FSP Franklin Street Properties Corp

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 $25.7 million or $0.26 per share for the first quarter ended March 31, 2015; and net income was $12.5 million or $0.13 per share for the first quarter ended March 31, 2015.

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 March 31,

(in 000's except pershare data)

2015

   

2014

 

Increase(Decrease)

  Net Income $ 12,533 $ 3,573   $ 8,960     FFO $ 25,672 $ 28,779   $ (3,107 ) Per Share Data: EPS $ 0.13 $ 0.04 $ 0.09 FFO $ 0.26 $ 0.29 $ (0.03 )   Weighted average shares (diluted)   100,187   100,187     -  

Comparing results for the first quarter of 2015 to the same period in 2014, FFO decreased $3.1 million or $0.03 per share to $25.7 million or $0.26 per share in 2015. The FFO decrease was primarily from lower property income as a result of asset sales and loan repayments achieved in the last twelve months and from lower occupancy, which were partially offset by lower interest expense for the quarter as we used proceeds to repay debt. Interest expense was also lower as a result of lower spreads on our revolving line of credit that was amended on October 29, 2014. We achieved a $10.5 million gain on the sale of two properties in the first quarter of 2015. Net Income and EPS was $12.5 million or $0.13 per share for the first quarter of 2015 compared to a net income of $3.6 million or $0.04 per share for the first quarter of 2014.

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

“For the first quarter of 2015, FSP’s profits as represented by FFO totaled approximately $25.7 million or $0.26 per share. Our directly owned real estate portfolio of 36 properties totaling approximately 9.3 million square feet was 90.4% leased as of March 31, 2015. We are maintaining our full-year 2015 FFO guidance range of $1.03 to $1.08 per share.

During the first quarter of 2015 we completed the disposition of a property known as Willow Bend located in Plano, Texas for approximately $20.8 million, and a property known as Eden Bluff located in Eden Prairie, Minnesota for approximately $28.0 million. A total gain of $10.5 million was realized as a result of the sale of these properties. Willow Bend is a two-story suburban office property with approximately 117,050 square feet and is a suburban office property that had been owned by FSP or an FSP affiliate for over fifteen years. Eden Bluff is a one story, flex, single-tenant, suburban office property with approximately 153,028 square feet that was owned by FSP for approximately five and one-half years. In December 2014, we also sold a property known as Centennial located in Colorado Springs, Colorado for approximately $15.5 million. The sale proceeds from these dispositions were not re-invested during the first quarter of 2015.

However, on April 8, 2015, we completed the acquisition of a property known as Two Ravinia in the greater Atlanta, Georgia market for $78 million, effectively fully re-investing proceeds from the Centennial, Willow Bend, and Eden Bluff dispositions.

Two Ravinia is a 17-story, class “A” multi-tenant office tower with approximately 442,130 rentable square feet of space that is located in the Central Perimeter Submarket of Atlanta, Georgia. The newly acquired property is directly adjacent to our existing 386,603 square foot office tower known as One Ravinia, which we have owned since July 31, 2012. Two Ravinia is currently 80.5% leased, with in place rents that we believe average approximately 25% below today’s current market asking rates. We anticipate planned building capital investments at Two Ravinia (excluding leasing costs) of approximately $4.8 million over the next three to four years.

We continue to actively pursue further potential dispositions of other suburban office assets that we believe are no longer core to our long-term strategy of acquiring larger, multi-tenant, urban infill, CBD or town-center office properties. We believe selective acquisitions of this profile will provide shareholders with better risk/reward adjusted returns over an extended slow growth period in the U.S. business cycle. Potential target acquisition opportunities are primarily being pursued in our five core markets of Atlanta, Dallas, Denver, Houston and Minneapolis. Along with our existing property portfolio’s ongoing leasing activity, we believe the results, size, timing and execution of our current capital recycling efforts will meaningfully affect value-creation and results for full year 2015 and beyond.

We remain very positive about our prospects and opportunities.”

Dividend Update

On April 10, 2015, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended March 31, 2015 of $0.19 per share of common stock that will be paid on May 14, 2015 to stockholders of record on April 24, 2015.

FFO Guidance

Our full year FFO guidance for 2015 continues to be maintained 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 March 31, 2015. 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.

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 March 31, (In thousands, except per share amounts)

2015

     

2014

  Net income $ 12,533 $ 3,573 Gain on sale of assets, less applicable income tax (10,462 ) - GAAP loss from non-consolidated REITs 322 484 FFO from non-consolidated REITs 601 419 Depreciation & amortization   22,678           24,289 NAREIT FFO 25,672 28,765 Acquisition costs of new properties   -           14 Funds From Operations (FFO) $ 25,672         $ 28,779   Per Share Data EPS $ 0.13 $ 0.04 FFO $ 0.26 $ 0.29   Weighted average shares (basic and diluted)   100,187           100,187

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 April 29, 2015 at 10:00 a.m. (ET) to discuss the first quarter 2015 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.

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      

Franklin Street Properties Corp. Financial Results

Supplementary Schedule A

Condensed Consolidated Income (Loss) Statements

(Unaudited)

          For the

Three Months Ended

March 31,

(in thousands, except per share amounts)       2015       2014       Revenue: Rental $ 59,013 $ 61,597 Related party revenue: Management fees and interest income from loans 1,473 1,643 Other         21           23   Total revenue         60,507           63,263     Expenses: Real estate operating expenses 15,356 15,071 Real estate taxes and insurance 10,048 9,251 Depreciation and amortization 22,672 24,300 Selling, general and administrative 3,691 3,272 Interest         6,187           7,176     Total expenses         57,954           59,070     Income before interest income, equity in losses of non-consolidated REITs and taxes 2,553 4,193 Interest income 1 1 Equity in losses of non-consolidated REITs (322 ) (484 ) Gain on sale of properties, less applicable income tax         10,462           -     Income before taxes on income 12,694 3,710 Taxes on income         161           137     Net income       $ 12,533         $ 3,573     Weighted average number of shares outstanding, basic and diluted         100,187           100,187       Net income per share, basic and diluted       $ 0.13         $ 0.04                

Franklin Street Properties Corp. Financial Results

Supplementary Schedule B

Condensed Consolidated Balance Sheets

(Unaudited)

  March 31, December 31, (in thousands, except share and par value amounts)         2015       2014 Assets: Real estate assets: Land $ 174,707 $ 183,930 Buildings and improvements 1,581,524 1,604,984 Fixtures and equipment           1,724           1,677   1,757,955 1,790,591 Less accumulated depreciation           271,058           266,284   Real estate assets, net 1,486,897 1,524,307 Acquired real estate leases, less accumulated amortization of $105,045 and $101,838, respectively 124,337 138,714 Investment in non-consolidated REITs 78,228 78,611 Cash and cash equivalents 14,945 7,519 Restricted cash 56 742 Tenant rent receivables, less allowance for doubtful accounts of $330 and $325, respectively 4,587 4,733 Straight-line rent receivable, less allowance for doubtful accounts of $162 and $162, respectively 45,498 47,021 Prepaid expenses and other assets 13,526 10,292 Related party mortgage loan receivables 93,641 93,641 Other assets: derivative asset 774 3,020 Office computers and furniture, net of accumulated depreciation of $1,109 and $1,036, respectively 588 609 Deferred leasing commissions, net of accumulated amortization of $17,429 and $16,944, respectively           26,335           27,181   Total assets         $ 1,889,412         $ 1,936,390     Liabilities and Stockholders’ Equity: Liabilities: Bank note payable $ 240,000 $ 268,000 Term loans payable 620,000 620,000 Accounts payable and accrued expenses 36,065 42,561 Accrued compensation 1,241 3,758 Tenant security deposits 4,019 4,248 Other liabilities: derivative liability 9,836 7,268 Acquired unfavorable real estate leases, less accumulated amortization of $9,218 and $8,687, respectively           9,921           10,908   Total liabilities           921,082           956,743     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 loss (9,062 ) (4,248 ) Accumulated distributions in excess of accumulated earnings           (296,174 )         (289,671 ) Total stockholders’ equity           968,330           979,647   Total liabilities and stockholders’ equity         $ 1,889,412         $ 1,936,390        

Franklin Street Properties Corp. Financial Results

Supplementary Schedule C

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

For the Three Months EndedMarch 31,

(in thousands)       2015       2014 Cash flows from operating activities:       Net income $ 12,533 $ 3,573 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 23,189 24,797 Amortization of above market lease 6 (11 ) Equity in losses of non-consolidated REITs 322 484 Gain on sale of properties, less applicable income tax (10,462 ) - Changes in operating assets and liabilities: Restricted cash 686 (45 ) Tenant rent receivables 146 (933 ) Straight-line rents (69 ) (1,784 ) Lease acquisition costs (3 ) (347 ) Prepaid expenses and other assets 283 800 Accounts payable, accrued expenses and other items (7,706 ) (7,257 ) Accrued compensation (2,517 ) (1,958 ) Tenant security deposits (230 ) 231 Payment of deferred leasing commissions         (1,116 )         (1,113 ) Net cash provided by operating activities         15,062           16,437   Cash flows from investing activities: Property acquisitions Property improvements, fixtures and equipment (4,298 ) (4,850 ) Distributions in excess of earnings from non-consolidated REITs 27 27 Investment in related party mortgage loan receivable - (2,170 ) Proceeds received on sales of real estate assets 47,671 - Changes in deposits on real estate assets         (4,000 )         -   Net cash provided by (used in) investing activities         39,400           (6,993 ) Cash flows from financing activities: Distributions to stockholders (19,036 ) (19,036 ) Borrowings under bank note payable 20,000 10,000 Repayments of bank note payable         (48,000 )         -   Net cash used in financing activities         (47,036 )         (9,036 ) Net increase in cash and cash equivalents 7,426 408 Cash and cash equivalents, beginning of year         7,519           19,623   Cash and cash equivalents, end of year       $ 14,945         $ 20,031    

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 349,621 3.8% 2016 1,005,893 10.8% 2017 1,039,874 11.2% 2018 934,962 10.0% 2019 1,566,112 16.8% Thereafter (2) 4,413,669 47.4% 9,310,131 100.0%   (1)       Percentages are determined based upon square footage of expiring commercial leases. (2) Includes 897,321 square feet of current vacancies. (dollars & square feet in 000's) As of March 31, 2015 # of         % of     Square     % of State

Properties

Investment

Portfolio

Feet

Portfolio

  Texas 9 $ 373,025 25.1 % 2,422 26.0 % Colorado 5 433,900 29.2 % 2,010 21.6 % Georgia 3 221,523 14.9 % 1,396 15.0 % Virginia 4 96,087 6.5 % 685 7.4 % Minnesota 1 29,865 2.0 % 475 5.1 % Missouri 3 61,609 4.1 % 477 5.1 % North Carolina 3 63,212 4.2 % 431 4.6 % Illinois 2 45,833 3.1 % 372 4.0 % Maryland 1 52,465 3.5 % 325 3.5 % Florida 1 42,729 2.9 % 213 2.3 % Indiana 1 32,573 2.2 % 205 2.2 % California 2 20,313 1.4 % 182 2.0 % Washington 1       13,763     0.9 % 117     1.2 % 36     $ 1,486,897     100.0 % 9,310     100.0 %

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule E

Portfolio and Other Supplementary Information

(Unaudited & Approximated)

            Recurring Capital Expenditures Owned Portfolio Three Months (in thousands) Ended

31-Mar-15

  Tenant improvements $ 2,936 Deferred leasing costs 830 Non-investment capex   643 $ 4,409   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 Square foot & leased percentages March 31,   December 31,   2015 2014   Owned portfolio of commercial real estate Number of properties 36 38 Square feet 9,310,131 9,580,057 Leased percentage 90.4% 92.8%   Investments in non-consolidated REITs Number of properties 2 2 Square feet 1,396,071 1,395,780 Leased percentage 70.1% 71.3%   Single Asset REITs (SARs) managed Number of properties 7 8 Square feet 1,488,003 1,897,801 Leased percentage 73.4% 84.7%   Total owned, investments & managed properties Number of properties 45 48 Square feet 12,194,205 12,873,638 Leased percentage 86.0% 89.3%  

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

            Square     % Leased     % Interest

Single Asset REIT name

City

State

Feet

31-Mar-15

Held

FSP 303 East Wacker Drive Corp. Chicago IL 861,000 59.6 % 43.7 % FSP Grand Boulevard Corp. Kansas City MO 535,071     86.9 % 27.0 % 1,396,071     70.1 %

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule F

Percentage of Leased Space

(Unaudited & Estimated)

                            Fourth First % Leased (1) Quarter % Leased (1) Quarter as of Average % as of Average %

Property Name

Location

Square Feet

31-Dec-14

Dec-14

31-Mar-15

Leased (2)

  1 PARK SENECA Charlotte, NC 109,699 92.1% 91.0% 91.9% 90.4% 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 MEADOW POINT Chantilly, VA 138,537 92.6% 92.6% 92.6% 92.6% 5 TIMBERLAKE Chesterfield, MO 232,766 98.3% 98.3% 43.8% 43.8% 6 FEDERAL WAY Federal Way, WA 117,010 57.1% 57.3% 57.1% 57.1% 7 NORTHWEST POINT Elk Grove Village, IL 176,848 100.0% 100.0% 100.0% 100.0% 8 TIMBERLAKE EAST Chesterfield, MO 116,197 91.0% 91.0% 43.1% 35.8% 9 PARK TEN Houston, TX 157,460 63.1% 68.8% 63.1% 63.1% 10 MONTAGUE San Jose, CA 145,951 81.1% 81.1% 81.1% 81.1% 11 ADDISON Addison, TX 294,053 89.6% 93.4% 86.2% 88.5% 12 COLLINS CROSSING Richardson, TX 300,472 99.5% 99.5% 99.5% 99.5% 13 GREENWOOD PLAZA Englewood, CO 196,236 100.0% 100.0% 100.0% 100.0% 14 RIVER CROSSING Indianapolis, IN 205,059 100.0% 99.7% 100.0% 100.0% 15 LIBERTY PLAZA Addison, TX 218,934 90.6% 93.2% 90.7% 90.5% 16 INNSBROOK Glen Allen, VA 298,456 99.9% 99.9% 99.9% 99.9% 17 380 INTERLOCKEN Broomfield, CO 240,185 95.8% 95.8% 95.8% 95.8% 18 BLUE LAGOON Miami, FLA 212,619 100.0% 100.0% 100.0% 100.0% 19 ELDRIDGE GREEN Houston, TX 248,399 100.0% 100.0% 100.0% 100.0% 20 WILLOW BEND Plano, TX - 100.0% 100.0%

Sold February 23, 2015

21 ONE OVERTON PARK Atlanta, GA 387,267 86.3% 90.7% 84.4% 84.4% 22 390 INTERLOCKEN Broomfield, CO 241,516 72.3% 72.0% 72.3% 72.3% 23 EAST BALTIMORE Baltimore, MD 325,445 81.9% 81.9% 81.3% 81.3% 24 PARK TEN PHASE II Houston, TX 156,746 100.0% 100.0% 100.0% 100.0% 25 LAKESIDE CROSSING I Maryland Heights, MO 127,778 100.0% 100.0% 100.0% 100.0% 26 LOUDOUN TECH Dulles, VA 136,658 92.0% 92.0% 92.0% 92.0% 27 4807 STONECROFT Chantilly, VA 111,469 100.0% 100.0% 100.0% 100.0% 28 EDEN BLUFF Eden Prairie, MN - 100.0% 100.0%

Sold March 31, 2015

29 121 SOUTH EIGHTH ST Minneapolis, MN 475,012 91.2% 90.9% 90.2% 90.6% 30 EMPEROR BOULEVARD Durham, NC 259,531 100.0% 100.0% 100.0% 100.0% 31 LEGACY TENNYSON CTR Plano, TX 202,600 100.0% 100.0% 100.0% 100.0% 32 ONE LEGACY Plano, TX 214,110 100.0% 100.0% 100.0% 100.0% 33 909 DAVIS Evanston, IL 195,245 97.9% 97.9% 97.9% 97.9% 34 ONE RAVINIA DRIVE Atlanta, GA 386,603 95.2% 94.7% 95.2% 95.2% 35 WESTCHASE I & II Houston, TX 629,025 97.7% 97.7% 97.1% 97.1% 36 1999 BROADWAY Denver, CO 676,379 88.9% 88.4% 87.7% 88.0% 37 999 PEACHTREE Atlanta, GA 621,946 97.7% 97.9% 98.2% 97.8% 38 1001 17th STREET Denver, CO 655,420 84.8% 82.3% 86.1% 85.7%                          

TOTAL WEIGHTED AVERAGE (3)

9,310,131     92.8%     93.0%     90.4%     90.4%   (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 Q4 include Willow Bend and Eden Bluff, which were sold in Q1 2015.

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 March 31, 2015 % of

Tenant

Sq Ft

Portfolio

1 TCF National Bank 263,111 2.8% 2 Quintiles Transnational Corp 259,531 2.8% 3 CITGO Petroleum Corporation 248,399 2.7% 4 Sutherland Asbill Brennan LLP (a) 243,839 2.6% 5 Newfield Exploration Company 234,495 2.5% 6 US Government (b) 221,270 2.4% 7 Burger King Corporation 212,619 2.3% 8 Denbury Onshore, LLC 202,600 2.1% 9 SunTrust Bank (c) 182,888 2.0% 10 Citicorp Credit Services, Inc 176,848 1.9% 11 T-Mobile South, LLC dba T-Mobile 151,792 1.6% 12 Houghton Mifflin Harcourt Publishing Company 150,050 1.6% 13 Petrobras America, Inc. 144,813 1.6% 14 Murphy Exploration & Production Company 144,677 1.6% 15 Argo Data Resource Corporation 140,246 1.5% 16 Monsanto Company 127,778 1.4% 17 Federal National Mortgage Association 123,144 1.3% 18 Vail Corp d/b/a Vail Resorts (d) 122,232 1.3% 19 Kaiser Foundation Health Plan 120,979 1.3% 20 Giesecke & Devrient America 112,110 1.2% Total 3,583,421 38.5%   (a) Includes 222,422 expiring in 2020 and 21,417 expiring April 30, 2015. (b) Includes 180,444 and 27,398 square feet which expire in 2018 & 2017, respectively. The remaining 13,428 square feet expire between 2015 - 2020. (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.

Franklin Street Properties Corp. Earnings ReleaseSupplementary Schedule HDefinition 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.

Franklin Street Properties Corp.John Demeritt, 877-686-9496