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<SEC-DOCUMENT>0001171520-05-000200.txt : 20050504
<SEC-HEADER>0001171520-05-000200.hdr.sgml : 20050504
<ACCEPTANCE-DATETIME>20050504155131
ACCESSION NUMBER:		0001171520-05-000200
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20050429
ITEM INFORMATION:		Completion of Acquisition or Disposition of Assets
ITEM INFORMATION:		Other Events
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20050504
DATE AS OF CHANGE:		20050504

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FRANKLIN STREET PROPERTIES CORP /MA/
		CENTRAL INDEX KEY:			0001031316
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				042724223
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-32470
		FILM NUMBER:		05799108

	BUSINESS ADDRESS:	
		STREET 1:		401 EDGEWATER PL
		STREET 2:		STE 200
		CITY:			WAKEFIELD
		STATE:			MA
		ZIP:			01880
		BUSINESS PHONE:		7815571300

	MAIL ADDRESS:	
		STREET 1:		401 EDGEWATER PLACE
		STREET 2:		STE 200
		CITY:			WAKEFIELD
		STATE:			MA
		ZIP:			01880

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FRANKLIN STREET PARTNERS LP
		DATE OF NAME CHANGE:	20010301
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>eps1809.txt
<DESCRIPTION>FRANKLIN STREET PROPERTIES CORP.
<TEXT>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                         ------------------------------

                                    FORM 8-K

                                 CURRENT REPORT
     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

        Date of Report (Date of earliest event reported): April 29, 2005

                        FRANKLIN STREET PROPERTIES CORP.
- --------------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)

     Maryland                        000-32615                   04-3578653
- --------------------------------------------------------------------------------
(State or Other Juris-              (Commission                (IRS Employer
diction of Incorporation            File Number)             Identification No.)


  401 Edgewater Place, Suite 200, Wakefield MA                  01880-6210
- --------------------------------------------------------------------------------
    (Address of Principal Executive Offices)                    (Zip Code)

       Registrant's telephone number, including area code: (781) 557-1300


- --------------------------------------------------------------------------------
          (Former Name or Former Address, if Changed Since Last Report)

      Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

      |_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)

      |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)

      |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))

      |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
<PAGE>

Item 2.01. Completion of Acquisition or Disposition of Assets.

      On April 30, 2005, Franklin Street Properties Corp. ("FSP Corp."), four of
its wholly-owned subsidiaries (the "Acquisition Subsidiaries") and four real
estate investment trusts (the "Target REITs"), pursuant to the Agreement and
Plan of Merger dated as of August 13, 2004, as amended on March 10, 2005 (the
"Merger Agreement"), consummated the acquisition of the Target REITs by FSP
Corp. by means of the merger of each Target REIT with and into an Acquisition
Subsidiary ("the Mergers"). The Target REITs are FSP Montague Business Center
Corp., FSP Addison Circle Corp., FSP Royal Ridge Corp. and FSP Collins Crossing
Corp.

      In connection with the Mergers, the preferred stock of each Target REIT
(the "Target Stock") was converted into that number of shares of common stock of
FSP Corp. set forth in the table below. Under the terms of the Merger Agreement,
each outstanding share of common stock of the Target REITs was cancelled. In
connection with the Mergers, FSP Corp. reserved for issuance an aggregate of
10,894,994 shares.

                                                       Shares of common stock of
                     Shares of common stock of FSP     FSP Corp. issuable in the
                    Corp. issuable in exchange for     aggregate to stockholders
Target REIT           each share of Target Stock      of each Target REIT (1)(2)
- -----------------   ------------------------------    --------------------------
Addison Circle                 5,948.67                       3,783,354
Collins Crossing               6,167.63                       3,423,035
Montague                       5,649.72                       1,887,007
Royal Ridge                    6,055.79                       1,801,598
                                                             ----------
Total                                                        10,894,994

(1)   Rounded to the nearest whole share.
(2)   This number of shares of common stock of FSP Corp. is slightly higher than
      the actual number of shares of common stock of FSP Corp. issued upon the
      consummation of the mergers due to the fact that FSP Corp. will pay cash
      in lieu of issuing fractional shares of common stock of FSP Corp.

      The shares of common stock of FSP Corp. issued in connection with the
Mergers have been registered under the Securities Act of 1933 pursuant to FSP
Corp.'s registration statement on Form S-4 (File No. 333-118748) filed with the
Securities and Exchange Commission and declared effective on February 25, 2005.
The Consent Solicitation/Prospectus included in the Registration Statement and
filed with the Securities and Exchange Commission under Rule 424(b)(3) includes
information in addition to that set forth in this Form 8-K.

      The Merger Agreement was approved by the board of directors of FSP Corp.
and the board of directors and stockholders of each Target REIT. A number of
conflicts of interest are inherent in the relationships among the Target REITs,
the boards of directors of the Target REITs, FSP Corp., FSP Corp.'s board of
directors and their respective affiliates. These conflicts of interest include,
among others:

o     George J. Carter, the President and a director of each Target REIT, is
      President, Chief Executive Officer and a director of FSP Corp. and owns an
      aggregate of 775,531 shares of common stock of FSP Corp.;

<PAGE>

o     R. Scott MacPhee, an Executive Vice President, a director of each Target
      REIT and a member of the special committee of each Target REIT's board of
      directors, is also an Executive Vice President of FSP Corp. and owns an
      aggregate of 372,451 shares of common stock of FSP Corp.;

o     Richard R. Norris, an Executive Vice President and a director of each
      Target REIT is also an Executive Vice President of FSP Corp. and was,
      until April 29, 2005, a director of FSP Corp., and owns an aggregate of
      258,087 shares of common stock of FSP Corp.;

o     William W. Gribbell, an Executive Vice President, a director of each
      Target REIT and a member of the special committee of each Target REIT's
      board of directors, is also an Executive Vice President of FSP Corp. and
      owns an aggregate of 129,761 shares of common stock of FSP Corp.;

o     Barbara J. Fournier, Vice President, Chief Operating Officer, Treasurer,
      Secretary and a director of each Target REIT, is also Vice President,
      Chief Operating Officer, Treasurer, Secretary and a director of FSP Corp.
      and owns an aggregate of 27,934 shares of common stock of FSP Corp.;

o     Janet P. Notopoulos, Vice President of each target REIT, is also a Vice
      President and director of FSP Corp. and owns an aggregate of 14,985 shares
      of common stock of FSP Corp.; and

o     Barry Silverstein, Dennis J. McGillicuddy, John N. Burke and Georgia
      Murray, are the only directors of FSP Corp. who are not also officers or
      directors of any Target REIT.

      Mr. Silverstein and Mr. McGillicuddy, each a director of FSP Corp., owned
an aggregate of 173 and 14 shares of Target Stock, respectively. Messrs.
Silverstein and McGillicuddy each purchased their shares in the original
offerings of Target Stock and on the same terms as other stockholders of such
Target REITs. These shares of Target Stock held by Messrs. Silverstein and
McGillicuddy converted into approximately 1,022,217 and approximately 80,836
shares of common stock of FSP Corp., respectively.

      The properties formerly owned by the Target REITs continue to be managed
by FSP Property Management, a subsidiary of FSP Corp. pursuant to management
services agreements under which FSP Corp. previously received certain fees from
each Target REIT for its management services.


Item 8.01. Other Events.

      On April 29, the Company's Board of Directors authorized the Company to
explore the possibility of the acquisition (by merger or otherwise) of any or
all of five REITs (each, a "Sponsored REIT"): FSP Willow Bend Office Corp., FSP
Innsbrook Corp., FSP 380 Interlocken Corp., FSP Blue Lagoon Drive Corp. and FSP
Eldridge Green Corp. The Company's wholly-owned subsidiary, FSP Investments LLC,
a registered broker/dealer, has sponsored the syndication of preferred stock
interests in each of these Sponsored REITs in offerings exempt from the
registration requirements of the Securities Act. The Company has retained a
common stock interest in each of these Sponsored REITs and also holds 49.25
shares of preferred stock in, or approximately 8.22% of, Blue Lagoon Drive Corp.
The Company has no obligation to acquire any or all of these Sponsored REITs.

<PAGE>

Item 9.01. Financial Statements and Exhibits

      (a)   Financial Statements of Business Acquired

            The financial statements required by this item are contained in
            Exhibit 99.1 to this Form 8-K and are incorporated herein by
            reference.

      (b)   Pro Forma Financial Information.

            The pro forma financial information required by this item is
            contained in Exhibit 99.2 to this Form 8-K and is incorporated
            herein by reference.

      (c)   Exhibits.

            See Exhibit Index attached hereto.
<PAGE>

                                    SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                      FRANKLIN STREET PROPERTIES CORP.


Date: May 4, 2005                     By: /s/ George J. Carter
                                          --------------------------------------
                                          President and Chief Executive Officer
<PAGE>

                                  EXHIBIT INDEX

Exhibit No.             Description
- -----------             -----------

2.1*                    Agreement and Plan of Merger, dated as of August 13,
                        2004, by and among Franklin Street Properties Corp., the
                        Acquisition Subsidiaries and the Target REITs

2.2**                   Amendment No. 1 to the Merger Agreement, dated March 10,
                        2005.

23.1**                  Consent of Braver and Company, P.C.

99.1**                  Financial Statements of FSP Montague Business Center
                        Corp., FSP Addison Circle Corp., FSP Royal Ridge Corp.
                        and FSP Collins Crossing Corp.

99.2**                  Pro Forma Financial Information of Franklin Street
                        Properties Corp.

* Incorporated herein by reference to Exhibit 2.1 to Franklin Street Properties
Corp.'s Current Report on Form 8-K, dated and filed on August 13, 2004.

** Filed herewith.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.2
<SEQUENCE>2
<FILENAME>ex2-2.txt
<TEXT>

                                                                     Exhibit 2.2


                                 AMENDMENT NO. 1

                                       TO

                          AGREEMENT AND PLAN OF MERGER

      This Amendment No. 1 to the Agreement and Plan of Merger (the "Agreement")
dated as of August 13, 2004 by and among Franklin Street Properties Corp. (the
"Company"), a Maryland corporation, the wholly-owned acquisition subsidiaries of
the Company, each a Delaware corporation (each an "Acquisition Subsidiary" and,
collectively, the "Acquisition Subsidiaries"), listed on the signature pages
hereto and the other corporations, each a Delaware corporation (each, a "Target
REIT" and, collectively, the "Target REITs"), also listed on the signature pages
hereto, is dated as of March 10, 2005.

      For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned hereby agree as follows:

      1.    The reference in Section 7.1(b) of the Agreement to "March 30, 2005"
            is hereby amended to read "May 15, 2005".

      2.    This Amendment shall not be deemed to amend any other term or
            condition of the Agreement, each of which shall remain in full force
            and effect.

                      [signatures begin on following page]
<PAGE>

      IN WITNESS WHEREOF, this Amendment No. 1 has been executed by each of the
parties as of the date first set forth above.

                                COMPANY:

                                FRANKLIN STREET PROPERTIES CORP.


                                By: /s/ George J. Carter

                                    Name: George J. Carter
                                    Title: President and Chief Executive Officer


                                ACQUISITION SUBSIDIARIES:


                                MONTAGUE ACQUISITION CORP.


                                By: /s/ George J. Carter

                                    Name: George J. Carter
                                    Title: President


                                ADDISON CIRCLE ACQUISITION CORP.


                                By: /s/ George J. Carter

                                    Name: George J. Carter
                                    Title: President


                                ROYAL RIDGE ACQUISITION CORP.


                                By: /s/ George J. Carter

                                    Name: George J. Carter
                                    Title: President


                                COLLINS CROSSING ACQUISITION CORP.


                                By: /s/ George J. Carter

                                    Name: George J. Carter
                                    Title: President


                                       2
<PAGE>

                                TARGET REITS:


                                FSP MONTAGUE BUSINESS CENTER CORP.


                                By: /s/ George J. Carter

                                    Name: George J. Carter
                                    Title: President


                                FSP ADDISON CIRCLE CORP.


                                By: /s/ George J. Carter

                                    Name: George J. Carter
                                    Title: President


                                FSP ROYAL RIDGE CORP.


                                By: /s/ George J. Carter

                                    Name: George J. Carter
                                    Title: President


                                FSP COLLINS CROSSING CORP.


                                By: /s/ George J. Carter

                                    Name: George J. Carter
                                    Title: President


                                       3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>3
<FILENAME>ex23-1.txt
<TEXT>

                                                                    Exhibit 23.1


                         CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the inclusion in this Current Report on Form 8-K and in the
Registration Statements on Form S-4 (File No. 333-118748) and Form S-8 (File No.
333-91860) of Franklin Street Properties Corp. of our reports dated March 7,
2005 relating to the financial statements and financial statement schedules for
the year ended December 31, 2004 of FSP Montague Business Center Corp., FSP
Addison Circle Corp., FSP Royal Ridge Corp. and FSP Collins Crossing Corp. that
appear in this Form 8-K.


/s/ Braver & Company P.C.
Newton Massachusetts
May 4, 2005
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>ex99-1.txt
<TEXT>

                                                                    Exhibit 99.1


                          INDEX TO FINANCIAL STATEMENTS

FSP Addison Circle Corp.

Index to financial statements as of December 31, 2004 and 2003, for
     the years ended December 31, 2004 and 2003 and for the period
     August 21, 2002 to December 31, 2002, including financial
     statement schedules                                                    F-2

FSP Collins Crossing Corp.

Index to financial statements as of December 31, 2004 and 2003, for
     the year ended December 31, 2004 and for the period January 16,
     2003 to December 31, 2003, including financial statement
     schedules                                                              F-17

FSP Montague Business Center Corp.

Index to financial statements as of December 31, 2004 and 2003, for
     the years ended December 31, 2004 and 2003 and for the period
     July 22, 2002 to December 31, 2002, including financial statement
     schedules                                                              F-32

FSP Royal Ridge Corp.

Index to financial statements as of and for the years ended
     December 31, 2004 and 2003, including financial statement schedules    F-46


                                       F-1
<PAGE>


                            FSP Addison Circle Corp.
                              Financial Statements
                        December 31, 2004, 2003 and 2002

                                Table of Contents

                                                                            Page
Financial Statements

Independent Auditor's Report..............................................   F-3

Balance Sheets as of December 31, 2004 and 2003...........................   F-4

Statements of Operations for the years ended December 31, 2004 and 2003
     and the period August 21, 2002 (date of inception) to
     December 31, 2002....................................................   F-5

Statements of Changes in Stockholders' Equity for the years ended
     December 31, 2004 and 2003 and the period August 21, 2002
     (date of inception) to December 31, 2002 ............................   F-6

Statements of Cash Flows for the years ended December 31, 2004 and 2003
     and the period August 21, 2002 (date of inception) to
     December 31, 2002....................................................   F-7

Notes to Financial Statements.............................................   F-8

Financial Statements Schedule - Schedule III..............................  F-15


                                      F-2
<PAGE>

                    [LETTERHEAD OF BRAVER AND COMPANY, P.C.]


                          INDEPENDENT AUDITOR'S REPORT


To the Stockholders
FSP Addison Circle Corp.
Wakefield, Massachusetts

We have audited the accompanying balance sheets of FSP Addison Circle Corp. as
of December 31, 2004 and 2003 and the related statements of operations, changes
in stockholders' equity and cash flows for the years ended December 31, 2004 and
2003 and for the period from August 21, 2002 (date of inception) to December 31,
2002. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FSP Addison Circle Corp. as of
December 31, 2004 and 2003, and the results of its operations and its cash flows
for the years ended December 31, 2004 and 2003 and for the initial period ended
December 31, 2002, in conformity with accounting principles generally accepted
in the United States of America.



/s/ Braver and Company, P.C.
Newton, Massachusetts
March 7, 2005


                                      F-3
<PAGE>

                            FSP Addison Circle Corp.
                                 Balance Sheets

<TABLE>
<CAPTION>
                                                                                December 31,            December 31,
(in thousands,except shares and par value amounts)                                 2004                    2003
===================================================================================================================

<S>                                                                                <C>                    <C>
Assets:

Real estate investments, at cost:
     Land                                                                          $  4,365               $  4,365
     Buildings and improvements                                                      46,469                 45,895
- -------------------------------------------------------------------------------------------------------------------
                                                                                     50,834                 50,260

     Less accumulated depreciation                                                    2,756                  1,519
- -------------------------------------------------------------------------------------------------------------------

Real estate investments, net                                                         48,078                 48,741

Acquired real estate leases, net of accumulated amortization
      of $669 and $349, respectively                                                  1,069                  1,389
Cash and cash equivalents                                                             3,613                  3,330
Cash-funded reserves                                                                  1,693                  2,636
Restricted cash                                                                          20                     35
Tenant rent receivable                                                                   37                     52
Step rent receivable                                                                    503                    421
Deferred leasing costs, net of accumulated amortization
      of $58 and $0, respectively                                                       363                     39
Prepaid expenses and other assets                                                        23                     24
- -------------------------------------------------------------------------------------------------------------------

      Total assets                                                                 $ 55,399               $ 56,667
===================================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
Accounts payable and accrued expenses                                              $  1,885               $  2,055
Distributions payable                                                                 1,289                  1,265
Tenant security deposits                                                                 20                     35
- -------------------------------------------------------------------------------------------------------------------

     Total liabilities                                                                3,194                  3,355
- -------------------------------------------------------------------------------------------------------------------

Commitments and Contingencies:                                                           --                     --

Stockholders' Equity:
     Preferred Stock, $.01 par value, 636 shares                                         --                     --
       authorized, issued and outstanding

     Common Stock, $.01 par value, 1 share
        authorized, issued and outstanding                                               --                     --
     Additional paid-in capital                                                      58,383                 58,383
     Retained earnings and distributions in excess of earnings                       (6,178)                (5,071)
- -------------------------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                                      52,205                 53,312
- -------------------------------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                                    $ 55,399               $ 56,667
===================================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-4
<PAGE>

                       FSP Addison Circle Corp.
                       Statements of Operations

<TABLE>
<CAPTION>
                                                                                    For the                   For the Period
                                                                                 Years Ended                  August 21, 2002
                                                                                 December 31,             (date of inception) to
(in thousands, except shares and per share amounts)                            2004        2003              December 31, 2002
================================================================================================================================

<S>                                                                          <C>          <C>                     <C>
Revenues:
     Rental                                                                  $ 8,753      $ 8,554                 $  2,102
- --------------------------------------------------------------------------------------------------------------------------------

       Total revenue                                                           8,753        8,554                    2,102
- --------------------------------------------------------------------------------------------------------------------------------

Expenses:

     Rental operating expenses                                                 1,940        1,783                      391
     Real estate taxes and insurance                                           1,040        1,354                      327
     Depreciation and amortization                                             1,615        1,497                      370
     General and administrative                                                  114           --                       --
     Interest                                                                     --           --                    3,897
- --------------------------------------------------------------------------------------------------------------------------------

       Total expenses                                                           4,709       4,634                    4,985
- --------------------------------------------------------------------------------------------------------------------------------

Income (loss) before interest income                                           4,044        3,920                   (2,883)

Interest income                                                                   94           85                       14
- --------------------------------------------------------------------------------------------------------------------------------

Net income (loss) before distributions to common stockholder                   4,138        4,005                   (2,869)

Distributions paid to common stockholder                                          --           --                      313
- --------------------------------------------------------------------------------------------------------------------------------

Net income (loss) attributable to preferred stockholders                     $ 4,138      $ 4,005                 $ (3,182)
================================================================================================================================

Weighted average number of preferred shares outstanding,
     basic and diluted                                                           636          636                      636
================================================================================================================================

Net income (loss) per preferred share, basic and diluted                     $ 6,506      $ 6,297                 $ (5,003)
================================================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-5
<PAGE>

                            FSP Addison Circle Corp.
                  Statements of Changes in Stockholders' Equity
               For the Years Ended December 31, 2004 and 2003 and
                         for the Period August 21, 2002
                    (date of inception) to December 31, 2002

<TABLE>
<CAPTION>
                                                                                              Retained Earnings
                                                                           Additional         and Distributions          Total
                                               Preferred      Common         Paid-in            in Excess of         Stockholders'
        (in thousands, except shares)            Stock         Stock         Capital              Earnings              Equity
====================================================================================================================================

<S>                                               <C>          <C>          <C>                   <C>                   <C>
Private offering of 636 shares, net               $ --         $ --         $ 58,383              $     --              $ 58,383

Distributions                                       --           --               --                (1,070)               (1,070)

Net loss                                            --           --               --                (2,869)               (2,869)
- ------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2002                          --           --           58,383                (3,939)               54,444

Distributions                                       --           --               --                (5,137)               (5,137)

Net income                                          --           --               --                 4,005                 4,005
- ------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2003                          --           --           58,383                (5,071)               53,312

Distributions                                       --           --               --                (5,245)               (5,245)

Net income                                          --           --               --                 4,138                 4,138
- ------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2004                        $ --         $ --         $ 58,383              $ (6,178)             $ 52,205
====================================================================================================================================
</TABLE>

           See accompanying notes to financial statements.


                                      F-6
<PAGE>


                             FSP Addison Circle Corp.
                             Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                    For the              For the Period
                                                                                  Years Ended            August 21, 2002
                                                                                  December 31,       (date of inception) to
(in thousands)                                                                 2004          2003       December 31, 2002
============================================================================================================================
<S>                                                                          <C>           <C>              <C>
Cash flows from operating activities:
   Net Income (loss)                                                         $ 4,138       $ 4,005          $ (2,869)
   Adjustments to reconcile net income (loss) to net cash provided by
       (used for) operating activities:
            Depreciation and amortization                                      1,615         1,497               370
        Changes in operating assets and liabilities:
            Cash-funded reserves                                                 943            83            (2,719)
            Restricted cash                                                       15             9               (44)
            Tenant rent receivable                                                15           (25)               --
            Step rent receivable                                                 (82)         (322)              (99)
            Prepaid expenses and other assets                                      1            29               (80)
            Accounts payable and accrued expenses                               (170)          165             1,890
            Tenant security deposits                                             (15)           (9)               44
       Payment of deferred leasing costs                                        (382)          (39)               --
- --------------------------------------------------------------------------------------------------------------------

                   Net cash provided by (used for) operating activities        6,078         5,393            (3,507)
- --------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
   Purchase of real estate assets                                               (574)          (25)          (50,235)
   Purchase of acquired real estate leases                                        --            --            (1,738)
- --------------------------------------------------------------------------------------------------------------------

                   Net cash used for investing activities                       (574)          (25)          (51,973)
- --------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
   Proceeds from sale of company stock                                            --            --            63,610
   Syndication costs                                                              --            --            (5,227)
   Distributions to stockholders                                              (5,221)       (4,721)             (220)
   Proceeds from long-term debt                                                   --            --            51,500
   Principal payments on long-term debt                                           --            --           (51,500)
- --------------------------------------------------------------------------------------------------------------------

                  Net cash (used for) provided by financing activities        (5,221)       (4,721)           58,163
- --------------------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                                        283           647             2,683

Cash and cash equivalents, beginning of period                                 3,330         2,683                --
- --------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                     $ 3,613       $ 3,330          $  2,683
====================================================================================================================

Supplemental disclosure of cash flow information:

Cash paid for:
   Interest                                                                  $    --       $    --          $  3,897

Disclosure of non-cash financing activities:
   Distributions declared but not paid                                       $ 1,289       $ 1,265          $    850
</TABLE>

                 See accompanying notes to financial statements.


                                      F-7
<PAGE>

                            FSP Addison Circle Corp.
                          Notes to Financial Statements

1.    Organization

FSP Addison Circle Corp. (the "Company") was organized on August 21, 2002 as a
Corporation under the laws of the State of Delaware to purchase, own and operate
a commercial office building located in Addison, TX (the "Property"). The
Property consists of a recently constructed, ten-story Class "A" suburban office
tower that contains approximately 293,787 square feet of space situated on
approximately 3.62 acres of land. The Company acquired the Property on September
30, 2002.

On August 13, 2004, the Company entered into a merger agreement with its common
shareholder, Franklin Street Properties Corp ("FSP"). On February 25, 2005, FSP
filed a Consent Solicitation/Prospectus with the United States Securities and
Exchange Commission indicating its intent to merge the Company and three
additional REITs with and into four of FSP's wholly-owned subsidiaries. The
merger requires the approval of the shareholders of the Company as well as the
shareholders of the three additional REITs. If approved, FSP will issue
approximately 3,783,354 shares of its common stock in exchange for a 100%
ownership interest in the Company. The Company has incurred $114,000 of costs
through December 31, 2004 related to the merger and these costs have been
included as an expense in the Statements of Operations.

2.    Summary of Significant Accounting Policies

BASIS OF PRESENTATION

The results of operations from inception to December 31, 2002 are not
necessarily indicative of the results to be obtained for other interim periods
or for the full fiscal year.

ESTIMATES AND ASSUMPTIONS

The Company prepares its financial statements and related notes in conformity
with accounting principles generally accepted in the United States of America
("GAAP"). These principles require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

RECLASSIFICATIONS

Certain information in the 2003 and 2002 financial statements have been
reclassified to conform to the 2004 presentation.

REAL ESTATE AND DEPRECIATION

Real estate assets are stated at the lower of cost or fair value, as
appropriate, less accumulated depreciation.

Costs related to property acquisition and improvements are capitalized. Typical
capital items include new roofs, site improvements, various exterior building
improvements and major interior renovations. Funding for capital improvements
typically is provided by cash set aside at the time the Property was purchased.

Routine replacements and ordinary maintenance and repairs that do not extend the
life of the assets are expensed as incurred. Typical expense items include
interior painting, landscaping and minor carpet replacements. Funding for
repairs and maintenance items typically is provided by cash flows from operating
activities.

Depreciation is computed using the straight-line method over the assets'
estimated useful lives as follows:

      Category                              Years
      --------                              -----
      Building - Commercial                   39
      Building Improvements                 15-39
      Furniture and equipment                5-7


                                      F-8
<PAGE>

                            FSP Addison Circle Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REAL ESTATE AND DEPRECIATION (continued)

The following schedule reconciles the cost of the Property as shown in the
Offering Memorandum as to the amounts shown on the Company's Balance Sheets:

      (in thousands)
      --------------

      Price per Offering Memorandum                 $      51,500
      Plus: Acquisition fees                                  318
            Other acquisition costs                           155
      --------------------------------------------------------------
        Total Acquisition Costs                     $      51,973
      ==============================================================

These costs were recorded in the Company's Balance Sheets as follows:

      (in thousands)
      --------------

      Land                                          $       4,365
      Building                                             45,870
      Acquired real estate leases                           1,738
      --------------------------------------------------------------
        Total recorded on Balance Sheets            $      51,973
      ==============================================================

The Company evaluates its assets used in operations by identifying indicators of
impairment and by comparing the sum of the estimated undiscounted future cash
flows for each asset to the asset's carrying value. When indicators of
impairment are present and the sum of the undiscounted future cash flows is less
than the carrying value of such asset, an impairment loss is recorded equal to
the difference between the asset's current carrying value and its fair value
based on discounting its estimated future cash flows. At December 31, 2004, no
such indicators of impairment were identified.

Depreciation expense of $1,237,000, $1,176,000 and $343,000 is included in
depreciation and amortization in the Company's Statements of Operations for the
years ended December 31, 2004 and 2003 and the period ended December 31, 2002,
respectively.

ACQUIRED REAL ESTATE LEASES

Acquired real estate leases are the estimated value of legal and leasing costs
related to acquired leases that were included in the purchase price when the
Company acquired the Property. Under Statement of Financial Accounting Standard
("SFAS") No. 141 "Business Combinations", which was approved by the Financial
Accounting Standards Board ("FASB") in June 2001, the Company is required to
segregate these costs from its investment in real estate. The Company
subsequently amortizes these costs on a straight-line basis over the remaining
life of the related leases. Amortization expense of $320,000, $322,000 and
$27,000 is included in depreciation and amortization in the Company's Statements
of Operations for the years ended December 31, 2004 and 2003 and the period
ended December 31, 2002, respectively.

Acquired real estate lease costs included in the purchase price of the property
were $1,738,000 and are being amortized over the weighted-average period of six
years in respect of the leases assumed. Detail of the acquired real estate
leases as of December 31, 2004 and 2003:

      (in thousands)                             2004               2003
      --------------                        ---------------    ----------------
      Cost                                    $     1,738        $     1,738
      Accumulated amortization                       (669)              (349)
                                            ---------------    ----------------
      Book value                              $     1,069        $     1,389
                                            ===============    ================


                                      F-9
<PAGE>

                            FSP Addison Circle Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

ACQUIRED REAL ESTATE LEASES (continued)

The estimated annual amortization expense for the four years succeeding December
31, 2004 are as follows:

      (in thousands)
      --------------
      2005                                    $       321
      2006                                    $       321
      2007                                    $       321
      2008                                    $       106

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments with an initial
maturity of three months or less to be cash equivalents.

CASH-FUNDED RESERVES

The Company has set aside funds in anticipation of future capital needs of the
Property. These funds typically are used for the payment of real estate assets
and deferred leasing commissions; however, there is no legal restriction on
their use and they may be used for any Company purpose.

RESTRICTED CASH

Restricted cash consists of tenant security deposits.

MARKETABLE SECURITIES

The Company accounts for investments in debt securities under the provisions of
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". The Company typically classifies its debt securities as
available-for-sale.

There were no investments in marketable securities at December 31, 2004 and
2003.

CONCENTRATION OF CREDIT RISKS

Cash, cash equivalents and short-term investments are financial instruments that
potentially subject the Company to a concentration of credit risk. The Company
maintains its cash balances and short-term investments principally in one bank
which the Company believes to be creditworthy. The Company periodically assesses
the financial condition of the bank and believes that the risk of loss is
minimal. Cash balances held with various financial institutions frequently
exceed the insurance limit of $100,000 provided by the Federal Deposit Insurance
Corporation.

For the periods ended December 31, 2004, 2003 and 2002, rental income was
derived from various tenants. As such, future receipts are dependent upon the
financial strength of the lessees and their ability to perform under the lease
agreements.

The following tenants represent greater than 10% of total revenue:

<TABLE>
<CAPTION>
                                                               Year Ended         Year Ended       Period Ended
                                                              December 31,       December 31,      December, 31
                                                                  2004              2003              2002
      ==========================================================================================================
<S>                                                                <C>               <C>               <C>
      McLeod USA Telecommunications Services, Inc.                 32%               31%               31%
      The Staubach Company                                         27%               28%               28%
      J.D. Edwards World Solutions Company (1)                     21%               20%               20%
</TABLE>

(1)   PeopleSoft (successor to JD Edwards) terminated their lease in 2004, which
      contained an early termination option. The space was subsequently re-let
      by January 2005.


                                      F-10
<PAGE>

                            FSP Addison Circle Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

FINANCIAL INSTRUMENTS

The Company estimates that the carrying value of cash and cash equivalents,
cash-funded reserves, and restricted cash approximate their fair values based on
their short-term maturity and prevailing interest rates.

TENANT RENT RECEIVABLE

Tenant rent receivable is reported at the amount the Company expects to collect
on balances outstanding at year-end. Management monitors outstanding balances
and tenant relationships and concluded that any realization losses would be
immaterial.

STEP RENT RECEIVABLE

Certain leases provide for fixed increases over the life of the lease. Rental
revenue is recognized on the straight-line basis over the related lease term;
however, billings by the Company are based on required minimum rentals in
accordance with the lease agreements. Step rent receivable, which is the
cumulative revenue recognized in excess of amounts billed by the Company, was
$503,000 and $421,000 at December 31, 2004 and 2003, respectively.

DEFERRED LEASING COSTS

Deferred leasing commissions represent direct and incremental external leasing
costs incurred in the leasing of commercial space. These costs are capitalized
and are amortized on a straight-line basis over the terms of the related lease
agreements. Amortization expense was approximately $58,000 and $0 for the years
ended December 31, 2004 and 2003, respectively. Detail of the deferred leasing
costs as of December 31,:

      (in thousands)                   2004             2003
      --------------                ----------       ----------
      Costs                         $      421       $       39
      Accumulated Amortization             (58)              --
                                    ----------       ----------
      Book Value                    $      363       $       39
                                    ==========       ==========

The estimated annual amortization expense for the three years succeeding
December 31, 2004 are as follows:

      (in thousands)
      --------------
      2005                                   $       136
      2006                                   $       136
      2007                                   $        91

SYNDICATION FEES

Syndication fees are selling commissions and other costs associated with the
initial offering of the Company's preferred shares. Such costs, in the amount of
$5,227,000 have been reported as a reduction in Stockholders' Equity in the
Company's Balance Sheets.


                                      F-11
<PAGE>

                            FSP Addison Circle Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REVENUE RECOGNITION

The Company has retained substantially all of the risks and benefits of
ownership of the Company's commercial property and accounts for its leases as
operating leases. Rental income from leases, which may include rent concession
(including free rent and tenant improvement allowances) and scheduled increases
in rental rates during the lease term, is recognized on a straight-line basis.
The Company does not have any percentage rent arrangements with its commercial
property tenants. Reimbursable costs are included in rental income in the period
earned. A schedule showing the components of rental revenue is shown below.

                                         Year Ended    Year Ended   Period Ended
                                        December 31,  December 31,  December, 31
      (in thousands)                        2004          2003          2002
      ==========================================================================
      Income from leases                  $7,258        $7,153        $1,823
      Termination Fee                        449            --            --
      Straight-line rent adjustment           82           322            99
      Reimbursable expenses                  964         1,079           180
      --------------------------------------------------------------------------

           Total                          $8,753        $8,554        $2,102
      ==========================================================================

INTEREST INCOME

Interest income is recognized when the related services are performed and the
earnings process is complete.

INCOME TAXES

The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under the Internal Revenue Code of 1986, as amended. As a REIT, the Company
generally is entitled to a tax deduction for dividends paid to its shareholders,
thereby effectively subjecting the distributed net income of the Company to
taxation at the shareholder level only. The Company must comply with a variety
of restrictions to maintain its status as a REIT. These restrictions include the
type of income it can earn, the type of assets it can hold, the number of
shareholders it can have and the concentration of their ownership, and the
amount of the Company's taxable income that must be distributed annually.

NET INCOME PER SHARE

The Company follows SFAS No. 128 "Earnings per Share", which specifies the
computation, presentation and disclosure requirements for the Company's net
income per share. Basic net income per preferred share is computed by dividing
net income by the weighted average number of shares outstanding during the
period. Diluted net income per preferred share reflects the potential dilution
that could occur if securities or other contracts to issue shares were exercised
or converted into shares. There were no potential dilutive shares outstanding at
December 31, 2004, 2003 and 2002. Subsequent to the completion of the offering
of preferred shares, the holders of common stock are not entitled to share in
any income nor in any related dividend.

3.    Income Taxes

The Company files as a REIT under Sections 856-860 of the Internal Revenue Code
of 1986, as amended. In order to qualify as a REIT, the Company is required to
distribute at least 90% of its taxable income to shareholders and to meet
certain asset and income tests as well as certain other requirements. The
Company will generally not be liable for federal income taxes, provided it
satisfies these requirements. Even as a qualified REIT, the Company is subject
to certain state and local taxes on its income and property.

For the period ended December 31, 2002, the Company incurred a net operating
loss for income tax purposes of approximately $2,932,000 that can be carried
forward until it expires in the year 2022.

At December 31, 2004, the Company's net tax basis of its real estate assets was
$49,768,000.


                                      F-12
<PAGE>

                            FSP Addison Circle Corp.
                          Notes to Financial Statements

3.   Income Taxes (continued)

The following schedule reconciles net income (loss) to taxable income subject to
dividend requirements:

<TABLE>
<CAPTION>
                                                          Year Ended       Year Ended       Period Ended
                                                          December 31,     December 31,     December 31,
      (in thousands)                                          2004             2003             2002
      ==================================================================================================
<S>                                                        <C>               <C>               <C>
      GAAP net income (loss)                               $ 4,138           $ 4,005           $(2,869)

         Add:  Book depreciation and amortization            1,615             1,497               370
         Less: Tax depreciation and amortization            (1,254)           (1,193)             (323)
               Straight-line rents                             (82)             (322)              (99)
      ------------------------------------------------------------------------------------------------
      Taxable income (loss)(1)                             $ 4,417           $ 3,987           $(2,921)
      ================================================================================================
</TABLE>

      (1)   A tax loss is not subject to a dividend requirement.

The following schedule reconciles cash dividends paid to the dividends paid
deduction:

<TABLE>
<CAPTION>
                                                                     Year Ended
                                                December 31, 2004                   December 31, 2003
                                         ------------------------------     ---------------------------------
                                                        Per       Per                     Per         Per
                                                     Preferred   Common                Preferred    Common
(in thousands, except per share data)      Total       Share      Share       Total      Share       Share
- -------------------------------------------------------------------------------------------------------------
<S>                                       <C>         <C>         <C>       <C>         <C>        <C>
Cash distributions paid                   $ 5,221     $ 8,209     $  --     $ 4,721     $ 7,275    $ 93,807
   Less: Return of captial                   (804)     (1,264)       --        (734)     (1,131)    (14,605)
- -------------------------------------------------------------------------------------------------------------
Dividends paid deduction                  $ 4,417     $ 6,945     $  --     $ 3,987     $ 6,144    $ 79,202
=============================================================================================================

<CAPTION>
                                                      Year Ended
                                         ---------------------------------
                                                 December 31, 2002
                                         ---------------------------------
                                                        Per         Per
                                                     Preferred     Common
(in thousands, except per share data)      Total       Share       Share
- --------------------------------------------------------------------------
<S>                                       <C>          <C>      <C>
Cash distributions paid                   $ 220        $  --    $ 220,000
   Less: Return of captial                 (220)          --     (220,000)
- --------------------------------------------------------------------------
Dividends paid deduction                  $  --        $  --    $      --
==========================================================================
</TABLE>

4.    Capital Stock

PREFERRED STOCK

Generally, each holder of Shares of Preferred Stock is entitled to receive
ratably all dividends, if any, declared by the Board of Directors out of funds
legally available. The right to receive dividends shall be non-cumulative, and
no right to dividends shall accrue by reason of the fact that no dividend has
been declared in any prior year. Each holder of Shares will be entitled to
receive, to the extent that funds are available therefore, $100,000 per Share,
before any payment to the holder of Common Stock, out of distributions to
stockholders upon liquidation, dissolution or the winding up of the Company; the
balance of any such funds available for distribution will be distributed among
the holders of Shares and the holder of Common Stock, pro rata based on the
number of shares held by each; provided, however, that for these purposes, one
share of Common Stock will be deemed to equal one-tenth of a share of Preferred
Stock.

In addition to certain voting rights provided in the corporate agreements, the
holder of Shares, acting by consent of at least 51%, shall have the further
right to approve or disapprove a proposed sale of the Property, the merger of
the Company with any other entity and amendments to the corporate charter. A
vote of the holders of 66.67% of the Shares is required for the issue of any
additional shares of capital stock. Holders of Shares have no redemption or
conversion rights.


                                      F-13
<PAGE>

                            FSP Addison Circle Corp.
                          Notes to Financial Statements

4.    Capital Stock (continued)

COMMON STOCK

Franklin Street Properties Corp. ("FSP"), is the sole holder of the Company's
Common Stock. FSP has the right, as one class together with the holders of
Preferred Stock, to vote to elect the directors of the Company and to vote on
all matters except those voted by the holders of Shares of Preferred Stock.
Subsequent to the completion of the offering of the preferred shares the holders
of common shares are not entitled to share in any income, nor in any related
dividend.

5.    Related Party Transactions

The Company executed a management agreement with FSP Property Management LLC, an
affiliate of FSP, that provides for a management fee equal to 1% of collected
revenues and is cancelable with 30 days notice by either party. For the periods
ended December 31, 2004, 2003 and 2002, fees incurred under the agreement were
$82,000, $79,000 and $19,000, respectively.

An acquisition fee of $318,000 and other costs of $67,000 were paid in 2002 to
an affiliate of the Common Shareholder. Such fees were included in the cost of
the real estate.

Syndication fees of $5,227,000 were paid in 2002 to an affiliate of the Common
Shareholder for services related to syndication of the Company's preferred
stock.

During 2002, the Company borrowed and repaid in full a note payable to FSP,
principal of $51,500,000, with interest equal to the Citizens Bank base rate.
Interest paid to FSP was $240,000. The average interest rate during the time the
loan was outstanding was 4.44%.

A commitment fee of $3,657,000 was paid to FSP during 2002 for obtaining the
first mortgage loan. Such amount is included in interest expense on the
Statement of Operations.

The Company paid a dividend of $313,000 to the common shareholder during 2002
relating to earnings of the Company prior to the completion of the offering of
preferred shares.

6.    Commitments and Contingencies

The Company, as lessor, has minimum future rental income under non-cancelable
operating leases as of December 31, 2004, as follows:

                                        Year Ending
      (in thousands)                    December 31,          Amount
                                        ------------        ---------

                                            2005            $  5,403
                                            2006               5,257
                                            2007               3,106
                                            2008               2,410
                                            2009                 920
                                         Thereafter               19
                                                            ---------
                                                            $ 17,115
                                                            =========

In addition, the lessees are liable for real estate taxes and certain operating
expenses of the Property.

Upon acquiring the commercial rental property in September 2002, the Company was
assigned the lease agreements between the seller of the Property and the
existing tenants. The original lease periods range from five to ten years with
renewal options.


                                      F-14
<PAGE>

                                  SCHEDULE III

                            FSP Addison Circle Corp.
                    Real Estate and Accumulated Depreciation
                                December 31, 2004

<TABLE>
<CAPTION>
                                                                Initial Cost
                                                       -------------------------------
                                                                              Costs
                                                                           Capitalized
                                                               Buildings   (Disposals)
                                                              Improvements Subsequent
                                                                  and          to
Description                         Encumbrances (1)   Land    Equipment   Acquisition
- -----------                         ----------------   ----    ---------   -----------

<S>                                  <C>              <C>        <C>          <C>
   Addison Circle, Addison, TX                        $4,365     $45,870      $599

<CAPTION>
                                                          Historical Costs
                                      ----------------------------------------------------------


                                              Buildings                             Total Costs,
                                             Improvements                              Net of     Depreciable
                                                 and                  Accumulated   Accumulated       Life      Date of
Description                           Land    Equipment   Total (2)  Depreciation   Depreciation     Years     Acquisition
- -----------                           ----    ---------   ---------  ------------   ------------     -----     -----------
                                          (in thousands)
<S>                                  <C>        <C>        <C>         <C>            <C>              <C>        <C>
   Addison Circle, Addison, TX       $4,365     $46,469    $50,834     $2,756         $48,078          39         2002
</TABLE>

(1)   There are no encumbrances on the above properties.
(2)   The aggregate cost for Federal Income Tax purposes is $52,572.


                                      F-15
<PAGE>

                            FSP Addison Circle Corp.

The following table summarizes the changes in the Company's real estate
investments and accumulated depreciation:

                                                          December 31,
                                           -------------------------------------
(in thousands)                               2004           2003          2002
================================================================================

Real estate investments, at cost:
   Balance, beginning of period            $50,260        $50,235        $    --
       Acquisitions                             --             --         50,235
       Improvements                            574             25             --
       Dispositions                             --             --             --
- --------------------------------------------------------------------------------

   Balance, end of period                  $50,834        $50,260        $50,235
================================================================================

Accumulated depreciation:
    Balance, beginning of period           $ 1,519        $   343        $    --
        Depreciation                         1,237          1,176            343
        Dispositions                            --             --             --
- --------------------------------------------------------------------------------

    Balance, end of period                 $ 2,756        $ 1,519        $   343
================================================================================


                                      F-16
<PAGE>

                           FSP Collins Crossing Corp.
                              Financial Statements
                           December 31, 2004 and 2003

                                Table of Contents

                                                                            Page
                                                                            ----
Financial Statements

Independent Auditor's Report.............................................   F-18

Balance Sheets as of December 31, 2004 and 2003..........................   F-19

Statements of Operations for the year ended December 31, 2004 and the
      period January 16, 2003 (date of inception) to December 31, 2003...   F-20

Statements of Changes in Stockholders' Equity for the year ended
      December 31, 2004 and the period January 16, 2003 (date of
       inception) to December 31, 2003...................................   F-21

Statements of Cash Flows for the year ended December 31, 2004 and the
      period January 16, 2003 (date of inception) to December 31, 2003...   F-22

Notes to Financial Statements............................................   F-23

Financial Statements Schedule - Schedule III.............................   F-30


                                      F-17
<PAGE>

                    [LETTERHEAD OF BRAVER AND COMPANY, P.C.]


                          INDEPENDENT AUDITOR'S REPORT


To the Stockholders
FSP Collins Crossing Corp.
Wakefield, Massachusetts

We have audited the accompanying balance sheets of FSP Collins Crossing Corp. as
of December 31, 2004 and 2003, and the related statements of operations, changes
in stockholders' equity and cash flows for the year ended December 31, 2004 and
the period from January 16, 2003 (date of inception) to December 31, 2003. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FSP Collins Crossing Corp. as
of December 31, 2004 and 2003, and the results of its operations and its cash
flows for the year ended December 31, 2004 and for the initial period then ended
in conformity with accounting principles generally accepted in the United States
of America.


/s/ Braver and Company, P.C.
Newton, Massachusetts
March 7, 2005


                                      F-18
<PAGE>

                      FSP Collins Crossing Corp.
                            Balance Sheets

<TABLE>
<CAPTION>
                                                                     December 31,     December 31,
(in thousands, except shares and par value amounts)                      2004             2003
==================================================================================================

<S>                                                                   <C>              <C>
Assets:

Real estate investments, at cost:
     Land                                                             $  4,022         $  4,022
     Buildings and improvements                                         34,233           34,224
- -----------------------------------------------------------------------------------------------
                                                                        38,255           38,246

     Less accumulated depreciation                                       1,609              731
- -----------------------------------------------------------------------------------------------

Real estate investments, net                                            36,646           37,515

Acquired real estate leases, net of accumulated amortization
     of $767 and $349, respectively                                      1,500            1,918
Acquired favorable real estate leases, net of accumulated
     amortization of $1,741 and $791, respectively                       3,403            4,353
Cash and cash equivalents                                                2,929            2,942
Cash-funded reserves                                                     1,998            2,124
Restricted cash                                                            115              115
Tenant rents receivable                                                    106               25
Step rent receivable                                                       610              279
Prepaid expenses and other assets                                           45               43
- -----------------------------------------------------------------------------------------------

      Total assets                                                    $ 47,352         $ 49,314
===============================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
Accounts payable and accrued expenses                                 $  1,372         $  1,467
Distributions payable                                                    1,184            1,331
Tenant security deposits                                                   115              115
- -----------------------------------------------------------------------------------------------

     Total liabilities                                                   2,671            2,913
- -----------------------------------------------------------------------------------------------

Commitments and Contingencies:                                              --               --

Stockholders' Equity:
     Preferred Stock, $.01 par value, 555 shares
        authorized, issued and outstanding                                  --               --

     Common Stock, $.01 par value, 1 share
        authorized, issued and outstanding                                  --               --
     Additional paid-in capital                                         51,100           51,100
     Retained earnings and distributions in excess of earnings          (6,419)          (4,699)
- -----------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                         44,681           46,401
- -----------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                       $ 47,352         $ 49,314
===============================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-19
<PAGE>

                      FSP Collins Crossing Corp.
                       Statements of Operations

<TABLE>
<CAPTION>
                                                                                           For the Period
                                                                      For the             January 16, 2003
                                                                    Year Ended         (date of inception) to
(in thousands, except shares and per share amounts)              December 31, 2004        December 31, 2003
=============================================================================================================

<S>                                                                   <C>                       <C>
Revenues:
     Rental                                                           $6,990                    $ 5,672
- -------------------------------------------------------------------------------------------------------------

       Total revenue                                                   6,990                      5,672
- -------------------------------------------------------------------------------------------------------------

Expenses:

     Rental operating expenses                                         1,842                      1,399
     Real estate taxes and insurance                                     773                        760
     Depreciation and amortization                                     1,296                      1,080
     General and administrative                                          109                         --
     Interest                                                             --                      3,444
- -------------------------------------------------------------------------------------------------------------

       Total expenses                                                  4,020                      6,683
- -------------------------------------------------------------------------------------------------------------

Income (loss) before interest income                                   2,970                     (1,011)

Interest income                                                           85                         35
- -------------------------------------------------------------------------------------------------------------

Net income (loss) before distributions to common stockholder           3,055                       (976)

Distributions paid to common stockholder                                  --                        373
- -------------------------------------------------------------------------------------------------------------

Net income (loss) attributable to preferred stockholders              $3,055                    $(1,349)
=============================================================================================================

Weighted average number of preferred shares outstanding,
     basic and diluted                                                   555                        555
=============================================================================================================

Net income (loss) per preferred share, basic and diluted              $5,505                    $(2,431)
=============================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-20
<PAGE>

                           FSP Collins Crossing Corp.
                  Statements of Changes in Stockholders' Equity
             For the Year Ended December 31, 2004 and for the Period
                      January 16, 2003 (date of inception)
                              to December 31, 2003

<TABLE>
<CAPTION>
                                                                                   Retained Earnings
                                                                     Additional    and Distributions         Total
                                           Preferred      Common      Paid-in         in Excess of       Stockholders'
        (in thousands, except shares)        Stock         Stock      Capital           Earnings            Equity
======================================================================================================================

<S>                                          <C>          <C>          <C>              <C>               <C>
Private offering of 555 shares, net          $  --        $  --        $51,100          $    --           $ 51,100

Distributions                                   --           --             --           (3,723)            (3,723)

Net loss                                        --           --             --             (976)              (976)
- ----------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2003                      --           --         51,100           (4,699)            46,401

Distributions                                   --           --             --           (4,775)            (4,775)

Net income                                      --           --             --            3,055              3,055
- ----------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2004                   $  --        $  --        $51,100          $(6,419)          $ 44,681
======================================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-21
<PAGE>

                            FSP Collins Crossing Corp.
                             Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                                          For the Period
                                                                                      For the            January 16, 2003
                                                                                    Year Ended        (date of inception) to
(in thousands)                                                                   December 31, 2004       December 31, 2003
============================================================================================================================
<S>                                                                                   <C>                  <C>
Cash flows from operating activities:
     Net Income (loss)                                                                $ 3,055              $   (976)
     Adjustments to reconcile net income (loss) to net cash provided by
             (used for) operating activities:
                    Depreciation and amortization                                       1,296                 1,080
                    Amortization of favorable lease                                       950                   791
              Changes in operating assets and liabilities:
                    Cash-funded reserves                                                  126                (2,124)
                    Restricted cash                                                        --                  (115)
                    Tenant rent receivable                                                (81)                  (25)
                    Step rent receivable                                                 (331)                 (279)
                    Prepaid expenses and other assets                                      (2)                  (43)
                    Accounts payable and accrued expenses                                 (95)                1,467
                    Tenant security deposits                                               --                   115
- ----------------------------------------------------------------------------------------------------------------------------

                        Net cash provided by (used for) operating activities            4,918                  (109)
- ----------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Purchase of real estate assets                                                        (9)              (38,246)
     Purchase of acquired real estate leases                                               --                (2,267)
     Purchase of acquired favorable real estate leases                                     --                (5,144)
- ----------------------------------------------------------------------------------------------------------------------------

                        Net cash used for investing activities                             (9)              (45,657)
- ----------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Proceeds from sale of company stock                                                   --                55,510
     Syndication costs                                                                     --                (4,410)
     Distributions to stockholders                                                     (4,922)               (2,392)
     Proceeds from long-term debt                                                          --                45,175
     Principal payments on long-term debt                                                  --               (45,175)
- ----------------------------------------------------------------------------------------------------------------------------

                        Net cash (used for) provided by financing activities           (4,922)               48,708
- ----------------------------------------------------------------------------------------------------------------------------

Net (decrease) increase in cash and cash equivalents                                      (13)                2,942

Cash and cash equivalents, beginning of period                                          2,942                    --
- ----------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                              $ 2,929              $  2,942
============================================================================================================================

Supplemental disclosure of cash flow information:

Cash paid for:
     Interest                                                                         $    --              $  3,444

Disclosure of non-cash financing activities:
     Distributions declared but not paid                                              $ 1,184              $  1,331
</TABLE>

                 See accompanying notes to financial statements.


                                      F-22
<PAGE>

                           FSP Collins Crossing Corp.
                          Notes to Financial Statements

1.    Organization

FSP Collins Crossing Corp. (the "Company") was organized on January 16, 2003 as
a Corporation under the laws of the State of Delaware to purchase, own and
operate a commercial office building located in Richardson, TX (the "Property").
Completed in 1999, the Property consists of an eleven story Class "A" suburban
office tower that contains approximately 298,766 square feet of space situated
on approximately ten acres of land (including an undeveloped parcel containing
approximately 3.5 acres). The company acquired the Property on March 3, 2003.

On August 13, 2004, the Company entered into a merger agreement with its common
shareholder, Franklin Street Properties Corp ("FSP"). On February 25, 2005, FSP
filed a Consent Solicitation/Prospectus with the United States Securities and
Exchange Commission indicating its intent to merge the Company and three
additional REITs with and into four of FSP's wholly-owned subsidiaries. The
merger requires the approval of the shareholders of the Company as well as the
shareholders of the three additional REITs. If approved, FSP will issue
approximately 3,423,035 shares of its common stock in exchange for a 100%
ownership interest in the Company. The Company has incurred $109,000 of costs
through December 31, 2004 related to the merger and these costs have been
included as an expense in the Statements of Operations.

2.    Summary of Significant Accounting Policies

BASIS OF PRESENTATION

The results of operations from inception to December 31, 2003 are not
necessarily indicative of the results to be obtained for other interim periods
or for the full fiscal year.

ESTIMATES AND ASSUMPTIONS

The Company prepares its financial statements and related notes in conformity
with accounting principles generally accepted in the United States of America
("GAAP"). These principles require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

RECLASSIFICATIONS

Certain information in the 2003 financial statements has been reclassified to
conform to the 2004 presentation.

REAL ESTATE AND DEPRECIATION

Real estate assets are stated at the lower of cost or fair value, as
appropriate, less accumulated depreciation.

Costs related to property acquisition and improvements are capitalized. Typical
capital items include new roofs, site improvements, various exterior building
improvements and major interior renovations. Funding for capital improvements
typically is provided by cash set aside at the time the Property was purchased.

Routine replacements and ordinary maintenance and repairs that do not extend the
life of the assets are expensed as incurred. Typical expense items include
interior painting, landscaping and minor carpet replacements. Funding for
repairs and maintenance items typically is provided by cash flows from operating
activities.

Depreciation is computed using the straight-line method over the assets'
estimated useful lives as follows:

      Category                                 Years
      --------                                 -----
      Building - Commercial                      39
      Building Improvements                    15-39
      Furniture and Equipment                   5-7


                                      F-23
<PAGE>

                           FSP Collins Crossing Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REAL ESTATE AND DEPRECIATION (continued)

The following schedule reconciles the cost of the property as shown in the
Offering Memorandum as to the amounts shown on the Company's Balance Sheets:

      (in thousands)
      --------------

      Price per Offering Memorandum                 $      45,175
      Plus:  Acquisition fees                                 277
      Plus:  Other acquisition costs                          205
      --------------------------------------------------------------
        Total Acquisition Costs                     $      45,657
      ==============================================================

These costs were recorded in the Company's Balance Sheet as follows:

      (in thousands)
      --------------

      Land                                          $       4,022
      Building                                             34,224
      Acquired real estate leases                           2,267
      Acquired favorable real estate lease                  5,144
      --------------------------------------------------------------
        Total recorded on Balance Sheets            $      45,657
      ==============================================================

The Company evaluates its assets used in operations by identifying indicators of
impairment and by comparing the sum of the estimated undiscounted future cash
flows for each asset to the asset's carrying value. When indicators of
impairment are present and the sum of the undiscounted future cash flows is less
than the carrying value of such asset, an impairment loss is recorded equal to
the difference between the asset's current carrying value and its fair value
based on discounting its estimated future cash flows. At December 31, 2004 and
2003, no such indicators of impairment were identified.

Depreciation expense amounted to $878,000 and $731,000 for the periods ended
December 31, 2004 and 2003, respectively.

ACQUIRED REAL ESTATE LEASES

Acquired real estate leases represents the estimated value of legal and leasing
costs related to acquired leases that were included in the purchase price when
the Company acquired the Property. Under Statement of Financial Accounting
Standards ("SFAS") No. 141 "Business Combinations", which was approved by the
Financial Accounting Standards Board ("FASB") in June 2001, the Company is
required to segregate these costs from its investment in real estate. The
Company subsequently amortizes these costs on a straight-line basis over the
weighted-average remaining life of the related leases. Amortization expense of
$418,000 and $349,000 is included in Depreciation and Amortization in the
Company's Statement of Operations for the period ended December 31, 2004 and
2003, respectively.

Acquired real estate lease costs included in the purchase price of the property
were $2,267,000 and are being amortized over a weighted average period of five
years in respect of the leases assumed. Detail of the acquired real estate lease
costs as of December 31,:

      (in thousands)                             2004               2003
      --------------
                                            ---------------    ----------------
      Cost                                    $     2,267        $     3,267
      Accumulated amortization                       (767)              (349)
                                            ---------------    ----------------
      Book value                              $     1,500        $     1,918
                                            ===============    ================

The estimated annual amortization expense for the four years succeeding December
31, 2004 are as follows:

      (in thousands)
      --------------

      2005                                    $       418
      2006                                    $       418
      2007                                    $       418
      2008                                    $       246


                                      F-24
<PAGE>

                           FSP Collins Crossing Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

ACQUIRED FAVORABLE REAL ESTATE LEASE

Acquired favorable real estate lease is the estimated benefit the Company
receives when the lease payments due under a tenant's lease exceed the market
rate of the lease at the date the property was acquired. Under SFAS 141 the
Company is required to report this value separately from its investment in real
estate. The Company subsequently amortizes this amount on a straight-line basis
over the remaining life of the tenant's lease. Amortization of $950,000 and
$791,000 is shown as a reduction of rental income in the Company's Statements of
Operations for the periods ended December 31, 2004 and 2003, respectively.

The acquired favorable real estate leases included in the purchase price of the
property was $5,144,000 and is being amortized over the period of five years in
respect of the lease assumed. Details of the acquired favorable real estate
lease as of December 31:

      (in thousands)                             2004               2003
      --------------                        ---------------     --------------
      Cost                                    $   5,144           $   5,144
      Accumulated amortization                   (1,741)               (791)
                                            ---------------     --------------
      Book value                              $   3,403           $   4,353
                                            ===============     ==============

The estimated annual amortization expense for the four years succeeding December
31, 2004 are as follows:

      (in thousands)
      --------------
      2005                                    $       950
      2006                                    $       950
      2007                                    $       950
      2008                                    $       553

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments with an initial
maturity of three months or less to be cash equivalents.

CASH-FUNDED RESERVES

The Company has set aside funds in anticipation of future capital needs of the
Property. Although these funds typically are used for the payment of real estate
assets and deferred leasing commissions, there is no legal restriction on their
use and they may be used for any Company purpose.

RESTRICTED CASH

Restricted cash consists of tenant security deposits.

MARKETABLE SECURITIES

The Company accounts for investments in debt securities under the provisions of
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". The Company typically classifies its debt securities as
available-for-sale.

There were no investments in marketable securities at December 31, 2004 and
2003.


                                      F-25
<PAGE>

                           FSP Collins Crossing Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

CONCENTRATION OF CREDIT RISKS

Cash, cash equivalents and short-term investments are financial instruments that
potentially subject the Company to a concentration of credit risk. The Company
maintains its cash balances and short-term investments principally in one bank
which the Company believes to be creditworthy. The Company periodically assesses
the financial condition of the bank and believes that the risk of loss is
minimal. Cash balances held with various financial institutions frequently
exceed the insurance limit of $100,000 provided by the Federal Deposit Insurance
Corporation.

For the periods ended December 31, 2004 and 2003, rental income was derived from
various tenants. As such, future receipts are dependent upon the financial
strength of the lessees and their ability to perform under the lease agreements.

The following tenant represents greater than 10% of total revenue:

                                           Year Ended            Period Ended
                                        December 31, 2004      December 31, 2003
      Tektronix Texas, LLC                     79%                    81%
      Macromedia                               10%                    9%

FINANCIAL INSTRUMENTS

The Company estimates that the carrying value of cash and cash equivalents,
cash-funded reserves and restricted cash approximate their fair values based on
their short-term maturity and prevailing interest rates.

STEP RENT RECEIVABLE

Certain leases provide for fixed increases over the life of the lease. Rental
revenue is recognized on the straight-line basis over the related lease term;
however, billings by the Company are based on required minimum rentals in
accordance with the lease agreements. Step rent receivable, which is the
cumulative revenue recognized in excess of amounts billed by the Company, is
$610,000 and $279,000 at December 31, 2004 and 2003, respectively.

TENANT RENT RECEIVABLE

Tenant rent receivable are reported at the amount the Company expects to collect
on balances outstanding at year-end. Management monitors outstanding balances
and tenant relationships and concluded that any realization losses would be
immaterial.

SYNDICATION FEES

Syndication fees are selling commissions and other costs associated with the
initial offering of the Company's preferred shares. Such costs, in the amount of
$4,410,000 have been reported as reduction in Stockholders' Equity in the
Company's Balance Sheets.


                                      F-26
<PAGE>

                           FSP Collins Crossing Corp.
                          Notes to Financial Statements

2.   Summary of Significant Accounting Policies (continued)

REVENUE RECOGNITION

The Company has retained substantially all of the risks and benefits of
ownership of the Company's commercial properties and accounts for its leases as
operating leases. Rental income from leases, which may include rent concession
(including free rent and tenant improvement allowances) and scheduled increases
in rental rates during the lease term, is recognized on a straight-line basis.
The Company does not have any percentage rent arrangements with its commercial
property tenants. Reimbursable costs are included in rental income in the period
earned. A schedule showing the components of rental revenue is shown below.

                                              Year Ended     Period Ended
                                             December, 31    December, 31
      (in thousands)                             2004            2003
      ====================================================================
      Income from leases                      $   6,715       $   5,559
      Straight-line rent adjustment                 331             279
      Reimbursable expenses                         894             625
      Amortization of favorable lease              (950)           (791)
      --------------------------------------------------------------------
           Total                              $   6,990       $   5,672
      ====================================================================

INTEREST INCOME

Interest income is recognized when the related services are performed and the
earnings process is complete.

INCOME TAXES

The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under the Internal Revenue Code of 1986, as amended. As a REIT, the Company
generally is entitled to a tax deduction for dividends paid to its shareholders,
thereby effectively subjecting the distributed net income of the Company to
taxation at the shareholder level only. The Company must comply with a variety
of restrictions to maintain its status as a REIT. These restrictions include the
type of income it can earn, the type of assets it can hold, the number of
shareholders it can have and the concentration of their ownership, and the
amount of the Company's taxable income that must be distributed annually.

NET INCOME PER SHARE

The Company follows SFAS No. 128 "Earnings per Share", which specifies the
computation, presentation and disclosure requirements for the Company's net
income per share. Basic net income per share is computed by dividing net income
by the weighted average number of shares outstanding during the period. Diluted
net income per share reflects the potential dilution that could occur if
securities or other contracts to issue shares were exercised or converted into
shares. There were no potential dilutive shares outstanding at December 31, 2004
and 2003. Subsequent to the completion of the offering of preferred shares, the
holders of common stock are not entitled to share in any income nor any related
dividend.

3.    Income Taxes

The Company files as a REIT under Sections 856-860 of the Internal Revenue Code
of 1986, as amended. In order to qualify as a REIT, the Company is required to
distribute at least 90% of its taxable income to shareholders and to meet
certain asset and income tests as well as certain other requirements. The
Company will generally not be liable for federal income taxes, provided it
satisfies these requirements. Even as a qualified REIT, the Company is subject
to certain state and local taxes on its income and property.

At December 31, 2004, the Company's net tax basis of its real estate assets was
$43,753,000.


                                      F-27
<PAGE>

                           FSP Collins Crossing Corp.
                          Notes to Financial Statements

3.    Income Taxes (continued)

The following schedule reconciles GAAP net income to taxable income subject to
dividend requirements:

<TABLE>
<CAPTION>
                                                                        Year Ended      Period Ended
                                                                        December 31,    December 31,
      (in thousands)                                                        2004            2003
      ==============================================================================================

<S>                                                                    <C>              <C>
      GAAP net income (loss)                                           $    3,055       $   (976)

         Add:  Book depreciation and amortization                           1,296          1,080
               Amortization for favorable lease                               950            791
               Deferred rent                                                 (481)           481
         Less: Tax depreciation and amortization                           (1,042)          (812)
               Straight-line rents                                           (331)          (279)
      ----------------------------------------------------------------------------------------------
      Taxable income subject to dividend requirement                   $    3,447       $    285
      ==============================================================================================
</TABLE>

The following schedule reconciles cash dividends paid to the dividends paid
deduction:

<TABLE>
<CAPTION>
                                                   Year Ended                          Year Ended
                                                December 31, 2004                   December 31, 2003
                                         ------------------------------     --------------------------------
                                                        Per       Per                     Per         Per
                                                     Preferred   Common                Preferred    Common
(in thousands, except per share data)      Total       Share      Share       Total      Share       Share
- ------------------------------------------------------------------------------------------------------------
<S>                                       <C>         <C>         <C>       <C>         <C>        <C>
- ------------------------------------------------------------------------------------------------------------
Cash distributions paid                   $ 4,922     $ 8,868     $  --     $ 2,392     $ 3,637    $ 373,500
   Less: Return of captial                 (1,475)     (2,658)       --      (2,107)     (3,204)    (329,067)
- ------------------------------------------------------------------------------------------------------------
Dividends paid deduction                  $ 3,447     $ 6,210     $  --     $   285     $   433    $  44,433
============================================================================================================
</TABLE>

4.    Capital Stock

PREFERRED STOCK

Generally, each holder of Shares of Preferred Stock is entitled to receive
ratably all dividends, if any, declared by the Board of Directors out of funds
legally available. The right to receive dividends shall be non-cumulative, and
no right to dividends shall accrue by reason of the fact that no dividend has
been declared in any prior year. Each holder of Shares will be entitled to
receive, to the extent that funds are available therefore, $100,000 per Share,
before any payment to the holder of Common Stock, out of distributions to
stockholders upon liquidation, dissolution or the winding up of the Company; the
balance of any such funds available for distribution will be distributed among
the holders of Shares and the holder of Common Stock, pro rata based on the
number of shares held by each; provided, however, that for these purposes, one
share of Common Stock will be deemed to equal one-tenth of a share of Preferred
Stock.

In addition to certain voting rights provided in the corporate agreements, the
holder of Shares, acting by consent of at least 51%, shall have the further
right to approve or disapprove a proposed sale of the Property, the merger of
the Company with any other entity and amendments to the corporate charter. A
vote of the holders of 66.67% of the Shares is required for the issue of any
additional shares of capital stock. Holders of Shares have no redemption or
conversion rights.

COMMON STOCK

Franklin Street Properties Corp. ("FSP"), is the sole holder of the Company's
Common Stock. FSP has the right, as one class together with the holders of
Preferred Stock, to vote to elect the directors of the Company and to vote on
all matters except those voted by the holders of Shares of Preferred Stock.
Subsequent to the completion of the offering of the preferred shares the holders
of common shares are not entitled to receive any income, nor shall the Company
declare or pay any cash dividends on shares of Common Stock.


                                      F-28
<PAGE>

                           FSP Collins Crossing Corp.
                          Notes to Financial Statements

5.    Related Party Transactions

The Company executed a management agreement with FSP Property Management LLC, an
affiliate of FSP, that provides for a management fee equal to 1% of collected
revenues and is cancelable with 30 days notice by either party. For the periods
ended December 31, 2004 and 2003, fees incurred under the agreement were $75,000
and $62,000, respectively.

An acquisition fee of $277,000 and other costs of $206,000 were paid in 2003 to
an affiliate of the Common Shareholder. Such fees were included in the cost of
the real estate.

Syndication fees of $4,410,000 were paid in 2004 to an affiliate of the Common
Shareholder for services related to syndication of the Company's preferred
stock.

During 2003, the Company borrowed and repaid in full a note payable to FSP,
principal of $45,175,000 with interest equal to the Citizens Bank base rate.
Interest paid to FSP was $253,000. The average interest rate during the time the
loan was outstanding was 4.44%.

A commitment fee of $3,191,000 was paid to FSP for obtaining the first mortgage
loan. Such amount is included in interest expense on the Statement of
Operations.

The Company paid a distribution of $373,000 to the common shareholder in 2003
relating to the operations of the Company prior to the completion of the
offering of preferred shares.

6.    Commitments and Contingencies

The Company, as lessor, has minimum future rentals due under non-cancelable
operating leases as follows:

                                        Year Ending
      (in thousands)                    December 31,         Amount
                                        ------------        ---------

                                            2005            $  7,017
                                            2006               6,097
                                            2007               5,871
                                            2008               5,872
                                            2009               5,854
                                         Thereafter            2,925
                                                            ---------
                                                            $ 33,636
                                                            =========

In addition, the lessees are liable for real estate taxes and certain operating
expenses of the Property.

Upon acquiring the commercial rental property in March 2003, the Company was
assigned the lease agreements between the seller of the Property and the
existing tenants. The original lease periods range from five to ten years with
renewal options.


                                      F-29
<PAGE>

                                  SCHEDULE III

                           FSP Collins Crossing Corp.
                    Real Estate and Accumulated Depreciation
                                December 31, 2004

<TABLE>
<CAPTION>
                                                                  Initial Cost
                                                         -------------------------------
                                                                                Costs
                                                                             Capitalized
                                                                 Buildings   (Disposals)
                                                                Improvements Subsequent
                                                                    and          to
Description                           Encumbrances (1)   Land    Equipment   Acquisition
- -----------                           ----------------   ----    ---------   -----------

<S>                                     <C>              <C>      <C>          <C>

   Collins Crossing, Richardson, TX                      $4,022   $34,224      $9

<CAPTION>
                                                             Historical Costs
                                         ----------------------------------------------------------


                                                 Buildings                             Total Costs,
                                                Improvements                              Net of     Depreciable
                                                    and                  Accumulated   Accumulated       Life      Date of
Description                              Land    Equipment   Total (2)  Depreciation   Depreciation     Years     Acquisition
- -----------                              ----    ---------   ---------  ------------   ------------     -----     -----------
                                            (in thousands)
<S>                                    <C>        <C>        <C>         <C>            <C>              <C>        <C>

   Collins Crossing, Richardson, TX    $4,022     $34,233    $38,255     $1,609         $36,646          39         2003
</TABLE>

(1)   There are no encumbrances on the above properties.
(2)   The aggregate cost for Federal Income Tax purposes is $45,666.


                                      F-30
<PAGE>

                           FSP Collins Crossing Corp.

The following table summarizes the changes in the Company's real estate
investments and accumulated depreciation:

                                                     December 31,   December 31,
                                                   -----------------------------
(in thousands)                                          2004           2003
================================================================================

Real estate investments, at cost:
   Balance, beginning of period                       $38,246         $    --
       Acquisitions                                        --          38,246
       Improvements                                         9              --
       Dispositions                                        --              --
- --------------------------------------------------------------------------------

   Balance, end of period                             $38,255         $38,246
================================================================================

Accumulated depreciation:
    Balance, beginning of period                      $   731         $    --
        Depreciation                                      878             731
        Dispositions                                       --              --
- --------------------------------------------------------------------------------

    Balance, end of period                            $ 1,609         $   731
================================================================================


                                      F-31
<PAGE>

                       FSP Montague Business Center Corp.
                              Financial Statements
                        December 31, 2004, 2003 and 2002

                                Table of Contents

                                                                            Page
                                                                            ----
Financial Statements

Independent Auditor's Report.............................................   F-33

Balance Sheets as of December 31, 2004, and 2003.........................   F-34

Statements of Operations for the years ended December 31, 2004 and 2003
      and for the period July 22, 2002 (date of inception) to
      December 31, 2002..................................................   F-35

Statements of Changes in Stockholders' Equity for the years ended
      December 31, 2004 and 2003 and for the period July 22, 2002
      (date of inception) to December 31, 2002...........................   F-36

Statements of Cash Flows for the years ended December 31, 2004 and 2003
      and for the period July 22, 2002 (date of inception) to
      December 31, 2002..................................................   F-37

Notes to Financial Statements............................................   F-38

Financial Statements Schedule - Schedule III.............................   F-44


                                      F-32
<PAGE>

                    [LETTERHEAD OF BRAVER AND COMPANY, P.C.]


                          INDEPENDENT AUDITOR'S REPORT


To the Stockholders
FSP Montague Business Center Corp.
Wakefield, Massachusetts

We have audited the accompanying balance sheets of FSP Montague Business Center
Corp. as of December 31, 2004 and 2003, and the related statements of
operations, changes in stockholders' equity and cash flows for the years ended
December 31, 2004 and 2003 and for the period from July 22, 2002 (date of
inception) to December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FSP Montague Business Center
Corp. as of December 31, 2004 and 2003, and the results of its operations and
its cash flows for the years ended December 31, 2004 and 2003 and for the
initial period ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.



/s/ Braver and Company, P.C.
Newton, Massachusetts
March 7, 2005


                                      F-33
<PAGE>

                  FSP Montague Business Center Corp.
                            Balance Sheets

<TABLE>
<CAPTION>
                                                                      December 31,        December 31,
(in thousands,except shares and par value amounts)                        2004                2003
======================================================================================================

<S>                                                                     <C>                <C>
Assets:

Real estate investments, at cost:
     Land                                                               $ 10,500           $ 10,500
     Buildings and improvements                                           10,499             10,499
- ------------------------------------------------------------------------------------------------------
                                                                          20,999             20,999

     Less accumulated depreciation                                           628                359
- ------------------------------------------------------------------------------------------------------

Real estate investments, net                                              20,371             20,640

Acquired real estate leases, net of accumulated amortization
     of $250 and $143, respectively                                          215                322
Acquired favorable real estate leases, net of accumulated
     amortization of  $2,907 and $1,744, respectively                      2,325              3,488
Cash and cash equivalents                                                  1,596              1,587
Cash-funded reserves                                                       2,061              2,007
Step rent receivable                                                         462                392
Prepaid expenses and other assets                                             20                 14
- ------------------------------------------------------------------------------------------------------

     Total assets                                                       $ 27,050           $ 28,450
======================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
Accounts payable and accrued expenses                                   $    452           $    411
Distributions payable                                                      1,020                960
- ------------------------------------------------------------------------------------------------------

     Total liabilities                                                     1,472              1,371
- ------------------------------------------------------------------------------------------------------

Commitments and Contingencies:                                                --                 --

Stockholders' Equity:
     Preferred Stock, $.01 par value, 334 shares
        authorized, issued and outstanding                                    --                 --

     Common Stock, $.01 par value, 1 share
        authorized, issued and outstanding                                    --                 --
     Additional paid-in capital                                           30,652             30,652
     Retained earnings and distirbutions in excess of earnings            (5,074)            (3,573)
- ------------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                           25,578             27,079
- ------------------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                         $ 27,050           $ 28,450
======================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-34
<PAGE>

                         FSP Montague Business Center Corp.
                              Statements of Operations

<TABLE>
<CAPTION>
                                                                                                                  For the Period
                                                                                                                   July 22, 2002
                                                              For the Year Ended       For the Year Ended       (date of inception)
(in thousands, except shares and per share amounts)            December 31, 2004       December 31, 2003       to December 31, 2002
===================================================================================================================================

<S>                                                                   <C>                     <C>                     <C>
Revenues:
     Rental                                                           $3,432                  $3,645                  $ 1,008
- -----------------------------------------------------------------------------------------------------------------------------------

       Total revneue                                                   3,432                   3,645                    1,008
- -----------------------------------------------------------------------------------------------------------------------------------

Expenses:

     Rental operating expenses                                           284                     314                      103
     Real estate taxes and insurance                                     255                     339                       83
     Depreciation and amortization                                       376                     368                      134
     General and administrative                                           63                      --                       --
     Interest                                                             --                      --                    1,949
- -----------------------------------------------------------------------------------------------------------------------------------

       Total expenses                                                    978                   1,021                    2,269
- -----------------------------------------------------------------------------------------------------------------------------------

Income (loss) before interest income                                   2,454                   2,624                   (1,261)

Interest income                                                           61                      45                       12
- -----------------------------------------------------------------------------------------------------------------------------------

Net income (loss) before distributions to common stockholder           2,515                   2,669                   (1,249)

Distributions paid to common stockholder                                  --                      --                       32
- -----------------------------------------------------------------------------------------------------------------------------------

Net income (loss) attributable to preferred stockholders              $2,515                  $2,669                  $(1,281)
===================================================================================================================================

Weighted average number of preferred shares outstanding,
     basic and diluted                                                   334                     334                      334
===================================================================================================================================

Net income (loss) per preferred share, basic and diluted              $7,530                  $7,991                  $(3,835)
===================================================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-35
<PAGE>

                       FSP Montague Business Center Corp.
                  Statements of Changes in Stockholders' Equity
               For the Years Ended December 31, 2004 and 2003 and
                for the Period July 22, 2002 (date of inception)
                              to December 31, 2002

<TABLE>
<CAPTION>
                                                                                    Retained Earnings
                                                                     Additional     and Distributions        Total
                                           Preferred      Common       Paid in        in Excess of       Stockholders'
        (in thousands, except shares)        Stock         Stock       Capital          Earnings             Equity
======================================================================================================================

<S>                                          <C>            <C>         <C>              <C>               <C>
Private offering of 334 shares, net          $  --          $  --       $30,652          $    --           $ 30,652

Distributions                                   --             --            --           (1,222)            (1,222)

Net loss                                        --             --            --           (1,249)            (1,249)
- ----------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2002                      --             --        30,652           (2,471)            28,181

Distributions                                   --             --            --           (3,771)            (3,771)

Net income                                      --             --            --            2,669              2,669
- ----------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2003                      --             --        30,652           (3,573)            27,079

Distributions                                   --             --            --           (4,016)            (4,016)

Net income                                      --             --            --            2,515              2,515
- ----------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2004                   $  --          $  --       $30,652          $(5,074)          $ 25,578
======================================================================================================================
</TABLE>

            See accompanying notes to financial statements.


                                      F-36
<PAGE>

                        FSP Montague Business Center Corp.
                             Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                                                  For the Period
                                                                                                                   July 22, 2002
                                                                     For the Year Ended   For the Year Ended  (date of inception) to
(in thousands)                                                        December 31, 2004   December 31, 2003      December 31, 2002
====================================================================================================================================

<S>                                                                         <C>               <C>                   <C>
Cash flows from operating activities:
     Net Income (loss)                                                      $ 2,515           $  2,669              $ (1,249)
     Adjustments to reconcile net income (loss) to net cash provided by
          (used for) operating activities:
                Depreciation and amortization                                   376                368                   134
                Amortization of favorable real estate lease                   1,163              1,164                   581
           Changes in operating assets and liabilities:
                Cash-funded reserves                                            (54)               366                (2,373)
                Step rent receivable                                            (70)              (262)                 (130)
                Prepaid expenses and other assets                                (6)                11                   (25)
                Accounts payable and accrued expenses                            41                383                    28
- --------------------------------------------------------------------------------------------------------------------------------

                    Net cash provided by (used for) operating activities      3,965              4,699                (3,034)
- --------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Purchase of real estate assets                                              --               (355)              (20,644)
     Purchase of acquired real estate lease                                      --                 --                  (465)
     Purchase of acquired favorable real estate lease                            --                 --                (5,232)
- --------------------------------------------------------------------------------------------------------------------------------

                    Net cash used for investing activities                       --               (355)              (26,341)
- --------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Proceeds from sale of company stock                                         --                 --                33,410
     Syndication costs                                                           --                 --                (2,758)
     Distributions to stockholders                                           (3,956)            (3,714)                 (320)
     Proceeds from long-term debt                                                --             26,000
     Principal payments on long-term debt                                        --            (26,000)
- --------------------------------------------------------------------------------------------------------------------------------

                    Net cash (used for) provided by financing activities     (3,956)            (3,714)               30,332
- --------------------------------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                                         9                630                   957

Cash and cash equivalents, beginning of period                                1,587                957                    --
- --------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                    $ 1,596           $  1,587              $    957
================================================================================================================================

Supplemental disclosure of cash flow information:

Cash paid for:
     Interest                                                               $    --           $     --              $  1,949

Disclosure of non-cash financing activities:
     Distributions declared but not paid                                    $ 1,020           $    960              $    902
</TABLE>

                 See accompanying notes to financial statements.


                                      F-37
<PAGE>

                       FSP Montague Business Center Corp.
                          Notes to Financial Statements

1.    Organization

FSP Montague Business Center Corp. (the "Company") was organized on July 22,
2002 as a Corporation under the laws of the State of Delaware to purchase, own
and operate two adjacent single-story research and development/office buildings
located in San Jose, California (the "Property"). The Property contains
approximately 145,951 square feet of space situated on approximately 9.95 acres
of land. The Company acquired the Property on August 27, 2002.

On August 13, 2004, the Company entered into a merger agreement with its common
shareholder, Franklin Street Properties Corp ("FSP"). On February 25, 2005, FSP
filed a Consent Solicitation/Prospectus with the United States Securities and
Exchange Commission indicating its intent to merge the Company and three
additional REITs with and into four of FSP's wholly-owned subsidiaries. The
merger requires the approval of the shareholders of the Company as well as the
shareholders of the three additional REITs. If approved, FSP will issue
approximately 1,887,007 shares of its common stock in exchange for a 100%
ownership interest in the Company. The Company has incurred $63,000 of costs
through December 31, 2004 related to the merger and these costs have been
included as an expense in the Statements of Operations.

2.    Summary of Significant Accounting Policies

BASIS OF PRESENTATION

The results of operations from inception to December 31, 2002 are not
necessarily indicative of the results to be obtained for other interim periods
or for the full fiscal year.

ESTIMATES AND ASSUMPTIONS

The Company prepares its financial statements and related notes in conformity
with accounting principles generally accepted in the United States of America
("GAAP"). These principles require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

REAL ESTATE AND DEPRECIATION

Real estate assets are stated at the lower of cost or fair value, as
appropriate, less accumulated depreciation.

Costs related to property acquisition and improvements are capitalized. Typical
capital items include new roofs, site improvements, various exterior building
improvements and major interior renovations. Funding for capital improvements
typically is provided by cash set aside at the time the Property was purchased.

Routine replacements and ordinary maintenance and repairs that do not extend the
life of the assets are expensed as incurred. Typical expense items include
interior painting, landscaping and minor carpet replacements. Funding for
repairs and maintenance items typically is provided by cash flows from operating
activities.

Depreciation is computed using the straight line method over the assets'
estimated useful lives as follows:

         Category                                 Years
         --------                                 -----
         Building - Commercial                      39
         Building Improvements                    15-39
         Furniture and equipment                   5-7

The following schedule reconciles the cost of the Property as shown in the
Offering Memorandum as to the amounts shown on the Company's Balance Sheets:

      (in thousands)
      --------------

      Price per Offering Memorandum                 $       26,000
      Plus:  Acquisition fees                                  167
      Plus:  Other acquisition costs                           174
      --------------------------------------------------------------
        Total Acquisition Costs                     $       26,341
      ==============================================================


                                      F-38
<PAGE>

                       FSP Montague Business Center Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REAL ESTATE AND DEPRECIATION (continued)

These costs are reported in the Company's Balance Sheets as follows:

      Land                                           $      10,500
      Building                                              10,144
      Acquired real estate lease                               465
      Acquired favorable lease                               5,232
      ---------------------------------------------------------------
        Total reported on Balance Sheet              $      26,341
      ===============================================================

The Company evaluates its assets used in operations by identifying indicators of
impairment and by comparing the sum of the estimated undiscounted future cash
flows for each asset to the asset's carrying value. When indicators of
impairment are present and the sum of the undiscounted future cash flows is less
than the carrying value of such asset, an impairment loss is recorded equal to
the difference between the asset's current carrying value and its fair value
based on discounting its estimated future cash flows. At December 31, 2004 and
2003 no such indicators of impairment were identified.

ACQUIRED REAL ESTATE LEASE

Acquired real estate lease represents the estimated value of legal and leasing
costs related to the acquired leases that were included in the purchase price
when the Company acquired the Property. Under Statement of Financial Accounting
Standards (`SFAS") No. 141 "Business Combinations" , which was approved by the
Financial Accounting Standards Board ("FASB") in June 2001, the Company is
required to segregate these costs from its investment in real estate. The
Company subsequently amortizes these costs on a straight-line basis over the
life of the related lease. Amortization expense of $107,000, $107,000 and
$36,000 is included in depreciation and amortization in the Company's Statements
of Operations for the periods ended December 31, 2004, 2003 and 2002,
respectively.

The acquired real estate lease included in the purchase price of the property
was $465,000 and is being amortized over a period of five years.

The estimated annual amortization expense for the two years succeeding December
31, 2004 are as follows:

      (in thousands)
      --------------

      2005                                    $       107
      2006                                    $       108

ACQUIRED FAVORABLE REAL ESTATE LEASE

Acquired favorable real estate lease represents the value related to the leases
when the lease payments due under a tenant's lease exceed the market rate of the
lease at the date the Property was acquired. Under SFAS 141 the Company is
required to capitalize this difference and report it separately from its
investment in real estate. The Company subsequently amortizes this amount on a
straight-line basis over the remaining life of the tenant's lease. Amortization
of $1,163,000, $1,164,000 and $581,000 is shown as a reduction of rental income
in the Company's Statements of Operations for the periods ended December 31,
2004, 2003 and 2002, respectively.

The acquired favorable real estate lease included in the purchase price of the
property was $5,232,000 and is being amortized over a period of five years in
respect of the lease assumed.

The estimated annual amortization for the two years succeeding December 31, 2004
are as follows:

      (in thousands)
      --------------

      2005                                    $     1,163
      2006                                    $     1,162


                                      F-39
<PAGE>

                       FSP Montague Business Center Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments with an initial
maturity of three months or less to be cash equivalents.

CASH-FUNDED RESERVES

The Company has set aside funds in anticipation of future capital needs of the
Property. These funds typically are used for the payment of real estate assets
and deferred leasing commissions; however, there is no legal restriction on
their use and they may be used for any Company purpose.

MARKETABLE SECURITIES

The Company accounts for investments in debt securities under the provisions of
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". The Company typically classifies its debt securities as
available-for-sale.

There were no investments in marketable securities at December 31, 2004 and
2003.

CONCENTRATION OF CREDIT RISKS

Cash, cash equivalents and short-term investments are financial instruments that
potentially subject the Company to a concentration of credit risk. The Company
maintains its cash balances and short-term investments principally in one bank
which the Company believes to be creditworthy. The Company periodically assesses
the financial condition of the bank and believes that the risk of loss is
minimal. Cash balances held with various financial institutions frequently
exceed the insurance limit of $100,000 provided by the Federal Deposit Insurance
Corporation.

For the periods ended December 31, 2004, 2003 and 2002, 100% of the rental
income was derived from one tenant, Novellus Systems, Inc. As such, future
receipts are dependent upon the financial strength of the lessee and its ability
to perform under the lease agreement.

FINANCIAL INSTRUMENTS

The Company estimates that the carrying value of cash and cash equivalents and
cash-funded reserves approximate their fair values based on their short-term
maturity and prevailing interest rates.

STEP RENT RECEIVABLE

The lease provides for fixed increases over the life of the lease. Rental
revenue is recognized on the straight-line basis over the related lease term;
however, billings by the Company are based on required minimum rentals in
accordance with the lease agreement. Step rent receivable, which is the
cumulative revenue recognized in excess of amounts billed by the Company, was
$462,000 and $392,000 at December 31, 2004 and 2003, respectively.

SYNDICATION FEES

Syndication fees are selling commissions and other costs associated with the
initial offering of the Company's preferred shares. Such costs in the amount of
$2,758,000 have been reported as a reduction in Stockholders' Equity in the
Company's Balance Sheets.


                                      F-40
<PAGE>

                       FSP Montague Business Center Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REVENUE RECOGNITION

The Company has retained substantially all of the risks and benefits of
ownership of the Company's commercial property and accounts for its lease as an
operating lease. Rental income from the lease, which may include rent concession
(including free rent and tenant improvement allowances) and scheduled increases
in rental rates during the lease term, is recognized on a straight-line basis.
The Company does not have any percentage rent arrangements with its commercial
property tenant. Reimbursable costs are included in rental income in the period
earned. A schedule showing the components of rental revenue is shown below.

                                         Year Ended    Year Ended   Period Ended
                                        December, 31  December, 31  December, 31
      (in thousands)                        2004          2003          2002
      ==========================================================================
      Income from leases                 $   3,982     $   3,789     $   1,269
      Straight-line rent adjustment             70           262           130
      Reimbursable expenses                    543           758           190
      Amortization of
        acquired
        favorable real estate lease         (1,163)       (1,164)         (581)
      --------------------------------------------------------------------------
           Total                         $   3,432     $   3,645     $   1,008
      ==========================================================================

INTEREST INCOME

Interest income is recognized when the related services are performed and the
earnings process is complete.

INCOME TAXES

The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under the Internal Revenue Code of 1986, as amended. As a REIT, the Company
generally is entitled to a tax deduction for dividends paid to its shareholders,
thereby effectively subjecting the distributed net income of the Company to
taxation at the shareholder level only. The Company must comply with a variety
of restrictions to maintain its status as a REIT. These restrictions include the
type of income it can earn, the type of assets it can hold, the number of
shareholders it can have and the concentration of their ownership, and the
amount of the Company's taxable income that must be distributed annually.

NET INCOME PER SHARE

The Company follows SFAS No. 128 "Earnings per Share", which specifies the
computation, presentation and disclosure requirements for the Company's net
income per share. Basic net income per preferred share is computed by dividing
net income by the weighted average number of preferred shares outstanding during
the period. Diluted net income per preferred share reflects the potential
dilution that could occur if securities or other contracts to issue shares were
exercised or converted into shares. There were no potential dilutive shares
outstanding at December 31, 2004, 2003 and 2002. Subsequent to the completion of
the offering of preferred shares, the holders of common stock are not entitled
to share in any income nor in any related dividend.

3.    Income Taxes

The Company files as a REIT under Sections 856-860 of the Internal Revenue Code
of 1986, as amended. In order to qualify as a REIT, the Company is required to
distribute at least 90% of its taxable income to shareholders and to meet
certain asset and income tests as well as certain other requirements. The
Company will generally not be liable for federal income taxes, provided it
satisfies these requirements. Even as a qualified REIT, the Company is subject
to certain state and local taxes on its income and property.

For the period ended December 31, 2002, the Company incurred a net operating
loss for income tax purposes of approximately $810,000 that can be carried
forward until it expires in the year 2022.

At December 31, 2004, the Company's net tax basis of its real estate assets was
$25,721,000.


                                      F-41
<PAGE>

                       FSP Montague Business Center Corp.
                         Notes to Financial Statements.

3.    Income Taxes (continued)

The following schedule reconciles net income (loss) to taxable income subject to
dividend requirements:

<TABLE>
<CAPTION>
                                                                    Year Ended       Year Ended       Period Ended
                                                                    December 31,     December 31,     December 31,
      (in thousands)                                                    2004             2003             2002
      ============================================================================================================

<S>                                                                  <C>              <C>              <C>
      GAAP net income (loss)                                         $   2,515        $   2,669        $  (1,249)

         Add:  Book depreciation and amortization                          376              368              134
               Amortization of favorable lease                           1,163            1,164              581
               Deferred rent                                              (379)             379               --
         Less: Tax depreciation and amortization                          (404)            (399)            (142)
               Straight-line rents                                         (70)            (262)            (130)
      ------------------------------------------------------------------------------------------------------------
      Taxable income (loss)(1) subject to a dividend requirement     $   3,201        $   3,919        $    (806)
      ============================================================================================================
</TABLE>

      (1)   A tax loss is not subject to a dividend requirement.

The following schedule summarizes the tax components of the distributions paid
for the years ended December 31,:

<TABLE>
<CAPTION>
                                                   Year Ended                          Year Ended
                                                December 31, 2004                   December 31, 2003
                                         ------------------------------     -------------------------------
                                                        Per       Per                     Per         Per
                                                     Preferred   Common                Preferred    Common
(in thousands, except per share data)      Total       Share      Share       Total      Share       Share
- -----------------------------------------------------------------------------------------------------------
<S>                                       <C>         <C>         <C>       <C>         <C>        <C>
- -----------------------------------------------------------------------------------------------------------
Cash distributions paid                   $ 3,956     $ 11,844    $  --     $3,714      $11,119    $  --
   Less: Return of captial                   (550)      (1,647)      --         --           --       --
- -----------------------------------------------------------------------------------------------------------
Dividends paid deduction                  $ 3,406     $ 10,197    $  --     $3,714      $11,119    $  --
===========================================================================================================

<CAPTION>
                                                      Year Ended
                                                 December 31, 2002
                                         ---------------------------------
                                                        Per         Per
                                                     Preferred     Common
(in thousands, except per share data)      Total       Share       Share
- --------------------------------------------------------------------------
<S>                                       <C>          <C>       <C>
Cash distributions paid                   $ 320        $ 861     $ 32,227
   Less: Return of captial                 (320)        (861)     (32,227)
- --------------------------------------------------------------------------
Dividends paid deduction                  $  --        $  --     $     --
==========================================================================
</TABLE>

4.   Capital Stock

PREFERRED STOCK

Generally, each holder of Shares of Preferred Stock is entitled to receive
ratably all distributions, if any, declared by the Board of Directors out of
funds legally available. The right to receive distributions shall be
non-cumulative, and no right to distributions shall accrue by reason of the fact
that no distribution has been declared in any prior year. Each holder of Shares
will be entitled to receive, to the extent that funds are available therefore,
$100,000 per Share, before any payment to the holder of Common Stock, out of
distributions to stockholders upon liquidation, dissolution or the winding up of
the Company; the balance of any such funds available for distribution will be
distributed among the holders of Shares and the holder of Common Stock, pro rata
based on the number of shares held by each; provided, however, that for these
purposes, one share of Common Stock will be deemed to equal one-tenth of a share
of Preferred Stock.


                                      F-42
<PAGE>

                       FSP Montague Business Center Corp.
                          Notes to Financial Statements

4.    Capital Stock (continued)

PREFERRED STOCK (continued)

In addition to certain voting rights provided in the corporate agreements, the
holder of Shares, acting by consent of at least 51%, shall have the further
right to approve or disapprove a proposed sale of the Property, the merger of
the Company with any other entity and amendments to the corporate charter. A
vote of the holders of 66.67% of the Shares is required for the issue of any
additional shares of capital stock. Holders of Shares have no redemption or
conversion rights.

COMMON STOCK

Franklin Street Properties Corp. ("FSP"), is the holder of the Company's Common
Stock. FSP has the right, as one class together with the holders of Preferred
Stock, to vote to elect the directors of the Company and to vote on all matters
except those voted by the holders of Shares of Preferred Stock. Subsequent to
the completion of the offering of the preferred shares the holders of common
shares are not entitled to share in any earnings nor any related dividend.

5.    Related Party Transactions

The Company executed a management agreement with FSP Property Management LLC, an
affiliate of FSP, that provides for a management fee equal to 1% of collected
revenues and is cancelable with 30 days notice by either party. For the years
ended December 31, 2004, 2003 and 2002, fees incurred under the agreement were
$46,000, $45,000 and $14,000, respectively.

An acquisition fee of $167,000 and other costs of $104,000 were paid in 2002 to
an affiliate of the Common Shareholder. Such fees were included in the cost of
the real estate.

Syndication fees of $2,758,000 were paid in 2002 to an affiliate of the Common
Shareholder for services related to syndication of the Company's preferred
stock.

During 2002, the Company borrowed and repaid in full a note payable to FSP,
principal of $26,000,000, with interest equal to the Citizens Bank base rate.
Interest paid to FSP was $29,000. The average interest rate during the time the
loan was outstanding was 4.75%.

A commitment fee of $1,920,000 was paid to FSP in 2002 for obtaining the first
mortgage loan and is included in interest expense on the Statement of
Operations.

The Company paid a dividend of $32,000 in 2002 to the common shareholder
relating to operations of the Company prior to the completion of the offering of
preferred shares.

6.    Commitments and Contingencies

The Company, as lessor, has minimum future rentals due under a non-cancelable
operating lease as follows:

                                        Year Ending
      (in thousands)                    December 31,          Amount
      --------------                    ------------        ---------

                                            2005             $ 4,174
                                            2006               4,390
                                                            ---------
                                                             $ 8,564
                                                            =========

In addition, the lessee is liable for real estate taxes and certain operating
expenses of the Property.


                                      F-43
<PAGE>

                                  SCHEDULE III

                       FSP Montague Business Center Corp.
                    Real Estate and Accumulated Depreciation
                                December 31, 2004

<TABLE>
<CAPTION>
                                                                        Initial Cost
                                                               -------------------------------
                                                                                      Costs
                                                                                   Capitalized
                                                                       Buildings   (Disposals)
                                                                      Improvements Subsequent
                                                                          and          to
Description                                 Encumbrances (1)   Land    Equipment   Acquisition
- -----------                                 ----------------   ----    ---------   -----------

<S>                                           <C>              <C>      <C>          <C>
   Montague Business Center, San Jose, CA                      $10,500  $10,144      $355

<CAPTION>
                                                                   Historical Costs
                                               ----------------------------------------------------------


                                                       Buildings                             Total Costs,
                                                      Improvements                              Net of     Depreciable
                                                          and                  Accumulated   Accumulated       Life      Date of
Description                                    Land    Equipment   Total (2)  Depreciation   Depreciation     Years     Acquisition
- -----------                                    ----    ---------   ---------  ------------   ------------     -----     -----------
                                                  (in thousands)
<S>                                          <C>        <C>        <C>         <C>            <C>              <C>        <C>
   Montague Business Center, San Jose, CA    $10,500    $10,499    $20,999     $628           $20,371          39         2002
</TABLE>

(1)   There are no encumbrances on the above properties.
(2)   The aggregate cost for Federal Income Tax purposes is $26,696.


                                      F-44
<PAGE>

                       FSP Montague Business Center Corp.

The following table summarizes the changes in the Company's real estate
investments and accumulated depreciation:

                                                      December 31,
                                       ---------------------------------------
(in thousands)                             2004          2003             2002
==============================================================================

Real estate investments, at cost:
   Balance, beginning of period         $20,999       $20,644          $    --
       Acquisitions                          --            --           20,644
       Improvements                          --           355               --
       Dispositions                          --            --               --
- ------------------------------------------------------------------------------

   Balance, end of period               $20,999       $20,999          $20,644
==============================================================================

Accumulated depreciation:
    Balance, beginning of period        $   359       $    98          $    --
        Depreciation                        269           261               98
        Dispositions                         --            --               --
- ------------------------------------------------------------------------------

    Balance, end of period              $   628       $   359          $    98
==============================================================================


                                      F-45
<PAGE>

                              FSP Royal Ridge Corp.
                              Financial Statements
                           December 31, 2004 and 2003

                                Table of Contents

                                                                            Page
                                                                            ----

Financial Statements

Independent Auditor's Report..............................................  F-47

Balance Sheets as of December 31, 2004 and 2003...........................  F-48

Statements of Operations for the years ended December 31, 2004 and 2003...  F-49

Statements of Changes in Stockholders' Equity for the years ended
      December 31, 2004 and 2003..........................................  F-50

Statements of Cash Flows for the years ended December 31, 2004 and 2003...  F-51

Notes to Financial Statements.............................................  F-52

Financial Statements Schedule - Schedule III..............................  F-59


                                      F-46
<PAGE>

                    [LETTERHEAD OF BRAVER AND COMPANY, P.C.]


                          INDEPENDENT AUDITOR'S REPORT


To the Stockholders
FSP Royal Ridge Corp.
Wakefield, Massachusetts

We have audited the accompanying balance sheets of FSP Royal Ridge Corp. as of
December 31, 2004 and 2003, and the related statements of operations, changes in
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FSP Royal Ridge Corp. as of
December 31, 2004 and 2003, and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.



/s/ Braver and Company, P.C.
Newton, Massachusetts
March 7, 2005


                                      F-47
<PAGE>

                            FSP Royal Ridge Corp.
                               Balance Sheets

<TABLE>
<CAPTION>
                                                                             December 31,    December 31,
(in thousands,except shares and par value amounts)                               2004            2003
=========================================================================================================

<S>                                                                           <C>              <C>
Assets:

Real estate investments, at cost:
     Land                                                                     $  1,649         $  1,649
     Buildings and improvements                                                 16,567           16,224
- -------------------------------------------------------------------------------------------------------
                                                                                18,216           17,873

     Less accumulated depreciation                                                 795              375
- -------------------------------------------------------------------------------------------------------

Real estate investments, net                                                    17,421           17,498

Acquired real estate leases, net of accumulated amortization
     of $299 and $143, respectively                                                819              975
Acquired favorable real estate leases, net of accumulated amortization
     of $891 and $426, respectively                                              2,442            2,907
Cash and cash equivalents                                                        1,038            1,214
Cash-funded reserves                                                               967            1,037
Restricted cash                                                                    571              571
Step rent receivable                                                             1,061              954
Prepaid expenses and other assets                                                    6               14
- -------------------------------------------------------------------------------------------------------

     Total assets                                                             $ 24,325         $ 25,170
=======================================================================================================

Liabilities and Stockholders' Equity:

Liabilities:
Accounts payable and accrued expenses                                         $    281         $    240
Distributions payable                                                              542              536
- -------------------------------------------------------------------------------------------------------

     Total liabilities                                                             823              776
- -------------------------------------------------------------------------------------------------------

Commitments and Contingencies:                                                      --               --

Stockholders' Equity:
     Preferred Stock, $.01 par value, 297.5 shares
        authorized, issued and outstanding                                          --               --

     Common Stock, $.01 par value, 1 share
        authorized, issued and outstanding                                          --               --
     Additional paid-in capital                                                 27,277           27,277
     Retained earnings and distributions in excess of earnings                  (3,775)          (2,883)
- -------------------------------------------------------------------------------------------------------

     Total Stockholders' Equity                                                 23,502           24,394
- -------------------------------------------------------------------------------------------------------

     Total Liabilities and Stockholders' Equity                               $ 24,325         $ 25,170
=======================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-48
<PAGE>

                            FSP Royal Ridge Corp.
                          Statements of Operations

<TABLE>
<CAPTION>
                                                                            For the
                                                                           Years Ended
                                                                          December 31,
(in thousands, except shares and per share amounts)                    2004          2003
=============================================================================================

<S>                                                                   <C>          <C>
Revenues:
     Rental                                                           $3,064       $ 2,264
- ---------------------------------------------------------------------------------------------

       Total revenue                                                   3,064         2,264
- ---------------------------------------------------------------------------------------------

Expenses:

     Rental operating expenses                                           875           746
     Real estate taxes and insurance                                     324           255
     Depreciation and amortization                                       576           518
     General and administrative                                           66            --
     Interest                                                             --         1,731
- ---------------------------------------------------------------------------------------------

       Total expenses                                                  1,841         3,250
- ---------------------------------------------------------------------------------------------

Income (loss) before interest income                                   1,223          (986)

Interest income                                                           37            28
- ---------------------------------------------------------------------------------------------

Net income (loss) before distributions to common stockholder           1,260          (958)

Distributions paid to common stockholder                                  --            14
- ---------------------------------------------------------------------------------------------

Net income (loss) attributable to preferred stockholders              $1,260       $  (972)
=============================================================================================

Weighted average number of preferred shares outstanding,
     basic and diluted                                                 297.5         297.5
=============================================================================================

Net income (loss) per preferred share, basic and diluted              $4,235       $(3,267)
=============================================================================================
</TABLE>

                              See accompanying notes to financial statements.


                                      F-49
<PAGE>

                              FSP Royal Ridge Corp.
                  Statements of Changes in Stockholders' Equity
                 For the Years Ended December 31, 2004 and 2003

<TABLE>
<CAPTION>
                                                                                       Retained Earnings
                                                                         Additional    and Distributions         Total
                                               Preferred      Common      Paid-in         in Excess of       Stockholders'
        (in thousands, except shares)            Stock         Stock      Capital           Earnings            Equity
==========================================================================================================================

<S>                                            <C>            <C>          <C>              <C>               <C>
Private offering of 297.5 shares, net          $  --          $  --        $27,277          $    --           $ 27,277

Distributions                                     --             --             --           (1,925)            (1,925)

Net loss                                          --             --             --             (958)              (958)
- --------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2003                        --             --         27,277           (2,883)            24,394

Distributions                                     --             --             --           (2,152)            (2,152)

Net income                                        --             --             --            1,260              1,260
- --------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2004                     $  --          $  --        $27,277          $(3,775)          $ 23,502
==========================================================================================================================
</TABLE>

                 See accompanying notes to financial statements.


                                      F-50
<PAGE>

                               FSP Royal Ridge Corp.
                             Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                            For the
                                                                                           Years Ended
                                                                                          December 31,
                                                                                     -----------------------
(in thousands)                                                                         2004          2003
============================================================================================================
<S>                                                                                  <C>           <C>
Cash flows from operating activities:
     Net Income (loss)                                                               $ 1,260       $   (958)
     Adjustments to reconcile net income (loss) to net cash provided by
         (used for) operating activities:
              Depreciation and amortization                                              576            518
              Amortization of favorable leases                                           465            426
          Changes in operating assets and liabilities:
              Cash-funded reserves                                                        70         (1,037)
              Restricted cash                                                             --           (571)
              Step rent receivable                                                      (107)          (954)
              Prepaid expenses and other assets                                            8            (14)
              Accounts payable and accrued expenses                                       41            240
- -----------------------------------------------------------------------------------------------------------
                       Net cash provided by (used for) operating activities            2,313         (2,350)
- -----------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
     Purchase of real estate assets                                                     (343)       (17,873)
     Purchase of acquired real estate leases                                              --         (1,118)
     Purchase of acquired favorable real estate leases                                    --         (3,333)
- -----------------------------------------------------------------------------------------------------------

                       Net cash used for investing activities                           (343)       (22,324)
- -----------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Proceeds from sale of company stock                                                  --         29,760
     Syndication costs                                                                    --         (2,483)
     Distributions to stockholders                                                    (2,146)        (1,389)
     Proceeds from long-term debt                                                         --         24,250
     Principal payments on long-term debt                                                 --        (24,250)
- -----------------------------------------------------------------------------------------------------------

                       Net cash (used for) provided by financing activities           (2,146)        25,888
- -----------------------------------------------------------------------------------------------------------

Net (decrease) increase in cash and cash equivalents                                    (176)         1,214

Cash and cash equivalents, beginning of year                                           1,214             --
- -----------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of year                                               $ 1,038       $  1,214
===========================================================================================================

Supplemental disclosure of cash flow information:

Cash paid for:
     Interest                                                                        $    --       $  1,731

Disclosure of non-cash financing activities:
     Distributions declared but not paid                                             $   542       $    536
</TABLE>

                 See accompanying notes to financial statements.


                                      F-51
<PAGE>

                              FSP Royal Ridge Corp.
                          Notes to Financial Statements

1.    Organization

FSP Royal Ridge Corp. (the "Company") was organized on December 20, 2002 as a
Corporation under the laws of the State of Delaware to purchase, own and operate
a six-story Class "A" suburban office building containing approximately 161,366
rental square feet of space located on approximately 13.2 acres of land in
Alpharetta, GA (the "Property). The Company acquired the Property on January 30,
2003.

On August 13, 2004, the Company entered into a merger agreement with its common
shareholder, Franklin Street Properties Corp ("FSP"). On February 25, 2005, FSP
filed a Consent Solicitation/Prospectus with the United States Securities and
Exchange Commission indicating its intent to merge the Company and three
additional REITs with and into four of FSP's wholly-owned subsidiaries. The
merger requires the approval of the shareholders of the Company as well as the
shareholders of the three additional REITs. If approved, FSP will issue
approximately 1,801,598 shares of its common stock in exchange for a 100%
ownership interest in the Company. The Company has incurred $66,000 of costs
through December 31, 2004 related to the merger and these costs have been
included as an expense in the Statements of Operations.

2.    Summary of Significant Accounting Policies

BASIS OF PRESENTATION

The results of operations from inception to December 31, 2003 are not
necessarily indicative of the results to be obtained for other interim periods
or for the full fiscal year.

ESTIMATES AND ASSUMPTIONS

The Company prepares its financial statements and related notes in conformity
with accounting principles generally accepted in the United States of America
("GAAP"). These principles require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

RECLASSIFICATIONS

Certain information in the 2003 financial statements have been reclassified to
conform to the 2004 presentation.

REAL ESTATE AND DEPRECIATION

Real estate assets are stated at the lower of cost or fair value, as
appropriate, less accumulated depreciation.

Costs related to property acquisition and improvements are capitalized. Typical
capital items include new roofs, site improvements, various exterior building
improvements and major interior renovations. Funding for capital improvements
typically is provided by cash set aside at the time the Property was purchased.

Routine replacements and ordinary maintenance and repairs that do not extend the
life of the asset are expensed as incurred. Typical expense items include
interior painting, landscaping and minor carpet replacements. Funding for
repairs and maintenance items typically is provided by cash flows from operating
activities.

Depreciation is computed using the straight-line method over the assets'
estimated useful lives as follows:

      Category                                 Years
      --------                                 -----
      Building - Commercial                      39
      Building Improvements                    15-39
      Furniture & Equipment                     5-7


                                      F-52
<PAGE>

                              FSP Royal Ridge Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REAL ESTATE AND DEPRECIATION (continued)

The following schedule reconciles the cost of the Property as shown in the
Offering Memorandum as to the amounts shown on the Company's Balance Sheet:

      (in thousands)
      --------------

      Price per Offering Memorandum                              $    24,250
      Plus:  Acquisition fees                                            149
      Plus:  Other acquisition costs                                     111
      Less : Closing credit for tenant improvements                   (3,251)
      Less : Closing credit for free rent                             (1,270)
      -------------------------------------------------------------------------
        Total Acquisition Costs                                  $    19,989
      =========================================================================

These costs were recorded in the Company's Balance Sheets as follows:

      Land                                                       $     1,649
      Building                                                        13,889
      Acquired real estate leases                                      1,118
      Acquired favorable real estate leases                            3,333
      -----------------------------------------------------------------------
        Total recorded on Balance Sheets                         $    19,989
      =======================================================================

The Company evaluates its assets used in operations by identifying indicators of
impairment and by comparing the sum of the estimated undiscounted future cash
flows for each asset to the asset's carrying value. When indicators of
impairment are present and the sum of the undiscounted future cash flows is less
than the carrying value of such asset, an impairment loss is recorded equal to
the difference between the asset's current carrying value and its fair value
based on discounting its estimated future cash flows. At December 31, 2004 and
2003, no such indicators of impairment were identified.

Depreciation expense of $420,000 and $375,000 is included in Depreciation and
Amortization in the Company's Statements of Operations for the years ended
December 31, 2004 and 2003, respectively.

ACQUIRED REAL ESTATE LEASES

Acquired real estate leases represent the estimated value of legal and leasing
costs related to acquired leases that were included in the purchase price when
the Company acquired the property. Under Statement of Financial Accounting
Standards ("SFAS") No. 141 "Business Combinations", which was approved by the
Financial Accounting Standards Board ("FASB") in June 2001, the Company is
required to segregate these costs from its investment in real estate. The
Company subsequently amortizes these costs on a straight-line basis over the
remaining life of the related leases. Amortization expense of $156,000 and
$143,000 are included in Depreciation and Amortization in the Company's
Statement of Operations for the periods ended December 31, 2004 and 2003,
respectively.

Acquired real estate lease costs included in the purchase price of the Property
were $1,118,000 and are being amortized over the weighted-average period of
seven years in respect of the leases assumed. Detail of the acquired real estate
leases as of December 31,:

      (in thousands)                          2004              2003
      --------------                     ---------------    --------------
      Cost                                 $  1,118           $  1,118
      Accumulated amortization                 (299)              (143)
                                         ---------------    --------------
      Book value                           $    819           $    975
                                         ===============    ==============


                                      F-53
<PAGE>

                              FSP Royal Ridge Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

ACQUIRED REAL ESTATE LEASES (continued)

The estimated annual amortization expense for the five years succeeding December
31, 2004 are as follows:

      (in thousands)
      --------------
      2005                               $   156
      2006                               $   156
      2007                               $   156
      2008                               $   156
      2009                               $   156
      Thereafter                         $    39

ACQUIRED FAVORABLE REAL ESTATE LEASES

Acquired favorable real estate leases represent the value related to the leases
when the lease payments due under a tenant's lease exceed the market rate of the
lease at the date the Property was acquired. Under SFAS 141 the Company is
required to report this value separately from its investment in real estate. The
Company subsequently amortizes this amount on a straight-line basis over the
remaining life of the related lease. Amortization of $465,000 and $426,000 is
shown as a reduction of rental income in the Company's Statements of Operations
for the periods ended December 31, 2004 and 2003 respectively.

The acquired favorable real estate leases included in the purchase price of the
property was $3,333,000 and is being amortized over a period of seven years with
respect of the leases assumed. Details of the acquired favorable real estate
leases as of December 31 are as follows:

                                           2004             2003
                                       ------------     -----------
      Cost                             $   3,333        $   3,333
      Accumulated Amortization              (891)            (426)
                                       ------------     -----------
      Book Value                       $   2,442        $   2,907
                                       ============     ===========

The estimated annual amortization for the five years succeeding December 31,
2004 are as follows:

      2005                           $       465
      2006                           $       465
      2007                           $       465
      2008                           $       465
      2009                           $       465
      Thereafter                     $       117

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments with an initial
maturity of three months or less to be cash equivalents.

CASH-FUNDED RESERVES

The Company has set aside funds in anticipation of future capital needs of the
Property. These funds typically are used for the payment of real estate assets
and deferred leasing commissions; however, there is no legal restriction on
their use and they may be used for any Company purpose.

RESTRICTED CASH

Restricted cash represents funds held in escrow for tenant improvements.


                                      F-54
<PAGE>

                              FSP Royal Ridge Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

MARKETABLE SECURITIES

The Company accounts for investments in debt securities under the provisions of
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". The Company typically classifies its debt securities as
available-for-sale.

There were no investments in marketable securities at December 31, 2004 and
2003.

CONCENTRATION OF CREDIT RISKS

Cash, cash equivalents and short-term investments are financial instruments that
potentially subject the Company to a concentration of credit risk. The Company
maintains its cash balances and short-term investments principally in one bank
which the Company believes to be creditworthy. The Company periodically assesses
the financial condition of the bank and believes that the risk of loss is
minimal. Cash balances held with various financial institutions frequently
exceed the insurance limit of $100,000 provided by the Federal Deposit Insurance
Corporation.

For the periods ended December 31, 2004 and 2003 rental income was derived from
various tenants. As such, future receipts are dependent upon the financial
strength of the lessees and their ability to perform under the lease agreements.

The following tenants represent greater than 10% of total revenue:

                                                             2004        2003
                                                             ----        ----
      Axis U.S Insurance                                     52%         52%
      Hagemeyer North America, Inc.                          38%         38%

FINANCIAL INSTRUMENTS

The Company estimates that the carrying value of cash and cash equivalents,
cash-funded reserves and restricted cash approximate their fair values based on
their short-term maturity and prevailing interest rates.

STEP RENT RECEIVABLE

Certain leases provide for fixed increases over the life of the lease. Rental
revenue is recognized on the straight-line basis over the related lease term;
however, billings by the Company are based on required minimum rentals in
accordance with the lease agreements. Step rent receivable, which is the
cumulative revenue recognized in excess of amounts billed by the Company, is $
1,061,000 and $954,000 at December 31, 2004 and 2003, respectively.

SYNDICATION FEES

Syndication fees are selling commissions and other costs associated with the
initial offering of the Company's preferred shares. Such costs, in the amount of
$ 2,483,000 have been reported as a reduction in Stockholders' Equity in the
Company's Balance Sheets.


                                      F-55
<PAGE>

                              FSP Royal Ridge Corp.
                          Notes to Financial Statements

2.    Summary of Significant Accounting Policies (continued)

REVENUE RECOGNITION

The Company has retained substantially all of the risks and benefits of
ownership of the Company's commercial properties and accounts for its leases as
operating leases. Rental income from leases, which may include rent concession
(including free rent and tenant improvement allowances) and scheduled increases
in rental rates during the lease term, is recognized on a straight-line basis.
The Company does not have any percentage rent arrangements with its commercial
property tenants. Reimbursable costs are included in rental income in the period
earned. A schedule showing the components of rental revenue is shown below.

                                                Year Ended       Period Ended
                                               December 31,      December 31,
      (in thousands)                               2004              2003
      ==========================================================================
      Income from leases                        $   2,204         $   1,152
      Straight-line rent adjustment                   107               954
      Reimbursable expenses                         1,218               584
      Amortization of favorable leases               (465)              (426)
      --------------------------------------------------------------------------
           Total                                $   3,064         $   2,264
      ==========================================================================

INTEREST INCOME

Interest income is recognized when the related services are performed and the
earnings process is complete.

INCOME TAXES

The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under the Internal Revenue Code of 1986, as amended. As a REIT, the Company
generally is entitled to a tax deduction for dividends paid to its shareholders,
thereby effectively subjecting the distributed net income of the Company to
taxation at the shareholder level only. The Company must comply with a variety
of restrictions to maintain its status as a REIT. These restrictions include the
type of income it can earn, the type of assets it can hold, the number of
shareholders it can have and the concentration of their ownership, and the
amount of the Company's taxable income that must be distributed annually.

NET INCOME PER SHARE

The Company follows SFAS No. 128 "Earnings per Share", which specifies the
computation, presentation and disclosure requirements for the Company's net
income per share. Basic net income per preferred share is computed by dividing
net income by the weighted average number of preferred shares outstanding during
the period. Diluted net income per preferred share reflects the potential
dilution that could occur if securities or other contracts to issue shares were
exercised or converted into shares. There were no potential dilutive shares
outstanding at December 31, 2004 and 2003. Subsequent to the completion of the
offering of preferred shares, the holders of common stock are not entitled to
share in any income nor in any related dividend.

3.    Income Taxes

The Company files as a REIT under Sections 856-860 of the Internal Revenue Code
of 1986, as amended. In order to qualify as a REIT, the Company is required to
distribute at least 90% of its taxable income to shareholders and to meet
certain asset and income tests as well as certain other requirements. The
Company will generally not be liable for federal income taxes, provided it
satisfies these requirements. Even as a qualified REIT, the Company is subject
to certain state and local taxes on its income and property.

For the period ended December 31, 2003, the Company incurred a net operating
loss for income tax purposes of approximately $1,349,000 that can be carried
forward until it expires in the year 2023.

At December 31, 2004, the Company's net tax basis of its real estate assets was
$21,635,000.


                                      F-56
<PAGE>

                              FSP Royal Ridge Corp.
                          Notes to Financial Statements

3.    Income Taxes (continued)

The following schedule reconciles net income (loss) to taxable income subject to
dividend requirements:

<TABLE>
<CAPTION>
                                                                     Year Ended       Period Ended
                                                                    December 31,      December 31,
      (in thousands)                                                    2004              2003
      ============================================================================================

<S>                                                                  <C>               <C>
      Net income (loss)                                              $   1,260         $    (958)

         Add:  Book depreciation and amortization                          576               518
               Amortization of favorable real estate leases                465               426
               Deferred rent                                               (99)               99
         Less: Tax depreciation and amortization                          (517)             (480)
               Straight-line rents                                        (107)             (954)
      --------------------------------------------------------------------------------------------
      Taxable income (loss)(1)                                       $   1,578         $  (1,349)
      ============================================================================================
</TABLE>

      (1)   A tax loss is not subject to a dividend requirement.

The following schedule reconciles cash dividends paid to the dividends paid
deduction:

<TABLE>
<CAPTION>
                                                                   Year Ended
                                                December 31, 2004                December 31, 2003
                                          ------------------------------   ------------------------------
                                                        Per        Per                    Per         Per
                                                     Preferred   Common                Preferred    Common
(in thousands, except per share data)      Total       Share      Share       Total      Share       Share
- ------------------------------------------------------------------------------------------------------------
<S>                                       <C>         <C>         <C>       <C>         <C>        <C>
Cash distributions paid                   $ 2,146     $ 7,213     $  --     $ 1,389     $ 4,621    $ 14,232
   Less: Return of captial                   (568)     (1,909)       --      (1,389)     (4,621)    (14,232)
- ------------------------------------------------------------------------------------------------------------
Dividends paid deduction                  $ 1,578     $ 5,304     $  --     $    --     $    --    $     --
- ------------------------------------------------------------------------------------------------------------
</TABLE>

4.    Capital Stock

PREFERRED STOCK

Generally, each holder of Shares of Preferred Stock is entitled to receive
ratably all dividends, if any, declared by the Board of Directors out of funds
legally available. The right to receive dividends shall be non-cumulative, and
no right to dividends shall accrue by reason of the fact that no dividend has
been declared in any prior year. Each holder of Shares will be entitled to
receive, to the extent that funds are available therefore, $100,000 per Share,
before any payment to the holder of Common Stock, out of distributions to
stockholders upon liquidation, dissolution or the winding up of the Company; the
balance of any such funds available for distribution will be distributed among
the holders of Shares and the holder of Common Stock, pro rata based on the
number of shares held by each; provided, however, that for these purposes, one
share of Common Stock will be deemed to equal one-tenth of a share of Preferred
Stock.

In addition to certain voting rights provided in the corporate agreements, the
holder of Shares, acting by consent of at least 51%, shall have the further
right to approve or disapprove a proposed sale of the Property, the merger of
the Company with any other entity and amendments to the corporate charter. A
vote of the holders of 66.67% of the Shares is required for the issue of any
additional shares of capital stock. Holders of Shares have no redemption or
conversion rights.

COMMON STOCK

Franklin Street Properties Corp. ("FSP"), is the sole holder of the Company's
Common Stock. FSP has the right, as one class together with the holders of
Preferred Stock, to vote to elect the directors of the Company and to vote on
all matters except those voted by the holders of Shares of Preferred Stock.
Subsequent to the completion of the offering of the preferred shares the holders
of common shares are not entitled to share in any earnings nor any related
dividend.


                                      F-57
<PAGE>

                              FSP Royal Ridge Corp.
                          Notes to Financial Statements

5.    Related Party Transactions

The Company executed a management agreement with FSP Property Management LLC, an
affiliate of FSP, that provides for a management fee equal to 1% of collected
revenues and is cancelable with 30 days notice by either party. For the period
ended December 31, 2004 and 2003, fees incurred under the agreement were $36,000
and $18,000 respectively.

An acquisition fee of $149,000 and other costs of $111,000 were paid in 2003 to
an affiliate of the Common Shareholder. Such fees were included in the cost of
the real estate.

Syndication fees of $2,380,000 were paid in 2003 to an affiliate of the Common
Shareholder for services related to syndication of the Company's preferred
stock.

During 2003, the Company borrowed and repaid in full a note payable to FSP,
principal of $24,250,000, with interest equal to the Citizens Bank base rate.
Interest paid to FSP was $20,000. The average interest rate during the time the
loan was outstanding was 4.50%.

A commitment fee of $1,711,000 was paid in 2003 to FSP for obtaining the first
mortgage loan. Such amount is included in interest expense on the Statements of
Operations.

The Company paid a distribution of $14,000 in 2003 to the common shareholder
relating to the operations of the Company prior to the completion of the
offering of preferred shares.

6.    Commitments and Contingencies

The Company, as lessor, has minimum future rentals due under non-cancelable
operating leases as follows:

                                        Year Ending
      (in thousands)                    December 31,          Amount
                                        ------------       ---------
                                            2005            $  2,040
                                            2006               2,071
                                            2007               2,123
                                            2008               2,176
                                            2009               2,230
                                         Thereafter            6,748
                                                            ---------
                                                            $ 17,388
                                                            =========

In addition, the lessees are liable for real estate taxes and certain operating
expenses of the Property.

Upon acquiring the commercial rental property in January 2003, the Company was
assigned the lease agreements between the seller of the Property and the
existing tenants. The original lease periods range from two to ten years with
renewal options.


                                      F-58
<PAGE>

                                  SCHEDULE III

                              FSP Royal Ridge Corp.
                    Real Estate and Accumulated Depreciation
                                December 31, 2004

<TABLE>
<CAPTION>
                                                                  Initial Cost
                                                         -------------------------------
                                                                                Costs
                                                                             Capitalized
                                                                 Buildings   (Disposals)
                                                                Improvements Subsequent
                                                                    and          to
Description                           Encumbrances (1)   Land    Equipment   Acquisition
- -----------                           ----------------   ----    ---------   -----------

<S>                                     <C>              <C>      <C>          <C>

   Royal Ridge, Alpharetta, GA                          $1,649    $16,224      $343

<CAPTION>
                                                           Historical Costs
                                       ----------------------------------------------------------


                                               Buildings                             Total Costs,
                                              Improvements                              Net of     Depreciable
                                                  and                  Accumulated   Accumulated       Life      Date of
Description                            Land    Equipment   Total (2)  Depreciation   Depreciation     Years     Acquisition
- -----------                            ----    ---------   ---------  ------------   ------------     -----     -----------
                                          (in thousands)
<S>                                  <C>        <C>        <C>         <C>            <C>              <C>        <C>

   Royal Ridge, Alpharetta, GA       $1,649     $16,567    $18,216     $795           $17,421          39         2003
</TABLE>

(1)   There are no encumbrances on the above properties.
(2)   The aggregate cost for Federal Income Tax purposes is $22,667


                                      F-59
<PAGE>

                              FSP Royal Ridge Corp.

The following table summarizes the changes in the Company's real estate
investments and accumulated depreciation:

                                                     December 31,   December 31,
                                                    ----------------------------
(in thousands)                                           2004           2003
================================================================================

Real estate investments, at cost:
   Balance, beginning of period                        $17,873         $    --
       Acquisitions                                         --          17,873
       Improvements                                        343              --
       Dispositions                                         --              --
- --------------------------------------------------------------------------------

   Balance, end of period                              $18,216         $17,873
================================================================================

Accumulated depreciation:
    Balance, beginning of period                       $   375         $    --
        Depreciation                                       420             375
        Dispositions                                        --              --
- --------------------------------------------------------------------------------

    Balance, end of period                             $   795         $   375
================================================================================


                                      F-60
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>5
<FILENAME>ex99-2.txt
<TEXT>

                                                                    Exhibit 99.2


            SELECTED PRO FORMA COMBINING CONSOLIDATED FINANCIAL DATA

      The following unaudited pro forma financial information gives effect to
the acquisition of the Target REITs by four wholly-owned acquisition
subsidiaries of FSP Corp., which was consummated on April 30, 2005.

      The unaudited pro forma financial information has been prepared based upon
certain pro forma adjustments to the historical consolidated financial
statements of FSP Corp. and the Target REITs. The pro forma consolidated balance
sheets have been presented as if the mergers occurred as of December 31, 2004.
The pro forma consolidated statements of income for the year ended December 31,
2004 and the consolidated pro forma statements of cash flow for the year ended
December 31, 2004 are presented as if the mergers occurred at the beginning of
the period presented.

      Certain balances in the Target REIT financial statements have been
reclassified to conform to FSP Corp.'s presentation.

      The unaudited pro forma financial information has been derived from the
financial statements of FSP Corp. and the Target REITs and should be read in
conjunction with those financial statements and the accompanying notes and
"Management's Discussion and Analysis of Financial Information and Results of
Operations," all of which are included in this Current Report on Form 8-K, in
FSP Corp.'s Annual Report on Form 10-K for the year ended December 31, 2004, or
in FSP Corp.'s Registration Statement on Form S-4 (No. 333-118748).

      The unaudited pro forma consolidated financial statement data are not
necessarily indicative of what the combined company's actual financial position
or results of operations would have been as of the date or for the period
indicated, nor do they purport to represent the combined company's financial
position or results of operations as of or for any future period.


                                        1
<PAGE>

                        Franklin Street Properties Corp.
                 Combining Consolidated Pro Forma Balance Sheets
                                December 31, 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                   Historical      Historical        Pro Forma
(in thousands)                                     FSP Corp.     Target REITs(g)     Adjustments        Pro Forma
=================================================================================================================

<S>                                               <C>               <C>             <C>                 <C>
Assets:

Real estate assets, net                           $ 439,755         $ 122,516       $ 14,172(c)(d)      $ 576,443
Acquired favorable leases, net                           --             8,170          1,760(d)             9,930
Acquired lease origination costs, net                 6,483             3,603            519(d)            10,605
Investment in non-consolidated REITs                  4,270                --             --                4,270
Assets held for syndication                          59,246                --             --               59,246
Cash and cash equivalents                            52,752            15,895           (553)(c)           67,939
                                                                                        (155)(b)
Restricted cash                                       1,033               706             --                1,739
Tenant rents receivable, net                            769               143             --                  912
Straight line rents receivable, net                   4,947             2,636         (2,636)(j)            4,947
Prepaid expenses                                        901                94             --                  995
Other assets                                          1,097                --           (447)(c)              650
Deferred lease origination costs                      1,484               363           (363)(l)            1,484
Office computers and equipment, net                     374                --             --                  374
- -----------------------------------------------------------------------------------------------------------------

Total assets                                      $ 573,111         $ 154,126       $ 12,297            $ 739,534
=================================================================================================================

Liabilities and stockholders' equity:

Liabilities:
Notes payable                                     $  59,439         $      --       $     --            $  59,439
Accounts payable and accrued expenses                 8,846             3,990             --               12,836
Accrued compensation                                    705                --             --                  705
Distributions payable                                    --             4,035          1,859(i)             5,894
Acquired unfavorable leases                              --                --            665(d)               665
Tenant security deposits                              1,033               135             --                1,168
- -----------------------------------------------------------------------------------------------------------------

Total liabilities                                    70,023             8,160          2,524               80,707
- -----------------------------------------------------------------------------------------------------------------

Stockholders' equity:

Preferred stock                                          --                --             --                   --
Common stock                                              5                --           1(f)                    6
Additional paid in capital                          512,813           167,412        (11,674)(f)          668,551
Treasury stock                                          (10)               --             --                  (10)
Retained earnings (distributions in excess
   of earnings), net                                 (9,720)          (21,446)        21,446(k)            (9,720)
- -----------------------------------------------------------------------------------------------------------------

Total stockholders' equity                          503,088           145,966          9,773              658,827
- -----------------------------------------------------------------------------------------------------------------

Total liabilities and stockholders' equity        $ 573,111         $ 154,126       $ 12,297            $ 739,534
=================================================================================================================
</TABLE>

See accompanying notes to combining consolidated pro forma financial statements.


                                       2
<PAGE>

                        Franklin Street Properties Corp.
              Combining Consolidated Pro Forma Statements of Income
                               For the Year Ended
                                December 31, 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                        Historical       Historical        Pro Forma
(in thousands, except per share amounts)                FSP Corp.      Target REITs (h)   Adjustments        Pro Forma
=======================================================================================================================
<S>                                                      <C>               <C>            <C>                 <C>
Revenue:
     Rental income                                       $  71,782         $22,239        $   (998)(d)        $  93,245
                                                                                               222(d)
Related party revenue:
     Syndication fees                                       13,579              --              --               13,579
     Transaction fees                                       14,093              --              --               14,093
     Management fees and interest from loans                   581              --            (239)(e)              342
     Other                                                      17              --              --                   17
- -----------------------------------------------------------------------------------------------------------------------

     Total revenue                                         100,052          22,239          (1,015)             121,276
=======================================================================================================================

Expenses:
     Rental operating expenses                              14,809           4,941            (239)(e)           19,511
     Real estate taxes and insurance                         9,479           2,392              --               11,871
     Depreciation and amortization                          13,592           3,863             363(d)            18,058
                                                                                               240(d)
     Selling, general and administrative                     5,686             352             155(b)             6,193
     Commissions                                             6,959              --              --                6,959
     Interest                                                1,527              --              --                1,527
- -----------------------------------------------------------------------------------------------------------------------

     Total expenses                                         52,052          11,548             519               64,119
=======================================================================================================================

Income (loss) before interest, taxes and                    48,000          10,691          (1,534)              57,157
   equity in earnings of non-consolidated REITs:
     Interest income                                           868             277              --                1,145
     Equity in earnings of non-consolidated REITs              620              --              --                  620
     Taxes on income (a)                                    (1,725)             --              --               (1,725)
- -----------------------------------------------------------------------------------------------------------------------

Net income                                                  47,763          10,968          (1,534)              57,197
=======================================================================================================================

Weighted average shares outstanding,
   basic and diluted                                        49,628              --          10,895(f)            60,523
=======================================================================================================================

Net income per share basic and diluted                   $    0.96         $    --        $     --            $    0.95
=======================================================================================================================
</TABLE>

See accompanying notes to combining consolidated pro forma financial statements.


                                       3
<PAGE>

                        Franklin Street Properties Corp.
            Combining Consolidated Pro Forma Statements of Cash Flows
                               For the Year Ended
                                December 31, 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                       Historical      Historical        Pro Forma
(in thousands)                                                         FSP Corp.     Target REITs (h)   Adjustments       Pro Forma
====================================================================================================================================

<S>                                                                     <C>              <C>            <C>               <C>
Cash flows from operating activities:
   Net income                                                           $ 47,763         $ 10,968       $  (1,534)        $  57,197
   Adjustments to reconcile net income to net cash provided by
     operating activities:
      Depreciation and amortization expense                               13,006            3,863             603(d)         17,472
      Amortization of above/below market leases, net                         235            2,578             776(d)          3,589
      Sponsored REIT income during consolidation                            (852)              --              --              (852)
      Equity in earnings from non-consolidated REITs                        (620)              --              --              (620)
      Distributions from non-consolidated REITs                            1,582               --              --             1,582
      Increase to bad debt reserves                                          195               --              --               195
      Shares issued as compensation                                          161               --              --               161
   Changes in operating assets and liabilities:
      Restricted cash                                                        (51)              15              --               (36)
      Tenant rent receivables, net                                           (83)             (66)             --              (149)
      Straight-line rents, net                                              (860)            (590)             --            (1,450)
      Prepaid expenses and other assets, net                              (1,192)               1             447(c)           (744)
      Accounts payable and accrued expenses                                3,816             (183)             --             3,633
      Accrued compensation                                                  (840)              --              --              (840)
      Tenant security deposits                                                51              (15)             --                36
   Payment of deferred leasing commissions                                  (582)            (382)             --              (964)
- -----------------------------------------------------------------------------------------------------------------------------------

        Net cash provided by operating activities                         61,729           16,189             292            78,210
- -----------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
      Purchase of real estate assets                                      (1,641)            (926)         (1,000)(c)        (3,567)
      Investment in non-consolidated REITs                                (4,270)              --              --            (4,270)
      Investment in assets held for syndication                          (55,490)              --              --           (55,490)
- -----------------------------------------------------------------------------------------------------------------------------------

      Net cash used for investing activities                             (61,401)            (926)         (1,000)          (63,327)
- -----------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
      Distributions to stockholders                                      (61,536)         (16,245)             --           (77,781)
      Purchase of treasury stock                                            (155)              --              --              (155)
      Proceeds from long-term debt                                        59,439               --              --            59,439
      Principal payments on long-term debt                                (4,117)              --              --            (4,117)
- -----------------------------------------------------------------------------------------------------------------------------------

      Net cash used for financing activities                              (6,369)         (16,245)             --           (22,614)
- -----------------------------------------------------------------------------------------------------------------------------------

Net decrease in cash and cash equivalents                                 (6,041)            (982)           (708)           (7,731)

Cash and cash equivalents, beginning of period                            58,793           16,877              --            75,670
- -----------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                $ 52,752         $ 15,895       $    (708)        $  67,939
===================================================================================================================================

Supplemental disclosure of cash flow information:
   Cash paid for:
      Interest                                                          $  1,503         $     --       $      --         $   1,503
      Income taxes                                                      $  1,665         $     --       $      --         $   1,665

   Non-cash investing and financing activities:
      Distributions declared but not paid                               $     --         $  4,035       $   1,859(i)      $   5,894
      Assets acquired through issuance of common stock
         in merger transactions, net                                    $     --         $     --       $ 149,075         $ 149,075
</TABLE>

See accompanying notes to combining consolidated pro forma financial statements.


                                       4
<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO COMBINING CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

BASIS OF PRESENTATION

      On April 30, 2005, each of four wholly-owned subsidiaries of FSP Corp.
acquired a Target REIT by merger. The following unaudited pro forma condensed
consolidated financial statement presentation has been prepared based upon
certain pro forma adjustments to the historical consolidated financial
statements of FSP Corp. The pro forma balance sheets are presented as if the
mergers occurred as of December 31, 2004. The pro forma statements of income and
the pro forma statements of cash flow are presented as if the mergers occurred
as of the beginning of the periods presented.

      The mergers will be treated as a purchase of assets and each Target REIT's
assets and liabilities will be recorded on FSP Corp.'s books at their fair value
as of the effective date of the mergers, which was April 30, 2005. The value
ascribed to the net assets of the target REITs is estimated to be $156,739,000,
which includes real estate assets of $149,075,000 at their appraised values,
cash of $6,664,000 and capitalized merger costs of $1,000,000. Other assets, net
of liabilities, are expected to be immaterial. FSP Corp. will record the mergers
based upon the fair value of the assets acquired, not the value of the shares of
FSP Corp.'s common stock issued. The value allocated to the assets acquired in
the mergers is preliminary; the final value allocated to the assets acquired
is subject to change as additional information is obtained.

PRO FORMA ADJUSTMENTS

      Certain assumptions regarding the operations of FSP Corp. have been made
in connection with the preparation of the pro forma condensed consolidated
financial information. These assumptions are as follows:

      (a)   FSP Corp. and each of the Target REITs have elected to be, and are
            qualified as, a real estate investment trust for federal income tax
            purposes. Each entity has met the various required tests; therefore,
            no provision for federal or state income taxes has been reflected on
            real estate operations.

            FSP Corp. has subsidiaries which are not in the business of real
            estate operations. Those subsidiaries are taxable as real estate
            investment trust subsidiaries, or TRS, and are subject to income
            taxes at statutory tax rates. The taxes on income shown in the pro
            forma statements of income are the taxes on income of the TRS. There
            are no material items that would cause a deferred tax asset or a
            deferred tax liability.

      (b)   Costs of the mergers to the Target REITs are estimated at $507,000
            and are reflected as paid at December 31, 2004, and are recorded as
            an administrative expense. Costs of $352,000 were previously
            recorded as administrative expenses in 2004 and an additional
            $155,000 is estimated to complete the merger.

      (c)   The costs of the mergers to FSP Corp. are estimated at $1,000,000
            and are reflected as paid as of December 31, 2004 and are
            capitalized to the assets acquired. Costs of $447,000 were
            previously recorded as other assets in 2004 and an additional
            $553,000 is estimated to complete the merger.

      (d)   The following schedule shows the merger consideration for the
            acquired properties and is reconciled to the purchase price of such
            properties (which is equal to the appraised value of such property
            plus capitalized merger costs attributable to such property).


                                       5
<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO COMBINING CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

<TABLE>
<CAPTION>
      (in thousands)                  Montague      Addison    Royal Ridge    Collins Crossing       Total
      --------------                  --------      -------    -----------    ----------------       -----
<S>                                   <C>          <C>          <C>              <C>               <C>
      Merger consideration            $ 33,400     $ 66,965     $ 31,888         $  60,588         $ 192,841
      Premium                          (11,365)     (10,788)      (4,846)          (10,103)          (37,102)
      Adjusted Cash Reserves            (2,035)      (1,677)        (967)           (1,985)           (6,664)
                                      ----------------------------------------------------------------------
      Purchase price of properties
          at appraised value            20,000       54,500       26,075            48,500           149,075
      Capitalized merger costs             182          349          164               305             1,000
                                      ----------------------------------------------------------------------
                                      $ 20,182     $ 54,849     $ 26,239         $  48,805         $ 150,075
                                      ======================================================================
</TABLE>

      The cost of the property held by each Target REIT (including capitalized
merger costs of $1,000,000) has been allocated to real estate assets, acquired
lease origination costs and acquired favorable or unfavorable leases. Acquired
lease origination costs represent the value associated with acquiring an
in-place lease (i.e. the market cost to execute a similar lease, including
leasing commission, legal, vacancy and other related costs). Acquired favorable
or unfavorable leases represents the value associated with a lease which has a
rental stream with above or below market rates. The value assigned to buildings,
land and leases approximates their fair value.

      The following schedule shows the difference between historical costs of
the properties and their allocated purchase price. The purchase price of the
properties is determined based upon the fair value of the assets acquired.
Depreciation and amortization for the Target REITs is based on a preliminary
allocation of the purchase price to real estate investments and to the leases
acquired. The allocation is subject to change as additional information is
obtained. An increase in the value allocated to leases will result in an
increase in amortization. For each $1,000,000 increase in the value allocated to
leases, the related pro forma amortization will increase by approximately
$325,000 per year.


                                       6
<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO COMBINING CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

<TABLE>
                                                                                                       Adjustment to
                                                                                                      Depreciation and
                                                                                                        Amortization
                                                                                         Estimated        for the
                                             Historical     Allocated                      Life          Year ended
         (in thousands, except years)           Cost      Purchase Price   Difference     (years)    December 31, 2004
      ------------------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>           <C>              <C>           <C>
      Montague
      Land                                   $   10,500      $   9,776     $    (724)       N/A           $     --
      Building                                    9,871          6,310        (3,561)       39                 (91)
      Acquired favorable leases                   2,325          3,313           988         2                 494
      Acquired lease origination costs              215            783           568         2                 284
                                             ----------      ---------     ---------                      --------
               Total                         $   22,911      $  20,182     $  (2,729)                     $    687
                                             ==========      =========     =========                      ========

      Addison Circle
      Land                                   $    4,365      $   4,874     $     509        N/A           $     --
      Building                                   43,713         47,529         3,816        39                  98
      Acquired favorable leases                       -          2,235         2,235         3                 745
      Acquired unfavorable leases                     -           (665)         (665)        3                (222)
      Acquired lease origination costs            1,069            876          (193)        3                 (64)
                                             ----------      ---------     ---------                      --------
               Total                         $   49,147      $  54,849     $   5,702                      $    557
                                             ==========      =========     =========                      ========

      Royal Ridge
      Land                                   $    1,649      $   2,160     $     511        N/A           $     --
      Building                                   15,772         21,680         5,908        39                 151
      Acquired favorable leases                   2,442          1,448          (994)        8                (124)
      Acquired lease origination costs              819            951           132         8                  17
                                             ----------      ---------     ---------                      --------
               Total                         $   20,682      $  26,239     $   5,557                      $     44
                                             ==========      =========     =========                      ========
      `
      Collins Crossing
      Land                                   $    4,022      $   3,744     $    (278)       N/A           $     --
      Building                                   32,624         40,615         7,991        39                 205
      Acquired favorable leases                   3,403          2,934          (469)        4                (117)
      Acquired lease origination costs            1,500          1,512            12         4                   3
                                             ----------      ---------     ---------                      --------
               Total                         $   41,549      $  48,805     $   7,256                      $     91
                                             ==========      =========     =========                      ========

      Total:
      Land                                   $   20,536      $  20,554     $      18        N/A           $     --
      Building                                  101,980        116,134        14,154        39                 363
                                             ----------      ---------     ---------                      --------
      Real estate assets, net                   122,516        136,688        14,172

      Acquired favorable leases                   8,170          9,930         1,760        2-8                998
      Acquired unfavorable leases                     -           (665)         (665)        3                (222)
      Acquired lease origination costs            3,603          4,122           519        2-8                240
                                             ----------      ---------     ---------                      --------
      Total                                  $  134,289      $ 150,075     $  15,786                      $  1,379
                                             ==========      =========     =========                      ========
</TABLE>

      (e)   Management fees of $239,000 charged by FSP Corp. to the Target REITs
            have been eliminated from revenue and expenses.


                                       7
<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO COMBINING CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

      (f)   Approximately 10,894,994 shares of FSP common stock were issued in
            exchange for the 1,822.5 outstanding shares of Target REIT preferred
            stock in connection with the mergers. Stockholders' equity will be
            adjusted by the net difference between the assets and liabilities
            acquired in the merger. The following schedule shows a
            reconciliation detailing the adjustments to additional
            paid-in-capital.

<TABLE>
<CAPTION>
                                                            FSP           Target
             (in thousands)                                 Corp           REITs          Total
             --------------                             -------------------------------------------

<S>                                                       <C>            <C>            <C>
             Additional paid-in-capital:
             FSP Corp:
             Total excess of Allocated Purchase
                Price over Historical Cost                $15,786
             Less Estimated Merger Costs                   (1,000)
                                                        -----------
                                                           14,786                       $ 14,786
             Adjustment to record Par Value                    (1)                            (1)

             Target REITS:
             Adjustments for:
             Estimated merger costs                                      $   (155)          (155)
             Deferred leasing costs, net                                     (363)          (363)
             Straight-line rent receivables                                (2,636)        (2,636)
             Distribution payable                                          (1,859)        (1,859)
             Distributions in excess of earnings                          (21,446)       (21,446)

                                                        -------------------------------------------
                                                          $14,785        $(26,459)      $(11,674)
                                                        ===========================================
</TABLE>


                                       8
<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO COMBINING CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

      (g)   The following table combines the historical balance sheets of the
            Target REITs as of December 31, 2004.


<TABLE>
<CAPTION>
(in thousands)                                    Montague      Addison Circle     Royal Ridge   Collins Crossing      Total
- --------------                                  ------------    --------------    ------------   ----------------   ------------
<S>                                             <C>              <C>              <C>              <C>              <C>
Assets:
Land                                            $     10,500     $      4,365     $      1,649     $      4,022     $     20,536
Building                                              10,499           46,469           16,567           34,233          107,768
                                                ------------     ------------     ------------     ------------     ------------
Real estate investments, cost                         20,999           50,834           18,216           38,255          128,304
   Less accumulated depreciation                         628            2,756              795            1,609            5,788
                                                ------------     ------------     ------------     ------------     ------------
Real estate investments, net                          20,371           48,078           17,421           36,646          122,516

Acquired favorable leases, net                         2,325               --            2,442            3,403            8,170
Acquired lease origination costs, net                    215            1,069              819            1,500            3,603
Cash and equivalents                                   3,657            5,306            2,005            4,927           15,895
Restricted cash                                           --               20              571              115              706
Tenant rent receivable, net                               --               37               --              106              143
Step rent receivable, net                                462              503            1,061              610            2,636
Prepaid expenses                                          20               23                6               45               94
Deferred leasing commissions, net                         --              363               --               --              363
                                                ------------     ------------     ------------     ------------     ------------
      Total assets                              $     27,050     $     55,399     $     24,325     $     47,352     $    154,126
                                                ============     ============     ============     ============     ============

Liabilities and stockholders' Equity:
Accounts payable and accrued expenses           $        452     $      1,885     $        281     $      1,372     $      3,990
Distributions payable                                  1,020            1,289              542            1,184            4,035
Tenant security deposits                                  --               20               --              115              135
                                                ------------     ------------     ------------     ------------     ------------
      Total liabilities                                1,472            3,194              823            2,671            8,160
                                                ------------     ------------     ------------     ------------     ------------

Stockholders' equity
Preferred stock                                           --               --               --               --               --
Common stock                                              --               --               --               --               --
Additional paid in capital                            30,652           58,383           27,277           51,100          167,412
Retained deficit and distributions in excess
   of earnings                                        (5,074)          (6,178)          (3,775)          (6,419)         (21,446)
                                                ------------     ------------     ------------     ------------     ------------

Total stockholders' equity                            25,578           52,205           23,502           44,681          145,966
                                                ------------     ------------     ------------     ------------     ------------

Total liabilities & stockholders' equity        $     27,050     $     55,399     $     24,325     $     47,352     $    154,126
                                                ============     ============     ============     ============     ============
</TABLE>


                                       9
<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO COMBINING CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

      (h)   The following table combines the historical operations for the
            Target REITs for the year ended December 31, 2004.

<TABLE>
<CAPTION>
(in thousands)                          Montague     Addison Circle   Royal Ridge   Collins Crossing       Total
- --------------                        ------------   --------------   ------------  ----------------   ------------

<S>                                   <C>             <C>             <C>             <C>              <C>
Revenue:
Rental                                $      3,432    $      8,753    $      3,064    $      6,990     $     22,239
                                      ------------    ------------    ------------    ------------     ------------
Total revenue                                3,432           8,753           3,064           6,990           22,239
                                      ------------    ------------    ------------    ------------     ------------

Expenses:
Rental operating expenses                      284           1,940             875           1,842            4,941
Real estate taxes and insurance                255           1,040             324             773            2,392
Depreciation and amortization                  376           1,615             576           1,296            3,863
Selling general and administrative              63             114              66             109              352
                                      ------------    ------------    ------------    ------------     ------------
Total expenses                                 978           4,709           1,841           4,020           11,548
                                      ------------    ------------    ------------    ------------     ------------

Income before interest                       2,454           4,044           1,223           2,970           10,691
Interest income                                 61              94              37              85              277
                                      ------------    ------------    ------------    ------------     ------------
Net income                            $      2,515    $      4,138    $      1,260    $      3,055     $     10,968
                                      ============    ============    ============    ============     ============
</TABLE>

      (i)   FSP Corp. purchased the real estate assets and a stated amount of
            cash (the adjusted cash reserves) from each Target REIT in exchange
            for a fixed number of shares of FSP common stock. The final dividend
            to the shareholders of the Target REITs represents the estimated
            amount of cash in excess of the stated amount of cash and assuming
            settlement of certain current assets and liabilities as of the date
            of the pro forma balance sheet. The estimated final dividend as of
            the date of the pro forma balance sheet for the Target REITs is
            shown in the following table. The actual final dividend will be
            based upon the amount of cash in excess of the stated amount of cash
            and assuming settlement of certain current assets and liabilities as
            of the actual merger date.

             (in thousands)
             --------------
             Montague                     $   140
             Addison                          465
             Royal Ridge                      762
             Collins Crossing                 492
                                          -------
                 Total                    $ 1,859
                                          =======

      (j)   The cumulative unbilled straight-line rents of the Target REITs will
            be eliminated at acquisition.

      (k)   The cumulative deficit of the Target REITs will be eliminated at
            acquisition.

      (l)   The cumulative net deferred leasing costs of the Target REITs will
            be eliminated at acquisition.


                                       10
<PAGE>

                        FRANKLIN STREET PROPERTIES CORP.
         NOTES TO COMBINING CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
                                   (Unaudited)

      (m)   The following table combines the historical cash flows for the
            Target REITs for the year ended December 31, 2004.

<TABLE>
<CAPTION>
(in thousands)                                                    Montague     Addison      Royal     Collins Crossing    Total
==================================================================================================================================

<S>                                                                <C>         <C>         <C>            <C>             <C>
Cash flows from operating activities:
   Net income                                                      $ 2,515     $ 4,138     $ 1,260        $ 3,055         $ 10,968

   Adjustments to reconcile net income (loss) to net cash
     provided by (used for)operating activities:
       Depreciation and amortization expense                           376       1,615         576          1,296            3,863
       Amortization of favorable leases                              1,163          --         465            950            2,578
   Changes in operating assets and liabilities:
       Restricted cash                                                  --          15          --             --               15
       Tenant rent receivables                                          --          15          --            (81)             (66)
       Step rent receivable                                            (70)        (82)       (107)          (331)            (590)
       Prepaid expenses and other assets                                (6)          1           8             (2)               1
       Accounts payable and accrued expenses                            41        (170)         41            (95)            (183)
       Tenant security deposits                                         --         (15)         --             --              (15)
   Payment of deferred leasing commissions                              --        (382)         --             --             (382)
- ----------------------------------------------------------------------------------------------------------------------------------

        Net cash provided by operating activities                    4,019       5,135       2,243          4,792           16,189
- ----------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
      Purchase of real estate assets and related leases,
         office computers and furniture                                 --        (574)       (343)            (9)            (926)
- ----------------------------------------------------------------------------------------------------------------------------------

      Net cash used for investing activities                            --        (574)       (343)            (9)            (926)
- ----------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
      Distributions to stockholders                                 (3,956)     (5,221)     (2,146)        (4,922)         (16,245)
- ----------------------------------------------------------------------------------------------------------------------------------

      Net cash used for financing activities                        (3,956)     (5,221)     (2,146)        (4,922)         (16,245)
- ----------------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                    63        (660)       (246)          (139)            (982)
Cash and cash equivalents, beginning of period                       3,594       5,966       2,251          5,066           16,877
- ----------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                           $ 3,657     $ 5,306     $ 2,005        $ 4,927         $ 15,895
==================================================================================================================================

Supplemental disclosure of cash flow information:
   Disclosure of non-cash financing activites:
      Distributions declared but not paid                          $ 1,020     $ 1,289     $   542        $ 1,184         $  4,035
</TABLE>


                                       11
<PAGE>

                           COMPARATIVE PER SHARE DATA

The following tables present on a per share basis:

      (a)   Basic and diluted net income book value, and dividends declared for
            FSP Corp. and each of the Target REITs on a historical basis.

      (b)   Consolidated pro forma basic and diluted net income per share, book
            value per share and dividends per share for FSP Corp. This table
            shows the effect of the mergers from the perspective of an owner of
            one share of FSP common stock.

      (c)   Equivalent pro forma basic and diluted net income per share,
            equivalent pro forma book value per share and equivalent pro forma
            dividends per share for each of the Target REITs. This table shows
            the effect of the mergers from the perspective of an owner of one
            share of stock of a Target REIT. The consolidated pro forma data are
            multiplied by the number of shares of FSP common stock issuable in
            exchange for each share of target stock, also known as the exchange
            ratio, as shown in the following table:

                Target REIT                            Exchange Ratio
                -----------                            --------------
                Addison                                   5,948.67
                Collins Crossing                          6,167.63
                Montague                                  5,649.72
                Royal Ridge                               6,055.79

      The pro forma financial data and equivalent pro forma data are unaudited
and are not necessarily indicative of the operating results that would have been
achieved had the mergers occurred as of the beginning of the period and should
not be construed as representative of future operations.

      FSP Corp. calculates historical book value per share by dividing
stockholders' equity by the number of shares of common stock (or preferred
stock, in the case of the Target REITs) outstanding at the end of each period.

      FSP Corp. calculates consolidated pro forma net income per share data for
FSP Corp. as if the mergers occurred on January 1, 2004 and resulted in weighted
average shares of 60,523,000 for the year ended December 31, 2004.

      FSP Corp. calculates consolidated pro forma book value per share data for
FSP Corp. as if the mergers occurred on December 31, 2004 and resulted in an
ending number of shares of 60,525,000.

      FSP Corp. calculates consolidated pro forma dividends per share by adding
the total dividends declared by FSP Corp. plus dividends declared by the Target
REITs and dividing this sum by 60,525,000 shares, as shown in the following
table:

                               Dividends Declared

                                                     For the Year
                                                        Ended
             (in thousands)                        December 31, 2004
             -------------------------------------------------------

             FSP Corp.                               $ 61,536
             Addison Circle                             5,245
             Collins Crossing                           4,775
             Montague                                   4,016
             Royal Ridge                                2,152
                                                   ----------
                 Total                               $ 77,724
                                                   ==========

                                       12
<PAGE>

                           COMPARATIVE PER SHARE DATA

      FSP Corp. calculates equivalent pro forma net income per share for each
Target REIT by multiplying the consolidated pro forma net income per share by
the exchange ratio.

      FSP Corp. calculates equivalent pro forma book value per share for each
Target REIT by multiplying the consolidated pro forma book value per share by
the exchange ratio.

      FSP Corp. calculates equivalent pro forma dividends per share for each
Target REIT by multiplying the consolidated pro forma dividends per share by the
exchange ratio.

      For the purposes of the consolidated pro forma net income per share and
book value per share data, FSP Corp.'s historical financial data have been
consolidated with the Target REITs' financial data.


                                       13
<PAGE>

                        Franklin Street Properties Corp.
                           Comparative Per Share Data
                          As of and for the year ended
                                December 31, 2004
                                   (Unaudited)

                                                       Pro forma      Pro forma
                                        Historical    Consolidated   Equivalent
                                      ------------------------------------------
Net income per share
  basic and diluted
    FSP Corp.                            $  0.96         $ 0.95       $    --

      Montague                             7,530             --         5,367
      Addison Circle                       6,506             --         5,651
      Royal Ridge                          4,235             --         5,753
      Collins Crossing                     5,505             --         5,859

Book value per share
    FSP Corp.                            $ 10.14         $10.89       $    --

      Montague                            76,581             --        61,525
      Addison Circle                      82,083             --        64,781
      Royal Ridge                         78,998             --        65,948
      Collins Crossing                    80,506             --        67,165

Dividends declared per share
    FSP Corp.                            $  1.24         $ 1.28       $    --

      Montague                            12,023             --         7,232
      Addison Circle                       8,246             --         7,614
      Royal Ridge                          7,233             --         7,751
      Collins Crossing                     8,603             --         7,895


                                       14
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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