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

Attached files

file	filename
EX-99.1 - EX-99.1 - FRANKLIN STREET PROPERTIES CORP /MA/	ex-99d1.htm
8-K - 8-K - FRANKLIN STREET PROPERTIES CORP /MA/	f8-k.htm

Exhibit 99.2

Franklin Street Properties

Supplemental Operating

and Financial Data

First Quarter 2017

Franklin Street Properties Corp.

401 Edgewater Place | Wakefield, Massachusetts 01880

781.557.1300 | www.fspreit.com

Table of Contents


	Page		Page

Company Information	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, which are detailed from time to time in FSP’s reports filed with the Securities and Exchange Commission. FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

		Rendering of 801 Marquette: Perkins + Will

March 31, 2017| Page 2


	Company Information

Overview		Snapshot (as of March 31, 2017)
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	35
		Total Square Feet	10.1 Million
		Trading Symbol	FSP
		Exchange	NYSE MKT
		Common Shares Outstanding	107,231,155
		Quarterly Dividend	$0.19
Our Business		Dividend Yield	6.3%
As of March 31, 2017, the Company owned and operated a portfolio of real estate consisting of 35 properties, managed seven Sponsored REITs and held five promissory notes secured by mortgages on real estate owned by Sponsored REITs. From time-to-time, the Company may acquire, develop or redevelop 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	$2.4 Billion
		Insider Holdings	3.9%


Management Team

George J. Carter	Jeffrey B. Carter
Chief Executive Officer and	President and Chief Investment
Chairman of the Board	Officer

John G. Demeritt	Scott H. Carter
Executive Vice President, Chief	Executive Vice President, General
Financial Officer and Treasurer	Counsel and Secretary

John F. Donahue	Eriel Anchondo
Executive Vice President	Executive Vice President and Chief Operating Officer	Dominion Towers, Denver, CO

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

March 31, 2017| Page 3


	Summary of Financial Highlights


(in thousands except per share amounts, SF & number of properties)
	31-Mar-17		31-Dec-16		30-Sep-16		30-Jun-16		31-Mar-16
Income Items:
Rental revenue	$	67,376		64,611	$	61,925	$	59,453	$	58,360
Total revenue		68,756		65,988		63,280		60,807		59,813
Adjusted EBITDA*		35,036		32,823		32,356		32,144		31,637
Equity in losses of non-consolidated REITs		(397)		(263)		(196)		(86)		(286)
Net income		4,480		1,729		2,458		1,612		2,579
FFO*		28,528		26,907		26,670		26,731		26,037

Per Share Data:
EPS	$	0.04		0.02	$	0.02	$	0.02	$	0.03
FFO*	$	0.27		0.25	$	0.26	$	0.27	$	0.26
Weighted Average Shares (diluted)		107,231		107,231		103,709		100,187		100,187
Closing share price	$	12.14		12.96	$	12.60	$	12.27	$	10.61
Dividend	$	0.19		0.19	$	0.19	$	0.19	$	0.19
Payout Ratio:		71%		76%		74%		71%		73%

Balance Sheet Items:
Real estate, net	$	1,686,154		1,685,269	$	1,567,521	$	1,526,936	$	1,487,281
Other assets, net		392,132		402,864		372,924		368,481		374,104
Total assets, net		2,078,286		2,088,133		1,940,445		1,895,417		1,861,385
Total liabilities, net		1,130,263		1,126,089		977,497		1,000,434		948,301
Shareholders' equity		948,023		962,044		962,948		894,983		913,084

Market Capitalization and Debt:
Total Market Capitalization (a)	$	2,366,786		2,439,716	$	2,249,113	$	2,159,299	$	1,947,988
Total debt outstanding (excluding unamortized financing costs)		1,065,000		1,050,000		898,000		930,000		885,000
Debt to Total Market Capitalization		45.0%		43.0%		39.9%		43.1%		45.4%
Debt to Adjusted EBITDA*		7.6		8.0		6.9		7.2		7.0

Owned Portfolio Leasing Statistics (b):
Owned portfolio assets		35		36		36		35		35
Portfolio total SF		10,118,112		10,163,615		9,683,846		9,523,054		9,325,249
Portfolio % leased		89.6%		89.3%		89.5%		90.1%		90.2%

(a)

Total Market Capitalization is the closing share price multiplied by the number of shares outstanding plus total debt outstanding on that date.

(b)

For periods in 2016 and 2017, excludes one property held for redevelopment located in Minneapolis, Minnesota.

*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.

March 31, 2017| Page 4

Condensed Consolidated Income Statements

($ in thousands, except per share amounts)


		For the									For the
	Three Months Ended		For the Three Months Ended								Year Ended
	31-Mar-17		31-Mar-16		30-Jun-16		30-Sep-16		31-Dec-16		31-Dec-16

Revenue:
Rental	$	67,376	$	58,360	$	59,453	$	61,925	$	64,611	$	244,349
Related party revenue:
Management fees and interest income from loans		1,370		1,433		1,337		1,338		1,357		5,465
Other		10		20		17		17		20		74
Total revenue		68,756		59,813		60,807		63,280		65,988		249,888

Expenses:
Real estate operating expenses		17,308		15,292		14,929		16,905		18,209		65,335
Real estate taxes and insurance		12,403		9,150		10,154		10,218		10,618		40,140
Depreciation and amortization		25,332		22,445		22,352		23,298		24,957		93,052
Selling, general and administrative		3,443		3,530		3,494		3,419		3,683		14,126
Interest		7,579		6,433		6,417		6,767		6,931		26,548
Total expenses		66,065		56,850		57,346		60,607		64,398		239,201

Income before equity in losses of non-consolidated REITs, other, gain (loss) on sale of properties and property held for sale, less applicable income tax and taxes		2,691		2,963		3,461		2,673		1,590		10,687
Equity in losses of non-consolidated REITs		(397)		(286)		(86)		(196)		(263)		(831)
Other		22		—		(1,009)		621		2,266		1,878
Gain (loss) on sale of properties and provision for loss on property held for sale, less applicable income tax		2,289		—		(643)		(523)		(1,772)		(2,938)

Income before taxes on income		4,605		2,677		1,723		2,575		1,821		8,796
Income tax expense		125		98		111		117		92		418

Net income	$	4,480	$	2,579	$	1,612	$	2,458	$	1,729	$	8,378

Weighted average number of shares outstanding, basic and diluted		107,231		100,187		100,187		103,709		107,231		102,843

Net income per share, basic and diluted	$	0.04	$	0.03	$	0.02	$	0.02	$	0.02	$	0.08

March 31, 2017| Page 5

$ in thousands, except per share amounts)

Condensed Consolidated Balance Sheets

(in thousands)


	March 31,		March 31,		June 30,		September 30,		December 31,
	2017		2016		2016		2016		2016
Assets:
Real estate assets:
Land	$	196,178	$	168,120	$	172,205	$	177,505	$	196,178
Buildings and improvements		1,836,073		1,625,819		1,667,507		1,713,296		1,822,183
Fixtures and equipment		4,600		2,649		2,771		3,205		4,136
		2,036,851		1,796,588		1,842,483		1,894,006		2,022,497
Less accumulated depreciation		350,697		309,307		315,547		326,485		337,228
Real estate assets, net		1,686,154		1,487,281		1,526,936		1,567,521		1,685,269

Acquired real estate leases, net		115,471		99,102		104,350		102,226		125,491
Investment in non-consolidated REITs		74,423		76,707		76,289		75,761		75,165
Asset held for sale		—		15,921		9,275		8,893		3,871
Cash and cash equivalents		11,143		14,316		7,524		13,372		9,335
Restricted cash		31		10		3		48		31
Tenant rent receivables, net		3,785		3,691		3,268		3,331		3,113
Straight-line rent receivable, net		52,304		49,696		50,196		50,742		50,930
Prepaid expenses and other assets		4,946		5,943		5,875		6,460		5,231
Related party mortgage loan receivable		81,515		79,575		79,310		79,045		81,780
Other assets: derivative asset		13,603		—		—		—		12,907
Office computers and furniture, net of accumulated depreciation		275		438		385		370		313
Deferred leasing commissions, net		34,636		28,705		32,006		32,676		34,697
Total assets	$	2,078,286	$	1,861,385	$	1,895,417	$	1,940,445	$	2,088,133

Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable	$	295,000	$	265,000	$	310,000	$	278,000	$	280,000
Term loan payable, net of unamortized financing costs		765,539		617,880		618,113		615,636		765,217
Accounts payable and accrued expenses		50,529		37,791		41,498		53,964		57,259
Accrued compensation		1,259		1,274		2,170		3,238		3,784
Tenant security deposits		5,441		4,433		4,693		4,719		5,355
Other liabilities: derivative liabilities		4,351		13,226		14,913		12,651		5,551
Acquired unfavorable real estate leases, net		8,144		8,697		9,047		9,289		8,923
Total liabilities		1,130,263		948,301		1,000,434		977,497		1,126,089

Commitments and contingencies

Stockholders’ Equity:
Preferred stock		-		-		-		-		-
Common stock		11		10		10		11		11
Additional paid-in capital		1,356,457		1,273,556		1,273,556		1,356,457		1,356,457
Accumulated other comprehensive income (loss)		7,351		(13,226)		(13,904)		(12,263)		5,478
Accumulated distributions in excess of accumulated earnings		(415,796)		(347,256)		(364,679)		(381,257)		(399,902)
Total stockholders’ equity		948,023		913,084		894,983		962,948		962,044
Total liabilities and stockholders’ equity	$	2,078,286	$	1,861,385	$	1,895,417	$	1,940,445	$	2,088,133

March 31, 2017| Page 6

Condensed Consolidated Statements of Cash Flows

(in thousands)


		Three Months ended March 31,			Twelve Months ended December 31,
		2017		2016	2016		2015
Cash flows from operating activities:
Net income	$	4,480	$	2,579	$	8,378	$	35,014
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		25,937		22,962		95,243		93,426
Amortization of above and below market leases		(168)		81		(496)		(158)
Hedge ineffectiveness		(22)		—		(1,878)		—
(Gain) loss on sale of properties and property held for sale, less applicable income tax		(2,289)		—		2,938		(23,662)
Equity in earnings (losses) from non-consolidated REITs		397		286		831		1,451
Increase in allowance for doubtful accounts		—		—		(30)		(195)
Changes in operating assets and liabilities:
Restricted cash		—		13		(8)		719
Tenant rent receivables		(672)		(793)		(185)		2,030
Straight-line rents		(1,082)		(1,275)		(1,977)		(2,448)
Lease acquisition costs		(292)		(199)		(1,095)		(1,487)
Prepaid expenses and other assets		1		(791)		(721)		422
Accounts payable and accrued expenses		(10,219)		(10,374)		5,751		5,505
Accrued compensation		(2,525)		(2,452)		58		(32)
Tenant security deposits		86		(396)		526		581
Payment of deferred leasing commissions		(1,606)		(1,825)		(12,965)		(8,276)
Net cash provided by operating activities		12,026		7,816		94,370		102,890

Cash flows from investing activities:
Property acquisitions		—		—		(221,119)		(66,104)
Acquired real estate leases		—		—		(51,509)		(10,604)
Property improvements, fixtures and equipment		(11,615)		(6,720)		(37,490)		(21,929)
Distributions in excess of earnings from non-consolidated REITs		346		27		1,023		107
Investment in related party mortgage loan receivable		—		—		(3,000)		(25,000)
Repayment of related party mortgage loan receivable		265		39,066		39,861		—
Proceeds received on sales of real estate assets		6,160		—		27,262		85,426
Net cash provided by (used in) investing activities		(4,844)		32,373		(244,972)		(38,104)

Cash flows from financing activities:
Distributions to stockholders		(20,374)		(19,036)		(77,481)		(76,142)
Proceeds (costs) from equity offering, net		—		—		82,902		—
Borrowings under bank note payable		30,000		15,000		175,000		110,000
Repayments of bank note payable		(15,000)		(40,000)		(185,000)		(88,000)
Borrowing (repayment) of term loan payable, net		—		—		150,000		—
Deferred Financing Costs		—		—		(3,647)		—
Net cash provided by (used in) financing activities		(5,374)		(44,036)		141,774		(54,142)
Net increase (decrease) in cash and cash equivalents		1,808		(3,847)		(8,828)		10,644
Cash and cash equivalents, beginning of period		9,335		18,163		18,163		7,519
Cash and cash equivalents, end of period	$	11,143	$	14,316	$	9,335	$	18,163

March 31, 2017| Page 7

Property Net Operating Income (NOI)* with

Same Store Comparison (in thousands)


	Rentable
	Square Feet	Three Months Ended		Three Months Ended		Inc		%
(in thousands)	or RSF	31-Mar-17		31-Mar-16		(Dec)		Change
Region
East	1,332	$	4,544	$	4,671	$	(127)	(2.7)	%
MidWest	1,225		3,017		2,958		59	2.0	%
South	4,468		16,211		17,200		(989)	(5.8)	%
West	2,010		8,189		8,190		(1)	(0.0)	%
Same Store	9,035		31,961		33,019		(1,058)	(3.2)	%

Acquisitions	1,083		4,914		—		4,914	—	%
Property NOI* from the continuing portfolio	10,118		36,875		33,019		3,856	11.7	%
Dispositions, Non-Operating, Development or Redevelopment			(2)		448		(450)	(1.5)	%
Property NOI*		$	36,873	$	33,467	$	3,406	10.2	%

Same Store		$	31,961	$	33,019	$	(1,058)	(3.2)	%

Less Nonrecurring
Items in NOI* (a)			65		413		(348)	1.0	%

Comparative
Same Store		$	31,896	$	32,606	$	(710)	(2.2)	%

(a)

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

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

March 31, 2017| Page 8

FFO* & AFFO* Reconciliation

(in thousands, except per share amounts)


	For the										For the
	Three Months Ended		For the Three Months Ended								Year Ended
	31-Mar-17		31-Mar-16		30-Jun-16		30-Sep-16		31-Dec-16		31-Dec-16

Net income	$	4,480	$	2,579	$	1,612	$	2,458	$	1,729	$	8,378

(Gain) loss on sale of properties and property held for sale, less applicable income tax		(2,289)		—		643		523		1,772		2,938
GAAP income from non-consolidated REITs		397		286		86		196		263		831
FFO from non-consolidated REITs		791		645		895		787		714		3,041
Depreciation & amortization		25,163		22,527		22,352		23,112		24,565		92,556
NAREIT FFO*		28,542		26,037		25,588		27,076		29,043		107,744
Hedge ineffectiveness		(22)		—		1,009		(621)		(2,266)		(1,878)
Acquisition costs		8		—		134		215		130		479
Funds From Operations (FFO)*	$	28,528	$	26,037	$	26,731	$	26,670	$	26,907	$	106,345


Adjusted Funds From Operations (AFFO)*
Funds From Operations (FFO)*	$	28,528	$	26,037	$	26,731	$	26,670	$	26,907	$	106,345
Reverse FFO from non-consolidated REITs		(791)		(645)		(895)		(787)		(714)		(3,041)
Distributions from non-consolidated REITs		346		27		332		332		332		1,023
Amortization of deferred financing costs		606		517		517		622		535		2,191
Straight-line rent		(1,082)		(1,275)		(700)		(119)		117		(1,977)
Tenant improvements		(6,474)		(1,929)		(1,329)		(3,325)		(7,885)		(14,468)
Leasing commissions		(1,579)		(1,613)		(4,966)		(2,247)		(3,783)		(12,609)
Non-investment capex		(1,670)		(438)		(1,052)		(2,211)		(1,842)		(5,543)
Adjusted Funds From Operations (AFFO)*	$	17,884	$	20,681	$	18,638	$	18,935	$	13,667	$	71,921

Per Share Data:
EPS	$	0.04	$	0.03	$	0.02	$	0.02	$	0.02	$	0.08
FFO*		0.27		0.26		0.27		0.26		0.25		1.03
AFFO*		0.17		0.21		0.19		0.18		0.13		0.70

Weighted Average Shares (basic and diluted)		107,231		100,187		100,187		103,709		107,231		102,843

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

March 31, 2017| Page 9

EBITDA* & Adjusted EBITDA* Reconciliation

(in thousands, except ratio amounts)


											Year
	Three Months Ended		Three Months Ended								Ended
	31-Mar-17		31-Mar-16		30-Jun-16		30-Sep-16		31-Dec-16		31-Dec-16

Net income	$	4,480	$	2,579	$	1,612	$	2,458	$	1,729	$	8,378
Interest expense		7,579		6,433		6,417		6,767		6,931		26,548
Depreciation and amortization		25,163		22,527		22,352		23,112		24,565		92,556
Income taxes		125		98		111		117		92		418
EBITDA*		37,347		31,637		30,492		32,454		33,317		127,900
(Gain) loss on sale of properties and property held for sale, less applicable income tax		(2,289)		—		643		523		1,772		2,938
Hedge ineffectiveness		(22)		—		1,009		(621)		(2,266)		(1,878)
Adjusted EBITDA*	$	35,036	$	31,637	$	32,144	$	32,356	$	32,823	$	128,960

Interest expense	$	7,579	$	6,433	$	6,417	$	6,767	$	6,931	$	26,548
Scheduled principal payments		—		—		—		—		—		—
Interest and scheduled principal payments	$	7,579	$	6,433	$	6,417	$	6,767	$	6,931	$	26,548

Interest coverage ratio		4.62		4.92		5.01		4.78		4.74		4.86

Debt service coverage ratio		4.62		4.92		5.01		4.78		4.74		4.86

Debt (excluding unamortized financing costs)	$	1,065,000	$	885,000	$	930,000	$	898,000	$	1,050,000

Adjusted EBITDA* (1)		35,036		31,637		32,478		32,721		34,418
Annualized		140,144		126,548		129,913		130,885		137,674

Debt-to-EBITDA*		7.6		7.0		7.2		6.9		7.6

See the Appendix for Definitions of these Non-GAAP Measures beginning on page 27. Amounts in the EBITDA and Adjusted 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.

(1) Includes an adjustment for acquisitions in the quarter acquired by the amount attributable to properties owned less than a full quarter. The calculation is based on

the partial quarter results over the number of days held multiplied by the number of days in the full quarter.

March 31, 2017| Page 10

Reconciliation of Net Income to Property NOI*

(in thousands)


Reconciliation of Net income to Property NOI*
	Three Months Ended		Three Months Ended
	31-Mar-17		31-Mar-16
Net Income	$	4,480	$	2,579
Add (deduct):
(Gain) loss on sale of properties and property held for sale, less applicable income taxes		(2,289)		—
Hedge ineffectiveness		(22)		—
Management fee income		(794)		(660)
Depreciation and amortization		25,332		22,445
Amortization of above/below market leases		(168)		81
Selling, general and administrative		3,443		3,530
Interest expense		7,579		6,433
Interest income		(1,214)		(1,279)
Equity in losses of non-consolidated REITs		397		286
Non-property specific items, net		129		52
Property NOI*	$	36,873	$	33,467

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

March 31, 2017| Page 11

Debt Summary

(in thousands)


		Maximum		Amount		Interest			Interest
	Maturity	Amount		Drawn at		Rate (a)			Rate at	Facility
	Date	of Loan		31-Mar-17		Components			31-Mar-17	Fee

BAML Revolver	29-Oct-18	$	500,000	$	295,000	L	+	1.25%	2.07%	0.25%
JPM Term Loan	30-Nov-18		150,000		150,000	L	+	1.35%	2.35%
BAML Term Loan	27-Sep-21		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%

		$	1,270,000	$	1,065,000				2.55%

We have a bank facility we call the BAML Credit Facility, which is comprised of a revolver under which we can borrow up to $500 million, which we call the BAML Revolver, and a term loan for $400 million that we call the BAML Term Loan. We also have a term loan we call the BMO Term Loan for $220 million and a bridge loan we call the JPM Term Loan for $150 million. Additional information about these loans can be found in the footnotes to our financial statements. Pricing is based on our credit rating for the BAML Revolver, JPM Term Loan, BAML Term Loan and the BMO Term Loan. Our credit rating as of March 31, 2017 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 2.07% as of March 31, 2017. 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 JPM Term Loan is priced based on our current credit rating at a spread of 1.35%, which was an interest rate of 2.35% at March 31, 2017.

The BAML Term Loan has base LIBOR fixed at 0.75% until September 27, 2017. At our credit rating, the spread for the BAML Term Loan is 1.45%, so our interest rate is 2.20%. On July 21, 2016, we extended the maturity date of the BAML Term Loan to September 27, 2021 (see below).

On July 21, 2016, we amended the BAML Credit Facility to extend the maturity date applicable to the BAML Term Loan from September 27, 2017 to September 27, 2021 (the extension period), and amended financial covenants and definitions. We also amended the BMO Term Loan to conform covenants and definitions to the BAML Credit Facility. On July 22, 2016, we entered into a forward interest rate swap that fixed the base LIBOR interest rate for the extension period at 1.12%. Accordingly, based upon our credit rating as of March 31, 2017, the interest rate when the extension period of the BAML Term Loan commences would be 2.57%.

The BMO Term Loan has fixed base LIBOR at 2.32% until August 20, 2020. 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 and BAML Term Loan and the credit facilities that preceded them. We also incurred financing costs in connection with the JPM Term Loan and 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 $2.5 million.

The BAML Revolver can be extended for 1 year at our option upon payment of fees. The BAML Credit Facility includes an accordion feature that allows for up to $350 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.

(a)

Interest rate excludes amortization of deferred financing costs and facility fees, which is discussed in the notes above.

March 31, 2017| Page 12

Capital Analysis

(in thousands, except per share amounts)


	31-Mar-17		31-Mar-16		30-Jun-16		30-Sep-16		31-Dec-16
Market Data:
Shares Outstanding		107,231		100,187		100,187		107,231		107,231
Closing market price per share	$	12.14	$	10.61	$	12.27	$	12.60	$	12.96
Market capitalization	$	1,301,786	$	1,062,988	$	1,229,299	$	1,351,113	$	1,389,716
Total Debt		1,065,000		885,000		930,000		898,000		1,050,000
Total Market Capitalization	$	2,366,786	$	1,947,988	$	2,159,299	$	2,249,113	$	2,439,716

Dividend Data:
Total dividends paid	$	20,374	$	19,036	$	19,036	$	19,036	$	20,373
Common dividend per share	$	0.19	$	0.19	$	0.19	$	0.19	$	0.19
Quarterly dividend as a % of FFO*		71.4%		73.1%		71.2%		73.9%		75.7%

Liquidity:
Cash and cash equivalents	$	11,143	$	14,316	$	7,524	$	13,372	$	9,335
Revolver:
Gross potential available under the BAML Revolver		500,000		500,000		500,000		500,000		500,000
Less:
Outstanding balance		(295,000)		(265,000)		(310,000)		(278,000)		(280,000)
Total Liquidity	$	216,143	$	249,316	$	197,524	$	235,372	$	229,335

*See page 9 for a reconciliation of Net Income to FFO and the Appendix for Definitions of Non-GAAP Measures beginning on page 27.

March 31, 2017| Page 13


	Owned Portfolio Overview


	As of the Quarter Ended
	31-Mar-17	31-Dec-16	30-Sep-16	30-Jun-16	31-Mar-16
Owned portfolio of commercial real estate:
Number of properties (a)	35	36	36	35	35
Square feet	10,118,112	10,163,615	9,683,846	9,523,054	9,325,249
Leased percentage	89.6%	89.3%	89.5%	90.1%	90.2%

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	1,396,071
Leased percentage	78.9%	78.1%	73.8%	73.1%	73.9%

Single Asset REITs (SARs) managed:
Number of properties	5	5	5	5	6
Square feet	1,075,135	1,075,135	1,075,135	1,075,135	1,191,135
Leased percentage	89.6%	89.6%	89.6%	86.1%	75.8%

Total owned, investments and managed properties:
Number of properties	42	43	43	42	43
Square feet	12,589,318	12,634,821	12,155,052	11,994,260	11,912,455
Leased percentage	88.5%	88.1%	87.7%	87.8%	86.8%

(a) Excludes one property being redeveloped.

March 31, 2017| 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	75.9%	76.1%	$	22.72	Northwest Point	Elk Grove Village	IL	177,095	100.0%	100.0%	$	15.85
								909 Davis Street	Evanston	IL	195,430	85.9%	80.4%	$	35.73
Washington, D.C.
Meadow Point	Chantilly	VA	138,537	100.0%	100.0%	$	26.11	Indianapolis
Stonecroft	Chantilly	VA	111,469	100.0%	100.0%	$	37.62	River Crossing	Indianapolis	IN	205,059	98.6%	87.9%	$	23.09
Loudoun Tech Center	Dulles	VA	136,658	92.0%	92.0%	$	18.04
								St. Louis
Richmond								Timberlake	Chesterfield	MO	234,496	100.0%	100.0%	$	25.24
Innsbrook	Glen Allen	VA	298,456	100.0%	100.0%	$	18.80	Timberlake East	Chesterfield	MO	117,036	100.0%	100.0%	$	24.99

Charlotte								Minneapolis
Forest Park	Charlotte	NC	62,212	100.0%	100.0%	$	13.62	121 South 8th Street	Minneapolis	MN	296,051	74.3%	57.7%	$	23.93
								Plaza Seven	Minneapolis	MN	326,413	95.7%	94.9%		31.61
Raleigh-Durham
Emperor Boulevard	Durham	NC	259,531	100.0%	100.0%	$	33.83

East Region Total			1,332,308	93.3%	93.3%	$	24.88	Midwest Region Total			1,551,580	92.2%	86.8%	$	26.22

(a)

Weighted Occupied Percentage for the three months ended March 31, 2017.

(b)

Weighted Average GAAP Rent per Occupied Square Foot.

March 31, 2017| 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								Denver
Legacy Tennyson Center	Plano	TX	202,600	65.6%	65.6%	$	21.55	380 Interlocken	Broomfield	CO	240,185	86.2%	81.8%	$	31.59
One Legacy Circle	Plano	TX	214,110	100.0%	96.6%	$	35.92	1999 Broadway	Denver	CO	676,379	75.7%	74.1%	$	32.07
Addison Circle	Addison	TX	288,794	86.6%	86.8%	$	33.63	Greenwood Plaza	Englewood	CO	196,236	100.0%	100.0%	$	24.90
Collins Crossing	Richardson	TX	300,887	100.0%	100.0%	$	24.67	390 Interlocken	Broomfield	CO	241,751	98.9%	95.5%	$	29.90
Liberty Plaza	Addison	TX	218,934	88.0%	81.4%	$	21.16	1001 17th Street	Denver	CO	655,413	90.7%	89.3%	$	37.20
								600 17th Street	Denver	CO	596,595	90.9%	91.0%	$	33.86
Houston								West Region Total			2,606,559	87.9%	86.4%	$	32.94
Park Ten	Houston	TX	157,460	65.4%	64.6%	$	30.94
Eldridge Green	Houston	TX	248,399	100.0%	100.0%	$	32.27	Total Owned			10,118,112	89.6%	88.0%	$	28.84
Park Ten Phase II	Houston	TX	156,746	100.0%	100.0%	$	30.48
Westchase I & II	Houston	TX	629,025	84.4%	84.6%	$	33.31

Miami-Ft. Lauderdale-West Palm Beach
Blue Lagoon Drive	Miami	FL	212,619	100.0%	100.0%	$	22.89

Atlanta
One Overton Park	Atlanta	GA	387,267	79.0%	78.4%	$	24.89
One Ravinia	Atlanta	GA	386,603	90.9%	90.9%	$	24.77
Two Ravinia	Atlanta	GA	442,130	77.4%	76.0%	$	26.16
Pershing Plaza	Atlanta	GA	160,145	97.4%	97.4%	$	35.13
999 Peachtree	Atlanta	GA	621,946	97.8%	95.0%	$	29.33
South Region Total			4,627,665	88.7%	87.7%	$	28.65

(a)

Weighted Occupied Percentage for the three months ended March 31, 2017.

(b)

Weighted Average GAAP Rent per Occupied Square Foot.

March 31, 2017| 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

Kansas City

(b)

Grand Boulevard

Kansas City

535,071

Southwest Region

Cincinnati

Centre Pointe V

West Chester

135,936

Houston

Energy Tower I

Houston

325,797

Southwest Region Total

325,797

Midwest Region Total

1,745,767

Total Managed

2,471,206

Total Owned & Managed

12,589,318

(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.

March 31, 2017| Page 17

Tenants by Industry

(By Square Feet)

March 31, 2017| Page 18

20
	20 Largest Tenants with Annualized Rent and Remaining Term


			Remaining	Aggregate				% of Aggregate
	Tenant	Number of	Lease Term	Leased	% of Total	Annualized		Leased
	Name	Leases	in Months	Square Feet	Square Feet	Rent		Annualized Rent

1	Quintiles IMS Healthcare Incorporated	1	110	259,531	2.9%	$	8,992,350	3.6%
2	US Government (a)	5	5, 9, 14, 42, 46	255,610	2.8%		7,896,318	3.1%
3	CITGO Petroleum Corporation	1	59	248,399	2.7%		8,363,594	3.3%
4	Newfield Exploration Company	1	59	234,495	2.6%		9,044,831	3.6%
5	Eversheds Sutherland (US) LLP	1	37	222,422	2.5%		6,965,667	2.8%
6	Burger King Corporation	1	18	212,619	2.3%		5,224,049	2.1%
7	Centene Management Company, LLC	3	75, 75, 75	206,262	2.3%		5,171,311	2.0%
8	EOG Resources, Inc. (b)	1	9, 116	174,215	1.9%		5,920,459	2.3%
9	SunTrust Bank (c)	2	54, 115	159,671	1.8%		3,138,904	1.2%
10	T-Mobile South, LLC dba T-Mobile	1	23	151,792	1.7%		3,948,366	1.6%
11	Citicorp Credit Services, Inc (d)	1	125	146,260	1.6%		—	0.0%
12	Petrobras America, Inc.	1	32	144,813	1.6%		5,452,209	2.2%
13	Murphy Exploration & Production Company	1	1	144,677	1.6%		4,695,172	1.9%
14	Jones Day	1	44	140,342	1.5%		4,853,880	1.9%
15	Argo Data Resource Corporation	1	77	140,246	1.5%		4,064,329	1.6%
16	Vail Corp d/b/a Vail Resorts (e)	3	24, 72, 72	132,229	1.5%		3,795,330	1.5%
17	Federal National Mortgage Association	1	18	123,144	1.4%		4,465,201	1.8%
18	Kaiser Foundation Health Plan	1	86	120,979	1.3%		3,177,030	1.3%
19	Randstad US (f)	2	12, 51	114,235	1.3%		2,624,487	1.0%
20	Giesecke & Devrient America	1	93	112,110	1.2%		1,979,863	0.8%

			Total	3,444,051	38.0%	$	99,773,350	39.5%

(a)

Includes 27,398 and 180,444 square feet which expire in 2017 and 2018, respectively. The remaining 47,768 square feet expire between 2018 and 2021.

(b)

Includes 13,278 square feet, which expire 12/31/17 and 160,937 square feet, which expire 12/21/26.

(c)

Includes 32,171 square feet, which expire 10/31/26 and 127,500 square feet, which expire 9/30/21.

(d)

Rent commences on 9/1/17.

(e)

Includes 38,293 square feet, which expire 3/31/19. The remaining 93,936 square feet expire 3/31/23.

(f)

Includes 12,050 square feet, which expire 3/31/18 and 102,185 square feet, which expire 6/30/21.

March 31, 2017| Page 19

Leasing Activity

(Owned Portfolio)


					Year		Year
	Three Months Ended				Ended		Ended
Leasing Activity		31-Mar-17		31-Mar-16		31-Dec-16		31-Dec-15
(in Square Feet - SF)
New leasing		62,000		45,000		299,000		362,000
Renewals and expansions		144,000		133,000		895,000		957,000
		206,000		178,000		1,194,000		1,319,000

Other information per SF
(Activity on a year-to-date basis)
GAAP Rents on leasing	$	28.36	$	28.69	$	29.64	$	28.66
Weighted average lease term		5.6 Years		6.6 Years		6.6 Years		5.3 Years

Increase over average GAAP rents in prior year		7.4%		3.3%		10.4%		10.4%

Average free rent		3 Months		3 Months		3 Months		3 Months
Tenant Improvements	$	23.02	$	13.47	$	18.71	$	13.17
Leasing Costs	$	8.32	$	10.75	$	10.05	$	5.81

March 31, 2017| Page 20

Lease Expirations by Square Feet

(Owned Portfolio)

March 31, 2017| 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

2017	63	(c)	519,746		$	15,623,462	$	30.06	6.2%	6.2%
2018	86		1,227,052			38,557,595		31.42	15.3%	21.5%
2019	80		1,378,864			38,940,946		28.24	15.4%	36.9%
2020	76		1,099,559			32,531,995		29.59	12.9%	49.8%
2021	58		853,285			23,426,159		27.45	9.3%	59.1%
2022	59		1,188,682			35,033,262		29.47	13.8%	72.9%
2023	31		747,629			19,860,626		26.56	7.9%	80.8%
2024	26		484,297			10,805,009		22.31	4.3%	85.1%
2025	12		367,140			9,223,413		25.12	3.6%	88.7%
2026	11		451,597			15,183,540		33.62	6.0%	94.7%
2027 and thereafter	70		752,949	(d)		13,280,096		17.64	5.3%	100.0%
	572		9,070,800		$	252,466,105	$	27.83	100.0%
Vacancies as of 3/31/17			1,047,312
Total Portfolio Square Footage			10,118,112

(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 March 31, 2017 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(c)

Includes 15 leases that are month-to-month.

(d)

Includes 102,603 square feet that are non-revenue producing building amenities.

March 31, 2017| Page 22


	Capital Expenditures


(in thousands)
	Three Months Ended
	31-Mar-17

Tenant improvements	$	6,474
Deferred leasing costs		1,579
Non-investment capex		1,670
Total Capital Expenditures	$	9,723


	For the Three Months Ended								Year ended
	31-Mar-16		30-Jun-16		30-Sep-16		31-Dec-16		31-Dec-16

Tenant improvements	$	1,929	$	1,329	$	3,325	$	7,885	$	14,468
Deferred leasing costs		1,613		4,966		2,247		3,783		12,609
Non-investment capex		438		1,052		2,211		1,842		5,543
Total Capital Expenditures	$	3,980	$	7,347	$	7,783	$	13,510	$	32,620

First generation leasing and investment capital was $7.0 million and $3.2 million for the three months ended March 31, 2017 and 2016, respectively.

March 31, 2017| Page 23

Transaction Activity

(in thousands except for Square Feet)

City

State

Square Feet

Date Acquired

Purchase Price

2016

Plaza Seven

Minneapolis

325,796

6/6/16

82,000

Pershing Plaza

Atlanta

160,145

8/10/16

45,450

600 17th Street

Denver

613,527

12/1/16

154,260

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 Sale		Gain (loss)
	City	State	Square Feet	Date Sold	Proceeds		on Sale
2017
Hillview	Milpitas	CA	36,288	1/6/17	$	6,152	$	2,289

2016
Lakeside I	Maryland Heights	MO	127,778	4/5/16	$	20,189	$	4,154
Federal Way	Federal Way	WA	117,010	12/16/16		7,500		(7,092)

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

March 31, 2017| 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-Mar-17		Rate (1)			Fee (2)	31-Mar-17

Secured revolving lines of credit
FSP Satellite Place Corp. (3)	Duluth, GA	31-Dec-19	$	5,500	$	2,915	L	+	4.40%	0.5%	5.21%
FSP 1441 Main Street Corp. (3)	Columbia, SC	31-Mar-19		10,800		9,000	L	+	4.40%	0.5%	5.21%
FSP Energy Tower I Corp.	Houston, TX	30-Jun-17		20,000		15,600	L	+	5.00%	0.5%	5.81%

Mortgage loan secured by property
FSP Monument Circle LLC (4)	Indianapolis, IN	7-Dec-18		21,000		21,000			4.90%	n/a	4.90%
FSP Energy Tower I Corp. (5)	Houston, TX	30-Jun-17		33,000		33,000			6.41%	n/a	6.41%

			$	90,300	$	81,515

(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)

These revolving lines of credit were extended on March 30, 2017.

(4)

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

(5)

This mortgage includes an annual extension fee of $108,900 paid by the borrower.

March 31, 2017| Page 25


	Net Asset Value Components


(in thousands except per share data)
	As of		Assets:			Other information:
	31-Mar-17		Loans outstanding on secured RE	$	81,515	Leased SF to be FFO producing
Total Market Capitalization Values			Investments in SARs (book basis)		74,423	During 2017 (in 000's)		140
Shares outstanding		107,231.2	Straight-line rent receivable		52,304
Closing price	$	12.14	Asset held for sale		—	Straight-line rental revenue current quarter	$	1,082
Market capitalization	$	1,301,786	Cash and cash equivalents		11,143
Debt		1,065,000	Restricted cash		31	Management fee income current quarter	$	156
Total Market Capitalization	$	2,366,786	Tenant rent receivables		3,785	Interest income from secured loans		1,214
			Prepaid expenses		2,704	Management fees and interest income from loans	$	1,370
			Office computers and furniture		275
	3 Months		Other assets:			FFO from non-consolidated REITs - Q4 2016 (6):
	Ended		Deferred financing costs, net		6,703	East Wacker	$	634
NOI Components	31-Mar-17		Other assets: Derivative Market Value		13,603	Grand Boulevard		80
			Other assets		—	Total	$	714
Same Store NOI (1)	$	31,961		$	246,486
Acquisitions (1) (2)		4,914				Footnotes to the components
Property NOI (1)		36,875	Liabilities:
Full quarter adjustment (3)		—	Debt (excluding contra for unamortized financing costs)	$	1,065,000	(1) See pages 11 & 28 for definitions and reconciliations.
Stabilized portfolio	$	36,875	Accounts payable & accrued expenses		51,788
			Tenant security deposits		5,441	(2) Includes NOI from acquisitions not in same store.
			Other liabilities: derivative liability		4,351
Financial Statement Reconciliation:				$	1,126,580	(3) Adjustment to reflect property NOI for a full quarter in the quarter acquired, if necessary.
Rental Revenue	$	67,376
Rental operating expenses		(17,308)				(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		(12,403)
NOI on assets sold		(2)				(5) Management & other fees are eliminated in consolidation but included in Property NOI.
Taxes (4)		(125)
Management fees & other (5)		(663)				(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)	$	36,875

March 31, 2017| 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, as management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness 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 as of May 17, 2016 in the table on page 9 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.

March 31, 2017| 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 hedge ineffectiveness, 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, 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 Same Store. The comparative Same Store results include properties held for the periods presented and exclude properties that are non-operating, being developed or redeveloped, 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 as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions.

March 31, 2017| 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 (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 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 (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 and cash flows from operating, investing and financing activities in the consolidated financial statements.

March 31, 2017| Page 29

Investor Relations Contact

Georgia Touma | 877.686.9496

InvestorRelations@fspreit.com

Pershing Park Plaza, Atlanta, GA

Franklin Street Properties Corp.

401 Edgewater Place Wakefield, Massachusetts 01880

781.557.1300 www.fspreit.com

March 31, 2017| Page 30

FRANKLIN STREET PROPERTIES CORP /MA/ - FORM 8-K - EX-99.2 - May 2, 2017

Attached files

FRANKLIN STREET PROPERTIES CORP /MA/ Reports