FSP Franklin Street Properties Corp

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, 2020.

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

“After a strong first quarter start to 2020, leasing activity hit the “pause button” in the second quarter at our 32 operating and 3 redevelopment properties. Prior to the emergence of the COVID-19 pandemic, we were confident that the company was well positioned for new tenant absorption, increasing occupancy levels and higher rental rates during 2020, allowing us the potential to start realizing the longer-term value-add property proposition that was such an integral part of the strategy of recasting our portfolio. However, in March 2020 the full weight of the COVID-19 pandemic and the consequent business shutdowns became apparent, negatively affecting both new leasing activity and rent collections for the second quarter.

Most leasing activity that was underway prior to March 2020, while slowed, has continued and we currently have approximately 200,000 square feet of active lease negotiations on-going and another approximately 300,000 square feet of leasing that is in earlier stages of active consideration by potential new tenants. Over the remainder of 2020, we have approximately 176,000 square feet of lease maturities and approximately 324,000 square feet of leases scheduled to commence. We expect continued, anticipated and planned for elevated levels of Capex in the coming quarters as we execute our value-add strategy at both our operating and redevelopment properties. Some of the Capex surrounding tenant space improvements for leasing done in 2019 and the first quarter of 2020 was pulled forward and funded during the second quarter of 2020. As a result of COVID-19 restrictions we had lower physical occupancy of space during the quarter, which enhanced the opportunity for more physical construction and reduced tenant employee disruption.

For the full second quarter of 2020 we collected approximately 98% of contracted rent and as of July 31, 2020 we have collected approximately 97% of July rents. However, at this time, we are not able to predict whether and to what extent our level of rental receipts may change in future months. Consequently, we are continuing suspension of Net Income and Funds From Operations (“FFO”) guidance and will not be providing additional guidance until such time as we have a better understanding of the duration of the COVID-19 pandemic and its impact on our business and the businesses of our tenants.

At this time, we believe the bulk of our tenants will be financially able to weather the COVID-19 pandemic and the inherent value of our property portfolio and our own financial resources and balance sheet flexibility will continue to see us through this difficult time. We believe that we will then be well positioned to resume the strong leasing activity that occurred in 2018, 2019 and the first quarter of 2020.”

Financial Highlights

• Net loss was $2.1 million, or $0.02 per basic and diluted share, for the second quarter ended June 30, 2020.
• FFO was $20.2 million, or $0.19 per basic and diluted share, for the second quarter ended June 30, 2020.
• Adjusted Funds From Operations (AFFO) was $0.2 million or $0.00 per basic and diluted share for the second quarter ended June 30, 2020.
• As of June 30, 2020, we had $570 million available on our revolving line of credit.
• Our debt is entirely unsecured and we have no debt maturities until November of 2021.

COVID-19 Pandemic Update

FSP remains committed to the health and safety of its employees, tenants, vendors and visitors and will continue to implement recommended guidelines for social distancing and other safety protocols at our properties and corporate headquarters.

• We have implemented working from home policies for FSP employees.
• All of our properties remain open for business.
• As of July 31, 2020, we had collected approximately 97% of rental receipts due in July 2020. Due to the high level of uncertainty related to the COVID-19 pandemic, we are unable to predict the level of rental receipts in future months.
• During the past approximately 18 weeks, we have received rent relief requests from some of our tenants. The majority of these requests for relief have been in the form of potential rent deferrals for varying lengths of time. To date, we have been in discussions with tenants regarding potential rent deferrals representing approximately 1% to 2% of annualized rents. We will continue to review each request for rent relief on a case by case basis. Where prudent, we may grant deferrals and, in some instances, seek extended lease terms. We are unable to predict the outcomes of these ongoing negotiations, the amount of the rent relief packages, if any, and ultimate recovery of any deferred amounts.

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 84.5% leased as of June 30, 2020 compared to approximately 87.6% leased as of December 31, 2019.
• During the quarter ended June 30, 2020, we leased approximately 44,000 square feet, of which approximately 22,000 square feet was with new tenants. During the six months ended June 30, 2020, we leased approximately 324,000 square feet, of which approximately 166,000 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.
• Despite delays caused by COVID-19, we currently have approximately 500,000 square feet of prospective tenants representing potential net absorption, including approximately 200,000 square feet in active lease negotiations. The approximately 500,000 square feet of potential net absorption also includes more than 110,000 square feet of multiple active prospects at our three redevelopment properties in Miami, Minneapolis and Charlotte.
• Lease expirations for the remainder of 2020 are approximately 176,000 square feet, or 1.8% of our portfolio. Those lease expirations will be offset by approximately 324,000 square feet of executed leases that are scheduled to commence during the remainder of 2020.
• The weighted average GAAP base rent per square foot achieved on leasing activity during the six months ended June 30, 2020 was $31.28, or 10.3% higher than average rents in the respective properties as applicable compared to the year ended December 31, 2019. The average lease term on leases in the first half of 2020 shortened to 6.1 years compared to 8.3 years for the full year of 2019. Overall the portfolio weighted average rent per occupied square foot decreased to $29.83 as of June 30, 2020 from $29.88 as of December 31, 2019.

Dividend Update

On July 6, 2020, the Company announced that its Board of Directors declared a regular quarterly cash dividend for the three months ended June 30, 2020 of $0.09 per share of common stock that will be paid on August 6, 2020 to stockholders of record on July 17, 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 June 30, 2020. 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 August 5, 2020 at 11:00 a.m. (ET) to discuss the second quarter 2020 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, 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 COVID-19 pandemic and other potential infectious disease outbreaks and terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, 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, 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, including without limitation, the “Risk Factors” set forth in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020. 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

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

(in thousands, except per share amounts)

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

60,398

 

$

65,485

 

$

122,965

 

$

128,844

 

Related party revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fees and interest income from loans

 

 

405

 

 

1,322

 

 

808

 

 

2,674

 

Other

 

 

5

 

 

6

 

 

18

 

 

11

 

Total revenue

 

 

60,808

 

 

66,813

 

 

123,791

 

 

131,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate operating expenses

 

 

15,470

 

 

17,116

 

 

32,768

 

 

34,842

 

Real estate taxes and insurance

 

 

12,307

 

 

12,801

 

 

24,069

 

 

24,903

 

Depreciation and amortization

 

 

22,245

 

 

22,109

 

 

44,583

 

 

45,354

 

General and administrative

 

 

3,817

 

 

3,702

 

 

7,342

 

 

7,211

 

Interest

 

 

8,980

 

 

9,371

 

 

18,043

 

 

18,739

 

Total expenses

 

 

62,819

 

 

65,099

 

 

126,805

 

 

131,049

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before taxes on income

 

 

(2,011)

 

 

1,714

 

 

(3,014)

 

 

480

 

Tax expense on income

 

 

64

 

 

81

 

 

132

 

 

52

 

Net income (loss)

 

$

(2,075)

 

$

1,633

 

$

(3,146)

 

$

428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding, basic and diluted

 

 

107,287

 

 

107,231

 

 

107,278

 

 

107,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share, basic and diluted

 

$

(0.02)

 

$

0.02

 

$

(0.03)

 

$

0.00

 

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)

 

2020

 

2019

 

Assets:

 

 

 

 

 

 

 

Real estate assets:

 

 

 

 

 

 

 

Land

 

$

191,578

 

$

191,578

 

Buildings and improvements

 

 

1,964,308

 

 

1,924,664

 

Fixtures and equipment

 

 

12,250

 

 

11,665

 

 

 

 

2,168,136

 

 

2,127,907

 

Less accumulated depreciation

 

 

522,238

 

 

490,697

 

Real estate assets, net

 

 

1,645,898

 

 

1,637,210

 

Acquired real estate leases, less accumulated amortization of $60,469 and $60,749, respectively

 

 

34,022

 

 

40,704

 

Cash, cash equivalents and restricted cash

 

 

2,890

 

 

9,790

 

Tenant rent receivables

 

 

4,192

 

 

3,851

 

Straight-line rent receivable

 

 

69,062

 

 

66,881

 

Prepaid expenses and other assets

 

 

6,506

 

 

7,246

 

Related party mortgage loan receivables

 

 

21,000

 

 

21,000

 

Other assets: derivative asset

 

 

—

 

 

3,022

 

Office computers and furniture, net of accumulated depreciation of $1,409 and $1,362, respectively

 

 

196

 

 

183

 

Deferred leasing commissions, net of accumulated amortization of $30,958 and $28,114, respectively

 

 

51,669

 

 

52,767

 

Total assets

 

$

1,835,435

 

$

1,842,654

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity:

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Bank note payable

 

$

30,000

 

$

—

 

Term loans payable, less unamortized financing costs of $3,507 and $4,267, respectively

 

 

766,493

 

 

765,733

 

Series A & Series B Senior Notes, less unamortized financing costs of $904 and $985, respectively

 

 

199,096

 

 

199,015

 

Accounts payable and accrued expenses

 

 

55,712

 

 

66,658

 

Accrued compensation

 

 

2,278

 

 

3,400

 

Tenant security deposits

 

 

9,155

 

 

9,346

 

Lease liability

 

 

1,716

 

 

1,890

 

Other liabilities: derivative liabilities

 

 

22,958

 

 

7,704

 

Acquired unfavorable real estate leases, less accumulated amortization of $4,804 and $4,676, respectively

 

 

2,024

 

 

2,512

 

Total liabilities

 

 

1,089,432

 

 

1,056,258

 

 

 

 

 

 

 

 

 

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, 107,328,199 and 107,269,201 shares issued and outstanding, respectively

 

 

11

 

 

11

 

Additional paid-in capital

 

 

1,357,131

 

 

1,356,794

 

Accumulated other comprehensive loss

 

 

(22,958)

 

 

(4,682)

 

Accumulated distributions in excess of accumulated earnings

 

 

(588,181)

 

 

(565,727)

 

Total stockholders’ equity

 

 

746,003

 

 

786,396

 

Total liabilities and stockholders’ equity

 

$

1,835,435

 

$

1,842,654

 

 

 

 

 

 

 

 

 

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)

 

2020

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income (loss)

 

$

(3,146)

 

$

428

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

46,055

 

 

46,791

 

Amortization of above and below market leases

 

 

(147)

 

 

(193)

 

Shares issued as compensation

 

 

337

 

 

—

 

Decrease in allowance for doubtful accounts and write-off of accounts receivable

 

 

(13)

 

 

(91)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Tenant rent receivables

 

 

(328)

 

 

(2,337)

 

Straight-line rents

 

 

(1,343)

 

 

(4,829)

 

Lease acquisition costs

 

 

(838)

 

 

(2,603)

 

Prepaid expenses and other assets

 

 

21

 

 

2,392

 

Accounts payable and accrued expenses

 

 

(10,006)

 

 

(8,741)

 

Accrued compensation

 

 

(1,122)

 

 

(852)

 

Tenant security deposits

 

 

(191)

 

 

2,799

 

Payment of deferred leasing commissions

 

 

(3,682)

 

 

(8,114)

 

Net cash provided by operating activities

 

 

25,597

 

 

24,650

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Property improvements, fixtures and equipment

 

 

(43,189)

 

 

(28,944)

 

Repayment of related party mortgage loan receivable

 

 

—

 

 

(2,400)

 

Investment in related party mortgage loan receivable

 

 

—

 

 

51,530

 

Proceeds received from liquidating trust

 

 

—

 

 

1,470

 

Net cash provided by (used in) investing activities

 

 

(43,189)

 

 

21,656

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Distributions to stockholders

 

 

(19,308)

 

 

(19,302)

 

Borrowings under bank note payable

 

 

60,000

 

 

45,000

 

Repayments of bank note payable

 

 

(30,000)

 

 

(70,000)

 

Deferred financing costs

 

 

—

 

 

(81)

 

Net cash provided by (used in) financing activities

 

 

10,692

 

 

(44,383)

 

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

 

 

(6,900)

 

 

1,923

 

Cash, cash equivalents and restricted cash, beginning of year

 

 

9,790

 

 

11,177

 

Cash, cash equivalents and restricted cash, end of period

$

2,890

$

13,100

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

 

2020

 

175,855

 

1.8%

 

2021

 

890,133

 

9.0%

 

2022

 

1,194,556

 

12.0%

 

2023

 

661,959

 

6.7%

 

2024

 

859,272

 

8.7%

 

Thereafter (2)

 

6,131,666

 

61.8%

 

 

 

9,913,441

 

100.0%

 

________________________________________

(1)

Percentages are determined based upon total square footage.   

(2)

Includes 1,475,577 square feet of vacancies at our operating properties and 179,254 square feet of vacancies at our redevelopment properties as of June 30, 2020. 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, 2020 (a)

 

 

 

# of

 

 

 

 

% of

 

Square

 

% of

 

State

 

Properties

 

Investment

 

Portfolio

 

Feet

 

Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Colorado

 

6

 

$

556,302

 

33.8%

 

2,620

 

26.4%

 

Texas

 

9

 

 

343,142

 

20.8%

 

2,420

 

24.4%

 

Georgia

 

5

 

 

322,785

 

19.6%

 

1,967

 

19.8%

 

Minnesota

 

3

 

 

121,271

 

7.4%

 

757

 

7.6%

 

Virginia

 

4

 

 

83,430

 

5.1%

 

685

 

6.9%

 

North Carolina

 

2

 

 

50,108

 

3.0%

 

322

 

3.2%

 

Missouri

 

2

 

 

43,943

 

2.7%

 

351

 

3.6%

 

Illinois

 

2

 

 

47,353

 

2.9%

 

372

 

3.8%

 

Florida

 

1

 

 

48,315

 

2.9%

 

213

 

2.2%

 

Indiana

 

1

 

 

29,249

 

1.8%

 

206

 

2.1%

 

Total

 

35

 

$

1,645,898

 

100.0%

 

9,913

 

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-20

 

30-Jun-20

 

30-Jun-20

 

Tenant improvements

 

$

10,716

 

$

13,531

 

$

24,247

 

Deferred leasing costs

 

 

2,730

 

 

603

 

 

3,333

 

Non-investment capex

 

 

4,527

 

 

6,581

 

 

11,108

 

 

 

$

17,973

 

$

20,715

 

$

38,688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Square foot & leased percentages

 

June 30,

 

December 31,

 

 

 

2020

 

2019

 

Operating Properties (a):

 

 

 

 

 

Number of properties

 

32

 

32

 

Square feet

 

9,508,226

 

9,504,634

 

Leased percentage

 

84.5%

 

87.6%

 

 

 

 

 

 

 

Redevelopment Properties:

 

 

 

 

 

Number of properties

 

3

 

3

 

Square feet

 

405,215

 

405,215

 

Leased percentage

 

55.8%

 

50.3%

 

 

 

 

 

 

 

Managed Properties - Single Asset REITs (SARs):

 

 

 

 

 

Number of properties

 

2

 

2

 

Square feet

 

348,545

 

348,545

 

 

 

 

 

 

 

Total Operating, Redevelopment and Managed Properties:

 

 

 

 

 

Number of properties

 

37

 

37

 

Square feet

 

10,261,986

 

10,258,394

 

(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-20

 

Leased (2)

 

30-Jun-20

 

Leased (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

MEADOW POINT

 

Chantilly, VA

 

138,537

 

91.1%

 

94.1%

 

70.3%

 

70.3%

 

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

 

71.7%

 

71.7%

 

71.7%

 

71.7%

 

6

 

PARK TEN PHASE II

 

Houston, TX

 

156,746

 

95.0%

 

95.0%

 

95.0%

 

95.0%

 

7

 

GREENWOOD PLAZA

 

Englewood, CO

 

196,236

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

8

 

ADDISON

 

Addison, TX

 

289,302

 

79.4%

 

76.4%

 

79.4%

 

79.4%

 

9

 

COLLINS CROSSING

 

Richardson, TX

 

300,887

 

79.7%

 

79.7%

 

79.7%

 

79.7%

 

10

 

INNSBROOK

 

Glen Allen, VA

 

298,183

 

57.2%

 

57.2%

 

57.2%

 

57.2%

 

11

 

RIVER CROSSING

 

Indianapolis, IN

 

205,729

 

98.5%

 

98.5%

 

98.5%

 

98.5%

 

12

 

LIBERTY PLAZA

 

Addison, TX

 

216,847

 

73.4%

 

72.7%

 

73.7%

 

73.6%

 

13

 

380 INTERLOCKEN

 

Broomfield, CO

 

240,359

 

73.1%

 

73.8%

 

73.1%

 

73.1%

 

14

 

390 INTERLOCKEN

 

Broomfield, CO

 

241,512

 

99.4%

 

99.0%

 

98.2%

 

99.0%

 

15

 

ELDRIDGE GREEN

 

Houston, TX

 

248,399

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

16

 

ONE OVERTON PARK

 

Atlanta, GA

 

387,267

 

93.3%

 

88.9%

 

93.3%

 

93.3%

 

17

 

LOUDOUN TECH

 

Dulles, VA

 

136,658

 

98.9%

 

98.9%

 

98.9%

 

98.9%

 

18

 

4807 STONECROFT

 

Chantilly, VA

 

111,469

 

0.0%

 

0.0%

 

0.0%

 

0.0%

 

19

 

121 SOUTH EIGHTH ST

 

Minneapolis, MN

 

297,209

 

93.7%

 

92.5%

 

86.4%

 

91.2%

 

20

 

EMPEROR BOULEVARD

 

Durham, NC

 

259,531

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

21

 

LEGACY TENNYSON CTR

 

Plano, TX

 

207,049

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

22

 

ONE LEGACY

 

Plano, TX

 

214,110

 

52.9%

 

53.2%

 

52.9%

 

52.9%

 

23

 

909 DAVIS

 

Evanston, IL

 

195,098

 

93.3%

 

93.3%

 

93.3%

 

93.3%

 

24

 

ONE RAVINIA DRIVE

 

Atlanta, GA

 

386,602

 

87.9%

 

86.9%

 

87.9%

 

87.9%

 

25

 

TWO RAVINIA

 

Atlanta, GA

 

411,047

 

69.8%

 

70.6%

 

69.5%

 

69.4%

 

26

 

WESTCHASE I & II

 

Houston, TX

 

629,025

 

55.8%

 

57.5%

 

55.6%

 

55.5%

 

27

 

1999 BROADWAY

 

Denver, CO

 

677,377

 

89.7%

 

89.9%

 

85.6%

 

85.6%

 

28

 

999 PEACHTREE

 

Atlanta, GA

 

621,946

 

91.8%

 

91.6%

 

90.9%

 

90.9%

 

29

 

1001 17th STREET

 

Denver, CO

 

655,420

 

98.5%

 

98.5%

 

97.7%

 

98.0%

 

30

 

PLAZA SEVEN

 

Minneapolis, MN

 

330,096

 

89.0%

 

89.3%

 

88.8%

 

89.0%

 

31

 

PERSHING PLAZA

 

Atlanta, GA

 

160,145

 

98.9%

 

98.9%

 

98.9%

 

98.9%

 

32

 

600 17th STREET

 

Denver, CO

 

609,353

 

92.4%

 

91.3%

 

92.9%

 

91.6%

 

 

 

OPERATING TOTAL

 

 

 

9,508,226

 

85.4%

 

85.2%

 

84.5%

 

84.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33

 

FOREST PARK

 

Charlotte, NC

 

62,212

 

35.6%

 

11.9%

 

35.6%

 

35.6%

 

34

 

BLUE LAGOON

 

Miami, FL

 

213,182

 

73.1%

 

73.1%

 

73.1%

 

73.1%

 

35

 

801 MARQUETTE AVE

 

Minneapolis, MN

 

129,821

 

37.0%

 

37.0%

 

37.0%

 

37.0%

 

 

 

REDEVELOPMENT TOTAL

 

 

 

405,215

 

55.8%

 

52.1%

 

55.8%

 

55.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OWNED PORTFOLIO TOTAL

 

 

 

9,913,441

 

 

 

 

 

 

 

 

 

________________________________________

(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.

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, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% 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

 

231,743

 

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

 

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

 

Worldventures Holdings, LLC

 

129,998

 

1.3%

 

14

 

Kaiser Foundation Health Plan

 

120,979

 

1.2%

 

15

 

Argo Data Resource Corporation

 

114,200

 

1.1%

 

16

 

Giesecke & Devrient America

 

112,110

 

1.1%

 

17

 

Randstad General Partner (US)

 

109,638

 

1.1%

 

18

 

VMWare, Inc.

 

100,853

 

1.0%

 

19

 

Ping Identity Corp.

 

89,856

 

1.0%

 

20

 

Common Grounds LLC

 

76,984

 

0.8%

 

 

 

Total

 

3,153,538

 

31.8%

 

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

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

(In thousands, except per share amounts)

 

2020

 

2019

 

2020

 

2019

 

Net income (loss)

 

$

(2,075)

 

$

1,633

 

$

(3,146)

 

$

428

 

Depreciation & amortization

 

 

22,170

 

 

22,028

 

 

44,435

 

 

45,161

 

NAREIT FFO

 

 

20,095

 

 

23,661

 

 

41,289

 

 

45,589

 

Lease Acquisition costs

 

 

99

 

 

108

 

 

197

 

 

290

 

Funds From Operations (FFO)

 

$

20,194

 

$

23,769

 

$

41,486

 

$

45,879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations (FFO)

 

$

20,194

 

$

23,769

 

$

41,486

 

$

45,879

 

Amortization of deferred financing costs

 

 

726

 

 

720

 

 

1,474

 

 

1,437

 

Shares issued as compensation

 

 

337

 

 

—

 

 

337

 

 

—

 

Straight-line rent

 

 

(377)

 

 

(3,689)

 

 

(1,343)

 

 

(4,829)

 

Tenant improvements

 

 

(13,531)

 

 

(10,169)

 

 

(24,247)

 

 

(18,487)

 

Leasing commissions

 

 

(603)

 

 

(3,666)

 

 

(3,333)

 

 

(7,905)

 

Non-investment capex

 

 

(6,581)

 

 

(4,049)

 

 

(11,108)

 

 

(6,462)

 

Adjusted Funds From Operations (AFFO)

 

$

165

 

$

2,916

 

$

3,266

 

$

9,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS

 

$

(0.02)

 

$

0.02

 

$

(0.03)

 

$

0.00

 

FFO

 

$

0.19

 

$

0.22

 

$

0.39

 

$

0.43

 

AFFO

 

$

0.00

 

$

0.03

 

$

0.03

 

$

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares (basic and diluted)

 

 

107,287

 

 

107,231

 

 

107,278

 

 

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rentable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square Feet

 

Three Months Ended

 

Three Months Ended

 

Inc

 

%

 

(in thousands)

 

or RSF

 

30-Jun-20

 

31-Mar-20

 

(Dec)

 

Change

 

Region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East

 

944

 

$

2,746

 

$

2,664

 

$

82

 

3.1

%

MidWest

 

1,557

 

 

5,088

 

 

5,485

 

 

(397)

 

(7.2)

%

South

 

4,387

 

 

13,025

 

 

13,290

 

 

(265)

 

(2.0)

%

West

 

2,620

 

 

11,211

 

 

11,463

 

 

(252)

 

(2.2)

%

Property NOI* from Operating Properties

 

9,508

 

 

32,070

 

 

32,902

 

 

(832)

 

(2.5)

%

Dispositions and Redevelopment Properties

 

405

 

 

126

 

 

(28)

 

 

154

 

0.4

%

NOI*

 

9,913

 

$

32,196

 

$

32,874

 

$

(678)

 

(2.1)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sequential Same Store

 

 

 

$

32,070

 

$

32,902

 

$

(832)

 

(2.5)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Nonrecurring

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items in NOI* (a)

 

 

 

 

810

 

 

26

 

 

784

 

(2.4)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sequential Same Store

 

 

 

$

31,260

 

$

32,876

 

$

(1,616)

 

(4.9)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

 

 

 

Reconciliation to Net income

 

 

 

30-Jun-20

 

31-Mar-20

 

 

 

 

 

 

Net loss

 

 

 

$

(2,075)

 

$

(1,071)

 

 

 

 

 

 

Add (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fee income

 

 

 

 

(446)

 

 

(478)

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

22,245

 

 

22,338

 

 

 

 

 

 

Amortization of above/below market leases

 

 

 

 

(75)

 

 

(73)

 

 

 

 

 

 

General and administrative

 

 

 

 

3,817

 

 

3,525

 

 

 

 

 

 

Interest expense

 

 

 

 

8,980

 

 

9,063

 

 

 

 

 

 

Interest income

 

 

 

 

(381)

 

 

(382)

 

 

 

 

 

 

Non-property specific items, net

 

 

 

 

131

 

 

(48)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI*

 

 

 

$

32,196

 

$

32,874

 

 

 

 

 

 

(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/20200804005928/en/

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