| PRESS RELEASE | Franklin Street Properties Corp.. |
401 Edgewater Place · Suite 200 · Wakefield, Massachusetts 01880-6210 · (781) 557-1300 · www.franklinstreetproperties.com |
Contact: Donna Brownell 877-686-9496 | FOR IMMEDIATE RELEASE |
FRANKLIN STREET PROPERTIES CORP. ANNOUNCES
THIRD QUARTER 2008 RESULTS
Wakefield, MA—November 4, 2008—Franklin Street Properties Corp. (the “Company” or “FSP”) (NYSE Alternext US/AMEX: FSP), an investment firm specializing in real estate, announced today Net Income of $7.4 million and Earnings Per Share (EPS) of $0.11 for the three months ended September 30, 2008. The Company also announced Funds From Operations (FFO) of $17.1 million or $0.24 per share for the third quarter and provided an update on other activities.
The Company evaluates its performance based on Net Income, EPS, FFO, Gains on Sales (GOS) and FFO+GOS, and believes each is an important measure. A reconciliation of Net Income to FFO and FFO+GOS, which are non-GAAP financial measures, is provided on page 3 of this press release.
| (in 000's except per share data) | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | 2008 | | | 2007 | | | Increase (Decrease) | | | 2008 | | | 2007 | | | Increase (Decrease) | |
| | | | | | | | | | | | | | | | | | | |
| Net Income | | $ | 7,419 | | | $ | 9,486 | | | $ | (2,067 | ) | | $ | 25,340 | | | $ | 51,694 | | | $ | (26,354 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| FFO | | $ | 17,084 | | | $ | 16,922 | | | $ | 162 | | | $ | 53,005 | | | $ | 56,477 | | | $ | (3,472 | ) |
| GOS | | | - | | | | 1,942 | | | | (1,942 | ) | | | - | | | | 23,532 | | | | (23,532 | ) |
| FFO+GOS | | $ | 17,084 | | | $ | 18,864 | | | $ | (1,780 | ) | | $ | 53,005 | | | $ | 80,009 | | | $ | (27,004 | ) |
| Per Share Data: | | | | | | | | | | | | | | | | | | | | | | | | |
| EPS | | $ | 0.11 | | | $ | 0.13 | | | $ | (0.03 | ) | | $ | 0.36 | | | $ | 0.73 | | | $ | (0.38 | ) |
| FFO | | $ | 0.24 | | | $ | 0.24 | | | $ | 0.00 | | | $ | 0.75 | | | $ | 0.80 | | | $ | (0.05 | ) |
| GOS | | $ | - | | | $ | 0.03 | | | $ | (0.03 | ) | | $ | - | | | $ | 0.33 | | | $ | (0.33 | ) |
| FFO+GOS | | $ | 0.24 | | | $ | 0.27 | | | $ | (0.02 | ) | | $ | 0.75 | | | $ | 1.13 | | | $ | (0.38 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted ave shares (diluted) | | | 70,481 | | | | 70,596 | | | | (115 | ) | | | 70,481 | | | | 70,709 | | | | (228 | ) |
Comparing results for the third quarter of 2008 to 2007, Net Income and EPS decreased $2.1 million or $0.03 per share, and FFO increased $0.2 million but was flat on a per share basis. There was no GOS in the third quarter of 2008 compared to $1.9 million, or $0.03 per share, in the third quarter of 2007. Comparing results for the third quarter of 2008 to 2007, the FFO increase was primarily a result of increases in real estate FFO of $0.6 million, which was partially offset by a decrease in FFO from investment banking of $0.4 million. Primarily as a result of these changes, FFO+GOS decreased $1.8 million or $0.02 per share comparing the third quarter of 2008 to 2007.
Comparing results for the nine months of 2008 to 2007, Net Income and EPS decreased $26.4 million or $0.38 per share, and FFO decreased $3.5 million or $0.05 per share. There was no GOS for the nine months of 2008 compared to $23.5 million or $0.33 per share in the nine months of 2007. Comparing results for the nine months of 2008 to 2007, the FFO decrease was primarily a result of a decrease in FFO from investment banking of $4.8 million, which was partially offset by increases in real estate FFO of $1.3 million. The FFO decrease from investment banking was primarily because of lower sales of securities by our investment bank, which decreased $61.8 million to $57.4 million for the nine months of 2008 compared to $119.2 million in the nine months of 2007. Revenue from our investment bank is primarily based on the value of these securities sales. As a result of these changes, FFO+GOS decreased $27.0 million or $0.38 per share comparing the nine months of 2008 to 2007.
George J. Carter, President and CEO, commented as follows:
“For the third quarter of 2008, FSP’s profits as represented by FFO+GOS totaled approximately $17.1 million or $0.24 per share. Dividend distributions declared for the third quarter of 2008, which are payable on November 20, 2008, totaled approximately $13.4 million or $0.19 per share.
Significant portions of our real estate investment business are transactional. Beginning in the third quarter of 2007, those transactional businesses became materially impacted by external financial, mortgage/debt and investment market conditions that have arisen from the “credit crunch”. FSP has certain properties in its portfolio that we may contemplate selling but have not put up for sale because of these market conditions. Consequently, the third quarter of 2008 produced no GOS profit contribution. Changes in mortgage loan availability and changes in the cost of those loans continue to restrict many potential sales of commercial office buildings around the country. Rather than sell in this negative environment, FSP continues to postpone consideration of the sale of some properties until a more attractive environment establishes itself, particularly within the mortgage/debt markets. A time frame for improvement in these markets is hard to predict, especially with the uncertainty of how significant an impact the current financial market turmoil will have on broader U.S. economic activity. We are constantly evaluating property disposition opportunities, as well as potential new property acquisition opportunities that may present themselves at attractive prices.
Additionally as a result of the turmoil in the financial, mortgage/debt and investment markets, the investor appetite for our real estate private placement business has suffered and continues to negatively affect our Investment Banking equity-raising efforts. During the third quarter of 2008, we raised $4.8 million of equity capital, compared with $49.9 million in the second quarter of 2008 and $2.7 million in the first quarter of 2008. Concern and uncertainty continues to surround the potential impact on commercial real estate emanating from the financial credit crisis and has caused a “wait-and-see” attitude to prevail among many of our established investor clients. We anticipate business in this area to remain very volatile quarter-to-quarter as long as broader investment market activity and financial events continue to meaningfully sway investor confidence and sentiment.
While profits continued to suffer in the third quarter of 2008 from our transactional businesses, which were negatively impacted by turmoil in the broader capital markets, our real estate portfolio of 27 properties maintained its overall 93% occupancy and provided steady rental income. FFO for the third quarter of 2008 was $0.24 per share, all of which came from real estate operations.
On October 15, 2008, FSP used its balance sheet strength to obtain a $75 million unsecured term loan. The loan was provided by three banks that are participants in FSPs existing $250 million revolving line of credit facility. The purpose for the loan is to increase capital to take advantage of property acquisition opportunities that are beginning to present themselves at attractive prices as a result of the current distress surrounding some aspects of the broader commercial real estate markets.
As the capital markets and U.S. economy work through the current financial/credit crisis, we will continue to pursue additional commercial property investment opportunities. It will be FSP’s objective to continue to grow its property portfolio and rental income business during this period of liquidity-constrained capital markets by using its balance sheet strength to help finance and fund new acquisitions. We continue to be very optimistic about FSP’s position in the current commercial real estate investment market and the opportunities that are presenting themselves to acquire commercial properties at better pricing and value metrics than we have seen in the last several years.”
Dividend Announcement
On October 17, 2008, the Company announced that its Board of Directors declared a regularly quarterly dividend for the three months ended September 30, 2008 of $0.19 per share of common stock payable on November 20, 2008 to stockholders of record on October 31, 2008.
Real Estate Update
Supplementary Schedules D & E provide property information for our continuing real estate portfolio of 27 properties and for two non-consolidated REITs that we have interests in as of September 30, 2008. The Company is in the process of compiling an expanded supplemental information package that will provide stockholders and the financial community with additional operating and financial data. The Company expects to file this supplemental information package with the SEC and to post it to its website at www.franklinstreetproperties.com on or before Friday, November 7, 2008.
A reconciliation of Net Income to FFO and FFO+GOS is shown below and definitions of FFO and FFO+GOS are provided on Supplementary Schedule H. We believe FFO is used broadly throughout the real estate investment trust (REIT) industry as a measurement of performance and is generally calculated in a similar manner to our calculation. We also believe that FFO+GOS is an important measure as it considers investment performance.
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| (In thousands, except per share amounts) | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | |
| Net income | | $ | 7,419 | | | $ | 9,486 | | | $ | 25,340 | | | $ | 51,694 | |
| (Gain) Loss on sale of properties | | | - | | | | (1,942 | ) | | | - | | | | (23,532 | ) |
| GAAP (income) loss from non-consolidated REITs | | | (680 | ) | | | (105 | ) | | | (2,167 | ) | | | 620 | |
| Distributions from non-consolidated REITs | | | 1,561 | | | | 476 | | | | 3,838 | | | | 1,199 | |
| Depreciation of real estate & intangible amortization | | | 8,784 | | | | 9,007 | | | | 25,994 | | | | 26,496 | |
| Funds From Operations (FFO) | | | 17,084 | | | | 16,922 | | | | 53,005 | | | | 56,477 | |
| Plus gains on sales of properties (GOS) | | | - | | | | 1,942 | | | | - | | | | 23,532 | |
| FFO+GOS | | $ | 17,084 | | | $ | 18,864 | | | $ | 53,005 | | | $ | 80,009 | |
| | | | | | | | | | | | | | | | | |
| Per Share Data | | | | | | | | | | | | | | | | |
| EPS | | $ | 0.11 | | | $ | 0.13 | | | $ | 0.36 | | | $ | 0.73 | |
| FFO | | $ | 0.24 | | | $ | 0.24 | | | $ | 0.75 | | | $ | 0.80 | |
| GOS | | $ | - | | | $ | 0.03 | | | $ | - | | | $ | 0.33 | |
| FFO+GOS | | $ | 0.24 | | | $ | 0.27 | | | $ | 0.75 | | | $ | 1.13 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares (basic and diluted) | | | 70,481 | | | | 70,596 | | | | 70,481 | | | | 70,709 | |
Today’s news release, along with other news about Franklin Street Properties Corp., is available on the Internet at www.franklinstreetproperties.com.
A conference call is scheduled for November 5, 2008 at 9:30 a.m. (ET) to discuss the third quarter 2008 results. The toll free number is 1-800-295-4740, passcode 93615566. Internationally, the call may be accessed by dialing 1-617-614-3925, passcode 93615566. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website, www.franklinstreetproperties.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 achieving current income and long-term growth through investments in commercial properties. FSP operates in two business segments: real estate operations and investment banking/investment services. The majority of FSP's property portfolio is suburban office buildings, with select investments in certain central business district properties. FSP's subsidiary, FSP Investments LLC (member, FINRA and SIPC), is a real estate investment banking firm and a registered broker/dealer. 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.franklinstreetproperties.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 based on current judgments and current knowledge of management, which 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, changes in economic conditions in the United States, disruptions in the debt markets, changes in economic conditions in the markets in which we own properties, changes in the demand by investors for investment in Sponsored REITs (as defined in our Annual Report on Form 10 -K for the year ended December 31, 2007), risks of a lessening of demand for the types of real estate owned by us, changes in government regulations, and expenditures that cannot be anticipated such as utility rate and usage increases, 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, 2007, 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, 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 |
| Prior 4 Quarters Information | F |
| Largest 20 Tenants – FSP Owned Portfolio | G |
| Definition of Funds From Operations (FFO) and FFO+GOS | H |
Franklin Street Properties Corp. Financial Results
Condensed Consolidated Income Statements
| | | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |
| (in thousands, except per share amounts) | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | |
| Revenue: | | | | | | | | | | | | |
| Rental | | $ | 27,927 | | | $ | 27,109 | | | $ | 82,283 | | | $ | 75,110 | |
| Related party revenue: | | | | | | | | | | | | | | | | |
| Syndication fees | | | 304 | | | | 687 | | | | 3,766 | | | | 7,090 | |
| Transaction fees | | | 300 | | | | 604 | | | | 3,606 | | | | 7,446 | |
| Management fees and interest income from loans | | | 380 | | | | 1,497 | | | | 1,364 | | | | 5,176 | |
| Other | | | 13 | | | | 37 | | | | 52 | | | | 84 | |
| Total revenue | | | 28,924 | | | | 29,934 | | | | 91,071 | | | | 94,906 | |
| | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | |
| Real estate operating expenses | | | 7,159 | | | | 7,151 | | | | 20,973 | | | | 19,026 | |
| Real estate taxes and insurance | | | 4,590 | | | | 4,398 | | | | 13,375 | | | | 12,490 | |
| Depreciation and amortization | | | 7,666 | | | | 7,756 | | | | 22,616 | | | | 21,710 | |
| Selling, general and administrative | | | 1,927 | | | | 1,787 | | | | 6,557 | | | | 5,675 | |
| Commissions | | | 208 | | | | 406 | | | | 2,020 | | | | 3,720 | |
| Interest | | | 1,108 | | | | 1,823 | | | | 3,351 | | | | 6,121 | |
| | | | | | | | | | | | | | | | | |
| Total expenses | | | 22,658 | | | | 23,321 | | | | 68,892 | | | | 68,742 | |
| | | | | | | | | | | | | | | | | |
| Income before interest income, equity in earnings (losses) of | | | | | | | | | | | | | |
| non-consolidated REITs and taxes | | | 6,266 | | | | 6,613 | | | | 22,179 | | | | 26,164 | |
| Interest income | | | 177 | | | | 650 | | | | 657 | | | | 1,864 | |
| Equity in earnings (losses) of non-consolidated REITs | | | 679 | | | | 147 | | | | 2,167 | | | | (611 | ) |
| | | | | | | | | | | | | | | | | |
| Income before taxes | | | 7,122 | | | | 7,410 | | | | 25,003 | | | | 27,417 | |
| Income tax expense (benefit) | | | (297 | ) | | | (206 | ) | | | (337 | ) | | | 514 | |
| | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | 7,419 | | | | 7,616 | | | | 25,340 | | | | 26,903 | |
| Discontinued operations: | | | | | | | | | | | | | | | | |
| Income (loss) from discontinued operations | | | - | | | | (72 | ) | | | - | | | | 1,259 | |
| Gain on sale of assets, less applicable income tax | | | - | | | | 1,942 | | | | - | | | | 23,532 | |
| Total discontinued operations | | | - | | | | 1,870 | | | | - | | | | 24,791 | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 7,419 | | | $ | 9,486 | | | $ | 25,340 | | | $ | 51,694 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of shares outstanding, | | | | | | | | | | | | | | | | |
| basic and diluted | | | 70,481 | | | | 70,596 | | | | 70,481 | | | | 70,709 | |
| | | | | | | | | | | | | | | | | |
| Earnings per share, basic and diluted, attributable to: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | 0.11 | | | $ | 0.11 | | | $ | 0.36 | | | $ | 0.38 | |
| Discontinued operations | | | - | | | | 0.02 | | | | - | | | | 0.35 | |
| Net income per share, basic and diluted | | $ | 0.11 | | | $ | 0.13 | | | $ | 0.36 | | | $ | 0.73 | |
Franklin Street Properties Corp. Financial Results
Condensed Consolidated Balance Sheets
| (in thousands, except share and par value amounts) | | September 30, | | | December 31, | |
| | | 2008 | | | 2007 | |
| Assets: | | | | | | |
| Real estate assets, net | | $ | 812,438 | | | $ | 790,319 | |
| Acquired real estate leases, less accumulated amortization | | | | | | | | |
| of $26,831 and $23,401, respectively | | | 28,024 | | | | 33,695 | |
| Investment in non-consolidated REITs | | | 83,896 | | | | 85,663 | |
| Assets held for syndication, net | | | 13,335 | | | | 26,310 | |
| Cash and cash equivalents | | | 34,527 | | | | 46,988 | |
| Restricted cash | | | 336 | | | | 336 | |
| Tenant rent receivables, less allowance for doubtful accounts | | | | | | | | |
| of $509 and $430, respectively | | | 1,174 | | | | 1,472 | |
| Straight-line rent receivable, less allowance for doubtful accounts | | | | | | | | |
| of $261 and $261, respectively | | | 8,255 | | | | 7,387 | |
| Prepaid expenses | | | 2,922 | | | | 1,395 | |
| Other assets | | | 1,475 | | | | 406 | |
| Office computers and furniture, net of accumulated depreciation | | | | | | | | |
| of $1,075 and $968, respectively | | | 313 | | | | 309 | |
| Deferred leasing commissions, net of accumulated amortization | | | | | | | | |
| of $2,988, and $1,975, respectively | | | 10,365 | | | | 9,186 | |
| Total assets | | $ | 997,060 | | | $ | 1,003,466 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity: | | | | | | | | |
| Liabilities: | | | | | | | | |
| Bank note payable | | $ | 105,118 | | | $ | 84,750 | |
| Accounts payable and accrued expenses | | | 24,945 | | | | 20,255 | |
| Accrued compensation | | | 1,652 | | | | 1,564 | |
| Tenant security deposits | | | 1,823 | | | | 1,874 | |
| Acquired unfavorable real estate leases, less accumulated amortization | | | | | | | | |
| of $1,587, and $1,226, respectively | | | 4,654 | | | | 4,405 | |
| Total liabilities | | | 138,192 | | | | 112,848 | |
| | | | | | | | | |
| 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, 70,480,705 and 70,480,705 shares issued and outstanding, respectively | | | 7 | | | | 7 | |
| Additional paid-in capital | | | 889,019 | | | | 889,019 | |
| Earnings (distributions) in excess of accumulated earnings/distributions | | | (30,158 | ) | | | 1,592 | |
| Total stockholders’ equity | | | 858,868 | | | | 890,618 | |
| Total liabilities and stockholders’ equity | | $ | 997,060 | | | $ | 1,003,466 | |
Franklin Street Properties Corp. Financial Results
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | For the Nine Months Ended September 30, | |
| (in thousands) | | 2008 | | | 2007 | |
| Cash flows from operating activities: | | | | | | |
| Net income | | $ | 25,340 | | | $ | 51,694 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| Gains on assets sold | | | - | | | | (23,532 | ) |
| Depreciation and amortization expense | | | 22,649 | | | | 22,818 | |
| Amortization of above market lease | | | 3,376 | | | | 3,706 | |
| Equity in earnings (losses) from non-consolidated REITs | | | (2,167 | ) | | | 619 | |
| Distributions from non-consolidated REITs | | | 3,838 | | | | 1,199 | |
| Increase in bad debt reserve | | | 79 | | | | - | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Restricted cash | | | - | | | | 425 | |
| Tenant rent receivables, net | | | 219 | | | | 1,053 | |
| Straight-line rents, net | | | (854 | ) | | | (2,924 | ) |
| Prepaid expenses and other assets, net | | | (1,474 | ) | | | (717 | ) |
| Accounts payable and accrued expenses | | | 3,863 | | | | 572 | |
| Accrued compensation | | | 88 | | | | (1,273 | ) |
| Tenant security deposits | | | (51 | ) | | | 179 | |
| Payment of deferred leasing commissions | | | (2,434 | ) | | | (2,905 | ) |
| | | | | | | | | |
| Net cash provided by operating activities | | | 52,472 | | | | 50,914 | |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
Purchase of real estate assets, office computers and furniture, capitalized merger costs | | | (37,215 | ) | | | (75,887 | ) |
| Purchase of acquired favorable and unfavorable leases | | | (2,067 | ) | | | (3,726 | ) |
| Investment in non-consolidated REITs | | | (10 | ) | | | (18 | ) |
| Investment in loan receivable | | | (1,125 | ) | | | - | |
| Redemption of certificate of deposit | | | - | | | | 5,143 | |
| Investment in assets held for syndication, net | | | 12,235 | | | | (112,618 | ) |
| Proceeds received on sales of real estate assets | | | - | | | | 85,673 | |
| | | | | | | | | |
| Net cash used in investing activities | | | (28,182 | ) | | | (101,433 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Distributions to stockholders | | | (57,089 | ) | | | (65,813 | ) |
| Purchase of treasury shares | | | - | | | | (4,767 | ) |
| Repayments under bank note payable, net | | | 20,368 | | | | 104,550 | |
| Deferred financing costs | | | (30 | ) | | | (7 | ) |
| | | | | | | | | |
| Net cash (used in) provided by financing activities | | | (36,751 | ) | | | 33,963 | |
| | | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | (12,461 | ) | | | (16,556 | ) |
| | | | | | | | | |
| Cash and cash equivalents, beginning of period | | | 46,988 | | | | 69,973 | |
| | | | | | | | | |
| Cash and cash equivalents, end of period | | $ | 34,527 | | | $ | 53,417 | |
| | | | | | | | | |
| The accompanying notes are an integral part of these condensed consolidated financial statements. | |
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 |
| 2008 | | 91,653 | 1.8% |
| 2009 | | 555,808 | 10.8% |
| 2010 | | 770,393 | 15.0% |
| 2011 | | 372,518 | 7.2% |
| 2012 | | 748,427 | 14.5% |
| 2013 | | 346,513 | 6.7% |
| Thereafter (2) | | 2,268,425 | 44.0% |
| | | 5,153,737 | 100.0% |
| | (1) | Percentages are determined based upon square footage of expiring commercial leases and if applicable, exclude assets held for sale. |
| | (2) | Includes 380,000 square feet of current vacancies. |
| (Dollars and square feet in 000's) | As of September 30, 2008 |
| | # of | | % of | | Square | % of |
| State | Properties | Investment | Portfolio | | Feet | Portfolio |
| | | | | | | |
| Texas | 7 | $ 235,444 | 29.0% | | 1,489 | 28.8% |
| Colorado | 4 | 131,339 | 16.2% | | 791 | 15.4% |
| Georgia | 1 | 77,872 | 9.6% | | 387 | 7.5% |
| Maryland | 2 | 63,200 | 7.8% | | 424 | 8.2% |
| Virginia | 2 | 62,631 | 7.6% | | 433 | 8.4% |
| Missouri | 2 | 56,832 | 7.0% | | 349 | 6.8% |
| Florida | 1 | 49,572 | 6.1% | | 213 | 4.1% |
| Indiana | 1 | 37,622 | 4.6% | | 205 | 4.0% |
| Illinois | 1 | 31,728 | 3.9% | | 177 | 3.5% |
| California | 2 | 21,417 | 2.6% | | 182 | 3.5% |
| Michigan | 1 | 15,274 | 1.9% | | 215 | 4.2% |
| Washington | 1 | 15,073 | 1.9% | | 117 | 2.3% |
| North Carolina | 2 | 14,433 | 1.8% | | 172 | 3.3% |
| | 27 | $ 812,437 | 100.0% | | 5,154 | 100.0% |
| Property by type: | | | | | | |
| (dollars & square feet in 000's) | As of September 30, 2008 |
| | # of | | % of | | Square | % of |
| Type | Properties | Investment | Portfolio | | Feet | Portfolio |
| Office | 26 | 807,265 | 99.4% | | 5,055 | 98.1% |
| Industrial | 1 | 5,172 | 0.6% | | 99 | 1.9% |
| | 27 | $ 812,437 | 100.0% | | 5,154 | 100.0% |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule E
Portfolio and Other Supplementary Information
(Unaudited & Approximated)
| Capital Expenditures | | | | | | |
| Owned Portfolio | | Nine Months Ended | |
| (in thousands) | | 30-Sep-08 | | | 30-Sep-07 | |
| | | | | | | |
| Tenant improvements | | $ | 4,564 | | | $ | 5,599 | |
| Deferred leasing costs | | | 2,434 | | | | 2,905 | |
| Building improvements | | | 1,310 | | | | 3,596 | |
| | | $ | 8,308 | | | $ | 12,100 | |
| Square foot & leased percentages | September 30, | | December 31, |
| | | 2008 | | 2007 |
| | | | | |
| Owned portfolio of commercial real estate | | | |
| | Number of properties | 27 | | 26 |
| | Square feet | 5,153,737 | | 4,998,280 |
| | Leased percentage | 93% | | 93% |
| | | | | |
| Investments in non-consolidated commercial real estate | | | |
| | Number of properties | 2 | | 3 |
| | Square feet | 1,461,224 | | 1,614,380 |
| | Leased percentage | 79% | | 92% |
| | | | | |
| Single Asset REITs (SARs) managed | | | |
| | Number of properties | 10 | | 9 |
| | Square feet* | 2,683,105 | | 2,682,770 |
| | Leased percentage* | 92% | | 92% |
| | | | | |
| Total owned, investments & managed properties | | | |
| | Number of properties* | 39 | | 38 |
| | Square feet* | 9,298,066 | | 9,295,430 |
| | Leased percentage* | 90% | | 93% |
| | | | | |
| *Excludes a property to be constructed with approximately 285,000 square feet. |
The following table shows property information for our investments in non-consolidated REITs:
| | | | Square | % Leased | % Interest |
| Single Asset REIT Name | City | State | Feet | 30-Sep-08 | Held |
| FSP 303 East Wacker Drive Corp. | Chicago | IL | 842,717 | 87.9% | 43.7% |
| FSP Phoenix Tower Corp. | Houston | TX | 618,507 | 67.9% | 4.6% |
| | | | 1,461,224 | 79.4% | |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule F: Prior 4 Quarters Information
(Unaudited)
| (in thousands) | | | | | | | | | | | | |
| | | | Q3 | | | | Q4 | | | | Q1 | | | | Q2 | |
| Revenue: | | 2007 | | | 2007 | | | 2008 | | | 2008 | |
| Rental | | $ | 27,109 | | | $ | 25,851 | | | | 26,656 | | | | 27,700 | |
| Related party revenue: | | | | | | | | | | | | | | | | |
| Syndication fees | | | 687 | | | | 1,896 | | | | 205 | | | | 3,257 | |
| Transaction fees | | | 604 | | | | 2,452 | | | | 168 | | | | 3,138 | |
| Management fees and | | | | | | | | | | | | | | | | |
| interest income from loans | | | 1,497 | | | | 1,854 | | | | 561 | | | | 423 | |
| Other | | | 37 | | | | 34 | | | | 20 | | | | 19 | |
| Total revenue | | | 29,934 | | | | 32,087 | | | | 27,610 | | | | 34,537 | |
| | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | |
| Real estate operating expenses | | | 7,151 | | | | 7,145 | | | | 6,698 | | | | 7,116 | |
| Real estate taxes and insurance | | | 4,398 | | | | 4,046 | | | | 4,279 | | | | 4,505 | |
| Depreciation and amortization | | | 7,756 | | | | 7,624 | | | | 7,359 | | | | 7,591 | |
| Selling, general and administrative | | | 1,787 | | | | 1,790 | | | | 2,009 | | | | 2,621 | |
| Commissions | | | 406 | | | | 1,017 | | | | 158 | | | | 1,654 | |
| Interest | | | 1,823 | | | | 1,563 | | | | 1,192 | | | | 1,051 | |
| Total expenses | | | 23,321 | | | | 23,185 | | | | 21,695 | | | | 24,538 | |
| | | | | | | | | | | | | | | | | |
| Income before interest income, equity | | | | | | | | | | | | | | | | |
| in earnings in non-consolidated REITs | | | 6,613 | | | | 8,902 | | | | 5,915 | | | | 9,999 | |
| Interest income | | | 650 | | | | 514 | | | | 303 | | | | 176 | |
| Equity in earnings in non-consolidated REITs | | | 147 | | | | 147 | | | | 793 | | | | 694 | |
| | | | | | | | | | | | | | | | | |
| Income before taxes on income | | | 7,410 | | | | 9,563 | | | | 7,011 | | | | 10,869 | |
| Taxes on income | | | (206 | ) | | | 359 | | | | (375 | ) | | | 335 | |
| | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | 7,616 | | | | 9,204 | | | | 7,386 | | | | 10,534 | |
| Loss from discontinued operations | | | (72 | ) | | | (70 | ) | | | - | | | | - | |
| Gain on sale of assets | | | 1,942 | | | | 257 | | | | - | | | | - | |
| Net income | | $ | 9,486 | | | $ | 9,391 | | | $ | 7,386 | | | $ | 10,534 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| FFO and FFO+GOS calculations: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 9,486 | | | $ | 9,391 | | | $ | 7,386 | | | $ | 10,534 | |
| (Gain) Loss on sale of assets | | | (1,942 | ) | | | (257 | ) | | | - | | | | - | |
| GAAP income from non-consolidated REITs | | | (106 | ) | | | (147 | ) | | | (793 | ) | | | (694 | ) |
| Distributions from non-consolidated REITs | | | 476 | | | | 607 | | | | 546 | | | | 1,731 | |
| Depreciation & amortization | | | 9,008 | | | | 8,978 | | | | 8,498 | | | | 8,712 | |
| Funds From Operations (FFO) | | | 16,922 | | | | 18,572 | | | | 15,637 | | | | 20,283 | |
| Plus gains on sales of assets (GOS) | | | 1,942 | | | | 257 | | | | - | | | | - | |
| FFO+GOS | | $ | 18,864 | | | $ | 18,829 | | | $ | 15,637 | | | $ | 20,283 | |
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 square feet leased.
| | | | | % of |
| | Tenant | Sq Ft | SIC Code | Portfolio |
| 1 | Capital One Services, Inc.* (1) | 297,789 | 61 | 6.0% |
| 2 | Citgo Petroleum Corporation | 248,399 | 29 | 5.0% |
| 3 | Tektronix Texas, LLC | 241,372 | 38 | 4.8% |
| 4 | Burger King Corporation | 212,619 | 58 | 4.3% |
| 5 | New Era of Networks, Inc. (Sybase) | 199,077 | 42 | 4.0% |
| 6 | Citgroup Credit Services, Inc. | 176,848 | 61 | 3.5% |
| 7 | RGA Reinsurance Company | 171,120 | 63 | 3.4% |
| 8 | International Business Machines Corp. | 138,033 | 73 | 2.8% |
| 9 | Murphy Exploration & Production Company | 133,786 | 13 | 2.7% |
| 10 | CACI Technologies, Inc. | 132,896 | 73 | 2.7% |
| 11 | Maines Paper and Food Service, Inc. | 98,745 | 42 | 2.0% |
| 12 | Jones Lang Lasalle | 92,827 | 87 | 1.9% |
| 13 | AMDOCS, Inc. | 91,928 | 73 | 1.8% |
| 14 | Ober Kaler Grimes | 90,811 | 81 | 1.8% |
| 15 | County of Santa Clara | 90,467 | 91 | 1.8% |
| 16 | Vail Corp, dba Vail Resorts | 83,620 | 79 | 1.7% |
| 17 | Corporate Holdings, LLC | 81,818 | 67 | 1.6% |
| 18 | Technip-Coflexip USA Holdings, Inc | 79,496 | 73 | 1.6% |
| 19 | Noble Royalties, Inc. | 78,344 | 67 | 1.6% |
| 20 | Cooley Godward LLP | 72,850 | 81 | 1.5% |
| | Total | 2,812,845 | | 56.3% |
| | | | | |
| (1) | Capital One subleases all of its space to LandAmerica Financial Group. | |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule H
Definition of Funds From Operations (“FFO”),
and FFO plus Gains on Sales (“FFO+GOS”)
The Company evaluates the performance of its reportable segments based on several measures including, Funds From Operations (“FFO”) and FFO plus Gains on Sales (“FFO+GOS”) as management believes they represent important measures of activity and are an important consideration in determining distributions paid to equity holders. The Company defines FFO as net income (computed in accordance with generally accepted accounting principles, or GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments to exclude non-cash income (or losses) from non-consolidated or Sponsored REITs, plus distributions received from non-consolidated or Sponsored REITs. The Company defines FFO+GOS as FFO as defined above, plus gains (or losses) from sales of properties and provisions for assets held for sale, if applicable.
FFO and FFO+GOS should not be considered as alternatives to net income (determined in accordance with GAAP), as indicators of the Company’s financial performance, nor as alternatives to cash flows from operating activities (determined in accordance with GAAP), nor as measures of the Company’s liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company’s needs. Other real estate companies may define these terms in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, FFO and FFO+GOS should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.
