Exhibit 99.2

 

 

Supplemental Operating and Financial Data Third Quarter 2013

 

 

 

Franklin Street Properties Corp. ● 401 Edgewater Place ● Wakefield, MA 01880 ● (781) 557-1300

 

www.franklinstreetproperties.com

 

 

	Page			Page
Company Overview	3		Tenant Analysis and Leasing Activity
			20 Largest Tenants, Industry Profile	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 & FAD	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 FAD	28
			NOI	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, 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.

 

 

Overview

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. FSP’s subsidiary, FSP Investments LLC (member, FINRA and SIPC), is a real estate investment banking firm and registered broker/dealer that previously sponsored the organization of single-purpose entities that own real estate and the private placement of equity in those entities, which we refer to as “Sponsored REITs”.

 

Our Business

As of September 30, 2013, the Company owned and operated a portfolio of real estate consisting of 40 properties including one property held for sale, managed 15 Sponsored REITs and held seven promissory notes secured by mortgages on real estate owned by Sponsored REITs. From time-to-time, the Company may acquire real estate, make additional secured loans or acquire one of its Sponsored REITs. The Company may also pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, or for geographic or property specific reasons.

 

Management Team
George J. Carter			Scott H. Carter
President, Chief Executive Officer			Executive Vice President, General
Chairman of the Board			Counsel and Assistant Secretary
Barbara J. Fournier			Jeffrey B. Carter
Executive Vice President,  Chief Operating Officer,			Executive Vice President and
Treasurer, Secretary and Director			Chief Investment Officer
Janet Notopoulos			John G. Demeritt
Executive Vice President and Director			Executive Vice President and
			Chief Financial Officer

 

Inquiries

Inquiries should be directed to: John Demeritt, CFO

877-686-9496 or InvestorRelations@franklinstreetproperties.com

 

Snapshot (as of September 30, 2013)
Corporate Headquarters	Wakefield, MA
Fiscal Year-End	31-Dec
Total Properties	40
Total Square Feet	9.8 Million
Trading Symbol	FSP
Exchange	NYSE MKT
Common Shares Outstanding	100,187,405
Quarterly Dividend	$0.19
Dividend Yield	6.0%
Total Market Capitalization	$2.2 Billion
Insider Holdings	10.6%

 

 

 

 

(in thousands except per share amounts, SF & number of properties)		For the Three Months Ended
		30-Sep-13				30-Jun-13				31-Mar-13				31-Dec-12				30-Sep-12				30-Jun-12				31-Mar-12
Income Items:
Rental revenue		$	56,760			$	46,017			$	42,841			$	41,227			$	38,251			$	35,570			$	36,303
Total revenue			58,446				47,671				44,494				43,115				41,775				38,654				38,953
Adjusted EBITDA*			31,862				26,075				24,712				25,492				23,348				22,751				22,789
Equity in earnings in non-consolidated REITs			(431	)			(196	)			(187	)			972				176				494				391
Net income			4,094				4,741				4,401				5,459				(8,998	)			5,433				5,738
FFO*			27,134				22,142				20,616				20,516				19,913				19,042				19,571
Per Share Data:
EPS		$	0.04			$	0.05			$	0.05			$	0.07			$	(0.11	)		$	0.07			$	0.07
FFO*		$	0.27			$	0.24			$	0.25			$	0.25			$	0.24			$	0.23			$	0.24
Weighted Average Shares (diluted)			100,187				91,847				82,937				82,937				82,937				82,937				82,937
Closing share price		$	12.74			$	13.20			$	14.62			$	12.31			$	11.07			$	10.58			$	10.60
Dividend		$	0.19			$	0.19			$	0.19			$	0.19			$	0.19			$	0.19			$	0.19
Payout Ratio:			70	%			79	%			76	%			77	%			79	%			83	%			81	%
Balance Sheet Items:
Real estate, net		$	1,575,690			$	1,280,252			$	1,128,398			$	1,134,788			$	1,008,111			$	974,778			$	979,063
Other assets, net			500,939				428,789				383,244				391,280				386,662				454,373				458,203
Total assets, net			2,076,629				1,709,041				1,511,642				1,526,068				1,394,773				1,429,151				1,437,266
Total liabilities, net			1,017,480				627,997				657,809				661,319				520,177				528,128				525,919
Shareholders' equity			1,059,149				1,081,044				853,833				864,749				874,596				901,023				911,347
Market Capitalization and Debt:
Total Market Capitalization (a)		$	2,227,888			$	1,903,974			$	1,834,295			$	1,637,709			$	1,400,117			$	1,371,478			$	1,373,136
Total debt outstanding			951,500				581,500				621,750				616,750				482,000				494,000				494,000
Debt to Total Market Capitalization			42.7	%			30.5	%			33.9	%			37.7	%			34.4	%			36.0	%			36.0	%
Debt to Adjusted EBITDA			7.5				5.6				6.3				6.0				5.2				5.4				5.4
Owned Portfolio Leasing Statistics:
Owned portfolio assets (includes asset held for sale)			40				38				37				37				37				36				36
Portfolio total SF			9,807,339				8,529,752				7,856,859				7,854,679				7,439,195				7,052,592				7,052,068
Portfolio % leased			93.8	%			94.4	%			94.4	%			94.0	%			89.9	%			90.0	%			89.0	%

 

(a)

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

*

See pages 9 & 10 for reconciliations of Net Income to FFO and Adjusted EBITDA, respectively, and the Appendix for Defintions of these Non-GAAP Measures beginning on page 27.

 

 

														For the Nine																				For the
		For the Three Months Ended												Months Ended				For the Three Months Ended																Year Ended
		31-Mar-13				30-Jun-13				30-Sep-13				30-Sep-13				31-Mar-12				30-Jun-12				30-Sep-12				31-Dec-12				31-Dec-12
Revenue:
Rental		$	42,841			$	46,017			$	56,760			$	145,618			$	35,998			$	35,265			$	37,944			$	41,227			$	150,434
Related party revenue:
Management fees and interest income from loans			1,622				1,642				1,665				4,929				2,616				3,045				3,485				1,801				10,947
Other			31				12				21				64				34				39				39				87				199
Total revenue			44,494				47,671				58,446				150,611				38,648				38,349				41,468				43,115				161,580
Expenses:
Real estate operating expenses			10,770				11,116				13,991				35,877				8,694				8,602				9,642				10,501				37,439
Real estate taxes and insurance			6,595				7,308				8,801				22,704				5,694				5,491				5,761				5,959				22,905
Depreciation and amortization			15,781				16,919				22,163				54,863				12,866				12,798				13,367				15,019				54,050
Selling, general and administrative			2,532				3,204				3,477				9,213				2,077				2,236				3,141				2,462				9,916
Interest			4,208				4,174				5,474				13,856				3,677				4,037				4,187				4,167				16,068
Total expenses			39,886				42,721				53,906				136,513				33,008				33,164				36,098				38,108				140,378
Income before interest income, equity in earnings of non-consolidated REITs and taxes			4,608				4,950				4,540				14,098				5,640				5,185				5,370				5,007				21,202
Interest income			1				4				5				10				8				4				5				34				51
Equity in earnings of non-consolidated REITs			(187	)			(196	)			(431	)			(814	)			391				494				176				972				2,033
Income before taxes on income			4,422				4,758				4,114				13,294				6,039				5,683				5,551				6,013				23,286
Income tax expense			119				115				118				352				79				77				80				99				335
Income from continuing operations			4,303				4,643				3,996				12,942				5,960				5,606				5,471				5,914				22,951
Income from discontinued operations			98				98				98				294				(222	)			(172	)			(169	)			71				(492	)
Gain (loss) on sale, less applicable income tax			—				—				—				—				—				—				(14,300	)			(526	)			(14,826	)
Net income		$	4,401			$	4,741			$	4,094			$	13,236			$	5,738			$	5,434			$	(8,998	)		$	5,459			$	7,633
Weighted average number of shares outstanding, basic and diluted			82,937				91,847				100,187				91,720				82,937				82,937				82,937				82,937				82,937
Earnings per share, basic and diluted, attributable to:
Continuing operations		$	0.05			$	0.05			$	0.04			$	0.14			$	0.07			$	0.07			$	0.07			$	0.07			$	0.28
Discontinued operations			—				—				—				—				—				—				—				—				(0.01	)
Gain (loss) on sale, less applicable income tax			—				—				—				—				—				—				(0.18	)			—				(0.18	)
Net income per share, basic and diluted		$	0.05			$	0.05			$	0.04			$	0.14			$	0.07			$	0.07			$	(0.11	)		$	0.07			$	0.09

 

 

		March 31,				June 30,				September 30,				March 31,				June 30,				September 30,				December 31,
		2013				2013				2013				2012				2012				2012				2012
Assets:
Real estate assets:
Land		$	141,545			$	157,879			$	185,479			$	129,602			$	129,602			$	133,054			$	141,545
Buildings and improvements			1,175,743				1,320,703				1,599,519				1,004,490				1,007,906				1,045,895				1,172,928
Fixtures and equipment			904				960				985				860				871				904				904
			1,318,192				1,479,542				1,785,983				1,134,952				1,138,379				1,179,853				1,315,377
Less accumulated depreciation			189,794				199,290				210,293				155,889				163,601				171,742				180,589
Real estate assets, net			1,128,398				1,280,252				1,575,690				979,063				974,778				1,008,111				1,134,788
Acquired real estate leases, net			102,274				129,226				194,893				82,778				78,646				88,766				108,203
Investment in non-consolidated REITs			81,746				81,523				81,065				87,061				86,658				85,927				81,960
Assets held for sale			10,431				10,286				10,143				26,217				25,895				11,404				10,575
Cash and cash equivalents			17,282				24,962				25,539				29,283				22,620				23,962				21,267
Restricted cash			583				602				623				511				533				546				575
Tenant rent receivables, net			2,357				2,331				6,029				1,090				1,403				1,182				1,749
Straight-line rent receivable, net			36,210				37,865				40,086				31,832				33,003				34,134				35,374
Prepaid expenses and other assets			10,545				12,532				11,846				1,164				2,605				2,336				1,106
Related party mortgage loan receivable			96,896				97,846				98,846				172,286				177,536				108,236				93,896
Other assets: derivative asset			—				6,739				4,365				4,006				3,640				8,467				13,199
Deferred leasing commissions, net			24,920				24,877				27,504				21,975				21,834				21,702				23,376
Total assets		$	1,511,642			$	1,709,041			$	2,076,629			$	1,437,266			$	1,429,151			$	1,394,773			$	1,526,068
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable		$	221,750			$	181,500			$	331,500			$	494,000			$	494,000			$	82,000			$	216,750
Term loan payable			400,000				400,000				620,000				—				—				400,000				400,000
Accounts payable and accrued expenses			25,493				29,971				39,907				23,311				25,408				26,462				31,122
Accrued compensation			540				1,677				2,432				446				944				2,194				2,540
Tenant security deposits			2,474				3,074				3,891				2,181				2,113				2,281				2,489
Other liabilities: derivative termination value			778				—				4,579				—				—				1,671				1,219
Acquired unfavorable real estate leases, net			6,774				11,775				15,171				5,981				5,663				5,569				7,199
Total liabilities			657,809				627,997				1,017,480				525,919				528,128				520,177				661,319
Commitments and contingencies
Stockholders’ Equity:
Preferred stock			—				—				—				—				—				—				—
Common stock			8				10				10				8				8				8				8
Additional paid-in capital			1,042,876				1,273,585				1,273,585				1,042,876				1,042,876				1,042,876				1,042,876
Accumulated other comprehensive income (loss)			(778	)			6,739				(214	)			—				—				(1,671	)			(1,219	)
Accumulated distributions in excess of accumulated earnings			(188,273	)			(199,290	)			(214,232	)			(131,537	)			(141,861	)			(166,617	)			(176,916	)
Total stockholders’ equity			853,833				1,081,044				1,059,149				911,347				901,023				874,596				864,749
Total liabilities and stockholders’ equity		$	1,511,642			$	1,709,041			$	2,076,629			$	1,437,266			$	1,429,151			$	1,394,773			$	1,526,068

 

 

		Nine Months ended September 30,								Twelve Months ended December 31
		2013				2012				2012				2011
Cash flows from operating activities:
Net income		$	13,236			$	2,174			$	7,633			$	43,524
Adjustments to reconcile net income to net cash provided by  operating activities:
Depreciation and amortization expense			56,796				41,846				57,500				50,261
Amortization of above market lease			(277	)			56				71				(47	)
Gain (loss) on sale, less applicable income tax			—				14,300				14,826				(21,939	)
Equity in earnings (losses) from non-consolidated REITs			814				(1,061	)			(2,033	)			(3,086	)
Distributions from non-consolidated REITs			—				1,246				705				3,474
Increase in bad debt reserve			(1,220	)			105				65				(365	)
Changes in operating assets and liabilities:
Restricted cash			(48	)			(53	)			(82	)			(73	)
Tenant rent receivables			(3,060	)			173				(354	)			827
Straight-line rents			(3,920	)			(3,498	)			(4,464	)			(9,878	)
Lease acquisition costs			(820	)			(2,235	)			(2,520	)			—
Prepaid expenses and other assets			(4,845	)			(1,278	)			(328	)			1,611
Accounts payable and accrued expenses			6,860				(25	)			3,717				4,213
Accrued compensation			(108	)			(28	)			318				419
Tenant security deposits			1,402				273				481				78
Payment of deferred leasing commissions			(7,532	)			(2,425	)			(5,179	)			(8,058	)
Net cash provided by operating activities			57,278				49,570				70,356				60,961
Cash flows from investing activities:
Purchase of real estate assets, office computers and furniture, capitalized merger costs and acquired real estate leases			(566,036	)			(63,585	)			(221,170	)			(236,250	)
Investment in non-consolidated REITs			4,858				(1	)			(1	)			(10	)
Distributions in excess of earnings from non-consolidated REITs			81				1,487				2,105				1,582
Investment in related party mortgage loan receivable			(4,950	)			(73,920	)			(74,580	)			(82,832	)
Repayment of related party mortgage loan receivable			—				106,200				121,200				—
Changes in deposits on real estate assets			—				—				—				200
Investment in assets held for syndication, net			—				—				—				2,230
Proceeds received on sales of real estate assets			—				—				157				96,790
Net cash used in investing activities			(566,047	)			(29,819	)			(172,289	)			(218,290	)
Cash flows from financing activities:
Distributions to stockholders			(50,552	)			(47,274	)			(63,032	)			(62,177	)
Proceeds (costs) from equity offering, net			230,711				—				—				17,295
Borrowings under bank note payable			150,000				160,000				294,750				449,000
Borrowings (repayments) under Revolver			(35,250	)			(527,000	)			(527,000	)			(209,968	)
Borrowing (repayment) of term loan payable, net			220,000				400,000				400,000				(74,850	)
Deferred Financing Costs			(1,868	)			(5,328	)			(5,331	)			(5,388	)
Swap termination payment			—				—				—				(983	)
Net cash provided by (used in) financing activities			513,041				19,602				99,387				112,929
Net increases (decreases) in cash and cash equivalents			4,272				149				(2,546	)			(44,400	)
Cash and cash equivalents, beginning of period			21,267				23,813				23,813				68,213
Cash and cash equivalents, end of period		$	25,539			$	23,962			$	21,267			$	23,813

 

 

(in thousands)
		Rentable																Nine Months																Nine Months
		Square Feet				Three Months Ended												Ended				Three Months Ended												Ended				Inc				%
Region		or RSF				31-Mar-13				30-Jun-13				30-Sep-13				30-Sep-13				31-Mar-12				30-Jun-12				30-Sep-12				30-Sep-12				(Dec)				Change
East			1,441			$	4,756			$	5,440			$	4,914			$	15,110			$	5,113			$	4,723			$	4,799			$	14,635			$	475				3.2	%
MidWest			1,682				4,839				5,008				4,944				14,791				5,122				4,980				5,164				15,266				(475	)			-3.1	%
South			2,508				9,307				9,393				9,230				27,930				8,963				8,764				9,218				26,945				985				3.7	%
West			1,088				2,350				2,118				2,440				6,908				2,278				2,443				2,428				7,149				(241	)			-3.4	%
Same Store			6,719				21,252				21,959				21,528				64,739				21,476				20,910				21,609				63,995				744				1.2	%
Acquisitions			2,966				3,920				5,106				11,812				20,838				—				—				712				712				20,126				31.1	%
Property NOI from the continuing portfolio			9,685				25,172				27,065				33,340				85,577				21,476				20,910				22,321				64,707				20,870				32.3	%
Dispositions and asset held for sale							252				252				253				757				118				204				155				477				280				0.1	%
Property NOI						$	25,424			$	27,317			$	33,593			$	86,334			$	21,594			$	21,114			$	22,476			$	65,184			$	21,150				32.4	%
Same Store						$	21,252			$	21,959			$	21,528			$	64,739			$	21,476			$	20,910			$	21,609			$	63,995			$	744				1.2	%
Less Nonrecurring
Items in NOI (a)							63				557				—				620				514				21				307				842				(222	)			0.3	%
Comparative
Same Store						$	21,189			$	21,402			$	21,528			$	64,119			$	20,962			$	20,889			$	21,302			$	63,153			$	966				1.5	%

 

(a)

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

*

See page 11 for a reconciliation of Net Income to Property NOI and the Appendix for Definitions of Non-GAAP Measures beginning on page 27. Property NOI Excludes NOI from investments in and interest income from secured loans to non-consolidated REITs.

 

 

 

														For the Nine																				For the
		For the Three Months Ended												Months Ended				For the Three Months Ended:																Year Ended
		31-Mar-13				30-Jun-13				30-Sep-13				30-Sep-13				31-Mar-12				30-Jun-12				30-Sep-12				31-Dec-12				31-Dec-12
Net income		$	4,401			$	4,741			$	4,094			$	13,236			$	5,738			$	5,434			$	(8,998	)		$	5,459			$	7,633
Gain (loss) on sale, less applicable income tax			—												—				—				—				14,300				526				14,826
GAAP income from non-consolidated REITs			187				196				431				814				(391	)			(494	)			(176	)			(972	)			(2,033	)
Distributions from non-consolidated REITs			27				27				27				81				929				898				907				76				2,810
Depreciation & amortization			15,984				17,045				22,176				55,205				13,295				13,203				13,779				15,241				55,518
NAREIT FFO*			20,599				22,009				26,728				69,336				19,571				19,041				19,812				20,330				78,754
Acquisition costs			17				133				406				556				—				—				101				186				287
Funds From Operations (FFO)*		$	20,616			$	22,142			$	27,134			$	69,892			$	19,571			$	19,041			$	19,913			$	20,516			$	79,041
Funds Available for Distribution:
Funds From Operations (FFO)*			20,616				22,142				27,134				69,892				19,571				19,041				19,913				20,516				79,041
Straight-line rent			(657	)			(1,186	)			(2,071	)			(3,914	)			(1,517	)			(1,054	)			(927	)			(965	)			(4,463	)
Capital expenditures			(1,118	)			(1,622	)			(1,552	)			(4,292	)			(746	)			(1,003	)			(711	)			(1,252	)			(3,712	)
Funds Available for Distribution (FAD)*		$	18,841			$	19,334			$	23,511			$	61,686			$	17,308			$	16,984			$	18,275			$	18,299			$	70,866
Per Share Data:
EPS		$	0.05			$	0.05			$	0.04			$	0.14			$	0.07			$	0.07			$	(0.11	)		$	0.07			$	0.09
FFO*			0.25				0.24				0.27				0.76				0.24				0.23				0.24				0.25				0.95
FAD*			0.23				0.21				0.23				0.67				0.21				0.20				0.22				0.22				0.85
Weighted Average Shares (basic and diluted)			82,937				91,847				100,187				91,720				82,937				82,937				82,937				82,937				82,937

 

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

 

 

														For the Nine																				Year Ended
	For the Three Months Ended													Months Ended								For the three months ended:												31-Dec-12
		31-Mar-13				30-Jun-13				30-Sep-13				30-Sep-13				31-Mar-12				30-Jun-12				30-Sep-12				31-Dec-12
Net income		$	4,401			$	4,741			$	4,094			$	13,236			$	5,738			$	5,434			$	(8,998	)		$	5,459			$	7,633
Interest expense			4,208				4,174				5,474				13,856				3,677				4,037				4,187				4,167				16,068
Depreciation and amortization			15,984				17,045				22,176				55,205				13,295				13,203				13,779				15,241				55,518
Income taxes			119				115				118				352				79				77				80				99				335
EBITDA			24,712				26,075				31,862				82,649				22,789				22,751				9,048				24,966				79,554
Excluding (gain) loss on sale, less applicable income tax			—				—				—				—				—				—				14,300				526				14,826
Adjusted EBITDA		$	24,712			$	26,075			$	31,862			$	82,649			$	22,789			$	22,751			$	23,348			$	25,492			$	94,380
Interest expense		$	4,208			$	4,174			$	5,474			$	13,856			$	3,677			$	4,037			$	4,187			$	4,167			$	16,068
Scheduled principal payments			—				—				—				—				—				—				—				—				—
Interest and scheduled principal payments		$	4,208			$	4,174			$	5,474			$	13,856			$	3,677			$	4,037			$	4,187			$	4,167			$	16,068
Interest coverage ratio			5.87				6.25				5.82				5.96				6.20				5.64				5.58				6.12				5.87
Debt service coverage ratio			5.87				6.25				5.82				5.96				6.20				5.64				5.58				6.12				5.87
Debt		$	621,750			$	581,500			$	951,500			$	581,500			$	494,000			$	494,000			$	482,000			$	616,750
Adjusted EBITDA			24,712				26,075				31,862				82,649				22,789				22,751				23,348				25,492
Annualized			98,848				104,300				127,448				165,298				91,156				91,004				93,392				101,968
Debt-to-EBITDA			6.3				5.6				7.5				3.5				5.4				5.4				5.2				6.0

 

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

 

 

Reconciliation to Net income														Nine Months																Nine Months
	Three Months Ended													Ended				Three Months Ended												Ended
			31-Mar-13				30-Jun-13				30-Sep-13				30-Sep-13				31-Mar-12				30-Jun-12				30-Sep-12				30-Sep-12
Net Income		$	4,401			$	4,741			$	4,094			$	13,236			$	5,738			$	5,434			$	(8,998	)		$	2,174
Add (deduct):
Discontinued operations			(98	)			(98	)			(98	)			(294	)			222				172				169				563
Loss provision or (gain) on sale of assets			—				—				—				—				—				—				14,300				14,300
Management fee income			(559	)			(553	)			(692	)			(1,804	)			(488	)			(479	)			(562	)			(1,529	)
Depreciation and amortization			15,784				16,916				22,163				54,863				12,866				12,798				13,367				39,031
Amortization of above/below market leases			48				(27	)			(143	)			(122	)			91				31				86				208
Selling, general and administrative			2,532				3,204				3,477				9,213				2,077				2,236				3,141				7,454
Interest expense			4,208				4,174				5,474				13,856				3,677				4,037				4,187				11,901
Interest income			(1,353	)			(1,382	)			(1,411	)			(4,146	)			(2,340	)			(2,774	)			(3,201	)			(8,315	)
Equity in earnings of															—																—
nonconsolidated REITs			187				196				431				814				(391	)			(494	)			(176	)			(1,061	)
Non-property specific items, net			22				(106	)			45				(39	)			24				(51	)			8				(19	)
Property NOI from the continuing portfolio		$	25,172			$	27,065			$	33,340			$	85,577			$	21,476			$	20,910			$	22,321			$	64,707
Dispositions and asset held for sale			252				252				253				757				118				204				155				477
Property NOI		$	25,424			$	27,317			$	33,593			$	86,334			$	21,594			$	21,114			$	22,476			$	65,184

 

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

 

 

																		(a)
(dollars in thousands)						Maximum				Amount				Interest				Interest
		Maturity				Amount				Drawn at				Rate				Rate at				Facility
		Date				of Loan				30-Jun-13				Components				30-Sep-13				Fee
2012 Revolver			27-Sep-16			$	500,000			$	331,500				L+1.45%				1.58	%			0.3	%
2012 Term Loan			27-Sep-17				400,000				400,000				0.75% + 1.45%				2.20	%			0.3	%
2013 Term Loan			26-Aug-20				220,000				220,000				2.32% + 1.45%				3.77	%
						$	1,120,000			$	951,500								2.35	%
(a) Interest rate excludes amortization of deferred financing costs and facility fees, see notes below

 

On August 26, 2013, we entered into a term loan we call the 2013 Term Loan and borrowed $220 million. On September 27, 2012, we entered into a new bank facility we call the 2012 Credit Facility for a total of $900 million, which is comprised of a line of credit that we can borrow up to $500 million on, which we call the 2012 Revolver and a term loan for $400 million that we call the 2012 Term Loan. Additional information about these loans are in the footnotes to our financial statements.

Pricing is leverage based over LIBOR for the 2013 Term Loan and the 2012 Credit Facility. Each of these facilities also has the option to use the respective bank’s base rate.

•

The 2013 Term Loan fixed LIBOR at 2.32% for seven years. The current leverage spread over LIBOR is 1.45%, however based on recent acquisitions using debt we expect that spread to change to increase in Q4 2013.

•

The 2012 Credit Facility has the 2012 Term Loan with LIBOR fixed at 0.75% for five years and the 2012 Revolver is at the LIBOR rate. The current leverage spread for the 2012 Credit Facility is 1.40%, however based on recent acquisitions using debt we expect that spread to increase in Q4 2013.

•

The total amount available under the 2012 Credit Facility is $900 million and is subject to a facility fee on the entire amount based on the leverage ratio. As of September 30, 2013 the facility fee was 25 bps based on our leverage ratio, or approximately $2.25 million per year. We anticipate the facility fee to be approximately $2.8 million for 2013

•

We incurred financing costs to close the 2013 Term Loan, 2012 Credit Facility and the 2011 Revolver that preceded the 2012 Credit Facility. 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 $2.0 million.

•

The 2012 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 2013 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.

 

 

		31-Mar-13				30-Jun-13				30-Sep-13					31-Mar-12				30-Jun-12				30-Sep-12				31-Dec-12
Market Data:
Shares Outstanding			82,937				100,187				100,187					82,937				82,937				82,937				82,937
Closing market price per share		$	14.62			$	13.20			$	12.74				$	10.60			$	10.58			$	11.07			$	12.31
Market capitalization		$	1,212,545			$	1,322,474			$	1,276,388				$	879,136			$	877,478			$	918,117			$	1,020,959
Total Debt			621,750				581,500				951,500					494,000				494,000				482,000				616,750
Total Market Capitalization		$	1,834,295			$	1,903,974			$	2,227,888				$	1,373,136			$	1,371,478			$	1,400,117			$	1,637,709
Dividend Data:
Total dividends paid		$	15,758			$	15,758			$	19,036				$	15,758			$	15,758			$	15,758			$	15,758
Common dividend per share		$	0.19			$	0.19			$	0.19				$	0.19			$	0.19			$	0.19			$	0.19
Quarterly dividend as a % of FFO*			76.0	%			79.2	%			70.4	%				80.5	%			82.6	%			79.2	%			76.8	%
Liquidity:
Cash and cash equivalents		$	17,282			$	24,962			$	25,539				$	29,283			$	22,620			$	23,962			$	21,267
Revolving credit facilities:
Gross potential available under current credit facilities			900,000				900,000				900,000					600,000				600,000				900,000				900,000
Less:
Outstanding balance			(621,750	)			(581,500	)			(731,500	)				(494,000	)			(494,000	)			(482,000	)			(616,750	)
Total Liquidity		$	295,532			$	343,462			$	194,039				$	135,283			$	128,620			$	441,962			$	304,517

 

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

 

 

		For the Three Months Ended
		30-Sep-13				30-Jun-13				31-Mar-13				31-Dec-12				30-Sep-12				30-Jun-12
Owned portfolio of commercial real estate:
Number of properties (a)			40				38				37				37				37				36
Square feet			9,807,339				8,529,752				7,856,859				7,854,679				7,439,195				7,052,592
Leased percentage			93.8	%			94.4	%			94.4	%			94.0	%			89.9	%			90.0	%
Investments in non-consolidated
commercial real estate:
Number of properties (a)			2				2				2				2				3				3
Square feet			1,395,500				1,395,500				1,392,316				1,392,316				2,016,260				2,003,968
Leased percentage			61.5	%			67.6	%			66.1	%			65.0	%			68.0	%			89.5	%
Single Asset REITs (SARs) managed:
Number of properties			13				13				13				13				13				13
Square feet			3,323,198				3,323,566				3,323,566				3,323,566				3,322,589				3,322,589
Leased percentage			86.6	%			83.9	%			87.8	%			87.0	%			84.8	%			84.8	%
Total owned (a) , investments
and managed properties:
Number of properties			55				53				52				52				53				52
Square feet			14,526,037				13,248,818				12,572,741				12,570,561				12,778,044				12,379,149
Leased percentage			89.1	%			88.9	%			89.5	%			89.0	%			85.1	%			88.5	%

 

(a) Includes assets held for sale or sold in prior periods

 

 

													Percent				Wtd Ave (a)				GAAP (b)
MSA / Property Name		City			State				Square Feet				Leased				Occupied				Rent
East Region
Baltimore
East Baltimore		Baltimore			MD				325,445				76.8	%			72.2	%		$	24.60
Washington, D.C.
Meadow Point		Chantilly			VA				138,537				92.6	%			92.6	%		$	26.82
Stonecroft		Chantilly			VA				111,469				100.0	%			100.0	%		$	38.16
Loudoun Tech Center		Dulles			VA				135,888				100.0	%			100.0	%		$	15.85
Richmond
Innsbrook		Glen Allen			VA				298,456				99.9	%			98.9	%		$	17.86
Charlotte
Park Seneca		Charlotte			NC				109,674				80.7	%			78.2	%		$	15.69
Forest Park		Charlotte			NC				62,212				100.0	%			100.0	%		$	14.34
Raleigh-Durham
Emperor Boulevard		Durham			NC				259,531				100.0	%			100.0	%		$	35.61
East Region Total									1,441,212				92.6	%			91.1	%		$	24.65
Midwest Region
Chicago
Northwest Point		Elk Grove Village			IL				176,848				100.0	%			100.0	%		$	19.33
909 Davis Street		Evanston			IL				195,245				97.9	%			97.9	%		$	34.50
Indianapolis
River Crossing		Indianapolis			IN				205,059				99.1	%			92.2	%		$	22.13
St. Louis
Timberlake		Chesterfield			MO				232,766				98.3	%			97.6	%		$	21.38
Timberlake East		Chesterfield			MO				116,197				94.6	%			94.1	%		$	22.92
Lakeside Crossing		Maryland Heights			MO				127,778				100.0	%			100.0	%		$	24.51
Minneapolis
Eden Bluff		Eden Prairie			MN				153,028				100.0	%			100.0	%		$	27.43
121 South 8th Street		Minneapolis			MN				474,791				90.2	%			90.2	%		$	15.04
Midwest Region Total									1,681,712				96.3	%			95.3	%		$	22.04

 

(a) Weighted Occupied Percentage for the nine months ended September 30, 2013

(b) Weighted Average GAAP Rent per Occupied Square Foot

 

 

													Percent				Wtd Ave (a)				GAAP (b)
MSA / Property Name		City			State				Square Feet				Leased				Occupied				Rent
South Region
Dallas-Fort Worth
Willow Bend Office Center		Plano			TX				117,050				92.3	%			87.8	%		$	20.95
Legacy Tennyson Center		Plano			TX				202,600				100.0	%			100.0	%		$	18.84
One Legacy Circle		Plano			TX				214,110				100.0	%			100.0	%		$	31.74
Addison Circle		Addison			TX				293,787				94.3	%			96.1	%		$	23.94
Collins Crossing		Richardson			TX				298,766				99.5	%			93.2	%		$	23.71
East Renner Road		Richardson			TX				122,300				100.0	%			100.0	%		$	9.99
Liberty Plaza		Addison			TX				218,934				86.0	%			82.8	%		$	19.66
Houston
Park Ten		Houston			TX				157,460				100.0	%			98.9	%		$	28.56
Eldridge Green		Houston			TX				248,399				100.0	%			100.0	%		$	29.55
Park Ten Phase II		Houston			TX				156,746				100.0	%			100.0	%		$	31.88
Westchase I & II		Houston			TX				629,025				97.1	%			96.2	%		$	30.42
Miami-Ft. Lauderdale-West Palm Beach
Blue Lagoon Drive		Miami			FL				212,619				100.0	%			100.0	%		$	23.72
Atlanta
One Overton Place		Atlanta			GA				387,267				98.9	%			85.5	%		$	22.84
One Ravinia		Atlanta			GA				386,603				91.0	%			87.7	%		$	21.95
999 Peachtree		Houston			TX				621,946				94.3	%			94.6	%		$	28.59
South Region Total									4,267,612				96.5	%			94.2	%		$	25.61
West Region
Seattle
Federal Way		Federal Way			WA				117,010				51.5	%			47.6	%		$	18.32
San Francisco-San Jose-Oakland
Hillview Center		Milpitas			CA				36,288				100.0	%			100.0	%		$	15.42
Montague Business Center		San Jose			CA				145,951				100.0	%			100.0	%		$	15.54
Denver
380 Interlocken		Broomfield			CO				240,184				86.1	%			86.2	%		$	29.40
1999 Broadway		Denver			CO				673,793				95.8	%			95.7	%		$	30.33
Greenwood Plaza		Englewood			CO				196,236				100.0	%			58.9	%		$	20.28
390 Interlocken		Broomfield			CO				241,516				69.4	%			80.2	%		$	28.31
1001 17th Street		Denver			CO				655,420				88.5	%			88.5	%		$	31.68
Colorado Springs
Centennial Technology Center		Colorado Springs			CO				110,405				85.4	%			85.4	%		$	15.41
West Region Total									2,416,803				88.2	%			85.8	%		$	27.56
Total Owned									9,807,339				93.83	%			91.87	%		$	25.29

 

(a) Weighted Occupied Percentage for the nine months ended September 30, 2013

(b) Weighted Average GAAP Rent per Occupied Square Foot

 

 

MSA / Property Name	City	State	Square Feet			MSA / Property Name	City	State	Square Feet
Southeast Region						Midwest Region
Columbia						Chicago
1441 Main Street	Columbia	SC	264,857			East Wacker (a)	Chicago	IL	860,429
Atlanta						Indianapolis
Satellite Place	Duluth	GA	134,785			Monument Circle	Indianapolis	IN	213,609
Southeast Region Total			399,642			St. Louis
						Lakeside Crossing II	Maryland Heights	MO	116,000
Southwest Region
						Minneapolis
Dallas-Fort Worth						505 Waterford	Plymouth	MN	255,999
5601 Executive Drive	Irving	TX	152,121			50 South Tenth Street	Minneapolis	MN	498,768
Galleria North	Dallas	TX	379,518
						Kansas City
Houston						Grand Boulevard (b)	Kansas City	MO	535,071
Energy Tower I	Houston	TX	325,797
						Cincinnati
Denver						Centre Pointe V	West Chester	OH	135,936
Highland Place	Centennial	CO	139,142			Union Centre	West Chester	OH	409,798
385 Interlocken	Broomfield	CO	296,868
						Midwest Region Total			3,025,610
Southwest Region Total			1,293,446
						Total Managed			4,718,698
						Total Owned & Managed			14,526,037

 

(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.

 

 

 

 

 

			Remaining	Aggregate	% of Aggregate	Annualized	% of Aggregate
	Tenant	Number of	Lease Term	Leased	Leased	Rent	Leased
	Name	Leases	in Months	Square Feet	Square Feet	(in 000's)	Annualized Rent
1	TCF National Bank	2	27	263,111	2.7%	$     2,883,485	1.3%
2	Quintiles Transnational Corp	1	66	259,531	2.7%	8,462,648	3.9%
3	CITGO Petroleum Corporation	1	101	248,399	2.6%	7,356,701	3.4%
4	Sutherland Asbill Brennan LLP	1	79	243,839	2.5%	6,989,724	3.2%
5	Newfield Exploration Company	1	101	234,495	2.4%	7,692,386	3.6%
6	US Government (a)	6	11,12,15,23,56,84	229,752	2.4%	7,094,596	3.3%
7	Burger King Corporation	1	60	212,619	2.2%	4,756,424	2.2%
8	Denbury Onshore, LLC	2	70	202,600	2.1%	3,510,042	1.6%
9	RGA Reinsurance Company	2	15	197,354	2.0%	4,275,024	2.0%
10	SunTrust Bank (b)	2	37,96	182,888	1.9%	3,638,692	1.7%
11	Citicorp Credit Services, Inc	1	39	176,848	1.8%	3,511,335	1.6%
12	C.H. Robinson Worldwide, Inc	1	93	153,028	1.6%	4,111,367	1.9%
13	T-Mobile South, LLC dba T-Mobile	1	65	151,792	1.6%	3,515,404	1.6%
14	Houghton Mifflin Harcourt Publishing Company	1	42	150,050	1.5%	5,815,593	2.7%
15	Petrobras America, Inc.	1	74	144,813	1.5%	4,855,533	2.3%
16	Murphy Exploration & Production Company	1	43	144,677	1.5%	4,243,797	2.0%
17	Argo Data Resource Corporation	1	119	138,540	1.4%	2,902,133	1.3%
18	Giesecke & Devrient America, Inc. (c)	1	3, 135	135,888	1.4%	1,897,346	0.9%
19	Monsanto Company	1	16	127,778	1.3%	3,297,783	1.5%
20	Federal National Mortgage Association	1	36	123,144	1.3%	2,886,188	1.3%
			Total	3,721,146	38.4%	$    93,696,200	43.6%

 

(a) Includes 180,444 and 37,813 square feet which expire in 2018 & 2014, respectively. The remaining 11,495 square feet expire between 2015 - 2020.

(b) Includes 55,388 square feet which expires October 31, 2016.

(c) Includes 23,778 square feet which expires December 31, 2013.

 

 

			Nine
			Months				Year
			Ended				Ended
Leasing Activity			30-Sep-13				31-Dec-12
(in Square Feet - SF)
New leasing			187,481				315,740
Renewals			457,380				700,838
			644,861				1,016,578
Other information per SF
(Activity on a year-to-date basis)
GAAP Rents on leasing		$	23.13			$	22.41
Weighted average lease term			7.75 Years				5.1 Years
Increase over ave GAAP
rents in 2012			10.4	%			1.5	%
Average free rent			4 Months				3 Months
Tenant Improvements		$	22.14			$	12.26
Leasing Costs		$	9.14			$	5.40

 

 

Year				Total Square Feet				% of Square Feet Commercial
	2013				60,908				0.6	%
	2014				474,667				4.9	%
	2015				1,065,576				11.0	%
	2016				968,158				10.0	%
	2017				1,069,533				11.0	%
	2018				849,054				8.8	%
	2019				1,559,761				16.1	%
	2020				510,923				5.3	%
	2021				821,936				8.5	%
	2022				870,127				9.0	%
	2023				350,061				3.6	%
	2024				221,372				2.3	%
	2025				159,376				1.6	%
	2025				98,643				1.0	%
	Vacant				604,944				6.3	%
	Total				9,685,039				100.0	%

 

 

 

 

				Rentable				Annualized		Percentage
	Number of			Square				Rent		of Total Final
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			Leases		Leases (a)		Leases		Leases		Total
2013	62	(b)		60,908		1,216,867		19.98		0.57%		0.57%
2014	77			474,667		11,338,442		23.89		5.27%		5.84%
2015	88			1,065,576		26,478,906		24.85		12.31%		18.15%
2016	71			968,158		20,351,067		21.02		9.46%		27.61%
2017	66			1,069,533		27,976,663		26.16		13.01%		40.61%
2018	53			849,054		23,154,531		27.27		10.76%		51.37%
2019	39			1,559,761		38,356,149		24.59		17.83%		69.20%
2020	16			510,923		14,033,840		27.47		6.52%		75.73%
2021	15			821,936		16,904,807		20.57		7.86%		83.59%
2022 and thereafter	59			1,699,746		35,307,873		20.77		16.41%		100.00%
	546			9,080,262		215,119,143		23.69		100.00%
Vacancies as of 9/30/13				604,777
Total Portfolio Square Footage				9,685,039

 

(a)

Annualized rent represents the monthly rent, including tenant reimbursements, for each lease in effect at September 30, 2013 mulitplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

 

(b)

45 leases are Month to Month

 

 

														Nine Months
	For the Three Months Ended													Ended
		31-Mar-13				30-Jun-13				30-Sep-13				30-Sep-13
Tenant improvements		$	1,729			$	5,754			$	4,596			$	12,079
Deferred leasing costs			2,813				1,087				3,821				7,721
Building improvements			1,118				1,622				1,552				4,292
Total		$	5,660			$	8,463			$	9,969			$	24,092

 

																		Year
	For the Three Months Ended																	Ended
		31-Mar-12				30-Jun-12				30-Sep-12				31-Dec-12				31-Dec-12
Tenant improvements		$	3,014			$	2,705			$	2,854			$	4,464			$	13,037
Deferred leasing costs			2,196				1,343				1,104				2,784				7,427
Building improvements			746				1,003				711				1,252				3,712
Total		$	5,956			$	5,051			$	4,669			$	8,500			$	24,176

 

 

Recent Acquisitions:

Purchase Price

City

State

Square Feet

Date Acquired

(in thousands)

2013

1999 Broadway

Denver

CO

673,793

5/22/13

$

183,000

999 Peachtree

Atlanta

GA

621,946

7/1/13

157,900

1001 17th Street

Denver

CO

655,420

8/28/13

217,000

2012

One Ravinia

Atlanta

GA

386,603

7/31/12

$

52,750

Westchase

Houston

TX

629,025

11/1/12

154,750

2011

Emperor Boulevard

Durham

NC

259,531

3/4/11

75,800

Legacy Tennyson Center

Plano

TX

202,600

3/10/11

37,000

One Legacy Circle

Plano

TX

214,110

3/24/11

52,983

909 Davis

Evanston

IL

195,245

9/30/11

37,062

East Renner Road

Richardson

TX

122,300

10/6/11

11,282

Recent Dispositions:

Net Sales

Gain (Loss)

City

State

Square Feet

Date Sold

Proceeds

on Sale

(in thousands)

2012

Southfield

Southfield

MI

252,613

12/21/12

$

293

$

(14,826

)

2011

Fairview

Falls Church

VA

252,613

1/21/11

89,382

19,592

Bollman (a)

Savage

MD

98,745

6/24/11

7,408

2,346

 

(a) Industrial property. All other acquisitions and dispositions are office properties

 

 

(dollars in thousands)								Maximum				Amount												Interest
					Maturity				Amount				Drawn at				Interest				Draw				Rate at
Sponsored REIT		Location			Date				of Loan				30-Sep-13				Rate (1)				Fee (2)				30-Sep-13
Secured revolving lines of credit
FSP Highland Place I Corp.		Centennial, CO			31-Dec-13			$	5,500			$	1,575				L+4.4%				0.5	%			4.58	%
FSP Satellite Place Corp.		Duluth, GA			31-Mar-14				5,500				5,500				L+4.4%				0.5	%			4.58	%
FSP 1441 Main Street Corp.		Columbia, SC			31-Mar-14				10,800				9,000				L+4.4%				0.5	%			4.58	%
FSP 505 Waterford Corp.		Plymouth, MN			30-Nov-13				7,000				2,350				L+4.4%				0.5	%			4.58	%
FSP Galleria North Corp.		Dallas, TX			30-Jan-15				15,000				9,880				L+5.0%				0.5	%			5.18	%
Secured construction loan
FSP 385 Interlocken
Development Corp.		Broomfield, CO			30-Apr-14				42,000				37,541				L+4.4%				n/a				4.58	%
Mortgage loan secured by property
FSP Energy Tower I Corp. (3)		Houston, TX			5-Jul-14				33,000				33,000				6.41.%				n/a				6.41	%
								$	118,800			$	98,846

 

 

(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) The loan has a secured fixed mortgage amount of $33,000,000.  A loan fee of $300,630 was paid at the time of closing and funding of the loan on July 5, 2012.  The borrower is required to pay the Company an exit fee in the amount of 0.982% of  the principal repayment amount.

 

 

(in thousands except per share data)
			As of
			30-Sep-13
Total Market Capitalization Values
Shares outstanding			100,187.4
Closing price, December 31st		$	12.74
Market capitalization		$	1,276,388
Debt			951,500
Total Market Capitalization			2,227,888
			3 Months
			Ended
NOI Components			30-Sep-13
Same Store NOI (1)		$	21,528
Acquisitions (1) (2)			11,812
Property NOI (1)			33,340
Full quarter adjustment (3)			2,413
Stabilized portfolio		$	35,753
Financial Statement Reconciliation:
Rental Revenue		$	56,760
Rental operating expenses			(13,991	)
Real estate taxes and insurance			(8,801	)
Taxes (4)			(105	)
Management fees & other (5)			(523	)
Property NOI (1)		$	33,340

Assets:
Loans outstanding on secured RE		$	98,846
Investments in SARs (book basis)			81,065
Straight-line rent receivable			40,086
Asset held for sale			10,143
Cash and cash equivalents			25,539
Restricted cash			623
Tenant rent receivables			6,029
Prepaid expenses			3,151
Office computers and furniture			543
Other assets:
Deferred financing costs, net			7,666
Other assets: Derivative Market Value			4,365
Phoenix Tower Liquidating Trust (6)			14
Other assets			472
		$	278,542
			—
Liabilities:
Debt		$	951,500
Accounts payable & accrued expenses			42,339
Tenant security deposits			3,891
Other liabilities: derivative liability			4,579
		$	1,002,309

Other information:
Leased SF to be FFO producing
During 2013, (primarily Q4 2013)			110
Straight-line rental revenue Q3		$	2,071
Management fee income third quarter 2013		$	259
Interest income from secured loans			1,406
Management fees and interest income from loans		$	1,665

 

  

Footnotes to the components
(1)	See pages 11 & 29 for definitions and reconciliations
(2)	Includes NOI from 2 acquisitions in 2012 and 3 from 2013
(3)	Adjustment to reflect property NOI for a full quarter in the quarter acquired, if necessary
(4)	HB3 Tax in Texas is classified as an income tax, though we treat it as a real estate tax in Property NOI
(5)	Management & other fees are eliminated in consolidation but included on Property NOI
(6)	Expected liquidating distribution from sale of equity interest (Collection within 3 years, subject to some expenses)

 

 

Definition of Funds From Operations (“FFO”)

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

 

 

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 Funds Available for Distribution (FAD)

 

The Company defines FAD as the sum of (1) FFO, (2) less the effect of straight-line rent, (3) less recurring capital expenditures that are generally for maintenance of properties and are not recovered through rental income from tenants, and (4) plus non-cash compensation expenses, if any. FAD 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, FAD should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.

 

 

Definition of Property Net Operating Income (Property NOI)

Property NOI is a non-GAAP financial measure equal to 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. Property NOI presented 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. 

 

Investor Relations Contact   (877) 686-9496 InvestorRelations@franklinstreetproperties.com

 

 

 

Franklin Street Properties Corp. ● 401 Edgewater Place ● Wakefield, MA 01880 ● (781) 557-1300

 

www.franklinstreetproperties.com