Franklin Street Properties Corp. Announces Fourth Quarter and Full Year 2024 Results

Rhea-AI Summary

Franklin Street Properties Corp. (FSP) reported its Q4 and full-year 2024 results, marking significant developments in its portfolio management. The company leased approximately 252,000 square feet in Q4 within its 4.8 million square foot portfolio. FSP completed the sale of Pershing Park Plaza in Atlanta for $34 million and used $27.4 million to reduce debt.

Key financial results include a GAAP net loss of $8.5 million ($0.08 per share) for Q4 and $52.7 million ($0.51 per share) for the full year. The portfolio's occupancy decreased to 70.3% from 74.0% year-over-year. The weighted average GAAP base rent increased 8.2% to $30.06 per square foot.

Since December 2020, FSP's property dispositions have generated approximately $1.1 billion in gross proceeds, helping reduce total indebtedness by about 75% to $250 million. The company declared a quarterly dividend of $0.01 per share for Q4 2024.

Positive

• Property dispositions since 2020 generated $1.1 billion in gross proceeds
• Reduced total indebtedness by 75% to $250 million
• 8.2% increase in weighted average GAAP base rent to $30.06 per square foot
• Successfully leased 252,000 square feet in Q4 2024

Negative

• GAAP net loss of $52.7 million for full-year 2024
• Portfolio occupancy decreased to 70.3% from 74.0% year-over-year
• Quarterly dividend remains low at $0.01 per share

Insights

Financial Analyst

FSP's full-year 2024 results paint a concerning picture of operational challenges despite strategic efforts to optimize its portfolio. The significant net loss of $52.7 million and declining occupancy to 70.3% reflect substantial headwinds in the office sector.

The company's aggressive deleveraging strategy has successfully reduced debt by approximately 75% since 2020, from $1 billion to $250 million. While this strengthens the balance sheet, it has come at the cost of portfolio reduction and income-generating capacity. The remaining 14 properties spanning 4.8 million square feet are primarily concentrated in the Sunbelt and Mountain West regions, suggesting a focused geographical strategy.

The minimal quarterly dividend of $0.01 per share reflects a conservative capital allocation approach, preserving liquidity but offering income to shareholders. While achieving higher rental rates with an 8.2% increase in weighted average GAAP base rent is positive, this appears insufficient to offset the impact of declining occupancy and property dispositions on overall financial performance.

The company's Funds From Operations (FFO) of $13.3 million ($0.13 per share) for 2024 demonstrates weak operational performance, raising concerns about the sustainability of even the current modest dividend level. The reduced portfolio size and high vacancy rate of nearly 30% suggest significant challenges ahead in generating sufficient cash flow to support growth initiatives and shareholder returns.

WAKEFIELD, Mass.--(BUSINESS WIRE)-- 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

Source: Franklin Street Properties Corp.

FAQ

What was FSP's net loss for full-year 2024?

FSP reported a GAAP net loss of $52.7 million, or $0.51 per share, for the full year 2024.

How much did FSP reduce its debt in 2024?

FSP reduced its total indebtedness to approximately $250.3 million, using $27.4 million from the Pershing Park Plaza sale in October 2024.

What was FSP's portfolio occupancy rate at the end of 2024?

FSP's portfolio occupancy rate was 70.3% as of December 31, 2024, down from 74.0% at the end of 2023.

How much did FSP receive from the Pershing Park Plaza sale?

FSP sold Pershing Park Plaza in Atlanta for a gross selling price of $34 million in October 2024.

What is FSP's quarterly dividend for Q4 2024?

FSP declared a quarterly cash dividend of $0.01 per share for Q4 2024, payable on February 13, 2025.