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, 2019.
George J. Carter, Chairman and Chief Executive Officer,
commented as follows:
“Leasing activity for full-year 2019 continued its strong pace
of the previous year and as we begin 2020, prospective new tenant
interest at our 32 operating and 3 redevelopment properties has
never been stronger. Our goal is for 2020, the third year of a
large lease roll period in our portfolio that began in 2018, to
conclude by ushering in a solid long-term change in earnings
trajectory that realizes the inherent value-add characteristics of
our properties and their locations. Over the past two years, much
of our leasing activity has been focused on renewing or backfilling
existing tenant lease rollover space. In 2020, we will seek to
achieve meaningful net new tenant absorption, with the objective of
potentially increasing occupancies and rental rates for many years
to come. The longer term value-add proposition that was such an
integral part of the strategy of recasting our property portfolio
over the last ten years is, we believe, finally at an inflection
point. While 2020 will be the final year of our very large
three-year leasing effort, it will also have its challenges as well
as opportunities. We are well equipped to handle and take advantage
of both, with over $600 million of available liquidity as of
December 31, 2019, we are confident that we have the financial
resources needed for flexibility on our balance sheet and to
maximize our leasing and redevelopment value-add
opportunities.”
Highlights
- Net Income was $3.6 million and $6.5 million, or $0.03 and
$0.06 per basic and diluted share, for the fourth quarter and year
ended December 31, 2019, respectively. FFO was $26.8 million and
$97.5 million, or $0.25 and $0.91 per basic and diluted share, for
the fourth quarter and year ended December 31, 2019,
respectively.
- Adjusted Funds From Operations (AFFO) was $0.01 and $0.19 per
basic and diluted share for the fourth quarter and year ended
December 31, 2019, respectively.
- During 2019, we reduced total debt outstanding by $25 million
to $970 million and have $600 million available on our line of
credit at December 31, 2019.
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 87.6%
leased as of December 31, 2019 compared to approximately 89.0%
leased as of December 31, 2018.
- During the quarter ended December 31, 2019, we leased
approximately 278,000 square feet, of which approximately 90,000
square feet was with new tenants. During the year ended December
31, 2019, we leased approximately 1,417,000 square feet, of which
approximately 534,000 square feet was with new tenants.
- There are currently approximately 400,000 square feet of new
prospective tenants that have toured and short-listed FSP assets in
multiple markets.
- Jones Day (approximately 140,000 square feet at Pershing Park
Plaza in Atlanta) exercised an option to extend for six months. The
Jones Day lease is now scheduled to expire on May 31, 2021.
- Somerset CPAs (approximately 70,000 square feet at River
Crossing in Indianapolis) expanded and renewed for ten years. The
Somerset lease is now scheduled to expire on October 31, 2032.
- The weighted average GAAP base rent per square foot achieved on
leasing activity during the year ended December 31, 2019 was $31.78
compared to $31.02 in 2018 and the average lease term on leases in
2019 lengthened to 8.3 years compared to 7.2 years in 2018. Overall
the portfolio weighted average rent per occupied square foot
increased from $29.01 as of December 31, 2018 to $29.88 as of
December 31, 2019.
Dividend Update
On January 10, 2020, the Company announced that its Board of
Directors declared a regular quarterly cash dividend for the three
months ended December 31, 2019 of $0.09 per share of common stock
that will be paid on February 13, 2020 to stockholders of record on
January 24, 2020.
Non-GAAP Financial
Information
A reconciliation of Net income to FFO, AFFO and Sequential Same
Store NOI and our definitions of FFO, AFFO and Sequential Same
Store NOI can be found on Supplementary Schedules H and I.
Real Estate Update
Supplementary schedules provide property information for the
Company’s owned and managed real estate portfolio as of December
31, 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.
Net Income and FFO
Guidance
We are introducing our full year net income (loss) guidance for
2020 which is estimated to be in the range of approximately $(0.03)
to $0.03 per basic and diluted share, and are introducing net loss
guidance for the first quarter of 2020, which is estimated to be in
the range of approximately $(0.03) to $(0.01) per basic and diluted
share. We are introducing our full year FFO guidance for 2020,
which is estimated to be in the range of approximately $0.81 to
$0.87 per basic and diluted share, and are introducing FFO guidance
for the first quarter of 2020 which is estimated to be in the range
of approximately $0.18 to $0.20 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 per share to the
guidance for FFO per share is provided as follows:
Q1 2020 Range
Full Year 2020 Range
Low
High
Low
High
Net income (loss) per share
$
(0.03
)
$
(0.01
)
$
(0.03
)
$
0.03
Depreciation & Amortization
0.21
0.21
0.84
0.84
Funds From Operations per share
$
0.18
$
0.20
$
0.81
$
0.87
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 12, 2020 at 10:00
a.m. (ET) to discuss the fourth 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 earnings,
FFO and net income in future periods, expectations for operating
performance, 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, 2019, 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 Statements (Unaudited)
For the Three Months
Ended December 31,
For the Year Ended
December 31,
(in thousands, except per share
amounts)
2019
2018
2019
2018
Revenue:
Rental
$
68,575
$
65,304
$
265,527
$
263,777
Related party revenue:
Management fees and interest income from
loans
417
1,268
3,517
5,061
Other
5
6
21
32
Total revenue
68,997
66,578
269,065
268,870
Expenses:
Real estate operating expenses
19,428
18,652
72,311
70,703
Real estate taxes and insurance
10,463
10,737
47,871
45,857
Depreciation and amortization
22,996
23,327
90,909
94,230
General and administrative
3,376
3,162
14,473
13,070
Interest
8,982
9,200
36,757
38,374
Total expenses
65,245
65,078
262,321
262,234
Income before taxes on income and equity
in income of non-consolidated REITs
3,752
1,500
6,744
6,636
Tax expense on income
104
129
269
360
Equity in income of non-consolidated
REITs
—
—
—
6,793
Net income
$
3,648
$
1,371
$
6,475
$
13,069
Weighted average number of shares
outstanding, basic and diluted
107,240
107,231
107,233
107,231
Net income per share, basic and
diluted
$
0.03
$
0.01
$
0.06
$
0.12
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)
2019
2018
Assets:
Real estate assets:
Land
$
191,578
$
191,578
Buildings and improvements
1,924,664
1,857,935
Fixtures and equipment
11,665
8,839
2,127,907
2,058,352
Less accumulated depreciation
490,697
432,579
Real estate assets, net
1,637,210
1,625,773
Acquired real estate leases, less
accumulated amortization of $60,749 and $101,897, respectively
40,704
59,595
Cash, cash equivalents and restricted
cash
9,790
11,177
Tenant rent receivables
3,851
3,938
Straight-line rent receivable
66,881
54,006
Prepaid expenses and other assets
7,246
10,400
Related party mortgage loan
receivables
21,000
70,660
Other assets: derivative asset
3,022
14,765
Office computers and furniture, net of
accumulated depreciation of $1,362 and $1,512, respectively
183
197
Deferred leasing commissions, net of
accumulated amortization of $28,114 and $24,318, respectively
52,767
47,591
Total assets
$
1,842,654
$
1,898,102
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable
$
—
$
25,000
Term loans payable, less unamortized
financing costs of $4,267 and $5,722, respectively
765,733
764,278
Series A & Series B Senior Notes, less
unamortized financing costs of $985 and $1,150, respectively
199,015
198,850
Accounts payable and accrued expenses
66,658
59,183
Accrued compensation
3,400
3,043
Tenant security deposits
9,346
6,319
Lease liability
1,890
—
Other liabilities: derivative
liabilities
7,704
—
Acquired unfavorable real estate leases,
less accumulated amortization of $4,676 and $6,605,
respectively
2,512
3,795
Total liabilities
1,056,258
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, 107,269,201 and 107,231,155 shares
issued and outstanding, respectively
11
11
Additional paid-in capital
1,356,794
1,356,457
Accumulated other comprehensive income
(loss)
(4,682)
14,765
Accumulated distributions in excess of
accumulated earnings
(565,727)
(533,599)
Total stockholders’ equity
786,396
837,634
Total liabilities and stockholders’
equity
$
1,842,654
$
1,898,102
Franklin Street Properties Corp. Financial ResultsSupplementary
Schedule CCondensed Consolidated Statements of Cash
Flows(Unaudited)
For the Year Ended
December 31,
(in thousands)
2019
2018
Cash flows from operating
activities:
Net income
$
6,475
$
13,069
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense
93,787
97,171
Amortization of above and below market
leases
(402
)
(556
)
Shares issued as compensation
337
—
Equity in income of non-consolidated
REITs
—
(6,793
)
Decrease in allowance for doubtful
accounts
and write-off of accounts receivable
(71
)
(50
)
Changes in operating assets and
liabilities:
Tenant rent receivables
158
(765
)
Straight-line rents
(8,876
)
381
Lease acquisition costs
(3,999
)
(1,193
)
Prepaid expenses and other assets
2,313
(1,940
)
Accounts payable and accrued expenses
3,910
(4,077
)
Accrued compensation
357
(598
)
Tenant security deposits
3,027
936
Payment of deferred leasing
commissions
(15,101
)
(15,383
)
Net cash provided by operating
activities
81,915
80,202
Cash flows from investing
activities:
Property improvements, fixtures and
equipment
(70,746
)
(51,057
)
Investment in non-consolidated REITs
—
74,931
Distributions in excess of earnings from
non-consolidated REITs
—
710
Repayment of related party mortgage loan
receivable
(2,400
)
—
Investment in related party mortgage loan
receivable
52,060
1,060
Proceeds received from liquidating
trust
1,470
—
Net cash provided by (used in) investing
activities
(19,616
)
25,644
Cash flows from financing
activities:
Distributions to stockholders
(38,603
)
(49,326
)
Borrowings under bank note payable
45,000
38,000
Repayments of bank note payable
(70,000
)
(91,000
)
Deferred financing costs
(83
)
(2,162
)
Net cash used in financing activities
(63,686
)
(104,488
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(1,387
)
1,358
Cash, cash equivalents and restricted
cash, beginning of year
11,177
9,819
Cash, cash equivalents and restricted
cash, end of period
$
9,790
$
11,177
Franklin Street Properties Corp.
Earnings Release Supplementary Schedule D Real Estate Portfolio
Summary Information (Unaudited & Approximated)
Commercial portfolio lease
expirations (1)
Year
Total Square Feet
% of Portfolio
2020
761,756
7.7
%
2021
799,020
8.1
%
2022
1,182,547
11.9
%
2023
650,569
6.6
%
2024
875,989
8.8
%
Thereafter (2)
5,639,968
56.9
%
9,909,849
100.0
%
(1) Percentages are determined based upon
total square footage. (2) Includes 1,174,774 square feet of
vacancies at our operating properties and 201,388 square feet of
vacancies at our redevelopment properties as of December 31, 2019.
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 December 31, 2019 (a)
State
# of Properties
Investment
% of Portfolio
Square Feet
% of Portfolio
Colorado
6
$
550,821
33.6
%
2,620
26.4
%
Texas
9
347,170
21.2
%
2,420
24.4
%
Georgia
5
321,099
19.6
%
1,967
19.9
%
Minnesota
3
120,389
7.3
%
754
7.6
%
Virginia
4
81,735
5.0
%
685
6.9
%
North Carolina
2
50,655
3.1
%
322
3.2
%
Missouri
2
45,093
2.8
%
352
3.5
%
Illinois
2
47,728
2.9
%
372
3.8
%
Florida
1
43,806
2.7
%
213
2.2
%
Indiana
1
28,714
1.8
%
205
2.1
%
Total
35
$
1,637,210
100.0
%
9,910
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
(in thousands)
For the Three Months Ended
Year Ended
31-Mar-19
30-Jun-19
30-Sep-19
31-Dec-19
31-Dec-19
Tenant improvements
$
8,318
$
10,169
$
7,890
$
15,874
$
42,251
Deferred leasing costs
4,239
3,666
1,286
3,164
12,355
Non-investment capex
2,413
4,049
3,968
6,304
16,734
$
14,970
$
17,884
$
13,144
$
25,342
$
71,340
For the Three Months Ended
Year Ended
31-Mar-18
30-Jun-18
30-Sep-18
31-Dec-18
31-Dec-18
Tenant improvements
$
6,777
$
8,212
$
7,084
$
6,895
$
28,968
Deferred leasing costs
1,021
5,314
4,394
3,746
14,475
Non-investment capex
1,858
2,558
2,328
3,342
10,086
$
9,656
$
16,084
$
13,806
$
13,983
$
53,529
Square foot & leased
percentages
December 31, 2019
December 31, 2018
Operating Properties (a):
Number of properties
32
32
Square feet
9,504,634
9,486,650
Leased percentage
87.6
%
89.0
%
Redevelopment Properties:
Number of properties
3
3
Square feet
405,215
404,652
Leased percentage
50.3
%
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
10,258,394
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)
Property Name
Location
Square Feet
% Leased (1) as of
30-Sep-19
Third Quarter
Average % Leased (2)
% Leased (1) as of
31-Dec-19
Fourth Quarter
Average % Leased (2)
1
MEADOW POINT
Chantilly, VA
138,537
100.0
%
100.0
%
100.0
%
100.0
%
2
TIMBERLAKE
Chesterfield, MO
234,496
95.7
%
95.7
%
95.7
%
95.7
%
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
%
96.4
%
79.0
%
84.8
%
6
PARK TEN PHASE II
Houston, TX
156,746
88.8
%
87.3
%
84.4
%
85.8
%
7
GREENWOOD PLAZA
Englewood, CO
196,236
100.0
%
100.0
%
100.0
%
100.0
%
8
ADDISON
Addison, TX
289,302
82.4
%
82.4
%
80.5
%
81.1
%
9
COLLINS CROSSING
Richardson, TX
300,887
99.4
%
99.4
%
88.4
%
88.4
%
10
INNSBROOK
Glen Allen, VA
298,183
57.2
%
57.3
%
57.2
%
57.2
%
11
RIVER CROSSING
Indianapolis, IN
205,729
95.0
%
95.0
%
98.5
%
98.0
%
12
LIBERTY PLAZA
Addison, TX
216,834
73.4
%
72.1
%
72.4
%
72.4
%
13
380 INTERLOCKEN
Broomfield, CO
240,359
97.1
%
97.1
%
87.2
%
90.5
%
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
81.2
%
81.1
%
85.3
%
82.5
%
17
LOUDOUN TECH
Dulles, VA
136,658
98.9
%
98.9
%
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
90.1
%
88.7
%
90.1
%
90.1
%
20
EMPEROR BOULEVARD
Durham, NC
259,531
100.0
%
100.0
%
100.0
%
100.0
%
21
LEGACY TENNYSON CTR
Plano, TX
207,049
91.8
%
91.8
%
100.0
%
97.3
%
22
ONE LEGACY
Plano, TX
214,110
100.0
%
100.0
%
69.4
%
69.4
%
23
909 DAVIS
Evanston, IL
195,098
93.3
%
93.3
%
93.3
%
93.3
%
24
ONE RAVINIA DRIVE
Atlanta, GA
386,602
86.8
%
86.5
%
86.8
%
86.8
%
25
TWO RAVINIA
Atlanta, GA
411,047
68.2
%
68.2
%
71.0
%
69.7
%
26
WESTCHASE I & II
Houston, TX
629,025
77.3
%
77.3
%
62.3
%
72.4
%
27
1999 BROADWAY
Denver, CO
677,378
87.1
%
85.6
%
90.0
%
88.2
%
28
999 PEACHTREE
Atlanta, GA
621,946
95.8
%
94.2
%
94.2
%
94.5
%
29
1001 17th STREET
Denver, CO
655,420
98.5
%
98.5
%
98.5
%
98.5
%
30
PLAZA SEVEN
Minneapolis, MN
326,757
88.6
%
88.6
%
88.6
%
88.6
%
31
PERSHING PLAZA
Atlanta, GA
160,145
98.9
%
97.9
%
98.9
%
98.9
%
32
600 17th STREET
Denver, CO
609,112
89.8
%
88.5
%
89.5
%
89.6
%
OPERATING TOTAL
9,504,634
89.7
%
89.3
%
87.6
%
88.2
%
33
FOREST PARK
Charlotte, NC
62,212
0.0
%
0.0
%
0.0
%
0.0
%
34
BLUE LAGOON
Miami, FL
213,182
73.1
%
24.4
%
73.1
%
73.1
%
35
801 MARQUETTE AVE
Minneapolis, MN
129,821
37.0
%
37.0
%
37.0
%
37.0
%
REDEVELOPMENT TOTAL
405,215
50.3
%
24.7
%
50.3
%
50.3
%
OWNED PORTFOLIO TOTAL
9,909,849
(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 December 31, 2019
Tenant
Sq Ft
% of Portfolio
1
IQVIA Holdings Inc.
259,531
2.6
%
2
US Government
259,141
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
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
Lennar Homes, LLC
155,808
1.6
%
10
T-Mobile South, LLC dba T-Mobile
151,792
1.5
%
11
Citicorp Credit Services, Inc.
146,260
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
Giesecke & Devrient America
112,110
1.1
%
17
Northrop Grumman Systems Corp.
111,469
1.1
%
18
Randstad General Partner (US)
109,638
1.1
%
19
ADS Alliance Data Systems, Inc.
107,698
1.1
%
20
VMWare, Inc.
95,754
1.0
%
Total
3,254,210
32.8
%
Franklin Street Properties Corp.
Earnings Release Supplementary Schedule H Reconciliation and
Definitions of Funds From Operations (“FFO”) and Adjusted Funds
From Operations (“AFFO”)
A reconciliation of Net income to FFO and
AFFO is shown below and a definition of FFO and AFFO is provided on
Supplementary Schedule I. Management believes FFO and AFFO are used
broadly throughout the real estate investment trust (REIT) industry
as measurements of performance. The Company has included the
National Association of Real Estate Investment Trusts (NAREIT) FFO
definition as of May 17, 2016 in the table and notes that other
REITs may not define FFO in accordance with the current NAREIT
definition or may interpret the current NAREIT definition
differently. The Company’s computation of FFO and AFFO may not be
comparable to FFO or AFFO reported by other REITs or real estate
companies that define FFO or AFFO differently.
Reconciliation of Net Income to FFO and
AFFO:
Three Months Ended December
31,
Year Ended December 31,
(In thousands, except per share
amounts)
2019
2018
2019
2018
Net income
$
3,648
$
1,371
$
6,475
$
13,069
Equity in loss from non-consolidated
REITs
—
—
—
(6,793
)
FFO from non-consolidated REITs
—
—
—
2,511
Depreciation & amortization
22,898
23,175
90,507
93,674
NAREIT FFO
26,546
24,546
96,982
102,461
Lease Acquisition costs
209
—
560
—
Funds From Operations (FFO)
$
26,755
$
24,546
$
97,542
$
102,461
Funds From Operations (FFO)
$
26,755
$
24,546
$
97,542
$
102,461
Reverse FFO from non-consolidated
REITs
—
—
—
(2,511
)
Distributions from non-consolidated
REITs
—
—
—
710
Amortization of deferred financing
costs
721
717
2,878
2,940
Shares issued as compensation
337
—
337
—
Straight-line rent
(1,927
)
(440
)
(8,876
)
381
Tenant improvements
(15,874
)
(6,895
)
(42,251
)
(28,968
)
Leasing commissions
(3,164
)
(3,746
)
(12,355
)
(14,475
)
Non-investment capex
(6,304
)
(3,342
)
(16,734
)
(10,086
)
Adjusted Funds From Operations (AFFO)
$
544
$
10,840
$
20,541
$
50,452
Per Share Data
EPS
$
0.03
$
0.01
$
0.06
$
0.12
FFO
$
0.25
$
0.23
$
0.91
$
0.96
AFFO
$
0.01
$
0.10
$
0.19
$
0.47
Weighted average shares (basic and
diluted)
107,240
107,231
107,233
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, (5) plus the value of
shares issued as compensation and (6) 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 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:
(in thousands)
Rentable Square
Feet or RSF
Three
Months Ended 31-Dec-19
Three
Months Ended 30-Sep-19
Inc (Dec)
% Change
Region
East
944
$
3,174
$
3,001
$
173
5.8
%
MidWest
1,554
5,243
5,297
(54
)
(1.0
)%
South
4,387
17,589
17,456
133
0.8
%
West
2,620
11,974
11,134
840
7.5
%
Property NOI* from Operating
Properties
9,505
37,980
36,888
1,092
3.0
%
Dispositions and Redevelopment
Properties
405
(47
)
(21
)
(26
)
(0.1
)%
NOI*
9,910
$
37,933
$
36,867
$
1,066
2.9
%
Sequential Same Store
$
37,980
$
36,888
$
1,092
3.0
%
Less Nonrecurring
Items in NOI* (a)
4,402
3,434
968
(2.6
)%
Comparative
Sequential Same Store
$
33,578
$
33,454
$
124
0.4
%
Reconciliation to Net income
Three
Months Ended 31-Dec-19
Three
Months Ended 30-Sep-19
Net income
$
3,648
$
2,399
Add (deduct):
Management fee income
(570
)
(634
)
Depreciation and amortization
22,996
22,559
Amortization of above/below market
leases
(97
)
(112
)
General and administrative
3,375
3,886
Interest expense
8,982
9,036
Interest income
(390
)
(395
)
Non-property specific items, net
(11
)
128
NOI*
$
37,933
$
36,867
(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/20200211006046/en/
Georgia Touma, 877-686-9496
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