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
SECOND QUARTER 2012 RESULTS
Wakefield, MA—August 1, 2012—Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE MKT: FSP), an investment firm specializing in real estate, announced today Funds From Operations (FFO) of $19.0 million or $0.23 per share for the second quarter ended June 30, 2012. The Company also announced Net Income of $5.4 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 and FFO and believes each is an important measure. A reconciliation of Net Income to FFO, which is a non-GAAP financial measure, is provided on page 3 of this press release.
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| (in 000's except per share data) | | 2012 | | | 2011 | | | Increase
(Decrease) | | | 2012 | | | 2011 | | | Increase
(Decrease) | |
| | | | | | | | | | | | | | | | | | | |
| Net Income | | $ | 5,434 | | | $ | 10,381 | | | $ | (4,947 | ) | | $ | 11,172 | | | $ | 35,148 | | | $ | (23,976 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| FFO | | $ | 19,041 | | | $ | 20,140 | | | $ | (1,099 | ) | | $ | 38,612 | | | $ | 36,390 | | | $ | 2,222 | |
| Per Share Data: | | | | | | | | | | | | | | | | | | | | | | | | |
| EPS | | $ | 0.07 | | | $ | 0.13 | | | $ | (0.06 | ) | | $ | 0.13 | | | $ | 0.43 | | | $ | (0.30 | ) |
| FFO | | $ | 0.23 | | | $ | 0.25 | | | $ | (0.02 | ) | | $ | 0.47 | | | $ | 0.45 | | | $ | 0.02 | |
Comparing results for the second quarter of 2012 to 2011, Net Income and EPS decreased $4.9 million or $0.06 per share and FFO decreased $1.1 million or $0.02 per share. The decrease in Net Income and EPS was primarily because in the second quarter of 2011 our investment bank contributed about $3.3 million and we realized a gain on sale of a property in Savage, Maryland in June of 2011, which contributed $2.3 million, neither of which was a factor in the second quarter of 2012. These decreases were partially offset by the benefits of real estate investments made over the last 12 months discussed further below. The decrease in FFO was also because of the investment banking segment, which was discontinued during 2011, and was partially offset by increases from the benefit of increased interest income from real estate loan investments, five property acquisitions made in 2011 (including three acquisitions made in March 2011), all of which we had for the full second quarter of 2012 and leasing activity.
Comparing results for the first half of 2012 to 2011, Net Income and EPS decreased $24.0 million or $0.30 per share and FFO increased $2.2 million or $0.02 per share. The decrease in Net Income and EPS was primarily from the gains on sale of properties in January and June of 2011, which contributed $21.9 million or $0.27 per share to the first half of 2011. We did not sell any properties during the first half of 2012. In addition, during the six months ended June 30, 2011 our investment bank contributed about $3.4 million, which was not a factor during the six months ended June 30, 2012. These decreases were partially offset by the benefits of real estate investments made over the last 12 months discussed further below. The increase in FFO was primarily from the benefits of increased interest income from real estate loan investments, five property acquisitions made in 2011 (including three acquisitions made in March 2011), all of which we had for the full first half of 2012. We also had the benefit of increased leasing activity that increased occupancy in the real estate portfolio at June 30, 2012 to 90.0% compared to 86.9% at June 30, 2011.
George J. Carter, President and CEO, commented as follows:
“For the second quarter of 2012, FSP's profits as represented by FFO totaled approximately $19.0 million or $0.23 per share, a decrease of approximately $529,000 or $0.01 per share compared to the first quarter of 2012. Dividend distributions declared for the second quarter of 2012, which are payable on August 16, 2012, will be approximately $15.8 million or $0.19 per share.
Our directly-owned real estate portfolio of 36 properties, totaling 7,052,592 square feet, was approximately 90% leased as of June 30, 2012, up from approximately 89% leased as of March 31, 2012. Our property portfolio is primarily suburban office assets. Most of the rental/leasing markets where our properties are located remained stable during the second quarter, both in terms of occupancy and rental rate levels. Within this environment, we continue to make slow but steady leasing progress. Our property portfolio has relatively modest lease expirations over the next two and a half years and, along with our improving occupancy levels, should allow overall tenant improvement expenditures and leasing costs to moderate in relation to the level of rental revenues being achieved. We are beginning to see the early signs of that trend.
There were no additional real estate investments completed in the second quarter of 2012. However, on July 5, 2012, FSP made a $33 million two-year bridge loan on a suburban office property located in the I-10 energy corridor of Houston, Texas. The property is a 14-story, multi-tenant Class A office building containing approximately 325,796 rentable square feet. The property is owned by FSP Energy Tower I Corp., a single-asset REIT affiliate of FSP, and is approximately 100% leased. The loan is secured by a first mortgage on the property. On July 31, 2012, FSP purchased a Class A suburban office property in Atlanta, Georgia known as “One Ravinia Drive” for $52.8 million. The property is 17 stories, contains approximately 386,603 rentable square feet, is approximately 82% leased to numerous tenants and is located in the “Central Perimeter” submarket of Atlanta. FSP and its affiliates have been investing in the suburban Atlanta office market since 2003 and currently own three properties there totaling approximately 907,000 square feet.
There were no property sales in the second quarter of 2012, although we continuously review and evaluate our directly-owned portfolio of 36 properties for potentially advantageous disposition opportunities. In addition, certain properties owned by some of our single-asset REIT affiliates, and in which FSP may have a financial interest, could become possible candidates for sale as they stabilize their occupancies and the markets in which they are located become more attractive to potential acquirers. FSP Phoenix Tower Corp., a single-asset REIT affiliate of FSP, owns a 34-story multi-tenant Class A office building containing approximately 623,944 square feet located in Houston, Texas that is currently being offered for sale. FSP has both an equity and first mortgage loan investment in FSP Phoenix Tower Corp. On July 27, 2012, FSP’s $106.2 million two-year bridge loan to its single-asset REIT affiliate, FSP 50 South Tenth Street Corp., was repaid in full from the proceeds of an institutional third-party first mortgage loan secured by the Minneapolis, Minnesota CBD property. Additional potential real estate investment opportunities are actively being explored and we anticipate further real estate investments this year.
We continue looking forward to the balance of 2012 and beyond.”
Dividend Announcement
On July 13, 2012, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended June 30, 2012 of $0.19 per share of common stock payable on August 16, 2012 to stockholders of record on July 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 June 30, 2012. 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 is shown below and a definition of FFO is provided on Supplementary Schedule I. We believe FFO is used broadly throughout the real estate investment trust (REIT) industry as a measurement of performance. We have included the NAREIT FFO definition in our table and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do. Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that define FFO differently.
| | | | | | | | | | | | | |
| Reconciliation of Net Income to FFO: | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| (In thousands, except per share amounts) | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | | | | | | | | | | | |
| Net income | | $ | 5,434 | | | $ | 10,381 | | | $ | 11,172 | | | $ | 35,148 | |
| Less gain on sale of properties | | | — | | | | (2,346 | ) | | | — | | | | (21,939 | ) |
| GAAP (income) loss from non-consolidated REITs | | | (494 | ) | | | (1,166 | ) | | | (885 | ) | | | (2,938 | ) |
| Distributions from non-consolidated REITs | | | 898 | | | | 1,215 | | | | 1,827 | | | | 2,982 | |
| Depreciation & amortization | | | 13,203 | | | | 12,047 | | | | 26,498 | | | | 22,859 | |
| NAREIT FFO | | | 19,041 | | | | 20,131 | | | | 38,612 | | | | 36,112 | |
| Acquisition costs of new properties | | | — | | | | 9 | | | | — | | | | 278 | |
| Funds From Operations (FFO) | | $ | 19,041 | | | $ | 20,140 | | | $ | 38,612 | | | $ | 36,390 | |
| | | | | | | | | | | | | | | | | |
| Per Share Data | | | | | | | | | | | | | | | | |
| EPS | | $ | 0.07 | | | $ | 0.13 | | | $ | 0.13 | | | $ | 0.43 | |
| FFO | | $ | 0.23 | | | $ | 0.25 | | | $ | 0.47 | | | $ | 0.45 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares (basic and diluted) | | | 82,937 | | | | 81,437 | | | | 82,937 | | | | 81,437 | |
__________________________________________________________________________________________
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 2, 2012 at 10:00 a.m. (ET) to discuss the second quarter 2012 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 atwww.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 and regulatory uncertainty, uncertainty about governmental fiscal policy, 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 – Prior Four Quarters | F |
| Percentage of Leased Space | G |
| Largest 20 Tenants – FSP Owned Portfolio | H |
| Definition of Funds From Operations (FFO) | I |
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) | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | | | | | | | | | | | |
| Revenue: | | | | | | | | | | | | | | | | |
| Rental | | $ | 35,830 | | | $ | 33,606 | | | $ | 72,498 | | | $ | 64,705 | |
| Related party revenue: | | | | | | | | | | | | | | | | |
| Management fees and interest income from loans | | | 3,045 | | | | 1,150 | | | | 5,661 | | | | 1,958 | |
| Other | | | 39 | | | | 7 | | | | 73 | | | | 13 | |
| Total revenue | | | 38,914 | | | | 34,763 | | | | 78,232 | | | | 66,676 | |
| | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | |
| Real estate operating expenses | | | 8,828 | | | | 8,765 | | | | 17,905 | | | | 17,495 | |
| Real estate taxes and insurance | | | 5,576 | | | | 5,228 | | | | 11,389 | | | | 9,987 | |
| Depreciation and amortization | | | 13,224 | | | | 12,029 | | | | 26,480 | | | | 22,774 | |
| Selling, general and administrative | | | 2,236 | | | | 1,602 | | | | 4,313 | | | | 3,247 | |
| Interest | | | 4,037 | | | | 3,578 | | | | 7,714 | | | | 5,986 | |
| | | | | | | | | | | | | | | | | |
| Total expenses | | | 33,901 | | | | 31,202 | | | | 67,801 | | | | 59,489 | |
| | | | | | | | | | | | | | | | | |
| Income before interest income, equity in earnings of | | | | | | | | | | | | | | | | |
| non-consolidated REITs and taxes | | | 5,013 | | | | 3,561 | | | | 10,431 | | | | 7,187 | |
| Interest income | | | 4 | | | | 5 | | | | 12 | | | | 16 | |
| Equity in earnings of non-consolidated REITs | | | 494 | | | | 1,166 | | | | 885 | | | | 2,134 | |
| | | | | | | | | | | | | | | | | |
| Income before taxes on income | | | 5,511 | | | | 4,732 | | | | 11,328 | | | | 9,337 | |
| Taxes on income | | | 77 | | | | 68 | | | | 156 | | | | 118 | |
| | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | 5,434 | | | | 4,664 | | | | 11,172 | | | | 9,219 | |
| | | | | | | | | | | | | | | | | |
| Discontinued operations: | | | | | | | | | | | | | | | | |
| Income from discontinued operations, net of income tax | | | — | | | | 3,371 | | | | — | | | | 3,990 | |
| Gain on sale of property less applicable income tax | | | — | | | | 2,346 | | | | — | | | | 21,939 | |
| Total discontinued operations | | | — | | | | 5,717 | | | | — | | | | 25,929 | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 5,434 | | | $ | 10,381 | | | $ | 11,172 | | | $ | 35,148 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of shares outstanding, | | | | | | | | | | | | | | | | |
| basic and diluted | | | 82,937 | | | | 81,437 | | | | 82,937 | | | | 81,437 | |
| | | | | | | | | | | | | | | | | |
| Earnings per share, basic and diluted, attributable to: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | 0.07 | | | $ | 0.06 | | | $ | 0.13 | | | $ | 0.11 | |
| Discontinued operations | | | — | | | | 0.07 | | | | — | | | | 0.32 | |
| Net income per share, basic and diluted | | $ | 0.07 | | | $ | 0.13 | | | $ | 0.13 | | | $ | 0.43 | |
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) | | 2012 | | | 2011 | |
| Assets: | | | | | | | | |
| Real estate assets, net | | $ | 997,345 | | | $ | 1,006,221 | |
| Acquired real estate leases, less accumulated amortization | | | | | | | | |
| of $32,337 and $31,189, respectively | | | 82,769 | | | | 91,613 | |
| Investment in non-consolidated REITs | | | 86,658 | | | | 87,598 | |
| Cash and cash equivalents | | | 22,620 | | | | 23,813 | |
| Restricted cash | | | 533 | | | | 493 | |
| Tenant rent receivables, less allowance for doubtful accounts | | | | | | | | |
| of $1,300 and $1,235, respectively | | | 1,403 | | | | 1,460 | |
| Straight-line rent receivable, less allowance for doubtful accounts | | | | | | | | |
| of $135 and $135, respectively | | | 33,142 | | | | 28,545 | |
| Prepaid expenses | | | 2,605 | | | | 1,223 | |
| Related party mortgage loan receivables | | | 177,536 | | | | 140,516 | |
| Other assets | | | 3,184 | | | | 4,070 | |
| Office computers and furniture, net of accumulated depreciation | | | | | | | | |
| of $500 and $428, respectively | | | 456 | | | | 468 | |
| Deferred leasing commissions, net of accumulated amortization | | | | | | | | |
| of $10,706 and $9,220, respectively | | | 22,112 | | | | 22,641 | |
| Total assets | | $ | 1,430,363 | | | $ | 1,408,661 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity: | | | | | | | | |
| Liabilities: | | | | | | | | |
| Bank note payable | | $ | 494,000 | | | $ | 449,000 | |
| Accounts payable and accrued expenses | | | 25,408 | | | | 26,446 | |
| Accrued compensation | | | 944 | | | | 2,222 | |
| Tenant security deposits | | | 2,113 | | | | 2,008 | |
| Acquired unfavorable real estate leases, less accumulated amortization of $4,203 and $3,759, respectively | | | 6,875 | | | | 7,618 | |
| Total liabilities | | | 529,340 | | | | 487,294 | |
| | | | | | | | | |
| 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 82,937,405 shares issued and outstanding, respectively | | | 8 | | | | 8 | |
| Additional paid-in capital | | | 1,042,876 | | | | 1,042,876 | |
| Accumulated distributions in excess of accumulated earnings | | | (141,861 | ) | | | (121,517 | ) |
| Total stockholders’ equity | | | 901,023 | | | | 921,367 | |
| Total liabilities and stockholders’ equity | | $ | 1,430,363 | | | $ | 1,408,661 | |
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) | | 2012 | | | 2011 | |
| Cash flows from operating activities: | | | | | | | | |
| Net income | | $ | 11,172 | | | $ | 35,148 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
| Depreciation and amortization expense | | | 27,495 | | | | 23,670 | |
| Amortization of above market lease | | | 20 | | | | (62 | ) |
| Gain on sale of real estate assets | | | — | | | | (21,939 | ) |
| Equity in earnings of non-consolidated REITs | | | (885 | ) | | | (2,844 | ) |
| Distributions from non-consolidated REITs | | | 993 | | | | 2,318 | |
| Increase (decrease) in bad debt reserve | | | 65 | | | | (365 | ) |
| Changes in operating assets and liabilities: | | | | | | | | |
| Restricted cash | | | (40 | ) | | | (39 | ) |
| Tenant rent receivables, net | | | (8 | ) | | | 441 | |
| Straight-line rents, net | | | (2,571 | ) | | | (5,176 | ) |
| Lease acquisition costs | | | (2,026 | ) | | | (55 | ) |
| Prepaid expenses and other assets, net | | | (1,512 | ) | | | 914 | |
| Accounts payable and accrued expenses | | | (1,395 | ) | | | (726 | ) |
| Accrued compensation | | | (1,278 | ) | | | (733 | ) |
| Tenant security deposits | | | 105 | | | | 546 | |
| Payment of deferred leasing commissions | | | (1,513 | ) | | | (5,386 | ) |
| Net cash provided by operating activities | | | 28,622 | | | | 25,712 | |
| Cash flows from investing activities: | | | | | | | | |
| Purchase of real estate assets, office computers and furniture | | | (7,112 | ) | | | (127,999 | ) |
| Acquired real estate leases | | | — | | | | (45,032 | ) |
| Investments in non-consolidated REITs | | | (1 | ) | | | (10 | ) |
| Distributions in excess of earnings from non-consolidated REITs | | | 834 | | | | 664 | |
| Investment in related party mortgage loan receivable | | | (37,020 | ) | | | (4,232 | ) |
| Changes in deposits on real estate assets | | | — | | | | 200 | |
| Investment in assets held for syndication, net | | | — | | | | (8,200 | ) |
| Proceeds received on sales of real estate assets | | | — | | | | 96,790 | |
| Net cash used in investing activities | | | (43,299 | ) | | | (87,819 | ) |
| Cash flows from financing activities: | | | | | | | | |
| Distributions to stockholders | | | (31,516 | ) | | | (30,946 | ) |
| Proceeds from equity offering, net | | | — | | | | (90 | ) |
| Borrowings under bank note payable | | | 45,000 | | | | 345,000 | |
| Repayment of bank note payable | | | — | | | | (209,968 | ) |
| Repayment of term loan payable | | | — | | | | (74,850 | ) |
| Deferred financing costs | | | — | | | | (5,389 | ) |
| Swap termination payment | | | — | | | | (982 | ) |
| Net cash provided by financing activities | | | 13,484 | | | | 22,775 | |
| Net decrease in cash and cash equivalents | | | (1,193 | ) | | | (39,332 | ) |
| Cash and cash equivalents, beginning of period | | | 23,813 | | | | 68,213 | |
| Cash and cash equivalents, end of period | | $ | 22,620 | | | $ | 28,881 | |
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 |
| 2012 | | 155,148 | 2.2% |
| 2013 | | 450,290 | 6.4% |
| 2014 | | 415,284 | 5.9% |
| 2015 | | 812,702 | 11.5% |
| 2016 | | 921,681 | 13.1% |
| Thereafter (2) | | 4,297,487 | 60.9% |
| | | 7,052,592 | 100.0% |
| (1) | | Percentages are determined based upon square footage of expiring commercial leases. |
| (2) | | Includes 705,090 square feet of current vacancies. |
| (dollars & square feet in thousands) | As of June 30, 2012 |
| | # of | | % of | | Square | % of |
| State | Properties | Investment | Portfolio | | Feet | Portfolio |
| | | | | | | |
| Texas | 10 | $ 291,915 | 29.4% | | 2,029 | 28.7% |
| Colorado | 4 | 124,153 | 12.4% | | 789 | 11.2% |
| Virginia | 4 | 101,082 | 10.1% | | 684 | 9.7% |
| Minnesota | 2 | 38,814 | 3.9% | | 626 | 8.9% |
| Missouri | 3 | 66,949 | 6.7% | | 477 | 6.8% |
| North Carolina | 3 | 67,834 | 6.8% | | 431 | 6.1% |
| Georgia | 1 | 70,932 | 7.1% | | 387 | 5.5% |
| Illinois | 2 | 50,283 | 5.0% | | 372 | 5.3% |
| Maryland | 1 | 53,776 | 5.4% | | 325 | 4.6% |
| Michigan | 1 | 14,659 | 1.5% | | 215 | 3.0% |
| Florida | 1 | 46,244 | 4.6% | | 213 | 3.0% |
| Indiana | 1 | 34,886 | 3.5% | | 205 | 2.9% |
| California | 2 | 21,716 | 2.2% | | 182 | 2.6% |
| Washington | 1 | 14,102 | 1.4% | | 117 | 1.7% |
| | 36 | $ 997,345 | 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 | | Three Months Ended | | | Three Months Ended | | | Six Months Ended | |
| (in thousands) | | 31-Mar-12 | | | 31-Mar-11 | | | 30-Jun-12 | | | 30-Jun-11 | | | 30-Jun-12 | | | 30-Jun-11 | |
| | | | | | | | | | | | | | | | | | | |
| Tenant improvements | | $ | 3,014 | | | $ | 2,506 | | | $ | 2,705 | | | $ | 3,215 | | | $ | 5,719 | | | $ | 5,721 | |
| Deferred leasing costs | | | 2,196 | | | | 2,819 | | | | 1,343 | | | | 2,567 | | | | 3,539 | | | | 5,386 | |
| Building improvements | | | 746 | | | | 449 | | | | 1,003 | | | | 876 | | | | 1,749 | | | | 1,325 | |
| | | $ | 5,956 | | | $ | 5,774 | | | $ | 5,051 | | | $ | 6,658 | | | $ | 11,007 | | | $ | 12,432 | |
| Square foot & leased percentages | June 30, | | December 31, |
| | | 2012 | | 2011 |
| | | | | |
| Owned portfolio of commercial real estate | | | |
| | Number of properties | 36 | | 36 |
| | Square feet | 7,052,592 | | 7,052,068 |
| | Leased percentage | 90% | | 89% |
| | | | | |
| Investments in non-consolidated REITs | | | |
| | Number of properties | 3 | | 3 |
| | Square feet | 2,003,968 | | 2,001,542 |
| | Leased percentage | 89% | | 87% |
| | | | | |
| Single Asset REITs (SARs) managed | | | |
| | Number of properties | 13 | | 13 |
| | Square feet | 3,322,589 | | 3,322,639 |
| | Leased percentage | 85% | | 80% |
| | | | | |
| Total owned, investments & managed properties | | | |
| | Number of properties | 52 | | 52 |
| | Square feet | 12,379,149 | | 12,376,249 |
| | Leased percentage | 89% | | 86% |
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-12 | Held |
| FSP 303 East Wacker Drive Corp. | Chicago | IL | 844,953 | 93.8% | 43.7% |
| FSP Grand Boulevard Corp. | Kansas City | MO | 535,071 | 79.9% | 27.0% |
| FSP Phoenix Tower Corp. | Houston | TX | 623,944 | 91.8% | 4.6% |
| | | | 2,003,968 | 89.5% | |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule F: Quarterly Information
(Unaudited)
| (in thousands) | | | | | | | | | | | | | | | | |
| | | | Q2 | | | | Q3 | | | | Q4 | | | | Q1 | |
| Revenue: | | | 2011 | | | | 2011 | | | | 2011 | | | | 2012 | |
| Rental | | $ | 33,606 | | | $ | 33,672 | | | $ | 37,014 | | | $ | 36,668 | |
| Related party revenue: | | | | | | | | | | | | | | | | |
| Management fees and interest income from loans | | | 1,150 | | | | 1,037 | | | | 1,051 | | | | 2,616 | |
| Other | | | 7 | | | | 7 | | | | 29 | | | | 34 | |
| Total revenues | | | 34,763 | | | | 34,716 | | | | 38,094 | | | | 39,318 | |
| Expenses: | | | | | | | | | | | | | | | | |
| Real estate operating expenses | | | 8,765 | | | | 9,328 | | | | 9,862 | | | | 9,077 | |
| Real estate taxes and insurance | | | 5,228 | | | | 5,020 | | | | 5,426 | | | | 5,813 | |
| Depreciation and amortization | | | 12,029 | | | | 12,351 | | | | 13,124 | | | | 13,256 | |
| Selling, general and administrative | | | 1,602 | | | | 1,654 | | | | 2,012 | | | | 2,077 | |
| Interest | | | 3,578 | | | | 3,419 | | | | 3,261 | | | | 3,677 | |
| Total expenses | | | 31,202 | | | | 31,772 | | | | 33,685 | | | | 33,900 | |
| | | | | | | | | | | | | | | | | |
| Income before interest income, equity in earnings of non-consolidated REITs and taxes on income | | | 3,561 | | | | 2,944 | | | | 4,409 | | | | 5,418 | |
| Interest income | | | 5 | | | | 3 | | | | 3 | | | | 8 | |
| Equity in earnings of non-consolidated REITs | | | 1,166 | | | | 573 | | | | 978 | | | | 391 | |
| | | | | | | | | | | | | | | | | |
| Income before taxes on income | | | 4,732 | | | | 3,520 | | | | 5,390 | | | | 5,817 | |
| Taxes on income | | | 68 | | | | 67 | | | | 82 | | | | 79 | |
| | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | 4,664 | | | | 3,453 | | | | 5,308 | | | | 5,738 | |
| Discontinued operations: | | | | | | | | | | | | | | | | |
| Income (loss) from discontinued operations, net of tax | | | 3,371 | | | | (139 | ) | | | (246 | ) | | | — | |
| Gain on sale of properties, less applicable income tax | | | 2,346 | | | | — | | | | — | | | | — | |
| Total discontinued operations | | | 5,717 | | | | (139 | ) | | | (246 | ) | | | — | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 10,381 | | | $ | 3,314 | | | $ | 5,062 | | | $ | 5,738 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| FFO calculations: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 10,381 | | | $ | 3,314 | | | $ | 5,062 | | | $ | 5,738 | |
| (Gain) Loss on sale of assets | | | (2,346 | ) | | | — | | | | — | | | | — | |
| GAAP income from non-consolidated REITs | | | (1,166 | ) | | | (573 | ) | | | (978 | ) | | | (391 | ) |
| Distributions from non-consolidated REITs | | | 1,215 | | | | 1,104 | | | | 970 | | | | 929 | |
| Acquisition costs | | | 9 | | | | 185 | | | | 157 | | | | — | |
| Depreciation of real estate & intangible amortization | | | 12,047 | | | | 12,332 | | | | 13,248 | | | | 13,295 | |
| | | | | | | | | | | | | | | | | |
| Funds From Operations (FFO) | | $ | 20,140 | | | $ | 16,362 | | | $ | 18,459 | | | $ | 19,571 | |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule G
Percentage of Leased Space
(Unaudited & Estimated)
| | | | | | First | | Second |
| | | | | % Leased (1) | Quarter | % Leased (1) | Quarter |
| | | | Square | as of | Average % | as of | Average % |
| | Property Name | Location | Feet | 31-Mar-12 | Leased (2) | 30-Jun-12 | Leased (2) |
| | | | | | | | |
| 1 | PARK SENECA | Charlotte, NC | 109,550 | 80.5% | 79.9% | 81.5% | 80.9% |
| 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% | 39.6% | 38.5% |
| 4 | FOREST PARK | Charlotte, NC | 62,212 | 100.0% | 100.0% | 100.0% | 100.0% |
| 5 | CENTENNIAL | Colorado Springs, CO | 110,405 | 85.4% | 85.4% | 85.4% | 85.4% |
| 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% | 93.2% | 96.2% |
| 8 | FEDERAL WAY | Federal Way, WA | 117,010 | 47.0% | 47.0% | 47.0% | 47.0% |
| 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% | 85.9% | 97.0% | 89.6% |
| 11 | PARK TEN | Houston, TX | 155,715 | 81.2% | 81.2% | 96.1% | 91.1% |
| 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 | 87.8% | 87.8% | 87.8% | 87.8% |
| 15 | GREENWOOD PLAZA | Englewood, CO | 197,527 | 48.9% | 48.9% | 48.9% | 48.9% |
| 16 | RIVER CROSSING | Indianapolis, IN | 205,059 | 93.9% | 93.1% | 96.1% | 94.6% |
| 17 | LIBERTY PLAZA | Addison, TX | 218,934 | 76.4% | 77.4% | 84.1% | 78.9% |
| 18 | INNSBROOK | Glen Allen, VA | 298,456 | 98.3% | 98.3% | 98.3% | 98.3% |
| 19 | 380 INTERLOCKEN | Broomfield, CO | 240,184 | 89.5% | 86.5% | 89.5% | 89.5% |
| 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 | 117,050 | 77.4% | 77.4% | 77.8% | 77.8% |
| 23 | ONE OVERTON PARK | Atlanta, GA | 387,267 | 91.7% | 90.9% | 92.6% | 92.3% |
| 24 | 390 INTERLOCKEN | Broomfield, CO | 241,516 | 96.4% | 94.6% | 97.2% | 96.9% |
| 25 | EAST BALTIMORE | Baltimore, MD | 325,445 | 56.2% | 55.9% | 58.2% | 57.5% |
| 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 | 472,712 | 93.8% | 93.8% | 95.6% | 94.4% |
| 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 | 100.0% | 100.0% | 100.0% | 100.0% |
| | | | | | | | |
| | TOTAL WEIGHTED AVERAGE | | 7,052,592 | 89.0% | 88.8% | 90.0% | 89.5% |
(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 June 30, 2012 | | | |
| | | | % of |
| Tenant | Sq Ft | SIC Code | Portfolio |
| TCF National Bank | 268,984 | 60 | 3.8% |
| Quintiles Transnational Corp | 259,531 | 87 | 3.7% |
| CITGO Petroleum Corporation | 248,399 | 29 | 3.5% |
| Burger King Corporation | 212,619 | 58 | 3.0% |
| Denbury Onshore LLC | 202,600 | 13 | 2.9% |
| RGA Reinsurance Company | 185,501 | 63 | 2.6% |
| SunTrust Bank | 182,888 | 60 | 2.6% |
| Citicorp Credit Services, Inc | 176,848 | 61 | 2.5% |
| C.H. Robinson Worldwide, Inc | 153,028 | 47 | 2.2% |
| Houghton Mifflin Harcourt Publishing Company | 150,050 | 27 | 2.1% |
| Murphy Exploration & Production Company | 144,677 | 13 | 2.1% |
| Giesecke & Devrient America, Inc. | 135,888 | 73 | 1.9% |
| Monsanto Company | 127,778 | 28 | 1.8% |
| AT&T Services, Inc. | 122,300 | 48 | 1.7% |
| Vail Holdings, Inc. | 122,232 | 79 | 1.7% |
| Northrop Grumman Systems Corporation | 111,469 | 73 | 1.6% |
| Argo Data Resource Corporation | 109,990 | 73 | 1.6% |
| Alliance Data Systems | 96,749 | 73 | 1.4% |
| Federal National Mortgage Association | 92,358 | 61 | 1.3% |
| County of Santa Clara | 90,467 | 91 | 1.3% |
| Total | 3,194,356 | | 45.3% |
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule I
Definition of Funds From Operations (“FFO”),
The Company evaluates performance based on Funds From Operations, which we refer to as FFO, as management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company defines FFO as net income (computed 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 have included the NAREIT FFO definition in our table and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do.
We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.
