Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or
“our”) (NYSE American: FSP), a real estate investment trust (REIT),
announced its results for the fourth quarter and year ended
December 31, 2023.
George J. Carter, Chairman and Chief Executive Officer,
commented as follows:
“As the first quarter of 2024 begins, we continue to believe
that the current price of our common stock does not accurately
reflect the value of our underlying real estate assets. We will
seek to increase shareholder value by continuing to (1) pursue the
sale of select properties where we believe that short to
intermediate term valuation potential has been reached and (2)
strive to increase occupancy through the leasing of vacant space.
We intend to use proceeds from property dispositions primarily for
debt reduction.
During the fourth quarter of 2023, we sold two office properties
for aggregate gross proceeds of approximately $116 million. On
October 26, 2023, we sold an office property located in Plano,
Texas, known as One Legacy Circle, for gross proceeds of
approximately $48 million. On December 6, 2023, we sold an office
property located in Miami, Florida, known as Blue Lagoon, for gross
proceeds of approximately $68 million. Subsequent to December 31,
2023, on January 26, 2024, we sold an office property located in
Richardson, Texas, known as Collins Crossing, for gross proceeds of
approximately $35 million. Collectively, these three dispositions
resulted in aggregate gross proceeds of approximately $151 million.
Since December 2020, our dispositions have resulted in aggregate
gross proceeds of approximately $1 billion and reflect an average
sales price per square foot of approximately $217.
As a result of our recent property dispositions and our ongoing
operations, as of December 31, 2023, we had cash, or cash
equivalents on our balance sheet of approximately $127.9 million.
On February 21, 2024, we repaid approximately $102 million of our
debt and entered into amendments of our outstanding debt facilities
pursuant to which all of our debt now matures on April 1, 2026.
We look forward to the remainder of 2024 and beyond with
anticipation and optimism.”
Financial Highlights
- GAAP net income was $3.6 million and net loss of $48.1 million,
or $0.03 and $(0.47) per basic and diluted share for the three and
twelve months ended December 31, 2023, respectively.
- Funds From Operations (FFO) was $6.9 million and $30.0 million,
or $0.07 and $0.29 per basic and diluted share, for the three and
twelve months ended December 31, 2023, respectively.
- Subsequent to December 31, 2023, on February 21, 2024, we
repaid approximately $102 million of debt. Immediately following
the debt repayment and related transaction closing costs, including
accrued interest, we had approximately $39.2 million in cash and
cash equivalents on hand.
- Subsequent to December 31, 2023, on February 21, 2024, we
entered into amendments to each our bank term loan, revolving line
of credit agreement and Series A and Series B notes. As a result of
these amendments, we changed the maturity date and repaid the
principal amounts of each as set forth in the table below. In
addition, the amendment to the revolving line of credit converted
the revolving loan to a term loan. Additional information on the
amendments is available in our Annual Report on Form 10-K for the
year ended December 31, 2023.
(in 000’s)
Debt
Principal
Amount
Outstanding
Prior to
Amendment
Principal
Amount
Repaid
Principal
Amount
Outstanding
After
Amendment
Maturity Date
Prior to
Amendment
Maturity Date
After
Amendment
Bank Term Loan
$115,000
$28,963
$86,037
October 1, 2024
April 1, 2026
Revolving Line of Credit*
90,000
22,667
67,333
October 1, 2024
April 1, 2026
Series A Notes
116,000
29,215
86,785
December 20, 2024
April 1, 2026
Series B Notes
84,000
21,155
62,845
December 20, 2027
April 1, 2026
Total
$405,000
$102,000
$303,000
*Revolving line of credit converted to a term loan
Leasing Highlights
- During the year ended December 31, 2023, we leased
approximately 706,000 square feet, including 228,000 square feet of
new leases.
- Our directly owned real estate portfolio of 17 owned
properties, totaling approximately 5.6 million square feet, was
approximately 74.0% leased as of December 31, 2023, compared to
approximately 75.6% leased as of December 31, 2022. The decrease in
the leased percentage is primarily a result of lease expirations
and property dispositions, which was partially offset by leasing
completed during the year ended December 31, 2023.
- The weighted average GAAP base rent per square foot achieved on
leasing activity during the year ended December 31, 2023, was
$29.71, or 7.4% higher than average rents in the respective
properties for the year ended December 31, 2022. The average lease
term on leases signed during the year ended December 31, 2023, was
6.8 years compared to 6.4 years during the year ended December 31,
2022. Overall, the portfolio weighted average rent per occupied
square foot was $30.72 as of December 31, 2023, compared to $30.48
as of December 31, 2022.
- We are currently tracking more than 600,000 square feet of new
prospective tenants, including approximately 300,000 square feet of
prospective tenants that have identified our properties on their
respective short lists of potential locations.
- We believe that our continuing portfolio of real estate is well
located, primarily in the Sunbelt and Mountain West geographic
regions, and consists of high-quality assets with upside leasing
potential.
Investment Highlights
- We have primarily used asset sale disposition proceeds for debt
reduction and remain committed to seeking to sell select properties
during 2024 and continue using proceeds primarily for debt
reduction.
- Since December 2020, our dispositions have resulted in
aggregate gross proceeds of approximately $1 billion and reflect an
average sales price per square foot of approximately $217.
- On October 26, 2023, we completed the sale of One Legacy in
Plano, Texas for approximately $48 million in gross proceeds.
- On December 6, 2023, we completed the sale of Blue Lagoon in
Miami, Florida for approximately $68 million in gross
proceeds.
- Subsequent to December 31, 2023, on January 26, 2024, we
completed the sale of Collins Crossing in Richardson, Texas for
approximately $35 million in gross proceeds.
Dividends
- On January 12, 2024, we announced that our Board of Directors
declared a quarterly cash dividend for the three months ended
December 31, 2023, of $0.01 per share of common stock that was paid
on February 15, 2024, to stockholders of record on January 26,
2024.
Consolidation of Sponsored
REIT
As of January 1, 2023, we consolidated the operations of our
Monument Circle sponsored REIT into our financial statements. On
October 29, 2021, we agreed to amend and restate our existing loan
to Monument Circle that is secured by a mortgage on real estate
owned by Monument Circle, which we refer to as the Sponsored REIT
Loan. The amended and restated Sponsored REIT Loan extended the
maturity date from December 6, 2022 to June 30, 2023 (and was
further extended to September 30, 2023 on June 26, 2023), increased
the aggregate principal amount of the loan from $21 million to $24
million, and included certain other modifications. On September 26,
2023, the maturity date was further extended to September 30, 2024.
In consideration of our agreement to amend and restate the
Sponsored REIT Loan, we obtained from the stockholders of Monument
Circle the right to vote their shares in favor of any sale of the
property owned by Monument Circle any time on or after January 1,
2023. As a result of our obtaining this right to vote shares, GAAP
variable interest entity (VIE) rules required us to consolidate
Monument Circle as of January 1, 2023. A gain on consolidation of
approximately $0.4 million was recognized in the three months ended
March 31, 2023.
Additional information about the consolidation of Monument
Circle can be found in Note 1, “Organization, Properties, Basis of
Presentation, Financial Instruments, and Recent Accounting
Standards – Variable Interest Entities (VIEs)” and Note 3, “Related
Party Transactions and Investments in Non-Consolidated Entities -
Management fees and interest income from loans”, in the Notes to
Consolidated Financial Statements included in our Annual Report on
Form 10-K for the year ended December 31, 2023.
Non-GAAP Financial
Information
A reconciliation of Net income to FFO, Adjusted Funds From
Operations (AFFO) and Sequential Same Store NOI and our definitions
of FFO, AFFO and Sequential Same Store NOI can be found on
Supplementary Schedules H and I.
2024 Net Income, FFO and Disposition
Guidance
At this time, due primarily to economic conditions and
uncertainty surrounding the timing and amount of proceeds received
from property dispositions, we are continuing suspension of Net
Income, FFO and property disposition guidance.
Real Estate Update
Supplementary schedules provide property information for the
Company’s owned and consolidated properties as of December 31,
2023. The Company will also be filing an updated supplemental
information package that will provide stockholders and the
financial community with additional operating and financial data.
The Company will file this supplemental information package with
the SEC and make it available on its website at
www.fspreit.com.
Today’s news release, along with other news about Franklin
Street Properties Corp., is available on the Internet at
www.fspreit.com. We routinely post information that may be
important to investors in the Investor Relations section of our
website. We encourage investors to consult that section of our
website regularly for important information about us and, if they
are interested in automatically receiving news and information as
soon as it is posted, to sign up for E-mail Alerts.
Earnings Call
A conference call is scheduled for February 27, 2024, at 11:00
a.m. (ET) to discuss the fourth quarter and full year 2023 results.
To access the call, please dial 888-440-4368 and use conference ID
5398803. Internationally, the call may be accessed by dialing
646-960-0856 and using conference ID 5398803. To listen via live
audio webcast, please visit the Webcasts & Presentations
section in the Investor Relations section of the Company's website
(www.fspreit.com) at least ten minutes prior to the start of the
call and follow the posted directions. The webcast will also be
available via replay from the above location starting one hour
after the call is finished.
About Franklin Street Properties
Corp.
Franklin Street Properties Corp., based in Wakefield,
Massachusetts, is focused on infill and central business district
(CBD) office properties in the U.S. Sunbelt and Mountain West, as
well as select opportunistic markets. FSP seeks value-oriented
investments with an eye towards long-term growth and appreciation,
as well as current income. FSP is a Maryland corporation that
operates in a manner intended to qualify as a real estate
investment trust (REIT) for federal income tax purposes. To learn
more about FSP please visit our website at www.fspreit.com.
Forward-Looking Statements
Statements made in this press release that state FSP’s or
management’s intentions, beliefs, expectations, or predictions for
the future may be forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. This press
release may also contain forward-looking statements, such as those
relating to expectations for future potential leasing activity,
expectations for future potential property dispositions, the
payment of dividends and the repayment of debt in future periods,
value creation/enhancement in future periods and expectations for
growth and leasing activities in future periods that are based on
current judgments and current knowledge of management and are
subject to certain risks, trends and uncertainties that could cause
actual results to differ materially from those indicated in such
forward-looking statements. Accordingly, readers are cautioned not
to place undue reliance on forward-looking statements. Investors
are cautioned that our forward-looking statements involve risks and
uncertainty, including without limitation, adverse changes in
general economic or local market conditions, including as a result
of the long-term effects of the COVID-19 pandemic, wars, terrorist
attacks or other acts of violence, which may negatively affect the
markets in which we and our tenants operate, inflation rates,
increasing interest rates, disruptions in the debt markets,
economic conditions in the markets in which we own properties,
risks of a lessening of demand for the types of real estate owned
by us, adverse changes in energy prices, which if sustained, could
negatively impact occupancy and rental rates in the markets in
which we own properties, including energy-influenced markets such
as Dallas, Denver and Houston, changes in government regulations
and regulatory uncertainty, uncertainty about governmental fiscal
policy, geopolitical events and expenditures that cannot be
anticipated, such as utility rate and usage increases, delays in
construction schedules, unanticipated increases in construction
costs, increases in the level of general and administrative costs
as a percentage of revenues as revenues decrease as a result of
property dispositions, unanticipated repairs, additional staffing,
insurance increases and real estate tax valuation reassessments.
See the “Risk Factors” set forth in Part I, Item 1A of our Annual
Report on Form 10-K for the year ended December 31, 2023, which may
be updated from time to time in subsequent filings with the United
States Securities and Exchange Commission. Although we believe the
expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity,
acquisitions, dispositions, performance or achievements. We will
not update any of the forward-looking statements after the date of
this press release to conform them to actual results or to changes
in our expectations that occur after such date, other than as
required by law.
Franklin Street Properties
Corp.
Earnings Release
Supplementary
Information
Table of Contents
Franklin Street Properties Corp. Financial
Results
A-C
Real Estate Portfolio Summary
Information
D
Portfolio and Other Supplementary
Information
E
Percentage of Leased Space
F
Largest 20 Tenants – FSP Owned
Portfolio
G
Reconciliation and Definitions of Funds
From Operations (FFO) and Adjusted
Funds From Operations (AFFO)
H
Reconciliation and Definition of
Sequential Same Store results to Property Net
Operating Income (NOI) and Net Loss
I
Franklin Street Properties Corp.
Financial Results
Supplementary Schedule A
Condensed Consolidated Statements
of Operations
(Unaudited)
For the
For the
Three Months Ended
Year Ended
December 31,
December 31,
(in thousands, except per share
amounts)
2023
2022
2023
2022
Revenue:
Rental
$
34,519
$
40,745
$
145,446
$
163,739
Related party revenue:
Management fees and interest income from
loans
—
462
—
1,855
Other
252
4
261
21
Total revenue
34,771
41,211
145,707
165,615
Expenses:
Real estate operating expenses
13,105
14,273
50,732
52,820
Real estate taxes and insurance
5,943
7,907
27,200
34,620
Depreciation and amortization
11,958
14,804
54,738
63,808
General and administrative
3,172
2,888
14,021
13,885
Interest
6,219
5,668
24,318
22,808
Total expenses
40,397
45,540
171,009
187,941
Loss on extinguishment of debt
—
—
(106
)
(78
)
Gain on consolidation of Sponsored
REIT
—
—
394
—
Impairment and loan loss reserve
—
(2,380
)
—
(4,237
)
Gain (loss) on sale of properties and
impairment of assets held for sale, net
8,701
3,862
(23,384
)
27,939
Interest income
567
—
567
—
Income (loss) before taxes
3,642
(2,847
)
(47,831
)
1,298
Tax expense
67
37
279
204
Net income (loss)
$
3,575
$
(2,884
)
$
(48,110
)
$
1,094
Weighted average number of shares
outstanding, basic and diluted
103,430
103,236
103,357
103,338
Net income (loss) per share, basic and
diluted
$
0.03
$
(0.03
)
$
(0.47
)
$
0.01
Franklin Street Properties Corp.
Financial Results
Supplementary Schedule B
Condensed Consolidated Balance
Sheets
(Unaudited)
December 31,
December 31,
(in thousands, except share and
par value amounts)
2023
2022
Assets:
Real estate assets:
Land
$
110,298
$
126,645
Buildings and improvements
1,133,971
1,388,869
Fixtures and equipment
12,904
11,151
1,257,173
1,526,665
Less accumulated depreciation
366,349
423,417
Real estate assets, net
890,824
1,103,248
Acquired real estate leases, less
accumulated amortization of $20,413 and $20,243, respectively
6,694
10,186
Assets held for sale
73,318
—
Cash, cash equivalents and restricted
cash
127,880
6,632
Tenant rent receivables
2,191
2,201
Straight-line rent receivable
40,397
52,739
Prepaid expenses and other assets
4,239
6,676
Related party mortgage loan receivable,
less allowance for credit loss of $0 and $4,237, respectively
—
19,763
Other assets: derivative asset
—
4,358
Office computers and furniture, net of
accumulated depreciation of $1,020 and $1,115, respectively
123
154
Deferred leasing commissions, net of
accumulated amortization of $16,008 and $19,043, respectively
23,664
35,709
Total assets
$
1,169,330
$
1,241,666
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable
$
90,000
$
48,000
Term loans payable, less unamortized
financing costs of $293 and $250, respectively
114,707
164,750
Series A & Series B Senior Notes, less
unamortized financing costs of $329 and $494, respectively
199,670
199,506
Accounts payable and accrued expenses
41,879
50,366
Accrued compensation
3,644
3,644
Tenant security deposits
6,204
5,710
Lease liability
334
759
Acquired unfavorable real estate leases,
less accumulated amortization of $396 and $574, respectively
87
195
Total liabilities
456,525
472,930
Commitments and contingencies
Stockholders’ Equity:
Preferred stock, $.0001 par value,
20,000,000 shares authorized, none issued or outstanding
—
—
Common stock, $.0001 par value,
180,000,000 shares authorized, 103,430,353 and 103,235,914 shares
issued and outstanding, respectively
10
10
Additional paid-in capital
1,335,091
1,334,776
Accumulated other comprehensive income
355
4,358
Accumulated distributions in excess of
accumulated earnings
(622,651
)
(570,408
)
Total stockholders’ equity
712,805
768,736
Total liabilities and stockholders’
equity
$
1,169,330
$
1,241,666
Franklin Street Properties Corp.
Financial Results
Supplementary Schedule C
Condensed Consolidated Statements
of Cash Flows
(Unaudited)
For the
Year Ended
December 31,
(in thousands)
2023
2022
Cash flows from operating
activities:
Net income (loss)
$
(48,110
)
$
1,094
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization expense
57,240
65,697
Amortization of above and below market
leases
(44
)
(118
)
Amortization of other comprehensive income
into interest expense
(3,851
)
—
Shares issued as compensation
315
394
Loss on extinguishment of debt
106
78
Gain on consolidation of Sponsored
REIT
(394
)
—
Impairment and loan loss reserve
—
4,237
(Gain) loss on sale of properties and
impairment of assets held for sale, net
23,384
(27,939
)
Changes in operating assets and
liabilities:
Tenant rent receivables
10
(247
)
Straight-line rents
625
(5,895
)
Lease acquisition costs
(2,007
)
(4,494
)
Prepaid expenses and other assets
382
(1,805
)
Accounts payable and accrued expenses
(2,709
)
(5,983
)
Accrued compensation
—
(1,060
)
Tenant security deposits
494
(509
)
Payment of deferred leasing
commissions
(7,575
)
(8,216
)
Net cash provided by operating
activities
17,866
15,234
Cash flows from investing
activities:
Property improvements, fixtures and
equipment
(31,637
)
(54,910
)
Consolidation of Sponsored REIT
3,048
—
Proceeds received from sales of
properties
142,225
128,949
Net cash provided by investing
activities
113,636
74,039
Cash flows from financing
activities:
Distributions to stockholders
(4,133
)
(53,988
)
Proceeds received from termination of
interest rate swap
4,206
—
Stock repurchases
—
(4,843
)
Borrowings under bank note payable
77,000
90,000
Repayments of bank note payable
(35,000
)
(42,000
)
Repayments of term loans payable
(50,000
)
(110,000
)
Deferred financing costs
(2,327
)
(2,561
)
Net cash used in financing activities
(10,254
)
(123,392
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
121,248
(34,119
)
Cash, cash equivalents and restricted
cash, beginning of year
6,632
40,751
Cash, cash equivalents and restricted
cash, end of period
$
127,880
$
6,632
Franklin Street Properties Corp.
Earnings Release
Supplementary Schedule D
Real Estate Portfolio Summary
Information
(Unaudited &
Approximated)
Commercial portfolio lease expirations
(1)
Total
% of
Year
Square Feet
Portfolio
2024
518,878
9.0
%
2025
437,374
7.6
%
2026
567,886
9.8
%
2027
330,757
5.7
%
2028
233,589
4.0
%
Thereafter (2)
3,691,058
63.9
%
5,779,542
100.0
%
____________________
(1) Percentages are determined based upon
total square footage.
(2)
Includes 1,649,948 square feet of
vacancies at our owned and consolidated properties as of December
31, 2023.
(dollars & square feet in 000's)
As of December 31, 2023
% of
Square
% of
State
Properties
Investment
Portfolio
Feet
Portfolio
Colorado
4
$
451,320
50.7
%
2,140
37.0
%
Texas (a)
8
265,449
29.8
%
2,209
38.2
%
Georgia (a)
1
-
0.0
%
160
2.8
%
Minnesota
3
117,095
13.1
%
758
13.1
%
Virginia
1
37,606
4.2
%
298
5.2
%
Indiana
1
19,354
2.2
%
214
3.7
%
Total
18
$
890,824
100.0
%
5,779
100.0
%
____________________
(a) Includes one property in each state
that was classified as an asset held for sale as of December 31,
2023.
Franklin Street Properties Corp.
Earnings Release
Supplementary Schedule E
Portfolio and Other Supplementary
Information
(Unaudited &
Approximated)
Recurring Capital Expenditures
Year
(in thousands)
For the Three Months Ended
Ended
31-Mar-23
30-Jun-23
30-Sep-23
31-Dec-23
31-Dec-23
Tenant improvements
$
3,047
$
4,381
$
3,653
$
5,295
$
16,376
Deferred leasing costs
908
3,230
1,114
1,649
6,901
Non-investment capex
2,967
2,042
1,775
5,230
12,014
$
6,922
$
9,653
$
6,542
$
12,174
$
35,291
(in thousands)
For the Three Months Ended
Year Ended
31-Mar-22
30-Jun-22
30-Sep-22
31-Dec-22
31-Dec-22
Tenant improvements
$
1,877
$
5,453
$
6,813
$
7,508
$
21,651
Deferred leasing costs
3,032
1,327
2,053
1,152
7,564
Non-investment capex
5,065
6,736
9,289
9,074
30,164
$
9,974
$
13,516
$
18,155
$
17,734
$
59,379
Square foot & leased
percentages
December 31,
December 31,
2023
2022
Owned Properties:
Number of properties (a)
17
21
Square feet
5,565,782
6,239,530
Leased percentage
74.0
%
75.6
%
Consolidated Property - Single Asset
REIT (SAR):
Number of properties
1
—
Square feet
213,760
—
Leased percentage
4.1
%
Total Owned and Consolidated
Properties:
Number of properties
18
21
Square feet
5,779,542
6,239,530
Leased percentage
71.5
%
75.6
%
(a) Includes two properties that were
classified as an asset held for sale as of December 31, 2023.
Franklin Street Properties Corp.
Earnings Release
Supplementary Schedule F
Percentage of Leased Space
(Unaudited & Estimated)
Third
Fourth
% Leased (1)
Quarter
% Leased (1)
Quarter
as of
Average %
as of
Average %
Property Name
Location
Square Feet
30-Sep-23
Leased (2)
31-Dec-23
Leased (2)
1
PARK TEN
Houston, TX
157,609
83.8
%
83.8
%
83.8
%
83.8
%
2
PARK TEN PHASE II
Houston, TX
156,746
95.0
%
95.0
%
95.0
%
95.0
%
3
GREENWOOD PLAZA
Englewood, CO
196,236
66.3
%
66.3
%
66.3
%
66.3
%
4
ADDISON
Addison, TX
289,333
83.0
%
83.0
%
83.0
%
83.0
%
5
COLLINS CROSSING (3)
Richardson, TX
300,887
85.5
%
91.8
%
85.5
%
85.5
%
6
INNSBROOK
Glen Allen, VA
298,183
81.3
%
81.3
%
90.5
%
87.4
%
7
LIBERTY PLAZA
Addison, TX
217,841
78.3
%
76.1
%
80.2
%
80.8
%
BLUE LAGOON (4)
Miami, FL
98.5
%
98.5
%
(4
)
(4
)
8
ELDRIDGE GREEN
Houston, TX
248,399
100.0
%
100.0
%
100.0
%
100.0
%
9
121 SOUTH EIGHTH ST
Minneapolis, MN
298,121
79.6
%
79.6
%
80.5
%
79.9
%
10
801 MARQUETTE AVE
Minneapolis, MN
129,691
91.8
%
91.8
%
91.8
%
91.8
%
11
LEGACY TENNYSON CTR
Plano, TX
209,461
67.3
%
65.7
%
56.6
%
57.2
%
ONE LEGACY (5)
Plano, TX
71.3
%
72.1
%
(5
)
(5
)
12
WESTCHASE I & II
Houston, TX
629,025
60.7
%
60.1
%
62.7
%
62.4
%
13
1999 BROADWAY
Denver, CO
682,639
57.5
%
59.8
%
51.7
%
52.9
%
14
1001 17TH STREET
Denver, CO
649,235
71.1
%
71.4
%
71.1
%
71.1
%
15
PLAZA SEVEN
Minneapolis, MN
330,096
59.3
%
61.0
%
62.3
%
61.3
%
16
PERSHING PLAZA (6)
Atlanta, GA
160,145
79.8
%
79.8
%
79.8
%
79.8
%
17
600 17TH STREET
Denver, CO
612,135
80.8
%
80.8
%
81.7
%
81.4
%
OWNED PORTFOLIO
5,565,782
74.8
%
75.4
%
74.0
%
74.5
%
18
MONUMENT CIRCLE (7)
Indianapolis, IN
213,760
4.1
%
4.1
%
4.1
%
4.1
%
OWNED & CONSOLIDATED
PORTFOLIO
5,779,542
72.4
%
72.9
%
71.5
%
72.0
%
____________________
(1)
% Leased as of month's end
includes all leases that expire on the last day of the quarter.
(2)
Average quarterly percentage is
the average of the end of the month leased percentage for each of
the three months during the quarter.
(3)
Property was classified as an
asset held for sale as of December 31, 2023 and was sold on January
26, 2024.
(4)
Property was sold on December 6,
2023.
(5)
Property was sold on October 26,
2023.
(6)
Property was classified as an
asset held for sale as of December 31, 2023.
(7)
Consolidated property as of
January 1, 2023, which was previously a managed property.
Franklin Street Properties Corp.
Earnings Release
Supplementary Schedule G
Largest 20 Tenants – FSP Owned
and Consolidated Portfolio
(Unaudited & Estimated)
The following table includes the
largest 20 tenants in FSP’s owned and consolidated portfolio based
on total square feet:
As of December 31, 2023
% of
Tenant
Sq Ft
Portfolio
1
CITGO Petroleum Corporation
248,399
4.3
%
2
EOG Resources, Inc.
169,167
2.9
%
3
US Government
168,573
2.9
%
4
Commonwealth of Virginia
127,500
2.2
%
5
Kaiser Foundation Health Plan, Inc.
120,979
2.1
%
6
Swift, Currie, McGhee & Hiers, LLP
101,296
1.8
%
7
Deluxe Corporation
98,922
1.7
%
8
Ping Identity Corp.
89,856
1.6
%
9
Argo Data Resource Corporation
85,650
1.5
%
10
Permian Resources Operating, LLC
67,856
1.2
%
11
PwC US Group
66,304
1.1
%
12
Hall and Evans LLC
65,878
1.1
%
13
Cyxtera Management, Inc.
61,826
1.1
%
14
Precision Drilling (US) Corporation
59,569
1.0
%
15
EMC Corporation
57,100
1.0
%
16
ID Software, LLC
57,100
1.0
%
17
Olin Corporation
54,080
0.9
%
18
ChemTreat Inc.
49,548
0.9
%
19
Coresite, LLC
49,518
0.9
%
20
GE Vernova International LLC
47,559
0.8
%
Total
1,846,680
32.0
%
Franklin Street Properties Corp. Earnings
Release Supplementary Schedule H Reconciliation and Definitions of
Funds From Operations (“FFO”) and Adjusted Funds From Operations
(“AFFO”)
A reconciliation of Net income to FFO and AFFO is shown below
and a definition of FFO and AFFO is provided on Supplementary
Schedule I. Management believes FFO and AFFO are used broadly
throughout the real estate investment trust (REIT) industry as
measurements of performance. The Company has included the National
Association of Real Estate Investment Trusts (NAREIT) FFO
definition as of May 17, 2016 in the table and notes that other
REITs may not define FFO in accordance with the current NAREIT
definition or may interpret the current NAREIT definition
differently. The Company’s computation of FFO and AFFO may not be
comparable to FFO or AFFO reported by other REITs or real estate
companies that define FFO or AFFO differently.
Reconciliation of Net Loss to FFO and
AFFO:
Three Months Ended
Year Ended
December 31,
December 31,
(In thousands, except per share
amounts)
2023
2022
2023
2022
Net income (loss)
$
3,575
$
(2,884
)
$
(48,110
)
$
1,094
Gain on consolidation of Sponsored
REIT
—
—
(394
)
—
Impairment and loan loss reserve
—
2,380
—
4,237
(Gain) loss on sale of properties and
impairment of assets held for sale, net
(8,701
)
(3,862
)
23,384
(27,939
)
Depreciation & amortization
11,952
14,773
54,694
63,689
NAREIT FFO
6,826
10,407
29,574
41,081
Lease Acquisition costs
112
56
390
262
Funds From Operations (FFO)
$
6,938
$
10,463
$
29,964
$
41,343
Funds From Operations (FFO)
$
6,938
$
10,463
$
29,964
$
41,343
Loss on extinguishment of debt
—
—
106
78
Amortization of deferred financing
costs
576
421
2,502
1,889
Shares issued as compensation
—
—
315
394
Straight-line rent
198
(1,831
)
626
(5,895
)
Tenant improvements
(5,295
)
(7,508
)
(16,376
)
(21,651
)
Leasing commissions
(1,649
)
(1,152
)
(6,901
)
(7,564
)
Non-investment capex
(5,230
)
(9,074
)
(12,014
)
(30,164
)
Adjusted Funds From Operations (AFFO)
$
(4,462
)
$
(8,681
)
$
(1,778
)
$
(21,570
)
Per Share Data
EPS
$
0.03
$
(0.03
)
$
(0.47
)
$
0.01
FFO
$
0.07
$
0.10
$
0.29
$
0.40
AFFO
$
(0.04
)
$
(0.08
)
$
(0.02
)
$
(0.21
)
Weighted average shares (basic and
diluted)
103,430
103,236
103,357
103,338
Funds From Operations (“FFO”)
The Company evaluates performance based on Funds From
Operations, which we refer to as FFO, as management believes that
FFO represents the most accurate measure of activity and is the
basis for distributions paid to equity holders. The Company defines
FFO as net income or loss (computed in accordance with GAAP),
excluding gains (or losses) from sales of property, hedge
ineffectiveness, acquisition costs of newly acquired properties
that are not capitalized and lease acquisition costs that are not
capitalized plus depreciation and amortization, including
amortization of acquired above and below market lease intangibles
and impairment charges on mortgage loans, properties or investments
in non-consolidated REITs, and after adjustments to exclude equity
in income or losses from, and, to include the proportionate share
of FFO from, non-consolidated REITs.
FFO should not be considered as an alternative to net income or
loss (determined in accordance with GAAP), nor as an indicator of
the Company’s financial performance, nor as an alternative to cash
flows from operating activities (determined in accordance with
GAAP), nor as a measure of the Company’s liquidity, nor is it
necessarily indicative of sufficient cash flow to fund all of the
Company’s needs.
Other real estate companies and the National Association of Real
Estate Investment Trusts, or NAREIT, may define this term in a
different manner. We have included the NAREIT FFO as of May 17,
2016 in the table and note that other REITs may not define FFO in
accordance with the current NAREIT definition or may interpret the
current NAREIT definition differently than we do.
We believe that in order to facilitate a clear understanding of
the results of the Company, FFO should be examined in connection
with net income or loss and cash flows from operating, investing
and financing activities in the consolidated financial
statements.
Adjusted Funds From Operations (“AFFO”)
The Company also evaluates performance based on Adjusted Funds
From Operations, which we refer to as AFFO. The Company defines
AFFO as (1) FFO, (2) excluding loss on extinguishment of debt that
is non-cash, (3) excluding our proportionate share of FFO and
including distributions received, from non-consolidated REITs, (4)
excluding the effect of straight-line rent, (5) plus the
amortization of deferred financing costs, (6) plus the value of
shares issued as compensation and (7) less recurring capital
expenditures that are generally for maintenance of properties,
which we call non-investment capex or are second generation capital
expenditures. Second generation costs include re-tenanting space
after a tenant vacates, which include tenant improvements and
leasing commissions.
We exclude development/redevelopment activities, capital
expenditures planned at acquisition and costs to reposition a
property. We also exclude first generation leasing costs, which are
generally to fill vacant space in properties we acquire or were
planned for at acquisition.
AFFO should not be considered as an alternative to net income or
loss (determined in accordance with GAAP), nor as an indicator of
the Company’s financial performance, nor as an alternative to cash
flows from operating activities (determined in accordance with
GAAP), nor as a measure of the Company’s liquidity, nor is it
necessarily indicative of sufficient cash flow to fund all of the
Company’s needs. Other real estate companies may define this term
in a different manner. We believe that in order to facilitate a
clear understanding of the results of the Company, AFFO should be
examined in connection with net income or loss and cash flows from
operating, investing and financing activities in the consolidated
financial statements.
Franklin Street Properties Corp. Earnings
Release Supplementary Schedule I Reconciliation and Definition of
Sequential Same Store results to property Net Operating Income
(NOI) and Net Income
Net Operating Income (“NOI”)
The Company provides property performance based on Net Operating
Income, which we refer to as NOI. Management believes that
investors are interested in this information. NOI is a non-GAAP
financial measure that the Company defines as net income or loss
(the most directly comparable GAAP financial measure) plus general
and administrative expenses, depreciation and amortization,
including amortization of acquired above and below market lease
intangibles and impairment charges, interest expense, less equity
in earnings of nonconsolidated REITs, interest income, management
fee income, hedge ineffectiveness, gains or losses on
extinguishment of debt, gains or losses on the sale of assets and
excludes non-property specific income and expenses. The information
presented includes footnotes and the data is shown by region with
properties owned in the periods presented, which we call Sequential
Same Store. The comparative Sequential Same Store results include
properties held for all periods presented. We exclude properties
that have been placed in service, but that do not have operating
activity for all periods presented, dispositions and significant
nonrecurring income such as bankruptcy settlements and lease
termination fees. NOI, as defined by the Company, may not be
comparable to NOI reported by other REITs that define NOI
differently. NOI should not be considered an alternative to net
income or loss as an indication of our performance or to cash flows
as a measure of the Company’s liquidity or its ability to make
distributions. The calculations of NOI and Sequential Same Store
are shown in the following table:
Rentable
Square Feet
Three Months Ended
Three Months Ended
Inc
%
(in thousands)
or RSF
31-Dec-23
30-Sep-23
(Dec)
Change
Region
East
298
$
285
$
239
$
46
19.2
%
MidWest
758
1,656
1,396
260
18.6
%
South
2,369
6,393
6,499
(106
)
(1.6
)%
West
2,140
5,994
6,505
(511
)
(7.9
)%
Property NOI* from Owned Properties
5,565
14,328
14,639
(311
)
(2.1
)%
Disposition and Acquisition Properties
(a)
214
751
1,965
(1,214
)
(7.1
)%
NOI*
5,779
$
15,079
$
16,604
$
(1,525
)
(9.2
)%
Sequential Same Store
$
14,328
$
14,639
$
(311
)
(2.1
)%
Less Nonrecurring
Items in NOI* (b)
217
485
(268
)
1.8
%
Comparative
Sequential Same Store
$
14,111
$
14,154
$
(43
)
(0.3
)%
Reconciliation to
Three Months Ended
Three Months Ended
Net income (loss)
31-Dec-23
30-Sep-23
Net income (loss)
$
3,575
$
(45,671
)
Add (deduct):
Loss on extinguishment of debt
—
39
Gain on sale of properties, net
(8,701
)
39,671
Management fee income
(446
)
(460
)
Depreciation and amortization
11,957
13,409
Amortization of above/below market
leases
(6
)
(9
)
General and administrative
3,171
3,265
Interest expense
6,219
6,209
Interest income
(567
)
—
Non-property specific items, net
(123
)
151
NOI*
$
15,079
$
16,604
(a)
We define Disposition and
Acquisition Properties as properties that were sold or acquired or
consolidated and do not have operating activity for all periods
presented.
(b)
Nonrecurring Items in NOI include
proceeds from bankruptcies, lease termination fees or other
significant nonrecurring income or expenses, which may affect
comparability.
*Excludes NOI from investments in
and interest income from secured loans to non-consolidated
REITs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240226756553/en/
Georgia Touma (877) 686-9496
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