Exhibit 99.2
SELECTED COMBINING CONDENSED CONSOLIDATED PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial information of Franklin Street
Properties Corp. ("FSP Corp." or the "Registrant") gives effect to the
acquisition of a property ("One Overton Park") on June 27, 2006 by FSP One
Overton Park LLC (the "Purchaser"), a wholly-owned subsidiary of FSP Corp. and
the acquisition by merger (the "2006 Merger") of FSP Willow Bend Office Center
Corp. ("Willow Bend"), FSP Innsbrook Corp. ("Innsbrook"), FSP 380 Interlocken
Corp. ("380 Interlocken"), FSP Blue Lagoon Drive Corp. ("Blue Lagoon"), and FSP
Eldridge Green Corp. ("Eldridge") (collectively, the "Target REITs") by five
wholly-owned acquisition subsidiaries of FSP Corp., which was consummated on
April 30, 2006 and previously reported in Current Reports on Form 8-K filed on
May 4, 2006 and May 22, 2006. In addition, the following unaudited pro forma
financial information gives effect to the 2005 Merger (as defined in note (g) to
these Combining Condensed Consolidated Pro Forma Statements of Income).
The unaudited pro forma financial information has been prepared based upon
certain pro forma adjustments to the historical consolidated financial
statements of FSP Corp., One Overton Park and the Target REITs. FSP Corp.'s
consolidated balance sheet as of June 30, 2006 reflects the acquisition of One
Overton Park and the Target REITs; therefore a pro forma balance sheet is not
presented. The pro forma consolidated statements of income for the six months
ended June 30, 2006 and for the year ended December 31, 2005 are presented as if
the acquisitions occurred at the beginning of the periods presented.
Certain balances in One Overton Park and the Target REIT financial
statements have been reclassified to conform to FSP Corp.'s presentation.
The unaudited pro forma financial information has been derived from the
consolidated financial statements of FSP Corp., One Overton Park and the Target
REITs and should be read in conjunction with those financial statements and the
accompanying notes. For FSP Corp., please refer to its quarterly report on Form
10-Q for the quarter ended June 30, 2006.
The unaudited pro forma consolidated financial statement data are not
necessarily indicative of what the actual financial position or results of
operations of the combined companies would have been as of the date or for the
period indicated, nor do they purport to represent the financial position or
results of operations of the combined companies as of or for any future period.
P-1
Franklin Street Properties Corp.
Combining Condensed Consolidated Pro Forma Statements of Income
For the Six Months Ended
June 30, 2006
(Unaudited)
2006 Merger One Overton
Pro Forma Park
Historical Adjustment Acquisition
(in thousands, except per share amounts) FSP Corp. (d) (c) Pro Forma
- ------------------------------------------------------------------------------------------------------- --------------
Revenue:
Rental income $44,844 $8,111 $3,530 $56,485
Related party revenue:
Syndication fees 5,426 -- -- 5,426
Transaction fees 5,408 -- -- 5,408
Management fees and interest on loans 869 (88) -- 781
Other 22 -- 49 71
- ------------------------------------------------------------------------------------------------------- --------------
Total revenue 56,569 8,023 3,579 68,171
- ------------------------------------------------------------------------------------------------------- --------------
Expenses:
Rental operating expenses 9,783 1,977 1,095 12,855
Real estate taxes and insurance 5,944 1,195 336 7,475
Depreciation and amortization 10,733 2,324 1,296 14,353
-
Selling, general and administrative 3,758 -- -- 3,758
Commissions 2,832 -- -- 2,832
Interest 1,140 -- -- 1,140
- ------------------------------------------------------------------------------------------------------- --------------
Total expenses 34,190 5,496 2,727 42,413
- ------------------------------------------------------------------------------------------------------- --------------
Income before interest income,
equity in earnings in non-consolidated
REITs, taxes, discontinued operations
and gain on sales of properties 22,379 2,527 852 25,758
Interest Income 1,345 241 -- 1,586
Equity in income of non-consolidated
REITs 236 (75) -- 161
Taxes on income (a) (404) -- -- (404)
Income from discontinued operations 1,952 -- -- 1,952
Gain on sale of properties 28,108 -- -- 28,108
- ------------------------------------------------------------------------------------------------------- --------------
Net income $53,616 $2,693 $852 $57,161
======================================================================================================= ==============
Weighted average shares outstanding,
basic and diluted 63,492 70,776
- -------------------------------------------------------------------------------------------------------------------------
Income per share attributable to:
Continuing operations $ 0.37 $ 0.38
Discontinued operations 0.03 $ 0.03
Gain on sale of properties, net 0.44 $ 0.40
- --------------------------------------------------------------------------------------------------------------------------
Basic and diluted net income per share $ 0.84 $ 0.81
==========================================================================================================================
P-2
Franklin Street Properties Corp.
Combining Condensed Consolidated Pro Forma Statements of Income
For the Year Ended
December 31, 2005
(Unaudited)
2005 Merger 2006 Merger One Overton
Pro Forma Pro Forma Pro Forma Park
Historical Adjustments Adjustment Adjustment Acquisition
(in thousands, except per share amounts) FSP Corp. (b) (g) (f) (e) Pro Forma
- ------------------------------------------------------------------------------------------------------------------------ ----------
Revenue:
Rental income $75,896 $(10,114) $6,633 $24,751 $4,644 $101,810
Related party revenue:
Syndication fees 9,268 -- -- -- -- 9,268
Transaction fees 9,412 -- -- -- -- 9,412
Management fees and interest on loans 1,807 -- (77) (264) -- 1,466
Other 10 (10) -- -- 79 79
- ------------------------------------------------------------------------------------------------------------------------ ----------
Total revenue 96,393 (10,124) 6,556 24,487 4,723 122,035
- ------------------------------------------------------------------------------------------------------------------------ ----------
Expenses:
Rental operating expenses 17,350 (2,557) 1,556 4,826 1,955 23,130
Real estate taxes and insurance 10,105 (953) 818 3,602 687 14,259
Depreciation and amortization 15,927 (1,925) 1,648 6,972 2,592 25,214
-
Selling, general and administrative 7,452 -- 495 588 -- 8,535
Commissions 5,005 -- -- -- -- 5,005
Interest 2,997 -- -- -- -- 2,997
- ------------------------------------------------------------------------------------------------------------------------ ----------
Total expenses 58,836 (5,435) 4,517 15,988 5,234 79,140
- ------------------------------------------------------------------------------------------------------------------------ ----------
Income (loss) before interest income,
equity in earnings in non-consolidated
REITs, taxes, discontinued operations
and gain on sales of properties 37,557 (4,689) 2,039 8,499 (511) 42,895
Interest Income 1,588 -- 112 384 -- 2,084
Equity in income of non-consolidated
REITs 1,397 -- -- (248) -- 1,149
Taxes on income (a) (422) -- -- -- -- (422)
Income from discontinued operations 4,503 4,689 -- -- -- 9,192
Gain on sale of properties 30,493 -- -- -- -- 30,493
- ------------------------------------------------------------------------------------------------------------------------ ----------
Net income (loss) $75,116 $ -- $2,151 $ 8,635 $ (511) $ 85,391
======================================================================================================================== ==========
Weighted average shares outstanding,
basic and diluted 56,847 71,431
- ------------------------------------------------------------------------------------------------------------------------------------
Income per share attributable to:
Continuing operations $ 0.70 $ 0.64
Discontinued operations 0.08 $ 0.13
Gain on sale of properties, net 0.54 $ 0.43
- ------------------------------------------------------------------------------------------------------------------------------------
Basic and diluted net income per share $ 1.32 $ 1.20
====================================================================================================================================
P-3
FRANKLIN STREET PROPERTIES CORP.
NOTES TO COMBINING CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The following unaudited combining condensed consolidated pro forma
financial statement presentation has been prepared based upon certain pro forma
adjustments to the historical consolidated financial statements of FSP Corp. The
pro forma statements of income are presented as if the acquisition and mergers
occurred as of the beginning of the periods presented.
Each of the acquisition of One Overton Park on June 27, 2006 and the 2006
Merger has been treated as a purchase of assets. One Overton Park and the Target
REITs' assets and liabilities have been recorded on FSP Corp.'s books at their
fair value as of the effective date of the mergers as determined in accordance
with generally accepted accounting principles in the United States (or "GAAP").
PRO FORMA ADJUSTMENTS
Certain assumptions regarding the operations of FSP Corp. have been made
in connection with the preparation of the combining condensed consolidated
financial pro forma information. These assumptions are as follows:
(a) FSP Corp. and each of the Target REITs have elected to be, and are
qualified as, a real estate investment trust for federal income tax
purposes. Each entity has met the various required tests; therefore,
no provision for federal or state income taxes has been reflected on
real estate operations.
FSP Corp. has subsidiaries which are not in the business of real
estate operations. Those subsidiaries are taxable as real estate
investment trust subsidiaries, or TRS, and are subject to income
taxes at statutory tax rates. The taxes on income shown in the pro
forma statements of income are the taxes on income of the TRS. There
are no material items that would cause a deferred tax asset or a
deferred tax liability.
(b) The pro forma adjustments reflect the adjustments needed to classify
the operations of three properties sold or held for sale subsequent
to December 31, 2005 as discontinued operations.
P-4
FRANKLIN STREET PROPERTIES CORP.
NOTES TO COMBINING CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
(c) The following table combines the historical operations of the One
Overton Park for the period starting January 1, 2006 through the
acquisition date.
One Overton Adjustments
(in thousands) Park resulting from Pro Forma
Historical Acquisition Adjustment
----------- -------------- ----------
Revenue:
Rental (1) $ 3,548 $ (18) $ 3,530
Management fees and interest on loans -- -- --
Other 49 -- 49
-------- -------- --------
Total revenue 3,597 (18) 3,579
-------- -------- --------
Expenses:
Rental operating expenses 1,095 -- 1,095
Real estate taxes and insurance 336 -- 336
Depreciation and amortization (2) -- 1,296 1,296
Selling, general and administrative -- -- --
-------- -------- --------
Total expenses 1,431 1,296 2,727
-------- -------- --------
Income (loss) before interest income,
equity in earnings in non-consolidated
REITs, taxes, discontinued operations
and gain on sales of properties 2,166 (1,314) 852
Interest income -- -- --
Equity Interest in non-consolidated REITs -- --
-------- -------- --------
Net income $ 2,166 $ (1,314) $ 852
======== ======== ========
(1) The pro forma rental adjustment includes amounts related to the
amortization of above and/or below market leases, which are being
amortized over the remaining non-cancelable term of the respective leases
in accordance with SFAS 141.
(2) The pro forma for depreciation and amortization is due to depreciation of
the acquired building and improvements using a straight-line method over
and estimated life of 39 years. In addition, the value of the in place
leases (exclusive of the value of above and/or below market leases), are
being amortized over the remaining non-cancelable term of the respective
leases in accordance with SFAS 141.
P-5
FRANKLIN STREET PROPERTIES CORP.
NOTES TO COMBINING CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
(d) The following table combines the historical operations of the 2006
Merger for the four months ended April 30, 2006.
Adjustments
(in thousands) Willow 380 Blue resulting from Pro Forma
Bend Innsbrook Interlocken Lagoon Eldridge 2006 Merger Adjustment
------ --------- ----------- ------ -------- -------------- ----------
Revenue:
Rental (1) $ 764 $1,846 $1,856 $1,801 $2,141 $ (297) $8,111
Management fees and
interest on loans (2) -- -- -- -- -- (88) (88)
------ ------ ------ ------ ------ ------ ------
Total revenue 764 1,846 1,856 1,801 2,141 (385) 8,023
------ ------ ------ ------ ------ ------ ------
Expenses:
Rental operating expenses (2) 274 731 589 114 357 (88) 1,977
Real estate taxes and
insurance 128 131 397 219 320 -- 1,195
Depreciation and
amortization (3) 222 356 318 479 367 582 2,324
Selling, general and
administrative (4) 69 123 125 150 121 (588) --
------ ------ ------ ------ ------ ------ ------
Total expenses 693 1,341 1,429 962 1,165 (94) 5,496
------ ------ ------ ------ ------ ------ ------
Income (loss) before interest
income, equity in earnings
in non-consolidated REITs,
taxes, discontinued operations
and gain on sales of properties 71 505 427 839 976 (291) 2,527
Interest income 17 38 71 77 38 -- 241
Equity Interest in
non-consolidated REITs (5) -- -- -- -- -- (75) (75)
------ ------ ------ ------ ------ ------ ------
Net income (loss) $ 88 $ 543 $ 498 $ 916 $1,014 $ (366) $2,693
====== ====== ====== ====== ====== ====== ======
(1) The pro forma rental adjustment includes amounts related to the
amortization of above and/or below market leases, which are being
amortized over the remaining non-cancelable term of the respective leases
in accordance with SFAS 141.
(2) Management fees of $88,000 charged by FSP Corp. to the Target REITs for
the four months ended April 30, 2006 have been eliminated from revenue and
expenses.
(3) The pro forma for depreciation and amortization is due to depreciation of
the acquired building and improvements using a straight-line method over
and estimated life of 39 years. In addition, the value of the in place
leases (exclusive of the value of above and/or below market leases), are
being amortized over the remaining non-cancelable term of the respective
leases in accordance with SFAS 141.
(4) Costs of the 2006 Merger to the Target REITs were approximately $588,000
and are reflected as incurred in the period ending December 31, 2005, and
are recorded as an administrative expense. (5) The $75,000 of equity in
earnings of non-consolidated REITs for the four months ended April 30,
2006 related to FSP Corp.'s investment in Blue Lagoon has been eliminated
from revenue.
P-6
FRANKLIN STREET PROPERTIES CORP.
NOTES TO COMBINING CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
(e) The following table combines the historical operations of One
Overton Park for the year ended December 31, 2005.
One Overton Adjustments
(in thousands) Park resulting from Pro Forma
Historical Acquisition Adjustment
----------- -------------- ----------
Revenue:
Rental (1) $ 4,680 $ (36) $ 4,644
Management fees and interest on loans -- -- --
Other 79 -- 79
-------- -------- --------
Total revenue 4,759 (36) 4,723
-------- -------- --------
Expenses:
Rental operating expenses 1,955 -- 1,955
Real estate taxes and insurance 687 -- 687
Depreciation and amortization (2) -- 2,592 2,592
Selling, general and administrative -- -- --
-------- -------- --------
Total expenses 2,642 2,592 5,234
-------- -------- --------
Income (loss) before interest income,
equity in earnings in non-consolidated
REITs, taxes, discontinued operations
and gain on sales of properties 2,117 (2,628) (511)
Interest income -- -- --
Equity Interest in non-consolidated REITs -- -- --
-------- -------- --------
Net income (loss) $ 2,117 $ (2,628) $ (511)
======== ======== ========
(1) The pro forma rental adjustment includes amounts related to the
amortization of above and/or below market leases, which are being
amortized over the remaining non-cancelable term of the respective leases
in accordance with SFAS 141.
(2) The pro forma for depreciation and amortization is due to depreciation of
the acquired building and improvements using a straight-line method over
and estimated life of 39 years. In addition, the value of the in place
leases (exclusive of the value of above and/or below market leases), are
being amortized over the remaining non-cancelable term of the respective
leases in accordance with SFAS 141.
P-7
FRANKLIN STREET PROPERTIES CORP.
NOTES TO COMBINING CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
(f) The following table combines the historical operations of the 2006
Merger for the year ended December 31, 2005.
Adjustments
resulting
(in thousands) Willow 380 Blue from Pro Forma
Bend Innsbrook Interlocken Lagoon Eldridge 2006 Merger Adjustment
--------- --------- ----------- --------- --------- ----------- ----------
Revenue:
Rental (1) $ 2,129 $ 5,591 $ 6,100 $ 5,371 $ 6,452 $ (892) $ 24,751
Management fees and interest on loans (2) -- -- -- -- -- (264) (264)
--------- --------- --------- --------- --------- --------- ---------
Total revenue 2,129 5,591 6,100 5,371 6,452 (1,156) 24,487
--------- --------- --------- --------- --------- --------- ---------
Expenses:
Rental operating expenses (2) 860 1,528 1,442 325 935 (264) 4,826
Real estate taxes and insurance 334 416 1,283 643 926 -- 3,602
Depreciation and amortization (3) 677 1,066 948 1,439 1,100 1,742 6,972
Selling, general and administrative (4) -- -- -- -- -- 588 588
--------- --------- --------- --------- --------- --------- ---------
Total expenses 1,871 3,010 3,673 2,407 2,961 2,066 15,988
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before interest income,
equity in earnings in
non-consolidated REITs, taxes,
discontinued operations
and gain on sales of properties 258 2,581 2,427 2,964 3,491 (3,222) 8,499
Interest income 48 63 111 95 67 -- 384
Equity Interest in non-consolidated REITs (5) -- -- -- -- -- (248) (248)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) $ 306 $ 2,644 $ 2,538 $ 3,059 $ 3,558 $ (3,470) $ 8,635
========= ========= ========= ========= ========= ========= =========
(1) The pro forma rental adjustment includes amounts related to the
amortization of above and/or below market leases, which are being
amortized over the remaining non-cancelable term of the respective leases
in accordance with SFAS 141.
(2) Management fees of $264,000 charged by FSP Corp. to the Target REITs for
the four months ended April 30, 2006 have been eliminated from revenue and
expenses.
(3) The pro forma for depreciation and amortization is due to depreciation of
the acquired building and improvements using a straight-line method over
and estimated life of 39 years. In addition, the value of the in place
leases (exclusive of the value of above and/or below market leases), are
being amortized over the remaining non-cancelable term of the respective
leases in accordance with SFAS 141.
P-8
(4) Costs of the 2006 Merger to the Target REITs were approximately $588,000
and are reflected as incurred in the period ending December 31, 2005, and
are recorded as an administrative expense.
(5) The $248,000 of equity in earnings of non-consolidated REITs for the four
months ended April 30, 2006 related to FSP Corp.'s investment in Blue
Lagoon has been eliminated from revenue.
P-9
FRANKLIN STREET PROPERTIES CORP.
NOTES TO COMBINING CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
(g) The following table combines the historical operations of the 2005
Merger (as defined below) for the four months ended April 30, 2005.
The 2005 Merger refers to the acquisition by merger of FSP Addison
Circle Corp., FSP Collins Crossing Corp., FSP Montague Business
Center Corp., and FSP Royal Ridge Corp. (collectively, the "2005
Target REITs") by four wholly-owned acquisition subsidiaries of FSP
Corp., which was consummated on April 30, 2005 and previously
reported in FSP Corp.'s Current Report on Form 8-K filed on May 4,
2005.
Adjustments
(in thousands) 2005 Merger resulting from Pro Forma
Historical 2005 Merger Adjustment
------------- ------------- -------------
Revenue:
Rental (1) $ 7,141 $ (508) $ 6,633
Management fees and interest on loans (2) -- (77) (77)
------------- ------------- -------------
Total revenue 7,141 (585) 6,556
------------- ------------- -------------
Expenses:
Rental operating expenses (2) 1,633 (77) 1,556
Real estate taxes and insurance 818 -- 818
Depreciation and amortization (3) 1,371 277 1,648
Selling, general and administrative (4) 143 352 495
------------- ------------- -------------
Total expenses 3,965 552 4,517
------------- ------------- -------------
Income (loss) before interest income,
equity in earnings in non-consolidated
REITs, taxes, discontinued operations
and gain on sales of properties 3,176 (1,137) 2,039
Interest income 112 -- 112
Equity Interest in non-consolidated REITs -- -- --
------------- ------------- -------------
Net income (loss) $ 3,288 $ (1,137) $ 2,151
============= ============= =============
(1) The pro forma rental adjustment includes amounts related to the
amortization of above and/or below market leases, which are being
amortized over the remaining non-cancelable term of the respective leases
in accordance with SFAS 141.
(2) Management fees of $77,000 charged by FSP Corp. to the 2005 Target REITs
for the four months ended April 30, 2005 have been eliminated from revenue
and expenses.
(3) The pro forma for depreciation and amortization is due to depreciation of
the acquired building and improvements using a straight-line method over
and estimated life of 39 years. In addition, the value of the in place
leases (exclusive of the value of above and/or below market leases), are
being amortized over the remaining non-cancelable term of the respective
leases in accordance with SFAS 141.
(4) Costs of the 2005 Merger to the 2005 Target REITs were approximately
$495,000 and are reflected as incurred in the period ending December 31,
2005, and are recorded as an administrative expense.
P-10