Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or
“our”) (NYSE American: FSP), a real estate investment trust (REIT),
announced its results for the second quarter ended June 30,
2019.
George J. Carter, Chairman and Chief Executive Officer,
commented as follows:
“Leasing activity within our property portfolio of 32
operating and 3 redevelopment properties continued at a strong pace
during the second quarter of 2019 and, when combined with our first
quarter, set a record for the amount of square footage leased in
the first half of any FSP fiscal year. In addition, while the price
of crude oil was volatile during the second quarter of 2019, we
believe that a continuation at recent pricing levels could maintain
support to the many businesses and their growth plans within our
energy-influenced markets of Houston and Denver. Prospective new
tenant activity at our 3 redevelopment properties located in Miami,
Minneapolis and Charlotte continued to be robust during the second
quarter of 2019. We expect to make meaningful progress with these
assets during the remainder of 2019. With over $600 million of
available liquidity as of June 30, 2019, we are confident that we
have the financial resources needed to maximize our leasing and
redevelopment value-add opportunities.”
Highlights
- Net income was $1.6 million or $0.02 per basic and diluted
share for the second quarter ended June 30, 2019. Funds From
Operations (FFO) was $23.8 million or $0.22 per basic and diluted
share for the second quarter ended June 30, 2019.
- Adjusted Funds From Operations (AFFO) was $0.03 per basic and
diluted share for the second quarter ended June 30, 2019.
- We are raising our full year FFO guidance for 2019, which is
now estimated to be in the range of $0.84 to $0.88 per basic and
diluted share from our previously estimated range of $0.81 to $0.87
per basic and diluted share.
- On June 27, 2019, one of our single-asset REITs, FSP Energy
Tower I Corp., sold the property owned by it to a third party.
Following that sale, we received approximately $51 million as
repayment in full of a mortgage loan.
Leasing Update
- Our directly owned real estate portfolio of 32 operating
properties (excluding 3 redevelopment properties) totaling
approximately 9.5 million square feet was approximately 88.1%
leased as of June 30, 2019.
- During the quarter ended June 30, 2019, we leased approximately
375,000 square feet, of which approximately 123,000 square feet was
with new tenants. During the six months ended June 30, 2019, we
leased approximately 835,000 square feet, of which approximately
218,000 square feet was with new tenants. The leasing total
represents a first half record high for FSP. The average first half
leasing total for the prior five years was approximately 563,000
square feet.
- The weighted average GAAP base rent achieved on leasing
activity during the first half of 2019 was $31.46 per square foot
and the portfolio weighted average rent per occupied square foot
increased from $29.01 as of December 31, 2018 to $29.68 as of June
30, 2019.
Dividend Update
On July 5, 2019, the Company announced that its Board of
Directors declared a regular quarterly cash dividend for the three
months ended June 30, 2019 of $0.09 per share of common stock that
will be paid on August 8, 2019 to stockholders of record on July
19, 2019.
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 and managed real estate portfolio as of June 30,
2019. 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 raising our full year net income or loss guidance for
2019, which is estimated to be in the range of net income of
approximately $0.00 to net income of $0.04 per basic and diluted
share, and are introducing guidance for the third quarter of 2019,
which is estimated to be in the range of net income of
approximately $0.00 to net income of approximately $0.02 per basic
and diluted share. We are raising our full year FFO guidance for
2019, which is estimated to be in the range of approximately $0.84
to $0.88 per basic and diluted share, and are introducing guidance
for the third quarter of 2019, which is estimated to be in the
range of approximately $0.21 to $0.23 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:
Q3 2019 Range
Full Year 2019 Range
Low
High
Low
High
Net income (loss) per share
$
0.00
$
0.02
$
0.00
$
0.04
Depreciation & Amortization
0.21
0.21
0.84
0.84
Funds From Operations per share
$
0.21
$
0.23
$
0.84
$
0.88
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 July 31, 2019 at 11:00 a.m.
(ET) to discuss the second quarter 2019 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 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 our
ability to lease space in the future, expectations for FFO and net
income (loss) in future periods, expectations for operating
performance, expectations for crude oil prices and their impact on
the Houston and Denver markets in future periods, value
creation/enhancement in future periods, expectations for growth and
leasing activities in future periods, expectations regarding the
timing, leasing and economic results of our redevelopment
properties 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,
including the level of 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, 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, 2018, 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
For the
Three Months Ended
Six Months Ended
June 30,
June 30,
(in thousands, except per share
amounts)
2019
2018
2019
2018
Revenue:
Rental
$
65,485
$
65,409
$
128,844
$
131,037
Related party revenue:
Management fees and interest income from
loans
1,322
1,276
2,674
2,532
Other
6
9
11
18
Total revenue
66,813
66,694
131,529
133,587
Expenses:
Real estate operating expenses
17,116
16,954
34,842
34,105
Real estate taxes and insurance
12,801
12,292
24,903
23,469
Depreciation and amortization
22,109
23,591
45,354
47,626
General and administrative
3,702
3,082
7,211
6,514
Interest
9,371
9,753
18,739
19,239
Total expenses
65,099
65,672
131,049
130,953
Income before taxes on income and equity
in loss of non-consolidated REITs
1,714
1,022
480
2,634
Tax expense on income
81
75
52
157
Equity in loss of non-consolidated
REITs
—
(282
)
—
(387
)
Net income
$
1,633
$
665
$
428
$
2,090
Weighted average number of shares
outstanding, basic and diluted
107,231
107,231
107,231
107,231
Net income per share, basic and
diluted
$
0.02
$
0.01
$
0.00
$
0.02
Franklin Street Properties Corp.
Financial Results Supplementary Schedule B Condensed Consolidated
Balance Sheets (Unaudited)
June 30,
December 31,
(in thousands, except share and par value
amounts)
2019
2018
Assets:
Real estate assets:
Land
$
191,578
$
191,578
Buildings and improvements
1,886,294
1,857,935
Fixtures and equipment
10,607
8,839
2,088,479
2,058,352
Less accumulated depreciation
460,798
432,579
Real estate assets, net
1,627,681
1,625,773
Acquired real estate leases, less
accumulated amortization of $70,108 and $101,897, respectively
49,475
59,595
Cash, cash equivalents and restricted
cash
13,100
11,177
Tenant rent receivables
6,366
3,938
Straight-line rent receivable
61,438
54,006
Prepaid expenses and other assets
8,052
10,400
Related party mortgage loan
receivables
21,530
70,660
Other assets: derivative asset
4,645
14,765
Office computers and furniture, net of
accumulated depreciation of $1,428 and $1,512, respectively
154
197
Deferred leasing commissions, net of
accumulated amortization of $26,930 and $24,318, respectively
50,901
47,591
Total assets
$
1,843,342
$
1,898,102
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable
$
—
$
25,000
Term loans payable, less unamortized
financing costs of $4,995 and $5,722, respectively
765,005
764,278
Series A & Series B Senior Notes, less
unamortized financing costs of $1,067 and $1,150, respectively
198,933
198,850
Accounts payable and accrued expenses
54,282
59,183
Accrued compensation
2,191
3,043
Tenant security deposits
9,118
6,319
Lease liability
2,059
—
Other liabilities: derivative
liabilities
8,132
—
Acquired unfavorable real estate leases,
less accumulated amortization of $5,034 and $6,605,
respectively
3,114
3,795
Total liabilities
1,042,834
1,060,468
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 income
(loss)
(3,487
)
14,765
Accumulated distributions in excess of
accumulated earnings
(552,473
)
(533,599
)
Total stockholders’ equity
800,508
837,634
Total liabilities and stockholders’
equity
$
1,843,342
$
1,898,102
Franklin Street Properties Corp.
Financial Results Supplementary Schedule C Condensed Consolidated
Statements of Cash Flows (Unaudited)
For the
Six Months Ended
June 30,
(in thousands)
2019
2018
Cash flows from operating
activities:
Net income
$
428
$
2,090
Adjustments to reconcile net income or
loss to net cash provided by operating activities:
Depreciation and amortization expense
46,791
49,050
Amortization of above and below market
leases
(193
)
(208
)
Equity in loss of non-consolidated
REITs
—
387
Decrease in allowance for doubtful
accounts and write-off of accounts receivable
(91
)
(80
)
Changes in operating assets and
liabilities:
Tenant rent receivables
(2,337
)
(836
)
Straight-line rents
(4,829
)
299
Lease acquisition costs
(2,603
)
(398
)
Prepaid expenses and other assets
2,392
325
Accounts payable and accrued expenses
(8,741
)
(8,609
)
Accrued compensation
(852
)
(1,863
)
Tenant security deposits
2,799
193
Payment of deferred leasing
commissions
(8,114
)
(6,641
)
Net cash provided by operating
activities
24,650
33,709
Cash flows from investing
activities:
Property improvements, fixtures and
equipment
(28,944
)
(24,281
)
Distributions in excess of earnings from
non-consolidated REITs
—
710
Repayment of related party mortgage loan
receivable
51,530
530
Investment in related party mortgage loan
receivable
(2,400
)
—
Proceeds received from liquidating
trust
1,470
—
Net cash provided by (used in) investing
activities
21,656
(23,041
)
Cash flows from financing
activities:
Distributions to stockholders
(19,302
)
(30,025
)
Borrowings under bank note payable
45,000
30,000
Repayments of bank note payable
(70,000
)
(10,000
)
Deferred financing costs
(81
)
(14
)
Net cash used in financing activities
(44,383
)
(10,039
)
Net increase in cash, cash equivalents
and restricted cash
1,923
629
Cash, cash equivalents and restricted
cash, beginning of year
11,177
9,819
Cash, cash equivalents and restricted
cash, end of period
$
13,100
$
10,448
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
2019
335,299
3.4%
2020
801,274
8.1%
2021
685,244
6.9%
2022
1,221,950
12.3%
2023
651,756
6.6%
Thereafter (2)
6,207,987
62.7%
9,903,510
100.0%
_______________________
(1) Percentages are determined based upon total square footage.
(2) Includes 1,132,755 square feet of current vacancies at our
operating properties and 356,633 square feet of current vacancies
at our redevelopment properties. We define redevelopment properties
as properties being developed, redeveloped or where
development/redevelopment is complete but that are not yet
stabilized.
(dollars & square feet in 000's)
As of June 30, 2019 (a)
# of
% of
Square
% of
State
Properties
Investment
Portfolio
Feet
Portfolio
Colorado
6
$
544,745
33.5%
2,620
26.5%
Texas
9
345,057
21.2%
2,415
24.4%
Georgia
5
320,753
19.7%
1,967
19.9%
Minnesota
3
119,813
7.4%
754
7.6%
Virginia
4
81,238
5.0%
685
6.9%
North Carolina
2
51,172
3.1%
322
3.2%
Missouri
2
46,323
2.8%
351
3.5%
Illinois
2
48,148
3.0%
372
3.8%
Florida
1
41,206
2.5%
213
2.1%
Indiana
1
29,226
1.8%
205
2.1%
Total
35
$
1,627,681
100.0%
9,904
100.0%
(a) Includes investment in our redevelopment properties. We
define redevelopment properties as properties being developed,
redeveloped or where complete, but that are not yet stabilized.
Franklin Street Properties Corp.
Earnings Release Supplementary Schedule E Portfolio and Other
Supplementary Information (Unaudited & Approximated)
Recurring Capital Expenditures
Six Months
(in thousands)
For the Three Months Ended
Ended
31-Mar-19
30-Jun-19
30-Jun-19
Tenant improvements
$
8,318
$
10,169
$
18,487
Deferred leasing costs
4,239
3,666
7,905
Non-investment capex
2,413
4,049
6,462
$
14,970
$
17,884
$
32,854
Six Months
For the Three Months Ended
Ended
31-Mar-18
30-Jun-18
30-Jun-18
Tenant improvements
$
6,777
$
8,212
$
14,989
Deferred leasing costs
1,021
5,314
6,335
Non-investment capex
1,858
2,558
4,416
$
9,656
$
16,084
$
25,740
Square foot & leased
percentages
June 30,
December 31,
2019
2018
Operating Properties (a):
Number of properties
32
32
Square feet
9,498,858
9,486,650
Leased percentage
88.1%
89.0%
Redevelopment Properties:
Number of properties
3
3
Square feet
404,652
404,652
Leased percentage
11.9%
27.2%
Managed Properties - Single Asset REITs
(SARs):
Number of properties
2
3
Square feet
348,545
674,342
Total Operating, Redevelopment and
Managed Properties:
Number of properties
37
38
Square feet
10,252,055
10,565,644
(a) Excludes investment in our redevelopment properties. We
define redevelopment properties as properties being developed,
redeveloped or where development/redevelopment is complete but that
are not yet stabilized.
Franklin Street Properties Corp.
Earnings Release Supplementary Schedule F Percentage of Leased
Space (Unaudited & Estimated)
First
Second
% Leased (1)
Quarter
% Leased (1)
Quarter
as of
Average %
as of
Average %
Property Name
Location
Square Feet
31-Mar-19
Leased (2)
30-Jun-19
Leased (2)
1
MEADOW POINT
Chantilly, VA
138,537
100.0%
100.0%
100.0%
100.0%
2
TIMBERLAKE
Chesterfield, MO
234,496
100.0%
100.0%
95.7%
97.1%
3
TIMBERLAKE EAST
Chesterfield, MO
117,036
100.0%
100.0%
100.0%
100.0%
4
NORTHWEST POINT
Elk Grove Village, IL
177,095
100.0%
100.0%
100.0%
100.0%
5
PARK TEN
Houston, TX
157,460
96.4%
95.1%
96.4%
96.4%
6
PARK TEN PHASE II
Houston, TX
156,746
65.5%
65.5%
66.9%
66.4%
7
GREENWOOD PLAZA
Englewood, CO
196,236
100.0%
100.0%
100.0%
100.0%
8
ADDISON
Addison, TX
289,302
89.3%
89.3%
82.4%
82.4%
9
COLLINS CROSSING
Richardson, TX
300,887
99.4%
99.4%
99.4%
99.4%
10
INNSBROOK
Glen Allen, VA
298,456
57.3%
57.3%
57.3%
57.3%
11
RIVER CROSSING
Indianapolis, IN
205,059
95.0%
94.5%
95.0%
95.0%
12
LIBERTY PLAZA
Addison, TX
216,834
74.5%
78.7%
71.5%
69.1%
13
380 INTERLOCKEN
Broomfield, CO
240,359
90.5%
91.5%
97.1%
97.1%
14
390 INTERLOCKEN
Broomfield, CO
241,512
98.2%
98.2%
98.2%
98.2%
15
ELDRIDGE GREEN
Houston, TX
248,399
100.0%
100.0%
100.0%
100.0%
16
ONE OVERTON PARK
Atlanta, GA
387,267
80.1%
79.8%
80.6%
80.3%
17
LOUDOUN TECH
Dulles, VA
136,658
95.7%
95.7%
98.9%
98.9%
18
4807 STONECROFT
Chantilly, VA
111,469
100.0%
100.0%
100.0%
100.0%
19
121 SOUTH EIGHTH ST
Minneapolis, MN
297,209
80.9%
80.9%
86.9%
82.9%
20
EMPEROR BOULEVARD
Durham, NC
259,531
100.0%
100.0%
100.0%
100.0%
21
LEGACY TENNYSON CTR
Plano, TX
202,049
91.6%
90.9%
91.6%
91.6%
22
ONE LEGACY
Plano, TX
214,110
100.0%
100.0%
100.0%
100.0%
23
909 DAVIS
Evanston, IL
195,098
91.2%
91.2%
93.3%
91.9%
24
ONE RAVINIA DRIVE
Atlanta, GA
386,602
89.7%
91.7%
85.7%
87.0%
25
TWO RAVINIA
Atlanta, GA
411,047
78.4%
77.4%
69.3%
72.8%
26
WESTCHASE I & II
Houston, TX
629,025
80.1%
82.2%
77.3%
79.2%
27
1999 BROADWAY
Denver, CO
677,378
77.1%
76.6%
78.7%
78.3%
28
999 PEACHTREE
Atlanta, GA
621,946
90.7%
87.0%
90.9%
90.8%
29
1001 17th STREET
Denver, CO
655,420
98.5%
98.2%
98.5%
98.5%
30
PLAZA SEVEN
Minneapolis, MN
326,757
87.4%
87.6%
88.6%
87.8%
31
PERSHING PLAZA
Atlanta, GA
160,145
97.4%
97.4%
97.4%
97.4%
32
600 17th STREET
Denver, CO
608,733
86.7%
85.9%
86.9%
86.7%
OPERATING TOTAL
9,498,858
88.5%
88.4%
88.1%
88.1%
33
FOREST PARK
Charlotte, NC
62,212
0.0%
0.0%
0.0%
0.0%
34
BLUE LAGOON
Miami, FL
212,619
0.0%
0.0%
0.0%
0.0%
35
801 MARQUETTE AVE
Minneapolis, MN
129,821
37.0%
37.0%
37.0%
37.0%
REDEVELOPMENT TOTAL
404,652
11.9%
11.9%
11.9%
11.9%
OWNED PORTFOLIO TOTAL
9,903,510
_______________________
(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 June 30, 2019
% of
Tenant
Sq Ft
Portfolio
1
IQVIA Holdings Inc.
259,531
2.6%
2
CITGO Petroleum Corporation
248,399
2.5%
3
Newfield Exploration Company
234,495
2.4%
4
US Government
223,641
2.3%
5
Centene Management Company, LLC
216,879
2.2%
6
Eversheds Sutherland (US) LLP
179,868
1.8%
7
EOG Resources, Inc.
169,167
1.7%
8
The Vail Corporation
164,636
1.7%
9
T-Mobile South, LLC dba T-Mobile
151,792
1.5%
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
Worldventures Holdings, LLC
129,998
1.3%
15
Kaiser Foundation Health Plan
120,979
1.2%
16
VMWare, Inc.
119,558
1.2%
17
Giesecke & Devrient America
112,110
1.1%
18
Northrop Grumman Systems Corp.
111,469
1.1%
19
Randstad General Partner (US)
109,638
1.1%
20
ADS Alliance Data Systems, Inc.
107,698
1.1%
Total
3,231,519
32.6%
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 (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 to FFO and
AFFO:
Three Months Ended
Six Months Ended
June 30,
June 30,
(In thousands, except per share
amounts)
2019
2018
2019
2018
Net income
$
1,633
$
665
$
428
$
2,090
Equity in loss from non-consolidated
REITs
—
282
—
387
FFO from non-consolidated REITs
—
978
—
1,862
Depreciation & amortization
22,028
23,468
45,161
47,418
NAREIT FFO
23,661
25,393
45,589
51,757
Lease Acquisition costs
108
—
290
—
Funds From Operations (FFO)
$
23,769
$
25,393
$
45,879
$
51,757
Funds From Operations (FFO)
$
23,769
$
25,393
$
45,879
$
51,757
Reverse FFO from non-consolidated
REITs
—
(978)
—
(1,862)
Distributions from non-consolidated
REITs
—
355
—
710
Amortization of deferred financing
costs
720
713
1,437
1,424
Straight-line rent
(3,689)
259
(4,829)
299
Tenant improvements
(10,169)
(8,212)
(18,487)
(14,989)
Leasing commissions
(3,666)
(5,314)
(7,905)
(6,335)
Non-investment capex
(4,049)
(2,558)
(6,462)
(4,416)
Adjusted Funds From Operations (AFFO)
$
2,916
$
9,658
$
9,633
$
26,588
Per Share Data
EPS
$
0.02
$
0.01
$
0.00
$
0.02
FFO
$
0.22
$
0.24
$
0.43
$
0.48
AFFO
$
0.03
$
0.09
$
0.09
$
0.25
Weighted average shares (basic and
diluted)
107,231
107,231
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, 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 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 our proportionate share of FFO and
including distributions received, from non-consolidated REITs, (3)
excluding the effect of straight-line rent, (4) plus the
amortization of 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 Release Supplementary Schedule I Reconciliation 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 redevelopment properties, which include
properties being developed, redeveloped or where redevelopment is
complete but are in lease-up and are not stabilized, 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
30-Jun-19
31-Mar-19
(Dec)
Change
Region
East
945
$
3,301
$
3,185
$
116
3.6
%
MidWest
1,553
5,174
5,163
11
0.2
%
South
4,382
15,196
14,272
924
6.5
%
West
2,619
11,240
10,559
681
6.4
%
Property NOI* from Operating
Properties
9,499
34,911
33,179
1,732
5.2
%
Dispositions and Redevelopment
Properties
405
(215)
(205)
(10)
0.0
%
NOI*
9,904
$
34,696
$
32,974
$
1,722
5.2
%
Sequential Same Store
$
34,911
$
33,179
$
1,732
5.2
%
Less Nonrecurring
Items in NOI* (a)
706
35
671
(2.0)
%
Comparative
Sequential Same Store
$
34,205
$
33,144
$
1,061
3.2
%
Three Months Ended
Three Months Ended
Reconciliation to Net income
(loss)
30-Jun-19
31-Mar-19
Net income (loss)
$
1,633
$
(1,205)
Add (deduct):
(Gain) loss on sale of properties
—
—
Hedge ineffectiveness
—
—
Management fee income
(645)
(677)
Depreciation and amortization
22,109
23,245
Amortization of above/below market
leases
(81)
(112)
General and administrative
3,703
3,509
Interest expense
9,371
9,368
Interest income
(1,259)
(1,294)
Equity in (income) loss of
non-consolidated REITs
—
—
Non-property specific items, net
(135)
140
NOI*
$
34,696
$
32,974
(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/20190730006046/en/
For Franklin Street Properties Corp. Georgia Touma,
877-686-9496
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