Exhibit 99.1
| PRESS RELEASE | Franklin Street Properties Corp. |
401 Edgewater Place · Suite 200 · Wakefield, Massachusetts 01880-6210 · (781) 557-1300 · www.franklinstreetproperties.com |
Contact: John Demeritt 877-686-9496 | | FOR IMMEDIATE RELEASE |
FRANKLIN STREET PROPERTIES CORP. ANNOUNCES
SECOND QUARTER 2009 RESULTS
Wakefield, MA—August 4, 2009—Franklin Street Properties Corp. (the “Company” or “FSP”) (NYSE Amex: FSP), an investment firm specializing in real estate, announced today Funds From Operations (FFO) of $17.4 million or $0.25 per share for the second quarter ended June 30, 2009, which was sequentially flat compared to the first quarter of 2009. The Company also announced Net Income of $4.9 million and Earnings Per Share (EPS) of $0.07 for the second quarter ended June 30, 2009.
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 4 of this press release.
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| (in 000's except per share data) | | 2009 | | | 2008 | | | | Increase
(Decrease) | | | 2009 | | | 2008 | | | | Increase
(Decrease) | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Income | | $ | 4,865 | | | $ | 10,534 | | | | $ | (5,669 | ) | | $ | 12,673 | | | $ | 17,920 | | | | $ | (5,247 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FFO | | $ | 17,409 | | | $ | 20,283 | | | | $ | (2,874 | ) | | $ | 34,747 | | | $ | 35,920 | | | | $ | (1,173 | ) |
| GOS | | | - | | | | - | | | | | - | | | | - | | | | - | | | | | - | |
| FFO+GOS | | $ | 17,409 | | | $ | 20,283 | | | | $ | (2,874 | ) | | $ | 34,747 | | | $ | 35,920 | | | | $ | (1,173 | ) |
| Per Share Data: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| EPS | | $ | 0.07 | | | $ | 0.15 | | | | $ | (0.08 | ) | | $ | 0.18 | | | $ | 0.25 | | | | $ | (0.07 | ) |
| FFO | | $ | 0.25 | | | $ | 0.29 | | | | $ | (0.04 | ) | | $ | 0.49 | | | $ | 0.51 | | | | $ | (0.02 | ) |
| GOS | | $ | - | | | $ | - | | | | $ | - | | | $ | - | | | $ | - | | | | $ | - | |
| FFO+GOS | | $ | 0.25 | | | $ | 0.29 | | | | $ | (0.04 | ) | | $ | 0.49 | | | $ | 0.51 | | | | $ | (0.02 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted average | | | | | | | | | | | | | | | | | | | | | | | | | | |
| shares (diluted) | | | 70,481 | | | | 70,481 | | | | | - | | | | 70,481 | | | | 70,481 | | | | | - | |
Comparing results for the second quarter of 2009 to 2008, Net Income and EPS decreased $5.7 million or $0.08 per share; and FFO and FFO+GOS each decreased $2.9 million or $0.04 per share. The decrease in FFO was primarily from a decrease in investment banking FFO of $3.7 million and was partially offset by an increase in real estate FFO of $0.8 million. The decrease from investment banking was caused by lower sales of securities by our investment bank, which decreased $49.5 million to $375,000 for the second quarter of 2009 compared to the second quarter of 2008. Revenue from our investment bank is primarily based on the value of these securities sales. The increase in real estate FFO was primarily from contributions from two acquisitions made in December 2008. There was no GOS in the second quarter of 2009 or 2008.
Comparing results for the first half of 2009 to 2008, Net Income and EPS decreased $5.2 million or $0.07 per share; and FFO and FFO+GOS each decreased $1.2 million or $0.02 per share. The decrease in FFO was primarily from a decrease in investment banking FFO of $4.0 million and was partially offset by an increase in real estate FFO of $2.8 million. The decrease from investment banking was caused by lower sales of securities by our investment bank, which decreased $52.0 million to $550,000 for the six months ended June 30, 2009 compared to the six months ended June 30, 2008. Revenue from our investment bank is primarily based on the value of these securities sales. The increase in real estate FFO was primarily from contributions from two acquisitions made in December 2008. There was no GOS in the first half of 2009 or 2008.
George J. Carter, President and CEO, commented as follows:
“For the second quarter of 2009, FSP’s profits as represented by FFO+GOS totaled approximately $17.4 million or $0.25 per share, sequentially flat compared to the first quarter of 2009. Dividend distributions declared for the second quarter of 2009, which are payable on August 20, 2009, will be approximately $13.4 million or $0.19 per share.
Significant portions of our real estate investment business, specifically property sales and investment banking, are transactional. Similar to the first quarter of 2009, neither of these business segments made a positive contribution to the second quarter results. Substantially all profits for the quarter were produced by our ongoing/recurring real estate operations.
Although FSP has certain properties in its portfolio that we would contemplate selling, we have not listed any property for sale because of current adverse market conditions. 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. However, we continue to constantly evaluate property disposition opportunities.
During the second quarter of 2009, our investment banking group raised $375,000 of equity capital, an insignificant contribution similar to the first quarter of 2009. Concern continues to surround the potential impact on commercial real estate emanating from the U.S. recession and financial/credit crisis, and our established investor clients continue to sit on the sidelines until a clearer sense of stability returns to the property markets before considering significant new investment purchases. The lack of equity raising activity resulted in our investment banking business segment operating at a loss for the second quarter totaling approximately $0.3 million, which is less than $0.01 per share. We anticipate business in this area to remain constrained as long as broader commercial real estate fundamentals continue to deteriorate.
While profits continued to suffer in the second quarter of 2009 from our transactional businesses, our real estate portfolio of 31 properties maintained an overall 92% occupancy and provided steady rental income. FFO for the second quarter of 2009 was $0.25 per share, all of which came from real estate operations net of the cost of maintaining our investment banking capability.
During the last week of the second quarter of 2009, FSP purchased two additional office properties for our portfolio. The total purchase price for the two assets was approximately $51.6 million. Both acquisitions are in areas of the country where FSP or its affiliates have been active owners and managers of office property. Both properties are newly constructed within the last three years and are 100% net leased to excellent credit tenants. Considering cap rate, price per square foot, replacement cost and other metrics, we believe these acquisitions represent outstanding values. The acquisition dates of the assets did not allow them to contribute meaningfully to our second quarter results, but both properties will be owned for the full third quarter. These two property acquisitions are our first in 2009 and along with our three property acquisitions made during 2008, are now fully contributing to FSP’s rental revenue. Additionally, during the second quarter of 2009, FSP purchased approximately 27% of the preferred stock in FSP Grand Boulevard Corp. for a net cost of $15,049,125. FSP Grand Boulevard Corp. owns a 28-story, class-A, multi-tenant office tower containing approximately 532,000 square feet of rentable space and is located in the Crown Center section of downtown Kansas City, Missouri. Continued active property acquisition efforts are ongoing, and we would expect to acquire additional properties in 2009.
As the capital markets and U.S. economy work through the current recession and financial/credit crisis, we will continue to pursue additional commercial property investment opportunities. It will be FSP’s objective to continue to grow our property portfolio and rental income business during this period of liquidity-constrained capital markets by using our 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 July 17, 2009, we announced that the Board of Directors declared a regular quarterly dividend for the three months ended June 30, 2009 of $0.19 per share of common stock payable on August 20, 2009 to stockholders of record on July 31, 2009.
Real Estate Update
During June 2009 we acquired an office property in Chantilly, Virginia for approximately $29 million and an office property in Eden Prairie, Minnesota for approximately $22.6 million. Supplementary Schedules D & E provide property information for our continuing real estate portfolio of 31 properties and for three non-consolidated REITs that we have interests in as of June 30, 2009. The Company will also be filing a 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.franklinstreetproperties.com.
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 | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| (In thousands, except per share amounts) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | |
| Net income | | $ | 4,865 | | | $ | 10,534 | | | $ | 12,673 | | | $ | 17,920 | |
| (Gain) Loss on sale of properties | | | - | | | | - | | | | - | | | | - | |
| GAAP (income) loss from non-consolidated REITs | | | (443 | ) | | | (694 | ) | | | (1,235 | ) | | | (1,487 | ) |
| Distributions from non-consolidated REITs | | | 1,523 | | | | 1,731 | | | | 3,137 | | | | 2,277 | |
| Acquisition costs of new properties | | | 248 | | | | - | | | | 248 | | | | - | |
| Depreciation of real estate & intangible amortization | | | 11,216 | | | | 8,712 | | | | 19,924 | | | | 17,210 | |
| Funds From Operations (FFO) | | | 17,409 | | | | 20,283 | | | | 34,747 | | | | 35,920 | |
| Plus gains on sales of properties | | | - | | | | - | | | | - | | | | - | |
| FFO+GOS | | $ | 17,409 | | | $ | 20,283 | | | $ | 34,747 | | | $ | 35,920 | |
| | | | | | | | | | | | | | | | | |
| Per Share Data | | | | | | | | | | | | | | | | |
| EPS | | $ | 0.07 | | | $ | 0.15 | | | $ | 0.18 | | | $ | 0.25 | |
| FFO | | $ | 0.25 | | | $ | 0.29 | | | $ | 0.49 | | | $ | 0.51 | |
| GOS | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| FFO+GOS | | $ | 0.25 | | | $ | 0.29 | | | $ | 0.49 | | | $ | 0.51 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares (basic and diluted) | | | 70,481 | | | | 70,481 | | | | 70,481 | | | | 70,481 | |
Today’s news release, along with other news about Franklin Street Properties Corp., is available on the Internet at www.franklinstreetproperties.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.
A conference call is scheduled for August 5, 2009 at 10:00 a.m. (ET) to discuss the second quarter 2009 results. The toll free number is 1-866-770-7051, passcode 12644681. Internationally, the call may be accessed by dialing 1- 617-213-8064, passcode 12644681. 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, economic conditions in the United States, disruptions in the debt markets, 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, 2008), 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, 2008, 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 |
| Quarterly 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 June 30, | | | For the Six Months Ended June 30, | |
| (in thousands, except per share amounts) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | |
| Revenue: | | | | | | | | | | | | |
| Rental | | $ | 29,254 | | | $ | 27,700 | | | $ | 59,072 | | | $ | 54,356 | |
| Related party revenue: | | | | | | | | | | | | | | | | |
| Syndication fees | | | 29 | | | | 3,257 | | | | 39 | | | | 3,462 | |
| Transaction fees | | | 514 | | | | 3,138 | | | | 542 | | | | 3,306 | |
| Management fees and interest income from loans | | | 317 | | | | 423 | | | | 862 | | | | 984 | |
| Other | | | 18 | | | | 19 | | | | 36 | | | | 39 | |
| Total revenue | | | 30,132 | | | | 34,537 | | | | 60,551 | | | | 62,147 | |
| | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | |
| Real estate operating expenses | | | 7,144 | | | | 7,116 | | | | 14,424 | | | | 13,815 | |
| Real estate taxes and insurance | | | 4,686 | | | | 4,505 | | | | 9,515 | | | | 8,784 | |
| Depreciation and amortization | | | 10,225 | | | | 7,591 | | | | 18,139 | | | | 14,950 | |
| Selling, general and administrative | | | 2,127 | | | | 2,621 | | | | 4,135 | | | | 4,630 | |
| Commissions | | | 40 | | | | 1,654 | | | | 170 | | | | 1,812 | |
| Interest | | | 1,599 | | | | 1,051 | | | | 3,176 | | | | 2,243 | |
| | | | | | | | | | | | | | | | | |
| Total expenses | | | 25,821 | | | | 24,538 | | | | 49,559 | | | | 46,234 | |
| | | | | | | | | | | | | | | | | |
| Income before interest income, equity in earnings of | | | | | | | | | | | | | | | | |
| non-consolidated REITs and taxes | | | 4,311 | | | | 9,999 | | | | 10,992 | | | | 15,913 | |
| Interest income | | | 36 | | | | 176 | | | | 72 | | | | 479 | |
| Equity in earnings of non-consolidated REITs | | | 443 | | | | 694 | | | | 1,235 | | | | 1,487 | |
| | | | | | | | | | | | | | | | | |
| Income before taxes | | | 4,790 | | | | 10,869 | | | | 12,299 | | | | 17,879 | |
| Income tax expense (benefit) | | | (75 | ) | | | 335 | | | | (374 | ) | | | (41 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 4,865 | | | $ | 10,534 | | | $ | 12,673 | | | $ | 17,920 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of shares outstanding, | | | | | | | | | | | | | | | | |
| basic and diluted | | | 70,481 | | | | 70,481 | | | | 70,481 | | | | 70,481 | |
| | | | | | | | | | | | | | | | | |
| Net income per share, basic and diluted | | $ | 0.07 | | | $ | 0.15 | | | $ | 0.18 | | | $ | 0.25 | |
| | | | | | | | | | | | | | | | | |
| The accompanying notes are an integral part of these condensed consolidated financial statements. | |
Franklin Street Properties Corp. Financial Results
Condensed Consolidated Balance Sheets
| (in thousands, except share and par value amounts) | | June 30, | | | December 31, | |
| | | 2009 | | | 2008 | |
| Assets: | | | | | | |
| Real estate assets, net | | $ | 869,557 | | | $ | 844,058 | |
| Acquired real estate leases, less accumulated amortization | | | | | | | | |
| of $32,930 and $29,200, respectively | | | 38,996 | | | | 28,518 | |
| Investment in non-consolidated REITs | | | 94,579 | | | | 83,046 | |
| Assets held for syndication, net | | | - | | | | 13,254 | |
| Cash and cash equivalents | | | 24,542 | | | | 29,244 | |
| Restricted cash | | | 335 | | | | 336 | |
| Tenant rent receivables, less allowance for doubtful accounts | | | | | | | | |
| of $620 and $509, respectively | | | 720 | | | | 1,329 | |
| Straight-line rent receivable, less allowance for doubtful accounts | | | | | | | | |
| of $100 and $261, respectively | | | 9,219 | | | | 8,816 | |
| Prepaid expenses | | | 2,267 | | | | 2,206 | |
| Related party mortgage loan receivable | | | 12,115 | | | | 1,125 | |
| Other assets | | | 1,854 | | | | 2,406 | |
| Office computers and furniture, net of accumulated depreciation | | | | | | | | |
| of $1,160 and $1,108, respectively | | | 417 | | | | 281 | |
| Deferred leasing commissions, net of accumulated amortization | | | | | | | | |
| of $4,221, and $3,416, respectively | | | 10,895 | | | | 10,814 | |
| Total assets | | $ | 1,065,496 | | | $ | 1,025,433 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity: | | | | | | | | |
| Liabilities: | | | | | | | | |
| Bank note payable | | $ | 124,038 | | | $ | 67,468 | |
| Term loan payable | | | 75,000 | | | | 75,000 | |
| Accounts payable and accrued expenses | | | 21,252 | | | | 22,297 | |
| Accrued compensation | | | 500 | | | | 1,654 | |
| Tenant security deposits | | | 1,765 | | | | 1,874 | |
| Other liabilities: derivative termination value | | | 2,394 | | | | 3,099 | |
| Acquired unfavorable real estate leases, less accumulated amortization | | | | | | | | |
| of $2,266, and $1,779, respectively | | | 4,954 | | | | 5,044 | |
| Total liabilities | | | 229,903 | | | | 176,436 | |
| | | | | | | | | |
| 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 | |
| Accumulated other comprehensive loss | | | (2,394 | ) | | | (3,099 | ) |
| Accumulated distributions in excess of accumulated earnings | | | (51,039 | ) | | | (36,930 | ) |
| Total stockholders’ equity | | | 835,593 | | | | 848,997 | |
| Total liabilities and stockholders’ equity | | $ | 1,065,496 | | | $ | 1,025,433 | |
Franklin Street Properties Corp. Financial Results
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | For the Six Months Ended June 30, | |
| (in thousands) | | 2009 | | | 2008 | |
| Cash flows from operating activities: | | | | | | |
| Net income | | $ | 12,673 | | | $ | 17,920 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization expense | | | 18,276 | | | | 14,973 | |
| Amortization of above market lease | | | 1,780 | | | | 2,259 | |
| Equity in earnings of non-consolidated REITs | | | (1,235 | ) | | | (1,487 | ) |
| Distributions from non-consolidated REITs | | | 3,137 | | | | 2,277 | |
| Increase in bad debt reserve | | | 111 | | | | 79 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Restricted cash | | | 1 | | | | 1 | |
| Tenant rent receivables, net | | | 498 | | | | 404 | |
| Straight-line rents, net | | | (444 | ) | | | (507 | ) |
| Prepaid expenses and other assets, net | | | (943 | ) | | | 160 | |
| Accounts payable, accrued expenses | | | 482 | | | | (2,002 | ) |
| Accrued compensation | | | (1,154 | ) | | | 281 | |
| Tenant security deposits | | | (109 | ) | | | (64 | ) |
| Payment of deferred leasing commissions | | | (1,557 | ) | | | (2,131 | ) |
| Net cash provided by operating activities | | | 31,516 | | | | 32,163 | |
| Cash flows from investing activities: | | | | | | | | |
| Purchase of real estate assets and office computers and furniture, capitalized merger costs | | | (56,135 | ) | | | (36,970 | ) |
| Changes in deposits on real estate assets | | | 1,300 | | | | - | |
| Investment in non-consolidated REITs | | | (13,198 | ) | | | (10 | ) |
| Investment in related party mortgage loan receivable | | | (10,990 | ) | | | (1,000 | ) |
| Investment in assets held for syndication | | | 13,017 | | | | 11,698 | |
| Net cash used in investing activities | | | (66,006 | ) | | | (26,282 | ) |
| Cash flows from financing activities: | | | | | | | | |
| Distributions to stockholders | | | (26,782 | ) | | | (43,698 | ) |
| Borrowings under bank note payable | | | 56,570 | | | | 25,245 | |
| Deferred financing costs | | | - | | | | (30 | ) |
| Net cash provided by (used in) financing activities | | | 29,788 | | | | (18,483 | ) |
| Net decrease in cash and cash equivalents | | | (4,702 | ) | | | (12,602 | ) |
| Cash and cash equivalents, beginning of period | | | 29,244 | | | | 46,988 | |
| Cash and cash equivalents, end of period | | $ | 24,542 | | | $ | 34,386 | |
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 |
| 2009 | | 688,524 | 12.1% |
| 2010 | | 751,156 | 13.2% |
| 2011 | | 370,196 | 6.5% |
| 2012 | | 735,399 | 13.0% |
| 2013 | | 347,286 | 6.1% |
| 2014 | | 557,128 | 9.8% |
| Thereafter (2) | | 2,232,322 | 39.3% |
| | | 5,682,011 | 100.0% |
| (1) | Percentages are determined based upon square footage of expiring commercial leases. |
| (2) | Includes 468,000 square feet of current vacancies. |
| (In Thousands) | As of June 30, 2009 |
| | # of | | % of | | Square | % of |
| State | Properties | Investment | Portfolio | | Feet | Portfolio |
| | | | | | | |
| Texas | 7 | $231,323 | 26.6% | | 1,489 | 26.2% |
| Colorado | 4 | 129,691 | 14.9% | | 792 | 13.9% |
| Virginia | 4 | 101,085 | 11.6% | | 680 | 12.0% |
| Georgia | 1 | 76,711 | 8.8% | | 387 | 6.8% |
| Missouri | 3 | 73,170 | 8.4% | | 477 | 8.4% |
| Maryland | 2 | 62,273 | 7.1% | | 424 | 7.5% |
| Florida | 1 | 48,685 | 5.6% | | 213 | 3.7% |
| Indiana | 1 | 36,990 | 4.2% | | 205 | 3.6% |
| Illinois | 1 | 30,750 | 3.5% | | 177 | 3.1% |
| California | 2 | 21,631 | 2.5% | | 182 | 3.2% |
| Michigan | 1 | 14,981 | 1.7% | | 215 | 3.8% |
| Washington | 1 | 14,920 | 1.7% | | 117 | 2.1% |
| Minnesota | 1 | 14,459 | 1.7% | | 153 | 2.7% |
| North Carolina | 2 | 14,281 | 1.6% | | 172 | 3.0% |
| | 31 | $870,948 | 100.0% | | 5,682 | 100.0% |
| Property by type: | |
| (dollars & square feet | As of June 30, 2009 |
| in 000's) | # of | | % of | | Square | % of |
| Type | Properties | Investment | Portfolio | | Feet | Portfolio |
| Office | 30 | $865,863 | 99.4% | | 5,583 | 98.3% |
| Industrial | 1 | 5,085 | 0.6% | | 99 | 1.7% |
| | 31 | $870,948 | 100.0% | | 5,682 | 100.0% |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule E
Portfolio and Other Supplementary Information
(Unaudited & Approximated)
| Capital Expenditures | | | | | | |
| Owned Portfolio | | Six Months Ended | |
| (in thousands) | | 30-Jun-09 | | | 30-Jun-08 | |
| | | | | | | |
| Tenant improvements | | $ | 2,286 | | | $ | 2,897 | |
| Deferred leasing costs | | | 1,557 | | | | 2,130 | |
| Building improvements | | | 581 | | | | 569 | |
| | | $ | 4,424 | | | $ | 5,596 | |
| Square foot & leased percentages | June 30, | | December 31, |
| | | 2009 | | 2008 |
| | | | | |
| Owned portfolio of commercial real estate | | | |
| | Number of properties | 31 | | 29 |
| | Square feet | 5,682,011 | | 5,417,515 |
| | Leased percentage | 92% | | 93% |
| | | | | |
| Investments in non-consolidated commercial real estate | | | |
| | Number of properties | 3 | | 2 |
| | Square feet | 1,994,686 | | 1,461,224 |
| | Leased percentage | 78% | | 80% |
| | | | | |
| Single Asset REITs (SARs) managed | | | |
| | Number of properties | 9 | | 10 |
| | Square feet* | 2,154,079 | | 2,684,561 |
| | Leased percentage* | 87% | | 92% |
| | | | | |
| Total owned, investments & managed properties | | | |
| | Number of properties* | 43 | | 41 |
| | Square feet* | 9,830,776 | | 9,563,300 |
| | Leased percentage* | 88% | | 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-Jun-09 | Held |
| FSP 303 East Wacker Drive Corp. | Chicago | IL | 843,726 | 75.27% | 43.7% |
| FSP Grand Boulevard Corp. | Kansas City | MO | 532,453 | 88.64% | 27.0% |
| FSP Phoenix Tower Corp. | Houston | TX | 618,507 | 72.11% | 4.6% |
| | | | 1,994,686 | 77.86% | |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule F: Quarterly Information
(Unaudited)
| (in 000's) | | | | | | | | | | | | | | | |
| | | | Q1 | | | | Q1 | | | | Q2 | | | | Q3 | | | | Q4 | |
| Revenue: | | | 2009 | | | | 2008 | | | | 2008 | | | | 2008 | | | | 2008 | |
| Rental | | $ | 29,818 | | | $ | 26,656 | | | $ | 27,700 | | | $ | 27,927 | | | $ | 28,915 | |
| Related party revenue: | | | | | | | | | | | | | | | | | | | | |
| Syndication fees | | | 10 | | | | 205 | | | | 3,257 | | | | 304 | | | | - | |
| Transaction fees | | | 28 | | | | 168 | | | | 3,138 | | | | 300 | | | | 35 | |
| Management fees and | | | | | | | | | | | | | | | | | | | | |
| interest income from loans | | | 545 | | | | 561 | | | | 423 | | | | 380 | | | | 375 | |
| Other | | | 18 | | | | 20 | | | | 19 | | | | 13 | | | | 20 | |
| Total revenue | | | 30,419 | | | | 27,610 | | | | 34,537 | | | | 28,924 | | | | 29,345 | |
| | | | | | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | | | | | |
| Real estate operating expenses | | | 7,280 | | | | 6,698 | | | | 7,116 | | | | 7,159 | | | | 8,026 | |
| Real estate taxes and insurance | | | 4,829 | | | | 4,279 | | | | 4,505 | | | | 4,590 | | | | 4,366 | |
| Depreciation and amortization | | | 7,914 | | | | 7,359 | | | | 7,591 | | | | 7,666 | | | | 7,744 | |
| Selling, general and administrative | | | 2,008 | | | | 2,009 | | | | 2,621 | | | | 1,927 | | | | 1,711 | |
| Commissions | | | 130 | | | | 158 | | | | 1,654 | | | | 208 | | | | 131 | |
| Interest | | | 1,577 | | | | 1,192 | | | | 1,051 | | | | 1,108 | | | | 1,570 | |
| Total expenses | | | 23,738 | | | | 21,695 | | | | 24,538 | | | | 22,658 | | | | 23,548 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income before interest income, equity | | | | | | | | | | | | | | | | | | | | |
| in earnings in non-consolidated REITs | | | 6,681 | | | | 5,915 | | | | 9,999 | | | | 6,266 | | | | 5,797 | |
| Interest income | | | 36 | | | | 303 | | | | 176 | | | | 177 | | | | 89 | |
| Equity in earnings in non-consolidated REITs | | | 792 | | | | 793 | | | | 694 | | | | 680 | | | | 580 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income before taxes on income | | | 7,509 | | | | 7,011 | | | | 10,869 | | | | 7,123 | | | | 6,466 | |
| Taxes on income | | | (299 | ) | | | (375 | ) | | | 335 | | | | (297 | ) | | | (153 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | 7,808 | | | | 7,386 | | | | 10,534 | | | | 7,420 | | | | 6,619 | |
| Income from discontinued operations | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | |
| Income before gain on sale of properties | | | 7,808 | | | | 7,386 | | | | 10,534 | | | | 7,420 | | | | 6,619 | |
| Gain on sale of assets | | | - | | | | - | | | | - | | | | - | | | | - | |
| Net income | | $ | 7,808 | | | $ | 7,386 | | | $ | 10,534 | | | $ | 7,420 | | | $ | 6,619 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| FFO and FFO+GOS calculations: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 7,808 | | | $ | 7,386 | | | $ | 10,534 | | | $ | 7,420 | | | $ | 6,619 | |
| (Gain) Loss on sale of assets | | | - | | | | - | | | | - | | | | - | | | | - | |
| GAAP income from non-consolidated REITs | | | (792 | ) | | | (793 | ) | | | (694 | ) | | | (680 | ) | | | (580 | ) |
| Distributions from non-consolidated REITs | | | 1,615 | | | | 546 | | | | 1,731 | | | | 1,561 | | | | 1,510 | |
| Acquisition costs | | | - | | | | - | | | | - | | | | - | | | | - | |
| Depreciation & amortization | | | 8,707 | | | | 8,498 | | | | 8,712 | | | | 8,783 | | | | 8,650 | |
| Funds From Operations (FFO) | | | 17,338 | | | | 15,637 | | | | 20,283 | | | | 17,084 | | | | 16,199 | |
| Plus gains on sales of assets | | | - | | | | - | | | | - | | | | - | | | | - | |
| FFO+GOS | | $ | 17,338 | | | $ | 15,637 | | | $ | 20,283 | | | $ | 17,084 | | | $ | 16,199 | |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule G
Largest 20 Tenants – FSP Owned Portfolio
As of June 30, 2009
(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 |
| Capital One Services, Inc. (1) | | 297,789 | 61 | 5.2% |
| Citgo Petroleum Corporation | | 248,399 | 29 | 4.4% |
| Tektronix Texas, LLC | | 241,372 | 73 | 4.1% |
| Burger King Corporation | | 212,619 | 58 | 3.7% |
| New Era of Networks, Inc. (Sybase) | | 199,077 | 73 | 3.5% |
| Citigroup Credit Services, Inc (2) | | 176,848 | 61 | 3.1% |
| RGA Reinsurance Company | | 171,120 | 63 | 3.0% |
| CH Robinson Worldwide, Inc. | | 153,028 | 47 | 2.7% |
| International Business Machines Corp. (3) | | 138,033 | 35 | 2.4% |
| Geisecke & Devrient | | 135,888 | 73 | 2.4% |
| Murphy Exploration & Production Company | | 133,786 | 13 | 2.3% |
| CACI Technologies, Inc. | | 132,896 | 73 | 2.3% |
| Monsanto | | 127,778 | 28 | 2.2% |
| Northrop Grumman Information Technology, Inc. | | 111,469 | 73 | 2.0% |
| Maines Paper & Food Service, Inc. | | 98,745 | 51 | 1.7% |
| Amdocs, Inc. | | 91,928 | 73 | 1.6% |
| County of Santa Clara | | 90,467 | 81 | 1.6% |
| Ober Kaler Grimes & Shriver | | 88,736 | 91 | 1.6% |
| Technip-Coflexip USA Holdings, Inc | | 86,059 | 13 | 1.5% |
| Vail Corp d/b/a Vail Resorts | | 83,620 | 79 | 1.5% |
| Total | | 3,019,657 | | 53.1% |
| (1) | Capital One Services, Inc. (“CapOne”) sublets all of the space to LandAmerica Financial Group, Inc. (“LandAm”). Both the direct lease with CapOne and the sublease with LandAm expire on October 31, 2009. On November 26, 2008, LandAm filed a voluntary motion for relief under Chapter 11 of the United States Bankruptcy Code. Significantly, our direct lease with CapOne remains in effect and CapOne continues to be financially obligated to us for all payments of rent due thereunder. |
| (2) | The lease with Citicorp Credit Services, Inc. is guaranteed by Citigroup. |
| (3) | On May 14, 2009 the Company signed a three-year lease commencing August 1, 2009 with IBM at its property located in Southfield, Michigan for 83,209 square feet of space. The tenant’s prior lease for 138,033 square feet expired on July 31, 2009. |
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 and acquisition costs of newly acquired properties that are not capitalized, 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 condensed consolidated financial statements.
