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):  October 27, 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):

 

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

 

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

 

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

 

o                                    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 October 27, 2015, Franklin Street Properties Corp. (the “Registrant”) announced its financial results for the three and nine months ended September 30, 2015.  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.

 

2


 

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: October 27, 2015

By:

/s/ George J. Carter

 

 

George J. Carter

 

 

President and Chief Executive Officer

 

3


 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release issued by Franklin Street Properties Corp. on October 27, 2015.

 

 

 

99.2

 

Supplemental Operating and Financial Data for the three and nine months ended September 30, 2015.

 

4



Exhibit 99.1

 

PRESS RELEASE

Franklin Street Properties Corp.

401 Edgewater Place · Suite 200 · Wakefield, Massachusetts 01880 · (781) 557-1300 · www.franklinstreetproperties.com

Contact: Georgia Touma (877) 686-9496

For Immediate Release

 

Franklin Street Properties Corp. Announces

Third Quarter 2015 Results

 

Wakefield, MA—October 27, 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 $27.0 million or $0.27 per share for the third quarter ended September 30, 2015; and net income of $3.2 million or $0.03 per share for the third quarter ended September 30, 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 September 30,

 

Nine Months Ended September 30,

 

(in 000’s except per
share data)

 

2015

 

 

2014

 

 

Increase
(Decrease)

 

2015

 

2014

 

 

Increase
(Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

3,166

 

 

$

1,567

 

 

$

1,599

 

$

19,602

 

$

8,853

 

 

$

10,749

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

26,954

 

 

$

27,904

 

 

$

(950

)

$

79,814

 

$

84,937

 

 

$

(5,123

)

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS

 

$

0.03

 

 

$

0.02

 

 

$

0.01

 

$

0.20

 

$

0.09

 

 

$

0.11

 

FFO

 

$

0.27

 

 

$

0.28

 

 

$

(0.01

)

$

0.80

 

$

0.85

 

 

$

(0.05

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares (diluted)

 

100,187

 

 

100,187

 

 

—

 

100,187

 

100,187

 

 

—

 

 

Comparing results for the third quarter of 2015 to the same period in 2014, FFO decreased $0.9 million or $0.01 per share to $27.0 million or $0.27 per share in 2015.  The FFO decrease was primarily from lower property income as a result of asset sales, loan repayments achieved in the last twelve months and lower occupancy, which was partially offset as a result of the acquisition of a property on April 8, 2015.  Net Income and EPS was $3.2 million and $0.03 per share for the third quarter of 2015, respectively, compared to a net income of $1.6 million and EPS of $0.02 per share for the third quarter of 2014.

 

Comparing results for the nine months ended September 30, 2015 to the same period in 2014, FFO decreased $5.1 million or $0.05 per share to $79.8 million or $0.80 per share.  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 was partially offset as a result of the acquisition of a property on April 8, 2015.  We recorded an $11.4 million gain on the sale of three properties during the nine months ended September 30, 2015.  Net Income and EPS was $19.6 million and $0.20 per share for the nine months ended September 30, 2015, respectively, compared to Net Income of $8.9 million or $0.09 per share for the nine months ended September 30, 2014.

 

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

 

“For the third quarter of 2015, FSP’s profits as represented by FFO totaled approximately $27.0 million, or $0.27 per share.  Our directly owned real estate portfolio of 36 properties totaling approximately 9.6 million square feet was 90.5% leased as of September 30, 2015.  We are updating our full-year 2015 FFO guidance to the range of $1.05 to $1.07 per share.

 


 

FSP continued efforts to transform its portfolio into one characterized by urban-infill assets within our top five core markets of Atlanta, Dallas, Denver, Houston and Minneapolis.  To that end, we remain focused on our strategy of disposing of non-core assets throughout the portfolio with emphasis on selling suburban commodity/legacy assets both inside and outside of our five core markets.  FSP is actively working on a number of potential dispositions and potential loan repayment transactions which, if consummated, would slightly expand our total potential disposition/loan repayment guidance range to between $150 and $225 million, including the approximately $57 million achieved so far this year.  A number of these in-process dispositions are still subject to their respective due diligence inspection periods and/or other transaction specific uncertainties, and so execution risks remain.  The timing of potential dispositions/loan repayments could spill into 2016 and we will keep the market informed as transaction clarity emerges.

 

Balancing the timing of potential new acquisition/development opportunities with potential dispositions continues to be challenging.  Repositioning our portfolio without incurring bridge financing indebtedness, which we believe would raise our corporate risk profile above levels that we are comfortable with, continues to be a significant timing exercise in our capital recycling efforts.  Currently, we have a pipeline of potential acquisitions that are receiving our full focus.  Our prior potential acquisition guidance had been between $150 and $300 million and we are maintaining that guidance at this time.  We will continue to manage disposition timing as best as possible to match-fund against new potential acquisitions.  New acquisitions may occur prior to year-end or spill into the new-year. We will keep the market informed as transaction clarity emerges.

 

Additionally, we have made progress on a redevelopment plan for our CBD Minneapolis, Minnesota property located at 801 Marquette Avenue. Although subject to change, FSP currently contemplates co-developing an approximately 50-story, mixed-use tower that would include a full-service hotel, residential apartments and office space. Under the current plan, FSP would contribute the land and approximately $80 to $90 million in additional capital costs for 100% ownership of the office portion of the project, which is tentatively slated to be approximately 260,000 rentable square feet in the middle of the tower stack. FSP is working with a residential group and hotel company to further evaluate the project. Final costing and development agreements have yet to be concluded and are fully subject to change and/or cancellation. If successful in the costing and pre-development work ahead, we intend to break ground on the project sometime during the second half of 2016. Significant thought and design are being incorporated into the redevelopment of 801 Marquette Avenue in order to integrate it with and enhance the appeal of its next-door neighbor office building, FSP’s tower at 121 South Eighth Street.

 

We remain very positive about our prospects and opportunities for the balance of the current year and 2016.”

 

Dividend Update

 

On October 9, 2015, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended September 30, 2015 of $0.19 per share of common stock that will be paid on November 12, 2015 to stockholders of record on October 23, 2015.

 

FFO Guidance

 

Our full year FFO guidance for 2015 has been updated to be in the range of $1.05 to $1.07 per diluted share.  This guidance (a) excludes the impact of future acquisitions, developments, 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.

 

2


 

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 September 30, 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

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

(In thousands, except per share amounts)

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

3,166

 

$

1,567

 

$

19,602

 

$

8,853

 

Gain on sale of assets, less applicable income tax

 

(1

)

—

 

(11,411

)

—

 

GAAP loss from non-consolidated REITs

 

284

 

455

 

644

 

1,491

 

FFO from non-consolidated REITs

 

645

 

508

 

2,131

 

1,278

 

Depreciation & amortization

 

22,848

 

25,374

 

68,694

 

73,301

 

NAREIT FFO

 

26,942

 

27,904

 

79,660

 

84,923

 

Acquisition costs of new properties

 

12

 

—

 

154

 

14

 

Funds From Operations (FFO)

 

$

26,954

 

$

27,904

 

$

79,814

 

$

84,937

 

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

 

 

EPS

 

$

0.03

 

$

0.02

 

$

0.20

 

$

0.09

 

FFO

 

$

0.27

 

$

0.28

 

$

0.80

 

$

0.85

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares (basic and diluted)

 

100,187

 

100,187

 

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 October 28, 2015 at 9:00 a.m. (ET) to discuss the third 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.

 

3


 

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

 

4


 

Franklin Street Properties Corp. Financial Results

Supplementary Schedule A

Condensed Consolidated Income (Loss) Statements

(Unaudited)

 

 

 

For the
Three Months Ended
September 30,

 

For the
Nine Months Ended
September 30,

 

(in thousands, except per share amounts)

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

Rental

 

$

60,386

 

$

59,728

 

$

178,200

 

$

182,319

 

Related party revenue:

 

 

 

 

 

 

 

 

 

Management fees and interest income from loans

 

1,470

 

1,462

 

4,355

 

4,776

 

Other

 

21

 

—

 

62

 

99

 

Total revenue

 

61,877

 

61,190

 

182,617

 

187,194

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Real estate operating expenses

 

15,951

 

15,632

 

45,951

 

45,698

 

Real estate taxes and insurance

 

9,941

 

8,555

 

29,458

 

27,569

 

Depreciation and amortization

 

22,911

 

24,878

 

68,790

 

72,741

 

Selling, general and administrative

 

3,071

 

3,071

 

10,163

 

9,491

 

Interest

 

6,425

 

6,883

 

18,977

 

20,950

 

Total expenses

 

58,299

 

59,019

 

173,339

 

176,449

 

 

 

 

 

 

 

 

 

 

 

Income before interest income, equity in losses of non-consolidated REITs and taxes

 

3,578

 

2,171

 

9,278

 

10,745

 

Interest income

 

—

 

—

 

1

 

2

 

Equity in losses of non-consolidated REITs

 

(284

)

(455

)

(644

)

(1,491

)

Gain on sale of properties, less applicable income tax

 

1

 

—

 

11,411

 

—

 

Income before taxes on income

 

3,295

 

1,716

 

20,046

 

9,256

 

Taxes on income

 

129

 

149

 

444

 

403

 

Net income

 

$

3,166

 

$

1,567

 

$

19,602

 

$

8,853

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding, basic and diluted

 

100,187

 

100,187

 

100,187

 

100,187

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic and diluted:

 

 

 

 

 

 

 

 

 

Net income per share, basic and diluted

 

$

0.03

 

$

0.02

 

$

0.20

 

$

0.09

 

 

5


 

Franklin Street Properties Corp. Financial Results

Supplementary Schedule B

Condensed Consolidated Balance Sheets

(Unaudited)

 

 

 

September 30,

 

December 31,

 

(in thousands, except share and par value amounts)

 

2015

 

2014

 

Assets:

 

 

 

 

 

Real estate assets:

 

 

 

 

 

Land

 

$

180,271

 

$

183,930

 

Buildings and improvements

 

1,639,869

 

1,604,984

 

Fixtures and equipment

 

1,882

 

1,677

 

 

 

1,822,022

 

1,790,591

 

Less accumulated depreciation

 

291,331

 

266,284

 

Real estate assets, net

 

1,530,691

 

1,524,307

 

Acquired real estate leases, less accumulated amortization of $116,711 and $101,838, respectively

 

117,272

 

138,714

 

Investment in non-consolidated REITs

 

77,853

 

78,611

 

Cash and cash equivalents

 

19,100

 

7,519

 

Restricted cash

 

34

 

742

 

Tenant rent receivables, less allowance for doubtful accounts of $200 and $325, respectively

 

3,548

 

4,733

 

Straight-line rent receivable, less allowance for doubtful accounts of $50 and $162, respectively

 

47,330

 

47,021

 

Prepaid expenses and other assets

 

9,773

 

10,292

 

Related party mortgage loan receivables

 

93,641

 

93,641

 

Other assets: derivative asset

 

—

 

3,020

 

Office computers and furniture, net of accumulated depreciation of $1,261 and $1,036, respectively

 

551

 

609

 

Deferred leasing commissions, net of accumulated amortization of $19,294 and $16,944, respectively

 

26,587

 

27,181

 

Total assets

 

$

1,926,380

 

$

1,936,390

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity:

 

 

 

 

 

Liabilities:

 

 

 

 

 

Bank note payable

 

$

300,000

 

$

268,000

 

Term loans payable

 

620,000

 

620,000

 

Accounts payable and accrued expenses

 

42,164

 

42,561

 

Accrued compensation

 

3,236

 

3,758

 

Tenant security deposits

 

4,349

 

4,248

 

Other liabilities: derivative liability

 

12,096

 

7,268

 

Acquired unfavorable real estate leases, less accumulated amortization of $10,504 and $8,687, respectively

 

10,241

 

10,908

 

Total liabilities

 

992,086

 

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

 

(12,096

)

(4,248

)

Accumulated distributions in excess of accumulated earnings

 

(327,176

)

(289,671

)

Total stockholders’ equity

 

934,294

 

979,647

 

Total liabilities and stockholders’ equity

 

$

1,926,380

 

$

1,936,390

 

 

6


 

Franklin Street Properties Corp. Financial Results

Supplementary Schedule C

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

For the
Nine Months Ended
September 30,

 

(in thousands)

 

2015

 

2014

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

19,602

 

$

8,853

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization expense

 

70,340

 

74,237

 

Amortization of above market lease

 

(96

)

560

 

Equity in losses of non-consolidated REITs

 

644

 

1,491

 

Gain on sale of properties, less applicable income tax

 

(11,411

)

—

 

Increase (decrease) in allowance for doubtful accounts

 

(125

)

125

 

Changes in operating assets and liabilities:

 

 

 

 

 

Restricted cash

 

708

 

(64

)

Tenant rent receivables

 

1,310

 

2,112

 

Straight-line rents

 

(1,573

)

(4,038

)

Lease acquisition costs

 

(463

)

(438

)

Prepaid expenses and other assets

 

(997

)

(106

)

Accounts payable, accrued expenses and other items

 

(603

)

(2,133

)

Accrued compensation

 

(522

)

(122

)

Tenant security deposits

 

101

 

304

 

Payment of deferred leasing commissions

 

(4,254

)

(4,854

)

Net cash provided by operating activities

 

72,661

 

75,927

 

Cash flows from investing activities:

 

 

 

 

 

Property acquisitions

 

(66,104

)

—

 

Acquired real estate leases

 

(10,604

)

—

 

Property improvements, fixtures and equipment

 

(15,005

)

(12,403

)

Distributions in excess of earnings from non-consolidated REITs

 

81

 

81

 

Repayment of related party mortgage loan receivable

 

—

 

13,880

 

Investment in related party mortgage loan receivable

 

—

 

(2,570

)

Proceeds received on sales of real estate assets

 

55,659

 

—

 

Net cash used in investing activities

 

(35,973

)

(1,012

)

Cash flows from financing activities:

 

 

 

 

 

Distributions to stockholders

 

(57,107

)

(57,108

)

Borrowings under bank note payable

 

95,000

 

10,000

 

Repayments of bank note payable

 

(63,000

)

(31,500

)

Net cash used in financing activities

 

(25,107

)

(78,608

)

Net increase in cash and cash equivalents

 

11,581

 

(3,693

)

Cash and cash equivalents, beginning of year

 

7,519

 

19,623

 

Cash and cash equivalents, end of period

 

$

19,100

 

$

15,930

 

 

7


 

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

 

69,019

 

0.7

%

2016

 

1,005,764

 

10.4

%

2017

 

1,119,778

 

11.6

%

2018

 

996,420

 

10.3

%

2019

 

1,473,328

 

15.3

%

Thereafter (2)

 

4,976,595

 

51.7

%

 

 

9,640,904

 

100.0

%

 

(1)         Percentages are determined based upon total square footage.

(2)         Includes 915,234 square feet of current vacancies.

 

(dollars & square feet in 000’s)

 

 

 

As of September 30, 2015

 

 

 

# of

 

 

 

% of

 

Square

 

% of

 

State

 

Properties

 

Investment

 

Portfolio

 

Feet

 

Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

Texas

 

9

 

$

367,987

 

24.0

%

2,418

 

25.1

%

Colorado

 

5

 

431,870

 

28.2

%

2,010

 

20.8

%

Georgia

 

4

 

285,408

 

18.6

%

1,838

 

19.1

%

Virginia

 

4

 

94,528

 

6.2

%

685

 

7.1

%

Minnesota

 

1

 

29,957

 

2.0

%

475

 

4.9

%

Missouri

 

3

 

60,626

 

4.0

%

478

 

5.0

%

North Carolina

 

2

 

55,570

 

3.6

%

322

 

3.3

%

Illinois

 

2

 

44,909

 

2.9

%

372

 

3.9

%

Maryland

 

1

 

51,553

 

3.4

%

326

 

3.4

%

Florida

 

1

 

42,266

 

2.8

%

213

 

2.2

%

Indiana

 

1

 

31,890

 

2.1

%

205

 

2.1

%

California

 

2

 

20,560

 

1.3

%

182

 

1.9

%

Washington

 

1

 

13,567

 

0.9

%

117

 

1.2

%

 

 

36

 

$

1,530,691

 

100.0

%

9,641

 

100.0

%

 

8


 

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule E

Portfolio and Other Supplementary Information

(Unaudited & Approximated)

 

Recurring Capital Expenditures

Owned Portfolio

 

 

 

 

 

 

 

 

 

For the Nine

 

 

 

 

 

For the Three Months Ended

 

Months Ended

 

 

 

(in thousands)

 

31-Mar-15

 

30-Jun-15

 

30-Sep-15

 

30-Sep-15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenant improvements

 

$

2,936

 

$

3,420

 

$

1,794

 

$

8,150

 

 

 

Deferred leasing costs

 

830

 

1,539

 

1,490

 

3,859

 

 

 

Non-investment capex

 

643

 

1,418

 

1,090

 

3,151

 

 

 

 

 

$

4,409

 

$

6,377

 

$

4,374

 

$

15,160

 

 

 

 

 

 

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

 

 

 

September 30,

 

December 31,

 

 

 

2015

 

2014

 

 

 

 

 

 

 

Owned portfolio of commercial real estate

 

 

 

 

 

Number of properties

 

36

 

38

 

Square feet

 

9,640,904

 

9,580,057

 

Leased percentage

 

90.5

%

92.8

%

 

 

 

 

 

 

Investments in non-consolidated REITs

 

 

 

 

 

Number of properties

 

2

 

2

 

Square feet

 

1,396,071

 

1,395,780

 

Leased percentage

 

71.2

%

71.3

%

 

 

 

 

 

 

Single Asset REITs (SARs) managed

 

 

 

 

 

Number of properties

 

7

 

8

 

Square feet

 

1,487,026

 

1,897,801

 

Leased percentage

 

77.0

%

84.7

%

 

 

 

 

 

 

Total owned, investments & managed properties

 

 

 

 

 

Number of properties

 

45

 

48

 

Square feet

 

12,524,001

 

12,873,638

 

Leased percentage

 

86.8

%

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

 

30-Sep-15

 

Held

 

FSP 303 East Wacker Drive Corp.

 

Chicago

 

IL

 

861,000

 

60.6

%

43.7

%

FSP Grand Boulevard Corp.

 

Kansas City

 

MO

 

535,071

 

88.4

%

27.0

%

 

 

 

 

 

 

1,396,071

 

71.2

%

 

 

 

9


 

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule F

Percentage of Leased Space

(Unaudited & Estimated)

 

 

 

 

 

 

 

 

 

 

 

Second

 

 

 

Third

 

 

 

 

 

 

 

 

 

% Leased (1)

 

Quarter

 

% Leased (1)

 

Quarter

 

 

 

 

 

 

 

 

 

as of

 

Average %

 

as of

 

Average %

 

 

 

Property Name

 

Location

 

Square Feet

 

30-Jun-15

 

Leased (2)

 

30-Sep-15

 

Leased (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

HILLVIEW CENTER

 

Milpitas, CA

 

36,288

 

100.0

%

100.0

%

100.0

%

100.0

%

2

 

FOREST PARK

 

Charlotte, NC

 

62,212

 

100.0

%

100.0

%

100.0

%

100.0

%

3

 

MEADOW POINT

 

Chantilly, VA

 

138,537

 

100.0

%

100.0

%

100.0

%

100.0

%

4

 

TIMBERLAKE

 

Chesterfield, MO

 

234,023

 

93.8

%

60.4

%

93.8

%

93.8

%

5

 

FEDERAL WAY

 

Federal Way, WA

 

117,010

 

58.9

%

58.9

%

58.9

%

58.9

%

6

 

NORTHWEST POINT

 

Elk Grove Village, IL

 

176,848

 

100.0

%

100.0

%

100.0

%

100.0

%

7

 

TIMBERLAKE EAST

 

Chesterfield, MO

 

116,197

 

43.7

%

43.5

%

43.7

%

43.7

%

8

 

PARK TEN

 

Houston, TX

 

157,460

 

63.1

%

63.1

%

63.1

%

63.1

%

9

 

MONTAGUE

 

San Jose, CA

 

145,951

 

81.1

%

81.1

%

81.1

%

81.1

%

10

 

ADDISON

 

Addison, TX

 

290,041

 

91.6

%

88.6

%

93.4

%

92.8

%

11

 

COLLINS CROSSING

 

Richardson, TX

 

300,887

 

100.0

%

99.7

%

100.0

%

100.0

%

12

 

GREENWOOD PLAZA

 

Englewood, CO

 

196,236

 

100.0

%

100.0

%

100.0

%

100.0

%

13

 

RIVER CROSSING

 

Indianapolis, IN

 

205,059

 

90.6

%

93.7

%

90.6

%

90.6

%

14

 

LIBERTY PLAZA

 

Addison, TX

 

218,934

 

84.2

%

86.3

%

82.5

%

82.5

%

15

 

INNSBROOK

 

Glen Allen, VA

 

298,456

 

99.9

%

99.9

%

99.9

%

99.9

%

16

 

380 INTERLOCKEN

 

Broomfield, CO

 

240,185

 

97.1

%

96.7

%

97.1

%

97.1

%

17

 

BLUE LAGOON

 

Miami, FLA

 

212,619

 

100.0

%

100.0

%

100.0

%

100.0

%

18

 

ELDRIDGE GREEN

 

Houston, TX

 

248,399

 

100.0

%

100.0

%

100.0

%

100.0

%

19

 

ONE OVERTON PARK

 

Atlanta, GA

 

387,267

 

84.5

%

83.8

%

85.0

%

84.5

%

20

 

390 INTERLOCKEN

 

Broomfield, CO

 

241,516

 

72.3

%

72.3

%

85.3

%

81.0

%

21

 

EAST BALTIMORE

 

Baltimore, MD

 

325,445

 

81.3

%

81.3

%

85.4

%

84.7

%

22

 

PARK TEN PHASE II

 

Houston, TX

 

156,746

 

100.0

%

100.0

%

100.0

%

100.0

%

23

 

LAKESIDE CROSSING I

 

Maryland Heights, MO

 

127,778

 

100.0

%

100.0

%

100.0

%

100.0

%

24

 

LOUDOUN TECH

 

Dulles, VA

 

136,658

 

92.0

%

92.0

%

92.0

%

92.0

%

25

 

4807 STONECROFT

 

Chantilly, VA

 

111,469

 

100.0

%

100.0

%

100.0

%

100.0

%

26

 

121 SOUTH EIGHTH ST

 

Minneapolis, MN

 

475,694

 

90.2

%

90.2

%

90.8

%

90.1

%

27

 

EMPEROR BOULEVARD

 

Durham, NC

 

259,531

 

100.0

%

100.0

%

100.0

%

100.0

%

28

 

LEGACY TENNYSON CTR

 

Plano, TX

 

202,600

 

100.0

%

100.0

%

100.0

%

100.0

%

29

 

ONE LEGACY

 

Plano, TX

 

214,110

 

100.0

%

100.0

%

100.0

%

100.0

%

30

 

909 DAVIS

 

Evanston, IL

 

195,245

 

100.0

%

99.7

%

100.0

%

100.0

%

31

 

ONE RAVINIA DRIVE

 

Atlanta, GA

 

386,603

 

95.2

%

95.2

%

94.8

%

94.8

%

32

 

TWO RAVINIA

 

Atlanta, GA

 

442,130

 

77.5

%

77.5

%

77.4

%

76.9

%

33

 

WESTCHASE I & II

 

Houston, TX

 

629,025

 

95.9

%

95.9

%

90.2

%

90.2

%

34

 

1999 BROADWAY

 

Denver, CO

 

676,379

 

86.2

%

86.7

%

82.5

%

85.1

%

35

 

999 PEACHTREE

 

Atlanta, GA

 

621,946

 

95.1

%

96.0

%

94.7

%

94.7

%

36

 

1001 17th STREET

 

Denver, CO

 

655,420

 

86.3

%

86.5

%

86.3

%

86.3

%

 

 

TOTAL WEIGHTED AVERAGE

 

 

 

9,640,904

 

90.6

%

89.9

%

90.5

%

90.5

%

 

(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.

 

10


 

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 total square feet:

 

 

 

As of September 30, 2015

 

 

 

 

 

 

 

 

 

 

 

 

% of

 

 

 

Tenant

 

Sq Ft

 

Portfolio

 

1

 

TCF National Bank

 

263,111

 

2.7

%

2

 

Quintiles Transnational Corp

 

259,531

 

2.7

%

3

 

CITGO Petroleum Corporation

 

248,399

 

2.6

%

4

 

Newfield Exploration Company

 

234,495

 

2.4

%

5

 

US Government

 

223,433

 

2.3

%

6

 

Sutherland Asbill Brennan LLP

 

222,422

 

2.3

%

7

 

Burger King Corporation

 

212,619

 

2.2

%

8

 

Denbury Onshore, LLC

 

202,600

 

2.1

%

9

 

SunTrust Bank

 

182,888

 

1.9

%

10

 

Citicorp Credit Services, Inc

 

176,848

 

1.8

%

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

 

1.5

%

14

 

Murphy Exploration & Production Company

 

144,677

 

1.5

%

15

 

Argo Data Resource Corporation

 

140,246

 

1.5

%

16

 

Monsanto Company

 

127,778

 

1.3

%

17

 

Federal National Mortgage Association

 

123,144

 

1.3

%

18

 

Vail Corp d/b/a Vail Resorts

 

122,232

 

1.3

%

19

 

Kaiser Foundation Health Plan

 

120,979

 

1.3

%

20

 

Centene Management Company, LLC

 

117,618

 

1.2

%

 

 

Total

 

3,569,675

 

37.1

%

 

11


 

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.

 

12



Exhibit 99.2

Supplemental Operating and Financial Data Third Quarter 2015 1001 17thStreet, Denver, CO 1300 www.franklinstreetproperties.com Franklin Street Properties Corp. 401 Edgewater Place Wakefield, MA 01880 (781)557-1300

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Table of Contents Page Page Company Overview 3 Tenant Analysis and Leasing Activity Tenants by Industry 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 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) 63 V 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) s63 V SEC reports. FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. 1001 17thStreet, Denver, CO September 30, 2015 2

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Company Overview Overview Snapshot (as of September 30, 2015) Franklin Street Properties Corp. ³)63 (NYSE MKT: FSP) is investing in Corporate Headquarters Wakefield, MA institutional-quality office properties in the U.S.)63 V strategy is to invest in select urban infill and central Fiscal Year-End 31-Dec business district (CBD) properties, with primary emphasis on our top five markets of Atlanta, Dallas, Denver, Total Properties 36 Houston, and Minneapolis. FSP seeks value-oriented investments with an eye towards long-term growth and Total Square Feet 9.6 Million appreciation, as well as current income. FSP is a Maryland corporation that operates in a manner intended to Trading Symbol FSP qualify as a real estate investment trust (REIT) for federal income tax purposes. )63 V real estate operations Exchange NYSE MKT include property acquisitions and dispositions, short-term financing, leasing, development and asset Common Shares Outstanding 100,187,405 management. Quarterly Dividend $0.19 Dividend Yield 7.1% Our Business Total Market Capitalization $2.0 Billion As of September 30, 2015, the Company owned and operated a portfolio of real estate consisting of 36 Insider Holdings 5.1% properties, managed 9 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 Secretary John G. Demeritt Jeffrey B. Carter Executive Vice President, Chief Executive Vice President and Financial Officer & Treasurer Chief Investment Officer Janet Notopoulos Eriel Anchondo Executive Vice President and Director Senior Vice President of Operations Inquiries Inquires should be directed to: Georgia Touma 877-686-9496 or InvestorRelations@franklinstreetproperties.com 999 Peachtree Street, Atlanta GA September 30, 2015 3

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Summary of Financial Highlights (in thousands except per share amounts, SF & number of properties) 30-Sep-15 30-Jun-15 31-Mar-15 31-Dec-14 30-Sep-14 Income Items: Rental revenue $ 60,386 $ 58,801 $ 59,013 $ 61,022 $ 59,728 Total revenue 61,877 60,233 60,507 62,489 61,190 Adjusted EBITDA* 32,567 32,642 31,097 33,182 33,973 Equity in losses of non-consolidated REITs (284) (38) (322) (269) (455) Net income 3,166 3,903 12,533 4,295 1,567 FFO* 26,954 27,188 25,672 27,525 27,904 Per Share Data: EPS $ 0.03 $ 0.04 $ 0.13 $ 0.04 $ 0.02 FFO* $ 0.27 $ 0.27 $ 0.26 $ 0.27 $ 0.28 Weighted Average Shares (diluted) 100,187 100,187 100,187 100,187 100,187 Closing share price $ 10.75 $ 11.31 $ 12.82 $ 12.27 $ 11.22 Dividend $ 0.19 $ 0.19 $ 0.19 $ 0.19 $ 0.19 Payout Ratio: 71% 70% 74% 69% 68% Balance Sheet Items: Real estate, net $ 1,530,691 $ 1,539,343 $ 1,486,897 $ 1,524,307 $ 1,542,012 Other assets, net 395,689 400,758 402,515 412,083 425,305 Total assets, net 1,926,380 1,940,101 1,889,412 1,936,390 1,967,317 Total liabilities, net 992,086 984,555 921,082 956,743 968,948 Shareholders' equity 934,294 955,546 968,330 979,647 998,369 Market Capitalization and Debt: Total Market Capitalization (a) $ 1,997,015 $ 2,053,120 $ 2,144,403 $ 2,117,299 $ 2,029,103 Total debt outstanding 920,000 920,000 860,000 888,000 905,000 Debt to Total Market Capitalization 46.1% 44.8% 40.1% 41.9% 44.6% Debt to Adjusted EBITDA 7.1 7.0 6.9 6.7 6.7 Owned Portfolio Leasing Statistics: Owned portfolio assets 36 36 36 38 39 Portfolio total SF 9,640,904 9,639,740 9,310,131 9,580,057 9,690,361 Portfolio % leased 90.5% 90.6% 90.4% 92.8% 93.3% (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. September 30, 2015 4

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Condensed Consolidated Income Statements ($ in thousands, except per share amounts) For the Nine For the For the Three Months Ended Months Ended For the Three Months Ended Year Ended 31-Mar-15 30-Jun-15 30-Sep-15 30-Sep-15 31-Mar-14 30-Jun-14 30-Sep-14 31-Dec-14 31-Dec-14 Revenue: Rental $ 59,013 $ 58,801 $ 60,386 $ 178,200 $ 61,597 $ 60,994 $ 59,728 $ 61,022 $ 243,341 Related party revenue: Management fees and interest income from loans 1,473 1,412 1,470 4,355 1,643 1,671 1,462 1,465 6,241 Other 21 20 21 62 23 76 - 2 101 Total revenue 60,507 60,233 61,877 182,617 63,263 62,741 61,190 62,489 249,683 Expenses: Real estate operating expenses 15,356 14,644 15,951 45,951 15,071 14,995 15,632 16,334 62,032 Real estate taxes and insurance 10,048 9,469 9,941 29,458 9,251 9,763 8,555 9,288 36,857 Depreciation and amortization 22,672 23,207 22,911 68,790 24,300 23,563 24,878 23,174 95,915 Selling, general and administrative 3,691 3,401 3,071 10,163 3,272 3,148 3,071 3,492 12,983 Interest 6,187 6,365 6,425 18,977 7,176 6,891 6,883 6,483 27,433 Total expenses 57,954 57,086 58,299 173,339 59,070 58,360 59,019 58,771 235,220 Income before interest income, equity in losses of non-consolidated REITs and taxes 2,553 3,147 3,578 9,278 4,193 4,381 2,171 3,718 14,463 Interest income 1 - - 1 1 1 - 1 3 Equity in losses of non-consolidated REITs (322) (38) (284) (644) (484) (552) (455) (269) (1,760) Gain on sale of properties, less applicable income tax 10,462 948 1 11,411 - - - 940 940 Income before taxes on income 12,694 4,057 3,295 20,046 3,710 3,830 1,716 4,390 13,646 Income tax expense 161 154 129 444 137 117 149 95 498 Net income $ 12,533 $ 3,903 $ 3,166 $ 19,602 $ 3,573 $ 3,713 $ 1,567 $ 4,295 $ 13,148 Weighted average number of shares outstanding, basic and diluted 100,187 100,187 100,187 100,187 100,187 100,187 100,187 100,187 100,187 Net income per share, basic and diluted $ 0.13 $ 0.04 $ 0.03 $ 0.20 $ 0.04 $ 0.04 $ 0.02 $ 0.04 $ 0.13 September 30, 2015 5

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Condensed Consolidated Balance Sheets (in thousands) March 31, June 30, September 30, March 31, June 30, September 30, December 31, 2015 2015 2015 2014 2014 2014 2014 Assets: Real estate assets: Land $ 174,707 $ 180,271 $ 180,271 $ 185,479 $ 185,479 $ 185,479 $ 183,930 Buildings and improvements 1,581,524 1,636,444 1,639,869 1,605,808 1,609,747 1,613,699 1,604,984 Fixtures and equipment 1,724 1,800 1,882 1,296 1,395 1,633 1,677 1,757,955 1,818,515 1,822,022 1,792,583 1,796,621 1,800,811 1,790,591 Less accumulated depreciation 271,058 279,172 291,331 234,447 246,658 258,799 266,284 Real estate assets, net 1,486,897 1,539,343 1,530,691 1,558,136 1,549,963 1,542,012 1,524,307 Acquired real estate leases, net 124,337 126,926 117,272 172,262 161,519 149,019 138,714 Investment in non-consolidated REITs 78,228 78,164 77,853 79,983 79,405 78,907 78,611 Cash and cash equivalents 14,945 15,841 19,100 20,031 18,455 15,930 7,519 Restricted cash 56 48 34 688 728 707 742 Tenant rent receivables, net 4,587 2,886 3,548 6,035 2,867 2,865 4,733 Straight-line rent receivable, net 45,498 46,168 47,330 44,392 46,021 46,737 47,021 Prepaid expenses and other assets 14,114 9,658 10,324 9,954 9,716 9,768 10,901 Related party mortgage loan receivable 93,641 93,641 93,641 101,916 88,436 88,436 93,641 Other assets: derivative asset 774 918 - 4,801 2,626 4,582 3,020 Deferred leasing commissions, net 26,335 26,508 26,587 27,477 28,861 28,354 27,181 Total assets $ 1,889,412 $ 1,940,101 $ 1,926,380 $ 2,025,675 $ 1,988,597 $ 1,967,317 $ 1,936,390 Liabilities: Bank note payable $ 240,000 $ 300,000 $ 300,000 $ 316,500 $ 296,500 $ 285,000 $ 268,000 Term loan payable 620,000 620,000 620,000 620,000 620,000 620,000 620,000 Accounts payable and accrued expenses 36,065 39,199 42,164 34,390 34,590 40,228 42,561 Accrued compensation 1,241 2,327 3,236 1,027 2,052 2,863 3,758 Tenant security deposits 4,019 4,315 4,349 4,258 4,259 4,331 4,248 Other liabilities: derivative termination value 9,836 7,632 12,096 3,825 5,985 4,847 7,268 Acquired unfavorable real estate leases, net 9,921 11,082 10,241 13,273 12,467 11,679 10,908 Total liabilities 921,082 984,555 992,086 993,273 975,853 968,948 956,743 Commitments and contingencies 6WRFNKROGHUV (Preferred stock - - - - - - -Common stock 10 10 10 10 10 10 10 Additional paid-in capital 1,273,556 1,273,556 1,273,556 1,273,556 1,273,556 1,273,556 1,273,556 Accumulated other comprehensive income (loss) (9,062) (6,714) (12,096) 976 (3,359) (265) (4,248) Accumulated distributions in excess of accumulated earnings (296,174) (311,306) (327,176) (242,140) (257,463) (274,932) (289,671) s968,330 955,546 934,294 1,032,402 1,012,744 998,369 979,647 $ 1,889,412 $ 1,940,101 $ 1,926,380 $ 2,025,675 $ 1,988,597 $ 1,967,317 $ 1,936,390 September 30, 2015 6

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Condensed Consolidated Statements of Cash Flows (in thousands) Nine Months ended September 30, Twelve Months ended December 31 2015 2014 2014 2013 Cash flows from operating activities: Net income $ 19,602 $ 8,853 $ 13,148 $ 19,827 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 70,340 74,237 97,916 81,267 Amortization of above market lease (96) 560 635 (365) Gain on sale of properties, less applicable income tax (11,411) - (940) (2,158) Equity in earnings (losses) from non-consolidated REITs 644 1,491 1,760 1,358 Increase in allowance for doubtful accounts (125) 125 275 (1,250) Changes in operating assets and liabilities: Restricted cash 708 (64) (99) (68) Tenant rent receivables 1,310 2,112 94 (2,103) Straight-line rents (1,573) (4,038) (4,737) (5,782) Lease acquisition costs (463) (438) (440) (1,146) Prepaid expenses and other assets (997) (106) 700 (1,547) Accounts payable and accrued expenses (603) (2,133) 206 11,137 Accrued compensation (522) (122) 773 445 Tenant security deposits 101 304 222 1,538 Payment of deferred leasing commissions (4,254) (4,854) (6,347) (9,125) Net cash provided by operating activities 72,661 75,927 103,166 92,028 Cash flows from investing activities: Property acquisitions (66,104) - - (454,447) Acquired real estate leases (10,604) - - (100,143) Property improvements, fixtures and equipment (15,005) (12,403) (18,370) (19,120) Office computers and furniture - - (191) (355) Investment in non-consolidated REITs - - - 4,858 Distributions in excess of earnings from non-consolidated REITs 81 81 107 108 Investment in related party mortgage loan receivable - (2,570) (11,170) (8,200) Repayment of related party mortgage loan receivable - 13,880 17,275 2,350 Changes in deposits on real estate assets - - - - Proceeds received on sales of real estate assets 55,659 - 14,192 12,301 Net cash provided by (used in) investing activities (35,973) (1,012) 1,843 (562,648) Cash flows from financing activities: Distributions to stockholders (57,107) (57,108) (76,142) (69,588) Proceeds (costs) from equity offering, net - - - 230,682 Borrowings under bank note payable 95,000 10,000 15,000 160,000 Repayments of bank note payable (63,000) (31,500) (53,500) (70,250) Borrowing (repayment) of term loan payable, net - - - 220,000 Deferred Financing Costs - - (2,471) (1,868) Net cash provided by (used in) financing activities (25,107) (78,608) (117,113) 468,976 Net decreases in cash and cash equivalents 11,581 (3,693) (12,104) (1,644) Cash and cash equivalents, beginning of period 7,519 19,623 19,623 21,267 Cash and cash equivalents, end of period $ 19,100 $ 15,930 $ 7,519 $ 19,623 September 30, 2015 7

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Property Net Operating Income (NOI)* with Same Store Comparison (in thousands) (in thousands) Rentable Nine Months Nine Months Square Feet Three Months Ended Ended Three Months Ended Ended Inc % Region or RSF 31-Mar-15 30-Jun-15 30-Sep-15 30-Sep-15 31-Mar-14 30-Jun-14 30-Sep-14 30-Sep-14 (Dec) Change East 1,333 $ 4,736 $ 4,648 $ 4,703 $ 14,087 $ 4,577 $ 4,655 $ 4,600 $ 13,832 $ 255 1.8% MidWest 1,531 3,469 3,563 3,547 10,579 4,586 4,541 4,610 13,737 (3,158) -23.0% South 4,026 15,781 15,995 15,971 47,747 16,796 16,183 16,370 49,349 (1,602) -3.2% West 2,309 8,216 8,571 8,523 25,310 9,388 9,290 8,522 27,200 (1,890) -6.9% Same Store 9,199 32,202 32,777 32,744 97,723 35,347 34,669 34,102 104,118 (6,395) -6.1% Acquisitions 442 - 1,057 1,067 2,124 - - - - 2,124 2.0% Property NOI from the continuing portfolio 9,641 32,202 33,834 33,811 99,847 35,347 34,669 34,102 104,118 (4,271) -4.1% Dispositions 822 61 6 889 1,226 1,257 1,351 3,834 (2,945) -2.6% Property NOI $ 33,024 $ 33,895 $ 33,817 $ 100,736 $ 36,573 $ 35,926 $ 35,453 $ 107,952 $ (7,216) -6.7% Same Store $ 32,202 $ 32,777 $ 32,744 $ 97,723 $ 35,347 $ 34,669 $ 34,102 $ 104,118 $ (6,395) -6.1% Less Nonrecurring Items in NOI (a) 75 81 419 575 707 287 173 1,167 (592) 0.5% Comparative Same Store $ 32,127 $ 32,696 $ 32,325 $ 97,148 $ 34,640 $ 34,382 $ 33,929 $ 102,951 $ (5,803) -5.6% (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. September 30, 2015 8

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FFO & AFFO Reconciliation (in thousands, except per share amounts) For the Nine For the For the Three Months Ended Months Ended For the Three Months Ended Year Ended 31-Mar-15 30-Jun-15 30-Sep-15 30-Sep-15 31-Mar-14 30-Jun-14 30-Sep-14 31-Dec-14 31-Dec-14 Net income $ 12,533 $ 3,903 $ 3,166 $ 19,602 $ 3,573 $ 3,713 $ 1,567 $ 4,295 $ 13,148 Gain (loss) on sale, less applicable income tax (10,462) (948) (1) (11,411) - - - (940) (940) GAAP income from non-consolidated REITs 322 38 284 644 484 552 455 269 1,760 FFO from non-consolidated REITs 601 885 645 2,131 419 351 508 652 1,930 Depreciation & amortization 22,678 23,168 22,848 68,694 24,289 23,638 25,374 23,249 96,550 NAREIT FFO* 25,672 27,046 26,942 79,660 28,765 28,254 27,904 27,525 112,448 Acquisition costs - 142 12 154 14 - - - 14 Funds From Operations (FFO)* $ 25,672 $ 27,188 $ 26,954 $ 79,814 $ 28,779 $ 28,254 $ 27,904 $ 27,525 $ 112,462 Adjusted Funds From Operations (AFFO)* Funds From Operations (FFO)* $ 25,672 $ 27,188 $ 26,954 $ 79,814 $ 28,779 $ 28,254 $ 27,904 $ 27,525 $ 112,462 Reverse FFO from non-consolidated REITs (601) (885) (645) (2,131) (419) (351) (508) (652) (1,930) Distributions from non-consolidated REITs 27 27 27 81 27 27 27 26 107 Amortization of deferred financing costs 517 517 516 1,550 499 499 498 506 2,002 Straight-line rent (69) (574) (930) (1,573) (1,783) (1,541) (714) (698) (4,736) Tenant improvements (2,936) (3,420) (1,794) (8,150) (1,132) (1,837) (2,612) (4,244) (9,825) Leasing commissions (830) (1,539) (1,490) (3,859) (1,080) (2,786) (577) (1,405) (5,848) Non-investment capex (643) (1,418) (1,090) (3,151) (364) (1,621) (700) (851) (3,536) Adjusted Funds From Operations (AFFO)* $ 21,137 $ 19,896 $ 21,548 $ 62,581 $ 24,527 $ 20,644 $ 23,318 $ 20,207 $ 88,696 Per Share Data: EPS $ 0.13 $ 0.04 $ 0.03 $ 0.20 $ 0.04 $ 0.04 $ 0.02 $ 0.04 $ 0.13 FFO* 0.26 0.27 0.27 0.80 0.29 0.28 0.28 0.27 1.12 AFFO* 0.21 0.20 0.22 0.62 0.24 0.21 0.23 0.20 0.89 Weighted Average Shares (basic and diluted) 100,187 100,187 100,187 100,187 100,187 100,187 100,187 100,187 100,187 * See the Appendix for Definitions of these Non-GAAP Measures beginning on page 27. September 30, 2015 9

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EBITDA Reconciliation (in thousands, except ratio amounts) Nine Months For the Three Months Ended Ended For the Three Months Ended Year Ended 31-Mar-15 30-Jun-15 30-Sep-15 30-Sep-15 31-Mar-14 30-Jun-14 30-Sep-14 31-Dec-14 31-Dec-14 Net income $ 12,533 $ 3,903 $ 3,166 $ 19,602 $ 3,573 $ 3,713 $ 1,567 $ 4,295 $ 13,148 Interest expense 6,187 6,365 6,425 18,977 7,176 6,891 6,883 6,483 27,433 Depreciation and amortization 22,678 23,168 22,848 68,694 24,289 23,638 25,374 23,249 96,550 Income taxes 161 154 129 444 137 117 149 95 498 EBITDA 41,559 33,590 32,568 107,717 35,175 34,359 33,973 34,122 137,629 Excluding (gain) loss on sale, less applicable income tax (10,462) (948) (1) (11,411) - - - (940) (940) Adjusted EBITDA $ 31,097 $ 32,642 $ 32,567 $ 96,306 $ 35,175 $ 34,359 $ 33,973 $ 33,182 $ 136,689 Interest expense $ 6,187 $ 6,365 $ 6,425 $ 18,977 $ 7,176 $ 6,891 $ 6,883 $ 6,483 $ 27,433 Scheduled principal payments - - - - - - - - - Interest and scheduled principal payments $ 6,187 $ 6,365 $ 6,425 $ 18,977 $ 7,176 $ 6,891 $ 6,883 $ 6,483 $ 27,433 Interest coverage ratio 5.03 5.13 5.07 5.07 4.90 4.99 4.94 5.12 4.98 Debt service coverage ratio 5.03 5.13 5.07 5.07 4.90 4.99 4.94 5.12 4.98 Debt $ 860,000 $ 920,000 $ 920,000 $ 936,500 $ 916,500 $ 905,000 $ 888,000 Adjusted EBITDA 31,097 32,642 32,567 35,175 34,359 33,973 33,182 Annualized 124,388 130,568 130,268 140,700 137,436 135,892 132,728 Debt-to-EBITDA 6.9 7.0 7.1 6.7 6.7 6.7 6.7 * 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. September 30, 2015 10

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 Reconciliation of Net Income to Property NOI* (in thousands) Reconciliation to Net income Nine Months Nine Months Three Months Ended Ended Three Months Ended Ended 31-Mar-15 30-Jun-15 30-Sep-15 30-Sep-15 31-Mar-14 30-Jun-14 30-Sep-14 30-Sep-14 Net Income $ 12,533 $ 3,903 $ 3,166 $ 19,602 $ 3,573 $ 3,713 $ 1,567 $ 8,853 Add (deduct): Gain on sale of properties, less applicable income taxes (10,462) (948) (1) (11,411) - - - - Management fee income (643) (559) (621) (1,823) (646) (682) (649) (1,977) Depreciation and amortization 22,672 23,207 22,911 68,790 24,300 23,563 24,878 72,741 Amortization of above/below market leases 6 (39) (63) (96) (11) 74 497 560 Selling, general and administrative 3,691 3,401 3,071 10,163 3,272 3,148 3,071 9,491 Interest expense 6,187 6,365 6,426 18,978 7,176 6,891 6,883 20,950 Interest income (1,262) (1,278) (1,293) (3,833) (1,410) (1,408) (1,216) (4,034) Equity in losses of - - non-consolidated REITs 322 38 284 644 484 552 455 1,491 Non-property specific items, net (20) (195) (63) (278) (165) 75 (33) (123) Property NOI $ 33,024 $ 33,895 $ 33,817 $ 100,736 $ 36,573 $ 35,926 $ 35,453 $ 107,952 * See the Appendix for Definition of Non-GAAP Measures beginning on page 27. September 30, 2015 11

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Debt Summary (in thousands) Maximum Amount Interest Interest Maturity Amount Drawn at Rate Rate at Facility Date of Loan 30-Sep-15 Components 30-Sep-15 Fee BAML Revolver 29-Oct-18 $ 500,000 $ 300,000 L+1.25% 1.45% 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 $ 920,000 2.38% (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 September 30, 2015 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 1.44% as of September 30, 2015. 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. The BAML Term Loan has LIBOR fixed at 0.75% for five years. At our credit rating, the spread for the BAML Term Loan is 1.45%, so our interest rate is 2.20%. The BMO Term Loan has fixed LIBOR at 2.32% for seven years. At our credit rating, the spread over LIBOR is 1.65%, so our interest rate is 3.97%. 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. September 30, 2015 12

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Capital Analysis (in thousands, except per share amounts) 31-Mar-15 30-Jun-15 30-Sep-15 31-Mar-14 30-Jun-14 30-Sep-14 31-Dec-14 Market Data: Shares Outstanding 100,187 100,187 100,187 100,187 100,187 100,187 100,187 Closing market price per share $ 12.82 $ 11.31 $ 10.75 $ 12.60 $ 12.58 $ 11.22 $ 12.27 Market capitalization $ 1,284,403 $ 1,133,120 $ 1,077,015 $ 1,262,361 $ 1,260,358 $ 1,124,103 $ 1,229,299 Total Debt 860,000 920,000 920,000 936,500 916,500 905,000 888,000 Total Market Capitalization $ 2,144,403 $ 2,053,120 $ 1,997,015 $ 2,198,861 $ 2,176,858 $ 2,029,103 $ 2,117,299 Dividend Data: Total dividends paid $ 19,036 $ 19,035 $ 19,035 $ 19,036 $ 19,035 $ 19,036 $ 19,036 Common dividend per share $ 0.19 $ 0.19 $ 0.19 $ 0.19 $ 0.19 $ 0.19 $ 0.19 Quarterly dividend as a % of FFO* 73.1% 70.4% 70.4% 65.5% 67.9% 67.9% 70.4% Liquidity: Cash and cash equivalents $ 14,946 $ 15,841 $ 19,100 $ 20,031 $ 18,455 $ 15,930 $ 7,519 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 Less: Outstanding balance (640,000) (700,000) (700,000) (716,500) (696,500) (685,000) (668,000) Total Liquidity $ 274,946 $ 215,841 $ 219,100 $ 203,531 $ 221,955 $ 230,930 $ 239,519 *See page 9 for a reconciliation of Net Income to FFO and the Appendix for Definitions of Non-GAAP Measures beginning on page 27. September 30, 2015 13

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Portfolio Overview As of the Quarter Ended Portfolio Breakdown by 30-Sep-15 30-Jun-15 31-Mar-15 31-Dec-14 30-Sep-14 FSP Participation Owned portfolio of commercial real estate: Owned Properties Number of properties 36 36 36 38 39 Square feet 9,640,904 9,639,740 9,310,131 9,580,057 9,690,361 Non-Consolidated Properties Leased percentage 90.5% 90.6% 90.4% 92.8% 93.3% Managed Single Asset REITs (SARs) Investments in non-consolidated commercial real estate: 11.9% Number of properties 2 2 2 2 2 Square feet 1,396,071 1,396,071 1,396,071 1,395,780 1,395,500 Leased percentage 71.2% 69.7% 70.1% 71.3% 71.0% 11.1% Single Asset REITs (SARs) managed: Number of properties 7 7 7 8 9 Square feet 1,487,026 1,487,026 1,488,003 1,897,801 2,036,572 Leased percentage 77.0% 73.5% 73.4% 84.7% 86.6% Total owned (a) , investments and managed properties: Number of properties 45 45 45 48 50 Square feet 12,524,001 12,522,837 12,194,205 12,873,638 13,122,433 77.0 % Leased percentage 86.8% 86.3% 86.0% 89.3% 89.9% September 30, 2015 14

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Owned Portfolio Overview Percent Wtd Ave (a) GAAP (b) Percent Wtd Ave (a) GAAP (b) MSA / Property Name City State Square Feet Leased Occupied Rent MSA / Property Name City State Square Feet Leased Occupied Rent East Region Midwest Region Baltimore Chicago East Baltimore Baltimore MD 325,445 85.4% 81.3% $ 23.40 Northwest Point Elk Grove Village IL 176,848 100.0% 100.0% $ 24.73 909 Davis Street Evanston IL 195,245 100.0% 98.9% $ 35.20 Washington, D.C. Meadow Point Chantilly VA 138,537 100.0% 94.3% $ 27.31 Indianapolis Stonecroft Chantilly VA 111,469 100.0% 100.0% $ 37.64 River Crossing Indianapolis IN 205,059 90.6% 94.7% $ 20.43 Loudoun Tech Center Dulles VA 136,658 92.0% 92.0% $ 17.88 St. Louis Richmond Timberlake Chesterfield MO 234,023 93.8% 54.7% $ 21.15 Innsbrook Glen Allen VA 298,456 99.9% 99.9% $ 18.73 Timberlake East Chesterfield MO 116,197 43.7% 28.5% $ 21.96 Lakeside Crossing Maryland Heights MO 127,778 100.0% 100.0% $ 24.33 Charlotte Forest Park Charlotte NC 62,212 100.0% 100.0% $ 13.82 Minneapolis 121 South 8th Street Minneapolis MN 475,694 90.8% 89.9% $ 15.49 Raleigh-Durham Emperor Boulevard Durham NC 259,531 100.0% 100.0% $ 35.93 Midwest Region Total 1,530,844 90.7% 83.7% $ 22.10 East Region Total 1,332,308 95.6% 94.0% $ 25.53 (a) Weighted Occupied Percentage for the nine months ended September 30, 2015. (b) Weighted Average GAAP Rent per Occupied Square Foot. September 30, 2015 15

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Owned Portfolio Overview Percent Wtd Ave (a) GAAP (b) Percent Wtd Ave (a) GAAP (b) MSA / Property Name City State Square Feet Leased Occupied Rent MSA / Property Name City State Square Feet Leased Occupied Rent South Region West Region Dallas-Fort Worth Seattle Legacy Tennyson Center Plano TX 202,600 100.0% 100.0% $ 17.37 Federal Way Federal Way WA 117,010 58.9% 58.1% $ 18.58 One Legacy Circle Plano TX 214,110 100.0% 100.0% $ 33.36 Addison Circle Addison TX 290,041 93.4% 86.1% $ 24.79 San Francisco-San Jose-Oakland Collins Crossing Richardson TX 300,887 100.0% 99.5% $ 24.54 Hillview Center Milpitas CA 36,288 100.0% 100.0% $ 16.33 Liberty Plaza Addison TX 218,934 82.5% 86.3% $ 20.76 Montague Business Center San Jose CA 145,951 81.1% 81.1% $ 16.55 Houston Denver Park Ten Houston TX 157,460 63.1% 63.1% $ 31.56 380 Interlocken Broomfield CO 240,185 97.1% 96.3% $ 29.54 Eldridge Green Houston TX 248,399 100.0% 100.0% $ 31.28 1999 Broadway Denver CO 676,379 82.5% 85.8% $ 32.23 Park Ten Phase II Houston TX 156,746 100.0% 100.0% $ 31.53 Greenwood Plaza Englewood CO 196,236 100.0% 100.0% $ 24.78 Westchase I & II Houston TX 629,025 90.2% 94.2% $ 33.99 390 Interlocken Broomfield CO 241,516 85.3% 71.7% $ 28.29 1001 17th Street Denver CO 655,420 86.3% 84.2% $ 34.39 Miami-Ft. Lauderdale-West Palm Beach Blue Lagoon Drive Miami FL 212,619 100.0% 100.0% $ 22.54 Atlanta One Overton Place Atlanta GA 387,267 85.0% 80.1% $ 24.40 West Region Total 2,308,985 85.9% 84.7% $ 29.70 One Ravinia Atlanta GA 386,603 94.8% 95.1% $ 22.91 Two Ravinia Atlanta GA 442,130 77.4% 75.8% $ 24.98 999 Peachtree Atlanta GA 621,946 94.7% 95.3% $ 30.14 South Region Total 4,468,767 83.7% 91.1% $ 27.30 Total Owned 9,640,904 90.5% 88.8% $ 26.81 (a) Weighted Occupied Percentage for the nine months ended September 30, 2015. (b) Weighted Average GAAP Rent per Occupied Square Foot. September 30, 2015 16

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Managed Portfolio Overview MSA / Property Name City State Square Feet MSA / Property Name City State Square Feet Southeast Region Midwest Region Columbia Chicago 1441 Main Street Columbia SC 264,857 (a) East Wacker Chicago IL 861,000 Atlanta Indianapolis Satellite Place Duluth GA 134,785 Monument Circle Indianapolis IN 213,760 Southeast Region Total 399,642 St. Louis Lakeside Crossing II Maryland Heights MO 116,000 Southwest Region Kansas City Houston (b) Grand Boulevard Kansas City MO 535,071 Energy Tower I Houston TX 325,797 Cincinnati Denver Centre Pointe V West Chester OH 135,936 385 Interlocken Broomfield CO 295,891 Southwest Region Total 621,688 Midwest Region Total 1,861,767 Total Managed 2,883,097 Total Owned & Managed 12,524,001 (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. September 30, 2015 17

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Tenants by Industry (By Square Feet) Oil & Gas 16.55% Other 16.86% Medical Professionals & Social Services 2.81% Restaurants 3.00% Banking 10.18% Medical Research 3.06% Insurance 3.17% Legal Services 8.57% Architecture & Engineering 3.47% Real Estate 3.57% General Business Services 3.75% IT & Computer Services 8.51% Communications 4.00% Government 5.62% Professional Services 6.87% Oil & Gas 16.55% Banking 10.18% Legal Services 8.57% IT & Computer Services 8.51% Professional Services 6.87% Government 5.62% Communications 4.00% General Business Services 3.75% Real Estate 3.57% Architecture & Engineering 3.47% Insurance 3.17% Medical Research 3.06% Restaurants 3.00% Medical Professionals & Social Services 2.81% Other 16.86% September 30, 2015 18

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 20 Largest Tenants with Annualized Rent and Remaining Term (Owned Portfolio) Remaining Aggregate Annualized % of Aggregate Tenant Number of Lease Term Leased % of Total Rent Leased Name Leases in Months Square Feet Square Feet (in 000's) Annualized Rent 1 TCF National Bank 2 3 263,111 2.7% $ 2,997,573 1.3% 2 Quintiles Transnational Corp 1 42 259,531 2.7% 9,067,770 4.0% 3 CITGO Petroleum Corporation 1 77 248,399 2.6% 7,904,056 3.5% 4 Newfield Exploration Company 1 77 234,495 2.4% 8,630,672 3.9% 5 US Government (a) 5 9, 11, 32, 46, 60 223,433 2.3% 7,225,672 3.2% 6 Sutherland Asbill Brennan LLP 1 55 222,422 2.3% 6,823,317 3.0% 7 Burger King Corporation 1 36 212,619 2.2% 5,134,749 2.3% 8 Denbury Onshore, LLC (b) 2 10, 46 202,600 2.1% 3,510,042 1.6% 9 SunTrust Bank (c) 3 8, 134, 72 182,888 1.9% 3,736,826 1.7% 10 Citicorp Credit Services, Inc 1 15 176,848 1.8% 4,612,196 2.1% 11 T-Mobile South, LLC dba T-Mobile 1 41 151,792 1.6% 3,635,589 1.6% 12 Houghton Mifflin Harcourt Publishing Company 1 18 150,050 1.6% 6,243,052 2.8% 13 Petrobras America, Inc. 1 50 144,813 1.5% 5,337,807 2.4% 14 Murphy Exploration & Production Company 1 19 144,677 1.5% 4,718,321 2.1% 15 Argo Data Resource Corporation 1 95 140,246 1.5% 3,718,923 1.7% 16 Monsanto Company 1 52 127,778 1.3% 3,019,394 1.3% 17 Federal National Mortgage Association 1 12 123,144 1.3% 2,695,622 1.2% 18 Vail Corp d/b/a Vail Resorts (d) 2 42, 90 122,232 1.3% 3,478,650 1.6% 19 Kaiser Foundation Health Plan 1 104 120,979 1.3% 3,091,345 1.4% 20 Centene Management Company, LLC (e) 1 93 117,618 1.2% - - Total 3,569,675 37.1% $ 95,581,575 42.7% (a) Includes 180,444 and 27,398 square feet which expire in 2018 & 2017, respectively. The remaining 15,591 square feet expire between 2016 - 2020. (b) Includes 102,600 square feet which expire 7/31/16 and 100,000 square feet that expire 7/31/19. (c) Includes 23,217 square feet, which expire 4/30/16 and 32,171 square feet, which expire 10/31/26. The remaining 127,500 square feet expire 9/30/21. (d) Includes 38,293 square feet which expire March 31, 2019. The remaining 83,939 square feet expire March 31, 2023. (e) The lease was executed June 30, 2015 and rent has not commenced. September 30, 2015 19

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Leasing Activity (Owned Portfolio) Nine Months Year Year Ended Ended Ended Leasing Activity 30-Sep-15 31-Dec-14 31-Dec-13 (in Square Feet - SF) New leasing 262,000 149,000 267,000 Renewals 454,000 635,000 645,000 716,000 784,000 912,000 Other information per SF (Activity on a year-to-date basis) GAAP Rents on leasing $ 26.70 $ 26.89 $ 23.33 Weighted average lease term 5.2 Years 6.25 Years 7.2 Years Increase over average GAAP rents in prior year 12.9% 11.8% 8.0% Average free rent 3 Months 3 Months 3 Months Tenant Improvements $ 16.88 $ 16.40 $ 18.25 Leasing Costs $ 6.33 $ 7.66 $ 8.48 September 30, 2015 20

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Lease Expirations by Square Feet (Owned Portfolio) % of Square 2,000,000 Year Total Square Feet Feet 1,800,000 2015 69,019 0.7% 2016 1,005,764 10.4% 1,600,000 2017 1,119,778 11.6% 1,400,000 2018 996,420 10.3% 2019 1,473,328 15.3% 1,200,000 2020 859,385 8.9% 1,000,000 2021 816,955 8.5% 2022 992,342 10.3% 800,000 2023 596,384 6.2% 600,000 2024 273,770 2.9% 2025 320,471 3.3% 400,000 2026 202,054 2.1% 200,000 Vacant 915,234 9.5% 0 Total 9,640,904 100.0% 2015 2017 2019 2021 2023 2025 Total Square Feet September 30, 2015 21

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 Lease Expirations with Annualized Rent per Square Foot (Owned Portfolio ) Rentable Annualized Percentage Number of Square Rent of Total 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 (a) Leases Leases (b) Leases Leases Total 2015 21 (c) 69,019 $ 1,996,865 $ 28.93 0.9% 0.9% 2016 65 1,005,764 21,309,028 21.19 9.5% 10.4% 2017 71 1,119,778 32,867,345 29.35 14.7% 25.1% 2018 74 996,420 29,078,109 29.18 13.0% 38.1% 2019 62 1,473,328 41,082,293 27.88 18.4% 56.4% 2020 58 859,385 22,049,788 25.66 9.8% 66.3% 2021 26 816,955 19,713,951 24.13 8.8% 75.1% 2022 25 992,342 28,891,248 29.11 12.9% 88.0% 2023 19 596,384 11,562,784 19.39 5.2% 93.2% 2024 7 273,770 6,862,689 25.07 3.1% 96.2% 2025 and thereafter 17 522,525 (d) 8,447,095 16.17 3.8% 100.0% 445 8,725,670 $ 223,861,194 $ 25.66 100.0% Vacancies as of 9/30/15 915,234 Total Portfolio Square Footage 9,640,904 (a) The number of leases approximates the number of tenants. Tenants with lease maturities in different years are included in annual totals for each lease. Tenants may have multiple leases in the same year. (b) Annualized rent represents the monthly rent charged, including tenant reimbursements, for each lease in effect at September 30, 2015 mulitplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges. (c) Includes 13 leases that are month-to-month. (d) Includes 68,281 square feet that are non-revenue producing building amenities. September 30, 2015 22

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Capital Expenditures (in thousands) Nine Months For the Three Months Ended Ended 31-Mar-15 30-Jun-15 30-Sep-15 30-Sep-15 Tenant improvements $ 2,936 $ 3,420 $ 1,794 $ 8,150 Deferred leasing costs 830 1,539 1,490 3,859 Non-investment capex 643 1,418 1,090 3,151 Recurring Capital Expenditures 4,409 6,377 4,374 15,160 1st generation leasing 1,934 712 451 3,097 Investment capex 230 243 558 1,031 121 South 8thStreet, Minneapolis, MN Total Capital Expenditures $ 6,573 $ 7,332 $ 5,383 $ 19,288 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 September 30, 2015 23

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Transaction Activity (in thousands except for Square feet) Recent Acquisitions: Purchase Price City State Square Feet Date Acquired 2015 Two Ravinia Atlanta GA 442,130 4/8/15 $ 78,000 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 Recent Dispositions: Gross Sales Gains City State Square Feet Date Sold Proceeds on Sales 2015 Willow Bend Plano TX 117,050 2/23/15 $ 20,750 $ 1,462 Eden Bluff Eden Prairie MN 153,028 3/31/15 28,000 9,000 Park Seneca Charlotte NC 109,699 5/13/15 8,150 948 2014 Centennial Colorado Springs CO 110,405 12/3/14 $ 15,500 $ 940 2013 East Renner Road Richardson TX 122,300 10/29/13 $ 12,475 $ 2,169 September 30, 2015 24

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Loan Portfolio of Secured Real Estate (in thousands) (dollars in thousands) Maximum Amount Interest Maturity Amount Drawn at Interest Draw Rate at Sponsored REIT Location Date of Loan 30-Sep-15 Rate (1) Fee (2) 30-Sep-15 Secured revolving lines of credit FSP Satellite Place Corp. Duluth, GA 31-Mar-17 $ 5,500 $ 5,500 L+4.4% 0.5% 4.60% FSP 1441 Main Street Corp. Columbia, SC 31-Mar-16 10,800 9,000 L+4.4% 0.5% 4.60% FSP Energy Tower I Corp. Houston, TX 30-Jun-17 20,000 8,600 L+5.0% 0.5% 5.20% Secured construction loan FSP 385 Interlocken Development Corp. Broomfield, CO 30-Apr-16 42,000 37,541 L+4.4% n/a 4.60% Mortgage loan secured by property FSP Energy Tower I Corp. Houston, TX 30-Jun-17 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. September 30, 2015 25

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Net Asset Value Components (in thousands except per share data) As of Assets: Other information: 30-Sep-15 Loans outstanding on secured RE $ 93,641 Leased SF to be FFO producing Total Market Capitalization Values Investments in SARs (book basis) 77,853 During 2015 (in 000's) 74 Shares outstanding 100,187.4 Straight-line rent receivable 47,330 Closing price $ 10.75 Asset held for sale - Straight-line rental revenue current quarter $ 930 Market capitalization $ 1,077,015 Cash and cash equivalents 19,100 Debt 920,000 Restricted cash 34 Management fee income current quarter $ 177 Total Market Capitalization $ 1,997,015 Tenant rent receivables 3,548 Interest income from secured loans 1,294 Prepaid expenses 956 Management fees and interest income from loans $ 1,470 Office computers and furniture 551 3 Months Other assets: FFO from non-consolidated REITs - Q1 2015 (7): Ended Deferred financing costs, net 7,637 East Wacker $ 680 NOI Components 30-Sep-15 Other assets: Derivative Market Value - Grand Boulevard 205 Phoenix Tower Liquidating Trust (6) 4 Total $ 885 Same Store NOI (1) $ 32,744 Other assets 1,176 Acquisitions (1) (2) 1,067 $ 251,830 Footnotes to the components Property NOI (1) 33,811 - (1) See pages 11 & 28 for definitions and reconciliations Full quarter adjustment (3) - Liabilities: (2) Includes NOI from 3 acquisitions 2013 Stabilized portfolio $ 33,811 Debt $ 920,000 (3) Adjustment to reflect property NOI for a full quarter Accounts payable & accrued expenses 45,400 in the quarter acquired, if necessary Tenant security deposits 4,349 (4) HB3 Tax in Texas is classified as an income tax, though Financial Statement Reconciliation: Other liabilities: derivative liability 12,096 we treat it as a real estate tax in Property NOI Rental Revenue $ 60,386 $ 981,845 (5) Management & other fees are eliminated in consolidation Rental operating expenses (15,951) - but included on Property NOI Real estate taxes and insurance (9,941) (6) Expected liquidating distribution from sale of equity interest NOI on assets sold during the quarter (6) (Collection within 2 years, subject to some expenses) Taxes (4) (129) (7) We report FFO from non-consolidated REITs for the previous Management fees & other (5) (548) quarter as their financial statements are not yet complete for Property NOI (1) $ 33,811 the current quarter. September 30, 2015 26

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Appendix: Non-GAAP Financial Measure Definitions 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 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. 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. September 30, 2015 27

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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. September 30, 2015 28

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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. September 30, 2015 29

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Investor Relations Contact: Georgia Touma (877) 686-9496 InvestorRelations@franklinstreetproperties.com One & Two RaviniaDrive, Atlanta, GA www.franklinstreetproperties.com Franklin Street Properties Corp. 401 Edgewater Place Wakefield, MA 01880 (781)557-1300

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