Franklin Street Properties (FSP) 8-K Franklin Street Properties Corp. Announces First Quarter 2020 Results

Exhibit 99.2 

First Quarter 2020
Table of Contents

	Page		Page
Company Information	3	Tenant Analysis and Leasing Activity
		Tenants by Industry	18
Key Financial Data		20 Largest Tenants with Annualized Rent and Remaining Term	19-20
Financial Highlights	4	Leasing Activity	21
Income Statements	5	Lease Expirations by Square Feet	22
Balance Sheets	6	Lease Expirations with Annualized Rent per Square Foot	23
Cash Flow Statements	7	Redevelopment Activity	24
Property Net Operating Income (NOI)	8	Capital Expenditures	25
Reconciliation		Transaction Activity	26
FFO & AFFO	9
EBITDA	10	Loan Portfolio of Secured Real Estate	27
Property NOI	11
		Net Asset Value Components	28
Debt Summary	12
		Appendix: Definitions of Non-GAAP Measures
Capital Analysis	13	FFO	29
		EBITDA and NOI	30
Owned and Managed Portfolio Overview	14-17	AFFO	31

All financial information contained in this supplemental information package is unaudited.  In addition, certain statements contained in this supplemental information package may be deemed to be forward-looking statements within the meaning of the federal securities laws.  Although FSP believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.  Factors that could cause actual results to differ materially from FSP’s current expectations include adverse changes in general economic or local market conditions, including as a result of the COVID-19 pandemic and other potential infectious disease outbreaks and terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, increasing interest rates, 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, adverse changes in energy prices, which if sustained, could negatively impact occupancy and rental rates in the markets in which we own properties, including energy-influenced markets such as Dallas, Denver and Houston, 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, delays in construction schedules, unanticipated increases in construction costs, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments.  FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Greenwood Plaza, Englewood, CO

March 31, 2020| Page 2

Company Information

Overview		Snapshot (as of March  31, 2020
Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on infill and central business district (CBD) office properties in the U.S. Sunbelt and Mountain West, as well as select opportunistic markets.  FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income.  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. FSP’s real estate operations include property acquisitions and dispositions, short-term financing, leasing, development and asset management.		Corporate Headquarters	Wakefield, MA
		Fiscal Year-End	31-Dec
		Total Properties	35 (1)
		Total Square Feet	9.9 Million (1)
		Trading Symbol	FSP
		Exchange	NYSE American
		Common Shares Outstanding	107,269,201
		Quarterly Dividend	$0.09
Our Business		Dividend Yield	6.3%
As of March 31, 2020, the Company owned and operated a portfolio of real estate consisting of 32 operating properties, three redevelopment properties and two managed Sponsored REITs.  From time-to-time, the Company may acquire, develop or redevelop real estate, make additional secured loans or acquire one of its Sponsored REITs. The Company may also pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, or for geographic or property specific reasons.		Total Market Capitalization	$1.6 Billion (2)
		Insider Holdings	4.08%
Management Team
George J. Carter	Jeffrey B. Carter
Chief Executive Officer and	President and Chief Investment
Chairman of the Board	Officer
John G. Demeritt	Scott H. Carter
Executive Vice President, Chief	Executive Vice President, General
Financial Officer and Treasurer	Counsel and Secretary
John F. Donahue	Eriel Anchondo
Executive Vice President	Executive Vice President and Chief Operating Officer	Plaza Seven, Minneapolis, MN
Inquiries
Inquiries should be directed to:  Georgia Touma
877.686.9496 or InvestorRelations@fspreit.com (1) Includes both operating and redevelopment properties. (2) Total Market Capitalization is the closing share price multiplied by the number of shares outstanding plus total debt      outstanding.

March 31, 2020| Page 3

Summary of Financial Highlights

(in thousands except per share amounts, SF & number of properties)
	31-Mar-20		31-Dec-19		30-Sep-19		30-Jun-19		31-Mar-19
Income Items:
Rental revenue	$	62,567	$	68,575	$	68,108	$	65,485	$	63,359
Total revenue		62,983		68,997		68,539		66,813		64,716
Net income (loss)		(1,071)		3,648		2,399		1,633		(1,205)
Adjusted EBITDA*		30,325		35,632		33,996		33,113		31,267
FFO*		21,292		26,755		24,908		23,769		22,110
AFFO*		3,101		544		10,364		2,916		6,717
Per Share Data:
EPS	$	(0.01)	$	0.03	$	0.02	$	0.02	$	(0.01)
FFO*	$	0.20	$	0.25	$	0.23	$	0.22	$	0.21
AFFO*	$	0.03	$	0.01	$	0.10	$	0.03	$	0.06
Weighted Average Shares (diluted)		107,269		107,240		107,231		107,231		107,231
Closing share price	$	5.73	$	8.56	$	8.46	$	7.38	$	7.19
Dividend declared	$	0.09	$	0.09	$	0.09	$	0.09	$	0.09
Balance Sheet Items:
Real estate, net	$	1,639,196	$	1,637,210	$	1,626,510	$	1,627,681	$	1,624,833
Other assets, net		208,431		205,444		216,640		215,661		266,412
Total assets, net		1,847,627		1,842,654		1,843,150		1,843,342		1,891,245
Total liabilities, net		1,090,309		1,056,258		1,053,497		1,042,834		1,071,258
Shareholders' equity		757,318		786,396		789,653		800,508		819,987
Market Capitalization and Debt:
Total Market Capitalization (a)	$	1,614,653	$	1,888,224	$	1,877,176	$	1,761,366	$	1,780,992
Total debt outstanding (excluding unamortized financing costs)	$	1,000,000	$	970,000	$	970,000	$	970,000	$	1,010,000
Debt to Total Market Capitalization		61.9%		51.4%		51.7%		55.1%		56.7%
Net Debt to Adjusted EBITDA*		8.1		6.7		7.0		7.2		8.0
Operating Properties Leasing Statistics (b):
Operating properties assets		32		32		32		32		32
Operating properties total SF		9,506,513		9,504,634		9,503,964		9,498,858		9,495,118
Operating properties % leased		85.4%		87.6%		89.7%		88.1%		88.5%

(a) Total Market Capitalization is the closing share price multiplied by the number of shares outstanding plus total debt outstanding on that date.

(b) For periods in 2020 and 2019, excludes redevelopment properties.

*See pages 9 & 10 for reconciliations of Net income or loss to FFO, AFFO and Adjusted EBITDA, respectively, and the Appendix for Definitions of these Non-GAAP Measures beginning on page 29.

March 31, 2020| Page 4

Condensed Consolidated Income Statements ($ in thousands, except per share amounts)

											For the
	For the Three Months Ended		For the Three Months Ended								Year Ended
	31-Mar-20		31-Mar-19		30-Jun-19		30-Sep-19		31-Dec-19		31-Dec-19
Revenue:
Rental	$	62,567	$	63,359	$	65,485	$	68,108	$	68,575	$	265,527
Related party revenue:
Management fees and interest income from loans		403		1,352		1,322		426		417		3,517
Other		13		5		6		5		5		21
Total revenue		62,983		64,716		66,813		68,539		68,997		269,065
Expenses:
Real estate operating expenses		17,298		17,726		17,116		18,041		19,428		72,311
Real estate taxes and insurance		11,762		12,102		12,801		12,505		10,463		47,871
Depreciation and amortization		22,338		23,245		22,109		22,559		22,996		90,909
General and administrative		3,525		3,509		3,702		3,886		3,376		14,473
Interest		9,063		9,368		9,371		9,036		8,982		36,757
Total expenses		63,986		65,950		65,099		66,027		65,245		262,321
Income (loss) before taxes on income		(1,003)		(1,234)		1,714		2,512		3,752		6,744
Taxes on income		68		(29)		81		113		104		269
Net income (loss)	$	(1,071)	$	(1,205)	$	1,633	$	2,399	$	3,648	$	6,475
Weighted average number of shares outstanding, basic and diluted		107,269		107,231		107,231		107,231		107,240		107,233
Net income (loss) per share, basic and diluted	$	(0.01)	$	(0.01)	$	0.02	$	0.02	$	0.03	$	0.06

March 31, 2020| Page 5

	$ in thousands, except per share amounts)
	Condensed Consolidated Balance Sheets (in thousands)

	March 31,		March 31,		June 30,		September 30,		December 31,
	2020		2019		2019		2019		2019
Assets:
Real estate assets:
Land	$	191,578	$	191,578	$	191,578	$	191,578	$	191,578
Buildings and improvements		1,941,952		1,872,082		1,886,294		1,900,131		1,924,664
Fixtures and equipment		11,917		9,153		10,607		11,099		11,665
		2,145,447		2,072,813		2,088,479		2,102,808		2,127,907
Less accumulated depreciation		506,251		447,980		460,798		476,298		490,697
Real estate assets, net		1,639,196		1,624,833		1,627,681		1,626,510		1,637,210
Acquired real estate leases, net		37,270		53,948		49,475		45,066		40,704
Cash, cash equivalents and restricted cash		17,283		8,832		13,100		20,159		9,790
Tenant rent receivables, net		3,609		4,489		6,366		4,410		3,851
Straight-line rent receivable, net		68,317		55,836		61,438		64,111		66,881
Prepaid expenses and other assets		7,486		10,469		8,052		8,868		7,246
Related party mortgage loan receivable		21,000		72,795		21,530		21,265		21,000
Other assets: derivative asset		—		10,469		4,645		2,844		3,022
Office computers and furniture, net of accumulated depreciation		215		166		154		136		183
Deferred leasing commissions, net		53,251		49,408		50,901		49,781		52,767
Total assets	$	1,847,627	$	1,891,245	$	1,843,342	$	1,843,150	$	1,842,654
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable	$	30,000	$	40,000	$	—	$	—	$	—
Term loan payable, net of unamortized financing costs		766,124		764,642		765,005		765,369		765,733
Series A & Series B Senior Notes		199,055		198,892		198,933		198,974		199,015
Accounts payable and accrued expenses		57,076		52,248		54,282		61,657		66,658
Accrued compensation		1,335		1,073		2,191		3,769		3,400
Tenant security deposits		9,615		6,352		9,118		9,008		9,346
Lease liability		1,803		2,141		2,059		1,976		1,890
Other liabilities: derivative liabilities		23,035		2,496		8,132		9,934		7,704
Acquired unfavorable real estate leases, net		2,266		3,414		3,114		2,810		2,512
Total liabilities		1,090,309		1,071,258		1,042,834		1,053,497		1,056,258
Commitments and contingencies
Stockholders’ Equity:
Preferred stock		—		—		—		—		—
Common stock		11		11		11		11		11
Additional paid-in capital		1,356,794		1,356,457		1,356,457		1,356,457		1,356,794
Accumulated other comprehensive income (loss)		(23,035)		7,973		(3,487)		(7,090)		(4,682)
Accumulated distributions in excess of accumulated earnings		(576,452)		(544,454)		(552,473)		(559,725)		(565,727)
Total stockholders’ equity		757,318		819,987		800,508		789,653		786,396
Total liabilities and stockholders’ equity	$	1,847,627	$	1,891,245	$	1,843,342	$	1,843,150	$	1,842,654

March 31, 2020| Page 6

Condensed Consolidated Statements of Cash Flows (in thousands)

		Three Months Ended March 31,
		2020		2019
Cash flows from operating activities:
Net loss	$	(1,071)	$	(1,205)
Adjustments to reconcile net income or loss to net cash provided by operating activities:
Depreciation and amortization expense		23,086		23,962
Amortization of above and below market leases		(73)		(112)
Decrease in allowance for doubtful accounts and write-off of accounts receivable		(13)		(60)
Changes in operating assets and liabilities:
Tenant rent receivables		255		(491)
Straight-line rents		(966)		(1,140)
Lease acquisition costs		(470)		(689)
Prepaid expenses and other assets		(644)		1,497
Accounts payable and accrued expenses		(8,215)		(6,101)
Accrued compensation		(2,065)		(1,970)
Tenant security deposits		269		33
Payment of deferred leasing commissions		(2,892)		(4,242)
Net cash provided by operating activities		7,201		9,482
Cash flows from investing activities:
Property improvements, fixtures and equipment		(20,054)		(15,223)
Investment in related party mortgage loan receivable		—		(2,400)
Repayment of related party mortgage loan receivable		—		265
Proceeds received from liquidating trust		—		263
Net cash used in investing activities		(20,054)		(17,095)
Cash flows from financing activities:
Distributions to stockholders		(9,654)		(9,651)
Borrowings under bank note payable		35,000		30,000
Repayments of bank note payable		(5,000)		(15,000)
Deferred Financing Costs		—		(81)
Net cash provided by financing activities		20,346		5,268
Net increase (decrease) in cash, cash equivalents and restricted cash		7,493		(2,345)
Cash, cash equivalents and restricted cash, beginning of period		9,790		11,177
Cash, cash equivalents and restricted cash, end of period	$	17,283	$	8,832

March 31, 2020| Page 7

Property Net Operating Income (NOI)* with Same Store Comparison (in thousands)

	Rentable											Year
	Square Feet	Three Months Ended		Three Months Ended								Ended		Inc		%
(in thousands)	or RSF	31-Mar-20		31-Mar-19		30-Jun-19		30-Sep-19		31-Dec-19		31-Dec-19		(Dec)		Change
Region
East	944	$	2,664	$	3,185	$	3,301	$	3,001	$	3,174	$	12,661	$	(521)	(16.4)	%
MidWest	1,555		5,485		5,163		5,174		5,297		5,243		20,877		322	6.2	%
South	4,387		13,290		14,272		15,196		17,456		17,589		64,513		(982)	(6.9)	%
West	2,620		11,463		10,559		11,240		11,134		11,974		44,907		904	8.6	%
Property NOI* from Operating Properties	9,506		32,902		33,179		34,911		36,888		37,980		142,958		(277)	(0.8)	%
Dispositions and Redevelopment Properties	405		(28)		(205)		(215)		(21)		(47)		(488)		177	0.5	%
Property NOI*	9,911	$	32,874	$	32,974	$	34,696	$	36,867	$	37,933	$	142,470	$	(100)	(0.3)	%
Same Store		$	32,902	$	33,179	$	34,911	$	36,888	$	37,980	$	142,958	$	(277)	(0.8)	%
Less Nonrecurring
Items in NOI* (a)			26		35		706		3,434		4,402		8,577		(9)	0.0	%
Comparative
Same Store		$	32,876	$	33,144	$	34,205	$	33,454	$	33,578	$	134,381	$	(268)	(0.8)	%

(a) Nonrecurring items in NOI include proceeds from bankruptcies, lease termination fees or other significant nonrecurring income or expenses, which may affect comparability. 

*See the Appendix for Definition of Non-GAAP Measures beginning on page 29.

March 31, 2020| Page 8

FFO* & AFFO* Reconciliation (in thousands, except per share amounts)

											Year
	Three Months Ended		Three Months Ended								Ended
	31-Mar-20		31-Mar-19		30-Jun-19		30-Sep-19		31-Dec-19		31-Dec-19
Net income (loss)	$	(1,071)	$	(1,205)	$	1,633	$	2,399	$	3,648	$	6,475
Depreciation & amortization		22,265		23,133		22,028		22,448		22,898		90,507
NAREIT FFO*		21,194		21,928		23,661		24,847		26,546		96,982
Lease Acquisition costs		98		182		108		61		209		560
Funds From Operations (FFO)*	$	21,292	$	22,110	$	23,769	$	24,908	$	26,755	$	97,542
Adjusted Funds From Operations (AFFO)*
Funds From Operations (FFO)*	$	21,292	$	22,110	$	23,769	$	24,908	$	26,755	$	97,542
Amortization of deferred financing costs		748		717		720		720		721		2,878
Shares issued as compensation		—		—		—		—		337		337
Straight-line rent		(966)		(1,140)		(3,689)		(2,120)		(1,927)		(8,876)
Tenant improvements		(10,716)		(8,318)		(10,169)		(7,890)		(15,874)		(42,251)
Leasing commissions		(2,730)		(4,239)		(3,666)		(1,286)		(3,164)		(12,355)
Non-investment capex		(4,527)		(2,413)		(4,049)		(3,968)		(6,304)		(16,734)
Adjusted Funds From Operations (AFFO)*	$	3,101	$	6,717	$	2,916	$	10,364	$	544	$	20,541
Per Share Data:
EPS	$	(0.01)	$	(0.01)	$	0.02	$	0.02	$	0.03	$	0.06
FFO*		0.20		0.21		0.22		0.23		0.25		0.91
AFFO*		0.03		0.06		0.03		0.10		0.01		0.19
Weighted Average Shares (basic and diluted)		107,269		107,231		107,231		107,231		107,240		107,233

*See the Appendix for Definitions of these Non-GAAP Measures beginning on page 29. 

March 31, 2020| Page 9

EBITDA* & Adjusted EBITDA* Reconciliation (in thousands, except ratio amounts)

											Year
	Three Months Ended		Three Months Ended								Ended
	31-Mar-20		31-Mar-19		30-Jun-19		30-Sep-19		31-Dec-19		31-Dec-19
Net income (loss)	$	(1,071)	$	(1,205)	$	1,633	$	2,399	$	3,648	$	6,475
Interest expense		9,063		9,368		9,371		9,036		8,982		36,757
Depreciation and amortization		22,265		23,133		22,028		22,448		22,898		90,507
Income taxes		68		(29)		81		113		104		269
EBITDA*	$	30,325	$	31,267	$	33,113	$	33,996	$	35,632	$	134,008
(Gain) loss on sale of properties and provisions for loss on properties held for sale or equity investments		—		—		—		—		—		—
Adjusted EBITDA*	$	30,325	$	31,267	$	33,113	$	33,996	$	35,632	$	134,008
Interest expense	$	9,063	$	9,368	$	9,371	$	9,036	$	8,982	$	36,757
Scheduled principal payments		—		—		—		—		—		—
Interest and scheduled principal payments	$	9,063	$	9,368	$	9,371	$	9,036	$	8,982	$	36,757
Interest coverage ratio		3.35		3.34		3.53		3.76		3.97		3.65
Debt service coverage ratio		3.35		3.34		3.53		3.76		3.97		3.65
Debt excluding unamortized financing costs	$	1,000,000	$	1,010,000	$	970,000	$	970,000	$	970,000
Cash, cash equivalents and restricted cash		17,283		8,832		13,100		20,159		9,790
Net Debt (Debt less Cash, cash equivalents and restricted cash)	$	982,717	$	1,001,168	$	956,900	$	949,841	$	960,210
Adjusted EBITDA*	$	30,325	$	31,267	$	33,113	$	33,996	$	35,632
Annualized	$	121,300	$	125,068	$	132,452	$	135,984	$	142,528
Net Debt-to-Adjusted EBITDA*		8.1		8.0		7.2		7.0		6.7

*See the Appendix for Definitions of these Non-GAAP Measures beginning on page 29.  Amounts in the EBITDA and Adjusted EBITDA reconciliation do not reflect our proportionate share of interest expense, depreciation, amortization, income taxes, gains or losses on sales and debt from our investments in non-consolidated REITs, which are accounted for under the equity method.

March 31, 2020| Page 10

Reconciliation of Net Income (Loss) to Property NOI* (in thousands)

											Year
	Three Months Ended		Three Months Ended								Ended
	31-Mar-20		31-Mar-19		30-Jun-19		30-Sep-19		31-Dec-19		31-Dec-19
Net income (loss)	$	(1,071)	$	(1,205)	$	1,633	$	2,399	$	3,648	$	6,475
Add (deduct):
Management fee income		(478)		(677)		(645)		(634)		(570)		(2,526)
Depreciation and amortization		22,338		23,245		22,109		22,559		22,996		90,909
Amortization of above/below market leases		(73)		(112)		(81)		(112)		(97)		(402)
General and administrative		3,525		3,509		3,703		3,886		3,375		14,473
Interest expense		9,063		9,368		9,371		9,036		8,982		36,757
Interest income		(382)		(1,294)		(1,259)		(395)		(390)		(3,338)
Non-property specific items, net		(48)		140		(135)		128		(11)		122
Property NOI*	$	32,874	$	32,974	$	34,696	$	36,867	$	37,933	$	142,470

*See the Appendix for Definition of Non-GAAP Measures beginning on page 29.

March 31, 2020| Page 11

Debt Summary (in thousands)

		Maximum		Amount		Interest			Interest
	Maturity	Amount		Drawn at		Rate (a)			Rate at	Facility
	Date	of Loan		31-Mar-20		Components			31-Mar-20	Fee
BAML Revolver	12-Jan-22	$	600,000	$	30,000	L	+	1.20%	2.12%	0.25%
JPM Term Loan (b)	30-Nov-21		150,000		150,000	L	+	1.25%	3.21%
BAML Term Loan	12-Jan-23		400,000		400,000	1.12%	+	1.35%	2.47%
BMO Term Loan Tranche A	30-Nov-21		55,000		55,000	2.32%	+	1.25%	3.57%
BMO Term Loan Tranche B	31-Jan-24		165,000		165,000	2.32%	+	1.25%	3.57%
Series A Senior Notes	20-Dec-24		116,000		116,000				3.99%
Series B Senior Notes	20-Dec-27		84,000		84,000				4.26%
		$	1,570,000	$	1,000,000				3.14%

· On August 2, 2018, we entered into an Amended and Restated Credit Agreement with respect to the JPM Term Loan, which extended the maturity of the JPM Term Loan to November 30, 2021 and reduced the number of basis points over the LIBOR-based rate used to determine the interest rate.  On March 7, 2019, we entered into interest rate swap transactions for a  $100 million portion of the $150 million JPM Term Loan that fixed the LIBOR-based rate at 2.44% from March 29, 2019 and until the loan matures on November 30, 2021.  Accordingly, the interest rate on the $100 million portion was 3.69% and the interest rate on the remaining $50 million portion was 2.25% at March 31, 2020.  The weighted average rate at March 31, 2020 was 3.21% on the JPM Term Loan. 

· On September 27, 2018, we entered into a Second Amended and Restated Credit Agreement with respect to the BMO Term Loan, which consists of a $55 million tranche A term loan and a $165 million tranche B term loan.  The tranche A term loan matures on November 30, 2021 and the tranche B term loan matures on January 31, 2024.  The number of basis points over LIBOR used to determine the interest rate was reduced.     

· The BAML Revolver is subject to a 25 basis point facility fee based on our credit rating and, when applied to our availability of $600 million at March 31, 2020, would be $1.5 million annually.     

· On October 24, 2017, we entered into a note purchase agreement relating to a private placement of $200 million in aggregate principal amount of unsecured senior notes, consisting of $116 million in aggregate principal amount of 3.99% Series A Senior Notes with a 7-year maturity and $84 million in aggregate principal amount of 4.26% Series B Senior Notes with a 10-year maturity.  On December 20, 2017, we drew the proceeds from the private placement and reduced the outstanding balance on our revolving line of credit. 

· We incurred financing costs, some of which are deferred and amortized into interest expense during the terms of the loans we execute.  We estimate the annualized rate for this amortization to interest expense will be approximately $2.9 million.

· Additional information on these transactions can be found in Current Reports on Form 8-K that the Company filed with the U.S. Securities and Exchange Commission on October 24, 2017, August 2, 2018 and September 27, 2018.        

(a) Interest rate excludes amortization of deferred financing costs and facility fees, which is discussed in the notes above.

(b) The interest rate is calculated as $100 million at the fixed rate of 3.69% and the remaining $50 million at the floating rate plus 1.25%, or 2.25% as  of March 31, 2020.    

March 31, 2020| Page 12

Capital Analysis (in thousands, except per share amounts)

	31-Mar-20		31-Mar-19		30-Jun-19		30-Sep-19		31-Dec-19
Market Data:
Shares Outstanding		107,269		107,231		107,231		107,231		107,269
Closing market price per share	$	5.73	$	7.19	$	7.38	$	8.46	$	8.56
Market capitalization	$	614,653	$	770,992	$	791,366	$	907,176	$	918,224
Total debt outstanding excluding unamortized financing costs		1,000,000		1,010,000		970,000		970,000		970,000
Total Market Capitalization	$	1,614,653	$	1,780,992	$	1,761,366	$	1,877,176	$	1,888,224
Dividend Data:
Total dividends declared for the quarter	$	9,654	$	9,651	$	9,651	$	9,651	$	9,650
Common dividend declared per share	$	0.09	$	0.09	$	0.09	$	0.09	$	0.09
Declared dividend as a % of Net income (loss) per share		-901%		-801%		591%		402%		265%
Declared dividend as a % of AFFO* per share		311%		144%		331%		93%		1774%
Liquidity:
Cash, cash equivalents and restricted cash	$	17,283	$	8,832	$	13,100	$	20,159	$	9,790
Revolver:
Gross potential available under the BAML Revolver		600,000		600,000		600,000		600,000		600,000
Less:
Outstanding balance		(30,000)		(40,000)		—		—		—
Total Liquidity	$	587,283	$	568,832	$	613,100	$	620,159	$	609,790

*See page 9 for a reconciliation of Net Income (Loss) to AFFO and the Appendix for Definitions of Non-GAAP Measures beginning on page 29.

March 31, 2020| Page 13

Owned Portfolio Overview

	As of the Quarter Ended
	31-Mar-20	31-Dec-19	30-Sep-19	30-Jun-19	31-Mar-19
Operating Properties:
Number of properties	32	32	32	32	32
Square feet	9,506,513	9,504,634	9,503,964	9,498,858	9,495,118
Leased percentage	85.4%	87.6%	89.7%	88.1%	88.5%
Redevelopment Properties (a):
Number of properties	3	3	3	3	3
Square feet	405,215	405,215	405,215	404,652	404,652
Leased percentage	55.8%	50.3%	50.3%	11.9%	11.9%
Managed Properties - Single Asset REITs (SARs):
Number of properties	2	2	2	2	3
Square feet	348,545	348,545	348,545	348,545	674,342
Total Operating, Redevelopment and Managed Properties:
Number of properties	37	37	37	37	38
Square feet	10,260,273	10,258,394	10,257,724	10,252,055	10,574,112

(a) We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.

March 31, 2020| Page 14

Owned Portfolio Overview

				Percent	Wtd Occupied	GAAP						Percent	Wtd Occupied	GAAP
MSA / Property Name	City	State	Square Feet	Leased	Percentage (a)	Rent (b)		MSA / Property Name	City	State	Square Feet	Leased	Percentage (a)	Rent (b)
Operating Properties:
East Region								Midwest Region
Washington, D.C.								Chicago
Meadow Point	Chantilly	VA	138,537	91.1%	94.1%	$	25.72	Northwest Point	Elk Grove Village	IL	177,095	100.0%	100.0%	$	32.19
Stonecroft	Chantilly	VA	111,469	0.0%	0.0%	$	—	909 Davis Street	Evanston	IL	195,098	93.3%	93.3%	$	38.22
Loudoun Tech Center	Dulles	VA	136,658	98.9%	98.9%	$	19.65
								Indianapolis
Richmond								River Crossing	Indianapolis	IN	205,729	98.5%	97.4%	$	24.91
Innsbrook	Glen Allen	VA	298,183	57.2%	57.2%	$	18.94
								St. Louis
Raleigh-Durham								Timberlake	Chesterfield	MO	234,496	95.7%	95.7%	$	27.13
Emperor Boulevard	Durham	NC	259,531	100.0%	100.0%	$	33.06	Timberlake East	Chesterfield	MO	117,036	100.0%	100.0%	$	26.67
								Minneapolis
								121 South 8th Street	Minneapolis	MN	297,209	93.7%	89.5%	$	24.15
								Plaza Seven	Minneapolis	MN	328,403	89.0%	87.9%	$	32.03
East Region Total			944,378	73.2%	73.7%	$	25.61	Midwest Region Total			1,555,066	94.8%	93.6%	$	29.22

(a) Weighted Occupied Percentage for the three months ended March 31, 2020.

(b) Weighted Average GAAP Rent per Occupied Square Foot.

March 31, 2020| Page 15

Owned Portfolio Overview

				Percent	Wtd Occupied	GAAP						Percent	Wtd Occupied	GAAP
MSA / Property Name	City	State	Square Feet	Leased	Percentage (a)	Rent (b)		MSA / Property Name	City	State	Square Feet	Leased	Percentage (a)	Rent (b)
South Region								West Region
Dallas-Fort Worth								Denver
Legacy Tennyson Center	Plano	TX	207,049	100.0%	91.8%	$	29.80	380 Interlocken	Broomfield	CO	240,359	73.1%	72.4%	$	35.33
One Legacy Circle	Plano	TX	214,110	52.9%	45.5%	$	35.79	1999 Broadway	Denver	CO	677,377	89.7%	80.0%	$	33.84
Addison Circle	Addison	TX	289,302	79.4%	74.9%	$	33.45	Greenwood Plaza	Englewood	CO	196,236	100.0%	100.0%	$	25.18
Collins Crossing	Richardson	TX	300,887	79.7%	79.3%	$	27.09	390 Interlocken	Broomfield	CO	241,512	99.4%	98.2%	$	34.92
Liberty Plaza	Addison	TX	216,827	73.4%	72.4%	$	23.65	1001 17th Street	Denver	CO	655,420	98.5%	98.3%	$	37.01
								600 17th Street	Denver	CO	609,353	92.4%	86.4%	$	32.47
Houston								West Region Total			2,620,257	92.7%	88.5%	$	33.90
Park Ten	Houston	TX	157,460	71.7%	71.7%	$	24.79
Eldridge Green	Houston	TX	248,399	100.0%	100.0%	$	30.13	Total Operating Properties			9,506,513	85.4%	82.4%	$	30.31
Park Ten Phase II	Houston	TX	156,746	95.0%	82.6%	$	28.20
Westchase I & II	Houston	TX	629,025	55.8%	56.8%	$	29.88
								Redevelopment Properties (c)
Atlanta								Forest Park	Charlotte	NC	62,212	35.6%	0.0%	$	—
One Overton Park	Atlanta	GA	387,267	93.3%	81.3%	$	24.53	Blue Lagoon Drive	Miami	FL	213,182	73.1%	0.0%	$	—
One Ravinia	Atlanta	GA	386,602	87.9%	86.4%	$	27.64	801 Marquette Ave	Minneapolis	MN	129,821	37.0%	37.0%	$	25.88
Two Ravinia	Atlanta	GA	411,047	69.8%	67.7%	$	27.44	Total Redevelopment Properties			405,215	55.8%	11.9%	$	25.88
Pershing Plaza	Atlanta	GA	160,145	98.9%	98.4%	$	30.81
999 Peachtree	Atlanta	GA	621,946	91.8%	84.9%	$	33.67	Total Owned Portfolio			9,911,728	84.2%	79.5%	$	30.28
South Region Total			4,386,812	80.4%	76.6%	$	29.28

(a) Weighted Occupied Percentage for the three months ended March 31, 2020.

(b) Weighted Average GAAP Rent per Occupied Square Foot.

(c) We define Redevelopment Properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized. 

March 31, 2020| Page 16

Managed Portfolio Overview

MSA / Property Name	City	State	Square Feet	MSA / Property Name	City	State	Square Feet
Southeast Region				Midwest Region
Atlanta				Indianapolis
Satellite Place	Duluth	GA	134,785	Monument Circle	Indianapolis	IN	213,760
Southeast Region Total			134,785	Midwest Region Total			213,760
				Total Managed			348,545
				Total Operating & Managed			10,260,273

March 31, 2020| Page 17

Tenants by Industry (By Square Feet)  

March 31, 2020| Page 18

20 Largest Tenants with Annualized Rent and Remaining Term

			Remaining	Aggregate				% of Aggregate
	Tenant	Number of	Lease Term	Leased	% of Total	Annualized		Leased
	Name	Leases	in Months	Square Feet	Square Feet	Rent (a)		Annualized Rent
1	IQVIA Holdings Inc.	1	74	259,531	2.6%	$	8,847,806	3.7%
2	US Government (b)	4	1, 2, 6, 10, 122	259,141	2.6%		7,364,361	3.1%
3	CITGO Petroleum Corporation	1	23	248,399	2.5%		8,269,203	3.4%
4	Newfield Exploration Company	1	23	234,495	2.4%		9,845,185	4.1%
5	Centene Management Company, LLC	3	39, 39, 39	216,879	2.2%		6,199,728	2.6%
6	Eversheds Sutherland (US) LLP	1	73	179,868	1.8%		5,608,767	2.3%
7	EOG Resources, Inc.	1	81	169,167	1.7%		6,031,639	2.5%
8	The Vail Corporation	1	120	164,636	1.7%		5,557,414	2.3%
9	Lennar Homes, LLC (c)	1	192	155,808	1.6%		—	0.0%
10	T-Mobile South, LLC dba T-Mobile	1	65	151,792	1.5%		4,027,042	1.7%
11	Citicorp Credit Services, Inc.	1	89	146,260	1.5%		4,809,029	2.0%
12	Jones Day (d)	1	14	140,342	1.4%		5,029,308	2.1%
13	Worldventures Holdings, LLC	2	118, 124	129,998	1.3%		4,054,886	1.7%
14	Kaiser Foundation Health Plan	1	50	120,979	1.2%		3,656,687	1.5%
15	Argo Data Resource Corporation (d)	1	41, 125	114,200	1.1%		3,280,966	1.4%
16	Giesecke & Devrient America	1	57	112,110	1.1%		2,153,633	0.9%
17	Randstad General Partner (US) (e)	1	15, 50	109,638	1.1%		2,819,226	1.2%
18	VMWare, Inc.	1	74	100,853	1.0%		3,314,925	1.4%
19	Ping Identity Corp.	1	75	94,761	1.0%		3,678,065	1.5%
20	Common Grounds LLC (f)	2	121, 150	76,984	0.8%		—	0.0%
			Total	3,185,841	32.1%	$	94,547,870	39.4%

Footnotes on next page

March 31, 2020| Page 19

20 Largest Tenants with Annualized Rent and Remaining Term

Footnotes:

(a)    Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at March 31, 2020 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.  

(b)Includes 97,228 square feet, which expire in 2020,  and 36,913 square feet, which expire in 2021.  The remaining 125,000 square feet expire in 2030.

(c)Lease and rent commence on November 1, 2020.

(d)  Includes 28,550 square feet, which expire in 2023.  The remaining 85,650 square feet expire in 2030.       

(e)  Includes 98,695 square feet, which expire in 2021, and 10,943 square feet, which expire in 2024. 

(f)   Includes 27,478 square feet, which expire in 2030 and 49,506 square feet, which expire in 2032.  Rent commences in April and October 2020, respectively.    

March 31, 2020| Page 20

Leasing Activity (Owned Portfolio)

					Year		Year
	Three Months Ended				Ended		Ended
Leasing Activity (a)		31-Mar-20		31-Mar-19		31-Dec-19		31-Dec-18
(in Square Feet - SF)
New leasing		144,000		95,000		534,000		397,000
Renewals and expansions		136,000		365,000		883,000		1,284,000
		280,000		460,000		1,417,000		1,681,000
Other information per SF
(Activity on a year-to-date basis)
GAAP Rents on leasing	$	31.17	$	32.32	$	31.78	$	31.02
Weighted average lease term		6.3 Years		9.0 Years		8.3 Years		7.2 Years
Increase or decrease over average GAAP rents in prior year (b)		10.5%		9.9%		10.9%		7.3%
Average free rent		4 Months		3 Months		3 Months		4 Months
Tenant Improvements	$	22.13	$	28.76	$	34.44	$	29.13
Leasing Costs	$	7.80	$	13.41	$	13.51	$	8.99

(a)  Leasing activity includes leasing at redevelopment properties.  We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.

(b)  The increase or decrease percentage is calculated by comparing average GAAP rents at properties that had leasing activity in the current year to average GAAP rents at the same properties in the prior year. 

March 31, 2020| Page 21

Lease Expirations by Square Feet (a) (Owned Portfolio)

(a) Lease expirations include leases in redevelopment properties.  We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.

March 31, 2020| Page 22

Lease Expirations with Annualized Rent per Square Foot (Owned Portfolio)

			Rentable				Annualized		Percentage
	Number of		Square				Rent		of Total
Year of	Leases		Footage		Annualized		Per Square		Annualized
Lease	Expiring		Subject to		Rent Under		Foot Under		Rent Under
Expiration	Within the		Expiring		Expiring		Expiring		Expiring	Cumulative
December 31,	Year (a)		Leases		Leases (b)		Leases		Leases	Total
2020	37	(c)	355,633		$	11,685,526	$	32.86	4.9%	4.9%
2021	67		846,202			25,484,089		30.12	10.6%	15.5%
2022	79		1,193,848			39,663,258		33.22	16.5%	32.0%
2023	65		661,961			20,059,516		30.30	8.4%	40.4%
2024	62		863,983			25,877,579		29.95	10.8%	51.2%
2025	57		858,756			21,147,210		24.63	8.8%	60.0%
2026	25		909,107			29,594,860		32.55	12.3%	72.3%
2027	18		660,350			19,583,715		29.66	8.2%	80.5%
2028	13		378,390			9,189,593		24.29	3.8%	84.3%
2029	10		339,437			10,843,397		31.95	4.5%	88.8%
2030 and thereafter	72		1,279,750	(d)		26,908,468		21.03	11.2%	100.0%
Leased total	505		8,347,417		$	240,037,211	$	28.76	100.0%
Vacancies as of 3/31/20			1,385,057
Redevelopment properties (e)			179,254
Total Portfolio Square Footage			9,911,728

(a) The number of leases approximates the number of tenants. Tenants with lease maturities in different years are included in annual totals for each lease. Tenants may have multiple leases in the same year.  Includes annualized rent from redevelopment properties.  We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized. 

(b) Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at March 31, 2020 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(c) Includes 2 leases that are month-to-month.   

(d) Includes 115,152 square feet that are non-revenue producing building amenities.

(e) Redevelopment properties include properties being developed, redeveloped, or where redevelopment is complete, but are in lease-up and that are not stabilized. 

March 31, 2020| Page 23

Redevelopment Activity

(in 000's except square feet)										Estimated	Estimated
						Incurred		Percent	Estimated	Leased	Occupied
			Rentable	Anticipated		Through		Leased	Completion	Stabilization	Stabilization
Property Name	City	State	Square Feet	Investment (1)		31-Mar-20		31-Mar-20	Date	Date	Date
Redevelopment Activity
Redevelopment in Process
Forest Park (2)	Charlotte	NC	62,212	$	5,165	$	983	35.6%	30-Jun-20	31-Dec-20	1-Apr-21
Blue Lagoon Drive (3)	Miami	FL	213,182		39,614		10,972	73.1%	31-Dec-20	31-Dec-20	1-May-21
Total Office in Process			275,394		44,779		11,955
Redevelopment Complete But Not Stabilized
801 Marquette Ave (4)	Minneapolis	MN	129,821	$	29,593	$	23,020	37.0%	30-Jun-17	31-Dec-20	1-Jun-21
Total			405,215	$	74,372	$	34,975

(1) Anticipated Investment includes capitalized redevelopment costs, capitalized interest and lease-up costs.

(2) Leased square feet was 22,134 as of March 31, 2020. 

(3) Leased square feet was 155,808 as of March 31, 2020. 

(4) Leased square feet was 48,019 as of March 31, 2020.    

March 31, 2020| Page 24

Capital Expenditures

(in thousands)
	For the Three Months Ended
	31-Mar-20
Tenant improvements	$	10,716
Deferred leasing costs		2,730
Non-investment capex		4,527
Total Capital Expenditures	$	17,973

	For the Three Months Ended								Year Ended
	31-Mar-19		30-Jun-19		30-Sep-19		31-Dec-19		31-Dec-19
Tenant improvements	$	8,318	$	10,169	$	7,890	$	15,874	$	42,251
Deferred leasing costs		4,239		3,666		1,286		3,164		12,355
Non-investment capex		2,413		4,049		3,968		6,304		16,734
Total Capital Expenditures	$	14,970	$	17,884	$	13,144	$	25,342	$	71,340

First generation leasing and investment capital was  $3.6 million for three months ended March 31, 2020 and $18.1 million for the year ended December 31, 2019.  

March 31, 2020| Page 25

Transaction Activity (in thousands except for Square Feet)

Recent Acquisitions:	City	State	Square Feet	Date Acquired	Purchase Price
2016
Plaza Seven	Minneapolis	MN	325,796	6/6/16	$	82,000
Pershing Plaza	Atlanta	GA	160,145	8/10/16		45,450
600 17th Street	Denver	CO	613,527	12/1/16		154,260
2015
Two Ravinia	Atlanta	GA	442,130	4/8/15	$	78,000

Recent Dispositions:					Gross Sale		Gain (loss)
	City	State	Square Feet	Date Sold	Proceeds		on Sale
2017
Hillview	Milpitas	CA	36,288	1/6/17	$	6,342	$	2,289
East Baltimore	Baltimore	MD	325,445	10/20/17		32,547		(20,770)
2016
Lakeside I	Maryland Heights	MO	127,778	4/5/16	$	20,189	$	4,154
Federal Way	Federal Way	WA	117,010	12/16/16		7,500		(7,092)
2015
Willow Bend	Plano	TX	117,050	2/23/15	$	20,750	$	1,462
Eden Bluff	Eden Prairie	MN	153,028	3/31/15		28,000		9,000
Park Seneca	Charlotte	NC	109,699	5/13/15		8,150		949
Montague	San Jose	CA	145,561	12/9/15		30,250		12,251

March 31, 2020| Page 26

Loan Portfolio of Secured Real Estate (in thousands)

(dollars in thousands, except footnotes)			Maximum		Amount		Interest
		Maturity	Amount		Outstanding		Rate at
Sponsored REIT	Location	Date	of Loan		31-Mar-20		31-Mar-20
Mortgage loan secured by property
FSP Monument Circle LLC (1)	Indianapolis, IN	6-Dec-20		21,000		21,000	7.19%
			$	21,000	$	21,000

(1) Includes an origination fee of $164,000 and an exit fee of $38,000 when repaid by the borrower.    

March 31, 2020| Page 27

Net Asset Value Components

(in thousands except per share data)
	Asof		Assets:			Other information:
	31-Mar-20		Loans outstanding on secured RE	$	21,000	Leased SF to be FFO producing
Total Market Capitalization Values			Investments in SARs (book basis)		—	In 2020 (in 000's)		388
Shares outstanding		107,269.2	Straight-line rent receivable		68,317
Closing price	$	5.73	Asset held for sale		—	Straight-line rental revenue current quarter	$	966
Market capitalization	$	614,653	Cash, cash equivalents and restricted cash		17,283
Debt		1,000,000	Tenant rent receivables		3,609	Management fee income current quarter	$	21
Total Market Capitalization	$	1,614,653	Prepaid expenses		3,466	Interest income from secured loans		382
			Office computers and furniture		215	Management fees and interest income from loans	$	403
			Other assets:
	3 Months		Deferred financing costs, net		7,124
	Ended		Other assets: Derivative Market Value		—
NOI Components	31-Mar-20		Other assets - Right-to-Use Asset		1,717
				$	122,731
Same Store NOI (1)	$	32,902
Acquisitions (1) (2)		—	Liabilities:			Footnotes to the components
Property NOI (1)		32,902	Debt (excluding contra for unamortized financing costs)	$	1,000,000
Full quarter adjustment (3)		—	Accounts payable & accrued expenses		58,411	(1) See pages 11 & 30 for definitions and reconciliations.
Stabilized portfolio	$	32,902	Tenant security deposits		9,615
			Other liabilities: lease liability		1,803	(2) Includes NOI from acquisitions not in Same Store.
			Other liabilities: derivative liability		23,035
Financial Statement Reconciliation:				$	1,092,864	(3) Adjustment to reflect property NOI for a full quarter in the quarter acquired, if necessary.
Rental Revenue	$	62,567
Rental operating expenses		(17,298)				(4) HB3 Tax in Texas is classified as an income tax, though we treat it as a real estate tax in Property NOI.
Real estate taxes and insurance		(11,762)
NOI from dispositions & redevelopment properties		28				(5) Management & other fees are eliminated in consolidation but included in Property NOI.
Taxes (4)		(68)
Management & other fees (5)		(565)
Property NOI (1)	$	32,902

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Appendix: Non-GAAP Financial Measure Definitions

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 or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness, acquisition costs of newly acquired properties that are not capitalized and lease acquisition costs that are not capitalized plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on properties or investments in non-consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate share of FFO from, non-consolidated REITs.

FFO should not be considered as an alternative to net income or loss (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 as of May 17, 2016 in the table on page 9 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 or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.

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Appendix: Non-GAAP Financial Measure Definitions

Definition of Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)
and Adjusted EBITDA

EBITDA is defined as net income or loss plus interest expense, income tax expense and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA excluding hedge ineffectiveness, gains and losses on sales of properties or shares of equity investments or provisions for losses on assets held for sale or equity investments. EBITDA and Adjusted EBITDA are not intended to represent cash flow for the period, are not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP and are not indicative of operating income or cash provided by operating activities as determined under GAAP. EBITDA and Adjusted EBITDA are presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to service or incur debt. Because all companies do not calculate EBITDA or Adjusted EBITDA the same way, this presentation may not be comparable to similarly titled measures of other companies. The Company believes that net income or loss is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA and Adjusted EBITDA.

Definition of Property Net Operating Income (Property NOI)

The Company provides property performance based on Net Operating Income, which we refer to as NOI. Management believes that investors are interested in this information. NOI is a non-GAAP financial measure that the Company defines as net income or loss (the most directly comparable GAAP financial measure) plus general and administrative expenses, depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, interest expense, less equity in earnings of nonconsolidated REITs, interest income, management fee income, hedge ineffectiveness, gains or losses on the sale of assets and excludes non-property specific income and expenses. The information presented includes footnotes and the data is shown by region with properties owned in the periods presented, which we call Same Store. The comparative Same Store results include properties held for the periods presented and exclude properties that are redevelopment properties, dispositions and significant nonrecurring income such as bankruptcy settlements and lease termination fees.  We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized.  NOI, as defined by the Company, may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income or loss as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions.

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Appendix: Non-GAAP Financial Measure Definitions

Definition of Adjusted Funds From Operations (AFFO)

The Company also evaluates performance based on Adjusted Funds From Operations, which we refer to as AFFO.  The Company defines AFFO as (1) FFO, (2) excluding our proportionate share of FFO and including distributions received, from non-consolidated REITs, (3) excluding the effect of straight-line rent, (4) plus the amortization of deferred financing costs, (5) plus the value of shares issued for compensation and (6) less recurring capital expenditures that are generally for maintenance of properties, which we call non-investment capex or are second generation capital expenditures.  Second generation costs include re-tenanting space after a tenant vacates, which include tenant improvements and leasing commissions. 

We exclude development/redevelopment activities, capital expenditures planned at acquisition and costs to reposition a property. We also exclude first generation leasing costs, which are generally to fill vacant space in properties we acquire or were planned for at acquisition. 

AFFO should not be considered as an alternative to net income or loss (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 may define this term in a different manner.  We believe that in order to facilitate a clear understanding of the results of the Company, AFFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements. 

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