FSP Franklin Street Properties Corp

Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE American: FSP), a real estate investment trust (REIT), announced its results for the third quarter ended September 30, 2019.

George J. Carter, Chairman and Chief Executive Officer, commented as follows:

“Leasing activity during the third quarter of 2019 continued at a strong pace within our property portfolio of 32 operating and three redevelopment properties. We believe that we are adding value to our portfolio as we continue to work through a large, approximately three-year lease roll bulge, that began in 2018 and continues through 2020. Much of our recent leasing activity has been focused on renewing or backfilling existing tenant lease rollover space, but net new absorption is beginning to take place as well. We also continue to see generally rising rents and longer lease terms at our properties as we work through this period. Prospective new tenant activity at our three redevelopment properties located in Miami, Minneapolis and Charlotte continued to be solid during the quarter and we expect to make more progress with these assets during the remainder of 2019 and into 2020. With over $600 million of available liquidity as of September 30, 2019, we are confident that we have the financial resources needed for flexibility on our balance sheet and to maximize our leasing and redevelopment value-add opportunities.”

Highlights

• Net income was $2.4 million or $0.02 per basic and diluted share for the third quarter ended September 30, 2019. Funds From Operations (FFO) was $24.9 million or $0.23 per basic and diluted share for the third quarter ended September 30, 2019.
• Adjusted Funds From Operations (AFFO) was $0.10 per basic and diluted share for the third quarter ended September 30, 2019.
• We are raising our full year FFO guidance for 2019, which is now estimated to be in the range of $0.87 to $0.89 per basic and diluted share, from our previously estimated range of $0.84 to $0.88 per basic and diluted share. Lease termination fee income was approximately $4.2 million for the nine months ended September 30, 2019, compared to approximately $4.4 million for the same period in 2018. Our full year FFO guidance for 2019 includes estimated lease termination fee income of approximately $8.4 million, compared to approximately $6.1 million during the year ended 2018.

Leasing Update

• Our directly owned real estate portfolio of 32 operating properties (excluding 3 redevelopment properties) totaling approximately 9.5 million square feet was approximately 89.7% leased as of September 30, 2019 compared to approximately 88.1% leased as of June 30, 2019.
• During the quarter ended September 30, 2019, we leased approximately 304,000 square feet, of which approximately 226,000 square feet was with new tenants. During the nine months ended September 30, 2019, we leased approximately 1,139,000 square feet, of which approximately 444,000 square feet was with new tenants.
• The weighted average GAAP base rent per square foot achieved on leasing activity during the first nine months of 2019 was $32.73 compared to $31.02 in 2018 and the average lease term on leases in 2019 lengthened to 8.6 years compared to 7.2 years in 2018. Overall the portfolio weighted average rent per occupied square foot increased from $29.01 as of December 31, 2018 to $29.81 as of September 30, 2019.
• On September 13, 2019, we entered into a lease agreement with Lennar Homes, LLC for its new corporate headquarters. Lennar will occupy approximately 156,000 square feet of our property in Miami, Florida that we call Blue Lagoon. The lease has an initial term of 16 years.

Dividend Update

On October 11, 2019, the Company announced that its Board of Directors declared a regular quarterly cash dividend for the three months ended September 30, 2019 of $0.09 per share of common stock that will be paid on November 14, 2019 to stockholders of record on October 25, 2019.

Non-GAAP Financial Information

A reconciliation of Net income to FFO, AFFO and Sequential Same Store NOI and our definitions of FFO, AFFO and Sequential Same Store NOI can be found on Supplementary Schedules H and I.

Real Estate Update

Supplementary schedules provide property information for the Company’s owned and managed real estate portfolio as of September 30, 2019. The Company will also be filing an updated supplemental information package that will provide stockholders and the financial community with additional operating and financial data. The Company will file this supplemental information package with the SEC and make it available on its website at www.fspreit.com.

Net Income and FFO Guidance

We are raising our full year net income guidance for 2019, which is estimated to be in the range of approximately $0.03 to $0.05 per basic and diluted share, and are introducing net income guidance for the fourth quarter of 2019, which is estimated to be in the range of approximately $0.00 to $0.02 per basic and diluted share. We are raising our full year FFO guidance for 2019, which is estimated to be in the range of approximately $0.87 to $0.89 per basic and diluted share, and are introducing FFO guidance for the fourth quarter of 2019, which is estimated to be in the range of approximately $0.21 to $0.23 per basic and 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 general and administrative 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.

A reconciliation of the guidance for net income per share to the guidance for FFO per share is provided as follows:

 

 

Q4 2019 Range

 

Full Year 2019 Range

 

 

Low

 

High

 

Low

 

High

Net income per share

 

$

0.00

 

$

0.02

 

$

0.03

 

$

0.05

Depreciation & Amortization

 

 

0.21

 

 

0.21

 

 

0.84

 

 

0.84

Funds From Operations per share

 

$

0.21

 

$

0.23

 

$

0.87

 

$

0.89

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

Earnings Call

A conference call is scheduled for October 30, 2019 at 11:00 a.m. (ET) to discuss the third quarter 2019 results. To access the call, please dial 1-800-464-8240. Internationally, the call may be accessed by dialing 1-412-902-6521. To access the call from Canada, please dial 1-866-605-3852. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website (www.fspreit.com) at least ten minutes prior to the start of the call and follow the posted directions. The webcast will also be available via replay from the above location starting one hour after the call is finished.

About Franklin Street Properties Corp.

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on infill and central business district (CBD) office properties in the U.S. Sunbelt and Mountain West, as well as select opportunistic markets. FSP 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.fspreit.com.

Forward-Looking Statements

Statements made in this press release that state FSP’s or management’s intentions, beliefs, expectations, or predictions for the future may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release may also contain forward-looking statements, such as our ability to lease space in the future, expectations for FFO and net income in future periods, expectations for lease termination fees in future periods, expectations for operating performance, value creation/enhancement in future periods, expectations for growth and leasing activities in future periods, expectations regarding the timing, leasing and economic results of our redevelopment properties that are based on current judgments and current knowledge of management and are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, economic conditions in the United States, including the level of interest rates, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events and expenditures that cannot be anticipated such as utility rate and usage increases, delays in construction schedules, unanticipated 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, 2018, 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, acquisitions, dispositions, performance or achievements. We will not update any of the forward-looking statements after the date of this press release to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.

Franklin Street Properties Corp. Earnings Release Supplementary Information Table of Contents

 

 

Franklin Street Properties Corp. Financial Results

A-C

Real Estate Portfolio Summary Information

D

Portfolio and Other Supplementary Information

E

Percentage of Leased Space

F

Largest 20 Tenants – FSP Owned Portfolio

G

Reconciliation and Definitions of Funds From Operations (FFO) and Adjusted

 

Funds From Operations (AFFO)

H

Reconciliation and Definition of Sequential Same Store results to Property Net

 

Operating Income (NOI) and Net Income (Loss)

I

 

 

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)

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

68,108

 

$

67,436

 

$

196,952

 

$

198,473

 

Related party revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fees and interest income from loans

 

 

426

 

 

1,261

 

 

3,100

 

 

3,793

 

Other

 

 

5

 

 

8

 

 

16

 

 

26

 

Total revenue

 

 

68,539

 

 

68,705

 

 

200,068

 

 

202,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate operating expenses

 

 

18,041

 

 

17,946

 

 

52,883

 

 

52,051

 

Real estate taxes and insurance

 

 

12,505

 

 

11,651

 

 

37,408

 

 

35,120

 

Depreciation and amortization

 

 

22,559

 

 

23,277

 

 

67,913

 

 

70,903

 

General and administrative

 

 

3,886

 

 

3,394

 

 

11,097

 

 

9,908

 

Interest

 

 

9,036

 

 

9,935

 

 

27,775

 

 

29,174

 

Total expenses

 

 

66,027

 

 

66,203

 

 

197,076

 

 

197,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before taxes on income and equity in

income of non-consolidated REITs

 

 

2,512

 

 

2,502

 

 

2,992

 

 

5,136

 

Tax expense on income

 

 

113

 

 

74

 

 

165

 

 

231

 

Equity in income of non-consolidated REITs

 

 

—

 

 

7,180

 

 

—

 

 

6,793

 

Net income

 

$

2,399

 

$

9,608

 

$

2,827

 

$

11,698

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding, basic and diluted

 

 

107,231

 

 

107,231

 

 

107,231

 

 

107,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share, basic and diluted

 

$

0.02

 

$

0.09

 

$

0.03

 

$

0.11

 

 

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)

 

2019

 

2018

 

Assets:

 

 

 

 

 

 

 

Real estate assets:

 

 

 

 

 

 

 

Land

 

$

191,578

 

$

191,578

 

Buildings and improvements

 

 

1,900,131

 

 

1,857,935

 

Fixtures and equipment

 

 

11,099

 

 

8,839

 

 

 

 

2,102,808

 

 

2,058,352

 

Less accumulated depreciation

 

 

476,298

 

 

432,579

 

Real estate assets, net

 

 

1,626,510

 

 

1,625,773

 

Acquired real estate leases, less accumulated amortization of $68,542 and $101,897, respectively

 

 

45,066

 

 

59,595

 

Cash, cash equivalents and restricted cash

 

 

20,159

 

 

11,177

 

Tenant rent receivables

 

 

4,410

 

 

3,938

 

Straight-line rent receivable

 

 

64,111

 

 

54,006

 

Prepaid expenses and other assets

 

 

8,868

 

 

10,400

 

Related party mortgage loan receivables

 

 

21,265

 

 

70,660

 

Other assets: derivative asset

 

 

2,844

 

 

14,765

 

Office computers and furniture, net of accumulated depreciation of $1,355 and $1,512, respectively

 

 

136

 

 

197

 

Deferred leasing commissions, net of accumulated amortization of $27,433 and $24,318, respectively

 

 

49,781

 

 

47,591

 

Total assets

 

$

1,843,150

 

$

1,898,102

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity:

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Bank note payable

 

$

—

 

$

25,000

 

Term loans payable, less unamortized financing costs of $4,631 and $5,722, respectively

 

 

765,369

 

 

764,278

 

Series A & Series B Senior Notes, less unamortized financing costs of $1,026 and $1,150, respectively

 

 

198,974

 

 

198,850

 

Accounts payable and accrued expenses

 

 

61,657

 

 

59,183

 

Accrued compensation

 

 

3,769

 

 

3,043

 

Tenant security deposits

 

 

9,008

 

 

6,319

 

Lease liability

 

 

1,976

 

 

—

 

Other liabilities: derivative liabilities

 

 

9,934

 

 

—

 

Acquired unfavorable real estate leases, less accumulated amortization of $4,907 and $6,605, respectively

 

 

2,810

 

 

3,795

 

Total liabilities

 

 

1,053,497

 

 

1,060,468

 

 

 

 

 

 

 

 

 

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, 107,231,155 and 107,231,155 shares issued and outstanding, respectively

 

 

11

 

 

11

 

Additional paid-in capital

 

 

1,356,457

 

 

1,356,457

 

Accumulated other comprehensive income (loss)

 

 

(7,090)

 

 

14,765

 

Accumulated distributions in excess of accumulated earnings

 

 

(559,725)

 

 

(533,599)

 

Total stockholders’ equity

 

 

789,653

 

 

837,634

 

Total liabilities and stockholders’ equity

 

$

1,843,150

 

$

1,898,102

 

 

 

 

 

 

 

 

 

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)

 

2019

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

2,827

 

$

11,698

 

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

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

70,072

 

 

73,127

 

Amortization of above and below market leases

 

 

(305)

 

 

(405)

 

Equity in loss of non-consolidated REITs

 

 

—

 

 

(6,793)

 

Decrease in allowance for doubtful accounts and write-off of accounts receivable

 

 

(69)

 

 

(25)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Tenant rent receivables

 

 

(403)

 

 

(58)

 

Straight-line rents

 

 

(6,950)

 

 

821

 

Lease acquisition costs

 

 

(3,155)

 

 

(683)

 

Prepaid expenses and other assets

 

 

1,261

 

 

(487)

 

Accounts payable and accrued expenses

 

 

2,849

 

 

(2,665)

 

Accrued compensation

 

 

726

 

 

(797)

 

Tenant security deposits

 

 

2,689

 

 

236

 

Payment of deferred leasing commissions

 

 

(9,485)

 

 

(11,051)

 

Net cash provided by operating activities

 

 

60,057

 

 

62,918

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Property improvements, fixtures and equipment

 

 

(47,905)

 

 

(35,901)

 

Investment in non-consolidated REITs

 

 

—

 

 

74,931

 

Distributions in excess of earnings from non-consolidated REITs

 

 

—

 

 

710

 

Repayment of related party mortgage loan receivable

 

 

(2,400)

 

 

—

 

Investment in related party mortgage loan receivable

 

 

51,795

 

 

795

 

Proceeds received from liquidating trust

 

 

1,470

 

 

—

 

Net cash provided by investing activities

 

 

2,960

 

 

40,535

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Distributions to stockholders

 

 

(28,953)

 

 

(39,676)

 

Borrowings under bank note payable

 

 

45,000

 

 

30,000

 

Repayments of bank note payable

 

 

(70,000)

 

 

(91,000)

 

Deferred financing costs

 

 

(82)

 

 

(2,162)

 

Net cash used in financing activities

 

 

(54,035)

 

 

(102,838)

 

Net increase in cash, cash equivalents and restricted cash

 

 

8,982

 

 

615

 

Cash, cash equivalents and restricted cash, beginning of year

 

 

11,177

 

 

9,819

 

Cash, cash equivalents and restricted cash, end of period

 

$

20,159

$

10,434

 

 

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

 

2019

 

314,602

 

3.2%

 

2020

 

960,806

 

9.7%

 

2021

 

672,530

 

6.8%

 

2022

 

1,228,668

 

12.4%

 

2023

 

651,756

 

6.6%

 

Thereafter (2)

 

6,080,817

 

61.3%

 

 

 

9,909,179

 

100.0%

 

(1)

Percentages are determined based upon total square footage.

(2)

Includes 975,128 square feet of vacancies at our operating properties and 201,388 square feet of vacancies at our redevelopment properties as of September 30, 2019. We define redevelopment properties as properties being developed, redeveloped or where development/redevelopment is complete but that are not yet stabilized.

(dollars & square feet in 000's)

 

As of September 30, 2019 (a)

 

 

 

# of

 

 

 

 

% of

 

Square

 

% of

 

State

 

Properties

 

Investment

 

Portfolio

 

Feet

 

Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Colorado

 

6

 

$

547,250

 

33.6%

 

2,620

 

26.4%

 

Texas

 

9

 

 

343,531

 

21.1%

 

2,420

 

24.4%

 

Georgia

 

5

 

 

319,850

 

19.7%

 

1,967

 

19.9%

 

Minnesota

 

3

 

 

119,702

 

7.4%

 

754

 

7.6%

 

Virginia

 

4

 

 

80,437

 

4.9%

 

685

 

6.9%

 

North Carolina

 

2

 

 

50,947

 

3.1%

 

322

 

3.2%

 

Missouri

 

2

 

 

45,794

 

2.8%

 

351

 

3.5%

 

Illinois

 

2

 

 

47,971

 

3.0%

 

372

 

3.8%

 

Florida

 

1

 

 

42,131

 

2.6%

 

213

 

2.2%

 

Indiana

 

1

 

 

28,897

 

1.8%

 

205

 

2.1%

 

Total

 

35

 

$

1,626,510

 

100.0%

 

9,909

 

100.0%

 

(a)

Includes investment in our redevelopment properties. We define redevelopment properties as properties being developed, redeveloped or where complete, but that are not yet stabilized.

 

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

Recurring Capital Expenditures

 

 

 

 

Nine Months

 

(in thousands)

 

For the Three Months Ended

 

Ended

 

 

 

31-Mar-19

 

30-Jun-19

 

30-Sep-19

 

30-Sep-19

 

Tenant improvements

 

$

8,318

 

$

10,169

 

$

7,890

 

$

26,377

 

Deferred leasing costs

 

 

4,239

 

 

3,666

 

 

1,286

 

 

9,191

 

Non-investment capex

 

 

2,413

 

 

4,049

 

 

3,968

 

 

10,430

 

 

 

$

14,970

 

$

17,884

 

$

13,144

 

$

45,998

 

 

 

 

 

Nine Months

 

 

 

For the Three Months Ended

 

Ended

 

 

 

31-Mar-18

 

30-Jun-18

 

30-Sep-18

 

30-Sep-18

 

Tenant improvements

 

$

6,777

 

$

8,212

 

$

7,084

 

$

22,073

 

Deferred leasing costs

 

 

1,021

 

 

5,314

 

 

4,394

 

 

10,729

 

Non-investment capex

 

 

1,858

 

 

2,558

 

 

2,328

 

 

6,744

 

 

 

$

9,656

 

$

16,084

 

$

13,806

 

$

39,546

 

 

 

 

 

 

 

Square foot & leased percentages

 

September 30,

 

December 31,

 

 

 

2019

 

2018

 

Operating Properties (a):

 

 

 

 

 

Number of properties

 

32

 

32

 

Square feet

 

9,503,964

 

9,486,650

 

Leased percentage

 

89.7%

 

89.0%

 

 

 

 

 

 

 

Redevelopment Properties:

 

 

 

 

 

Number of properties

 

3

 

3

 

Square feet

 

405,215

 

404,652

 

Leased percentage

 

50.3%

 

27.2%

 

 

 

 

 

 

 

Managed Properties - Single Asset REITs (SARs):

 

 

 

 

 

Number of properties

 

2

 

3

 

Square feet

 

348,545

 

674,342

 

 

 

 

 

 

 

Total Operating, Redevelopment and Managed Properties:

 

 

 

 

 

Number of properties

 

37

 

38

 

Square feet

 

10,257,724

 

10,565,644

 

(a)

Excludes investment in our redevelopment properties. We define redevelopment properties as properties being developed, redeveloped or where development/redevelopment is complete but that are not yet stabilized.

 

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-19

 

Leased (2)

 

30-Sep-19

 

Leased (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

MEADOW POINT

 

Chantilly, VA

 

138,537

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

2

 

TIMBERLAKE

 

Chesterfield, MO

 

234,496

 

95.7%

 

97.1%

 

95.7%

 

95.7%

 

3

 

TIMBERLAKE EAST

 

Chesterfield, MO

 

117,036

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

4

 

NORTHWEST POINT

 

Elk Grove Village, IL

 

177,095

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

5

 

PARK TEN

 

Houston, TX

 

157,460

 

96.4%

 

96.4%

 

96.4%

 

96.4%

 

6

 

PARK TEN PHASE II

 

Houston, TX

 

156,746

 

66.9%

 

66.4%

 

88.8%

 

87.3%

 

7

 

GREENWOOD PLAZA

 

Englewood, CO

 

196,236

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

8

 

ADDISON

 

Addison, TX

 

289,302

 

82.4%

 

82.4%

 

82.4%

 

82.4%

 

9

 

COLLINS CROSSING

 

Richardson, TX

 

300,887

 

99.4%

 

99.4%

 

99.4%

 

99.4%

 

10

 

INNSBROOK

 

Glen Allen, VA

 

298,183

 

57.3%

 

57.3%

 

57.2%

 

57.3%

 

11

 

RIVER CROSSING

 

Indianapolis, IN

 

205,059

 

95.0%

 

95.0%

 

95.0%

 

95.0%

 

12

 

LIBERTY PLAZA

 

Addison, TX

 

216,834

 

71.5%

 

69.1%

 

73.4%

 

72.1%

 

13

 

380 INTERLOCKEN

 

Broomfield, CO

 

240,359

 

97.1%

 

97.1%

 

97.1%

 

97.1%

 

14

 

390 INTERLOCKEN

 

Broomfield, CO

 

241,512

 

98.2%

 

98.2%

 

98.2%

 

98.2%

 

15

 

ELDRIDGE GREEN

 

Houston, TX

 

248,399

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

16

 

ONE OVERTON PARK

 

Atlanta, GA

 

387,267

 

80.6%

 

80.3%

 

81.2%

 

81.1%

 

17

 

LOUDOUN TECH

 

Dulles, VA

 

136,658

 

98.9%

 

98.9%

 

98.9%

 

98.9%

 

18

 

4807 STONECROFT

 

Chantilly, VA

 

111,469

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

19

 

121 SOUTH EIGHTH ST

 

Minneapolis, MN

 

297,209

 

86.9%

 

82.9%

 

90.1%

 

88.7%

 

20

 

EMPEROR BOULEVARD

 

Durham, NC

 

259,531

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

21

 

LEGACY TENNYSON CTR

 

Plano, TX

 

207,049

 

91.6%

 

91.6%

 

91.8%

 

91.8%

 

22

 

ONE LEGACY

 

Plano, TX

 

214,110

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

23

 

909 DAVIS

 

Evanston, IL

 

195,098

 

93.3%

 

91.9%

 

93.3%

 

93.3%

 

24

 

ONE RAVINIA DRIVE

 

Atlanta, GA

 

386,602

 

85.7%

 

87.0%

 

86.8%

 

86.5%

 

25

 

TWO RAVINIA

 

Atlanta, GA

 

411,047

 

69.3%

 

72.8%

 

68.2%

 

68.2%

 

26

 

WESTCHASE I & II

 

Houston, TX

 

629,025

 

77.3%

 

79.2%

 

77.3%

 

77.3%

 

27

 

1999 BROADWAY

 

Denver, CO

 

677,378

 

78.7%

 

78.3%

 

87.1%

 

85.6%

 

28

 

999 PEACHTREE

 

Atlanta, GA

 

621,946

 

90.9%

 

90.8%

 

95.8%

 

94.2%

 

29

 

1001 17th STREET

 

Denver, CO

 

655,420

 

98.5%

 

98.5%

 

98.5%

 

98.5%

 

30

 

PLAZA SEVEN

 

Minneapolis, MN

 

326,757

 

88.6%

 

87.8%

 

88.6%

 

88.6%

 

31

 

PERSHING PLAZA

 

Atlanta, GA

 

160,145

 

97.4%

 

97.4%

 

98.9%

 

97.9%

 

32

 

600 17th STREET

 

Denver, CO

 

609,112

 

86.9%

 

86.7%

 

89.8%

 

88.5%

 

 

 

OPERATING TOTAL

 

 

 

9,503,964

 

88.1%

 

88.1%

 

89.7%

 

89.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33

 

FOREST PARK

 

Charlotte, NC

 

62,212

 

0.0%

 

0.0%

 

0.0%

 

0.0%

 

34

 

BLUE LAGOON

 

Miami, FL

 

213,182

 

0.0%

 

0.0%

 

73.1%

 

24.4%

 

35

 

801 MARQUETTE AVE

 

Minneapolis, MN

 

129,821

 

37.0%

 

37.0%

 

37.0%

 

37.0%

 

 

 

REDEVELOPMENT TOTAL

 

 

 

405,215

 

11.9%

 

11.9%

 

50.3%

 

24.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OWNED PORTFOLIO TOTAL

 

 

 

9,909,179

 

 

 

 

 

 

 

 

 

(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.

 

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, 2019

 

 

 

 

 

 

% of

 

 

 

Tenant

 

Sq Ft

 

Portfolio

 

1

 

IQVIA Holdings Inc.

 

259,531

 

2.6%

 

2

 

US Government

 

259,141

 

2.6%

 

3

 

CITGO Petroleum Corporation

 

248,399

 

2.5%

 

4

 

Newfield Exploration Company

 

234,495

 

2.4%

 

5

 

Centene Management Company, LLC

 

216,879

 

2.2%

 

6

 

Eversheds Sutherland (US) LLP

 

179,868

 

1.8%

 

7

 

EOG Resources, Inc.

 

169,167

 

1.7%

 

8

 

The Vail Corporation

 

164,636

 

1.7%

 

9

 

Lennar Homes, LLC

 

155,808

 

1.6%

 

10

 

T-Mobile South, LLC dba T-Mobile

 

151,792

 

1.5%

 

11

 

Citicorp Credit Services, Inc.

 

146,260

 

1.5%

 

12

 

Petrobras America, Inc.

 

144,813

 

1.5%

 

13

 

Jones Day

 

140,342

 

1.4%

 

14

 

Argo Data Resource Corporation

 

140,246

 

1.4%

 

15

 

Worldventures Holdings, LLC

 

129,998

 

1.3%

 

16

 

Kaiser Foundation Health Plan

 

120,979

 

1.2%

 

17

 

VMWare, Inc.

 

119,558

 

1.2%

 

18

 

Giesecke & Devrient America

 

112,110

 

1.1%

 

19

 

Northrop Grumman Systems Corp.

 

111,469

 

1.1%

 

20

 

Randstad General Partner (US)

 

109,638

 

1.1%

 

 

 

Total

 

3,315,129

 

33.4%

 

 

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule H

Reconciliation and Definitions of Funds From Operations (“FFO”) and

Adjusted Funds From Operations (“AFFO”)

 

A reconciliation of Net income to FFO and AFFO is shown below and a definition of FFO and AFFO is provided on Supplementary Schedule I. Management believes FFO and AFFO are used broadly throughout the real estate investment trust (REIT) industry as measurements of performance. The Company has included the National Association of Real Estate Investment Trusts (NAREIT) FFO definition as of May 17, 2016 in the table and notes that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently. The Company’s computation of FFO and AFFO may not be comparable to FFO or AFFO reported by other REITs or real estate companies that define FFO or AFFO differently.

Reconciliation of Net Income to FFO and AFFO:

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

(In thousands, except per share amounts)

 

2019

 

2018

 

2019

 

2018

 

Net income

 

$

2,399

 

$

9,608

 

$

2,827

 

$

11,698

 

Equity in loss from non-consolidated REITs

 

 

—

 

 

(7,180)

 

 

—

 

 

(6,793)

 

FFO from non-consolidated REITs

 

 

—

 

 

649

 

 

—

 

 

2,511

 

Depreciation & amortization

 

 

22,448

 

 

23,081

 

 

67,609

 

 

70,499

 

NAREIT FFO

 

 

24,847

 

 

26,158

 

 

70,436

 

 

77,915

 

Lease Acquisition costs

 

 

61

 

 

—

 

 

351

 

 

—

 

Funds From Operations (FFO)

 

$

24,908

 

$

26,158

 

$

70,787

 

$

77,915

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds From Operations (FFO)

 

$

24,908

 

$

26,158

 

$

70,787

 

$

77,915

 

Reverse FFO from non-consolidated REITs

 

 

—

 

 

(649)

 

 

—

 

 

(2,511)

 

Distributions from non-consolidated REITs

 

 

—

 

 

—

 

 

—

 

 

710

 

Amortization of deferred financing costs

 

 

720

 

 

799

 

 

2,157

 

 

2,223

 

Straight-line rent

 

 

(2,120)

 

 

522

 

 

(6,949)

 

 

821

 

Tenant improvements

 

 

(7,890)

 

 

(7,084)

 

 

(26,377)

 

 

(22,073)

 

Leasing commissions

 

 

(1,286)

 

 

(4,394)

 

 

(9,191)

 

 

(10,729)

 

Non-investment capex

 

 

(3,968)

 

 

(2,328)

 

 

(10,430)

 

 

(6,744)

 

Adjusted Funds From Operations (AFFO)

 

$

10,364

 

$

13,024

 

$

19,997

 

$

39,612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS

 

$

0.02

 

$

0.09

 

$

0.03

 

$

0.11

 

FFO

 

$

0.23

 

$

0.24

 

$

0.66

 

$

0.73

 

AFFO

 

$

0.10

 

$

0.12

 

$

0.19

 

$

0.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares (basic and diluted)

 

 

107,231

 

 

107,231

 

 

107,231

 

 

107,231

 

 

Funds From Operations (“FFO”)

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

FFO should not be considered as an alternative to net income or loss (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs.

Other real estate companies and the National Association of Real Estate Investment Trusts, or NAREIT, may define this term in a different manner. We have included the NAREIT FFO as of May 17, 2016 in the table and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do.

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

Adjusted Funds From Operations (“AFFO”)

The Company also evaluates performance based on Adjusted Funds From Operations, which we refer to as AFFO. The Company defines AFFO as (1) FFO, (2) excluding our proportionate share of FFO and including distributions received, from non-consolidated REITs, (3) excluding the effect of straight-line rent, (4) plus the amortization of deferred financing costs and (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 or loss (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs. Other real estate companies may define this term in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, AFFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.

Franklin Street Properties Corp. Earnings Release Supplementary Schedule I Reconciliation and Definition of Sequential Same Store results to property Net Operating Income (NOI) and Net Income

 

Net Operating Income (“NOI”)

 

The Company provides property performance based on Net Operating Income, which we refer to as NOI. Management believes that investors are interested in this information. NOI is a non-GAAP financial measure that the Company defines as net income or loss (the most directly comparable GAAP financial measure) plus general and administrative expenses, depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, interest expense, less equity in earnings of nonconsolidated REITs, interest income, management fee income, hedge ineffectiveness, gains or losses on the sale of assets and excludes non-property specific income and expenses. The information presented includes footnotes and the data is shown by region with properties owned in the periods presented, which we call Sequential Same Store. The comparative Sequential Same Store results include properties held for the periods presented and exclude properties that are redevelopment properties, which include properties being developed, redeveloped or where redevelopment is complete but are in lease-up and are not stabilized, dispositions and significant nonrecurring income such as bankruptcy settlements and lease termination fees. NOI, as defined by the Company, may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income or loss as an indication of our performance or to cash flows as a measure of the Company’s liquidity or its ability to make distributions. The calculations of NOI and Sequential Same Store are shown in the following table:

 

 

Rentable Square Feet

 

Three Months Ended

 

Three Months Ended

 

Inc

 

%

 

(in thousands)

 

or RSF

 

30-Sep-19

 

30-Jun-19

 

(Dec)

 

Change

 

Region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East

 

944

 

$

3,001

 

$

3,301

 

$

(300)

 

(9.1)

%

MidWest

 

1,553

 

 

5,297

 

 

5,174

 

 

123

 

2.4

%

South

 

4,387

 

 

17,456

 

 

15,196

 

 

2,260

 

14.9

%

West

 

2,620

 

 

11,134

 

 

11,240

 

 

(106)

 

(0.9)

%

Property NOI* from Operating Properties

 

9,504

 

 

36,888

 

 

34,911

 

 

1,977

 

5.7

%

Dispositions and Redevelopment Properties

 

405

 

 

(21)

 

 

(215)

 

 

194

 

0.6

%

NOI*

 

9,909

 

$

36,867

 

$

34,696

 

$

2,171

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sequential Same Store

 

 

 

$

36,888

 

$

34,911

 

$

1,977

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Nonrecurring

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items in NOI* (a)

 

 

 

 

3,434

 

 

706

 

 

2,728

 

(7.9)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sequential Same Store

 

 

 

$

33,454

 

$

34,205

 

$

(751)

 

(2.2)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

 

 

 

Reconciliation to Net income

 

 

 

30-Sep-19

 

30-Jun-19

 

 

 

 

 

 

Net income

 

 

 

$

2,399

 

$

1,633

 

 

 

 

 

 

Add (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fee income

 

 

 

 

(634)

 

 

(645)

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

22,559

 

 

22,109

 

 

 

 

 

 

Amortization of above/below market leases

 

 

 

 

(112)

 

 

(81)

 

 

 

 

 

 

General and administrative

 

 

 

 

3,886

 

 

3,703

 

 

 

 

 

 

Interest expense

 

 

 

 

9,036

 

 

9,371

 

 

 

 

 

 

Interest income

 

 

 

 

(395)

 

 

(1,259)

 

 

 

 

 

 

Non-property specific items, net

 

 

 

 

128

 

 

(135)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI*

 

 

 

$

36,867

 

$

34,696

 

 

 

 

 

 

(1)

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

 

*Excludes NOI from investments in and interest income from secured loans to non-consolidated REITs.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20191029006087/en/

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