Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or
“our”) (NYSE American: FSP), a real estate investment trust (REIT),
announced its results for the fourth quarter and the year ended
December 31, 2024.
George J. Carter, Chairman and Chief Executive Officer,
commented as follows:
“During the fourth quarter of 2024, we leased a total of
approximately 252,000 square feet of office space within our
approximately 4.8 million square foot directly–owned property
portfolio.
As previously reported, on October 23, 2024, we completed the
sale of our last property in Atlanta, Georgia. The property, known
as Pershing Park Plaza, sold for a gross selling price of $34
million. On October 25, 2024, we repaid approximately $27.4 million
of our debt with a portion of the net proceeds from the Pershing
Park Plaza disposition. As of October 25, 2024 and December 31,
2024, our total indebtedness was approximately $250.3 million,
equivalent to approximately $52 per square foot on our remaining
approximately 4.8 million square foot directly-owned property
portfolio.”
Financial Highlights
- GAAP net loss was $8.5 million and $52.7 million, or $0.08 and
$0.51 per basic and diluted share for the three and twelve months
ended December 31, 2024, respectively.
- Funds From Operations (FFO) was $2.7 million and $13.3 million,
or $0.03 and $0.13 per basic and diluted share, for the three and
twelve months ended December 31, 2024, respectively.
Leasing Highlights
- During the twelve months ended December 31, 2024, we leased
approximately 616,000 square feet, including 171,000 square feet of
new leases.
- Our directly-owned real estate portfolio of 14 owned
properties, totaling approximately 4.8 million square feet, was
approximately 70.3% leased as of December 31, 2024, compared to
approximately 74.0% leased as of December 31, 2023. The decrease in
the leased percentage is primarily a result of three property
dispositions and lease expirations during the year ended December
31, 2024, which were partially offset by leasing completed during
the year ended December 31, 2024.
- The weighted average GAAP base rent per square foot achieved on
leasing activity during the year ended December 31, 2024, was
$30.06, or 8.2% higher than average rents in the respective
properties for the year ended December 31, 2023. The average lease
term on leases signed during the year ended December 31, 2024, was
6.3 years compared to 6.8 years during the year ended December 31,
2023. Overall, the portfolio weighted average rent per occupied
square foot was $31.77 as of December 31, 2024, compared to $30.72
as of December 31, 2023.
- We believe that our continuing portfolio of real estate is well
located, primarily in the Sunbelt and Mountain West geographic
regions, and consists of high-quality assets with upside leasing
potential.
Investment Highlights
- We continue to believe that the current price of our common
stock does not accurately reflect the intrinsic value of our
underlying real estate assets. We will continue to seek to increase
shareholder value by pursuing the sale of select properties when we
believe that short to intermediate term valuation potential has
been reached.
- Since December of 2020, our property dispositions have resulted
in aggregate gross proceeds of approximately $1.1 billion and
reflect an average sales price per square foot of approximately
$211.
- Since December of 2020, we have used net proceeds from property
dispositions to reduce our total indebtedness by approximately 75%,
from approximately $1.0 billion to approximately $250 million.
- On October 23, 2024, we sold our last property in Atlanta,
Georgia, known as Pershing Park Plaza. The property, an
approximately 160,145 square foot office building, sold for a gross
selling price of $34 million. On October 25, 2024, we used
approximately $27.4 million of the net proceeds from the
disposition to repay debt resulting in a reduction in total
indebtedness to an aggregate of approximately $250.3 million, which
reflects about $52 per square foot on the remaining approximately
4.8 million square foot directly owned portfolio.
Dividends
- On January 10, 2025, we announced that our Board of Directors
declared a quarterly cash dividend for the three months ended
December 31, 2024, of $0.01 per share of common stock that will be
paid on February 13, 2025, to stockholders of record on January 24,
2025.
Consolidation of Sponsored
REIT
As of January 1, 2023, we consolidated the operations of our
Monument Circle sponsored REIT into our financial statements. On
October 29, 2021, we agreed to amend and restate our existing loan
to Monument Circle that is secured by a mortgage on real estate
owned by Monument Circle, which we refer to as the Sponsored REIT
Loan. The amended and restated Sponsored REIT Loan extended the
maturity date from December 6, 2022 to June 30, 2023 (and was
further extended to September 30, 2023 on June 26, 2023), increased
the aggregate principal amount of the loan from $21 million to $24
million, and included certain other modifications. On September 26,
2023, the maturity date was extended to September 30, 2024 and on
September 27, 2024, was further extended to September 30, 2025. In
consideration of our agreement to amend and restate the Sponsored
REIT Loan, we obtained from the stockholders of Monument Circle the
right to vote their shares in favor of any sale of the property
owned by Monument Circle any time on or after January 1, 2023. As a
result of our obtaining this right to vote shares, GAAP variable
interest entity (VIE) rules required us to consolidate Monument
Circle as of January 1, 2023. A gain on consolidation of
approximately $0.4 million was recognized in the three months ended
March 31, 2023.
Additional information about the consolidation of Monument
Circle can be found in Note 2, “Significant Accounting Policies -
Variable Interest Entities (VIEs)” and Note 3, “Related Party
Transactions and Investments in Non-Consolidated Entities -
Management fees and interest income from loans”, in the Notes to
Consolidated Financial Statements included in our Annual Report on
Form 10-K for year ended December 31, 2024.
Non-GAAP Financial
Information
A reconciliation of Net income (loss) to FFO, Adjusted Funds
From Operations (AFFO) and Sequential Same Store NOI and our
definitions of FFO, AFFO and Sequential Same Store NOI can be found
on Supplementary Schedules H and I.
2024 Net Income (Loss), FFO and
Disposition Guidance
At this time, due primarily to economic conditions and
uncertainty surrounding the timing and amount of proceeds received
from property dispositions, we are continuing suspension of Net
Income (Loss), FFO and property disposition guidance.
Real Estate Update
Supplementary schedules provide property information for the
Company’s owned and consolidated properties as of December 31,
2024. The Company will also be filing an updated 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.fspreit.com.
Today’s news release, along with other news about Franklin
Street Properties Corp., is available on the Internet at
www.fspreit.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.
Earnings Call
A conference call is scheduled for February 12, 2025, at 11:00
a.m. (ET) to discuss the fourth quarter and full year 2024 results.
To access the call, please dial 888-440-4368 and use conference ID
5398803. Internationally, the call may be accessed by dialing
646-960-0856 and using conference ID 5398803. To listen via live
audio webcast, please visit the Webcasts & Presentations
section in the Investor Relations section of the Company's website
(www.fspreit.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 infill and central business district
(CBD) office properties in the U.S. Sunbelt and Mountain West, as
well as select opportunistic markets. FSP is focused on 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. To learn more about FSP please visit our website at
www.fspreit.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, such as those
relating to expectations for future potential leasing activity,
expectations for future potential property dispositions, the
payment of dividends and the repayment of debt in future periods,
value creation/enhancement in future periods and expectations for
growth and leasing activities in future periods that are based on
current judgments and current knowledge of management and 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, adverse changes in
general economic or local market conditions, including as a result
of the long-term effects of the COVID-19 pandemic, wars, terrorist
attacks or other acts of violence, which may negatively affect the
markets in which we and our tenants operate, inflation rates,
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, increases in the level of general and administrative costs
as a percentage of revenues as revenues decrease as a result of
property dispositions, 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, 2024, which 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,
acquisitions, dispositions, 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
Percentage of Leased Space
F
Largest 20 Tenants – FSP Owned
Portfolio
G
Reconciliation and Definitions of Funds
From Operations (FFO) and Adjusted
Funds From Operations (AFFO)
H
Reconciliation and Definition of
Sequential Same Store results to Property Net
Operating Income (NOI) and Net Loss
I
Franklin Street Properties Corp.
Financial Results
Supplementary Schedule A
Condensed Consolidated Statements
of Operations
(Unaudited)
For the
For the
Three Months Ended
Year Ended
December 31,
December 31,
(in thousands, except per share
amounts)
2024
2023
2024
2023
Revenue:
Rental
$
28,375
$
34,519
$
120,080
$
145,446
Other
—
252
32
261
Total revenue
28,375
34,771
120,112
145,707
Expenses:
Real estate operating expenses
11,423
13,105
45,043
50,732
Real estate taxes and insurance
5,541
5,943
22,716
27,200
Depreciation and amortization
10,756
11,958
44,774
54,738
General and administrative
2,815
3,172
13,884
14,021
Interest
5,911
6,219
26,424
24,318
Total expenses
36,446
40,397
152,841
171,009
Loss on extinguishment of debt
(428
)
—
(1,042
)
(106
)
Gain on consolidation of Sponsored
REIT
—
—
—
394
Gain (loss) on sale of properties and
impairment of assets held for sale, net
(367
)
8,701
(20,826
)
(23,384
)
Interest income
394
567
2,090
567
Income (loss) before taxes
(8,472
)
3,642
(52,507
)
(47,831
)
Tax expense
54
67
216
279
Net income (loss)
$
(8,526
)
$
3,575
$
(52,723
)
$
(48,110
)
Weighted average number of shares
outstanding, basic and diluted
103,567
103,430
103,510
103,357
Net income (loss) per share, basic and
diluted
$
(0.08
)
$
0.03
$
(0.51
)
$
(0.47
)
Franklin Street Properties Corp.
Financial Results
Supplementary Schedule B
Condensed Consolidated Balance
Sheets
(Unaudited)
December 31,
December 31,
(in thousands, except share and par value
amounts)
2024
2023
Assets:
Real estate assets:
Land
$
105,298
$
110,298
Buildings and improvements
1,096,265
1,133,971
Fixtures and equipment
11,053
12,904
1,212,616
1,257,173
Less accumulated depreciation
377,708
366,349
Real estate assets, net
834,908
890,824
Acquired real estate leases, less
accumulated amortization of $13,613 and $20,413, respectively
4,205
6,694
Assets held for sale
—
73,318
Cash, cash equivalents and restricted
cash
42,683
127,880
Tenant rent receivables
1,283
2,191
Straight-line rent receivable
37,727
40,397
Prepaid expenses and other assets
3,114
4,239
Office computers and furniture, net of
accumulated depreciation of $1,073 and $1,020, respectively
70
123
Deferred leasing commissions, net of
accumulated amortization of $14,195 and $16,008, respectively
22,941
23,664
Total assets
$
946,931
$
1,169,330
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable
$
—
$
90,000
Term loans payable, less unamortized
financing costs of $2,220 and $293, respectively
124,491
114,707
Series A & Series B Senior Notes, less
unamortized financing costs of $1,191 and $329, respectively
122,430
199,670
Accounts payable and accrued expenses
34,067
41,879
Accrued compensation
3,097
3,644
Tenant security deposits
6,237
6,204
Lease liability
707
334
Acquired unfavorable real estate leases,
less accumulated amortization of $89 and $396, respectively
45
87
Total liabilities
291,074
456,525
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, 103,566,715 and 103,430,353 shares
issued and outstanding, respectively
10
10
Additional paid-in capital
1,335,361
1,335,091
Accumulated other comprehensive income
—
355
Accumulated distributions in excess of
accumulated earnings
(679,514
)
(622,651
)
Total stockholders’ equity
655,857
712,805
Total liabilities and stockholders’
equity
$
946,931
$
1,169,330
Franklin Street Properties Corp.
Financial Results
Supplementary Schedule C
Condensed Consolidated Statements
of Cash Flows
(Unaudited)
For the
Year Ended
December 31,
(in thousands)
2024
2023
Cash flows from operating
activities:
Net loss
$
(52,723
)
$
(48,110
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization expense
47,742
57,240
Amortization of above and below market
leases
(17
)
(44
)
Amortization of other comprehensive income
into interest expense
(355
)
(3,851
)
Shares issued as compensation
270
315
Loss on extinguishment of debt
1,042
106
Gain on consolidation of Sponsored
REIT
—
(394
)
Loss on sale of properties and impairment
of assets held for sale, net
20,826
23,384
Changes in operating assets and
liabilities:
Tenant rent receivables
908
10
Straight-line rents
1,970
625
Lease acquisition costs
(666
)
(2,007
)
Prepaid expenses and other assets
355
382
Accounts payable and accrued expenses
(3,708
)
(2,709
)
Accrued compensation
(547
)
—
Tenant security deposits
33
494
Payment of deferred leasing
commissions
(6,143
)
(7,575
)
Net cash provided by operating
activities
8,987
17,866
Cash flows from investing
activities:
Property improvements, fixtures and
equipment
(25,213
)
(31,637
)
Consolidation of Sponsored REIT
—
3,048
Proceeds received from sales of
properties
95,497
142,225
Net cash provided by investing
activities
70,284
113,636
Cash flows from financing
activities:
Distributions to stockholders
(4,140
)
(4,133
)
Proceeds received from termination of
interest rate swap
—
4,206
Borrowings under Bank note payable
—
77,000
Repayments of Bank note payable
(22,667
)
(35,000
)
Repayments of Term loans payable
(55,622
)
(50,000
)
Repayments of Series A&B Senior
Notes
(76,379
)
—
Deferred financing costs
(5,660
)
(2,327
)
Net cash used in financing activities
(164,468
)
(10,254
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(85,197
)
121,248
Cash, cash equivalents and restricted
cash, beginning of year
127,880
6,632
Cash, cash equivalents and restricted
cash, end of period
$
42,683
$
127,880
Franklin Street Properties Corp.
Earnings Release
Supplementary Schedule D
Real Estate Portfolio Summary
Information
(Unaudited &
Approximated)
Commercial portfolio lease expirations
(1)
Year
Total Square Feet
% of Portfolio
2025
321,725
6.4
%
2026
609,509
12.1
%
2027
301,642
6.0
%
2028
259,540
5.2
%
2029
486,384
9.7
%
Thereafter (2)
3,041,213
60.6
%
5,020,013
100.0
%
____________________
(1)
Percentages are determined based upon
total square footage.
(2)
Includes 1,632,976 square feet of
vacancies at our owned and consolidated properties as of December
31, 2024.
(dollars & square feet in 000's)
As of December 31, 2024
% of
Square
% of
State
Properties
Investment
Portfolio
Feet
Portfolio
Colorado
4
$
442,982
53.0
%
2,140
42.6
%
Texas
7
259,575
31.1
%
1,909
38.0
%
Minnesota
3
113,338
13.6
%
757
15.1
%
Indiana
1
19,013
2.3
%
214
4.3
%
Total
15
$
834,908
100.0
%
5,020
100.0
%
Franklin Street Properties Corp.
Earnings Release
Supplementary Schedule E
Portfolio and Other Supplementary
Information
(Unaudited &
Approximated)
Recurring Capital Expenditures
(in thousands)
For the Three Months Ended
Year Ended
31-Mar-24
30-Jun-24
30-Sep-24
31-Dec-24
31-Dec-24
Tenant improvements
$
2,619
$
2,558
$
4,444
$
4,173
$
13,794
Deferred leasing costs
2,237
511
421
2,974
6,143
Non-investment capex
1,019
1,480
1,658
2,568
6,725
$
5,875
$
4,549
$
6,523
$
9,715
$
26,662
(in thousands)
For the Three Months Ended
Year Ended
31-Mar-23
30-Jun-23
30-Sep-23
31-Dec-23
31-Dec-23
Tenant improvements
$
3,047
$
4,381
$
3,653
$
5,295
$
16,376
Deferred leasing costs
908
3,230
1,114
1,649
6,901
Non-investment capex
2,967
2,042
1,775
5,230
12,014
$
6,922
$
9,653
$
6,542
$
12,174
$
35,291
Square foot & leased
percentages
December 31,
December 31,
2024
2023
Owned Properties:
Number of properties (a)
14
17
Square feet
4,806,253
5,565,782
Leased percentage
70.3%
74.0%
Consolidated Property - Single Asset
REIT (SAR):
Number of properties
1
1
Square feet
213,760
213,760
Leased percentage
4.1%
4.1%
Total Owned and Consolidated
Properties:
Number of properties
15
18
Square feet
5,020,013
5,779,542
Leased percentage
67.5%
71.5%
(a) Includes two properties that were
classified as assets held for sale as of December 31, 2023.
Franklin Street Properties Corp.
Earnings Release
Supplementary Schedule F
Percentage of Leased Space
(Unaudited & Estimated)
Property Name
Location
Square Feet
% Leased (1) as of
30-Sep-24
Third Quarter
Average % Leased (2)
% Leased (1) as of
31-Dec-24
Fourth Quarter
Average % Leased (2)
1
PARK TEN
Houston, TX
157,609
82.1%
82.1%
83.5%
83.5%
2
PARK TEN PHASE II
Houston, TX
156,746
66.9%
66.9%
75.5%
69.7%
3
GREENWOOD PLAZA
Englewood, CO
196,236
65.0%
65.0%
65.0%
65.0%
4
ADDISON
Addison, TX
289,333
79.4%
79.4%
79.9%
79.9%
5
LIBERTY PLAZA
Addison, TX
217,841
75.9%
75.9%
78.4%
76.2%
6
ELDRIDGE GREEN
Houston, TX
248,399
100.0%
100.0%
100.0%
100.0%
7
121 SOUTH EIGHTH ST
Minneapolis, MN
297,541
72.4%
75.6%
78.5%
76.4%
8
801 MARQUETTE AVE
Minneapolis, MN
129,691
91.8%
91.8%
91.8%
91.8%
9
LEGACY TENNYSON CTR
Plano, TX
209,562
51.0%
52.4%
51.0%
51.0%
10
WESTCHASE I & II
Houston, TX
629,025
68.8%
67.6%
65.5%
65.5%
11
1999 BROADWAY
Denver, CO
682,639
50.7%
50.7%
50.2%
50.4%
12
1001 17TH STREET
Denver, CO
649,400
76.5%
76.5%
75.4%
75.4%
13
PLAZA SEVEN
Minneapolis, MN
330,096
53.8%
55.0%
52.8%
52.2%
PERSHING PLAZA (3)
Atlanta, GA
—
79.8%
79.8%
(3)
(3)
14
600 17TH STREET
Denver, CO
612,135
76.7%
77.1%
77.1%
76.8%
OWNED PORTFOLIO
4,806,253
70.4%
70.6%
70.3%
69.8%
15
MONUMENT CIRCLE (4)
Indianapolis, IN
213,760
4.1%
4.1%
4.1%
4.1%
OWNED & CONSOLIDATED
PORTFOLIO
5,020,013
67.7%
67.9%
67.5%
67.0%
____________________
(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
three months during the quarter.
(3)
Property was sold on October 23, 2024.
(4)
Consolidated property as of January 1,
2023, which was previously a managed property.
Franklin Street Properties Corp.
Earnings Release
Supplementary Schedule G
Largest 20 Tenants – FSP Owned
and Consolidated Portfolio
(Unaudited & Estimated)
The following table includes the
largest 20 tenants in FSP’s owned and consolidated portfolio based
on total square feet:
As of December 31, 2024
% of
Tenant
Sq Ft
Portfolio
1
CITGO Petroleum Corporation
248,399
4.9%
2
EOG Resources, Inc.
169,167
3.4%
3
US Government
168,573
3.4%
4
Kaiser Foundation Health Plan, Inc.
120,979
2.4%
5
Deluxe Corporation
98,922
2.0%
6
Ping Identity Corp.
89,856
1.8%
7
Olin Corporation
81,480
1.6%
8
Permian Resources Operating, LLC
67,856
1.3%
9
Hall and Evans LLC
65,878
1.3%
10
Cyxtera Management, Inc.
61,826
1.2%
11
Precision Drilling (US) Corporation
59,569
1.2%
12
PwC US Group
54,334
1.1%
13
Coresite, LLC
49,518
1.0%
14
Schwegman, Lundberg & Woessner,
P.A.
46,269
0.9%
15
Invenergy, LLC.
42,505
0.9%
16
Ark-La-Tex Financial Services, LLC.
41,011
0.8%
17
Chevron U.S.A., Inc.
35,088
0.7%
18
QB Energy Operating, LLC
34,063
0.7%
19
CarOffer, LLC.
30,913
0.6%
20
WDT Acquisition Corporation
30,913
0.6%
Total
1,597,119
31.8%
Franklin Street Properties Corp.
Earnings Release
Supplementary Schedule H
Reconciliation and Definitions of
Funds From Operations (“FFO”) and
Adjusted Funds From Operations
(“AFFO”)
A reconciliation of Net income (loss) to FFO and AFFO is shown
below and a definition of FFO and AFFO is provided on Supplementary
Schedule I. Management believes FFO and AFFO are used broadly
throughout the real estate investment trust (REIT) industry as
measurements of performance. The Company has included the National
Association of Real Estate Investment Trusts (NAREIT) FFO
definition as of May 17, 2016 in the table and notes that other
REITs may not define FFO in accordance with the current NAREIT
definition or may interpret the current NAREIT definition
differently. The Company’s computation of FFO and AFFO may not be
comparable to FFO or AFFO reported by other REITs or real estate
companies that define FFO or AFFO differently.
Reconciliation of Net income (loss) to FFO
and AFFO:
Three Months Ended
Year Ended
December 31,
December 31,
(In thousands, except per share
amounts)
2024
2023
2024
2023
Net income (loss)
$
(8,526
)
$
3,575
$
(52,723
)
$
(48,110
)
Gain on consolidation of Sponsored
REIT
—
—
—
(394
)
Loss on sale of properties and impairment
of asset held for sale, net
367
(8,701
)
20,826
23,384
Depreciation & amortization
10,755
11,952
44,757
54,694
NAREIT FFO
2,596
6,826
12,860
29,574
Lease Acquisition costs
111
112
426
390
Funds From Operations (FFO)
$
2,707
$
6,938
$
13,286
$
29,964
Funds From Operations (FFO)
$
2,707
$
6,938
$
13,286
$
29,964
Loss on extinguishment of debt
428
—
1,042
106
Amortization of deferred financing
costs
703
576
2,968
2,502
Shares issued as compensation
—
—
270
315
Straight-line rent
720
198
1,969
626
Tenant improvements
(4,173
)
(5,295
)
(13,794
)
(16,376
)
Leasing commissions
(2,974
)
(1,649
)
(6,143
)
(6,901
)
Non-investment capex
(2,568
)
(5,230
)
(6,725
)
(12,014
)
Adjusted Funds From Operations (AFFO)
$
(5,157
)
$
(4,462
)
$
(7,127
)
$
(1,778
)
Per Share Data
EPS
$
(0.08
)
$
0.03
$
(0.51
)
$
(0.47
)
FFO
$
0.03
$
0.07
$
0.13
$
0.29
AFFO
$
(0.05
)
$
(0.04
)
$
(0.07
)
$
(0.02
)
Weighted average shares (basic and
diluted)
103,567
103,430
103,510
103,357
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 mortgage loans, 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 as of May 17,
2016 in the 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 or loss and cash flows from operating, investing
and financing activities in the consolidated financial
statements.
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 loss on extinguishment of debt that
is non-cash, (3) excluding our proportionate share of FFO and
including distributions received, from non-consolidated REITs, (4)
excluding the effect of straight-line rent, (5) plus the
amortization of deferred financing costs, (6) plus the value of
shares issued as compensation and (7) 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.
Franklin Street Properties Corp.
Earnings Release
Supplementary Schedule I
Reconciliation and Definition of
Sequential Same Store results to property Net Operating Income
(NOI) and Net Income
Net Operating Income (“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
extinguishment of debt, 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 Sequential
Same Store. The comparative Sequential Same Store results include
properties held for all periods presented. We exclude properties
that have been placed in service, but that do not have operating
activity for all periods presented, dispositions and significant
nonrecurring income such as bankruptcy settlements and lease
termination fees. 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. The calculations of NOI and Sequential Same Store
are shown in the following table:
(in thousands)
Rentable Square Feet or
RSF
Three
Months Ended 31-Dec-24
Three
Months Ended 30-Sep-24
Inc (Dec)
% Change
Region
MidWest
757
1,170
1,278
(108
)
(8.5
)
%
South
1,909
4,549
4,390
159
3.6
%
West
2,140
5,670
6,037
(367
)
(6.1
)
%
Property NOI* from Owned Properties
4,806
11,389
11,705
(316
)
(2.7
)
%
Disposition and Acquisition Properties
(a)
214
(266
)
678
(944
)
(7.5
)
%
NOI*
5,020
$
11,123
$
12,383
$
(1,260
)
(10.2
)
%
Sequential Same Store
$
11,389
$
11,705
$
(316
)
(2.7
)
%
Less Nonrecurring
Items in NOI* (b)
185
78
107
(0.9
)
%
Comparative
Sequential Same Store
$
11,204
$
11,627
$
(423
)
(3.6
)
%
Reconciliation to Net
loss
Three
Months Ended 31-Dec-24
Three
Months Ended 30-Sep-24
Net loss
$
(8,526
)
$
(15,622
)
Add (deduct):
Loss on extinguishment of debt
428
477
Loss on sale of properties and impairment
of assets held for sale, net
367
7,254
Management fee income
(386
)
(422
)
Depreciation and amortization
10,757
10,911
Amortization of above/below market
leases
(1
)
(5
)
General and administrative
2,815
3,275
Interest expense
5,912
6,585
Interest income
(395
)
(340
)
Non-property specific items, net
152
270
NOI*
$
11,123
$
12,383
(a)
We define Disposition and Acquisition
Properties as properties that were sold acquired or consolidated
and do not have operating activity for all periods presented.
(b)
Nonrecurring Items in NOI include proceeds
from bankruptcies, lease termination fees or other significant
nonrecurring income or expenses, which may affect
comparability.
*Excludes NOI from investments in and
interest income from secured loans to non-consolidated REITs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250211364803/en/
Georgia Touma (877) 686-9496
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