Current Report Filing (8-k)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 17, 2015

Franklin Street Properties Corp.

(Exact name of registrant as specified in its charter)

Maryland

001-32470

04-3578653

(State or other jurisdiction

of incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

401 Edgewater Place, Suite 200, Wakefield, Massachusetts	01880
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (781) 557-1300

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On February 17, 2015, Franklin Street Properties Corp. (the “Registrant”) announced its financial results for the three and twelve months ended December 31, 2014. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The press release references certain supplemental operating and financial data that is now available on the Registrant’s website. A copy of the supplemental operating and financial data is attached hereto as Exhibit 99.2 and is incorporated by reference herein.

The information in this Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

See Exhibit Index attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FRANKLIN STREET PROPERTIES CORP.

Date: February 17, 2015	By: /s/ George J. Carter
		George J. Carter President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description

99.1	Press Release issued by Franklin Street Properties Corp. on February 17, 2015.

99.2	Supplemental Operating and Financial Data for the three and twelve months ended December 31, 2014.

Exhibit 99.1

PRESS RELEASE	Franklin Street Properties Corp.
401 Edgewater Place · Suite 200 · Wakefield, Massachusetts 01880 · (781) 557-1300 · www.franklinstreetproperties.com
Contact: John Demeritt (877) 686-9496		For Immediate Release

Franklin Street Properties Corp. Announces

Fourth Quarter and Year End 2014 Results

Wakefield, MA—February 17, 2015—Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE MKT: FSP), a real estate investment trust (REIT), announced today Funds From Operations (FFO) of $27.5 million or $0.27 per share for the fourth quarter ended December 31, 2014; and FFO of $112.5 million or $1.12 per share for the full year ended December 31, 2014. Net income was $4.3 million or $0.04 per share for the fourth quarter ended December 31, 2014 and $13.1 million or $0.13 per share for the year ended December 31, 2014.

The Company evaluates its performance based on FFO, Net Income and EPS and believes each is an important measure. A reconciliation of Net Income to FFO, which is a non-GAAP financial measure, is provided on page 3 of this press release.

	Three Months Ended December 31,							Year Ended December 31,
(in 000's except per share data)	2014		2013		Increase (Decrease)			2014		2013		Increase (Decrease)

Net Income	$	4,295	$	6,591	$	(2,296	)	$	13,148	$	19,827	$	(6,679	)

FFO	$	27,525	$	29,220	$	(1,695	)	$	112,462	$	100,832	$	11,630
Per Share Data:
EPS	$	0.04	$	0.07	$	(0.03	)	$	0.13	$	0.21	$	(0.08	)
FFO	$	0.27	$	0.29	$	(0.02	)	$	1.12	$	1.07	$	0.05

Weighted average shares (diluted)		100,187		100,187		—			100,187		93,855		6,333

Comparing results for the fourth quarter of 2014 to the same period in 2013, FFO decreased $1.7 million or $0.02 per share to $27.5 million or $0.27 per share in 2014. The FFO decrease was primarily from lower property income and higher personnel expenses, which were partially offset by lower interest expense for the quarter. Interest expense was lower as a result of lower spreads on our revolving line of credit that was amended on October 29, 2014 and from lower amounts outstanding during the fourth quarter of 2014 compared to the fourth quarter of 2013. Net Income and EPS was $4.3 million or $0.04 per share for the fourth quarter of 2014 compared to a net income of $6.6 million or $0.07 per share for the fourth quarter of 2013.

Comparing results for the year ended December 31, 2014 to the same period in 2013, FFO increased $11.6 million or $0.05 per share to $112.5 million or $1.12 per share. The FFO increase was primarily from higher property income from acquisitions made during 2013. These increases were partially offset by higher interest and personnel related expenses in 2014 compared to 2013. Interest expense was higher because we entered into a term loan on August 26, 2013, which is included in the full year results of 2014 and was outstanding for only a portion of 2013. Net Income and EPS was $13.1 million or $0.13 per share for the year ended December 31, 2014 compared to a net income of $19.8 million or $0.21 per share for the same period in 2013.

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George J. Carter, President and CEO, commented as follows:

“For the fourth quarter of 2014, FSP's funds from operations, or FFO, totaled approximately $27.5 million or $0.27 per share. For the full year 2014, FSP's FFO totaled approximately $112.5 million or $1.12 per share, a 4.7% increase per share over full year 2013. FSP has grown its per share FFO over 33% during the last four years. Dividend distributions declared for the fourth quarter of 2014 were approximately $19.0 million or $0.19 per share. Our directly-owned real estate portfolio of 38 properties, totaling approximately 9.6 million square feet, was approximately 92.8% leased as of December 31, 2014, and our comparative same-store growth totaled approximately 2.2% for the full year 2014.

During the fourth quarter of 2014, we completed the disposition of our "Centennial" property located in Colorado Springs, Colorado for approximately $15,500,000. A gain of $940,000 was realized as a result of the sale. Centennial is a110,405 square foot single story "flex" suburban office property that has been owned by FSP or an FSP affiliate for over 14 years. It was our only property in Colorado Springs. Currently, we are considering disposal of several of our other suburban office assets that we believe are no longer core to our long-term strategy. Also, in the fourth quarter, a single asset REIT affiliate of FSP, "FSP Highland Place I Corp." (or “Highland”), completed the sale of its suburban office property located in the greater Denver, Colorado area. Our outstanding loan with Highland totaling $3,395,000, which was secured by a first mortgage on the Highland Place property, was repaid in full.

We acquired no additional office properties in 2014 primarily because market pricing metrics on properties we were interested in were too elevated to conform to our underwriting criteria. However, as 2015 begins, we are actively pursuing a number of new property acquisition opportunities within our primary markets. We anticipate additional property acquisitions this year. We are also busy trying to finalize potential anchor tenants/leases for our anticipated 2016 development effort in downtown Minneapolis, Minnesota at 801 Marquette Avenue South, and hope to be able to announce the size and scope of this project later this year.

As we begin 2015, our property portfolio is operating smoothly with existing and known upcoming vacancy square footage actively being marketed to multiple potential tenants. We look forward with anticipation to 2015 and beyond.”

Dividend Update

On January 9, 2015, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended December 31, 2014 of $0.19 per share of common stock that will be paid on February 12, 2015 to stockholders of record on January 23, 2015.

FFO Guidance

Our full year FFO guidance for 2015 is updated to be in the range of $1.03 to $1.08 per diluted share. This guidance (a) excludes the impact of future acquisitions, dispositions, debt financings or repayments or other capital market transactions; (b) reflects estimates from our ongoing portfolio of properties, other real estate investments and G&A expenses; and (c) reflects our current expectations of economic conditions. We will update guidance quarterly in our earnings releases. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above.

Real Estate Update

Supplementary schedules provide property information for the Company’s owned real estate portfolio and for two non-consolidated REITs in which the Company holds preferred stock interests as of December 31, 2014. 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.franklinstreetproperties.com.

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Funds From Operations (FFO)

A reconciliation of Net Income to FFO is shown below and a definition of FFO is provided on Supplementary Schedule H. Management believes FFO is used broadly throughout the real estate investment trust (REIT) industry as a measurement of performance. Management also believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company has included the NAREIT FFO definition 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 may not be comparable to FFO reported by other REITs or real estate companies that define FFO differently.

Reconciliation of Net Income to FFO:	Three Months Ended						Year Ended
	December 31,						December 31,
(In thousands, except per share amounts)	2014			2013			2014			2013

Net income	$	4,295		$	6,591		$	13,148		$	19,827
Gain on sale of assets, less applicable income tax		(940	)		(2,158	)		(940	)		(2,158	)
GAAP loss from non-consolidated REITs		269			543			1,760			1,358
FFO from non-consolidated REITs		652			346			1,930			2,148
Depreciation & amortization		23,249			23,886			96,550			79,090
NAREIT FFO		27,525			29,208			112,448			100,265
Acquisition costs of new properties		—			12			14			568
Funds From Operations (FFO)	$	27,525		$	29,220		$	112,462		$	100,833

Per Share Data
EPS	$	0.04		$	0.07		$	0.13		$	0.21
FFO	$	0.27		$	0.29		$	1.12		$	1.07

Weighted average shares (basic and diluted)		100,187			100,187			100,187			93,855

Today’s news release, along with other news about Franklin Street Properties Corp., is available on the Internet at www.franklinstreetproperties.com. We routinely post information that may be important to investors in the Investor Relations section of our website. We encourage investors to consult that section of our website regularly for important information about us and, if they are interested in automatically receiving news and information as soon as it is posted, to sign up for E-mail Alerts.

Earnings Call

A conference call is scheduled for February 18, 2015 at 10:00 a.m. (ET) to discuss the fourth quarter 2014 results. To access the call, please dial 1-877-507-4376. Internationally, the call may be accessed by dialing 1-412-317-6014. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website (www.franklinstreetproperties.com) at least ten minutes prior to the start of the call and follow the posted directions. The webcast will also be available via replay from the above location starting one hour after the call is finished.

About Franklin Street Properties Corp.

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on investing in institutional-quality office properties in the U.S. FSP’s strategy is to invest in select urban infill and central business district (CBD) properties, with primary emphasis on our top five markets of Atlanta, Dallas, Denver, Houston, and Minneapolis. FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. To learn more about FSP please visit our website at www.franklinstreetproperties.com.

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Forward-Looking Statements

Statements made in this press release that state FSP’s or management’s intentions, beliefs, expectations, or predictions for the future may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release may also contain forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, economic conditions in the United States, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events and expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments. See the “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014, as the same may be updated from time to time in subsequent filings with the United States Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We will not update any of the forward-looking statements after the date of this press release to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.

Franklin Street Properties Corp.

Earnings Release

Supplementary Information

Table of Contents


Franklin Street Properties Corp. Financial Results	A-C
Real Estate Portfolio Summary Information	D
Portfolio and Other Supplementary Information	E
Percentage of Leased Space	F
Largest 20 Tenants – FSP Owned Portfolio	G
Definition of Funds From Operations (FFO)	H

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Franklin Street Properties Corp. Financial Results
Supplementary Schedule A
Condensed Consolidated Income (Loss) Statements
(Unaudited)

	For the Three Months Ended December 31,						For the Year Ended December 31,
(in thousands, except per share amounts)	2014			2013			2014			2013

Revenue:
Rental	$	61,022		$	61,307		$	243,341		$	206,926
Related party revenue:
Management fees and interest income from loans		1,465			1,717			6,241			6,646
Other		2			—			101			64
Total revenue		62,489			63,024			249,683			213,636

Expenses:
Real estate operating expenses		16,334			15,223			62,032			51,100
Real estate taxes and insurance		9,288			8,912			36,857			31,616
Depreciation and amortization		23,174			23,976			95,915			78,839
Selling, general and administrative		3,492			2,698			12,983			11,911
Interest		6,483			7,198			27,433			21,054

Total expenses		58,771			58,007			235,220			194,520

Income before interest income, equity in losses of
non-consolidated REITs and taxes		3,718			5,017			14,463			19,116
Interest income		1			6			3			16
Equity in losses of non-consolidated REITs		(269	)		(543	)		(1,760	)		(1,358	)
Gain on sale of property, less applicable income tax		940			—			940			—

Income before taxes on income		4,390			4,480			13,646			17,774
Taxes on income		95			128			498			480

Income from continuing operations		4,295			4,352			13,148			17,294

Discontinued operations:
Income from discontinued operations, net of income tax		—			81			—			375
Gain on sale of property, less applicable income tax		—			2,158			—			2,158
Total discontinued operations		—			2,239			—			2,533

Net income	$	4,295		$	6,591		$	13,148		$	19,827

Weighted average number of shares outstanding, basic and diluted		100,187			100,187			100,187			93,855

Earnings per share, basic and diluted, attributable to:
Continuing operations	$	0.04		$	0.04		$	0.13		$	0.18
Discontinued operations		—			0.03			—			0.03
Net income per share, basic and diluted	$	0.04		$	0.07		$	0.13		$	0.21

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Franklin Street Properties Corp. Financial Results
Supplementary Schedule B
Condensed Consolidated Balance Sheets
(Unaudited)

	December 31,
(in thousands, except share and par value amounts)	2014			2013
Assets:
Real estate assets:
Land	$	183,930		$	185,479
Buildings and improvements		1,604,984			1,603,941
Fixtures and equipment		1,677			1,170
		1,790,591			1,790,590
Less accumulated depreciation		266,284			222,252
Real estate assets, net		1,524,307			1,568,338
Acquired real estate leases, less accumulated amortization
of $101,838 and $69,848, respectively		138,714			183,454
Investment in non-consolidated REITs		78,611			80,494
Cash and cash equivalents		7,519			19,623
Restricted cash		742			643
Tenant rent receivables, less allowance for doubtful accounts
of $325 and $50, respectively		4,733			5,102
Straight-line rent receivable, less allowance for doubtful accounts
of $162 and $135, respectively		47,021			42,261
Prepaid expenses and other assets		10,292			10,506
Related party mortgage loan receivables		93,641			99,746
Other assets: derivative asset		3,020			5,321
Office computers and furniture, net of accumulated depreciation
of $1,036 and $747, respectively		609			709
Deferred leasing commissions, net of accumulated amortization
of $16,944 and $15,031, respectively		27,181			27,837
Total assets	$	1,936,390		$	2,044,034
		`
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable	$	268,000		$	306,500
Term loans payable		620,000			620,000
Accounts payable and accrued expenses		42,561			44,137
Accrued compensation		3,758			2,985
Tenant security deposits		4,248			4,027
Other liabilities: derivative liability		7,268			2,044
Acquired unfavorable real estate leases, less accumulated amortization of $8,687 and $6,926, respectively		10,908			14,175
Total liabilities		956,743			993,868

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, 100,187,405 and 100,187,405 shares issued and outstanding, respectively		10			10
Additional paid-in capital		1,273,556			1,273,556
Accumulated other comprehensive income (loss)		(4,248	)		3,277
Accumulated distributions in excess of accumulated earnings		(289,671	)		(226,677	)
Total stockholders’ equity		979,647			1,050,166
Total liabilities and stockholders’ equity	$	1,936,390		$	2,044,034

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Franklin Street Properties Corp. Financial Results
Supplementary Schedule C
Condensed Consolidated Statements of Cash Flows
(Unaudited)

	For the Year Ended December 31,
(in thousands)	2014			2013			2012
Cash flows from operating activities:
Net income	$	13,148		$	19,827		$	7,633
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		97,916			81,267			57,500
Amortization of above market lease		635			(365	)		71
Gain (loss) on sale of properties, less applicable income tax		(940	)		(2,158	)		14,826
Equity in earnings of non-consolidated REITs		1,760			1,358			(2,033	)
Distributions from non-consolidated REITs		—			—			705
Increase (decrease) in allowance for doubtful accounts		275			(1,250	)		65
Changes in operating assets and liabilities:
Restricted cash		(99	)		(68	)		(82	)
Tenant rent receivables		94			(2,103	)		(354	)
Straight-line rents		(4,737	)		(5,782	)		(4,464	)
Lease acquisition costs		(440	)		(1,146	)		(2,520	)
Prepaid expenses and other assets		700			(1,547	)		(328	)
Accounts payable, accrued expenses and other items		206			11,137			3,717
Accrued compensation		773			445			318
Tenant security deposits		222			1,538			481
Payment of deferred leasing commissions		(6,347	)		(9,125	)		(5,179	)
Net cash provided by operating activities		103,166			92,028			70,356

Cash flows from investing activities:
Property acquisitions		—			(454,447	)		(167,812	)
Property improvements, fixtures and equipment		(18,370	)		(19,120	)		(15,824	)
Office computers and furniture		(191	)		(355	)		(232	)
Acquired real estate leases		—			(100,143	)		(37,302	)
Investment in non-consolidated REITs		—			4,858			(1	)
Distributions in excess of earnings from non-consolidated REITs		107			108			2,105
Investment in related party mortgage loan receivable		(11,170	)		(8,200	)		(74,580	)
Repayment of related party mortgage receivable		17,275			2,350			121,200
Proceeds received on sales of real estate assets		14,192			12,301			157
Net cash provided by (used in) investing activities		1,843			(562,648	)		(172,289	)

Cash flows from financing activities:
Distributions to stockholders		(76,142	)		(69,588	)		(63,032	)
Proceeds from equity offering		—			241,500			—
Offering costs		—			(10,818	)		—
Borrowings under bank note payable		15,000			160,000			294,750
Repayments of bank note payable		(53,500	)		(70,250	)		(527,000	)
Borrowing of term loan payable		—			220,000			400,000
Deferred financing costs		(2,471	)		(1,868	)		(5,331	)
Net cash provided by (used in) financing activities		(117,113	)		468,976			99,387
Net decrease in cash and cash equivalents		(12,104	)		(1,644	)		(2,546	)
Cash and cash equivalents, beginning of year		19,623			21,267			23,813
Cash and cash equivalents, end of year	$	7,519		$	19,623		$	21,267

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Franklin Street Properties Corp. Earnings Release
Supplementary Schedule D
Real Estate Portfolio Summary Information
(Unaudited & Approximated)

Commercial portfolio lease expirations (1)
	Total	% of
Year	Square Feet	Portfolio
2015	710,649	7.4%
2016	962,093	10.0%
2017	1,059,927	11.1%
2018	944,323	9.9%
2019	1,606,640	16.8%
Thereafter (2)	4,296,425	44.8%
	9,580,057	100.0%

(1)

Percentages are determined based upon square footage of expiring commercial leases.

(2)

Includes 688,936 square feet of current vacancies.

(dollars & square feet in 000's)	As of December 31, 2014
	# of		% of	Square	% of
State	Properties	Investment	Portfolio	Feet	Portfolio

Texas	10	$ 393,054	25.8%	2,539	26.5%
Colorado	5	436,166	28.6%	2,010	21.0%
Georgia	3	221,383	14.5%	1,396	14.6%
Virginia	4	96,028	6.3%	685	7.1%
Minnesota	2	43,373	2.9%	628	6.6%
Missouri	3	62,111	4.1%	477	5.0%
North Carolina	3	63,683	4.2%	431	4.5%
Illinois	2	46,295	3.0%	372	3.9%
Maryland	1	52,103	3.4%	325	3.4%
Florida	1	43,081	2.8%	213	2.2%
Indiana	1	32,819	2.2%	205	2.1%
California	2	20,393	1.3%	182	1.9%
Washington	1	13,818	0.9%	117	1.2%
	38	$ 1,524,307	100.0%	9,580	100.0%

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Franklin Street Properties Corp. Earnings Release
Supplementary Schedule E
Portfolio and Other Supplementary Information
(Unaudited & Approximated)

Recurring Capital Expenditures
Owned Portfolio
(in thousands)	For the Three Months Ended								Year ended
	31-Mar-14		30-Jun-14		30-Sep-14		31-Dec-14		31-Dec-14

Tenant improvements	$	1,132	$	1,837	$	2,612	$	4,244	$	9,825
Deferred leasing costs		1,080		2,786		577		1,405		5,848
Non-investment capex		364		1,621		700		851		3,536
	$	2,576	$	6,244	$	3,889	$	6,500	$	19,209

	For the Three Months Ended:								Year ended
	31-Mar-13		30-Jun-13		30-Sep-13		31-Dec-13		31-Dec-13

Tenant improvements	$	1,724	$	5,094	$	4,594	$	2,993	$	14,405
Deferred leasing costs		2,812		909		3,821		1,498		9,040
Non-investment capex		482		707		498		1,179		2,866
	$	5,018	$	6,710	$	8,913	$	5,670	$	26,311

Square foot & leased percentages		December,	December 31,
		2014	2013

Owned portfolio of commercial real estate
	Number of properties	38	39
	Square feet	9,580,057	9,685,285
	Leased percentage	92.8%	94.1%

Investments in non-consolidated REITs
	Number of properties	2	2
	Square feet	1,395,780	1,395,500
	Leased percentage	71.3%	64.1%

Single Asset REITs (SARs) managed
	Number of properties	8	12
	Square feet	1,897,801	3,067,199
	Leased percentage	84.7%	87.4%

Total owned, investments & managed properties
	Number of properties	48	53
	Square feet	12,873,638	14,147,984
	Leased percentage	89.3%	89.7%

The following table shows property information for our investments in non-consolidated REITs:

			Square	% Leased	% Interest
Single Asset REIT name	City	State	Feet	31-Dec-14	Held
FSP 303 East Wacker Drive Corp.	Chicago	IL	860,709	62.5%	43.7%
FSP Grand Boulevard Corp.	Kansas City	MO	535,071	85.5%	27.0%
			1,395,780	71.3%

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Franklin Street Properties Corp. Earnings Release
Supplementary Schedule F
Percentage of Leased Space
(Unaudited & Estimated)

					Third		Fourth
				% Leased (1)	Quarter	% Leased (1)	Quarter
			Square	as of	Average %	as of	Average %
	Property Name	Location	Feet	30-Sep-14	Leased (2)	31-Dec-14	Leased (2)

1	PARK SENECA	Charlotte, NC	109,674	88.4%	88.2%	92.1%	91.0%
2	HILLVIEW CENTER	Milpitas, CA	36,288	100.0%	100.0%	100.0%	100.0%
3	FOREST PARK	Charlotte, NC	62,212	100.0%	100.0%	100.0%	100.0%
4	CENTENNIAL	Colorado Springs, CO	-	97.3%	97.3%	Sold December 3, 2014
5	MEADOW POINT	Chantilly, VA	138,537	92.6%	92.6%	92.6%	92.6%
6	TIMBERLAKE	Chesterfield, MO	232,766	98.3%	98.3%	98.3%	98.3%
7	FEDERAL WAY	Federal Way, WA	117,010	56.5%	56.5%	57.1%	57.3%
8	NORTHWEST POINT	Elk Grove Village, IL	176,848	100.0%	100.0%	100.0%	100.0%
9	TIMBERLAKE EAST	Chesterfield, MO	116,197	91.0%	91.0%	91.0%	91.0%
10	PARK TEN	Houston, TX	157,460	80.3%	80.3%	63.1%	68.8%
11	MONTAGUE	San Jose, CA	145,951	81.1%	81.1%	81.1%	81.1%
12	ADDISON	Addison, TX	293,926	95.3%	96.0%	89.6%	93.4%
13	COLLINS CROSSING	Richardson, TX	300,472	99.5%	99.5%	99.5%	99.5%
14	GREENWOOD PLAZA	Englewood, CO	196,236	100.0%	100.0%	100.0%	100.0%
15	RIVER CROSSING	Indianapolis, IN	205,059	97.6%	97.0%	100.0%	99.7%
16	LIBERTY PLAZA	Addison, TX	218,934	96.0%	96.0%	90.6%	93.2%
17	INNSBROOK	Glen Allen, VA	298,456	99.9%	99.9%	99.9%	99.9%
18	380 INTERLOCKEN	Broomfield, CO	240,185	95.8%	95.8%	95.8%	95.8%
19	BLUE LAGOON	Miami, FL	212,619	100.0%	100.0%	100.0%	100.0%
20	ELDRIDGE GREEN	Houston, TX	248,399	100.0%	100.0%	100.0%	100.0%
21	WILLOW BEND	Plano, TX	117,050	100.0%	100.0%	100.0%	100.0%
22	ONE OVERTON PARK	Atlanta, GA	387,267	98.9%	98.9%	86.3%	90.7%
23	390 INTERLOCKEN	Broomfield, CO	241,516	71.2%	70.5%	72.3%	72.0%
24	EAST BALTIMORE	Baltimore, MD	325,445	81.2%	81.2%	81.9%	81.9%
25	PARK TEN PHASE II	Houston, TX	156,746	100.0%	100.0%	100.0%	100.0%
26	LAKESIDE CROSSING I	Maryland Heights, MO	127,778	100.0%	100.0%	100.0%	100.0%
27	LOUDOUN TECH	Dulles, VA	136,658	92.0%	97.3%	92.0%	92.0%
28	4807 STONECROFT	Chantilly, VA	111,469	100.0%	100.0%	100.0%	100.0%
29	EDEN BLUFF	Eden Prairie, MN	153,028	100.0%	100.0%	100.0%	100.0%
30	121 SOUTH EIGHTH ST	Minneapolis, MN	475,012	90.8%	90.6%	91.2%	90.9%
31	EMPEROR BOULEVARD	Durham, NC	259,531	100.0%	100.0%	100.0%	100.0%
32	LEGACY TENNYSON CTR	Plano, TX	202,600	100.0%	100.0%	100.0%	100.0%
33	ONE LEGACY	Plano, TX	214,110	100.0%	100.0%	100.0%	100.0%
34	909 DAVIS	Evanston, IL	195,245	97.9%	97.9%	97.9%	97.9%
35	ONE RAVINIA DRIVE	Atlanta, GA	386,603	93.7%	93.7%	95.2%	94.7%
36	WESTCHASE I & II	Houston, TX	629,025	97.3%	97.3%	97.7%	97.7%
37	1999 BROADWAY	Denver, CO	676,379	87.6%	89.6%	88.9%	88.4%
38	999 PEACHTREE	Atlanta, GA	621,946	97.8%	95.4%	97.7%	97.9%
39	1001 17th STREET	Denver, CO	655,420	81.1%	82.2%	84.8%	82.3%

	TOTAL WEIGHTED AVERAGE (3)		9,580,057	93.3%	93.4%	92.8%	93.0%

(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 3 months during the quarter.

(3) Totals for Q3 include Centennial, which was sold on December 3, 2014.

-11-

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule G
Largest 20 Tenants – FSP Owned Portfolio
(Unaudited & Estimated)

The following table includes the largest 20 tenants in FSP’s owned portfolio based on leased square feet:

	As of December 31, 2014
			% of
	Tenant	Sq Ft	Portfolio
1	TCF National Bank	263,111	2.8%
2	Quintiles Transnational Corp	259,531	2.7%
3	CITGO Petroleum Corporation	248,399	2.6%
4	Sutherland Asbill Brennan LLP	243,839	2.5%
5	Newfield Exploration Company	234,495	2.4%
6	US Government (a)	224,427	2.3%
7	Burger King Corporation	212,619	2.2%
8	Denbury Onshore, LLC	202,600	2.1%
9	RGA Reinsurance Company (b)	197,354	2.1%
10	SunTrust Bank (c)	182,888	1.9%
11	Citicorp Credit Services, Inc	176,848	1.9%
12	C.H. Robinson Worldwide, Inc	153,028	1.6%
13	T-Mobile South, LLC dba T-Mobile	151,792	1.6%
14	Houghton Mifflin Harcourt Publishing Company	150,050	1.6%
15	Petrobras America, Inc.	144,813	1.5%
16	Murphy Exploration & Production Company	144,677	1.5%
17	Argo Data Resource Corporation	140,246	1.5%
18	Monsanto Company	127,778	1.3%
19	Federal National Mortgage Association	123,144	1.3%
20	Vail Corp d/b/a Vail Resorts (d)	122,232	1.3%
	Total	3,703,871	38.7%

(a) Includes 180,444 and 5,090 square feet which expire in 2018 & 2016, respectively. The remaining 38,893 square feet expire between 2015 - 2020.

(b) Lease expired and tenants vacated on December 31, 2014. As of January 1, 2015, Kaiser Foundation Health Plan will become the 20th largest tenant with 120,979 square feet.

(c) Includes 55,388 square feet which expires October 31, 2016. The remaining 127,500 square feet expires September 30, 2021.

(d ) Includes 38,293 square feet which expires March 31, 2019. The remaining 83,939 square feet expires March 31, 2023.

-12-

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule H
Definition of Funds From Operations (“FFO”),

The Company evaluates performance based on Funds From Operations, which we refer to as FFO, as management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and acquisition costs of newly acquired properties that are not capitalized, plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on properties or investments in non-consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate share of FFO from, non-consolidated REITs.

FFO should not be considered as an alternative to net income (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 NAREIT, may define this term in a different manner. We have included the NAREIT FFO definition in our table and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do.

We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.

Exhibit 99.2

Supplemental Operating
and Financial Data

Fourth Quarter 2014

Franklin Street Properties Corp. ● 401 Edgewater Place ● Wakefield, MA 01880 ● (781) 557-1300

www.franklinstreetproperties.com

Table of Contents

	*Page*		*Page*

Company Overview	3	Tenant Analysis and Leasing Activity
		20 Largest Tenants, Industry Profile	18
Key Financial Data		20 Largest Tenants with Annualized Rent and Remaining Term	19
Financial Highlights	4	Leasing Activity	20
Income Statements	5	Lease Expirations by Square Feet	21
Balance Sheets	6	Lease Expirations with Annualized Rent per Square Foot	22
Cash Flow Statements	7	Capital Expenditures	23
Property Net Operating Income (NOI)	8
		Transaction Activity	24
Reconciliation
FFO & AFFO	9	Loan Portfolio of Secured Real Estate	25
EBITDA	10
Property NOI	11	Net Asset Value Components	26

Debt Summary	12	Appendix: Definitions of Non-GAAP Measures
		FFO	27
Capital Analysis	13	EBITDA and NOI	28
		AFFO	29
Owned and Managed Portfolio Overview	14-17	AFFO Comparison	30

All financial information contained in this supplemental information package is unaudited. In addition, certain statements contained in this supplemental information package may be deemed to be forward-looking statements within the meaning of the federal securities laws. Although FSP believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from FSP’s current expectations include general economic conditions, uncertainties relating to fiscal policy, changes in government regulations, regulatory uncertainty, geopolitical events, local real estate conditions, the performance of properties that FSP has acquired or may acquire, the timely lease-up of properties and other risks, detailed from time to time in FSP’s SEC reports. FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

December 31, 2014

Company Overview

Overview

Franklin Street Properties Corp. (“FSP”, “we”, “our” or the “Company”) (NYSE MKT: FSP) is investing in institutional-quality office properties in the U.S. FSP’s strategy is to invest in select urban infill and central business district (CBD) properties, with primary emphasis on our top five markets of Atlanta, Dallas, Denver, Houston, and Minneapolis. FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. FSP’s real estate operations include property acquisitions and dispositions, short-term financing, leasing, development and asset management.

Our Business

As of December 31, 2014, the Company owned and operated a portfolio of real estate consisting of 38 properties, managed 10 Sponsored REITs and held five promissory notes secured by mortgages on real estate owned by Sponsored REITs. From time-to-time, the Company may acquire real estate, make additional secured loans or acquire one of its Sponsored REITs. The Company may also pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, or for geographic or property specific reasons.

Management Team

George J. Carter		Scott H. Carter
President, Chief Executive Officer		Executive Vice President, General
Chairman of the Board		Counsel and Assistant Secretary

Barbara J. Fournier		Jeffrey B. Carter
Executive Vice President, Chief Operating Officer,		Executive Vice President and
Treasurer, Secretary and Director		Chief Investment Officer

Janet Notopoulos		John G. Demeritt
Executive Vice President and Director		Executive Vice President and
		Chief Financial Officer

Inquiries

Inquires should be directed to: John Demeritt, CFO

877-686-9496 or InvestorRelations@franklinstreetproperties.com

Snapshot (as of December 31, 2014)
Corporate Headquarters	Wakefield, MA
Fiscal Year-End	31-Dec
Total Properties	38
Total Square Feet	9.6
Trading Symbol	FSP
Exchange	NYSE MKT
Common Shares Outstanding	100,187,405
Quarterly Dividend	$0.19
Dividend Yield	6.2%
Total Market Capitalization	$2.1 Billion
Insider Holdings	10.2%

December 31, 2014

Summary of Financial Highlights

(in thousands except per share amounts, SF & number of properties)
	31-Dec-14			30-Sep-14			30-Jun-14			31-Mar-14			31-Dec-13			30-Sep-13			30-Jun-13			31-Mar-13
Income Items:
Rental revenue	$	61,022		$	59,728		$	60,994		$	61,597		$	61,307		$	56,760		$	46,017		$	42,842
Total revenue		62,489			61,190			62,741			63,263			63,024			58,446			47,671			44,495
Adjusted EBITDA*		33,182			33,973			34,359			35,175			35,645			31,862			26,074			24,712
Equity in losses of non-consolidated REITs		(269	)		(455	)		(552	)		(484	)		(543	)		(431	)		(196	)		(188	)
Net income		4,295			1,567			3,713			3,573			6,591			4,094			4,741			4,401
FFO*		27,525			27,904			28,254			28,779			29,220			27,566			22,810			21,237

Per Share Data:
EPS	$	0.04		$	0.02		$	0.04		$	0.04		$	0.07		$	0.04		$	0.05		$	0.05
FFO*	$	0.27		$	0.28		$	0.28		$	0.29		$	0.29		$	0.28		$	0.25		$	0.26
Weighted Average Shares (diluted)		100,187			100,187			100,187			100,187			100,187			100,187			91,847			82,937
Closing share price	$	12.27		$	11.22		$	12.58		$	12.60		$	11.95		$	12.74		$	13.20		$	14.62
Dividend	$	0.19		$	0.19		$	0.19		$	0.19		$	0.19		$	0.19		$	0.19		$	0.19
Payout Ratio:		69	%		68	%		67	%		66	%		66	%		69	%		77	%		74	%

Balance Sheet Items:
Real estate, net	$	1,524,307		$	1,542,012		$	1,549,963		$	1,558,136		$	1,568,338		$	1,575,690		$	1,280,252		$	1,128,398
Other assets, net		412,083			425,305			438,634			467,539			475,696			500,939			428,789			383,244
Total assets, net		1,936,390			1,967,317			1,988,597			2,025,675			2,044,034			2,076,629			1,709,041			1,511,642
Total liabilities, net		956,743			968,948			975,853			993,273			993,868			1,017,480			627,997			657,809
Shareholders' equity		979,647			998,369			1,012,744			1,032,402			1,050,166			1,059,149			1,081,044			853,833

Market Capitalization and Debt:
Total Market Capitalization (a)	$	2,117,299		$	2,029,103		$	2,176,858		$	2,198,861		$	2,123,739		$	2,227,888		$	1,903,974		$	1,834,295
Total debt outstanding		888,000			905,000			916,500			936,500			926,500			951,500			581,500			621,750
Debt to Total Market Capitalization		41.9	%		44.6	%		42.1	%		42.6	%		43.6	%		42.7	%		30.5	%		33.9	%
Debt to Adjusted EBITDA		6.7			6.7			6.7			6.7			6.5			7.5			5.6			6.3

Owned Portfolio Leasing Statistics:
Owned portfolio assets (includes asset held for sale before 12/31/13)		38			39			39			39			39			40			38			37
Portfolio total SF		9,580,057			9,690,361			9,686,215			9,686,055			9,685,285			9,807,339			8,529,752			7,856,859
Portfolio % leased		92.8	%		93.3	%		94.1	%		94.5	%		94.1	%		93.8	%		94.4	%		94.4	%

(a)

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

See pages 9 & 10 for reconciliations of Net Income to FFO and Adjusted EBITDA, respectively, and the Appendix for Defintions of these Non-GAAP Measures beginning on page 27.

December 31, 2014

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

													For the															For the
	For the Three Months Ended												Year Ended			For the Three Months Ended												Year Ended
	31-Mar-14			30-Jun-14			30-Sep-14			31-Dec-14			31-Dec-14			31-Mar-13			30-Jun-13			30-Sep-13			31-Dec-13			31-Dec-13

Revenue:
Rental	$	61,597		$	60,994		$	59,728		$	61,022		$	243,341		$	42,842		$	46,017		$	56,760		$	61,307		$	206,926
Related party revenue:
Management fees and interest income from loans		1,643			1,671			1,462			1,465			6,241			1,622			1,642			1,665			1,717			6,646
Other		23			76			—			2			101			31			12			21			—			64
Total revenue		63,263			62,741			61,190			62,489			249,683			44,495			47,671			58,446			63,024			213,636

Expenses:
Real estate operating expenses		15,071			14,995			15,632			16,334			62,032			10,770			11,116			13,991			15,223			51,100
Real estate taxes and insurance		9,251			9,763			8,555			9,288			36,857			6,595			7,308			8,801			8,912			31,616
Depreciation and amortization		24,300			23,563			24,878			23,174			95,915			15,781			16,919			22,163			23,976			78,839
Selling, general and administrative		3,272			3,148			3,071			3,492			12,983			2,532			3,204			3,477			2,698			11,911
Interest		7,176			6,891			6,883			6,483			27,433			4,208			4,174			5,474			7,198			21,054
Total expenses		59,070			58,360			59,019			58,771			235,220			39,886			42,721			53,906			58,007			194,520

Income before interest income, equity in losses of non-consolidated REITs and taxes		4,193			4,381			2,171			3,718			14,463			4,609			4,950			4,540			5,017			19,116
Interest income		1			1			—			1			3			1			4			5			6			16
Equity in losses of non-consolidated REITs		(484	)		(552	)		(455	)		(269	)		(1,760	)		(188	)		(196	)		(431	)		(543	)		(1,358	)
Gain on sale of property, less applicable income tax		—			—			—			940			940			—			—			—			—			—

Income before taxes on income		3,710			3,830			1,716			4,390			13,646			4,422			4,758			4,114			4,480			17,774
Income tax expense		137			117			149			95			498			119			115			118			128			480

Income from continuing operations		3,573			3,713			1,567			4,295			13,148			4,303			4,643			3,996			4,352			17,294
Income from discontinued operations		—												—			98			98			98			81			375
Gain on sale of property, less applicable income tax		—			—			—			—			—			—			—			—			2,158			2,158

Net income	$	3,573		$	3,713		$	1,567		$	4,295		$	13,148		$	4,401		$	4,741		$	4,094		$	6,591		$	19,827

Weighted average number of shares outstanding,
basic and diluted		100,187			100,187			100,187			100,187			100,187			82,937			91,847			100,187			100,187			93,855

Earnings per share, basic and diluted, attributable to:
Continuing operations	$	0.04		$	0.04		$	0.02		$	0.04		$	0.13		$	0.05		$	0.05		$	0.04		$	0.04		$	0.18
Discontinued operations		—			—			—			—			—			—			—			—			—			—
Gain on sale of property, less applicable income tax		—			—			—			—			—			—			—			—			0.03			0.03
Net income per share, basic and diluted	$	0.04		$	0.04		$	0.02		$	0.04		$	0.13		$	0.05		$	0.05		$	0.04		$	0.07		$	0.21

December 31, 2014

Condensed Consolidated Balance Sheets
(in thousands)

	March 31,			June 30,			September 30,			December 31,			March 31,			June 30,			September 30,			December 31,
	2014			2014			2014			2014			2013			2013			2013			2013
Assets:
Real estate assets:
Land	$	185,479		$	185,479		$	185,479		$	183,930		$	141,545		$	157,879		$	185,479		$	185,479
Buildings and improvements		1,605,808			1,609,747			1,613,699			1,604,984			1,175,743			1,320,703			1,599,519			1,603,941
Fixtures and equipment		1,296			1,395			1,633			1,677			904			960			985			1,170
		1,792,583			1,796,621			1,800,811			1,790,591			1,318,192			1,479,542			1,785,983			1,790,590
Less accumulated depreciation		234,447			246,658			258,799			266,284			189,794			199,290			210,293			222,252
Real estate assets, net		1,558,136			1,549,963			1,542,012			1,524,307			1,128,398			1,280,252			1,575,690			1,568,338

Acquired real estate leases, net		172,262			161,519			149,019			138,714			102,274			129,226			194,893			183,454
Investment in non-consolidated REITs		79,983			79,405			78,907			78,611			81,746			81,523			81,065			80,494
Assets held for sale		—												10,431			10,286			10,143			—
Cash and cash equivalents		20,031			18,455			15,930			7,519			17,282			24,962			25,539			19,623
Restricted cash		688			728			707			742			583			602			623			643
Tenant rent receivables, net		6,035			2,867			2,865			4,733			2,357			2,331			6,029			5,102
Straight-line rent receivable, net		44,392			46,021			46,737			47,021			36,210			37,865			40,086			42,261
Prepaid expenses and other assets		9,954			9,716			9,768			10,901			10,545			12,532			11,846			11,215
Related party mortgage loan receivable		101,916			88,436			88,436			93,641			96,896			97,846			98,846			99,746
Other assets: derivative asset		4,801			2,626			4,582			3,020			—			6,739			4,365			5,321
Deferred leasing commissions, net		27,477			28,861			28,354			27,181			24,920			24,877			27,504			27,837
Total assets	$	2,025,675		$	1,988,597		$	1,967,317		$	1,936,390		$	1,511,642		$	1,709,041		$	2,076,629		$	2,044,034

Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable	$	316,500		$	296,500		$	285,000		$	268,000		$	221,750		$	181,500		$	331,500		$	306,500
Term loan payable		620,000			620,000			620,000			620,000			400,000			400,000			620,000			620,000
Accounts payable and accrued expenses		34,390			34,590			40,228			42,561			25,493			29,971			39,907			44,137
Accrued compensation		1,027			2,052			2,863			3,758			540			1,677			2,432			2,985
Tenant security deposits		4,258			4,259			4,331			4,248			2,474			3,074			3,891			4,027
Other liabilities: derivative termination value		3,825			5,985			4,847			7,268			778			—			4,579			2,044
Acquired unfavorable real estate leases, net		13,273			12,467			11,679			10,908			6,774			11,775			15,171			14,175
Total liabilities		993,273			975,853			968,948			956,743			657,809			627,997			1,017,480			993,868

Commitments and contingencies

Stockholders’ Equity:
Preferred stock		—			—			—			—			—			—			—			—
Common stock		10			10			10			10			8			10			10			10
Additional paid-in capital		1,273,556			1,273,556			1,273,556			1,273,556			1,042,876			1,273,585			1,273,585			1,273,556
Accumulated other comprehensive income (loss)		976			(3,359	)		(265	)		(4,248	)		(778	)		6,739			(214	)		3,277
Accumulated distributions in excess of accumulated earnings		(242,140	)		(257,463	)		(274,932	)		(289,671	)		(188,273	)		(199,290	)		(214,232	)		(226,677	)
Total stockholders’ equity		1,032,402			1,012,744			998,369			979,647			853,833			1,081,044			1,059,149			1,050,166
Total liabilities and stockholders’ equity	$	2,025,675		$	1,988,597		$	1,967,317		$	1,936,390		$	1,511,642		$	1,709,041		$	2,076,629		$	2,044,034

December 31, 2014

Condensed Consolidated Statements of Cash Flows
(in thousands)

	Twelve Months ended December 31
	2014			2013			2012

Cash flows from operating activities:
Net income	$	13,148		$	19,827		$	7,633
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		97,916			81,267			57,500
Amortization of above market lease		635			(365	)		71
Gain (loss) on sale of properties, less applicable income tax		(940	)		(2,158	)		14,826
Equity in earnings (losses) from non-consolidated REITs		1,760			1,358			(2,033	)
Distributions from non-consolidated REITs		—			—			705
Increase in allowance for doubtful accounts		275			(1,250	)		65
Changes in operating assets and liabilities:
Restricted cash		(99	)		(68	)		(82	)
Tenant rent receivables		94			(2,103	)		(354	)
Straight-line rents		(4,737	)		(5,782	)		(4,464	)
Lease acquisition costs		(440	)		(1,146	)		(2,520	)
Prepaid expenses and other assets		700			(1,547	)		(328	)
Accounts payable and accrued expenses		206			11,137			3,717
Accrued compensation		773			445			318
Tenant security deposits		222			1,538			481
Payment of deferred leasing commissions		(6,347	)		(9,125	)		(5,179	)

Net cash provided by operating activities		103,166			92,028			70,356

Cash flows from investing activities:
Property acquisitions		—			(454,447	)		(167,812	)
Property improvements, fixtures and equipment		(18,370	)		(19,120	)		(15,824	)
Office computers and furniture		(191	)		(355	)		(232	)
Acquired real estate leases		—			(100,143	)		(37,302	)
Investment in non-consolidated REITs		—			4,858			(1	)
Distributions in excess of earnings from non-consolidated REITs		107			108			2,105
Investment in related party mortgage loan receivable		(11,170	)		(8,200	)		(74,580	)
Repayment of related party mortgage loan receivable		17,275			2,350			121,200
Changes in deposits on real estate assets		—			—			—
Investment in assets held for syndication, net		—			—			—
Proceeds received on sales of real estate assets		14,192			12,301			157

Net cash provided by (used in) investing activities		1,843			(562,648	)		(172,289	)

Cash flows from financing activities:
Distributions to stockholders		(76,142	)		(69,588	)		(63,032	)
Proceeds (costs) from equity offering, net		—			230,682			—
Borrowings under bank note payable		15,000			160,000			294,750
Borrowings (repayments) under Revolver		(53,500	)		(70,250	)		(527,000	)
Borrowing (repayment) of term loan payable, net		—			220,000			400,000
Deferred Financing Costs		(2,471	)		(1,868	)		(5,331	)
Swap termination payment		—			—			—

Net cash provided by (used in) financing activities		(117,113	)		468,976			99,387

Net decreases in cash and cash equivalents		(12,104	)		(1,644	)		(2,546	)

Cash and cash equivalents, beginning of period		19,623			21,267			23,813

Cash and cash equivalents, end of period	$	7,519		$	19,623		$	21,267

December 31, 2014

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

(in thousands)	Rentable
	Square										Year										Year
	Feet		Three Months Ended:								Ended		Three Months Ended:								Ended		Inc			%
Region	or RSF		31-Mar-14		30-Jun-14		30-Sep-14		31-Dec-14		31-Dec-14		31-Mar-13		30-Jun-13		30-Sep-13		31-Dec-13		31-Dec-13		(Dec)			Change
East		1,442	$	4,727	$	4,786	$	4,758	$	4,702	$	18,973	$	4,756	$	5,440	$	4,914	$	5,150	$	20,260	$	(1,287	)		-6.4%
MidWest		1,682		5,107		5,062		5,187		4,857		20,213		4,839		5,008		4,944		5,074		19,865		348			1.8%
South		3,525		14,135		13,694		13,720		13,803		55,352		13,226		13,297		13,199		13,410		53,132		2,220			4.2%
West		977		2,311		2,497		2,457		2,454		9,719		2,093		1,865		2,186		2,445		8,589		1,130			13.2%
Same Store		7,626		26,280		26,039		26,122		25,816		104,257		24,914		25,610		25,243		26,079		101,846		2,411			2.4%

Acquisitions		1,954		10,037		9,623		9,059		9,078		37,797		—		1,203		7,843		10,186		19,232		18,565			14.9%
Property NOI from the portfolio		9,580		36,317		35,662		35,181		34,894		142,054		24,914		26,813		33,086		36,265		121,078		20,976			17.3%
Property NOI on assets sold				256		264		272		207		999		510		505		507		340		1,862		(863	)		-0.8%
Property NOI			$	36,573	$	35,926	$	35,453	$	35,101	$	143,053	$	25,424	$	27,318	$	33,593	$	36,605	$	122,940	$	20,113			16.4%

Same Store			$	26,280	$	26,039	$	26,122	$	25,816	$	104,257	$	24,914	$	25,610	$	25,243	$	26,079	$	101,846	$	2,411			2.4%

Less Nonrecurring
Items in NOI (a)				707		287		173		56		1,223		63		557		—		378		998		225			-0.2%

Comparative
Same Store			$	25,573	$	25,752	$	25,949	$	25,760	$	103,034	$	24,851	$	25,053	$	25,243	$	25,701	$	100,848	$	2,186			2.2%

(a)

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

See page 11 for a reconciliation of Net Income to Property NOI and the Appendix for Definitions of Non-GAAP Measures beginning on page 27. Property NOI Excludes NOI from investments in and interest income from secured loans to non-consolidated REITs.

December 31, 2014

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

													For the															For the
	For the Three Months Ended												Year Ended			For the Three Months Ended												Year Ended
	31-Mar-14			30-Jun-14			30-Sep-14			31-Dec-14			31-Dec-14			31-Mar-13			30-Jun-13			30-Sep-13			31-Dec-13			31-Dec-13

Net income	$	3,573		$	3,713		$	1,567		$	4,295		$	13,148		$	4,401		$	4,741		$	4,094		$	6,591		$	19,827

Gain (loss) on sale, less applicable income tax		—									(940	)		(940	)		—			—			—			(2,158	)		(2,158	)
GAAP income from non-consolidated REITs		484			552			455			269			1,760			188			196			431			543			1,358
FFO from non-consolidated REITs		419			351			508			652			1,930			647			696			459			346			2,148
Depreciation & amortization		24,289			23,638			25,374			23,249			96,550			15,984			17,044			22,176			23,886			79,090
NAREIT FFO*		28,765			28,254			27,904			27,525			112,448			21,220			22,677			27,160			29,208			100,265
Acquisition costs		14			—			—			—			14			17			133			406			12			568
Funds From Operations (FFO)*	$	28,779		$	28,254		$	27,904		$	27,525		$	112,462		$	21,237		$	22,810		$	27,566		$	29,220		$	100,833

Adjusted Funds From Operations (AFFO)*
Funds From Operations (FFO)*		28,779			28,254			27,904			27,525			112,462			21,237			22,810			27,566			29,220			100,833
Reverse FFO from non-consolidated REITs		(419	)		(351	)		(508	)		(652	)		(1,930	)		(647	)		(696	)		(459	)		(346	)		(2,148	)
Distributions from non-consolidated REITs		27			27			27			26			107			27			27			27			26			107
Amortization of deferred financing costs		499			499			498			506			2,002			429			429			456			499			1,813
Straight-line rent		(1,783	)		(1,541	)		(714	)		(698	)		(4,736	)		(657	)		(1,186	)		(2,078	)		(1,862	)		(5,783	)
Tenant improvements		(1,132	)		(1,837	)		(2,612	)		(4,244	)		(9,825	)		(1,724	)		(5,094	)		(4,594	)		(2,993	)		(14,405	)
Leasing commissions		(1,080	)		(2,786	)		(577	)		(1,405	)		(5,848	)		(2,812	)		(909	)		(3,821	)		(1,498	)		(9,040	)
Non-investment capex		(364	)		(1,621	)		(700	)		(851	)		(3,536	)		(482	)		(707	)		(498	)		(1,179	)		(2,866	)
Adjusted Funds From Operations (AFFO)*	$	24,527		$	20,644		$	23,318		$	20,207		$	88,696		$	15,371		$	14,674		$	16,599		$	21,867		$	68,511

Per Share Data:
EPS	$	0.04		$	0.04		$	0.02		$	0.04		$	0.13		$	0.05		$	0.05		$	0.04		$	0.07		$	0.21
FFO*		0.29			0.28			0.28			0.27			1.12			0.26			0.25			0.28			0.29			1.07
AFFO*		0.24			0.21			0.23			0.20			0.89			0.19			0.16			0.17			0.22			0.73

Weighted Average Shares (basic and diluted)		100,187			100,187			100,187			100,187			100,187			82,937			91,847			100,187			100,187			93,855

* See the Appendix for Definitions of these Non-GAAP Measures beginning on page 27.

December 31, 2014

EBITDA Reconciliation
(in thousands, except ratio amounts)

	For the Three Months Ended									Year Ended			For the Three Months Ended									Year Ended
	31-Mar-14		30-Jun-14		30-Sep-14		31-Dec-14			31-Dec-14			31-Mar-13		30-Jun-13		30-Sep-13		31-Dec-13			31-Dec-13

Net income	$	3,573	$	3,713	$	1,567	$	4,295		$	13,148		$	4,401	$	4,741	$	4,094	$	6,591		$	19,827
Interest expense		7,176		6,891		6,883		6,483			27,433			4,208		4,174		5,474		7,198			21,054
Depreciation and amortization		24,289		23,638		25,374		23,249			96,550			15,984		17,044		22,176		23,886			79,090
Income taxes		137		117		149		95			498			119		115		118		128			480
EBITDA		35,175		34,359		33,973		34,122			137,629			24,712		26,074		31,862		37,803			120,451
Excluding (gain) loss on sale, less applicable income tax		—		—		—		(940	)		(940	)		—		—		—		(2,158	)		(2,158	)
Adjusted EBITDA	$	35,175	$	34,359	$	33,973	$	33,182		$	136,689		$	24,712	$	26,074	$	31,862	$	35,645		$	118,293

Interest expense	$	7,176	$	6,891	$	6,883	$	6,483		$	27,433		$	4,208	$	4,174	$	5,474	$	7,198		$	21,054
Scheduled principal payments		—		—		—		—			—			—		—		—		—			—
Interest and scheduled principal payments	$	7,176	$	6,891	$	6,883	$	6,483		$	27,433		$	4,208	$	4,174	$	5,474	$	7,198		$	21,054

Interest coverage ratio		4.90		4.99		4.94		5.12			4.98			5.87		6.25		5.82		4.95			5.62

Debt service coverage ratio		4.90		4.99		4.94		5.12			4.98			5.87		6.25		5.82		4.95			5.62


Debt	$	936,500	$	916,500	$	905,000	$	888,000					$	621,750	$	581,500	$	951,500	$	926,500

Adjusted EBITDA		35,175		34,359		33,973		33,182						24,712		26,074		31,862		35,645
Annualized		140,700		137,436		135,892		132,728						98,848		104,296		127,448		142,580

Debt-to-EBITDA		6.7		6.7		6.7		6.7						6.3		5.6		7.5		6.5

* See the Appendix for Definitions of these Non-GAAP Measures beginning on page 27. Amounts in the EBITDA reconciliation do not reflect our proportionate share of interest expense, depreciation, amortization , income taxes, gains or losses on sales and debt from our investments in non-consolidated REITs , which are accounted for under the equity method.

December 31, 2014

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

Reconciliation to Net income													Year															Year
				Three Months Ended:									Ended						Three Months Ended:									Ended
	31-Mar-14			30-Jun-14			30-Sep-14			31-Dec-14			31-Dec-14			31-Mar-13			30-Jun-13			30-Sep-13			31-Dec-13			31-Dec-13
Net Income	$	3,573		$	3,713		$	1,567		$	4,295		$	13,148		$	4,401		$	4,741		$	4,094		$	6,591		$	19,827
Add (deduct):
Discontinued operations		—			—			—			—			—			(98	)		(98	)		(98	)		(81	)		(375	)
Gain on sale of properties		—			—			—			(940	)		(940	)		—			—			—			(2,158	)		(2,158	)
Management fee income		(646	)		(682	)		(649	)		(619	)		(2,596	)		(559	)		(598	)		(692	)		(689	)		(2,538	)
Depreciation and amortization		24,300			23,563			24,878			23,174			95,915			15,784			16,917			22,163			23,976			78,840
Amortization of above/below market leases		(11	)		74			497			75			635			48			(29	)		(143	)		(91	)		(215	)
Selling, general and administrative		3,272			3,148			3,071			3,492			12,983			2,532			3,204			3,477			2,716			11,929
Interest expense		7,176			6,891			6,883			6,483			27,433			4,208			4,174			5,474			7,198			21,054
Interest income		(1,410	)		(1,408	)		(1,216	)		(1,264	)		(5,298	)		(1,353	)		(1,382	)		(1,411	)		(1,438	)		(5,584	)
Equity in earnings of non-consolidated REITs		484			552			455			269			1,760			187			196			431			544			1,358
Non-property specific items, net		(165	)		75			(33	)		136			13			22			(60	)		45			(45	)		(38	)
																													—
Property NOI fromv the continuing portfolio		36,573			35,926			35,453			35,101			143,053			25,172			27,065			33,340			36,523			122,100

Property NOI classified in discontinued operations		—			—			—			—			—			252			253			253			82			840
Property NOI	$	36,573		$	35,926		$	35,453		$	35,101		$	143,053		$	25,424		$	27,318		$	33,593		$	36,605		$	122,940

* See the Appendix for Definition of Non-GAAP Measures beginning on page 27.

December 31, 2014

Debt Summary

(dollars in thousands)			Maximum		Amount		Interest		(a) Interest
	Maturity		Amount		Drawn at		Rate		Rate at			Facility
	Date		of Loan		31-Dec-14		Components		31-Dec-14			Fee


BAML Revolver		29-Oct-18	$	500,000	$	268,000		L+1.25%		1.41	%		0.25%
BAML Term Loan		27-Sep-17		400,000		400,000		0.75% + 1.45%		2.20	%
BMO Term Loan		26-Aug-20		220,000		220,000		2.32% + 1.65%		3.97	%

			$	1,120,000	$	888,000				2.40	%

(a) Interest rate excludes amortization of deferred financing costs and facility fees, see notes below

On October 29, 2014, we amended and restated our bank facility we call the BAML Credit Facility, which has a total of $900 million available and is comprised of a revolver that we can borrow up to $500 million on, which we call the BAML Revolver and a term loan for $400 million that we call the BAML Term Loan. On August 26, 2013, we entered into a term loan we call the BMO Term Loan and borrowed $220 million. Additional information about these loans are in the footnotes to our financial statements. Pricing is based on our credit rating for the BAML Revolver, BAML Term Loan and the BMO Term Loan. Our credit rating as of December 31, 2014 was Baa3 from Moody’s.

•

The BAML Revolver is priced based on our current credit rating at a spread of 1.25%, which was an interest rate of 1.41% as of December 31, 2014. The BAML Revolver is also subject to a facility fee based on our credit rating, which was 25 bps or approximately $1.25 million per year at December 31, 2014.

•

The BAML Term Loan has LIBOR fixed at 0.75% for five years. At our current credit rating the spread for the BAML Term Loan is 1.45%, so our interest rate is 2.20% as of December 31, 2014.

•

The BMO Term Loan has fixed LIBOR at 2.32% for seven years. At our current credit rating the spread over LIBOR is 1.65%, so our interest rate is 3.97% as December 31, 2014.

•

We incurred financing costs to close the BAML Revolver, BAML Term Loan and the credit facilities that preceded them. We also incurred financing costs to close the BMO Term Loan. These costs are deferred and amortized into interest expense during the terms of the loans. The annual run rate for amortization to interest expense from deferred financing costs is approximately $2.1 million.

•

The BAML Revolver can be extended for 1 year at the Company’s option upon payment of fees and includes an accordion feature that allows for up to $250 million of additional borrowing capacity. The BMO Term Loan includes an accordion feature that allows for up to $50 million of additional borrowing capacity. The accordion features are subject to receipt of lender commitments and satisfaction of certain customary conditions.

December 31, 2014

Capital Analysis
(in thousands, except per share amounts)


	31-Mar-14			30-Jun-14			30-Sep-14			31-Dec-14			31-Mar-13			30-Jun-13			30-Sep-13			31-Dec-13
Market Data:
Shares Outstanding		100,187			100,187			100,187			100,187			82,937			100,187			100,187			100,187
Closing market price per share	$	12.60		$	12.58		$	11.22		$	12.27		$	14.62		$	13.20		$	12.74		$	11.95
Market capitalization	$	1,262,361		$	1,260,358		$	1,124,103		$	1,229,299		$	1,212,545		$	1,322,474		$	1,276,388		$	1,197,239
Total Debt		936,500			916,500			905,000			888,000			621,750			581,500			951,500			926,500
Total Market Capitalization	$	2,198,861		$	2,176,858		$	2,029,103		$	2,117,299		$	1,834,295		$	1,903,974		$	2,227,888		$	2,123,739

Dividend Data:
Total dividends paid	$	19,036		$	19,035		$	19,036		$	19,036		$	15,758		$	15,758		$	19,036		$	19,036
Common dividend per share	$	0.19		$	0.19		$	0.19		$	0.19		$	0.19		$	0.19		$	0.19		$	0.19
Quarterly dividend as a % of FFO*		65.5	%		67.9	%		67.9	%		70.4	%		73.1	%		76.0	%		67.9	%		65.5	%

Liquidity:
Cash and cash equivalents	$	20,031		$	18,455		$	15,930		$	7,519		$	17,282		$	24,962		$	25,539		$	19,623
Revolving credit facilities:
Gross potential available under the BAML Credit Facility		900,000			900,000			900,000			900,000			900,000			900,000			900,000			900,000
Less:
Outstanding balance		(716,500	)		(696,500	)		(685,000	)		(668,000	)		(621,750	)		(581,500	)		(731,500	)		(706,500	)
Total Liquidity	$	203,531		$	221,955		$	230,930		$	239,519		$	295,532		$	343,462		$	194,039		$	213,123

*See page 9 for a reconciliation of Net Income to FFO and the Appendix for Definitions of Non-GAAP Measures beginning on page 27.

December 31, 2014

Portfolio Overview

	As of the Quarter Ended
	31-Dec-14	30-Sep-14	30-Jun-14	31-Mar-14	31-Dec-13
Owned portfolio of commercial real estate:
Number of properties	38	39	39	39	39
Square feet	9,580,057	9,690,361	9,686,215	9,686,055	9,685,285
Leased percentage	92.8%	93.3%	94.1%	94.5%	94.1%


Investments in non-consolidated commercial real estate:
Number of properties	2	2	2	2	2
Square feet	1,395,780	1,395,500	1,395,500	1,395,500	1,395,500
Leased percentage	71.3%	71.0%	65.5%	64.0%	64.1%

Single Asset REITs (SARs) managed:
Number of properties	8	9	11	12	12
Square feet	1,897,801	2,036,572	2,687,775	3,067,199	3,067,199
Leased percentage	84.7%	86.6%	89.1%	87.4%	87.4%

Total owned (a) , investments
and managed properties:
Number of properties	48	50	52	53	53
Square feet	12,873,638	13,122,433	13,769,490	14,148,754	14,147,984
Leased percentage	89.3%	89.9%	90.2%	90.0%	89.7%

December 31, 2014

Owned Portfolio Overview

			Square	Percent	Wtd Ave (a)	GAAP (b)
MSA / Property Name	City	State	Feet	Leased	Occupied	Rent

East Region

Baltimore
East Baltimore	Baltimore	MD	325,445	81.9%	78.7%	$ 23.35

Washington, D.C.
Meadow Point	Chantilly	VA	138,537	92.6%	92.6%	$ 27.47
Stonecroft	Chantilly	VA	111,469	100.0%	100.0%	$ 38.46
Loudoun Tech Center	Dulles	VA	136,658	92.0%	97.3%	$ 16.17

Richmond
Innsbrook	Glen Allen	VA	298,456	99.9%	99.9%	$ 18.28

Charlotte
Park Seneca	Charlotte	NC	109,674	92.1%	85.2%	$ 15.43
Forest Park	Charlotte	NC	62,212	100.0%	100.0%	$ 14.15

Raleigh-Durham
Emperor Boulevard	Durham	NC	259,531	100.0%	100.0%	$ 35.66

East Region Total			1,441,982	93.8%	93.1%	$ 24.56

Midwest Region

Chicago
Northwest Point	Elk Grove Village	IL	176,848	100.0%	100.0%	$ 19.52
909 Davis Street	Evanston	IL	195,245	97.9%	97.9%	$ 35.70

Indianapolis
River Crossing	Indianapolis	IN	205,059	100.0%	98.2%	$ 23.08

St. Louis
Timberlake	Chesterfield	MO	232,766	98.3%	98.3%	$ 21.32
Timberlake East	Chesterfield	MO	116,197	91.0%	91.0%	$ 23.51
Lakeside Crossing	Maryland Heights	MO	127,778	100.0%	100.0%	$ 26.10

Minneapolis
Eden Bluff	Eden Prairie	MN	153,028	100.0%	100.0%	$ 27.73
121 South 8th Street	Minneapolis	MN	475,012	91.2%	90.3%	$ 15.00

Midwest Region Total			1,681,933	96.4%	96.0%	$ 22.50

(a) Weighted Occupied Percentage for the year ended December 31, 2014

(b) Weighted Average GAAP Rent per Occupied Square Foot

December 31, 2014

Owned Portfolio Overview

				Percent	Wtd Ave (a)	GAAP (b)
MSA / Property Name	City	State	Square Feet	Leased	Occupied	Rent

South Region

Dallas-Fort Worth
Willow Bend Office Center	Plano	TX	117,050	100.0%	98.7%	$ 20.89
Legacy Tennyson Center	Plano	TX	202,600	100.0%	100.0%	$ 17.59
One Legacy Circle	Plano	TX	214,110	100.0%	100.0%	$ 33.10
Addison Circle	Addison	TX	293,926	89.6%	92.6%	$ 24.47
Collins Crossing	Richardson	TX	300,472	99.5%	99.1%	$ 24.59
Liberty Plaza	Addison	TX	218,934	90.6%	93.8%	$ 20.63

Houston
Park Ten	Houston	TX	157,460	63.1%	82.6%	$ 29.64
Eldridge Green	Houston	TX	248,399	100.0%	100.0%	$ 31.23
Park Ten Phase II	Houston	TX	156,746	100.0%	100.0%	$ 31.15
Westchase I & II	Houston	TX	629,025	97.7%	96.9%	$ 32.82

Miami-Ft. Lauderdale-West Palm Beach
Blue Lagoon Drive	Miami	FL	212,619	100.0%	100.0%	$ 23.19

Atlanta
One Overton Place	Atlanta	GA	387,267	86.3%	96.8%	$ 23.38
One Ravinia	Atlanta	GA	386,603	95.2%	92.1%	$ 23.04
999 Peachtree	Houston	TX	621,946	97.7%	93.6%	$ 29.23
South Region Total			4,147,157	94.9%	95.9%	$ 26.82

West Region

Seattle
Federal Way	Federal Way	WA	117,010	57.1%	54.7%	$ 18.46

San Francisco-San Jose-Oakland
Hillview Center	Milpitas	CA	36,288	100.0%	100.0%	$ 16.10
Montague Business Center	San Jose	CA	145,951	81.1%	89.0%	$ 16.12

Denver
380 Interlocken	Broomfield	CO	240,185	95.8%	92.6%	$ 29.56
1999 Broadway	Denver	CO	676,379	88.9%	90.8%	$ 30.81
Greenwood Plaza	Englewood	CO	196,236	100.0%	100.0%	$ 23.65
390 Interlocken	Broomfield	CO	241,516	72.3%	70.0%	$ 27.50
1001 17th Street	Denver	CO	655,420	84.8%	85.0%	$ 31.78

West Region Total			2,308,985	85.7%	86.2%	$ 28.33

Total Owned			9,580,057	92.8%	93.1%	$ 26.04

(a) Weighted Occupied Percentage for the year ended December 31, 2014

(b) Weighted Average GAAP Rent per Occupied Square Foot

December 31, 2014

Managed Portfolio Overview

MSA / Property Name	City	State	Square Feet

Southeast Region

Columbia
1441 Main Street	Columbia	SC	264,857

Atlanta
Satellite Place	Duluth	GA	134,785

Southeast Region Total			399,642

Southwest Region

Houston
Energy Tower I	Houston	TX	325,797

Denver
385 Interlocken	Broomfield	CO	296,868

Southwest Region Total			622,665

Midwest Region

Chicago
East Wacker (a)	Chicago	IL	860,709

Indianapolis
Monument Circle	Indianapolis	IN	213,760

St. Louis
Lakeside Crossing II	Maryland Heights	MO	116,000

Kansas City
Grand Boulevard (b)	Kansas City	MO	535,071

Cincinnati
Centre Pointe V	West Chester	OH	135,936
Union Centre	West Chester	OH	409,798

Midwest Region Total			2,271,274

Total Managed			3,293,581

Total Owned & Managed			12,873,638

(a) FSP has a Preferred Share Interest of 43.7% in the entity that owns this property.

(b) FSP has a Preferred Share Interest of 27.0% in the entity that owns this property.

December 31, 2014

Tenants By Industry
(By Square Feet)

December 31, 2014

20 Largest Tenants with Annualized Rent and
Remaining Term (Owned Portfolio)

			Remaining	Aggregate	% of Aggregate		% of Aggregate
	Tenant	Number of	Lease Term	Leased	Leased	Annualized	Leased
	Name	Leases	in Months	Square Feet	Square Feet	Rent	Annualized Rent

1	TCF National Bank	2	12	263,111	2.8%	$ 2,937,400	1.3%
2	Quintiles Transnational Corp	1	51	259,531	2.7%	8,821,181	3.9%
3	CITGO Petroleum Corporation	1	86	248,399	2.6%	7,558,782	3.4%
4	Sutherland Asbill Brennan LLP	1	64	243,839	2.5%	7,352,253	3.3%
5	Newfield Exploration Company	1	86	234,495	2.4%	7,921,342	3.5%
6	US Government (a)	6	2, 8, 18, 41, 45, 69	224,427	2.3%	7,222,999	3.2%
7	Burger King Corporation	1	45	212,619	2.2%	5,217,670	2.3%
8	Denbury Onshore, LLC	2	55	202,600	2.1%	3,510,042	1.5%
9	RGA Reinsurance Company (b)	2	-	197,354	2.1%	4,304,802	1.9%
10	SunTrust Bank (c)	2	22, 81	182,888	1.9%	3,754,246	1.7%
11	Citicorp Credit Services, Inc	1	24	176,848	1.9%	3,689,049	1.6%
12	C.H. Robinson Worldwide, Inc	1	78	153,028	1.6%	4,221,068	1.9%
13	T-Mobile South, LLC dba T-Mobile	1	50	151,792	1.6%	3,588,227	1.6%
14	Houghton Mifflin Harcourt Publishing Company	1	27	150,050	1.6%	5,962,139	2.6%
15	Petrobras America, Inc.	1	59	144,813	1.5%	4,969,982	2.2%
16	Murphy Exploration & Production Company	1	28	144,677	1.5%	4,439,625	2.0%
17	Argo Data Resource Corporation	1	104	140,246	1.5%	3,741,362	1.7%
18	Monsanto Company	1	61	127,778	1.3%	3,282,617	1.5%
19	Federal National Mortgage Association	1	21	123,144	1.3%	2,678,382	1.2%
20	Vail Corp d/b/a Vail Resorts (d)	1	51, 99	122,232	1.3%	3,430,358	1.5%

			Total	3,703,871	38.7%	$ 98,603,524	43.8%

(a)

Includes 180,444 and 5,090 square feet which expire in 2018 & 2016, respectively. The remaining 38,893 square feet expire between 2015-2020.

(b)

Lease expired and tenants vacated on December 31, 2014. As of January 1, 2015, Kaiser Foundation Health Plan will become the 20th largest tenant with 120,979 square feet.

(c)

Includes 55,388 square feet which expires October 31, 2016. The remaining 127,500 square feet expires September 30, 2021.

(d)

Includes 38,293 square feet that expires March 31, 2019. The remaining 83,939 square feet expires March 31, 2023.

December 31, 2014

Leasing Activity
(Owned Portfolio)

	Year	Year	Year
	Ended	Ended	Ended
Leasing Activity	31-Dec-14	31-Dec-13	31-Dec-12
(in Square Feet - SF)
New leasing	149,000	267,000	315,740
Renewals	635,000	645,000	700,838
	784,000	912,000	1,016,578

Other information per SF
(Activity on a year-to-date basis)
GAAP Rents on leasing	$ 26.89	$ 23.33	$ 22.41
Weighted average lease term	6.25 Years	7.2 Years	5.1 Years

Increase over average GAAP
rents in prior year	11.8%	8.0%	1.5%

Average free rent	3 Months	3 Months	3 Months
Tenant Improvements	$ 16.40	$ 18.25	$ 12.26
Leasing Costs	$ 7.66	$ 8.48	$ 5.40

December 31, 2014

Lease Expirations by Square Feet
(Owned Portfolio)

Year	Total Square Feet	% of Square Feet

2015	710,649	7.4%
2016	962,093	10.0%
2017	1,059,927	11.1%
2018	944,323	9.9%
2019	1,606,640	16.8%
2020	771,151	8.1%
2021	933,499	9.7%
2022	903,231	9.4%
2023	359,567	3.8%
2024	243,257	2.5%
2025	286,792	3.0%
2026	109,992	1.1%
Vacant	688,936	7.2%

Total	9,580,057	100.0%

December 31, 2014

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

			Rentable			Annualized	Percentage
	Number of		Square			Rent	of Total Final
Year of	Leases		Footage		Annualized	Per Square	Annualized
Lease	Expiring		Subject to		Rent Under	Foot Under	Rent Under
Expiration	Within the		Expiring		Expiring	Expiring	Expiring	Cumulative
December 31,	Year		Leases		Leases (a)	Leases	Leases	Total
2015	110	(b)	710,649		17,647,630	24.83	7.8%	7.8%
2016	72		962,093		20,118,004	20.91	8.9%	16.7%
2017	75		1,059,927		29,480,637	27.81	13.1%	29.8%
2018	64		944,323		27,380,387	28.99	12.2%	42.0%
2019	57		1,606,640		42,132,132	26.22	18.7%	60.7%
2020	32		771,151		20,964,007	27.19	9.3%	70.0%
2021	20		933,499		22,261,544	23.85	9.9%	79.9%
2022	18		903,231		25,031,685	27.71	11.1%	91.0%
2023 and thereafter	27		999,608	(c)	20,204,027	20.21	9.0%	100.0%
	475		8,891,121		225,220,053	25.33	100.0%
Vacant SF as of 12/31/14			688,936
Total Portfolio Square Footage			9,580,057

(a)

Annualized rent represents the monthly rent, including tenant reimbursements, for each lease in effect at December 31, 2014 mulitplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(b)

Includes 24 leases that are month-to-month.

(c)

Includes 53,120 square feet that are non-revenue producing building amenities.

December 31, 2014

Capital Expenditures
(in thousands)

(in thousands)	For the Three Months Ended								Year ended
	31-Mar-14		30-Jun-14		30-Sep-14		31-Dec-14		31-Dec-14

Tenant improvements	$	1,132	$	1,837	$	2,612	$	4,244	$	9,825
Deferred leasing costs		1,080		2,786		577		1,405		5,848
Non-investment capex		364		1,621		700		851		3,536
Recurring Capital Expenditures		2,576		6,244		3,889		6,500		19,209
1st generation leasing		33		9		394		580		1,016
Investment capex		755		580		244		516		2,095
Total Capital Expenditures	$	3,364	$	6,833	$	4,527	$	7,596	$	22,320

	For the Three Months Ended:								Year ended
	31-Mar-13		30-Jun-13		30-Sep-13		31-Dec-13		31-Dec-13

Tenant improvements	$	1,724	$	5,094	$	4,594	$	2,993	$	14,405
Deferred leasing costs		2,812		909		3,821		1,498		9,040
Non-investment capex		482		707		498		1,179		2,866
Recurring Capital Expenditures		5,018		6,710		8,913		5,670		26,311
1st generation leasing		128		1,011		2		36		1,177
Investment capex		515		743		1,054		299		2,611
Total Capital Expenditures	$	5,661	$	8,464	$	9,969	$	6,005	$	30,099

December 31, 2014

Transaction Activity

Recent Acquisitions:					Purchase Price
	City	State	Square Feet	Date Acquired	(in thousands)
2013
1999 Broadway	Denver	CO	673,793	5/22/13	$ 183,000
999 Peachtree	Atlanta	GA	621,946	7/1/13	157,900
1001 17th Street	Denver	CO	655,420	8/28/13	217,000

2012
One Ravinia	Atlanta	GA	386,603	7/31/12	$ 52,750
Westchase	Houston	TX	629,025	11/1/12	154,750

2011
Emperor Boulevard	Durham	NC	259,531	3/4/11	75,800
Legacy Tennyson Center	Plano	TX	202,600	3/10/11	37,000
One Legacy Circle	Plano	TX	214,110	3/24/11	52,983
909 Davis	Evanston	IL	195,245	9/30/11	37,062
East Renner Road	Richardson	TX	122,300	10/6/11	11,282

Recent Dispositions:
					Net Sales	Gain (Loss)
	City	State	Square Feet	Date Sold	Proceeds	on Sale
					(in thousands)
2014
Centennial	Colorado Springs	CO	110,405	12/3/14	$ 15,500	$ 940
2013
East Renner Road	Richardson	TX	122,300	10/29/13	$ 12,300	$ 2,169

2012
Southfield	Southfield	MI	252,613	12/21/12	$ 293	$ (14,826)

2011
Fairview	Falls Church	VA	252,613	1/21/11	89,382	19,592
Bollman (a)	Savage	MD	98,745	6/24/11	7,408	2,346

(a) Industrial property. All other acquisitions and dispositions are office properties

December 31, 2014

Loan Portfolio of Secured Real Estate

(dollars in thousands)			Maximum	Amount			Interest
		Maturity	Amount	Drawn at	Interest	Draw	Rate at
Sponsored REIT	Location	Date	of Loan	31-Dec-14	Rate (1)	Fee (2)	31-Dec-14

Secured revolving lines of credit
FSP Satellite Place Corp.	Duluth, GA	31-Mar-15	$ 5,500	$ 5,500	L+4.4%	0.5%	4.55%
FSP 1441 Main Street Corp.	Columbia, SC	31-Mar-15	10,800	9,000	L+4.4%	0.5%	4.55%
FSP Energy Tower I Corp.	Houston, TX	3-Jul-15	20,000	8,600	L+5.0%	0.5%	5.15%

Secured construction loan
FSP 385 Interlocken
Development Corp.	Broomfield, CO	30-Apr-15	42,000	37,541	L+4.4%	n/a	4.55%

Mortgage loan secured by property
FSP Energy Tower I Corp. (3)	Houston, TX	3-Jul-15	33,000	33,000	6.41%	n/a	6.41%

			$ 111,300	$ 93,641

(1)

The interest rate is 30-day LIBOR rate plus the additional rate indicated, otherwise a fixed rate.

(2)

The draw fee is a percentage of each new advance, and is paid at the time of each new draw.

(3)

The loan has a secured fixed mortgage amount of $33,000,000, which was extended for one year from July 5, 2014 to July 3, 2015 and an extension fee of $108,900 was paid by the borrower to the Company.

December 31, 2014

Net Asset Value Components

(in thousands except per share data)
	As of
	31-Dec-14
Total Market Capitalization Values
Shares outstanding		100,187.4
Closing price, December 31st	$	12.27
Market capitalization	$	1,229,299
Debt		888,000
Total Market Capitalization		2,117,299


	3 Months
	Ended
NOI Components	31-Dec-14

Same Store NOI (1)	$	25,816
Acquisitions (1) (2)		9,078
Property NOI (1)		34,894
Full quarter adjustment (3)		—
Stabilized portfolio	$	34,894


Financial Statement Reconciliation:
Rental Revenue	$	61,022
Rental operating expenses		(16,334	)
Real estate taxes and insurance		(9,288	)
NOI on assets sold during the quarter		(207	)
Taxes (4)		(95	)
Management fees & other (5)		(204	)
Property NOI (1)	$	34,894

Assets:
Loans outstanding on secured RE	$	93,641
Investments in SARs (book basis)		78,611
Straight-line rent receivable		47,021
Asset held for sale		—
Cash and cash equivalents		7,519
Restricted cash		742
Tenant rent receivables		4,733
Prepaid expenses		1,475
Office computers and furniture		609
Other assets:
Deferred financing costs, net		7,637
Other assets: Derivative Market Value		3,020
Phoenix Tower Liquidating Trust (6)		4
Other assets		1,176
	$	246,188

Liabilities:
Debt	$	888,000
Accounts payable & accrued expenses		46,319
Tenant security deposits		4,248
Other liabilities: derivative liability		7,268
	$	945,835

Other information:

Leased SF to be FFO producing during 2015 (in 000's)		114

Straight-line rental revenue current quarter	$	699

Management fee income current quarter	$	202
Interest income from secured loans		1,263
Management fees and interest income from loans	$	1,465

FFO from non-consolidated REITs - Q3 2014 (7):
East Wacker	$	374
Grand Boulevard		134
Total	$	508

Footnotes to the components

(1)

See pages 11 & 29 for definitions and reconciliations

(2)

Includes NOI from 3 acquisitions 2013

(3)

Adjustment to reflect property NOI for a full quarter in the quarter acquired, if necessary

(4)

HB3 Tax in Texas is classified as an income tax, though we treat it as a real estate tax in Property NOI

(5)

Management & other fees are eliminated in consolidation but included on Property NOI

(6)

Expected liquidating distribution from sale of equity interest (Collection within 2 years, subject to some expenses)

(7)

We report FFO from non-consolidated REITs for the previous quarter as their financial statements are not yet complete for the current quarter.

December 31, 2014

Appendix: Non-GAAP Financial Measure Definitions

Definition of Funds From Operations (“FFO”)

Other real estate companies and the National Association of Real Estate Investment Trusts, or NAREIT, may define this term in a different manner. We have included the NAREIT FFO definition in our table and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do.

December 31, 2014

Appendix: Non-GAAP Financial Measure Definitions

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

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

Definition of Property Net Operating Income (Property NOI)

The Company provides property performance based on Net Operating Income, which we refer to as NOI. Management believes that investors are interested in this information. NOI is a non-GAAP financial measure that the Company defines as net income (the most directly comparable GAAP financial measure) plus selling, 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, 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 both periods, which we call Same Store. The Comparative Same Store results include properties held for the periods presented and exclude 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 as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions.

December 31, 2014

Appendix: Non-GAAP Financial Measure Definitions

Definition of Adjusted Funds From Operations (AFFO)

The Company defines AFFO as the sum of (1) FFO; (2) excluding our proportionate share of FFO and including distributions received, from non-consolidated REITs; (3) excluding the effect of straight-line rent; (4) plus deferred financing costs, (5) less recurring capital expenditures that are generally for (a) 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 (determined in accordance with GAAP), 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 and cash flows from operating, investing and financing activities in the consolidated financial statements.

December 31, 2014

AFFO* Comparison

*Quarterly AFFO Per Share*
*New Definition*	Q1	Q2	Q3	Q4	Total
2014	$ 0.24	$ 0.21	$ 0.23	$ 0.20	$ 0.89
2013	$ 0.19	$ 0.16	$ 0.17	$ 0.22	$ 0.73

*Old Definition*	Q1	Q2	Q3	Q4	Total
2014	$ 0.24	$ 0.20	$ 0.23	$ 0.19	$ 0.85
2013	$ 0.18	$ 0.14	$ 0.16	$ 0.21	$ 0.69

Adjusted Funds From Operations (AFFO)*
New Definition	For the Year Ended
	December 31,
(in thousands):	2014			2013
Funds From Operations (FFO)*	$	112,462		$	100,833
Reverse FFO from non-consolidated REITs		(1,930	)		(2,148	)
Distributions from non-consolidated REITs		107			107
Amortization of deferred financing costs		2,002			1,813
Straight-line rent		(4,736	)		(5,783	)
Tenant improvements		(9,825	)		(14,405	)
Leasing commissions		(5,848	)		(9,040	)
Non-investment capex		(3,536	)		(2,866	)
Adjusted Funds From Operations (AFFO)*	$	88,696		$	68,511

Weighted Average Shares (basic and diluted)		100,187			93,855

AFFO Per Share	$	0.89		$	0.73

Old Definition	For the Year Ended
	December 31,
(in thousands):	2014			2013
Funds From Operations (FFO)*	$	112,462		$	100,833
Reverse FFO from non-consolidated REITs		(1,930	)		(2,148	)
Distributions from non-consolidated REITs		107			107
Amortization of deferred financing costs		2,002			1,813
Straight-line rent		(4,736	)		(5,783	)
Tenant improvements		(10,350	)		(15,071	)
Leasing commissions		(6,338	)		(9,257	)
Non-investment capex		(5,632	)		(5,771	)
Adjusted Funds From Operations (AFFO)*	$	85,585		$	64,723

Weighted Average Shares (basic and diluted)		100,187			93,855

AFFO Per Share	$	0.85		$	0.69

Note:

The new definition excludes 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.

*Please see the definition of FFO on page 27 and AFFO on page 29.

December 31, 2014

Investor Relations Contact

(877) 686-9496

InvestorRelations@franklinstreetproperties.com

Franklin Street Properties Corp. ● 401 Edgewater Place ● Wakefield, MA 01880 ● (781) 557-1300

www.franklinstreetproperties.com

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