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,
2018.
George J. Carter, Chairman and Chief Executive Officer,
commented as follows:
“For the first quarter of 2018, FSP’s Funds from Operations or
FFO totaled approximately $26.4 million or $0.25 per share.
Adjusted Funds From Operations or AFFO for the same period totaled
approximately $16.9 million or $0.16 per share. Dividends declared
for the first quarter of 2018 were $9.7 million or $0.09 per share.
Potential leasing activity is strong within our property portfolio,
continuing the trends we saw in the third and fourth quarters of
2017. We anticipate higher leased percentages in the portfolio as
2018 continues. The energy influenced markets of Houston and Denver
continue to improve with the upward trend of oil prices and are
showing more potential leasing activity than the last several
years. A number of our larger tenants are approaching us with early
lease renewal requests and we would expect to see many of these
transactions completed this year and next.”
Highlights
- FFO was $26.4 million or $0.25 per
basic and diluted share for the first quarter ended March 31, 2018.
We had Net Income of $1.4 million or $0.01 per basic and diluted
share for the first quarter ended March 31, 2018.
- Adjusted Funds From Operations (AFFO)
was $0.16 per basic and diluted share for the first quarter ended
March 31, 2018.
Leasing Update
- Our directly owned real estate
portfolio of 34 properties totaling approximately 9.8 million
square feet was approximately 88.5% leased as of March 31, 2018,
which was a 1.2% decrease compared to December 31, 2017.
- During the quarter ended March 31,
2018, we leased approximately 109,000 square feet, of which
approximately 25,000 square feet was with new tenants.
- Second quarter 2018 leasing activity to
date includes approximately 500,000 square feet of potential leases
out for execution, more than 100,000 square feet of which would be
new leases and expansions.
- Weighted average annualized GAAP rent
per square foot was approximately $29.05 as of March 31, 2018,
compared to $28.87 as of December 31, 2017, $27.92 as of December
31, 2016, $26.93 as of December 31, 2015, and $26.04 as of December
31, 2014. We believe that the increase is attributable to the
enhanced quality of our real estate portfolio and value creation
derived from our recent acquisitions, dispositions and
leasing.
- Our project at 801 Marquette Avenue
provides a contemporary, forward-looking experience in a vintage
warehouse style office with modern systems and market leading
amenities in the heart of the Minneapolis CBD. The redevelopment of
801 Marquette, which is approximately 127,268 square feet, was
completed in 2017. Subsequent to quarter end, we signed a lease
with a tenant for approximately 18,000 square feet on the first
floor with anticipated occupancy in December 2018 and we also
signed a lease with an operator for a full service café located in
our Atrium with anticipated operations commencing this summer. Our
project continues to see great activity and our team has led
approximately 50 prospect tours representing in excess of 1.7
million square feet across all industries. We expect 801 Marquette
to be substantially leased by year end and stabilized in the third
quarter of 2019.
Acquisition and Disposition
Update
- We do not anticipate making new
acquisitions at this time but continue to monitor all prospective
investment opportunities in our core markets.
- We do not expect any significant
disposition activity within our directly-owned portfolio as we
begin the second quarter of 2018.
- We anticipate some potential
disposition activity within our managed portfolio during 2018.
Dividend Update
On April 6, 2018, the Company announced that its Board of
Directors declared a regular quarterly cash dividend for the three
months ended March 31, 2018 of $0.09 per share of common stock that
will be paid on May 10, 2018 to stockholders of record on April 20,
2018.
Non-GAAP Financial
Information
A reconciliation of Net income (loss) 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.
Real Estate Update
Supplementary schedules provide property information for the
Company’s owned real estate portfolio and for two non-consolidated
REITs in which the Company holds preferred stock interests as of
March 31, 2018. 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.
FFO Guidance
We are reaffirming our full year FFO guidance for 2018, which is
estimated to be in the range of approximately $0.96 to $1.00 per
basic and diluted share, and for the second quarter of 2018, are
initiating guidance, which is estimated to be in the range of
approximately $0.22 to $0.24 per basic and diluted share. We are
reaffirming full year 2018 net income guidance in the range of
$0.02 to $0.06 per basic and diluted share, and for the second
quarter of 2018, are initiating net income (loss) guidance in the
range of $(0.02) to $0.00 per basic and diluted share. This
guidance (a) excludes the impact of future acquisitions,
developments, dispositions, debt financings or repayments or other
capital market transactions; (b) reflects estimates from our
ongoing portfolio of properties, other real estate investments and
general and administrative expenses; and (c) reflects our current
expectations of economic conditions. We will update 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.
A reconciliation of the guidance for net income (loss) per share
to the guidance for FFO per share is provided as follows:
Q2 2018
Range Full Year 2018 Range Low High
Low High Net income (loss) per share $
(0.02 ) $ 0.00 $ 0.02
$ 0.06 GAAP loss from non-consolidated REITs 0.00
0.00 0.00 0.00 FFO from non-consolidated REITs 0.01 0.01 0.04 0.04
Depreciation & Amortization 0.23 0.23
0.90 0.90
Funds From Operations per share
$ 0.22 $ 0.24 $
0.96 $ 1.00
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 2, 2018 at 10:00 a.m.
(ET) to discuss the first quarter results. To access the call,
please dial 1-800-464-8240. Internationally, the call may be
accessed by dialing 1-412-902-6521. To access the call from Canada,
please dial 1-866-605-3852. 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 investing in institutional-quality
office properties in the U.S. FSP’s strategy is to invest in select
urban infill and central business district (CBD) properties, with
primary emphasis on our five core markets of Atlanta, Dallas,
Denver, Houston, and Minneapolis. 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 our
ability to lease space in the future, expectations for FFO and net
income (loss) in future periods, expectations for growth, leasing
and acquisition and disposition activities in future periods,
prospects for long-term sustainable growth and the timing of
leasing at our 801 Marquette Avenue property, 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, 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, delays in construction schedules,
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, 2017, 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 Income
(Loss) I
Franklin Street Properties Corp. Financial
Results
Supplementary Schedule A
Condensed Consolidated Income (Loss)
Statements
(Unaudited)
For the Three Months
Ended March 31, (in thousands,
except per share amounts)
2018
2017 Revenue: Rental $ 65,628 $ 67,376 Related party
revenue: Management fees and interest income from loans 1,256 1,370
Other 9 10
Total revenue 66,893
68,756 Expenses: Real estate operating
expenses 17,151 17,308 Real estate taxes and insurance 11,177
12,403 Depreciation and amortization 24,035 25,332 General and
administrative 3,432 3,443 Interest 9,486
7,579 Total expenses
65,281 66,065
Income before equity in losses of non-consolidated REITs,
other, gain on sale of properties and
properties held for sale,
less applicable income tax and taxes
1,612 2,691 Equity in losses of non-consolidated REITs (105 ) (397
) Other — 22 Gain on sale of properties and properties held for
sale,
less applicable income tax
— 2,289
Income before taxes on income 1,507 4,605 Taxes on income
82 125 Net
income $ 1,425 $ 4,480
Weighted average number of shares outstanding, basic and
diluted 107,231
107,231 Net income per share, basic and diluted
$ 0.01 $ 0.04
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)
2018 2017 Assets: Real estate assets:
Land $ 191,578 $ 191,578 Buildings and improvements 1,821,035
1,811,631 Fixtures and equipment 5,909
5,614 2,018,522 2,008,823 Less
accumulated depreciation 390,581
376,131 Real estate assets, net 1,627,941
1,632,692 Acquired real estate leases, less accumulated
amortization of $114,044 and $109,771, respectively 78,729 86,520
Investment in non-consolidated REITs 69,703 70,164 Cash, cash
equivalents and restricted cash 14,355 9,819 Tenant rent
receivables, less allowance for doubtful accounts of $325 and $250,
respectively 3,411 3,123 Straight-line rent receivable, less
allowance for doubtful accounts of $50 and $50, respectively 53,430
53,194 Prepaid expenses and other assets 8,355 8,387 Related party
mortgage loan receivables 71,455 71,720 Other assets: derivative
asset 18,740 13,925 Office computers and furniture, net of
accumulated depreciation of $1,448 and $1,420, respectively 261 289
Deferred leasing commissions, net of accumulated amortization of
$23,255 and $22,276, respectively 39,815
40,679 Total assets
$ 1,986,195 $ 1,990,512
Liabilities and Stockholders’ Equity: Liabilities: Bank note
payable $ 98,000 $ 78,000 Term loans payable, less unamortized
financing costs of $4,741 and $5,099, respectively 765,259 764,901
Series A&B Senior Notes, less unamortized financing costs of
$1,273 and $1,308, respectively 198,727 198,692 Accounts payable
and accrued expenses 53,327 61,039 Accrued compensation 1,112 3,641
Tenant security deposits 5,588 5,383 Other liabilities: derivative
liabilities — 1,759 Acquired unfavorable real estate leases, less
accumulated amortization of $8,063 and $7,638, respectively
5,264 5,805 Total
liabilities 1,127,277
1,119,220 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, 107,231,155 and
107,231,155 shares issued and outstanding, respectively 11 11
Additional paid-in capital 1,356,457 1,356,457 Accumulated other
comprehensive loss 18,740 12,166 Accumulated distributions in
excess of accumulated earnings (516,290 )
(497,342 ) Total stockholders’ equity
858,918 871,292
Total liabilities and stockholders’ equity $
1,986,195 $ 1,990,512
Franklin Street Properties Corp. Financial
Results
Supplementary Schedule C
Condensed Consolidated Statements of Cash
Flows
(Unaudited)
For the Three Months
Ended March 31, (in thousands)
2018
2017 Cash flows from operating
activities: Net income $ 1,425 $ 4,480 Adjustments to reconcile
net income or loss to net cash provided by operating activities:
Depreciation and amortization expense 24,748 25,937 Amortization of
above and below market leases (85 ) (168 ) Equity in losses of
non-consolidated REITs 105 397 Hedge ineffectiveness — (22 ) (Gain)
on sale of properties and properties held for sale, less applicable
income tax — (2,289 ) Increase in allowance for doubtful accounts
75 — Changes in operating assets and liabilities: Tenant rent
receivables (363 ) (672 ) Straight-line rents 40 (1,082 ) Lease
acquisition costs (276 ) (292 ) Prepaid expenses and other assets
(274 ) 1 Accounts payable, accrued expenses and other items (6,911
) (10,219 ) Accrued compensation (2,529 ) (2,525 ) Tenant security
deposits 205 86 Payment of deferred leasing commissions
(1,082 ) (1,606 ) Net cash
provided by operating activities 15,078
12,026
Cash flows from investing
activities: Property improvements, fixtures and equipment
(10,774 ) (11,615 ) Distributions in excess of earnings from
non-consolidated REITs 355 346 Repayment of related party mortgage
loan receivable 265 265 Proceeds received on sales of real estate
assets — 6,160
Net cash used in investing activities
(10,154 ) (4,844 )
Cash flows from
financing activities: Distributions to stockholders (20,374 )
(20,374 ) Borrowings under bank note payable 30,000 30,000
Repayments of bank note payable (10,000 ) (15,000 ) Deferred
financing costs (14 ) —
Net cash used in financing activities
(388 ) (5,374 )
Net increase in cash, cash
equivalents and restricted cash 4,536 1,808
Cash, cash
equivalents and restricted cash, beginning of year
9,819 9,366
Cash, cash equivalents and restricted cash, end of period
$ 14,355 $ 11,174
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 2018 984,501 10.1% 2019 1,225,298 12.6% 2020
843,681 8.6% 2021 687,821 7.0% 2022 1,195,787 12.2% Thereafter (2)
4,823,569 49.5% 9,760,657 100.0%
(1) Percentages are determined based upon total square
footage.(2) Includes 1,118,651 square feet of current
vacancies.
(dollars & square feet in 000's) As of March 31 ,2018 #
of % of Square % of State Properties Investment Portfolio Feet
Portfolio Colorado 6 $ 537,825 33.5% 2,609 26.7% Texas 9
349,548 21.8% 2,417 24.8% Georgia 5 322,499 20.1% 1,967 20.2%
Minnesota (a) 2 94,642 5.9% 620 6.3% Virginia 4 85,764 5.3% 685
7.0% North Carolina 2 51,741 3.2% 322 3.3% Missouri 2 48,712 3.0%
351 3.6% Illinois 2 46,948 2.9% 372 3.8% Florida 1 38,577 2.4% 213
2.2% Indiana 1 30,673 1.9% 205
2.1% Total 34 $ 1,606,929
100.0% 9,761 100.0%
(a) Excludes approximately $21,012, which is our investment in a
property that was redeveloped and is classified as
non-operating.
Franklin Street Properties Corp. Earnings
Release
Supplementary Schedule E
Portfolio and Other Supplementary
Information
(Unaudited & Approximated)
Recurring Capital Expenditures
Owned Portfolio
(in thousands) For the Three Months Ended
31-Mar-18 Tenant improvements $ 6,777 Deferred leasing costs 1,021
Non-investment capex 1,858 $ 9,656
For the
Three Months Ended Year Ended 31-Mar-17 30-Jun-17 30-Sep-17
31-Dec-17 31-Dec-17 Tenant improvements $ 6,474 $ 5,363 $ 4,474 $
4,166 $ 20,477 Deferred leasing costs 1,579 1,963 4,482 5,869
13,893 Non-investment capex 1,670 1,685 1,860
3,836 9,051 $ 9,723 $ 9,011 $ 10,816 $ 13,871 $
43,421
Square foot & leased
percentages March 31, December 31, 2018 2017 Owned portfolio of
commercial real estate Number of properties (a) 34 34 Square feet
9,760,657 9,761,984 Leased percentage 88.5% 89.7%
Investments in non-consolidated REITs Number of properties 2 2
Square feet 1,396,493 1,396,071 Leased percentage 74.4% 75.3%
Single Asset REITs (SARs) managed Number of properties 4 4
Square feet 810,278 810,278 Leased percentage 96.1% 93.0%
Total owned, investments & managed properties Number of
properties 40 40 Square feet 11,967,428 11,968,333 Leased
percentage 87.4% 88.2%
(a) Excludes one property that was redeveloped and is classified
as non-operating.
The following table shows property information for our
investments in non-consolidated REITs:
Square % Leased % Interest Single Asset REIT name City State
Feet 31-Mar-18 Held FSP 303 East Wacker Drive Corp. Chicago IL
861,422 74.7% 43.7% FSP Grand Boulevard Corp. Kansas City MO
535,071 74.1% 27.0% 1,396,493 74.4%
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-17 Leased (2) 31-Mar-18 Leased
(2) 1 FOREST PARK Charlotte, NC 62,212 100.0% 100.0%
100.0% 100.0% 2 MEADOW POINT Chantilly, VA 138,537 100.0% 100.0%
100.0% 100.0% 3 TIMBERLAKE Chesterfield, MO 234,496 100.0% 100.0%
100.0% 100.0% 4 TIMBERLAKE EAST Chesterfield, MO 117,036 100.0%
100.0% 100.0% 100.0% 5 NORTHWEST POINT Elk Grove Village, IL
177,095 100.0% 100.0% 100.0% 100.0% 6 PARK TEN Houston, TX 157,460
68.6% 69.8% 75.8% 73.4% 7 PARK TEN PHASE II Houston, TX 156,746
1.4% 1.4% 1.4% 1.4% 8 GREENWOOD PLAZA Englewood, CO 196,236 100.0%
100.0% 100.0% 100.0% 9 ADDISON Addison, TX 288,794 100.0% 100.0%
100.0% 100.0% 10 COLLINS CROSSING Richardson, TX 300,887 100.0%
100.0% 100.0% 100.0% 11 INNSBROOK Glen Allen, VA 298,456 100.0%
100.0% 100.0% 100.0% 12 RIVER CROSSING Indianapolis, IN 205,059
96.2% 97.0% 96.1% 96.1% 13 LIBERTY PLAZA Addison, TX 218,934 91.2%
91.2% 84.5% 88.6% 14 380 INTERLOCKEN Broomfield, CO 240,358 86.2%
86.2% 86.2% 86.2% 15 390 INTERLOCKEN Broomfield, CO 241,512 98.9%
98.9% 97.8% 97.8% 16 BLUE LAGOON Miami, FL 212,619 100.0% 100.0%
100.0% 100.0% 17 ELDRIDGE GREEN Houston, TX 248,399 100.0% 100.0%
100.0% 100.0% 18 ONE OVERTON PARK Atlanta, GA 387,267 61.1% 61.9%
61.1% 61.1% 19 LOUDOUN TECH Dulles, VA 136,658 95.7% 95.7% 95.7%
95.7% 20 4807 STONECROFT Chantilly, VA 111,469 100.0% 100.0% 100.0%
100.0% 21 121 SOUTH EIGHTH ST Minneapolis, MN 293,422 81.8% 81.9%
77.7% 78.9% 22 EMPEROR BOULEVARD Durham, NC 259,531 100.0% 100.0%
100.0% 100.0% 23 LEGACY TENNYSON CTR Plano, TX 202,600 86.4% 79.1%
86.4% 86.4% 24 ONE LEGACY Plano, TX 214,110 100.0% 100.0% 100.0%
100.0% 25 909 DAVIS Evanston, IL 195,098 91.5% 82.6% 92.3% 92.0% 26
ONE RAVINIA DRIVE Atlanta, GA 386,602 92.4% 90.8% 92.4% 92.4% 27
TWO RAVINIA Atlanta, GA 411,047 75.3% 75.9% 76.0% 75.8% 28
WESTCHASE I & II Houston, TX 629,025 87.7% 87.7% 86.0% 86.5% 29
1999 BROADWAY Denver, CO 676,379 80.2% 81.5% 80.6% 80.3% 30 999
PEACHTREE Atlanta, GA 621,946 95.1% 94.5% 88.6% 90.7% 31 1001 17th
STREET Denver, CO 655,413 96.8% 93.1% 96.8% 96.8% 32 PLAZA SEVEN
Minneapolis, MN 326,483 96.8% 96.8% 85.9% 93.2% 33 PERSHING PLAZA
Atlanta, GA 160,145 97.4% 97.4% 97.4% 97.4% 34 600 17th STREET
Denver, CO 598,626 87.1% 88.4%
84.6% 85.3%
TOTAL WEIGHTED AVERAGE
9,760,657 89.7%
89.3% 88.5% 89.0%
(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 3 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, 2018
% of Tenant Sq Ft
Portfolio 1 Quintiles IMS Healthcare Incorporated 259,531 2.7% 2 US
Government 250,520 2.6% 3 CITGO Petroleum Corporation 248,399 2.5%
4 Newfield Exploration Company 234,495 2.4% 5 Centene Management
Company, LLC 216,879 2.2% 6 Burger King Corporation 212,619 2.2% 7
Eversheds Sutherland (US) LLP 179,868 1.8% 8 EOG Resources, Inc.
160,937 1.6% 9 T-Mobile South, LLC dba T-Mobile 151,792 1.6% 10
Citicorp Credit Services, Inc. 146,260 1.5% 11 Petrobras America,
Inc. 144,813 1.5% 12 Jones Day 140,342 1.4% 13 Argo Data Resource
Corporation 140,246 1.4% 14 Vail Corp d/b/a Vail Resorts 132,229
1.4% 15 SunTrust Bank 127,500 1.3% 16 Federal National Mortgage
Association 123,144 1.3% 17 Kaiser Foundation Health Plan 120,979
1.2% 18 Giesecke & Devrient America 112,110 1.1% 19 Northrup
Grumman Systems Corp. 111,469 1.1% 20 ADS Alliance Data Systems,
Inc. 107,698 1.1% Total 3,321,830 34.0%
Franklin Street Properties Corp. Earnings
ReleaseSupplementary Schedule HReconciliation and Definitions of
Funds From Operations (“FFO”) andAdjusted Funds From Operations
(“AFFO”)
A reconciliation of Net income (loss) 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 (Loss) to
FFO and AFFO: Three Months Ended March 31, (In thousands, except
per share amounts) 2018 2017 Net income $ 1,425 $ 4,480 (Gain) on
sale of properties and properties held for sale, less applicable
income tax — (2,289 ) GAAP loss from non-consolidated REITs 105 397
FFO from non-consolidated REITs 884 791 Depreciation &
amortization 23,950 25,163 NAREIT FFO
26,364 28,542 Hedge ineffectiveness — (22 ) Acquisition costs of
new properties — 8 Funds From
Operations (FFO) $ 26,364 $ 28,528 Funds From
Operations (FFO) $ 26,364 $ 28,528 Reverse FFO from
non-consolidated REITs (884 ) (791 ) Distributions from
non-consolidated REITs 355 346 Amortization of deferred financing
costs 711 606 Straight-line rent 40 (1,082 ) Tenant improvements
(6,777 ) (6,474 ) Leasing commissions (1,021 ) (1,579 )
Non-investment capex (1,858 ) (1,670 ) Adjusted Funds
From Operations (AFFO) $ 16,930 $ 17,884 Per
Share Data EPS $ 0.01 $ 0.04 FFO $ 0.25 $ 0.27 AFFO $ 0.16 $ 0.17
Weighted average shares (basic and diluted) 107,231
107,231
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 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 on 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 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 our proportionate share of FFO and
including distributions received, from non-consolidated REITs, (3)
excluding the effect of straight-line rent, (4) plus deferred
financing costs and (5) 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
ReleaseSupplementary Schedule IReconciliation and Definition of
Sequential Same Store results to property Net Operating Income
(NOI) and Net Income (Loss)
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 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 properties that are non-operating, being developed or
redeveloped, 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-18 31-Dec-17 (Dec)
Change Region East 1,007 $ 3,991 $ 3,917 $ 74 1.9 % MidWest
1,549 6,257 4,940 1,317 26.7 % South 4,597 15,431 16,168 (737 )
(4.6 ) % West 2,608 10,958 11,352
(394 ) (3.5 ) % Same Store 9,761 36,637 36,377
260 0.7 % Acquisitions — — —
— — % NOI* from the continuing
portfolio 9,761 36,637 36,377 260 0.7 % Dispositions,
Non-Operating, Development or Redevelopment - 79
(77 ) 156 0.4 % NOI*
9,761 $ 36,716 $ 36,300 $ 416
1.1 % Sequential Same Store $ 36,637 $ 36,377 $ 260
0.7 % Less Nonrecurring Items in NOI* (a) 761
914 (153 ) 0.5 %
Comparative Sequential Same Store $ 35,876 $ 35,463
$ 413 1.2 %
Three Months Ended Three Months Ended
Reconciliation to Net income
31-Mar-18 31-Dec-17 Net income (loss) $ 1,425 $
(4,932 ) Add (deduct): Loss on sale of properties and property held
for sale, less applicable income taxes — 21 Hedge ineffectiveness —
2,096 Management fee income (746 ) (756 ) Depreciation and
amortization 24,035 25,659 Amortization of above/below market
leases (85 ) (90 ) General and administrative 3,432 3,665 Interest
expense 9,486 8,657 Interest income (1,120 ) (1,133 ) Equity in
losses of non-consolidated REITs 105 2,885 Non-property specific
items, net 184 228 NOI* $
36,716 $ 36,300
(a) 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180501006814/en/
Franklin Street Properties Corp.Georgia Touma, 877-686-9496
Franklin Street Properties (AMEX:FSP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Franklin Street Properties (AMEX:FSP)
Historical Stock Chart
From Apr 2023 to Apr 2024