FRANKLIN STREET PROPERTIES CORP /MA/ - FORM 8-K - EX-99.2

Attached files

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8-K - 8-K - FRANKLIN STREET PROPERTIES CORP /MA/	fsp-20160216x8k.htm
EX-99.1 - EX-99.1 - FRANKLIN STREET PROPERTIES CORP /MA/	fsp-20160216ex9912bf571.htm

Exhibit 99.2

Franklin Street Properties

Supplemental Operating

and Financial Data

Fourth Quarter 2015

Franklin Street Properties Corp.

401 Edgewater Place | Wakefield, Massachusetts 01880

781.557.1300 | www.franklinstreetproperties.com

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 FSP’s current expectations include general economic conditions, uncertainties relating to fiscal policy, changes in government regulations, regulatory uncertainty, geopolitical events, local real estate conditions, the performance of properties that FSP has acquired or may acquire, the timely lease-up of properties and other risks, detailed from time to time in FSP’s SEC reports. FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

		FSP 1001 17th Street, Denver, CO

December 31, 2015 | Page 2

Company Overview

Overview		Snapshot (as of December 31, 2015)
Franklin Street Properties Corp. (“FSP”, “we”, “our” or the “Company”) (NYSE MKT: FSP) is investing in institutional-quality office properties in the U.S. FSP’s strategy is to invest in select urban infill and central business district (CBD) properties, with primary emphasis on our top five markets of Atlanta, Dallas, Denver, Houston, and Minneapolis. FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. FSP’s real estate operations include property acquisitions and dispositions, short-term financing, leasing, development and asset management.		Corporate Headquarters	Wakefield, MA
		Fiscal Year-End	31-Dec
		Total Properties	36
		Total Square Feet	9.5 Million
		Trading Symbol	FSP
		Exchange	NYSE MKT
		Common Shares Outstanding	100,187,405
		Quarterly Dividend	$0.19
Our Business		Dividend Yield	7.3%
As of December 31, 2015, the Company owned and operated a portfolio of real estate consisting of 36 properties, managed 9 Sponsored REITs and held six 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.		Total Market Capitalization	$1.9 Billion
		Insider Holdings	4.1%


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	FSP 999 Peachtree Street, Atlanta, GA

Inquiries
Inquiries should be directed to: Georgia Touma
877.686.9496 or InvestorRelations@franklinstreetproperties.com

December 31, 2015 | Page 3


	Summary of Financial Highlights


(in thousands except per share amounts, SF & number of properties)
	31-Dec-15		30-Sep-15		30-Jun-15		31-Mar-15		31-Dec-14
Income Items:
Rental revenue	$	59,656	$	60,386	$	58,801	$	59,013	$	61,022
Total revenue		61,250		61,877		60,233		60,507		62,489
Adjusted EBITDA*		32,112		32,567		32,642		31,097		33,182
Equity in losses of non-consolidated REITs		(807)		(284)		(38)		(322)		(269)
Net income		15,412		3,166		3,903		12,533		4,295
FFO*		27,076		26,954		27,188		25,672		27,525

Per Share Data:
EPS	$	0.15	$	0.03	$	0.04	$	0.13	$	0.04
FFO*	$	0.27	$	0.27	$	0.27	$	0.26	$	0.27
Weighted Average Shares (diluted)		100,187		100,187		100,187		100,187		100,187
Closing share price	$	10.35	$	10.75	$	11.31	$	12.82	$	12.27
Dividend	$	0.19	$	0.19	$	0.19	$	0.19	$	0.19
Payout Ratio:		70%		71%		70%		74%		69%

Balance Sheet Items:
Real estate, net	$	1,509,624	$	1,530,691	$	1,539,343	$	1,486,897	$	1,524,307
Other assets, net		411,744		395,689		400,758		402,515		412,083
Total assets, net		1,921,368		1,926,380		1,940,101		1,889,412		1,936,390
Total liabilities, net		985,712		992,086		984,555		921,082		956,743
Shareholders' equity		935,656		934,294		955,546		968,330		979,647

Market Capitalization and Debt:
Total Market Capitalization (a)	$	1,946,940	$	1,997,015	$	2,053,120	$	2,144,403	$	2,117,299
Total debt outstanding		910,000		920,000		920,000		860,000		888,000
Debt to Total Market Capitalization		46.7%		46.1%		44.8%		40.1%		41.9%
Debt to Adjusted EBITDA		7.1		7.1		7.0		6.9		6.7

Owned Portfolio Leasing Statistics:
Owned portfolio assets		36		36		36		36		38
Portfolio total SF		9,494,953		9,640,904		9,639,740		9,310,131		9,580,057
Portfolio % leased		91.6%		90.5%		90.6%		90.4%		92.8%

(a)

Total Market Capitalization is the closing share price multiplied 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 Definitions of these Non-GAAP Measures beginning on page 27.

December 31, 2015 | Page 4

Condensed Consolidated Income Statements

($ in thousands, except per share amounts)


									For the										For the
	For the Three Months Ended								Year Ended		For the Three Months Ended								Year Ended
	31-Mar-15		30-Jun-15		30-Sep-15		31-Dec-15		31-Dec-15		31-Mar-14		30-Jun-14		30-Sep-14		31-Dec-14		31-Dec-14

Revenue:
Rental	$	59,013	$	58,801	$	60,386	$	59,656	$	237,856	$	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		1,575		5,930		1,643		1,671		1,462		1,465		6,241
Other		21		20		21		19		81		23		76		—		2		101
Total revenue		60,507		60,233		61,877		61,250		243,867		63,263		62,741		61,190		62,489		249,683

Expenses:
Real estate operating expenses		15,356		14,644		15,951		15,939		61,890		15,071		14,995		15,632		16,334		62,032
Real estate taxes and insurance		10,048		9,469		9,941		9,202		38,660		9,251		9,763		8,555		9,288		36,857
Depreciation and amortization		22,672		23,207		22,911		22,569		91,359		24,300		23,563		24,878		23,174		95,915
Selling, general and administrative		3,691		3,401		3,071		3,128		13,291		3,272		3,148		3,071		3,492		12,983
Interest		6,187		6,365		6,425		6,455		25,432		7,176		6,891		6,883		6,483		27,433
Total expenses		57,954		57,086		58,299		57,293		230,632		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		3,957		13,235		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)		(807)		(1,451)		(484)		(552)		(455)		(269)		(1,760)
Gain on sale of properties, less applicable income tax		10,462		948		1		12,251		23,662		—		—		—		940		940

Income before taxes on income		12,694		4,057		3,295		15,401		35,447		3,710		3,830		1,716		4,390		13,646
Income tax expense		161		154		129		(11)		433		137		117		149		95		498

Net income	$	12,533	$	3,903	$	3,166	$	15,412	$	35,014	$	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		100,187

Net income per share, basic and diluted	$	0.13	$	0.04	$	0.03	$	0.15	$	0.35	$	0.04	$	0.04	$	0.02	$	0.04	$	0.13

December 31, 2015 | Page 5

$ in thousands, except per share amounts)

Condensed Consolidated Balance Sheets

(in thousands)


	March 31,		June 30,		September 30,		December 31,		March 31,		June 30,		September 30,		December 31,
	2015		2015		2015		2015		2014		2014		2014		2014
Assets:
Real estate assets:
Land	$	174,707	$	180,271	$	180,271	$	170,021	$	185,479	$	185,479	$	185,479	$	183,930
Buildings and improvements		1,581,524		1,636,444		1,639,869		1,637,066		1,605,808		1,609,747		1,613,699		1,604,984
Fixtures and equipment		1,724		1,800		1,882		2,528		1,296		1,395		1,633		1,677
		1,757,955		1,818,515		1,822,022		1,809,615		1,792,583		1,796,621		1,800,811		1,790,591
Less accumulated depreciation		271,058		279,172		291,331		299,991		234,447		246,658		258,799		266,284
Real estate assets, net		1,486,897		1,539,343		1,530,691		1,509,624		1,558,136		1,549,963		1,542,012		1,524,307

Acquired real estate leases, net		124,337		126,926		117,272		108,046		172,262		161,519		149,019		138,714
Investment in non-consolidated REITs		78,228		78,164		77,853		77,019		79,983		79,405		78,907		78,611
Cash and cash equivalents		14,945		15,841		19,100		18,163		20,031		18,455		15,930		7,519
Restricted cash		56		48		34		23		688		728		707		742
Tenant rent receivables, net		4,587		2,886		3,548		2,898		6,035		2,867		2,865		4,733
Straight-line rent receivable, net		45,498		46,168		47,330		48,502		44,392		46,021		46,737		47,021
Prepaid expenses and other assets		13,526		9,096		9,773		7,837		9,208		9,006		9,131		10,292
Related party mortgage loan receivable		93,641		93,641		93,641		118,641		101,916		88,436		88,436		93,641
Other assets: derivative asset		774		918		—		1,132		4,801		2,626		4,582		3,020
Office computers and furniture, net of accumulated depreciation		588		562		551		484		746		710		637		609
Deferred leasing commissions, net		26,335		26,508		26,587		28,999		27,477		28,861		28,354		27,181
Total assets	$	1,889,412	$	1,940,101	$	1,926,380	$	1,921,368	$	2,025,675	$	1,988,597	$	1,967,317	$	1,936,390

Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable	$	240,000	$	300,000	$	300,000	$	290,000	$	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		620,000
Accounts payable and accrued expenses		36,065		39,199		42,164		49,489		34,390		34,590		40,228		42,561
Accrued compensation		1,241		2,327		3,236		3,726		1,027		2,052		2,863		3,758
Tenant security deposits		4,019		4,315		4,349		4,829		4,258		4,259		4,331		4,248
Other liabilities: derivative termination value		9,836		7,632		12,096		8,243		3,825		5,985		4,847		7,268
Acquired unfavorable real estate leases, net		9,921		11,082		10,241		9,425		13,273		12,467		11,679		10,908
Total liabilities		921,082		984,555		992,086		985,712		993,273		975,853		968,948		956,743

Commitments and contingencies

Stockholders’ Equity:
Preferred stock		-		-		-		-		-		-		-		-
Common stock		10		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		1,273,556
Accumulated other comprehensive income (loss)		(9,062)		(6,714)		(12,096)		(7,111)		976		(3,359)		(265)		(4,248)
Accumulated distributions in excess of accumulated earnings		(6,503)		(311,306)		(327,176)		(330,799)		(242,140)		(257,463)		(274,932)		(289,671)
Total stockholders’ equity		1,258,001		955,546		934,294		935,656		1,032,402		1,012,744		998,369		979,647
Total liabilities and stockholders’ equity	$	2,179,083	$	1,940,101	$	1,926,380	$	1,921,368	$	2,025,675	$	1,988,597	$	1,967,317	$	1,936,390

December 31, 2015 | Page 6

Condensed Consolidated Statements of Cash Flows

(in thousands)


	Twelve Months ended December 31
	2015		2014		2013
Cash flows from operating activities:
Net income	$	35,014	$	13,148	$	19,827
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		93,426		97,916		81,267
Amortization of above market lease		(158)		635		(365)
Gain on sale of properties, less applicable income tax		(23,662)		(940)		(2,158)
Equity in earnings (losses) from non-consolidated REITs		1,451		1,760		1,358
Increase in allowance for doubtful accounts		(195)		275		(1,250)
Changes in operating assets and liabilities:
Restricted cash		719		(99)		(68)
Tenant rent receivables		2,030		94		(2,103)
Straight-line rents		(2,448)		(4,737)		(5,782)
Lease acquisition costs		(1,487)		(440)		(1,146)
Prepaid expenses and other assets		422		700		(1,547)
Accounts payable and accrued expenses		5,505		206		11,137
Accrued compensation		(32)		773		445
Tenant security deposits		581		222		1,538
Payment of deferred leasing commissions		(8,276)		(6,347)		(9,125)
Net cash provided by operating activities		102,890		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		(21,750)		(18,370)		(19,120)
Office computers and furniture		(179)		(191)		(355)
Investment in non-consolidated REITs		—		—		4,858
Distributions in excess of earnings from non-consolidated REITs		107		107		108
Investment in related party mortgage loan receivable		(25,000)		(11,170)		(8,200)
Repayment of related party mortgage loan receivable		—		17,275		2,350
Proceeds received on sales of real estate assets		85,426		14,192		12,301
Net cash provided by (used in) investing activities		(38,104)		1,843		(562,648)

Cash flows from financing activities:
Distributions to stockholders		(76,142)		(76,142)		(69,588)
Proceeds (costs) from equity offering, net		—		—		230,682
Borrowings under bank note payable		110,000		15,000		160,000
Repayments of bank note payable		(88,000)		(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		(54,142)		(117,113)		468,976
Net increase (decrease) in cash and cash equivalents		10,644		(12,104)		(1,644)
Cash and cash equivalents, beginning of period		7,519		19,623		21,267
Cash and cash equivalents, end of period	$	18,163	$	7,519	$	19,623

December 31, 2015 | Page 7

Property Net Operating Income (NOI)* with

Same Store Comparison (in thousands)


(in thousands)
	Rentable									Year										Year
	Square Feet	Three Months Ended								Ended		Three Months Ended								Ended		Inc		%
Region	or RSF	31-Mar-15		30-Jun-15		30-Sep-15		31-Dec-15		31-Dec-15		31-Mar-14		30-Jun-14		30-Sep-14		31-Dec-14		31-Dec-14		(Dec)		Change
East	1,333	$	4,736	$	4,648	$	4,703	$	4,735	$	18,822	$	4,577	$	4,655	$	4,600	$	4,525	$	18,357	$	465	2.5%
MidWest	1,531		3,469		3,563		3,547		3,860		14,439		4,586		4,541		4,610		4,317		18,054		(3,615)	-20.0%
South	4,026		15,781		15,995		15,971		15,956		63,703		16,796		16,183		16,370		16,444		65,793		(2,090)	-3.2%
West	2,163		7,859		8,221		8,170		8,018		32,268		8,933		8,865		8,166		8,200		34,164		(1,896)	-5.5%
Same Store	9,053		31,845		32,427		32,391		32,569		129,232		34,892		34,244		33,746		33,486		136,368		(7,136)	-5.2%

Acquisitions	442		—		1,057		1,067		1,090		3,214		—		—		—		—		—		3,214	2.4%
Property NOI from the continuing portfolio	9,495		31,845		33,484		33,458		33,659		132,446		34,892		34,244		33,746		33,486		136,368		(3,922)	-2.9%
Dispositions			1,179		411		359		285		2,234		1,681		1,682		1,707		1,615		6,685		(4,451)	-3.0%
Property NOI		$	33,024	$	33,895	$	33,817	$	33,944	$	134,680	$	36,573	$	35,926	$	35,453	$	35,101	$	143,053	$	(8,373)	-5.9%

Same Store		$	31,845	$	32,427	$	32,391	$	32,569	$	129,232	$	34,892	$	34,244	$	33,746	$	33,486	$	136,368	$	(7,136)	-5.2%

Less Nonrecurring
Items in NOI (a)			75		81		420		576		1,152		707		287		173		56		1,223		(71)	0.0%

Comparative
Same Store		$	31,770	$	32,346	$	31,971	$	31,993	$	128,080	$	34,185	$	33,957	$	33,573	$	33,430	$	135,145	$	(7,065)	-5.2%

(a)

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

December 31, 2015 | Page 8

FFO & AFFO Reconciliation

(in thousands, except per share amounts)


									For the										For the
	For the Three Months Ended								Year Ended		For the Three Months Ended								Year Ended
	31-Mar-15		30-Jun-15		30-Sep-15		31-Dec-15		31-Dec-15		31-Mar-14		30-Jun-14		30-Sep-14		31-Dec-14		31-Dec-14

Net income	$	12,533	$	3,903	$	3,166	$	15,412	$	35,014	$	3,573	$	3,713	$	1,567	$	4,295	$	13,148

Gain (loss) on sale, less applicable income tax		(10,462)		(948)		(1)		(12,251)		(23,662)		—		—		—		(940)		(940)
GAAP income from non-consolidated REITs		322		38		284		807		1,451		484		552		455		269		1,760
FFO from non-consolidated REITs		601		885		645		601		2,732		419		351		508		652		1,930
Depreciation & amortization		22,678		23,168		22,848		22,507		91,201		24,289		23,638		25,374		23,249		96,550
NAREIT FFO*		25,672		27,046		26,942		27,076		106,736		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	$	27,076	$	106,890	$	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	$	27,076	$	106,890	$	28,779	$	28,254	$	27,904	$	27,525	$	112,462
Reverse FFO from non-consolidated REITs		(601)		(885)		(645)		(601)		(2,732)		(419)		(351)		(508)		(652)		(1,930)
Distributions from non-consolidated REITs		27		27		27		26		107		27		27		27		26		107
Amortization of deferred financing costs		517		517		516		518		2,068		499		499		498		506		2,002
Straight-line rent		(69)		(574)		(930)		(875)		(2,448)		(1,783)		(1,541)		(714)		(698)		(4,736)
Tenant improvements		(2,936)		(3,420)		(1,794)		(3,788)		(11,938)		(1,132)		(1,837)		(2,612)		(4,244)		(9,825)
Leasing commissions		(830)		(1,539)		(1,490)		(3,952)		(7,811)		(1,080)		(2,786)		(577)		(1,405)		(5,848)
Non-investment capex		(643)		(1,411)		(1,090)		(1,162)		(4,306)		(364)		(1,621)		(700)		(851)		(3,536)
Adjusted Funds From Operations (AFFO)*	$	21,137	$	19,903	$	21,548	$	17,242	$	79,830	$	24,527	$	20,644	$	23,318	$	20,207	$	88,696

Per Share Data:
EPS	$	0.13	$	0.04	$	0.03	$	0.15	$	0.35	$	0.04	$	0.04	$	0.02	$	0.04	$	0.13
FFO*		0.26		0.27		0.27		0.27		1.07		0.29		0.28		0.28		0.27		1.12
AFFO*		0.21		0.20		0.22		0.17		0.80		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		100,187

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

December 31, 2015 | Page 9

EBITDA Reconciliation

(in thousands, except ratio amounts)


	For the Three Months Ended								Year Ended		For the Three Months Ended								Year Ended
	31-Mar-15		30-Jun-15		30-Sep-15		31-Dec-15		31-Dec-15		31-Mar-14		30-Jun-14		30-Sep-14		31-Dec-14		31-Dec-14

Net income	$	12,533	$	3,903	$	3,166	$	15,412	$	35,014	$	3,573	$	3,713	$	1,567	$	4,295	$	13,148
Interest expense		6,187		6,365		6,425		6,455		25,432		7,176		6,891		6,883		6,483		27,433
Depreciation and amortization		22,678		23,168		22,848		22,507		91,201		24,289		23,638		25,374		23,249		96,550
Income taxes		161		154		129		(11)		433		137		117		149		95	$	498
EBITDA		41,559		33,590		32,568		44,363		152,080		35,175		34,359		33,973		34,122		137,629
Excluding (gain) loss on sale, less applicable income tax		(10,462)		(948)		(1)		(12,251)		(23,662)		—		—		—		(940)		(940)
Adjusted EBITDA	$	31,097	$	32,642	$	32,567	$	32,112	$	128,418	$	35,175	$	34,359	$	33,973	$	33,182	$	136,689

Interest expense	$	6,187	$	6,365	$	6,425	$	6,455	$	25,432	$	7,176	$	6,891	$	6,883	$	6,483	$	27,433
Scheduled principal payments		—		—		—		—		—		—		—		—		—		—
Interest and scheduled principal payments	$	6,187	$	6,365	$	6,425	$	6,455	$	25,432	$	7,176	$	6,891	$	6,883	$	6,483	$	27,433

Interest coverage ratio		5.03		5.13		5.07		4.97		5.05		4.90		4.99		4.94		5.12		4.98

Debt service coverage ratio		5.03		5.13		5.07		4.97		5.05		4.90		4.99		4.94		5.12		4.98


Debt	$	860,000	$	920,000	$	920,000	$	910,000			$	936,500	$	916,500	$	905,000	$	888,000

Adjusted EBITDA		31,097		32,642		32,567		32,112				35,175		34,359		33,973		33,182
Annualized		124,388		130,568		130,268		128,448				140,700		137,436		135,892		132,728

Debt-to-EBITDA		6.9		7.0		7.1		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.

December 31, 2015 | Page 10

Reconciliation of Net Income to Property NOI*

(in thousands)


Reconciliation to Net income									Year										Year
	Three Months Ended								Ended		Three Months Ended								Ended
	31-Mar-15		30-Jun-15		30-Sep-15		31-Dec-15		31-Dec-15		31-Mar-14		30-Jun-14		30-Sep-14		31-Dec-14		31-Dec-14
Net Income	$	12,533	$	3,903	$	3,166	$	15,412	$	35,014	$	3,573	$	3,713	$	1,567	$	4,295	$	13,148
Add (deduct):
Gain on sale of properties, less applicable income taxes		(10,462)		(948)		(1)		(12,251)		(23,662)		—		—		—		(940)		(940)
Management fee income		(643)		(559)		(621)		(645)		(2,468)		(646)		(682)		(649)		(619)		(2,596)
Depreciation and amortization		22,672		23,207		22,911		22,569		91,359		24,300		23,563		24,878		23,174		95,915
Amortization of above/below market leases		6		(39)		(63)		(62)		(158)		(11)		74		497		75		635
Selling, general and administrative		3,691		3,401		3,071		3,128		13,291		3,272		3,148		3,071		3,492		12,983
Interest expense		6,187		6,365		6,425		6,455		25,432		7,176		6,891		6,883		6,483		27,433
Interest income		(1,262)		(1,278)		(1,293)		(1,397)		(5,230)		(1,410)		(1,408)		(1,216)		(1,264)		(5,298)
Equity in losses of non-consolidated REITs		322		38		284		807		1,451		484		552		455		269		1,760
Non-property specific items, net		(20)		(195)		(62)		(72)		(349)		(165)		75		(33)		136		13
Property NOI	$	33,024	$	33,895	$	33,817	$	33,944	$	134,680	$	36,573	$	35,926	$	35,453	$	35,101	$	143,053

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

December 31, 2015 | Page 11

Debt Summary

(in thousands)


		Maximum		Amount		Interest			Interest
	Maturity	Amount		Drawn at		Rate			Rate at	Facility
	Date	of Loan		31-Dec-15		Components			31-Dec-15	Fee

BAML Revolver	29-Oct-18	$	500,000	$	290,000	L	+	1.25%	1.44%	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	$	910,000				2.39%

(a)

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

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

December 31, 2015 | Page 12

Capital Analysis

(in thousands, except per share amounts)


	31-Mar-15		30-Jun-15		30-Sep-15		31-Dec-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		100,187
Closing market price per share	$	12.82	$	11.31	$	10.75	$	10.35	$	12.60	$	12.58	$	11.22	$	12.27
Market capitalization	$	1,284,403	$	1,133,120	$	1,077,015	$	1,036,940	$	1,262,361	$	1,260,358	$	1,124,103	$	1,229,299
Total Debt		860,000		920,000		920,000		910,000		936,500		916,500		905,000		888,000
Total Market Capitalization	$	2,144,403	$	2,053,120	$	1,997,015	$	1,946,940	$	2,198,861	$	2,176,858	$	2,029,103	$	2,117,299

Dividend Data:
Total dividends paid	$	19,036	$	19,036	$	19,035	$	19,035	$	19,036	$	19,036	$	19,036	$	19,034
Common dividend per share	$	0.19	$	0.19	$	0.19	$	0.19	$	0.19	$	0.19	$	0.19	$	0.19
Quarterly dividend as a % of FFO*		74.1%		70.0%		70.6%		70.3%		66.1%		67.4%		68.2%		69.2%

Liquidity:
Cash and cash equivalents	$	14,945	$	15,841	$	19,100	$	18,163	$	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		900,000
Less:
Outstanding balance		(640,000)		(700,000)		(700,000)		(690,000)		(716,500)		(696,500)		(685,000)		(668,000)
Total Liquidity	$	274,945	$	215,841	$	219,100	$	228,163	$	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.

December 31, 2015 | Page 13

Portfolio Overview


	As of the Quarter Ended
	31-Dec-15	30-Sep-15	30-Jun-15	31-Mar-15	31-Dec-14
Owned portfolio of commercial real estate:
Number of properties (a)	36	36	36	36	38
Square feet	9,494,953	9,640,904	9,639,740	9,310,131	9,580,057
Leased percentage	91.6%	90.5%	90.6%	90.4%	92.8%

Investments in non-consolidated commercial real estate:
Number of properties	2	2	2	2	2
Square feet	1,396,071	1,396,071	1,396,071	1,396,071	1,395,780
Leased percentage	73.5%	71.2%	69.7%	70.1%	71.3%

Single Asset REITs (SARs) managed:
Number of properties	7	7	7	7	8
Square feet	1,487,026	1,487,026	1,487,026	1,488,003	1,897,801
Leased percentage	77.0%	77.0%	73.5%	73.4%	84.7%

Total owned, investments and managed properties:
Number of properties	45	45	45	45	48
Square feet	12,378,050	12,524,001	12,522,837	12,194,205	12,873,638
Leased percentage	87.8%	86.8%	86.3%	86.0%	89.3%

(a)

The number of properties was revised to present the 801 Marquette Ave building and the 121 South 8th Street building separately for all periods presented.

The buildings had previously been combined for presentation.

December 31, 2015 | Page 14


	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%	81.7%	$	23.61	Northwest Point	Elk Grove Village	IL	176,848	100.0%	100.0%	$	24.51
								909 Davis Street	Evanston	IL	195,245	100.0%	99.2%	$	36.08
Washington, D.C.
Meadow Point	Chantilly	VA	138,537	100.0%	95.7%	$	27.37	Indianapolis
Stonecroft	Chantilly	VA	111,469	100.0%	100.0%	$	37.54	River Crossing	Indianapolis	IN	205,059	91.1%	93.7%	$	20.57
Loudoun Tech Center	Dulles	VA	136,658	92.0%	92.0%	$	17.83
								St. Louis
Richmond								Timberlake	Chesterfield	MO	234,023	95.4%	59.9%	$	21.87
Innsbrook	Glen Allen	VA	298,456	100.0%	99.9%	$	18.75	Timberlake East	Chesterfield	MO	116,197	96.2%	32.3%	$	22.24
								Lakeside Crossing	Maryland Heights	MO	127,778	100.0%	100.0%	$	24.43
Charlotte
Forest Park	Charlotte	NC	62,212	100.0%	100.0%	$	13.96	Minneapolis
								121 South 8th Street	Minneapolis	MN	305,990	88.3%	86.2%	$	22.78
Raleigh-Durham								801 Marquette Ave	Minneapolis	MN	169,704	97.2%	97.4%	$	3.82
Emperor Boulevard	Durham	NC	259,531	100.0%	100.0%	$	36.03

East Region Total			1,332,308	95.6%	94.3%	$	25.60	Midwest Region Total			1,530,844	95.2%	84.7%	$	22.31

(a)

Weighted Occupied Percentage for the year ended December 31, 2015.

(b)

Weighted Average GAAP Rent per Occupied Square Foot.

December 31, 2015 | Page 15


	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%	$	17.23	Federal Way	Federal Way	WA	117,010	66.8%	58.7%	$	18.75
One Legacy Circle	Plano	TX	214,110	100.0%	100.0%	$	33.45
Addison Circle	Addison	TX	290,041	93.4%	87.2%	$	25.44	San Francisco-San Jose-Oakland
Collins Crossing	Richardson	TX	300,887	100.0%	99.6%	$	24.42	Hillview Center	Milpitas	CA	36,288	100.0%	100.0%	$	16.34
Liberty Plaza	Addison	TX	218,934	81.8%	83.0%	$	20.88
								Denver
Houston								380 Interlocken	Broomfield	CO	240,185	97.1%	96.5%	$	30.04
Park Ten	Houston	TX	157,460	63.1%	63.1%	$	30.96	1999 Broadway	Denver	CO	676,379	82.7%	85.0%	$	31.97
Eldridge Green	Houston	TX	248,399	100.0%	100.0%	$	31.04	Greenwood Plaza	Englewood	CO	196,236	100.0%	100.0%	$	24.22
Park Ten Phase II	Houston	TX	156,746	100.0%	100.0%	$	30.98	390 Interlocken	Broomfield	CO	241,516	84.6%	71.8%	$	28.18
Westchase I & II	Houston	TX	629,025	87.0%	92.4%	$	34.16	1001 17th Street	Denver	CO	655,420	88.6%	84.5%	$	34.31

Miami-Ft. Lauderdale-West Palm Beach								West Region Total			2,163,034	87.3%	84.8%	$	30.44
Blue Lagoon Drive	Miami	FL	212,619	100.0%	100.0%	$	22.25

Atlanta								Total Owned			9,494,953	91.6%	89.0%	$	26.93
One Overton Place	Atlanta	GA	387,267	85.0%	81.3%	$	24.38
One Ravinia	Atlanta	GA	386,603	94.8%	95.0%	$	22.87
Two Ravinia	Atlanta	GA	442,130	80.8%	76.4%	$	24.50
999 Peachtree	Atlanta	GA	621,946	95.0%	95.3%	$	30.06
South Region Total			4,468,767	83.2%	90.9%	$	27.23

(a)

Weighted Occupied Percentage for the year ended December 31, 2015.

(b)

Weighted Average GAAP Rent per Occupied Square Foot.

December 31, 2015 | Page 16


	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

264,857

(a)

East Wacker

Chicago

861,000

Atlanta

Indianapolis

Satellite Place

Duluth

134,785

Monument Circle

Indianapolis

213,760

Southeast Region Total

399,642

St. Louis

Lakeside Crossing II

Maryland Heights

116,000

Southwest Region

Kansas City

Houston

(b)

Grand Boulevard

Kansas City

535,071

Energy Tower I

Houston

325,797

Cincinnati

Denver

Centre Pointe V

West Chester

135,936

385 Interlocken (Sold 1/19/16)

Broomfield

295,891

Southwest Region Total

621,688

Midwest Region Total

1,861,767

Total Managed

2,883,097

Total Owned & Managed

12,378,050

(a)

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

(b)

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

December 31, 2015 | Page 17

Tenants by Industry

(By Square Feet)

December 31, 2015 | Page 18


	20 Largest Tenants with Annualized Rent and Remaining Term


			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 (a)	2	0	263,111	3.0%	$	483,031	0.2%
2	Quintiles Transnational Corp	1	125	259,531	3.0%		9,067,770	4.1%
3	CITGO Petroleum Corporation	1	74	248,399	2.9%		7,904,056	3.5%
4	Newfield Exploration Company	1	74	234,495	2.7%		8,639,475	3.9%
5	US Government (b)	5	6,8,29,43,57	223,433	2.6%		7,189,560	3.2%
6	Sutherland Asbill Brennan LLP	1	52	222,422	2.6%		6,823,317	3.1%
7	Burger King Corporation	1	33	212,619	2.4%		5,255,942	2.4%
8	Denbury Onshore, LLC (c)	2	7,43	202,600	2.3%		3,510,042	1.6%
9	SunTrust Bank (d)	3	4,69,131	182,888	2.1%		3,772,888	1.7%
10	Centene Management Company, LLC (e)	2	90,90	179,637	2.1%		—	—
11	Citicorp Credit Services, Inc	1	12	176,848	2.0%		4,612,196	2.1%
12	T-Mobile South, LLC dba T-Mobile	1	39	151,792	1.7%		3,646,044	1.6%
13	Houghton Mifflin Harcourt Publishing Company	1	15	150,050	1.7%		6,243,052	2.8%
14	Petrobras America, Inc.	1	47	144,813	1.7%		5,337,807	2.4%
15	Murphy Exploration & Production Company	1	16	144,677	1.7%		4,718,321	2.1%
16	Argo Data Resource Corporation	1	92	140,246	1.6%		3,718,923	1.7%
17	Monsanto Company	1	49	127,778	1.5%		3,019,394	1.4%
18	Federal National Mortgage Association	1	33	123,144	1.4%		2,695,622	1.2%
19	Vail Corp d/b/a Vail Resorts (f)	2	39,87	122,232	1.4%		3,532,873	1.6%
20	Kaiser Foundation Health Plan	1	101	120,979	1.4%		3,091,345	1.4%

			Total	3,631,694	41.8%	$	93,261,657	42.0%

(a)

These leases concluded on December 31, 2015, with reduced rent in the final month.

(b)

Includes 180,444 and 27,398 square feet which expire in 2018 & 2017, respectively. The remaining 15,591 square feet expire between 2016 - 2020.

(c)

Includes 102,600 square feet which expire 7/31/16 and 100,000 square feet that expire 7/31/19.

(d)

Includes 23,217 square feet, which expire 4/30/16 and 127,500 square feet, which expire 9/30/21. The remaining 32,171 square feet expires 10/31/26.

(e)

These leases were executed in 2015 will become rent producing in 2016.

(f)

Includes 38,293 square feet which expire March 31, 2019. The remaining 83,939 square feet expire March 31, 2023.

December 31, 2015 | Page 19

Leasing Activity

(Owned Portfolio)


	Year		Year		Year
	Ended		Ended		Ended
Leasing Activity		31-Dec-15		31-Dec-14		31-Dec-13
(in Square Feet - SF)
New leasing		362,000		149,000		267,000
Renewals		957,000		635,000		645,000
		1,319,000		784,000		912,000

Other information per SF
(Activity on a year-to-date basis)
GAAP Rents on leasing	$	28.66	$	26.89	$	23.33
Weighted average lease term		5.3 Years		6.25 Years		7.2 Years

Increase over average GAAP rents in prior year		10.4%		11.8%		8.0%

Average free rent		3 Months		3 Months		3 Months
Tenant Improvements	$	13.17	$	16.40	$	18.25
Leasing Costs	$	5.81	$	7.66	$	8.48

December 31, 2015 | Page 20

Lease Expirations by Square Feet

(Owned Portfolio)

December 31, 2015 | Page 21

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

2016	76	(c)	893,003		$	17,213,994	$	19.28	7.8%	7.8%
2017	71		1,111,385			32,072,789		28.86	14.5%	22.3%
2018	74		1,107,685			31,862,810		28.77	14.4%	36.7%
2019	66		1,286,426			33,419,650		25.98	15.1%	51.8%
2020	58		851,253			23,580,658		27.70	10.7%	62.5%
2021	31		753,234			18,274,036		24.26	8.3%	70.8%
2022	27		998,305			28,862,414		28.91	13.1%	83.9%
2023	19		626,267			10,858,863		17.34	4.9%	88.8%
2024	9		296,418			7,642,735		25.78	3.4%	92.2%
2025	9		320,671			6,008,364		18.74	2.7%	94.9%
2026 and thereafter	10		450,699	(d)		11,242,324		24.94	5.1%	100.0%
	450		8,695,346		$	221,038,636	$	25.42	100.0%
Vacancies as of 12/31/15			799,607
Total Portfolio Square Footage			9,494,953

(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 December 31, 2015 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(c)

Includes 22 leases that are month-to-month.

(d)

Includes 85,050 square feet that are non-revenue producing building amenities.

December 31, 2015 | Page 22


	Capital Expenditures


(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
Total Capital Expenditures	$	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
Total Capital Expenditures	$	2,576	$	6,244	$	3,889	$	6,500	$	19,209

First generation leasing and investment capital were $ 7.4 million and $3.1 million in 2015 and 2014, respectively.

December 31, 2015 | Page 23

Transaction Activity

(in thousands except for Square Feet)

City

State

Square Feet

Date Acquired

Purchase Price

2015

Two Ravinia

Atlanta

442,130

4/8/15

78,000

2013

1999 Broadway

Denver

673,793

5/22/13

183,000

999 Peachtree

Atlanta

621,946

7/1/13

157,900

1001 17th Street

Denver

655,420

8/28/13

217,000

2012

One Ravinia

Atlanta

386,603

7/31/12

52,750

Westchase

Houston

629,025

11/1/12

154,750


					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		949
Montague	San Jose	CA	145,561	12/9/15		30,000		12,251

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	$	2,158

December 31, 2015 | Page 24

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

31-Dec-15

Rate (1)

Fee (2)

31-Dec-15

Secured revolving lines of credit

FSP Satellite Place Corp.

Duluth, GA

31-Mar-17

5,500

4.40%

0.5%

4.64%

FSP 1441 Main Street Corp.

Columbia, SC

31-Mar-16

10,800

9,000

4.40%

0.5%

4.64%

FSP Energy Tower I Corp.

Houston, TX

30-Jun-17

20,000

12,600

5.00%

0.5%

5.24%

Secured construction loan

FSP 385 Interlocken Development Corp. (3)

Broomfield, CO

30-Apr-16

42,000

37,541

4.40%

n/a

4.64%

Mortgage loan secured by property

FSP Monument Circle LLC (4)

Indianapolis, IN

7-Dec-18

21,000

4.90%

n/a

4.90%

FSP Energy Tower I Corp.

Houston, TX

30-Jun-17

33,000

6.41%

n/a

6.41%

132,300

118,641

(1)

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

(2)

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

(3)

This secured construction loan was repaid on January 19, 2016.

(4)

Includes an origination fee of $164,000 and an exit fee of $38,000 when repaid by the borrower.

December 31, 2015 | Page 25


	Net Asset Value Components


(in thousands except per share data)
	As of		Assets:			Other information:
	31-Dec-15		Loans outstanding on secured RE	$	118,641	Leased SF to be FFO producing
Total Market Capitalization Values			Investments in SARs (book basis)		77,019	During 2016 (in 000's)		167
Shares outstanding		100,187.4	Straight-line rent receivable		48,502
Closing price	$	10.35	Asset held for sale		—	Straight-line rental revenue current quarter	$	875
Market capitalization	$	1,036,940	Cash and cash equivalents		18,163
Debt		910,000	Restricted cash		23	Management fee income current quarter	$	178
Total Market Capitalization	$	1,946,940	Tenant rent receivables		2,898	Interest income from secured loans		1,397
			Prepaid expenses		2,267	Management fees and interest income from loans	$	1,575
			Office computers and furniture		484
	3 Months		Other assets:			FFO from non-consolidated REITs - Q3 2015 (6):
	Ended		Deferred financing costs, net		5,570	East Wacker	$	460
NOI Components	31-Dec-15		Other assets: Derivative Market Value		1,132	Grand Boulevard		185
			Other assets		—	Total	$	645
Same Store NOI (1)	$	32,569		$	274,699
Acquisitions (1) (2)		1,090				Footnotes to the components
Property NOI (1)		33,659	Liabilities:
Full quarter adjustment (3)		—	Debt	$	910,000	(1) See pages 11 & 28 for definitions and reconciliations
Stabilized portfolio	$	33,659	Accounts payable & accrued expenses		53,215
			Tenant security deposits		4,829	(2) Includes NOI from 1 acquisitions 2015
			Other liabilities: derivative liability		8,243
Financial Statement Reconciliation:				$	976,287	(3) Adjustment to reflect property NOI for a full quarter in the quarter acquired, if necessary
Rental Revenue	$	59,656
Rental operating expenses		(15,939)				(4) HB3 Tax in Texas is classified as an income tax, though we treat it as a real estate tax in Property NOI
Real estate taxes and insurance		(9,202)
NOI on assets sold during the quarter		(285)				(5) Management & other fees are eliminated in consolidation but included on Property NOI
Taxes (4)		11
Management fees & other (5)		(582)				(6) We report FFO from non-consolidated REITs for the previous quarter as their financial statements are not yet complete for the current quarter.
Property NOI (1)	$	33,659

December 31, 2015 | Page 26


	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. 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.

December 31, 2015 | Page 27


	Appendix: Non-GAAP Financial Measure Definitions

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

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

Definition of Property Net Operating Income (Property NOI)

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

December 31, 2015 | Page 28


	Appendix: Non-GAAP Financial Measure Definitions

Definition of 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.

December 31, 2015 | Page 29

Investor Relations Contact

Georgia Touma | 877.686.9496

InvestorRelations@franklinstreetproperties.com

TwoRavinia_1

One & Two Ravinia Drive, Atlanta, GA

Franklin Street Properties Corp.

401 Edgewater Place Wakefield, Massachusetts 01880

781.557.1300 www.franklinstreetproperties.com

December 31, 2015 | Page 30

FRANKLIN STREET PROPERTIES CORP /MA/ - FORM 8-K - EX-99.2 - February 16, 2016

Attached files

FRANKLIN STREET PROPERTIES CORP /MA/ Reports