Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Franklin Street Properties Corp. Announces Fourth Quarter and Full Year 2023 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 fourth quarter and year ended December 31, 2023.

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

"As the first quarter of 2024 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. We will seek to increase shareholder value by continuing to (1) pursue the sale of select properties where we believe that short to intermediate term valuation potential has been reached and (2) strive to increase occupancy through the leasing of vacant space. We intend to use proceeds from property dispositions primarily for debt reduction.

During the fourth quarter of 2023, we sold two office properties for aggregate gross proceeds of approximately $116 million. On October 26, 2023, we sold an office property located in Plano, Texas, known as One Legacy Circle, for gross proceeds of approximately $48 million. On December 6, 2023, we sold an office property located in Miami, Florida, known as Blue Lagoon, for gross proceeds of approximately $68 million. Subsequent to December 31, 2023, on January 26, 2024, we sold an office property located in Richardson, Texas, known as Collins Crossing, for gross proceeds of approximately $35 million. Collectively, these three dispositions resulted in aggregate gross proceeds of approximately $151 million. Since December 2020, our dispositions have resulted in aggregate gross proceeds of approximately $1 billion and reflect an average sales price per square foot of approximately $217.

As a result of our recent property dispositions and our ongoing operations, as of December 31, 2023, we had cash, or cash equivalents on our balance sheet of approximately $127.9 million. On February 21, 2024, we repaid approximately $102 million of our debt and entered into amendments of our outstanding debt facilities pursuant to which all of our debt now matures on April 1, 2026.

We look forward to the remainder of 2024 and beyond with anticipation and optimism."

Financial Highlights

(in 000's)



Debt

Principal

Amount

Outstanding

Prior to

Amendment

 

 

Principal

Amount

Repaid

Principal

Amount

Outstanding

After

Amendment

 

 

Maturity Date

Prior to

Amendment

 

 

Maturity Date

After

Amendment

 

 

 

 

 

 

Bank Term Loan

$115,000

$28,963

$86,037

October 1, 2024

April 1, 2026

Revolving Line of Credit*

90,000

22,667

67,333

October 1, 2024

April 1, 2026

Series A Notes

116,000

29,215

86,785

December 20, 2024

April 1, 2026

Series B Notes

84,000

21,155

62,845

December 20, 2027

April 1, 2026

Total

$405,000

$102,000

$303,000

 

 

*Revolving line of credit converted to a term loan

Leasing Highlights

Investment Highlights

Dividends

Consolidation of Sponsored REIT

As of January 1, 2023, we consolidated the operations of our Monument Circle sponsored REIT into our financial statements. On October 29, 2021, we agreed to amend and restate our existing loan to Monument Circle that is secured by a mortgage on real estate owned by Monument Circle, which we refer to as the Sponsored REIT Loan. The amended and restated Sponsored REIT Loan extended the maturity date from December 6, 2022 to June 30, 2023 (and was further extended to September 30, 2023 on June 26, 2023), increased the aggregate principal amount of the loan from $21 million to $24 million, and included certain other modifications. On September 26, 2023, the maturity date was further extended to September 30, 2024. In consideration of our agreement to amend and restate the Sponsored REIT Loan, we obtained from the stockholders of Monument Circle the right to vote their shares in favor of any sale of the property owned by Monument Circle any time on or after January 1, 2023. As a result of our obtaining this right to vote shares, GAAP variable interest entity (VIE) rules required us to consolidate Monument Circle as of January 1, 2023. A gain on consolidation of approximately $0.4 million was recognized in the three months ended March 31, 2023.

Additional information about the consolidation of Monument Circle can be found in Note 1, "Organization, Properties, Basis of Presentation, Financial Instruments, and Recent Accounting Standards ? Variable Interest Entities (VIEs)" and Note 3, "Related Party Transactions and Investments in Non-Consolidated Entities - Management fees and interest income from loans", in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Non-GAAP Financial Information

A reconciliation of Net income to FFO, Adjusted Funds From Operations (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.

2024 Net Income, FFO and Disposition Guidance

At this time, due primarily to economic conditions and uncertainty surrounding the timing and amount of proceeds received from property dispositions, we are continuing suspension of Net Income, FFO and property disposition guidance.

Real Estate Update

Supplementary schedules provide property information for the Company's owned and consolidated properties as of December 31, 2023. 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 February 27, 2024, at 11:00 a.m. (ET) to discuss the fourth quarter and full year 2023 results. To access the call, please dial 888-440-4368 and use conference ID 5398803. Internationally, the call may be accessed by dialing 646-960-0856 and using conference ID 5398803. 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 expectations for future potential leasing activity, expectations for future potential property dispositions, the payment of 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 long-term effects of the COVID-19 pandemic, wars, terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, inflation rates, 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, 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, 2023, which 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

 

For the

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

(in thousands, except per share amounts)

 

2023

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

Revenue:

 

 

 

 

Rental

$

34,519

$

40,745

 

$

145,446

 

$

163,739

 

Related party revenue:

 

 

 

 

Management fees and interest income from loans

 

?

 

462

 

 

?

 

 

1,855

 

Other

 

252

 

4

 

 

261

 

 

21

 

Total revenue

 

34,771

 

41,211

 

 

145,707

 

 

165,615

 

 

 

 

 

 

Expenses:

 

 

 

 

Real estate operating expenses

 

13,105

 

14,273

 

 

50,732

 

 

52,820

 

Real estate taxes and insurance

 

5,943

 

7,907

 

 

27,200

 

 

34,620

 

Depreciation and amortization

 

11,958

 

14,804

 

 

54,738

 

 

63,808

 

General and administrative

 

3,172

 

2,888

 

 

14,021

 

 

13,885

 

Interest

 

6,219

 

5,668

 

 

24,318

 

 

22,808

 

Total expenses

 

40,397

 

45,540

 

 

171,009

 

 

187,941

 

 

 

 

 

 

Loss on extinguishment of debt

 

?

 

?

 

 

(106

)

 

(78

)

Gain on consolidation of Sponsored REIT

 

?

 

?

 

 

394

 

 

?

 

Impairment and loan loss reserve

 

?

 

(2,380

)

 

?

 

 

(4,237

)

Gain (loss) on sale of properties and impairment of assets held for sale, net

 

8,701

 

3,862

 

 

(23,384

)

 

27,939

 

Interest income

 

567

 

?

 

 

567

 

 

?

 

Income (loss) before taxes

 

3,642

 

(2,847

)

 

(47,831

)

 

1,298

 

Tax expense

 

67

 

37

 

 

279

 

 

204

 

Net income (loss)

$

3,575

$

(2,884

)

$

(48,110

)

$

1,094

 

 

 

 

 

 

Weighted average number of shares outstanding, basic and diluted

 

103,430

 

103,236

 

 

103,357

 

 

103,338

 

 

 

 

 

 

Net income (loss) per share, basic and diluted

$

0.03

$

(0.03

)

$

(0.47

)

$

0.01

 

Franklin Street Properties Corp. Financial Results

Supplementary Schedule B

Condensed Consolidated Balance Sheets

(Unaudited)

 

 

 

 

 

 

 

December 31,

 

December 31,

(in thousands, except share and par value amounts)

 

 

2023

 

 

 

2022

 

Assets:

 

 

Real estate assets:

 

 

Land

$

110,298

 

$

126,645

 

Buildings and improvements

 

1,133,971

 

 

1,388,869

 

Fixtures and equipment

 

12,904

 

 

11,151

 

 

 

1,257,173

 

 

1,526,665

 

Less accumulated depreciation

 

366,349

 

 

423,417

 

Real estate assets, net

 

890,824

 

 

1,103,248

 

Acquired real estate leases, less accumulated amortization of $20,413 and $20,243, respectively

 

6,694

 

 

10,186

 

Assets held for sale

 

73,318

 

 

?

 

Cash, cash equivalents and restricted cash

 

127,880

 

 

6,632

 

Tenant rent receivables

 

2,191

 

 

2,201

 

Straight-line rent receivable

 

40,397

 

 

52,739

 

Prepaid expenses and other assets

 

4,239

 

 

6,676

 

Related party mortgage loan receivable, less allowance for credit loss of $0 and $4,237, respectively

 

?

 

 

19,763

 

Other assets: derivative asset

 

?

 

 

4,358

 

Office computers and furniture, net of accumulated depreciation of $1,020 and $1,115, respectively

 

123

 

 

154

 

Deferred leasing commissions, net of accumulated amortization of $16,008 and $19,043, respectively

 

23,664

 

 

35,709

 

Total assets

$

1,169,330

 

$

1,241,666

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

Liabilities:

 

 

Bank note payable

$

90,000

 

$

48,000

 

Term loans payable, less unamortized financing costs of $293 and $250, respectively

 

114,707

 

 

164,750

 

Series A & Series B Senior Notes, less unamortized financing costs of $329 and $494, respectively

 

199,670

 

 

199,506

 

Accounts payable and accrued expenses

 

41,879

 

 

50,366

 

Accrued compensation

 

3,644

 

 

3,644

 

Tenant security deposits

 

6,204

 

 

5,710

 

Lease liability

 

334

 

 

759

 

Acquired unfavorable real estate leases, less accumulated amortization of $396 and $574, respectively

 

87

 

 

195

 

Total liabilities

 

456,525

 

 

472,930

 

 

 

 

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, 103,430,353 and 103,235,914 shares issued and outstanding, respectively

 

10

 

 

10

 

Additional paid-in capital

 

1,335,091

 

 

1,334,776

 

Accumulated other comprehensive income

 

355

 

 

4,358

 

Accumulated distributions in excess of accumulated earnings

 

(622,651

)

 

(570,408

)

Total stockholders' equity

 

712,805

 

 

768,736

 

Total liabilities and stockholders' equity

$

1,169,330

 

$

1,241,666

 

Franklin Street Properties Corp. Financial Results

Supplementary Schedule C

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

For the

 

 

Year Ended

 

 

December 31,

(in thousands)

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

Net income (loss)

$

(48,110

)

$

1,094

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

Depreciation and amortization expense

 

57,240

 

 

65,697

 

Amortization of above and below market leases

 

(44

)

 

(118

)

Amortization of other comprehensive income into interest expense

 

(3,851

)

 

?

 

Shares issued as compensation

 

315

 

 

394

 

Loss on extinguishment of debt

 

106

 

 

78

 

Gain on consolidation of Sponsored REIT

 

(394

)

 

?

 

Impairment and loan loss reserve

 

?

 

 

4,237

 

(Gain) loss on sale of properties and impairment of assets held for sale, net

 

23,384

 

 

(27,939

)

Changes in operating assets and liabilities:

 

 

Tenant rent receivables

 

10

 

 

(247

)

Straight-line rents

 

625

 

 

(5,895

)

Lease acquisition costs

 

(2,007

)

 

(4,494

)

Prepaid expenses and other assets

 

382

 

 

(1,805

)

Accounts payable and accrued expenses

 

(2,709

)

 

(5,983

)

Accrued compensation

 

?

 

 

(1,060

)

Tenant security deposits

 

494

 

 

(509

)

Payment of deferred leasing commissions

 

(7,575

)

 

(8,216

)

Net cash provided by operating activities

 

17,866

 

 

15,234

 

Cash flows from investing activities:

 

 

Property improvements, fixtures and equipment

 

(31,637

)

 

(54,910

)

Consolidation of Sponsored REIT

 

3,048

 

 

?

 

Proceeds received from sales of properties

 

142,225

 

 

128,949

 

Net cash provided by investing activities

 

113,636

 

 

74,039

 

Cash flows from financing activities:

 

 

Distributions to stockholders

 

(4,133

)

 

(53,988

)

Proceeds received from termination of interest rate swap

 

4,206

 

 

?

 

Stock repurchases

 

?

 

 

(4,843

)

Borrowings under bank note payable

 

77,000

 

 

90,000

 

Repayments of bank note payable

 

(35,000

)

 

(42,000

)

Repayments of term loans payable

 

(50,000

)

 

(110,000

)

Deferred financing costs

 

(2,327

)

 

(2,561

)

Net cash used in financing activities

 

(10,254

)

 

(123,392

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

121,248

 

 

(34,119

)

Cash, cash equivalents and restricted cash, beginning of year

 

6,632

 

 

40,751

 

Cash, cash equivalents and restricted cash, end of period

$

127,880

 

$

6,632

 

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

2024

518,878

9.0

%

2025

437,374

7.6

%

2026

567,886

9.8

%

2027

330,757

5.7

%

2028

233,589

4.0

%

Thereafter (2)

3,691,058

63.9

%

 

5,779,542

100.0

%

____________________

(1) Percentages are determined based upon total square footage.

(2)

Includes 1,649,948 square feet of vacancies at our owned and consolidated properties as of December 31, 2023.

(dollars & square feet in 000's)

As of December 31, 2023

 

 

 

% of

Square

% of

State

Properties

Investment

Portfolio

Feet

Portfolio

 

 

 

 

 

 

Colorado

4

$

451,320

50.7

%

2,140

37.0

%

Texas (a)

8

 

265,449

29.8

%

2,209

38.2

%

Georgia (a)

1

 

-

0.0

%

160

2.8

%

Minnesota

3

 

117,095

13.1

%

758

13.1

%

Virginia

1

 

37,606

4.2

%

298

5.2

%

Indiana

1

 

19,354

2.2

%

214

3.7

%

Total

18

$

890,824

100.0

%

5,779

100.0

%

____________________

(a) Includes one property in each state that was classified as an asset held for sale as of December 31, 2023.

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule E

Portfolio and Other Supplementary Information

(Unaudited & Approximated)

 

Recurring Capital Expenditures

 

 

Year

(in thousands)

For the Three Months Ended

Ended

 

31-Mar-23

30-Jun-23

30-Sep-23

31-Dec-23

31-Dec-23

Tenant improvements

$

3,047

$

4,381

$

3,653

$

5,295

$

16,376

Deferred leasing costs

 

908

 

3,230

 

1,114

 

1,649

 

6,901

Non-investment capex

 

2,967

 

2,042

 

1,775

 

5,230

 

12,014

 

$

6,922

$

9,653

$

6,542

$

12,174

$

35,291

 

 

 

 

 

 

(in thousands)

For the Three Months Ended

Year Ended

 

31-Mar-22

30-Jun-22

30-Sep-22

31-Dec-22

31-Dec-22

Tenant improvements

$

1,877

$

5,453

$

6,813

$

7,508

$

21,651

Deferred leasing costs

 

3,032

 

1,327

 

2,053

 

1,152

 

7,564

Non-investment capex

 

5,065

 

6,736

 

9,289

 

9,074

 

30,164

 

$

9,974

$

13,516

$

18,155

$

17,734

$

59,379

 

 

 

Square foot & leased percentages

December 31,

December 31,

 

2023

2022

Owned Properties:

 

 

Number of properties (a)

17

 

21

 

Square feet

5,565,782

 

6,239,530

 

Leased percentage

74.0

%

75.6

%

 

 

 

Consolidated Property - Single Asset REIT (SAR):

 

 

Number of properties

1

 

?

 

Square feet

213,760

 

?

 

Leased percentage

4.1

%

 

 

 

 

Total Owned and Consolidated Properties:

 

 

Number of properties

18

 

21

 

Square feet

5,779,542

 

6,239,530

 

Leased percentage

71.5

%

75.6

%

 

(a) Includes two properties that were classified as an asset held for sale as of December 31, 2023.

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule F

Percentage of Leased Space

(Unaudited & Estimated)

 

 

 

 

 

 

 

 

 

 

 

 

 

Third

 

Fourth

 

 

 

 

% Leased (1)

Quarter

% Leased (1)

Quarter

 

 

 

 

as of

Average %

as of

Average %

 

Property Name

Location

Square Feet

30-Sep-23

Leased (2)

31-Dec-23

Leased (2)

 

 

 

 

 

 

 

 

1

PARK TEN

Houston, TX

157,609

83.8

%

83.8

%

83.8

%

83.8

%

2

PARK TEN PHASE II

Houston, TX

156,746

95.0

%

95.0

%

95.0

%

95.0

%

3

GREENWOOD PLAZA

Englewood, CO

196,236

66.3

%

66.3

%

66.3

%

66.3

%

4

ADDISON

Addison, TX

289,333

83.0

%

83.0

%

83.0

%

83.0

%

5

COLLINS CROSSING (3)

Richardson, TX

300,887

85.5

%

91.8

%

85.5

%

85.5

%

6

INNSBROOK

Glen Allen, VA

298,183

81.3

%

81.3

%

90.5

%

87.4

%

7

LIBERTY PLAZA

Addison, TX

217,841

78.3

%

76.1

%

80.2

%

80.8

%

 

BLUE LAGOON (4)

Miami, FL

 

98.5

%

98.5

%

(4

)

(4

)

8

ELDRIDGE GREEN

Houston, TX

248,399

100.0

%

100.0

%

100.0

%

100.0

%

9

121 SOUTH EIGHTH ST

Minneapolis, MN

298,121

79.6

%

79.6

%

80.5

%

79.9

%

10

801 MARQUETTE AVE

Minneapolis, MN

129,691

91.8

%

91.8

%

91.8

%

91.8

%

11

LEGACY TENNYSON CTR

Plano, TX

209,461

67.3

%

65.7

%

56.6

%

57.2

%

 

ONE LEGACY (5)

Plano, TX

 

71.3

%

72.1

%

(5

)

(5

)

12

WESTCHASE I & II

Houston, TX

629,025

60.7

%

60.1

%

62.7

%

62.4

%

13

1999 BROADWAY

Denver, CO

682,639

57.5

%

59.8

%

51.7

%

52.9

%

14

1001 17TH STREET

Denver, CO

649,235

71.1

%

71.4

%

71.1

%

71.1

%

15

PLAZA SEVEN

Minneapolis, MN

330,096

59.3

%

61.0

%

62.3

%

61.3

%

16

PERSHING PLAZA (6)

Atlanta, GA

160,145

79.8

%

79.8

%

79.8

%

79.8

%

17

600 17TH STREET

Denver, CO

612,135

80.8

%

80.8

%

81.7

%

81.4

%

 

OWNED PORTFOLIO

 

5,565,782

74.8

%

75.4

%

74.0

%

74.5

%

 

 

 

 

 

 

 

 

18

MONUMENT CIRCLE (7)

Indianapolis, IN

213,760

4.1

%

4.1

%

4.1

%

4.1

%

 

 

 

 

 

 

 

 

 

OWNED & CONSOLIDATED PORTFOLIO

 

5,779,542

72.4

%

72.9

%

71.5

%

72.0

%

____________________

(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.

(3)

 

Property was classified as an asset held for sale as of December 31, 2023 and was sold on January 26, 2024.

(4)

 

Property was sold on December 6, 2023.

(5)

 

Property was sold on October 26, 2023.

(6)

 

Property was classified as an asset held for sale as of December 31, 2023.

(7)

 

Consolidated property as of January 1, 2023, which was previously a managed property.

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule G

Largest 20 Tenants ? FSP Owned and Consolidated Portfolio

(Unaudited & Estimated)

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

 

As of December 31, 2023

 

 

 

 

 

 

 

% of

 

Tenant

Sq Ft

Portfolio

1

CITGO Petroleum Corporation

248,399

4.3

%

2

EOG Resources, Inc.

169,167

2.9

%

3

US Government

168,573

2.9

%

4

Commonwealth of Virginia

127,500

2.2

%

5

Kaiser Foundation Health Plan, Inc.

120,979

2.1

%

6

Swift, Currie, McGhee & Hiers, LLP

101,296

1.8

%

7

Deluxe Corporation

98,922

1.7

%

8

Ping Identity Corp.

89,856

1.6

%

9

Argo Data Resource Corporation

85,650

1.5

%

10

Permian Resources Operating, LLC

67,856

1.2

%

11

PwC US Group

66,304

1.1

%

12

Hall and Evans LLC

65,878

1.1

%

13

Cyxtera Management, Inc.

61,826

1.1

%

14

Precision Drilling (US) Corporation

59,569

1.0

%

15

EMC Corporation

57,100

1.0

%

16

ID Software, LLC

57,100

1.0

%

17

Olin Corporation

54,080

0.9

%

18

ChemTreat Inc.

49,548

0.9

%

19

Coresite, LLC

49,518

0.9

%

20

GE Vernova International LLC

47,559

0.8

%

 

Total

1,846,680

32.0

%

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 Loss to FFO and AFFO:

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

(In thousands, except per share amounts)

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income (loss)

$

3,575

 

$

(2,884

)

$

(48,110

)

$

1,094

 

Gain on consolidation of Sponsored REIT

 

?

 

 

?

 

 

(394

)

 

?

 

Impairment and loan loss reserve

 

?

 

 

2,380

 

 

?

 

 

4,237

 

(Gain) loss on sale of properties and impairment of assets held for sale, net

 

(8,701

)

 

(3,862

)

 

23,384

 

 

(27,939

)

Depreciation & amortization

 

11,952

 

 

14,773

 

 

54,694

 

 

63,689

 

NAREIT FFO

 

6,826

 

 

10,407

 

 

29,574

 

 

41,081

 

Lease Acquisition costs

 

112

 

 

56

 

 

390

 

 

262

 

Funds From Operations (FFO)

$

6,938

 

$

10,463

 

$

29,964

 

$

41,343

 

 

 

 

 

 

Funds From Operations (FFO)

$

6,938

 

$

10,463

 

$

29,964

 

$

41,343

 

Loss on extinguishment of debt

 

?

 

 

?

 

 

106

 

 

78

 

Amortization of deferred financing costs

 

576

 

 

421

 

 

2,502

 

 

1,889

 

Shares issued as compensation

 

?

 

 

?

 

 

315

 

 

394

 

Straight-line rent

 

198

 

 

(1,831

)

 

626

 

 

(5,895

)

Tenant improvements

 

(5,295

)

 

(7,508

)

 

(16,376

)

 

(21,651

)

Leasing commissions

 

(1,649

)

 

(1,152

)

 

(6,901

)

 

(7,564

)

Non-investment capex

 

(5,230

)

 

(9,074

)

 

(12,014

)

 

(30,164

)

Adjusted Funds From Operations (AFFO)

$

(4,462

)

$

(8,681

)

$

(1,778

)

$

(21,570

)

 

 

 

 

 

Per Share Data

 

 

 

 

EPS

$

0.03

 

$

(0.03

)

$

(0.47

)

$

0.01

 

FFO

$

0.07

 

$

0.10

 

$

0.29

 

$

0.40

 

AFFO

$

(0.04

)

$

(0.08

)

$

(0.02

)

$

(0.21

)

 

 

 

 

 

Weighted average shares (basic and diluted)

 

103,430

 

 

103,236

 

 

103,357

 

 

103,338

 

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 all periods presented. We 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-Dec-23

 

30-Sep-23

 

(Dec)

 

Change

Region

 

 

 

 

 

 

 

 

 

 

East

 

298

 

$

285

 

 

$

239

 

 

$

46

 

 

19.2

%

MidWest

 

758

 

 

1,656

 

 

 

1,396

 

 

 

260

 

 

18.6

%

South

 

2,369

 

 

6,393

 

 

 

6,499

 

 

 

(106

)

 

(1.6

)%

West

 

2,140

 

 

5,994

 

 

 

6,505

 

 

 

(511

)

 

(7.9

)%

Property NOI* from Owned Properties

 

5,565

 

 

14,328

 

 

 

14,639

 

 

 

(311

)

 

(2.1

)%

Disposition and Acquisition Properties (a)

 

214

 

 

751

 

 

 

1,965

 

 

 

(1,214

)

 

(7.1

)%

NOI*

 

5,779

 

$

15,079

 

 

$

16,604

 

 

$

(1,525

)

 

(9.2

)%

 

 

 

 

 

 

 

 

 

 

 

Sequential Same Store

 

 

 

$

14,328

 

 

$

14,639

 

 

$

(311

)

 

(2.1

)%

 

 

 

 

 

 

 

 

 

 

 

Less Nonrecurring

 

 

 

 

 

 

 

 

 

 

Items in NOI* (b)

 

 

 

 

217

 

 

 

485

 

 

 

(268

)

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

Comparative

 

 

 

 

 

 

 

 

 

 

Sequential Same Store

 

 

 

$

14,111

 

 

$

14,154

 

 

$

(43

)

 

(0.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

 

Net income (loss)

 

 

 

31-Dec-23

 

30-Sep-23

 

 

 

 

Net income (loss)

 

 

 

$

3,575

 

 

$

(45,671

)

 

 

 

 

Add (deduct):

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

 

 

 

?

 

 

 

39

 

 

 

 

 

Gain on sale of properties, net

 

 

 

 

(8,701

)

 

 

39,671

 

 

 

 

 

Management fee income

 

 

 

 

(446

)

 

 

(460

)

 

 

 

 

Depreciation and amortization

 

 

 

 

11,957

 

 

 

13,409

 

 

 

 

 

Amortization of above/below market leases

 

 

 

 

(6

)

 

 

(9

)

 

 

 

 

General and administrative

 

 

 

 

3,171

 

 

 

3,265

 

 

 

 

 

Interest expense

 

 

 

 

6,219

 

 

 

6,209

 

 

 

 

 

Interest income

 

 

 

 

(567

)

 

 

?

 

 

 

 

 

Non-property specific items, net

 

 

 

 

(123

)

 

 

151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI*

 

 

 

$

15,079

 

 

$

16,604

 

 

 

 

 

(a)

 

We define Disposition and Acquisition Properties as properties that were sold or acquired or consolidated and 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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