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 $27.1 million or $0.27 per share for the fourth quarter ended December 31, 2015; and FFO of $106.9 million or $1.07 per share for the full year ended December 31, 2015. Net income was $15.4 million or $0.15 per share for the fourth quarter ended December 31, 2015 and $35.0 million or $0.35 per share for the year ended December 31, 2015.

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

                        (in 000's except per share data) Three Months Ended December 31, Year Ended December 31, Increase Increase 2015 2014 (Decrease) 2015 2014 (Decrease)   Net Income $ 15,412 $ 4,295 $ 11,117   $ 35,014 $ 13,148 $ 21,866     FFO $ 27,076 $ 27,525 $ (449 ) $ 106,890 $ 112,462 $ (5,572 ) Per Share Data: EPS $ 0.15 $ 0.04 $ 0.11 $ 0.35 $ 0.13 $ 0.22 FFO $ 0.27 $ 0.27 $ — $ 1.07 $ 1.12 $ (0.05 ) AFFO $ 0.17 $ 0.20 $ (0.03 ) $ 0.80 $ 0.89 $ (0.09 )   Weighted average shares (diluted) 100,187 100,187 —   100,187 100,187 —    

Comparing results for the fourth quarter of 2015 to the same period in 2014, FFO decreased $0.4 million to $27.1 million and was $0.27 per share for the fourth quarter of 2015 and 2014. 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. We recorded a $12.3 million gain on the sale of a property on December 9, 2015. Net Income and EPS was $15.4 million and $0.15 per share for the fourth quarter of 2015, respectively, compared to a Net Income of $4.3 million and EPS of $0.04 for the fourth quarter of 2014.

Comparing results for the year ended December 31, 2015 to the same period in 2014, FFO decreased $5.6 million or $0.05 per share to $106.9 million or $1.07 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 a $23.7 million gain on the sale of four properties during the year ended December 31, 2015. Net Income and EPS was $35.0 million and $0.35 per share for the year ended December 31, 2015, respectively, compared to Net Income of $13.1 million and EPS of $0.13 for the year ended December 31, 2014.

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

“For the fourth quarter of 2015, FSP’s funds from operations, or FFO, totaled approximately $27.1 million or $0.27 per share. For the full year 2015, our FFO totaled approximately $106.9 million or $1.07 a share. These results are within our initial full year 2015 FFO guidance range of $1.03 to $1.08 per diluted share. FSP’s full year 2015 adjusted funds from operations, or AFFO totaled approximately $79.8 million or $0.80 per share. Dividend distributions paid/declared for full year 2015 totaled $76.1 million or $0.76 per share. We also recorded gains on the sale of four properties during 2015 of $23.7 million or $0.24 per share. Our initial FFO guidance for full year 2016 is estimated to be in the range of $1.01 to $1.07 per diluted share and for the first quarter of 2016 we estimate FFO to be in the range of $0.24 to $0.26 per diluted share.

Our directly owned real estate portfolio of 36 properties totaling approximately 9.5 million square feet was approximately 91.6% leased as of December 31, 2015. We did significant leasing in the fourth quarter, much of it renewals ahead of lease expirations in future periods. We anticipate continued positive leasing activity within the portfolio during 2016.

On December 9, 2015, we sold our San Jose, California property, known as Montague Business Center, for $30.3 million. On January 19, 2016, an affiliate of FSP sold the 296,000 square foot office building, known as Central Park Tower, located at 385 Interlocken Boulevard in Broomfield, Colorado within the Denver-Boulder corridor for $83.5 million and our $37.5 million first mortgage loan on that property was repaid in full. Central Park Tower was developed as a spec office building in 2008-2009. Its sale represents a record price per square foot for an office property sale in the Northwest submarket of Denver. We continue to work on finalizing plans for our anticipated next development opportunity at 801 Marquette Avenue South in Minneapolis, Minnesota. We expect ongoing property disposition/acquisition activity during 2016 as we continue to reposition the portfolio into larger, multi-tenant, urban infill/CBD office assets, primarily within our five core markets of Atlanta, Dallas, Denver, Houston and Minneapolis.

As we begin 2016, our property portfolio is operating smoothly with existing and known upcoming vacancy square footage actively being marketed to multiple potential tenants. We look forward with anticipation to 2016 and beyond.”

Dividend Update

On January 8, 2016, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended December 31, 2015 of $0.19 per share of common stock that was paid on February 11, 2016 to stockholders of record on January 22, 2016.

FFO Guidance

Our full year FFO guidance for 2016 is estimated to be in the range of $1.01 to $1.07 per diluted share and for the first quarter of 2016 we estimate FFO to be in the range of $0.24 to $0.26 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.

Real Estate Update

Supplementary schedules provide property information for the Company’s owned real estate portfolio and for two non-consolidated REITs in which the Company holds preferred stock interests as of December 31, 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) and Adjusted Funds From Operations (AFFO)

A reconciliation of Net Income to FFO and AFFO is shown below and a definition of FFO and AFFO is provided on Supplementary Schedule H. Management believes FFO and AFFO are used broadly throughout the real estate investment trust (REIT) industry as measurements of performance. Management also believes that FFO and AFFO represent the most accurate measures of activity and are 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 and AFFO may not be comparable to FFO or AFFO reported by other REITs or real estate companies that define FFO or AFFO differently.

                Reconciliation of Net Income to FFO and AFFO: Three Months Ended Year Ended December 31, December 31, (In thousands, except per share amounts) 2015 2014 2015 2014   Net income $ 15,412 $ 4,295 $ 35,014 $ 13,148 Gain on sale of assets, less applicable income tax (12,251 ) (940 ) (23,662 ) (940 ) GAAP loss from non-consolidated REITs 807 269 1,451 1,760 FFO from non-consolidated REITs 601 652 2,732 1,930 Depreciation & amortization   22,507     23,249     91,201     96,550   NAREIT FFO 27,076 27,525 106,736 112,448 Acquisition costs of new properties   —     —     154     14   Funds From Operations (FFO) $ 27,076   $ 27,525   $ 106,890   $ 112,462     Funds From Operations (FFO) $ 27,076 $ 27,525 $ 106,890 $ 112,462 Reverse FFO from non-consolidated REITs (601 ) (652 ) (2,732 ) (1,930 ) Distributions from non-consolidated REITs 26 26 107 107 Amortization of deferred financing costs 518 506 2,068 2,002 Straight-line rent (875 ) (698 ) (2,448 ) (4,736 ) Tenant improvements (3,788 ) (4,244 ) (11,938 ) (9,825 ) Leasing commissions (3,952 ) (1,405 ) (7,811 ) (5,848 ) Non-investment capex   (1,162 )   (851 )   (4,306 )   (3,536 ) Adjusted Funds From Operations (AFFO) $ 17,242   $ 20,207   $ 79,830   $ 88,696     Per Share Data EPS $ 0.15 $ 0.04 $ 0.35 $ 0.13 FFO $ 0.27 $ 0.27 $ 1.07 $ 1.12 AFFO $ 0.17 $ 0.20 $ 0.80 $ 0.89   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 February 17, 2016 at 10:00 a.m. (ET) to discuss the fourth 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, 2015, 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 ReleaseSupplementary InformationTable 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 ResultsSupplementary Schedule ACondensed Consolidated Income (Loss) Statements(Unaudited)

                For the For the Three Months Ended Year Ended       December 31,     December 31, (in thousands, except per share amounts)     2015     2014     2015     2014   Revenue: Rental $ 59,656 $ 61,022 $ 237,856 $ 243,341 Related party revenue: Management fees and interest income from loans 1,575 1,465 5,930 6,241 Other       19         2         81         101   Total revenue       61,250         62,489         243,867         249,683     Expenses: Real estate operating expenses 15,939 16,334 61,890 62,032 Real estate taxes and insurance 9,202 9,288 38,660 36,857 Depreciation and amortization 22,569 23,174 91,359 95,915 Selling, general and administrative 3,128 3,492 13,291 12,983 Interest       6,455         6,483         25,432         27,433   Total expenses       57,293         58,771         230,632         235,220     Income before interest income, equity in losses of non-consolidated REITs and taxes 3,957 3,718 13,235 14,463 Interest income — 1 1 3 Equity in losses of non-consolidated REITs (807 ) (269 ) (1,451 ) (1,760 ) Gain on sale of properties, less applicable income tax       12,251         940         23,662         940     Income before taxes on income 15,401 4,390 35,447 13,646 Taxes on income       (11 )       95         433         498   Net income     $ 15,412       $ 4,295       $ 35,014       $ 13,148     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     $ 0.15       $ 0.04       $ 0.35       $ 0.13      

Franklin Street Properties Corp. Financial ResultsSupplementary Schedule BCondensed Consolidated Balance Sheets(Unaudited)

        December 31, (in thousands, except share and par value amounts)     2015     2014 Assets: Real estate assets: Land $ 170,021 $ 183,930 Buildings and improvements 1,637,066 1,604,984 Fixtures and equipment       2,528         1,677   1,809,615 1,790,591 Less accumulated depreciation       299,991         266,284   Real estate assets, net 1,509,624 1,524,307 Acquired real estate leases, less accumulated amortization of $112,844 and $101,838, respectively 108,046 138,714 Investment in non-consolidated REITs 77,019 78,611 Cash and cash equivalents 18,163 7,519 Restricted cash 23 742 Tenant rent receivables, less allowance for doubtful accounts of $130 and $325, respectively 2,898 4,733 Straight-line rent receivable, less allowance for doubtful accounts of $50 and $162, respectively 48,502 47,021 Prepaid expenses and other assets 7,837 10,292 Related party mortgage loan receivables 118,641 93,641 Other assets: derivative asset 1,132 3,020 Office computers and furniture, net of accumulated depreciation of $1,333 and $1,036, respectively 484 609 Deferred leasing commissions, net of accumulated amortization of $20,002 and $16,944, respectively       28,999         27,181   Total assets     $ 1,921,368       $ 1,936,390     Liabilities and Stockholders’ Equity: Liabilities: Bank note payable $ 290,000 $ 268,000 Term loans payable 620,000 620,000 Accounts payable and accrued expenses 49,489 42,561 Accrued compensation 3,726 3,758 Tenant security deposits 4,829 4,248 Other liabilities: derivative liability 8,243 7,268 Acquired unfavorable real estate leases, less accumulated amortization of $9,368 and $8,687, respectively       9,425         10,908   Total liabilities       985,712         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 (7,111 ) (4,248 ) Accumulated distributions in excess of accumulated earnings       (330,799 )       (289,671 ) Total stockholders’ equity       935,656         979,647   Total liabilities and stockholders’ equity     $ 1,921,368       $ 1,936,390            

Franklin Street Properties Corp. Financial ResultsSupplementary Schedule CCondensed Consolidated Statements of Cash Flows(Unaudited)

  For the Year Ended December 31, (in thousands)     2015     2014 Cash flows from operating activities: Net income $ 35,014 $ 13,148 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 93,426 97,916 Amortization of above market lease (158 ) 635 Equity in losses of non-consolidated REITs 1,451 1,760 Gain on sale of properties, less applicable income tax (23,662 ) (940 ) Increase (decrease) in allowance for doubtful accounts (195 ) 275 Changes in operating assets and liabilities: Restricted cash 719 (99 ) Tenant rent receivables 2,030 94 Straight-line rents (2,448 ) (4,737 ) Lease acquisition costs (1,487 ) (440 ) Prepaid expenses and other assets 422 700 Accounts payable, accrued expenses and other items 5,505 206 Accrued compensation (32 ) 773 Tenant security deposits 581 222 Payment of deferred leasing commissions       (8,276 )       (6,347 ) Net cash provided by operating activities       102,890         103,166   Cash flows from investing activities: Property acquisitions (66,104 ) — Acquired real estate leases (10,604 ) — Property improvements, fixtures and equipment (21,750 ) (18,370 ) Office computers and furniture (179 ) (191 ) Distributions in excess of earnings from non-consolidated REITs 107 107 Repayment of related party mortgage loan receivable — 17,275 Investment in related party mortgage loan receivable (25,000 ) (11,170 ) Proceeds received on sales of real estate assets 85,426 14,192 Changes in deposits on real estate assets       —         —   Net cash provided by (used in) investing activities       (38,104 )       1,843   Cash flows from financing activities: Distributions to stockholders (76,142 ) (76,142 ) Borrowings under bank note payable 110,000 15,000 Repayments of bank note payable (88,000 ) (53,500 ) Deferred financing costs       —         (2,471 ) Net cash used in financing activities       (54,142 )       (117,113 ) Net increase (decrease) in cash and cash equivalents 10,644 (12,104 ) Cash and cash equivalents, beginning of year       7,519         19,623   Cash and cash equivalents, end of period     $ 18,163       $ 7,519            

Franklin Street Properties Corp. Earnings ReleaseSupplementary Schedule DReal Estate Portfolio Summary Information(Unaudited & Approximated)

  Commercial portfolio lease expirations (1) Total % of

Year

Square Feet Portfolio 2016 893,003 9.4% 2017 1,111,385 11.7% 2018 1,107,685 11.7% 2019 1,286,426 13.6% 2020 851,253 9.0% Thereafter (2) 4,245,201     44.6% 9,494,953     100.0%  

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

(2) Includes 799,607 square feet of current vacancies.

                    (dollars & square feet in 000's) As of December 31, 2015 # of % of Square % of State Properties Investment Portfolio Feet Portfolio   Texas 9 $ 365,808 24.2% 2,418 25.5% Colorado 5 430,906 28.5% 2,010 21.2% Georgia 4 285,360 18.9% 1,838 19.4% Virginia 4 93,530 6.2% 685 7.2% Minnesota 2 30,891 2.0% 476 5.0% Missouri 3 61,438 4.1% 478 5.0% North Carolina 2 55,187 3.7% 322 3.4% Illinois 2 44,456 2.9% 372 3.9% Maryland 1 51,235 3.4% 325 3.4% Florida 1 41,919 2.8% 213 2.2% Indiana 1 31,611 2.1% 205 2.2% California 1 3,812 0.3% 36 0.4% Washington 1       13,471     0.9%     117     1.2% 36     $ 1,509,624     100.0%     9,495     100.0%    

Franklin Street Properties Corp. Earnings ReleaseSupplementary Schedule EPortfolio and Other Supplementary Information(Unaudited & Approximated)

Recurring Capital ExpendituresOwned Portfolio

                      (in thousands) For the Three Months Ended Year ended 31-Mar-15 30-Jun-15 30-Sep-15 31-Dec-15 31-Dec-15 Tenant improvements $ 2,936 $ 3,420 $ 1,794 $ 3,788 $ 11,938 Deferred leasing costs 830 1,539 1,490 3,952 7,811 Non-investment capex   643   1,411   1,090   1,162   4,306 $ 4,409 $ 6,370 $ 4,374 $ 8,902 $ 24,055                                   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 December 31, December 31, 2015 2014 Owned portfolio of commercial real estate Number of properties (a) 36 38 Square feet 9,494,953 9,580,057 Leased percentage 91.6% 92.8%   Investments in non-consolidated REITs Number of properties 2 2 Square feet 1,396,071 1,395,780 Leased percentage 73.5% 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 12,378,050 12,873,638 Leased percentage 87.8% 89.3%

(a) The number of properties at December 31, 2015 and 2014 includes our buildings at 801 Marquette Ave. and

121 South 8th Street in Minneapolis, MN separately. They had previously been presented as one property.

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

          Square     % Leased     % Interest Single Asset REIT name City State Feet 31-Dec-15 Held FSP 303 East Wacker Drive Corp. Chicago IL 861,000 63.9% 43.7% FSP Grand Boulevard Corp. Kansas City MO 535,071     88.8% 27.0% 1,396,071     73.5%  

Franklin Street Properties Corp. Earnings ReleaseSupplementary Schedule FPercentage of Leased Space(Unaudited & Estimated)

                          Third Fourth % Leased (1) Quarter % Leased (1) Quarter as of Average % as of Average % Property Name Location Square Feet 30-Sep-15 Leased (2) 31-Dec-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% 93.8% 95.4% 94.3% 5 FEDERAL WAY Federal Way, WA 117,010 58.9% 58.9% 66.8% 64.9% 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% 43.7% 96.2% 61.2% 8 PARK TEN Houston, TX 157,460 63.1% 63.1% 63.1% 63.1% MONTAGUE (3) San Jose, CA — 81.1% 81.1% (3) (3) 9 ADDISON Addison, TX 290,041 93.4% 92.8% 93.4% 93.4% 10 COLLINS CROSSING Richardson, TX 300,887 100.0% 100.0% 100.0% 100.0% 11 GREENWOOD PLAZA Englewood, CO 196,236 100.0% 100.0% 100.0% 100.0% 12 RIVER CROSSING Indianapolis, IN 205,059 90.6% 90.6% 91.1% 91.1% 13 LIBERTY PLAZA Addison, TX 218,934 82.5% 82.5% 81.8% 79.2% 14 INNSBROOK Glen Allen, VA 298,456 99.9% 99.9% 100.0% 100.0% 15 380 INTERLOCKEN Broomfield, CO 240,185 97.1% 97.1% 97.1% 97.1% 16 BLUE LAGOON Miami, FL 212,619 100.0% 100.0% 100.0% 100.0% 17 ELDRIDGE GREEN Houston, TX 248,399 100.0% 100.0% 100.0% 100.0% 18 ONE OVERTON PARK Atlanta, GA 387,267 85.0% 84.5% 85.0% 85.0% 19 390 INTERLOCKEN Broomfield, CO 241,516 85.3% 81.0% 84.6% 85.1% 20 EAST BALTIMORE Baltimore, MD 325,445 85.4% 84.7% 85.4% 85.4% 21 PARK TEN PHASE II Houston, TX 156,746 100.0% 100.0% 100.0% 100.0% 22 LAKESIDE CROSSING I Maryland Heights, MO 127,778 100.0% 100.0% 100.0% 100.0% 23 LOUDOUN TECH Dulles, VA 136,658 92.0% 92.0% 92.0% 92.0% 24 4807 STONECROFT Chantilly, VA 111,469 100.0% 100.0% 100.0% 100.0% 25 121 SOUTH EIGHTH ST Minneapolis, MN 305,990 90.8% 90.1% 88.3% 88.3% 26 801 Marquette Ave South Minneapolis, MN 169,704 90.8% 90.1% 97.2% 97.2% 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% 100.0% 100.0% 100.0% 31 ONE RAVINIA DRIVE Atlanta, GA 386,603 94.8% 94.8% 94.8% 94.8% 32 TWO RAVINIA Atlanta, GA 442,130 77.4% 76.9% 80.8% 78.6% 33 WESTCHASE I & II Houston, TX 629,025 90.2% 90.2% 87.0% 87.8% 34 1999 BROADWAY Denver, CO 676,379 82.5% 85.1% 82.7% 82.7% 35 999 PEACHTREE Atlanta, GA 621,946 94.7% 94.7% 95.0% 95.2% 36 1001 17th STREET Denver, CO 655,420     86.3%     86.3%     88.6%     87.6% TOTAL WEIGHTED AVERAGE (4) 9,494,953     90.5%     90.5%     91.6%     90.8%  

(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) Property was sold on December 9, 2015.

(4) Totals for Q3 include Montague, which was sold in Q4 2015.

 

Franklin Street Properties Corp. Earnings ReleaseSupplementary Schedule GLargest 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 December 31, 2015

                % of Tenant Sq Ft Portfolio 1 TCF National Bank (a) 263,111 3.0% 2 Quintiles Transnational Corp 259,531 3.0% 3 CITGO Petroleum Corporation 248,399 2.9% 4 Newfield Exploration Company 234,495 2.7% 5 US Government 223,433 2.6% 6 Sutherland Asbill Brennan LLP 222,422 2.6% 7 Burger King Corporation 212,619 2.4% 8 Denbury Onshore, LLC 202,600 2.3% 9 SunTrust Bank 182,888 2.1% 10 Centene Management Company, LLC 179,637 2.1% 11 Citicorp Credit Services, Inc 176,848 2.0% 12 T-Mobile South, LLC dba T-Mobile 151,792 1.7% 13 Houghton Mifflin Harcourt Publishing Company 150,050 1.7% 14 Petrobras America, Inc. 144,813 1.7% 15 Murphy Exploration & Production Company 144,677 1.7% 16 Argo Data Resource Corporation 140,246 1.6% 17 Monsanto Company 127,778 1.5% 18 Federal National Mortgage Association 123,144 1.4% 19 Vail Corp d/b/a Vail Resorts 122,232 1.4% 20 Kaiser Foundation Health Plan 120,979     1.4% Total 3,631,694     41.8%  

_________________

(a) The leases with this tenant concluded on December 31, 2015.

Franklin Street Properties Corp. Earnings ReleaseSupplementary Schedule HDefinition of Funds From Operations (“FFO”) andAdjusted Funds From Operations (“AFFO”)

Funds From Operations (“FFO”)

The Company evaluates performance based on Funds From Operations, which we refer to as FFO. 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.

Adjusted Funds From Operations (“AFFO”)

The Company also evaluates performance based on Adjusted Funds From Operations, which we refer to as AFFO. The Company defines AFFO as 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 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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160216006648/en/

Franklin Street Properties Corp.Georgia Touma, 877-686-9496