAVIS

 

Evanston, IL

 

195,098

 

93.3%

 

93.3%

 

93.3%

 

93.3%

 

19

 

WESTCHASE I & II

 

Houston, TX

 

629,025

 

57.6%

 

57.6%

 

56.7%

 

57.2%

 

20

 

1999 BROADWAY

 

Denver, CO

 

680,255

 

67.0%

 

66.9%

 

66.2%

 

66.8%

 

21

 

1001 17TH STREET

 

Denver, CO

 

657,706

 

95.2%

 

95.2%

 

79.8%

 

89.9%

 

22

 

PLAZA SEVEN

 

Minneapolis, MN

 

330,096

 

83.6%

 

84.2%

 

83.6%

 

83.6%

 

23

 

PERSHING PLAZA

 

Atlanta, GA

 

160,145

 

76.6%

 

76.6%

 

78.1%

 

77.1%

 

24

 

600 17TH STREET

 

Denver, CO

 

611,163

 

80.7%

 

82.1%

 

77.9%

 

78.9%

 

 

 

OWNED PORTFOLIO

 

 

 

6,915,609

 

78.4%

 

78.5%

 

77.3%

 

78.1%

 

________________________

(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 three months during the quarter.

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule G
Largest 20 Tenants ? FSP Owned Portfolio
(Unaudited & Estimated)

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

As of March 31, 2022

 

 

 

 

 

 

% of

 

 

 

Tenant

 

Sq Ft

 

Portfolio

 

1

 

CITGO Petroleum Corporation

 

248,399

 

3.6%

 

2

 

EOG Resources, Inc.

 

169,167

 

2.4%

 

3

 

US Government

 

168,573

 

2.4%

 

4

 

The Vail Corporation

 

164,636

 

2.4%

 

5

 

Lennar Homes, LLC

 

155,808

 

2.2%

 

6

 

Citicorp Credit Services, Inc

 

146,260

 

2.1%

 

7

 

Kaiser Foundation Health Plan

 

120,979

 

1.8%

 

8

 

Argo Data Resource Corporation

 

114,200

 

1.7%

 

9

 

Swift, Currie, McGhee & Hiers, LLP

 

101,296

 

1.5%

 

10

 

VMWare, Inc.

 

100,853

 

1.5%

 

11

 

Deluxe Corporation

 

98,922

 

1.4%

 

12

 

Ping Identity Corp.

 

89,856

 

1.3%

 

13

 

Centennial Resource Production, LLC

 

67,856

 

1.0%

 

14

 

ADS Alliance Data Systems, Inc.

 

67,274

 

1.0%

 

15

 

PricewaterhouseCoopers LLP

 

66,304

 

1.0%

 

16

 

DirecTV, Inc.

 

66,226

 

0.9%

 

17

 

Hall and Evans LLC

 

65,878

 

0.9%

 

18

 

WPX Energy, Inc.

 

65,846

 

0.9%

 

19

 

Cyxtera Management, Inc.

 

61,826

 

0.9%

 

20

 

Houghton Mifflin Co.

 

60,522

 

0.9%

 

 

 

Total

 

2,200,681

 

31.8%

 

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule H
Reconciliation and Definitions of Funds From Operations ("FFO") and
Adjusted Funds From Operations ("AFFO")

A reconciliation of Net income to FFO and AFFO is shown below and a definition of FFO and AFFO is provided on Supplementary Schedule I. Management believes FFO and AFFO are used broadly throughout the real estate investment trust (REIT) industry as measurements of performance. The Company has included the National Association of Real Estate Investment Trusts (NAREIT) FFO definition as of May 17, 2016 in the table and notes that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently. The Company's computation of FFO and AFFO may not be comparable to FFO or AFFO reported by other REITs or real estate companies that define FFO or AFFO differently.

Reconciliation of Net Income to FFO and AFFO:

 

Three Months Ended

 

 

 

March 31,

 

(In thousands, except per share amounts)

 

2022

 

2021

 

Net loss

 

$

(4,158

)

 

$

(6,460

)

 

Depreciation & amortization

 

 

15,661

 

 

 

24,349

 

 

NAREIT FFO

 

 

11,503

 

 

 

17,889

 

 

Lease Acquisition costs

 

 

79

 

 

 

116

 

 

Funds From Operations (FFO)

 

$

11,582

 

 

$

18,005

 

 

 

 

 

 

 

 

 

 

Funds From Operations (FFO)

 

$

11,582

 

 

$

18,005

 

 

Amortization of deferred financing costs

 

 

526

 

 

 

707

 

 

Straight-line rent

 

 

(1,216

)

 

 

(1,904

)

 

Tenant improvements

 

 

(1,877

)

 

 

(4,491

)

 

Leasing commissions

 

 

(3,032

)

 

 

(2,597

)

 

Non-investment capex

 

 

(5,065

)

 

 

(5,336

)

 

Adjusted Funds From Operations (AFFO)

 

$

918

 

 

$

4,384

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

EPS

 

$

(0.04

)

 

$

(0.06

)

 

FFO

 

$

0.11

 

 

$

0.17

 

 

AFFO

 

$

0.01

 

 

$

0.04

 

 

 

 

 

 

 

 

 

 

Weighted average shares (basic and diluted)

 

 

103,691

 

 

 

107,328

 

 

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 or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness, acquisition costs of newly acquired properties that are not capitalized and lease acquisition costs that are not capitalized plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on mortgage loans, properties or investments in non-consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate share of FFO from, non-consolidated REITs.

FFO should not be considered as an alternative to net income or loss (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 as of May 17, 2016 in the 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 or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.

Adjusted Funds From Operations ("AFFO")

The Company also evaluates performance based on Adjusted Funds From Operations, which we refer to as AFFO. The Company defines AFFO as (1) FFO, (2) excluding loss on extinguishment of debt that is non-cash, (3) excluding our proportionate share of FFO and including distributions received, from non-consolidated REITs, (4) excluding the effect of straight-line rent, (5) plus the amortization of deferred financing costs, (6) plus the value of shares issued as compensation and (7) less recurring capital expenditures that are generally for maintenance of properties, which we call non-investment capex or are second generation capital expenditures. Second generation costs include re-tenanting space after a tenant vacates, which include tenant improvements and leasing commissions.

We exclude development/redevelopment activities, capital expenditures planned at acquisition and costs to reposition a property. We also exclude first generation leasing costs, which are generally to fill vacant space in properties we acquire or were planned for at acquisition.

AFFO should not be considered as an alternative to net income or loss (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 may define this term in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, AFFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule I
Reconciliation and Definition of Sequential Same Store results to property Net Operating Income (NOI) and Net Income

Net Operating Income ("NOI")

The Company provides property performance based on Net Operating Income, which we refer to as NOI. Management believes that investors are interested in this information. NOI is a non-GAAP financial measure that the Company defines as net income or loss (the most directly comparable GAAP financial measure) plus general and administrative expenses, depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, interest expense, less equity in earnings of nonconsolidated REITs, interest income, management fee income, hedge ineffectiveness, gains or losses on extinguishment of debt, gains or losses on the sale of assets and excludes non-property specific income and expenses. The information presented includes footnotes and the data is shown by region with properties owned in the periods presented, which we call Sequential Same Store. The comparative Sequential Same Store results include properties held for the periods presented and exclude our redevelopment properties. We also exclude properties that have been placed in service, but that do not have operating activity for all periods presented, dispositions and significant nonrecurring income such as bankruptcy settlements and lease termination fees. NOI, as defined by the Company, may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income or loss as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions. The calculations of NOI and Sequential Same Store are shown in the following table:

 

 

Rentable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square Feet

 

Three Months Ended

 

Three Months Ended

 

Inc

 

%

 

(in thousands)

 

or RSF

 

31-Mar-22

 

31-Dec-21

 

(Dec)

 

Change

 

Region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East

 

363

 

$

497

 

 

$

584

 

 

$

(87

)

 

(14.9

)

%

MidWest

 

1,130

 

 

3,897

 

 

 

3,716

 

 

 

181

 

 

4.9

 

%

South

 

2,796

 

 

5,817

 

 

 

5,900

 

 

 

(83

)

 

(1.4

)

%

West

 

2,627

 

 

9,681

 

 

 

10,103

 

 

 

(422

)

 

(4.2

)

%

Property NOI* from Operating Properties

 

6,916

 

 

19,892

 

 

 

20,303

 

 

 

(411

)

 

(2.0

)

%

Dispositions and Redevelopment Properties (a)

 

-

 

 

(311

)

 

 

654

 

 

 

(965

)

 

(4.6

)

%

NOI*

 

6,916

 

$

19,581

 

 

$

20,957

 

 

$

(1,376

)

 

(6.6

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sequential Same Store

 

 

 

$

19,892

 

 

$

20,303

 

 

$

(411

)

 

(2.0

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Nonrecurring

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items in NOI* (b)

 

 

 

 

273

 

 

 

163

 

 

 

110

 

 

(0.6

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sequential Same Store

 

 

 

$

19,619

 

 

$

20,140

 

 

$

(521

)

 

(2.6

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

 

 

 

Reconciliation to Net income

 

 

 

31-Mar-22

 

31-Dec-21

 

 

 

 

 

 

Net income (loss)

 

 

 

$

(4,158

)

 

$

78,572

 

 

 

 

 

 

 

Add (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

 

 

 

?

 

 

 

498

 

 

 

 

 

 

 

Gain on sale of properties, net

 

 

 

 

?

 

 

 

(83,876

)

 

 

 

 

 

 

Management fee income

 

 

 

 

(291

)

 

 

(311

)

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

15,670

 

 

 

16,165

 

 

 

 

 

 

 

Amortization of above/below market leases

 

 

 

 

(9

)

 

 

4

 

 

 

 

 

 

 

General and administrative

 

 

 

 

3,784

 

 

 

4,041

 

 

 

 

 

 

 

Interest expense

 

 

 

 

5,366

 

 

 

5,691

 

 

 

 

 

 

 

Interest income

 

 

 

 

(451

)

 

 

(442

)

 

 

 

 

 

 

Non-property specific items, net

 

 

 

 

(330

)

 

 

615

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI*

 

 

 

$

19,581

 

 

$

20,957

 

 

 

 

 

 

 

(a)

We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.  We also include properties that have been placed in service, but that do not have operating activity for all periods presented. 

(b)

Nonrecurring Items in NOI include proceeds from bankruptcies, lease termination fees or other significant nonrecurring income or expenses, which may affect comparability.

*Excludes NOI from investments in and interest income from secured loans to non-consolidated REITs.


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