Exhibit 99.1
| PRESS RELEASE | Franklin Street Properties Corp. |
| 401 Edgewater Place· Suite 200· Wakefield, Massachusetts 01880· (781) 557-1300· www.franklinstreetproperties.com |
| Contact: John Demeritt (877) 686-9496 | FOR IMMEDIATE RELEASE |
| | | |
FRANKLIN STREET PROPERTIES CORP. ANNOUNCES
FOURTH QUARTER & YEAR END 2011 RESULTS
Wakefield, MA—February 21, 2012—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 $18.5 million and $71.2 million, or $0.22 and $0.87 per share, for the fourth quarter and year ended December 31, 2011, respectively. The Company also announced Net Income of $5.1 million and $43.5 million and Earnings Per Share (EPS) of $0.06 and $0.53 for the fourth quarter and year ended December 31, 2011, respectively, 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 December 31, | | Year Ended December 31, |
(in thousands except
per share data) | | 2011 | | 2010 | | Increase
(Decrease) | | 2011 | | 2010 | | Increase
(Decrease) |
| | | | | | | | | | | | | |
| Net Income | | $ | 5,062 | | | $ | 5,819 | | | $ | (757 | ) | | $ | 43,524 | | | $ | 22,093 | | | $ | 21,431 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| FFO | | $ | 18,459 | | | $ | 17,519 | | | $ | 940 | | | $ | 71,210 | | | $ | 66,922 | | | $ | 4,288 | |
| GOS | | | — | | | | — | | | | — | | | | 21,939 | | | | — | | | | 21,939 | |
| FFO+GOS | | $ | 18,459 | | | $ | 17,519 | | | $ | 940 | | | $ | 93,149 | | | $ | 66,922 | | | $ | 26,227 | |
| Per Share Data: | | | | | | | | | | | | | | | | | | | | | | | | |
| EPS | | $ | 0.06 | | | $ | 0.07 | | | $ | (0.01 | ) | | $ | 0.53 | | | $ | 0.28 | | | $ | 0.25 | |
| FFO | | $ | 0.22 | | | $ | 0.22 | | | $ | — | | | $ | 0.87 | | | $ | 0.84 | | | $ | 0.03 | |
| GOS | | $ | — | | | $ | — | | | $ | — | | | $ | 0.27 | | | $ | — | | | $ | 0.27 | |
| FFO+GOS | | $ | 0.22 | | | $ | 0.22 | | | $ | — | | | $ | 1.14 | | | $ | 0.84 | | | $ | 0.30 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average
shares (diluted) | | | 82,937 | | | | 80,187 | | | | 2,750 | | | | 81,857 | | | | 79,826 | | | | 2,031 | |
Comparing results for the fourth quarter of 2011 to 2010, Net Income and EPS decreased $0.8 million or $0.01 per share, FFO increased $0.9 million and FFO+GOS increased $0.9 million. The increase in FFO was primarily attributable to an increase in real estate FFO of $2.1 million and a decrease in investment banking FFO of $1.2 million. The increase in real estate FFO was primarily from three new acquisitions made in March 2011, a new acquisition in September 2011 and another acquisition in October 2011, and the benefits of increased occupancy in the real estate portfolio at December 31, 2011, compared to December 31, 2010, and was partially offset by the sale of two properties in 2011. One was a property in Falls Church, Virginia sold in January 2011 and the other was a property in Savage, Maryland sold in June 2011. The decrease from investment banking resulted from lower sales of securities by our investment bank, which was $9.2 million for the fourth quarter of 2011 as compared to $25.3 million in the fourth quarter of 2010. Revenue from our investment bank was primarily based on the value of the securities sales. There was no GOS during the fourth quarter of 2011 or 2010.
Comparing results for the years ended December 31, 2011 to the same period in 2010, Net Income and EPS increased $21.4 million or $0.25 per share, FFO increased $4.3 million or $0.03 per share and FFO+GOS increased $26.2 million or $0.30 per share. The increase in FFO was primarily attributable to an increase in real estate FFO of $1.6 million and an increase in investment banking FFO of $2.7 million. The increase in real estate FFO was primarily from three new acquisitions made in March 2011, a new acquisition in September 2011 and another acquisition in October 2011, and the benefits of increased occupancy in the real estate portfolio at December 31, 2011, compared to December 31, 2010, and was partially offset by the sale of two properties in 2011. The increase in investment banking FFO resulted from greater sales of securities by our investment bank, which were $66.8 million during the year ended December 31, 2011 as compared to $36.0 million for the same period in 2010. Revenue from our investment bank was primarily based on the value of the securities sales. The sale of a property in January 2011 located in Falls Church, Virginia contributed $19.6 million and the sale of a property in June 2011 located in Savage, Maryland contributed $2.3 million, or in the aggregate, $0.27 per share of GOS for the year ended December 31, 2011. There was no GOS during the same period in 2010.
George J. Carter, President and CEO, commented as follows:
“For the fourth quarter of 2011, FSP's profits as represented by FFO totaled approximately $18.5 million or $0.22 per share, an increase of approximately $2.1 million or $0.2 per share compared to the third quarter of 2011. Dividend distributions declared for the fourth quarter of 2011, which are payable on February 16, 2012, are approximately $15.8 million or $0.19 per share. For the full-year 2011, FSP’s profits as represented by FFO totaled approximately $71.2 million or $0.87 per share, an increase of approximately $4.3 million or $.03 per share compared to full-year 2010. For the full-year 2011, FSP’s profits as represented by FFO+GOS totaled approximately $93.1 million or $1.14 per share, an increase of approximately $26.2 million or $0.30 per share compared to full-year 2010.
Our directly-owned real estate portfolio of 36 properties totaling 7,052,068 square feet was approximately 88.7% leased as of December 31, 2011, up from approximately 88.1% leased as of September 30, 2011. Our property portfolio is primarily suburban office assets. Most of the rental/leasing markets where our properties are located remained stable during the fourth quarter, with some markets showing moderate improvement in occupancy and rental-rate levels. The nation’s slow employment growth as well as financial and regulatory uncertainty appear to be factors in deferring many corporate decisions on potential future office space needs. However, we continue to make steady leasing progress in our portfolio. With relatively modest lease expirations over the next three years, we have as our objective to move overall occupancy levels to the 90+% range during 2012.
There was one new real estate investment completed in the fourth quarter of 2011 for a total initial capital contribution of approximately $76.2 million. The investment is a two-year bridge loan secured by a first mortgage on a CBD office/retail property in Minneapolis, Minnesota. The property is owned by FSP 50 South Tenth Street Corp., a single-asset-REIT affiliate of FSP. The loan also includes a revolving line of credit component for up to $30 million to be used for lender-approved tenant improvement costs, leasing commissions and other incentives necessary to lease space at the property. Consequently, the total loan commitment amount is $106.2 million. The property is a 12-story Class A multi-tenant office/retail property, built in 2001, containing approximately 498,768 rentable square feet of which approximately 90% is office space. FSP sponsored the syndication of the shares of preferred stock in FSP 50 South Tenth Street Corp. between November 2006 and January 2007. The property has maintained an average occupancy in excess of 98% over the past five years and, as of December 31, 2011, was approximately 98.8% leased. The property is located between and connected by a sky-bridge directly to the Target Corporation and U.S. Bancorp corporate headquarters buildings in downtown Minneapolis. FSP has four office properties in the greater Minneapolis area, either owned directly or through affiliates, totaling approximately 1.4 million square feet.
Additional real estate investments during 2012 are a major objective of FSP. In addition, certain properties owned by some of our single-asset REIT affiliates may be possible candidates for sale as they stabilize their occupancies and the markets in which they are located become more attractive to potential acquirers. There were no property dispositions in the fourth quarter of 2011.
During the fourth quarter of 2011, we completed the full $62 million subscription of our private placement offering, FSP Union Centre Corp., which began in March. On December 15, 2011, we announced that FSP Investments LLC, our broker-dealer subsidiary, will no longer sponsor the syndication of preferred stock in newly-formed single property companies. FSP Investments LLC may sponsor other types of real estate investments in the future. FSP will continue to manage all the affairs of the 16 existing single property companies that sit outside of FSP. FSP, its subsidiaries and affiliates, and the employees, officers and directors thereof will continue to fulfill and provide all of the responsibilities/duties and services to the individual stockholders of those 16 existing single property companies and the assets that they own as they have done in the past. FSP has meaningful equity and first mortgage loan investments in many of these entities and receives on-going asset management fees from all of them. Original capitalization of these 16 single property companies was in excess of $900 million.
We believe FSP continues to be in an excellent position to achieve meaningful long term profit growth. Our company will continue to use its capabilities and strong balance sheet to take advantage of competitive tenant leasing requirements and attractive real estate investment opportunities that are presenting themselves as a result of the current cyclical softness in the economy and certain commercial property markets. We are very much looking forward to 2012 and beyond.”
Dividend Announcement
On January 13, 2012, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended December 31, 2011 of $0.19 per share of common stock payable on February 16, 2012 to stockholders of record on January 27, 2012.
Real Estate Update
Supplementary Schedules D and E provide property information for our continuing real estate portfolio of 36 properties and for three non-consolidated REITs that we had preferred stock interests in as of December 31, 2011. 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 I. We believe FFO is used broadly throughout the real estate investment trust (REIT) industry as a measurement of performance. Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that define FFO differently. 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 | | Year Ended |
| | | December 31, | | December 31, |
| (In thousands, except per share amounts) | | 2011 | | 2010 | | 2011 | | 2010 |
| | | | | | | | | |
| Net income | | $ | 5,062 | | | $ | 5,819 | | | $ | 43,524 | | | $ | 22,093 | |
| Less gain on sale of properties | | | — | | | | — | | | | (21,939 | ) | | | — | |
| GAAP (income) loss from non-consolidated REITs | | | (978 | ) | | | (152 | ) | | | (4,490 | ) | | | (1,190 | ) |
| Distributions from non-consolidated REITs | | | 970 | | | | 1,247 | | | | 5,056 | | | | 5,170 | |
| Acquisition costs of new properties | | | 157 | | | | — | | | | 620 | | | | 125 | |
| Depreciation & amortization | | | 13,248 | | | | 10,605 | | | | 48,439 | | | | 40,724 | |
| Funds From Operations (FFO) | | | 18,459 | | | | 17,519 | | | | 71,210 | | | | 66,922 | |
| Plus gains on sales of assets (GOS) | | | — | | | | — | | | | 21,939 | | | | — | |
| FFO+GOS | | $ | 18,459 | | | $ | 17,519 | | | $ | 93,149 | | | $ | 66,922 | |
| | | | | | | | | | | | | | | | | |
| Per Share Data | | | | | | | | | | | | | | | | |
| EPS | | $ | 0.06 | | | $ | 0.07 | | | $ | 0.53 | | | $ | 0.28 | |
| FFO | | $ | 0.22 | | | $ | 0.22 | | | $ | 0.87 | | | $ | 0.84 | |
| GOS | | $ | — | | | $ | — | | | $ | 0.27 | | | $ | — | |
| FFO+GOS | | $ | 0.22 | | | $ | 0.22 | | | $ | 1.14 | | | $ | 0.84 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares (basic and diluted) | | | 82,937 | | | | 80,187 | | | | 81,857 | | | | 79,826 | |
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 February 22, 2012 at 10:00 a.m. (ET) to discuss the fourth quarter 2011 results. To access the call, please dial 1-877-317-6789. Internationally, the call may be accessed by dialing 1-412-317-6789. 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. The majority of FSP's property portfolio is suburban office buildings, with select investments in certain central business district properties. 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, risks of a lessening of demand for the types of real estate owned by us, changes in government regulations, geopolitical events 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, 2011, 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 |
Franklin Street Properties Corp. Financial Results
Supplementary Schedule A
Condensed Consolidated Income Statements
(Unaudited)
| | | For the
Three Months Ended
December 31, | | For the
Year Ended
December 31, |
| (in thousands, except per share amounts) | | 2011 | | 2010 | | 2011 | | 2010 |
| | | | | | | | | |
| Revenue: | | | | | | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | | | | | | |
| Rental | | $ | 37,014 | | | $ | 29,782 | | | $ | 135,391 | | | $ | 114,638 | |
| Related party revenue: | | | | | | | | | | | | | | | | |
| Management fees and interest income from loans | | | 1,051 | | | | 719 | | | | 4,046 | | | | 2,440 | |
| Other | | | 29 | | | | 54 | | | | 49 | | | | 88 | |
| Total revenues | | | 38,094 | | | | 30,555 | | | | 139,486 | | | | 117,166 | |
| Expenses: | | | | | | | | | | | | | | | | |
| Real estate operating expenses | | | 9,862 | | | | 9,602 | | | | 36,685 | | | | 33,600 | |
| Real estate taxes and insurance | | | 5,426 | | | | 4,430 | | | | 20,433 | | | | 18,077 | |
| Depreciation and amortization | | | 13,124 | | | | 9,694 | | | | 48,249 | | | | 36,155 | |
| Selling, general and administrative | | | 2,012 | | | | 1,698 | | | | 6,913 | | | | 6,399 | |
| Interest | | | 3,261 | | | | 2,004 | | | | 12,666 | | | | 7,284 | |
| Total expenses | | | 33,685 | | | | 27,428 | | | | 124,946 | | | | 101,515 | |
| | | | | | | | | | | | | | | | | |
Income before interest income, equity in earnings of
non-consolidated REITs and taxes on income | | | 4,409 | | | | 3,127 | | | | 14,540 | | | | 15,651 | |
| Interest income | | | 3 | | | | 4 | | | | 22 | | | | 25 | |
| Equity in earnings of non-consolidated REITs | | | 978 | | | | 228 | | | | 3,685 | | | | 1,266 | |
| | | | | | | | | | | | | | | | | |
| Income before taxes on income | | | 5,390 | | | | 3,359 | | | | 18,247 | | | | 16,942 | |
| Taxes on income | | | 82 | | | | 55 | | | | 267 | | | | 217 | |
| | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | 5,308 | | | | 3,304 | | | | 17,980 | | | | 16,725 | |
| Discontinued operations: | | | | | | | | | | | | | | | | |
| Income from discontinued operations, net of income tax | | | (246 | ) | | | 2,515 | | | | 3,605 | | | | 5,368 | |
| Gain on sale of properties, less applicable income tax | | | — | | | | — | | | | 21,939 | | | | — | |
| Total discontinued operations | | | (246 | ) | | | 2,515 | | | | 25,544 | | | | 5,368 | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 5,062 | | | $ | 5,819 | | | $ | 43,524 | | | $ | 22,093 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of shares outstanding, basic and diluted | | | 82,937 | | | | 80,187 | | | | 81,857 | | | | 79,826 | |
| Earnings per share, basic and diluted, attributable to: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | 0.06 | | | $ | 0.04 | | | $ | 0.22 | | | $ | 0.21 | |
| Discontinued operations | | | — | | | | 0.03 | | | | 0.31 | | | | 0.07 | |
| Net income per share, basic and diluted | | $ | 0.06 | | | $ | 0.07 | | | $ | 0.53 | | | $ | 0.28 | |
Franklin Street Properties Corp. Financial Results
Supplementary Schedule B
Condensed Consolidated Balance Sheets
(Unaudited)
| | | December 31, | | December 31, |
| (in thousands, except share and par value amounts) | | 2011 | | 2010 |
| Assets: | | | | | | | | |
| Real estate assets, net | | $ | 1,006,221 | | | $ | 862,698 | |
| Acquired real estate leases, less accumulated amortization | | | | | | | | |
| of $31,189 and $19,294, respectively | | | 91,613 | | | | 40,578 | |
| Investment in non-consolidated REITs | | | 87,598 | | | | 89,327 | |
| Assets held for syndication, net | | | — | | | | 2,976 | |
| Assets held for sale | | | — | | | | 74,947 | |
| Cash and cash equivalents | | | 23,813 | | | | 68,213 | |
| Restricted cash | | | 493 | | | | 420 | |
| Tenant rent receivables, less allowance for doubtful accounts | | | | | | | | |
| of $1,235 and $1,600, respectively | | | 1,460 | | | | 1,922 | |
| Straight-line rent receivable, less allowance for doubtful accounts | | | | | | | | |
| of $135 and $700, respectively | | | 28,545 | | | | 18,584 | |
| Prepaid expenses | | | 1,223 | | | | 1,654 | |
| Related party mortgage loan receivable | | | 140,516 | | | | 57,684 | |
| Other assets | | | 4,070 | | | | 853 | |
| Office computers and furniture, net of accumulated depreciation | | | | | | | | |
| of $428 and $493, respectively | | | 468 | | | | 503 | |
| Deferred leasing commissions, net of accumulated amortization | | | | | | | | |
| of $9,220 and $7,175, respectively | | | 22,641 | | | | 18,376 | |
| Total assets | | $ | 1,408,661 | | | $ | 1,238,735 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity: | | | | | | | | |
| Liabilities: | | | | | | | | |
| Bank note payable | | $ | 449,000 | | | $ | 209,968 | |
| Term loan payable | | | — | | | | 74,850 | |
| Accounts payable and accrued expenses | | | 26,446 | | | | 22,435 | |
| Accrued compensation | | | 2,222 | | | | 1,803 | |
| Tenant security deposits | | | 2,008 | | | | 1,930 | |
| Other liabilities: derivative termination value | | | — | | | | 1,077 | |
| Acquired unfavorable real estate leases, less accumulated amortization | | | | | | | | |
| of $3,759 and $2,744, respectively | | | 7,618 | | | | 5,114 | |
| Total liabilities | | | 487,294 | | | | 317,177 | |
| | | | | | | | | |
| 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, 82,937,405 and 81,437,405
shares issued and outstanding, respectively | | | 8 | | | | 8 | |
| Additional paid-in capital | | | 1,042,876 | | | | 1,025,491 | |
| Accumulated other comprehensive loss | | | — | | | | (1,077 | ) |
| Accumulated distributions in excess of accumulated earnings | | | (121,517 | ) | | | (102,864 | ) |
| Total stockholders’ equity | | | 921,367 | | | | 921,558 | |
| Total liabilities and stockholders’ equity | | $ | 1,408,661 | | | $ | 1,238,735 | |
Franklin Street Properties Corp. Financial Results
Supplementary Schedule C
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | For the
Year Ended
December 31, |
| (in thousands) | | 2011 | | 2010 |
| Cash flows from operating activities: | | | | | | | | |
| Net income | | $ | 43,524 | | | $ | 22,093 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization expense | | | 50,261 | | | | 39,627 | |
| Amortization of above market lease | | | (47 | ) | | | 1,362 | |
| Gain on sale of real estate assets | | | (21,939 | ) | | | — | |
| Equity in earnings of non-consolidated REITs | | | (3,086 | ) | | | (1,183 | ) |
| Distributions from non-consolidated REITs | | | 3,474 | | | | 1,633 | |
| Increase (decrease) in bad debt reserve | | | (365 | ) | | | 980 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Restricted cash | | | (73 | ) | | | (86 | ) |
| Tenant rent receivables, net | | | 827 | | | | (1,120 | ) |
| Straight-line rents, net | | | (9,878 | ) | | | (4,249 | ) |
| Prepaid expenses and other assets, net | | | 1,611 | | | | 865 | |
| Accounts payable and accrued expenses | | | 4,213 | | | | (351 | ) |
| Accrued compensation | | | 419 | | | | 387 | |
| Tenant security deposits | | | 78 | | | | 122 | |
| Payment of deferred leasing commissions | | | (8,058 | ) | | | (10,515 | ) |
| Net cash provided by operating activities | | | 60,961 | | | | 49,565 | |
| Cash flows from investing activities: | | | | | | | | |
| Purchase of real estate assets, office computers and furniture | | | (174,020 | ) | | | (38,781 | ) |
| Acquired real estate leases | | | (62,230 | ) | | | (15,563 | ) |
| Investments in non-consolidated REITs | | | (10 | ) | | | (11 | ) |
| Distributions in excess of earnings from non-consolidated REITs | | | 1,582 | | | | 3,537 | |
| Investment in related party mortgage loan receivable | | | (82,832 | ) | | | (21,149 | ) |
| Changes in deposits on real estate assets | | | 200 | | | | (200 | ) |
| Investment in assets held for syndication, net | | | 2,230 | | | | 1,319 | |
| Proceeds received on sales of real estate assets | | | 96,790 | | | | — | |
| Net cash used in investing activities | | | (218,290 | ) | | | (70,848 | ) |
| Cash flows from financing activities: | | | | | | | | |
| Distributions to stockholders | | | (62,177 | ) | | | (60,586 | ) |
| Proceeds from offering | | | 18,001 | | | | 22,701 | |
| Equity offering costs | | | (706 | ) | | | (833 | ) |
| Borrowings under bank note payable | | | 449,000 | | | | 100,960 | |
| Repayment of bank note payable | | | (209,968 | ) | | | — | |
| Repayment of term loan payable | | | (74,850 | ) | | | (150 | ) |
| Deferred financing costs | | | (5,388 | ) | | | — | |
| Swap termination payment | | | (983 | ) | | | — | |
| Net cash provided by financing activities | | | 112,929 | | | | 62,092 | |
| Net decrease in cash and cash equivalents | | | (44,400 | ) | | | 40,809 | |
| Cash and cash equivalents, beginning of period | | | 68,213 | | | | 27,404 | |
| Cash and cash equivalents, end of period | | $ | 23,813 | | | $ | 68,213 | |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule D
Real Estate Portfolio Summary Information
(Unaudited & Approximated)
| Commercial portfolio lease expirations (1) |
| As of December 31, 2011 |
| | | | | |
| | | Total | | % of |
| Year | | Square Feet | | Portfolio |
| 2012 | | 287,371 | | 4.1% |
| 2013 | | 444,965 | | 6.3% |
| 2014 | | 425,504 | | 6.0% |
| 2015 | | 796,239 | | 11.3% |
| 2016 | | 922,543 | | 13.1% |
| Thereafter (2) | | 4,175,446 | | 59.2% |
| | | 7,052,068 | | 100.0% |
| (1) | | Percentages are determined based upon square footage of expiring commercial leases. |
| (2) | | Includes 793,574 square feet of current vacancies. |
| (dollars & square feet in thousands) | | As of December 31, 2011 |
| | | # of | | | | % of | | Square | | % of |
| State | | | Properties | | | | Investment | | | | Portfolio | | | | Feet | | | | Portfolio | |
| | | | | | | | | | | | | | | | | | | | | |
| Texas | | | 10 | | | $ | 295,264 | | | | 29.3 | % | | | 2,028 | | | | 28.8 | % |
| Colorado | | | 4 | | | | 125,615 | | | | 12.5 | % | | | 789 | | | | 11.2 | % |
| Virginia | | | 4 | | | | 101,537 | | | | 10.1 | % | | | 685 | | | | 9.7 | % |
| Minnesota | | | 2 | | | | 38,174 | | | | 3.8 | % | | | 626 | | | | 8.9 | % |
| Missouri | | | 3 | | | | 68,077 | | | | 6.8 | % | | | 477 | | | | 6.8 | % |
| North Carolina | | | 3 | | | | 68,740 | | | | 6.8 | % | | | 431 | | | | 6.1 | % |
| Georgia | | | 1 | | | | 71,627 | | | | 7.1 | % | | | 387 | | | | 5.5 | % |
| Illinois | | | 2 | | | | 50,523 | | | | 5.0 | % | | | 372 | | | | 5.3 | % |
| Maryland | | | 1 | | | | 54,344 | | | | 5.4 | % | | | 325 | | | | 4.6 | % |
| Michigan | | | 1 | | | | 14,995 | | | | 1.5 | % | | | 215 | | | | 3.0 | % |
| Florida | | | 1 | | | | 46,919 | | | | 4.7 | % | | | 213 | | | | 3.0 | % |
| Indiana | | | 1 | | | | 34,668 | | | | 3.4 | % | | | 205 | | | | 2.9 | % |
| California | | | 2 | | | | 21,503 | | | | 2.1 | % | | | 182 | | | | 2.6 | % |
| Washington | | | 1 | | | | 14,235 | | | | 1.4 | % | | | 117 | | | | 1.7 | % |
| | | | 36 | | | $ | 1,006,221 | | | | 100.0 | % | | | 7,052 | | | | 100.0 | % |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule E
Portfolio and Other Supplementary Information
(Unaudited & Approximated)
| Capital Expenditures | | | | |
| Owned Portfolio | | Twelve Months Ended |
| (in thousands) | | 31-Dec-11 | | 31-Dec-10 |
| | | | | |
| Tenant improvements | | $ | 19,032 | | | $ | 7,000 | |
| Deferred leasing costs | | | 8,058 | | | | 10,515 | |
| Building improvements | | | 2,826 | | | | 2,602 | |
| | | $ | 29,916 | | | $ | 20,117 | |
| Square foot & leased percentages | December 31, | December 31, |
| | | 2011 | | 2010 |
| | | | | |
| Owned portfolio of commercial real estate | | | |
| | Number of properties (1) | 36 | | 33 |
| | Square feet | 7,052,068 | | 6,422,357 |
| | Leased percentage | 89% | | 86% |
| | | | | |
| Preferred stock investments in non-consolidated REITs | | | |
| | Number of properties | 3 | | 3 |
| | Square feet | 2,001,542 | | 1,995,913 |
| | Leased percentage | 87% | | 77% |
| | | | | |
| Single Asset REITs (SARs) managed | | | |
| | Number of properties | 13 | | 12 |
| | Square feet | 3,322,639 | | 2,915,896 |
| | Leased percentage | 80% | | 75% |
| | | | | |
| Total owned, investments & managed properties | | | |
| | Number of properties | 52 | | 48 |
| | Square feet | 12,376,249 | | 11,334,166 |
| | Leased percentage | 86% | | 81% |
| | | | | |
| (1) Includes asset held for sale at 12/31/2010 | | | |
The following table shows property information for our preferred stock investments in non-consolidated REITs:
| | | | Square | % Leased | % Interest |
| Single Asset REIT name | City | State | Feet | 31-Dec-11 | Held |
| FSP 303 East Wacker Drive Corp. | Chicago | IL | 844,953 | 94.0% | 43.7% |
| FSP Grand Boulevard Corp. | Kansas City | MO | 535,717 | 82.4% | 27.0% |
| FSP Phoenix Tower Corp. | Houston | TX | 620,872 | 82.0% | 4.6% |
| | | | 2,001,542 | 87.1% | |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule F: Quarterly Information
(Unaudited)
| (in thousands) | | | | | | | | | | |
| | | Q1 | | Q2 | | Q3 | | Q4 | | Annual |
| Revenue: | | 2011 | | 2011 | | 2011 | | 2011 | | 2011 |
| Rental | | $ | 31,099 | | | $ | 33,606 | | | $ | 33,672 | | | $ | 37,014 | | | $ | 135,391 | |
| Related party revenue: | | | | | | | | | | | | | | | | | | | | |
Management fees and interest income
from loans | | | 808 | | | | 1,150 | | | | 1,037 | | | | 1,051 | | | | 4,046 | |
| Other | | | 6 | | | | 7 | | | | 7 | | | | 29 | | | | 49 | |
| Total revenues | | | 31,913 | | | | 34,763 | | | | 34,716 | | | | 38,094 | | | | 139,486 | |
| Expenses: | | | | | | | | | | | | | | | | | | | | |
| Real estate operating expenses | | | 8,730 | | | | 8,765 | | | | 9,328 | | | | 9,862 | | | | 36,685 | |
| Real estate taxes and insurance | | | 4,759 | | | | 5,228 | | | | 5,020 | | | | 5,426 | | | | 20,433 | |
| Depreciation and amortization | | | 10,745 | | | | 12,029 | | | | 12,351 | | | | 13,124 | | | | 48,249 | |
| Selling, general and administrative | | | 1,645 | | | | 1,602 | | | | 1,654 | | | | 2,012 | | | | 6,913 | |
| Interest | | | 2,408 | | | | 3,578 | | | | 3,419 | | | | 3,261 | | | | 12,666 | |
| Total expenses | | | 28,287 | | | | 31,202 | | | | 31,772 | | | | 33,685 | | | | 124,946 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income before interest income, equity in earnings of non-consolidated REITs and taxes on income | | | 3,626 | | | | 3,561 | | | | 2,944 | | | | 4,409 | | | | 14,540 | |
| Interest income | | | 11 | | | | 5 | | | | 3 | | | | 3 | | | | 22 | |
| Equity in earnings of non-consolidated REITs | | | 968 | | | | 1,166 | | | | 573 | | | | 978 | | | | 3,685 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income before taxes on income | | | 4,605 | | | | 4,732 | | | | 3,520 | | | | 5,390 | | | | 18,247 | |
| Taxes on income | | | 50 | | | | 68 | | | | 67 | | | | 82 | | | | 267 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | 4,555 | | | | 4,664 | | | | 3,453 | | | | 5,308 | | | | 17,980 | |
| Discontinued operations: | | | | | | | | | | | | | | | | | | | | |
| Income from discontinued operations, net of tax | | | 619 | | | | 3,371 | | | | (139 | ) | | | (246 | ) | | | 3,605 | |
| Gain on sale of properties, less applicable income tax | | | 19,593 | | | | 2,346 | | | | — | | | | — | | | | 21,939 | |
| Total discontinued operations | | | 20,212 | | | | 5,717 | | | | (139 | ) | | | (246 | ) | | | 25,544 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 24,767 | | | $ | 10,381 | | | $ | 3,314 | | | $ | 5,062 | | | $ | 43,524 | |
| | | | | | | | | | | | | | | | | | | | | |
| FFO and FFO+GOS calculations: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 24,767 | | | $ | 10,381 | | | $ | 3,314 | | | $ | 5,062 | | | $ | 43,524 | |
| (Gain) Loss on sale of assets | | | (19,593 | ) | | | (2,346 | ) | | | — | | | | — | | | | (21,939 | ) |
GAAP income from
non-consolidated REITs | | | (1,773 | ) | | | (1,166 | ) | | | (573 | ) | | | (978 | ) | | | (4,490 | ) |
| Distributions from non-consolidated REITs | | | 1,767 | | | | 1,215 | | | | 1,104 | | | | 970 | | | | 5,056 | |
| Acquisition costs | | | 269 | | | | 9 | | | | 185 | | | | 157 | | | | 620 | |
| Depreciation of real estate & intangible amortization | | | 10,812 | | | | 12,047 | | | | 12,332 | | | | 13,248 | | | | 48,439 | |
| | | | | | | | | | | | | | | | | | | | | |
| Funds From Operations (FFO) | | | 16,249 | | | | 20,140 | | | | 16,362 | | | | 18,459 | | | | 71,210 | |
| Plus gains on sales of assets | | | 19,593 | | | | 2,346 | | | | — | | | | — | | | | 21,939 | |
| FFO+GOS | | $ | 35,842 | | | $ | 22,486 | | | $ | 16,362 | | | $ | 18,459 | | | $ | 93,149 | |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule G
Percentage of Leased Space
(Unaudited & Estimated)
| | | | | | | Third | | Fourth |
| | | | | | % Leased (1) | Quarter | % Leased (1) | Quarter |
| | | | | | as of | Average % | as of | Average % |
| | Property Name | Location | | Square Feet | 30-Sep-11 | Leased (2) | 31-Dec-11 | Leased (2) |
| | | | | | | | | |
| 1 | PARK SENECA | Charlotte, NC | | 109,550 | 80.9% | 80.5% | 80.6% | 80.6% |
| 2 | HILLVIEW CENTER | Milpitas, CA | | 36,288 | 100.0% | 100.0% | 100.0% | 100.0% |
| 3 | SOUTHFIELD | Southfield, MI | | 214,697 | 39.2% | 39.2% | 39.2% | 39.2% |
| 4 | FOREST PARK | Charlotte, NC | | 62,212 | 100.0% | 100.0% | 100.0% | 100.0% |
| 5 | CENTENNIAL | Colorado Springs, CO | | 110,405 | 66.9% | 66.9% | 85.4% | 73.0% |
| 6 | MEADOW POINT | Chantilly, VA | | 138,537 | 100.0% | 100.0% | 100.0% | 100.0% |
| 7 | TIMBERLAKE | Chesterfield, MO | | 232,766 | 97.7% | 97.7% | 97.7% | 97.7% |
| 8 | FEDERAL WAY | Federal Way, WA | | 117,010 | 42.0% | 42.0% | 47.0% | 44.3% |
| 9 | NORTHWEST POINT | Elk Grove Village, IL | | 176,848 | 100.0% | 100.0% | 100.0% | 100.0% |
| 10 | TIMBERLAKE EAST | Chesterfield, MO | | 116,197 | 85.9% | 90.6% | 85.9% | 85.9% |
| 11 | PARK TEN | Houston, TX | | 155,715 | 98.8% | 98.8% | 81.2% | 81.2% |
| 12 | MONTAGUE | San Jose, CA | | 145,951 | 100.0% | 100.0% | 100.0% | 100.0% |
| 13 | ADDISON | Addison, TX | | 293,787 | 95.8% | 95.8% | 95.8% | 95.8% |
| 14 | COLLINS CROSSING | Richardson, TX | | 298,766 | 88.4% | 88.4% | 88.4% | 88.4% |
| 15 | GREENWOOD PLAZA | Englewood, CO | | 197,527 | 54.3% | 54.3% | 48.9% | 48.4% |
| 16 | RIVER CROSSING | Indianapolis, IN | | 205,059 | 93.5% | 93.5% | 93.5% | 93.5% |
| 17 | LIBERTY PLAZA | Addison, TX | | 218,934 | 68.6% | 68.0% | 77.9% | 74.8% |
| 18 | INNSBROOK | Glen Allen, VA | | 298,456 | 86.8% | 78.8% | 98.3% | 90.7% |
| 19 | 380 INTERLOCKEN | Broomfield, CO | | 240,184 | 85.1% | 85.1% | 85.1% | 85.1% |
| 20 | BLUE LAGOON | Miami, FLA | | 212,619 | 100.0% | 100.0% | 100.0% | 100.0% |
| 21 | ELDRIDGE GREEN | Houston, TX | | 248,399 | 100.0% | 100.0% | 100.0% | 100.0% |
| 22 | WILLOW BEND | Plano, TX | | 116,622 | 83.1% | 83.1% | 83.1% | 83.1% |
| 23 | ONE OVERTON PARK | Atlanta, GA | | 387,267 | 90.4% | 90.6% | 89.3% | 90.0% |
| 24 | 390 INTERLOCKEN | Broomfield, CO | | 241,516 | 96.6% | 96.9% | 93.4% | 94.3% |
| 25 | EAST BALTIMORE | Baltimore, MD | | 325,445 | 55.7% | 55.7% | 55.7% | 55.7% |
| 26 | PARK TEN PHASE II | Houston, TX | | 156,746 | 100.0% | 100.0% | 100.0% | 100.0% |
| 27 | LAKESIDE CROSSING I | Maryland Heights, MO | | 127,778 | 100.0% | 100.0% | 100.0% | 100.0% |
| 28 | LOUDOUN TECH | Dulles, VA | | 135,888 | 100.0% | 100.0% | 100.0% | 100.0% |
| 29 | 4807 STONECROFT | Chantilly, VA | | 111,469 | 100.0% | 100.0% | 100.0% | 100.0% |
| 30 | EDEN BLUFF | Eden Prairie, MN | | 153,028 | 100.0% | 100.0% | 100.0% | 100.0% |
| 31 | 121 SOUTH EIGHTH ST | Minneapolis, MN | | 472,616 | 93.6% | 93.1% | 93.6% | 93.6% |
| 32 | EMPEROR BOULEVARD | Durham, NC | | 259,531 | 100.0% | 100.0% | 100.0% | 100.0% |
| 33 | LEGACY TENNYSON CTR | Plano, TX | | 202,600 | 100.0% | 100.0% | 100.0% | 100.0% |
| 34 | ONE LEGACY | Plano, TX | | 214,110 | 100.0% | 100.0% | 100.0% | 100.0% |
| 35 | 909 DAVIS | Evanston, IL | | 195,245 | 94.8% | 94.8% | 94.8% | 94.8% |
| 36 | 1410 EAST RENNER | Richardson, TX | | 122,300 | n/a | n/a | 100.0% | 100.0% |
| | | | | | | | | |
| | TOTAL WEIGHTED AVERAGE | | 7,052,068 | 88.1% | 87.7% | 88.7% | 88.1% |
| | | | | | | | | |
| (1) % Leased as of month's end includes all leases that expire on the last day of the quarter. | | | |
| (2) Average quarterly percentage is the average of the end of the month leased percentage for each of the 3 months during the quarter. |
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 December 31, 2011 | | | |
| | | | | % of |
| | Tenant | Sq Ft | SIC Code | Portfolio |
| 1 | TCF National Bank | 267,470 | 60 | 3.8% |
| 2 | Quintiles Transnational Corp | 259,531 | 87 | 3.7% |
| 3 | CITGO Petroleum Corporation | 248,399 | 29 | 3.5% |
| 4 | Burger King Corporation | 212,619 | 58 | 3.0% |
| 5 | Denbury Onshore LLC | 202,600 | 13 | 2.9% |
| 6 | RGA Reinsurance Company | 185,501 | 63 | 2.6% |
| 7 | SunTrust Bank | 182,888 | 60 | 2.6% |
| 8 | Citicorp Credit Services, Inc | 176,848 | 61 | 2.5% |
| 9 | C.H. Robinson Worldwide, Inc | 153,028 | 47 | 2.2% |
| 10 | Houghton Mifflin Harcourt Publishing Company | 150,050 | 27 | 2.1% |
| 11 | Murphy Exploration & Production Company | 144,677 | 13 | 2.1% |
| 12 | Giesecke & Devrient America, Inc. | 135,888 | 73 | 1.9% |
| 13 | Monsanto Company | 127,778 | 28 | 1.8% |
| 14 | Vail Holdings, Inc. | 125,632 | 79 | 1.8% |
| 15 | AT&T Services, Inc. | 122,300 | 48 | 1.7% |
| 16 | Argo Data Resource Corporation | 111,687 | 73 | 1.6% |
| 17 | Northrop Grumman Systems Corporation | 111,469 | 73 | 1.6% |
| 18 | Alliance Data Systems | 96,749 | 73 | 1.4% |
| 19 | Federal National Mortgage Association | 92,358 | 61 | 1.3% |
| 20 | Amdocs, Inc | 91,928 | 73 | 1.3% |
| | Total | 3,199,400 | | 45.4% |
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 based on several measures, including Funds From Operations, or FFO, because management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company defines FFO as net income (determined in accordance with GAAP), excluding gains (or losses) from sales of property and acquisition costs of newly acquired properties that are not capitalized, plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, 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.
FFO should not be considered as an alternative to net income (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs. Other real estate companies and the National Association of Real Estate Investment Trusts, or NAREIT, may define this term in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.
