| 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 2010 RESULTS
Wakefield, MA—August 3, 2010—Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE Amex: FSP), an investment firm specializing in real estate, announced today Funds From Operations (FFO) of $16.7 million or $0.21 per share for the second quarter ended June 30, 2010. The Company also announced Net Income of $6.0 million and Earnings Per Share (EPS) of $0.07 for the second 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 4 of this press release.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| (in 000's except per share data) | 2010 | 2009 | Increase (Decrease) | 2010 | 2009 | Increase (Decrease) | ||||||||||||||||||||
| Net Income | $ | 5,954 | $ | 4,865 | $ | 1,089 | $ | 11,516 | $ | 12,673 | $ | (1,157 | ) | |||||||||||||
| FFO | $ | 16,702 | $ | 17,409 | $ | (707 | ) | $ | 33,352 | $ | 34,747 | $ | (1,395 | ) | ||||||||||||
| GOS | - | - | - | - | - | - | ||||||||||||||||||||
| FFO+GOS | $ | 16,702 | $ | 17,409 | $ | (707 | ) | $ | 33,352 | $ | 34,747 | $ | (1,395 | ) | ||||||||||||
| Per Share Data: | ||||||||||||||||||||||||||
| EPS | $ | 0.07 | $ | 0.07 | $ | - | $ | 0.14 | $ | 0.18 | $ | (0.04 | ) | |||||||||||||
| FFO | $ | 0.21 | $ | 0.25 | $ | (0.04 | ) | $ | 0.42 | $ | 0.49 | $ | (0.07 | ) | ||||||||||||
| GOS | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
| FFO+GOS | $ | 0.21 | $ | 0.25 | $ | (0.04 | ) | $ | 0.42 | $ | 0.49 | $ | (0.07 | ) | ||||||||||||
| Weighted average | ||||||||||||||||||||||||||
| shares (diluted) | 79,681 | 70,481 | 9,200 | 79,681 | 70,481 | 9,200 | ||||||||||||||||||||
Comparing results for the second quarter of 2010 to 2009, Net Income and EPS increased $1.1 million and was flat per share; and FFO decreased $0.7 million or $0.04 per share. The decrease in FFO was primarily attributable to a decrease in real estate FFO of $1.3 million and was partially offset by an increase in investment banking FFO of $0.6 million. The decrease in real estate FFO was primarily a result of decreased occupancy in the real estate portfolio during the second quarter of 2010 compared to the second quarter of 2009; and $0.2 million from decreases in distributions received from investments in our non-consolidated REITs. The increase in investment banking FFO resulted from greater sales of securities by our investment bank, which were $8.4 million in the second quarter of 2010 as compared to $0.4 million by our investment bank for the second quarter of 2009. Revenue from our investment bank is primarily based on the value of securities sales. There was no GOS during the second quarter of 2010 or 2009.
Comparing results for the first half of 2010 to 2009, Net Income and EPS decreased $1.2 million or $0.04 per share; and FFO decreased $1.4 million or $0.07 per share. The decrease in FFO was primarily attributable to a decrease in real estate FFO of $2.3 million and was partially offset by an increase in investment banking FFO of $0.9 million. The decrease in real estate FFO was primarily a result of decreased occupancy in the real estate portfolio during the first half of 2010 compared to the first half of 2009; and $0.4 million from decreases in distributions received from investments in our non-consolidated REITs. The increase in investment banking FFO resulted from greater sales of securities by our investment bank, which were $10.4 million during the first half of 2010 as compared to $0.6 million by our investment bank for the first half of 2009. Revenue from our investment bank is primarily based on the value of securities sales. There was no GOS during the first half of 2010 or 2009.
George J. Carter, President and CEO, commented as follows:
“For the second quarter of 2010, FSP's profits as represented by FFO + GOS totaled approximately $16.7 million or $0.21 per share, essentially flat compared to the first quarter of 2010. Dividend distributions declared for the second quarter of 2010, which are payable on August 20, 2010, will be approximately $15.1 million or $0.19 per share.
For 2010, FSP’s profit results may have more quarter-to-quarter variability than 2009. The transactional nature, success and timing of our re-leasing efforts of existing vacancy and lease-roll in the portfolio will interplay with the timing of new property acquisitions and the capital closings of private placement offerings through our investment bank to affect FFO levels.
Our real estate portfolio was approximately 85% leased as of June 30, 2010 and approximately 84% leased as of December 31, 2009. Several properties in our portfolio have significant lease roll scheduled to occur during the remainder of 2010 and, as a consequence, we expect occupancy and rental income for those properties to be lower in 2010. However, we believe that we will be successful in re-leasing all or some portion of that vacated space in 2010 and, during the second quarter, we saw significant prospective tenant interest at most of those properties. Successful re-leasing efforts during the remainder of 2010 would favorably position us going into 2011, as more modest scheduled lease expirations of approximately 7%, 8% and 8% of our square footage are projected in 2011, 2012 and 2013, respectively.
Property acquisition efforts in the second quarter of 2010 culminated in the purchase on June 29 of two office buildings totaling approximately 470,000 square feet, located in the Central Business District of Minneapolis, Minnesota. The buildings were acquired for a purchase price of $40.5 million, are adjacent to one another and are approximately 90% leased to a diverse group of tenants with TCF National Bank leasing approximately 54% of the combined property. The buildings were purchased for approximately $85 per square foot (a price we believe to be well under replacement cost), at an approximate 8.8% cap-rate of in-place net operating income. The smaller of the two buildings is a four-story structure occupying what we believe to be one of the best potential future new off ice tower development locations in the city. Because the property was acquired close to the end of the second quarter, its first significant contribution to FSP's rental income stream will not occur until the third quarter of 2010. The Company continues to work on additional property acquisitions and we would anticipate current and future efforts to produce additional acquisitions of properties for the FSP portfolio this year. New property acquisitions, when completed, are anticipated to provide additional accretive rental income to the FSP profit picture.
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During the second quarter of 2010, our Investment Banking Group placed approximately $8.4 million of equity in two different private placement syndications. Both of these offerings are now fully subscribed and closed. There are currently no private placement real estate investment offerings that are open. Our Investment Banking Group operated at about breakeven for the quarter generating net income of approximately $263,000. While we believe that general investor confidence and interest in commercial real estate investing continues to slowly improve, capital-raising efforts over any specific period of time remain choppy and unpredictable. In addition, the timing of property acquisition opportunities that could be attractive for our syndication business i s unpredictable. For full year 2009, our Investment Banking Group raised equity capital totaling about $40.4 million. For the first six months of 2010, the group has raised approximately $10.4 million, compared to $550,000 for the same period in 2009. While we are still optimistic that business for full year 2010 will show an increase over 2009, sourcing and securing the right real estate investment opportunities will likely be the controlling factor.
FSP did not have any of its properties listed for sale during the second quarter of 2010. Generally speaking, we continue to find the property sales environment challenged relative to both liquidity and pricing. However, we continue to witness improving pricing and liquidity in certain markets, extending a trend that began in the second half of 2009. Nationwide, the number of completed commercial real estate transactions still remains low by historical standards. We believe that both improving office property fundamentals as well as plentiful and attractive financing availability will likely be required to meaningfully improve the market place for property dispositions. Since this is an important part of our total return strategy, we intend to be active in property dispositions once the real estate cycle more fully establishes a pattern of improvement.
We believe FSP continues to be in an excellent environment to position itself for meaningful future growth in profits and dividends. Our company will continue to use its capabilities and conservative financial structure to take advantage of real estate investment opportunities that are presenting themselves as a result of the current cyclical downturn in the economy and commercial property market. We are looking forward to the second half of 2010 with optimism.”
Dividend Announcement
On July 16, 2010, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended June 30, 2010 of $0.19 per share of common stock payable on August 20, 2010 to stockholders of record on July 30, 2010.
Real Estate Update
Supplementary Schedules D & E provide property information for our continuing real estate portfolio of 33 properties and for three non-consolidated REITs that we have interests in as of June 30, 2010. 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.
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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.
| Reconciliation of Net Income to FFO and FFO+GOS: | Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (In thousands, except per share amounts) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
| Net income | $ | 5,954 | $ | 4,865 | $ | 11,516 | $ | 12,673 | ||||||||
| (Gain) Loss on sale of properties | - | - | - | - | ||||||||||||
| GAAP income from non-consolidated REITs | (380 | ) | (443 | ) | (633 | ) | (1,235 | ) | ||||||||
| Distributions from non-consolidated REITs | 1,324 | 1,523 | 2,731 | 3,138 | ||||||||||||
| Acquisition costs of new properties | 129 | 248 | 129 | 248 | ||||||||||||
| Depreciation of real estate & intangible amortization | 9,675 | 11,216 | 19,609 | 19,923 | ||||||||||||
| Funds From Operations (FFO) | 16,702 | 17,409 | 33,352 | 34,747 | ||||||||||||
| Plus gains on sales of properties | - | - | - | - | ||||||||||||
| FFO+GOS | $ | 16,702 | $ | 17,409 | $ | 33,352 | $ | 34,747 | ||||||||
| Per Share Data | ||||||||||||||||
| EPS | $ | 0.07 | $ | 0.07 | $ | 0.14 | $ | 0.18 | ||||||||
| FFO | $ | 0.21 | $ | 0.25 | $ | 0.42 | $ | 0.49 | ||||||||
| GOS | $ | - | $ | - | $ | - | $ | - | ||||||||
| FFO+GOS | $ | 0.21 | $ | 0.25 | $ | 0.42 | $ | 0.49 | ||||||||
| Weighted average shares (basic and diluted) | 79,681 | 70,481 | 79,681 | 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 4, 2010 at 10:00 a.m. (ET) to discuss the second quarter 2010 results. To access the call, please dial 1-888-873-4896, passcode 39156828. Internationally, the call may be accessed by dialing 1-617-213-8850, passcode 39156828. 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.
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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 limitat ion, 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, 2009), 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, 2009, 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 |
| Percentage of Leased Space | G |
| Largest 20 Tenants – FSP Owned Portfolio | H |
| Definition of Funds From Operations (FFO) and FFO+GOS | I |
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Franklin Street Properties Corp. Financial Results
Supplementary Schedule A
Condensed Consolidated Income Statements
(Unaudited)
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| (in thousands, except per share amounts) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
| Revenue: | ||||||||||||||||
| Rental | $ | 29,261 | $ | 29,254 | $ | 60,060 | $ | 59,072 | ||||||||
| Related party revenue: | ||||||||||||||||
| Syndication fees | 541 | 29 | 662 | 39 | ||||||||||||
| Transaction fees | 753 | 514 | 899 | 542 | ||||||||||||
| Management fees and interest income from loans | 558 | 317 | 1,091 | 862 | ||||||||||||
| Other | 6 | 18 | 15 | 36 | ||||||||||||
| Total revenue | 31,119 | 30,132 | 62,727 | 60,551 | ||||||||||||
| Expenses: | ||||||||||||||||
| Real estate operating expenses | 7,358 | 7,144 | 15,331 | 14,424 | ||||||||||||
| Real estate taxes and insurance | 4,318 | 4,686 | 9,564 | 9,515 | ||||||||||||
| Depreciation and amortization | 9,243 | 10,225 | 18,462 | 18,139 | ||||||||||||
| Selling, general and administrative | 2,559 | 2,127 | 4,730 | 4,135 | ||||||||||||
| Commissions | 336 | 40 | 450 | 170 | ||||||||||||
| Interest | 1,736 | 1,599 | 3,388 | 3,176 | ||||||||||||
| Total expenses | 25,550 | 25,821 | 51,925 | 49,559 | ||||||||||||
| Income before interest income, equity in earnings of | ||||||||||||||||
| non-consolidated REITs and taxes | 5,569 | 4,311 | 10,802 | 10,992 | ||||||||||||
| Interest income | 9 | 36 | 17 | 72 | ||||||||||||
| Equity in earnings of non-consolidated REITs | 380 | 443 | 633 | 1,235 | ||||||||||||
| Income before taxes on income | 5,958 | 4,790 | 11,452 | 12,299 | ||||||||||||
| Taxes on income | 4 | (75 | ) | (64 | ) | (374 | ) | |||||||||
| Net income | $ | 5,954 | $ | 4,865 | $ | 11,516 | $ | 12,673 | ||||||||
| Weighted average number of shares outstanding, basic and diluted | 79,681 | 70,481 | 79,681 | 70,481 | ||||||||||||
| Net income per share, basic and diluted | $ | 0.07 | $ | 0.07 | $ | 0.14 | $ | 0.18 | ||||||||
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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) | 2010 | 2009 | ||||||
| Assets: | ||||||||
| Real estate assets, net | $ | 935,530 | $ | 921,833 | ||||
| Acquired real estate leases, less accumulated amortization | ||||||||
| of $20,154 and $34,592, respectively | 56,431 | 44,757 | ||||||
| Investment in non-consolidated REITs | 90,782 | 92,910 | ||||||
| Assets held for syndication, net | - | 4,827 | ||||||
| Cash and cash equivalents | 21,487 | 27,404 | ||||||
| Restricted cash | 59 | 334 | ||||||
| Tenant rent receivables, less allowance for doubtful accounts | ||||||||
| of $1,100 and $620, respectively | 900 | 1,782 | ||||||
| Straight-line rent receivable, less allowance for doubtful accounts | ||||||||
| of $700 and $100, respectively | 14,955 | 10,754 | ||||||
| Prepaid expenses | 2,280 | 2,594 | ||||||
| Related party mortgage loan receivable | 46,270 | 36,535 | ||||||
| Other assets | 1,248 | 844 | ||||||
| Office computers and furniture, net of accumulated depreciation of $1,306 and $1,233, respectively | 372 | 384 | ||||||
| Deferred leasing commissions, net of accumulated amortization of $5,845, and $4,995, respectively | 16,587 | 10,808 | ||||||
| Total assets | $ | 1,186,901 | $ | 1,155,766 | ||||
| Liabilities and Stockholders’ Equity: | ||||||||
| Liabilities: | ||||||||
| Bank note payable | $ | 162,968 | $ | 109,008 | ||||
| Term loan payable | 75,000 | 75,000 | ||||||
| Accounts payable and accrued expenses | 18,766 | 23,787 | ||||||
| Accrued compensation | 1,040 | 1,416 | ||||||
| Tenant security deposits | 2,004 | 1,808 | ||||||
| Other liabilities: derivative termination value | 1,735 | 2,076 | ||||||
| Acquired unfavorable real estate leases, less accumulated amortization of $2,765, and $2,492, respectively | 6,536 | 5,397 | ||||||
| Total liabilities | 268,049 | 218,492 | ||||||
| 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, 79,680,705 and 79,680,705 shares issued and outstanding, respectively | 8 | 8 | ||||||
| Additional paid-in capital | 1,003,712 | 1,003,713 | ||||||
| Accumulated other comprehensive loss | (1,735 | ) | (2,076 | ) | ||||
| Accumulated distributions in excess of accumulated earnings | (83,133 | ) | (64,371 | ) | ||||
| Total stockholders’ equity | 918,852 | 937,274 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,186,901 | $ | 1,155,766 | ||||
-7-
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) | 2010 | 2009 | ||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 11,516 | $ | 12,673 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization expense | 18,597 | 18,276 | ||||||
| Amortization of above market lease | 1,147 | 1,780 | ||||||
| Equity in earnings of non-consolidated REITs | (633 | ) | (1,235 | ) | ||||
| Distributions from non-consolidated REITs | 2,731 | 3,137 | ||||||
| Increase in bad debt reserve | 480 | 111 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Restricted cash | 275 | 1 | ||||||
| Tenant rent receivables, net | 402 | 498 | ||||||
| Straight-line rents, net | (1,759 | ) | (444 | ) | ||||
| Prepaid expenses and other assets, net | (224 | ) | (943 | ) | ||||
| Accounts payable and accrued expenses | (4,139 | ) | 482 | |||||
| Accrued compensation | (376 | ) | (1,154 | ) | ||||
| Tenant security deposits | 196 | (109 | ) | |||||
| Payment of deferred leasing commissions | (7,085 | ) | (1,557 | ) | ||||
| Net cash provided by operating activities | 21,128 | 31,516 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of real estate assets, office computers and furniture | (45,848 | ) | (56,135 | ) | ||||
| Changes in deposits on real estate assets | - | 1,300 | ||||||
| Investment in non-consolidated REITs | - | (13,198 | ) | |||||
| Investment in related party mortgage loan receivable | (9,735 | ) | (10,990 | ) | ||||
| Investment in assets held for syndication, net | 4,858 | 13,017 | ||||||
| Net cash used in investing activities | (50,725 | ) | (66,006 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Distributions to stockholders | (30,279 | ) | (26,782 | ) | ||||
| Proceeds from equity offering, net | (1 | ) | - | |||||
| Borrowings under bank note payable | 53,960 | 56,570 | ||||||
| Net cash provided by financing activities | 23,680 | 29,788 | ||||||
| Net decrease in cash and cash equivalents | (5,917 | ) | (4,702 | ) | ||||
| Cash and cash equivalents, beginning of period | 27,404 | 29,244 | ||||||
| Cash and cash equivalents, end of period | $ | 21,487 | $ | 24,542 | ||||
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Franklin Street Properties Corp. Earnings Release
Supplementary Schedule D
Real Estate Portfolio Summary Information
(Unaudited & Approximated)
| Commercial portfolio lease expirations (1) | ||||||||
| As of June 30, 2010 | ||||||||
| Total | % of | |||||||
| Year | Square Feet | Portfolio | ||||||
| 2010 | 534,650 | 8.3 | % | |||||
| 2011 | 474,992 | 7.4 | % | |||||
| 2012 | 499,704 | 7.8 | % | |||||
| 2013 | 519,238 | 8.1 | % | |||||
| 2014 | 587,387 | 9.1 | % | |||||
| 2015 | 776,152 | 12.1 | % | |||||
| Thereafter (2) | 3,026,712 | 47.2 | % | |||||
| 6,418,835 | 100.0 | % | ||||||
| (1) | Percentages are determined based upon square footage of expiring commercial leases. |
| (2) | Includes 940,768 square feet of current vacancies. |
| (dollars & square feet in 000's) | As of June 30, 2010 | |||||||||||||||||||
| # of | % of | Square | % of | |||||||||||||||||
| State | Properties | Investment | Portfolio | Feet | Portfolio | |||||||||||||||
| Texas | 7 | $ | 225,711 | 24.1 | % | 1,489 | 23.2 | % | ||||||||||||
| Virginia | 5 | 160,781 | 17.2 | % | 942 | 14.7 | % | |||||||||||||
| Colorado | 4 | 126,578 | 13.5 | % | 791 | 12.3 | % | |||||||||||||
| Georgia | 1 | 74,475 | 8.0 | % | 387 | 6.0 | % | |||||||||||||
| Missouri | 3 | 71,224 | 7.6 | % | 477 | 7.5 | % | |||||||||||||
| Maryland | 2 | 60,857 | 6.5 | % | 424 | 6.6 | % | |||||||||||||
| Minnesota | 2 | 38,320 | 4.1 | % | 628 | 9.8 | % | |||||||||||||
| Florida | 1 | 47,588 | 5.1 | % | 213 | 3.3 | % | |||||||||||||
| Indiana | 1 | 36,136 | 3.8 | % | 205 | 3.2 | % | |||||||||||||
| Illinois | 1 | 29,446 | 3.1 | % | 177 | 2.8 | % | |||||||||||||
| California | 2 | 21,262 | 2.3 | % | 182 | 2.8 | % | |||||||||||||
| Michigan | 1 | 14,674 | 1.6 | % | 215 | 3.3 | % | |||||||||||||
| Washington | 1 | 14,534 | 1.6 | % | 117 | 1.8 | % | |||||||||||||
| North Carolina | 2 | 13,944 | 1.5 | % | 172 | 2.7 | % | |||||||||||||
| 33 | $ | 935,530 | 100.0 | % | 6,419 | 100.0 | % | |||||||||||||
| Property by type: | ||||||||||||||||||||
| (dollars & square feet in 000's) | As of June 30, 2010 | |||||||||||||||||||
| # of | % of | Square | % of | |||||||||||||||||
| Type | Properties | Investment | Portfolio | Feet | Portfolio | |||||||||||||||
| Office | 32 | $ | 930,562 | 99.5 | % | 6,320 | 98.5 | % | ||||||||||||
| Industrial | 1 | 4,968 | 0.5 | % | 99 | 1.5 | % | |||||||||||||
| 33 | $ | 935,530 | 100.0 | % | 6,419 | 100.0 | % | |||||||||||||
-9-
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-10 | 30-Jun-09 | ||||||
| Tenant improvements | $ | 2,240 | $ | 2,286 | ||||
| Deferred leasing costs | 7,085 | 1,557 | ||||||
| Building improvements | 878 | 581 | ||||||
| $ | 10,203 | $ | 4,424 | |||||
| Square foot & leased percentages | June 30, | December 31, | ||||||
| 2010 | 2009 | |||||||
| Owned portfolio of commercial real estate | ||||||||
| Number of properties | 33 | 32 | ||||||
| Square feet | 6,418,835 | 5,942,414 | ||||||
| Leased percentage | 85% | 84% | ||||||
| Investments in non-consolidated commercial real estate | ||||||||
| Number of properties | 3 | 3 | ||||||
| Square feet | 1,998,519 | 1,995,041 | ||||||
| Leased percentage | 77% | 78% | ||||||
| Single Asset REITs (SARs) managed | ||||||||
| Number of properties | 11 | 11 | ||||||
| Square feet* | 2,406,370 | 2,406,370 | ||||||
| Leased percentage* | 76% | 91% | ||||||
| Total owned, investments & managed properties | ||||||||
| Number of properties | 47 | 46 | ||||||
| Square feet* | 10,823,724 | 10,343,825 | ||||||
| Leased percentage* | 82% | 85% | ||||||
| *Excludes a property under construction 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-10 | Held | ||||||||
| FSP 303 East Wacker Drive Corp. | Chicago | IL | 847,559 | 75.2% | 43.7% | ||||||||
| FSP Grand Boulevard Corp. | Kansas City | MO | 532,453 | 89.5% | 27.0% | ||||||||
| FSP Phoenix Tower Corp. | Houston | TX | 618,507 | 68.2% | �� | 4.6% | |||||||
| 1,998,519 | 76.8% | ||||||||||||
-10-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule F: Quarterly Information
(Unaudited)
| (in 000's) | ||||||||||||||||
| Q1 | Q1 | Q2 | Q3 | |||||||||||||
| Revenue: | 2010 | 2009 | 2009 | 2009 | ||||||||||||
| Rental | $ | 30,799 | $ | 29,818 | $ | 29,254 | $ | 31,702 | ||||||||
| Related party revenue: | ||||||||||||||||
| Syndication fees | 121 | 10 | 29 | - | ||||||||||||
| Transaction fees | 146 | 28 | 514 | 1 | ||||||||||||
| Management fees and | ||||||||||||||||
| interest income from loans | 533 | 545 | 317 | 370 | ||||||||||||
| Other | 9 | 18 | 18 | 19 | ||||||||||||
| Total revenue | 31,608 | 30,419 | 30,132 | 32,092 | ||||||||||||
| Expenses: | ||||||||||||||||
| Real estate operating expenses | 7,973 | 7,280 | 7,144 | 7,752 | ||||||||||||
| Real estate taxes and insurance | 5,246 | 4,829 | 4,686 | 5,364 | ||||||||||||
| Depreciation and amortization | 9,219 | 7,914 | 10,225 | 8,801 | ||||||||||||
| Selling, general and administrative | 2,171 | 2,008 | 2,127 | 2,243 | ||||||||||||
| Commissions | 114 | 130 | 40 | 8 | ||||||||||||
| Interest | 1,652 | 1,577 | 1,599 | 1,744 | ||||||||||||
| Total expenses | 26,375 | 23,738 | 25,821 | 25,912 | ||||||||||||
| Income before interest income, equity | ||||||||||||||||
| in earnings in non-consolidated REITs | 5,233 | 6,681 | 4,311 | 6,180 | ||||||||||||
| Interest income | 8 | 36 | 36 | 16 | ||||||||||||
| Equity in earnings in non-consolidated REITs | 253 | 792 | 443 | 475 | ||||||||||||
| Income before taxes on income | 5,494 | 7,509 | 4,790 | 6,671 | ||||||||||||
| Taxes on income | (68 | ) | (299 | ) | (75 | ) | (270 | ) | ||||||||
| Net income | $ | 5,562 | $ | 7,808 | $ | 4,865 | $ | 6,941 | ||||||||
| FFO and FFO+GOS calculations: | ||||||||||||||||
| Net income | $ | 5,562 | $ | 7,808 | $ | 4,865 | $ | 6,941 | ||||||||
| (Gain) Loss on sale of assets | - | - | - | - | ||||||||||||
| GAAP income from non-consolidated REITs | (253 | ) | (792 | ) | (443 | ) | (475 | ) | ||||||||
| Distributions from non-consolidated REITs | 1,407 | 1,615 | 1,523 | 1,119 | ||||||||||||
| Acquisition costs | - | - | 248 | 391 | ||||||||||||
| Depreciation & amortization | 9,934 | 8,707 | 11,216 | 9,561 | ||||||||||||
| Funds From Operations (FFO) | 16,650 | 17,338 | 17,409 | 17,537 | ||||||||||||
| Plus gains on sales of assets | - | - | - | - | ||||||||||||
| FFO+GOS | $ | 16,650 | $ | 17,338 | $ | 17,409 | $ | 17,537 | ||||||||
-11-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule G
Percentage of Leased Space
(Unaudited & Estimated)
| (1) | (2) | (1) | (2) | ||||
| % Leased | Q1 Average | % Leased | Q2 Average | ||||
| Square Feet | as of | Square Feet | as of | Square Feet | |||
| Property Name | Location | 30-Jun-10 | 31-Mar-10 | Leased | 30-Jun-10 | Leased | |
| 1 | Park Seneca | Charlotte, NC | 109,550 | 85.1% | 85.2% | 84.4% | 84.8% |
| 2 | Hillview Center | Milpitas, CA | 36,288 | 100.0% | 100.0% | 100.0% | 100.0% |
| 3 | Southfield Centre | Southfield, MI | 214,697 | 55.7% | 55.6% | 56.4% | 55.9% |
| 4 | Bollman Place | Savage, MD | 98,745 | 100.0% | 100.0% | 100.0% | 100.0% |
| 5 | Forest Park | Charlotte, NC | 62,212 | 100.0% | 100.0% | 100.0% | 100.0% |
| 6 | Centennial | Colorado Springs, CO | 110,730 | 78.5% | 78.5% | 78.5% | 78.5% |
| 7 | Meadow Point | Chantilly, VA | 138,538 | 51.5% | 50.7% | 80.6% | 70.9% |
| 8 | Timberlake | Chesterfield, MO | 232,766 | 99.0% | 99.0% | 99.0% | 99.0% |
| 9 | Federal Way | Federal Way, WA | 117,010 | 26.1% | 26.1% | 28.3% | 26.9% |
| 10 | Northwest Point | Elk Grove Village, IL | 176,848 | 100.0% | 100.0% | 100.0% | 100.0% |
| 11 | Timberlake East | Chesterfield, MO | 116,197 | 100.0% | 100.0% | 100.0% | 100.0% |
| 12 | Park Ten | Houston, TX | 155,715 | 66.0% | 63.4% | 49.8% | 54.8% |
| 13 | Montague | San Jose, CA | 145,951 | 100.0% | 100.0% | 100.0% | 100.0% |
| 14 | Addison | Addison, TX | 293,787 | 61.3% | 61.3% | 92.7% | 71.8% |
| 15 | Collins Crossing | Richardson, TX | 298,766 | 100.0% | 100.0% | 100.0% | 100.0% |
| 16 | Greenwood Plaza | Englewood, CO | 199,077 | 100.0% | 100.0% | 30.6% | 53.7% |
| 17 | River Crossing | Indianapolis, IN | 205,059 | 94.7% | 94.7% | 94.7% | 94.7% |
| 18 | Liberty Plaza | Addison, TX | 218,934 | 77.8% | 74.4% | 78.0% | 77.7% |
| 19 | Innsbrook | Glen Allen, VA | 303,745 | 34.7% | 25.4% | 31.3% | 31.3% |
| 20 | 380 Interlocken | Broomfield, CO | 240,184 | 87.0% | 87.0% | 89.7% | 88.8% |
| 21 | Blue Lagoon | Miami, FLA | 212,619 | 100.0% | 100.0% | 100.0% | 100.0% |
| 22 | Eldridge Green | Houston, TX | 248,399 | 100.0% | 100.0% | 100.0% | 100.0% |
| 23 | Willow Bend | Plano, TX | 116,622 | 49.8% | 49.8% | 49.8% | 49.8% |
| 24 | One Overton Park | Atlanta, GA | 387,267 | 90.3% | 90.3% | 91.5% | 91.0% |
| 25 | 390 Interlocken | Broomfield, CO | 241,516 | 98.5% | 98.5% | 98.3% | 98.3% |
| 26 | East Baltimore | Baltimore, MD | 325,445 | 94.4% | 94.7% | 95.3% | 95.3% |
| 27 | Park Ten Phase II | Houston, TX | 156,746 | 97.8% | 97.8% | 97.8% | 97.8% |
| 28 | Lakeside Crossing I | Maryland Heights, MO | 127,778 | 100.0% | 100.0% | 100.0% | 100.0% |
| 29 | Loudoun Tech | Dulles, VA | 135,888 | 100.0% | 100.0% | 100.0% | 100.0% |
| 30 | 4807 Stonecroft | Chantilly, VA | 111,469 | 100.0% | 100.0% | 100.0% | 100.0% |
| 31 | Eden Bluff | Eden Prairie, MN | 153,028 | 100.0% | 100.0% | 100.0% | 100.0% |
| 32 | 3150 Fairview Park Drive | Falls Church, VA | 252,613 | 100.0% | 100.0% | 100.0% | 100.0% |
| 33 | 121 South 8th Street (3) | Minneapolis, MN | 474,646 | n/a | n/a | 89.8% | 89.8% |
| 6,418,835 | 85.4% | 84.7% | 85.3% | 84.6% |
| (1) | Percentage leased as of month's end and includes all leases that expire on the last day of the quarter. |
| (2) | Average quarterly percentage is the average of the end of the month leased percentage for each of the 3 months during the quarter. |
| (3) | Property was acquired on June 29, 2010. |
-12-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule H
Largest 20 Tenants – FSP Owned Portfolio
(Unaudited & Estimated)
The following table includes the largest 20 tenants in FSP’s owned portfolio based on leased square feet:
| As of June 30, 2010 | |||||
| % of | |||||
| Tenant | Sq Ft | SIC Code | Portfolio | ||
| 1 | TCF National Bank | (1) | 254,771 | 60 | 4.0% |
| 2 | Noblis, Inc. | 252,613 | 54 | 3.9% | |
| 3 | CITGO Petroleum Corporation | (2) | 248,399 | 29 | 3.9% |
| 4 | Tektronix Texas, LLC | (3) | 241,372 | 73 | 3.8% |
| 5 | Burger King Corporation | 212,619 | 58 | 3.3% | |
| 6 | Citigroup Credit Services, Inc | 176,848 | 61 | 2.8% | |
| 7 | RGA Reinsurance Company | 185,501 | 63 | 2.9% | |
| 8 | C.H. Robinson Worldwide, Inc. | 153,028 | 47 | 2.4% | |
| 9 | Geisecke & Devrient America, Inc. | 135,888 | 73 | 2.1% | |
| 10 | Murphy Exploration & Production Company | 133,786 | 13 | 2.1% | |
| 11 | Monsanto Company | 127,778 | 28 | 2.0% | |
| 12 | Vail Holding Corp d/b/a Vail Resorts | (4) | 121,913 | 79 | 1.9% |
| 13 | Northrop Grumman Information Technology, Inc. | 111,469 | 73 | 1.7% | |
| 14 | Maines Paper & Food Service, Inc. | 98,745 | 51 | 1.5% | |
| 15 | Federal National Mortgage Association | (5) | 92,358 | 61 | 1.4% |
| 16 | Amdocs, Inc. | 91,928 | 73 | 1.4% | |
| 17 | County of Santa Clara | 90,467 | 91 | 1.4% | |
| 18 | Ober Kaler Grimes & Shriver | 88,736 | 81 | 1.4% | |
| 19 | International Business Machines Corp. | 83,209 | 79 | 1.3% | |
| 20 | Corporate Holdings, LLC | 81,818 | 67 | 1.3% | |
| Total | 2,983,246 | 46.5% |
| (1) | Property was acquired on June 29, 2010. |
| (2) | On January 20, 2010, the Company signed a new lease at a Houston, Texas property, for approximately 248,000 square feet of space with one of its tenants, CITGO Petroleum Corporation, effectively extending the lease expiration from February 29, 2012 to February 28, 2022. |
| (3) | The Tektronix lease expired on June 30, 2010. Approximately 29,000 square feet had been subleased to ARGO Data Resource Corporation (ARGO), which went direct with FSP. As of July 1, 2010 ARGO has an aggregate of approximately 84,000 square feet leased through August 31, 2016. |
| (4) | On March 22, 2010, the Company signed a lease for an additional approximate 38,000 square feet of space with one of its tenants, Vail Holdings, Inc. through March 2019. The remaining space of approximately 84,000 square feet is leased through March 2023. |
| (5) | On June 7, 2010, Federal National Mortgage Association commenced a lease for approximately 92,000 square feet of space at an Addison, Texas property. The lease expires September 6, 2013. |
-13-
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule I
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 consolidated financial statements.
-14-