EX-99.1 2 ex99-1.htm EARNINGS RELEASE ex99-1.htm
Exhibit 99.1
 
PRESS RELEASE
Franklin Street Properties Corp.
401 Edgewater Place · Suite 200 · Wakefield, Massachusetts  01880-6210 · (781) 557-1300 ·  www.franklinstreetproperties.com
Contact: John Demeritt   877-686-9496
FOR IMMEDIATE RELEASE

FRANKLIN STREET PROPERTIES CORP. ANNOUNCES
THIRD QUARTER 2010 RESULTS

Wakefield, MA—November 2, 2010—Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE Amex:  FSP), an investment firm specializing in real estate, announced today Funds From Operations (FFO) of $16.1 million or $0.20 per share for the third quarter ended September 30, 2010.  The Company also announced Net Income of $4.8 million and Earnings Per Share (EPS) of $0.06 for the third quarter and provided an update on other activities.

The Company evaluates its performance based on Net Income, EPS, FFO, Gains on Sales (GOS) and FFO+GOS, and believes each is an important measure.  A reconciliation of Net Income to FFO and FFO+GOS, which are non-GAAP financial measures, is provided on page 4 of this press release.

     Three Months Ended September 30,      Nine Months Ended September 30,  
(in 000's except per share data)
  
2010
    
2009
    
Increase
(Decrease)
    
2010
    
2009
    
Increase
(Decrease)
  
                                     
Net Income
   $ 4,757     $ 6,941     $ (2,184 )   $ 16,273     $ 19,614     $ (3,341 )
                                                 
FFO
   $ 16,052     $ 17,537     $ (1,485 )   $ 49,404     $ 52,284     $ (2,880 )
GOS
     -       -       -       -       -       -  
FFO+GOS
   $ 16,052     $ 17,537     $ (1,485 )   $ 49,404     $ 52,284     $ (2,880 )
Per Share Data:
                                                
EPS
   $ 0.06     $ 0.10     $ (0.04 )   $ 0.20     $ 0.28     $ (0.08 )
FFO
   $ 0.20     $ 0.25     $ (0.05 )   $ 0.62     $ 0.74     $ (0.12 )
GOS
   $ -     $ -     $ -     $ -     $ -     $ -  
FFO+GOS
   $ 0.20     $ 0.25     $ (0.05 )   $ 0.62     $ 0.74     $ (0.12 )
                                                 
Weighted average
                                                
   shares (diluted)
     79,751       71,281       8,470       79,704       70,750       8,954  

Comparing results for the third quarter of 2010 to the same period in 2009, Net Income and EPS decreased by $2.2 million or $.04 per share; and FFO decreased by $1.5 million or $0.05 per share.  The decrease in FFO was primarily attributable to a decrease in real estate FFO of $1.7 million and was partially offset by an increase in investment banking FFO of $0.2 million.  The decrease in real estate FFO was primarily a result of decreased occupancy in the real estate portfolio during the third quarter of 2010 compared to the third quarter of 2009.  The increase in investment banking FFO resulted from greater sales of securities by our investment bank, which were $0.3 million in the third quarter of 2010 as we closed two syndications, compared to no sales by our investment bank for the third quarter of 2009.  Revenue from our investment bank is primarily based on the value of securities sales.  There was no GOS during the third quarters of 2010 or 2009.


 
 
 

Comparing results for the first nine months of 2010 to 2009, Net Income and EPS decreased by $3.3 million or $0.08 per share; and FFO decreased by $2.9 million or $0.12 per share.  The decrease in FFO was primarily attributable to a decrease in real estate FFO of $4.1 million and was partially offset by an increase in investment banking FFO of $1.2 million.   The decrease in real estate FFO was primarily a result of decreased occupancy in the real estate portfolio during the first nine months of 2010 compared to the first nine months of 2009; and a $0.3 million decrease in distributions received from investments in our non-consolidated REITs.  The increase in investment banking FFO resulted from greater sales of securities by our investment bank, which were $10.7 million during the first nine months of 2010 as compared to $0.6 million by our investment bank for the first nine months of 2009.  Revenue from our investment bank is primarily based on the value of securities sales.  There was no GOS during the first nine months of 2010 or 2009.
 
George J. Carter, President and CEO, commented as follows:

“For the third quarter of 2010, FSP's profits as represented by FFO + GOS totaled approximately $16.1 million or $0.20 per share, a reduction of $0.01 per share compared to the second quarter of 2010.  Dividend distributions declared for the third quarter of 2010, which are payable on November 19, 2010, will be approximately $15.2 million or $0.19 per share.

For 2010, FSP's profit results have been under pressure primarily from increasing vacancy in the property portfolio created by large amounts of tenant lease expirations within a generally weak office market.  Adding to this situation has been continuing lower levels of investment banking underwritings.  The Company has anticipated and planned for the levels of business activity and financial results we are experiencing this year.  The transactional nature, success and timing of our re-leasing efforts of existing vacancy and lease-roll in the portfolio will interplay with the timing of new property acquisitions and capital closings of private placement offerings through our investment bank to affect future FFO levels.

Our directly-owned real estate portfolio of 33 properties was approximately 82% leased as of September 30, 2010 and approximately 84% leased as of December 31, 2009.  Several of our properties have had significant lease-roll and consequential vacancy beginning in the fourth quarter of 2009 and continuing through the third quarter of 2010.  As a result, we have experienced lower levels of rental income from these properties.  However, assuming some level of continuing stability in the broader U.S. economic and employment picture, we believe that full-year 2010 is likely to mark the bottom of FSP's portfolio occupancy cycle.  While the third quarter of 2010 was slow relative to actual leases being signed, prospective new tenant interest and activity at most of our properties continues to be meaningful and we remain optimistic about higher potential occupancies going into 2011.

There were no new property acquisitions completed in the third quarter of 2010.  The Company continues to work on additional property acquisitions for both direct purchase into the FSP portfolio and syndication through our Investment Banking Group.  We would anticipate that current efforts will produce additional property acquisitions this year.

During the third quarter of 2010 our Investment Banking Group did not generate any syndication investment opportunities.  Consequently, equity sales for the quarter were only $0.3 million relating to two syndications we completed on July 9, 2010.  The Investment Banking Group operated at a loss of about $0.4 million, or nearly $0.01 per share, for the third quarter of 2010.  Currently we have one new $30 million private placement syndication open and we believe that we have better visibility for potential future syndication opportunities than we have had all year.  While we believe that general investor confidence and interest in commercial real estate investing continues to slowly improve, capital raising efforts over any specific period of time will likely remain unpredictable.


 
-2-
 

FSP did not have any properties listed for sale during the third quarter of 2010.  Generally speaking, we continue to find the property sales environment challenged relative to both liquidity and pricing.  However, we continue to witness improving pricing and liquidity in certain markets, extending a trend that began in the second half of 2009.  Nationwide, the number of completed commercial real estate transactions still remains low by historical standards.  We believe that both improving office property fundamentals as well as plentiful and attractive financing availability will likely be required to more meaningfully improve the market place for property dispositions.  Since gain on sale (GOS) is an important part of our total return strategy, we intend to be active in property dispositions once the real estate cycle more fully establishes a pattern of improvement.

We believe FSP continues to be in an excellent environment to position itself for meaningful future growth in profits and dividends.  Our company will continue to use its capabilities and conservative financial structure to take advantage of competitive tenant leasing requirements, opportunistic investment banking situations and attractive real estate investment opportunities that are presenting themselves as a result of the current cyclical downturn in the economy and commercial property market.  Since the fourth quarter of 2007 we have viewed 2010 as likely our most challenging year in dealing with a broad, financially-precipitated, cyclical, economic downturn.  As we begin the fourth quarter of 2010 and look to 2011, we are optimistic that FSP has managed its major challenges, while taking advantage of positioning opportunities that traditionally only present themselves during severe economic downturns.  We are very much looking forward to our future growth potential.”

Dividend Announcement

On October 15, 2010, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended September 30, 2010 of $0.19 per share of common stock payable on November 19, 2010 to stockholders of record on October 29, 2010.

Real Estate Update

Supplementary Schedules D & E provide property information for our continuing real estate portfolio of 33 properties and for three non-consolidated REITs that we have interests in as of September 30, 2010.  The Company will also be filing a supplemental information package that will provide stockholders and the financial community with additional operating and financial data.  The Company will file this supplemental information package with the SEC and make it available on its website at www.franklinstreetproperties.com.
 

 
-3-
 

A reconciliation of Net Income to FFO and FFO+GOS is shown below and definitions of FFO and FFO+GOS are provided on Supplementary Schedule H.  We believe FFO is used broadly throughout the real estate investment trust (REIT) industry as a measurement of performance and is generally calculated in a similar manner to our calculation.  We also believe that FFO+GOS is an important measure as it considers investment performance.

Reconciliation of Net Income to FFO and FFO+GOS:
  
Three Months Ended
    
Nine Months Ended
  
   
September 30,
    
September 30,
  
(In thousands, except per share amounts)
  
2010
    
2009
    
2010
    
2009
  
                         
Net income
   $ 4,757     $ 6,941     $ 16,273     $ 19,614  
     (Gain) Loss on sale of properties
     -       -       -       -  
     GAAP income from non-consolidated REITs
     (404 )     (475 )     (1,037 )     (1,710 )
     Distributions from non-consolidated REITs
     1,192       1,119       3,923       4,257  
     Acquisition costs of new properties
     (4 )     391       125       639  
     Depreciation of real estate & intangible amortization
     10,511       9,561       30,120       29,484  
Funds From Operations (FFO)
     16,052       17,537       49,404       52,284  
     Plus gains on sales of properties
     -       -       -       -  
FFO+GOS
   $ 16,052     $ 17,537     $ 49,404     $ 52,284  
                                 
Per Share Data
                                
EPS
   $ 0.06     $ 0.10     $ 0.20     $ 0.28  
FFO
   $ 0.20     $ 0.25     $ 0.62     $ 0.74  
GOS
   $ -     $ -     $ -     $ -  
FFO+GOS
   $ 0.20     $ 0.25     $ 0.62     $ 0.74  
                                 
Weighted average shares (basic and diluted)
     79,751       71,281       79,704       70,750  

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

A conference call is scheduled for November 3, 2010 at 10:00 a.m. (ET) to discuss the third quarter 2010 results. To access the call, please dial 1-866-730-5771, passcode 37601430.  Internationally, the call may be accessed by dialing 1-857-350-1595, passcode 37601430.  To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company’s website (www.franklinstreetproperties.com) at least ten minutes prior to the start of the call and follow the posted directions.  The webcast will also be available via replay from the above location starting one hour after the call is finished.

About Franklin Street Properties Corp.

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on achieving current income and long-term growth through investments in commercial properties.  FSP operates in two business segments: real estate operations and investment banking/investment services.  The majority of FSP’s property portfolio is suburban office buildings, with select investments in certain central business district properties.  FSP’s subsidiary, FSP Investments LLC (member, FINRA and SIPC), is a real estate investment banking firm and a registered broker/dealer.  FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes.  To learn more about FSP, please visit our website at www.franklinstreetproperties.com.
 
 

 
-4-
 

Forward-Looking Statements

Statements made in this press release that state FSP’s or management’s intentions, beliefs, expectations, or predictions for the future may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  This press release may also contain forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements.  Accordingly, readers are cautioned not to place undue reliance on forward-looking statements.  Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, economic conditions in the United States, disruptions in the debt markets, economic conditions in the markets in which we own properties, changes in the demand by investors for investment in Sponsored REITs (as defined in our Annual Report on Form 10-K for the year ended December 31, 2009), risks of a lessening of demand for the types of real estate owned by us, changes in government regulations, and expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments.  See the “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2009, as the same may be updated from time to time in subsequent filings with the United States Securities and Exchange Commission.  Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  We will not update any of the forward-looking statements after the date of this press release to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.

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

   
Franklin Street Properties Corp. Financial Results
A-C
Real Estate Portfolio Summary Information
D
Portfolio and Other Supplementary Information
E
Quarterly Information
F
Percentage of Leased Space
G
Largest 20 Tenants – FSP Owned Portfolio
H
Definition of Funds From Operations (FFO) and  FFO+GOS
I

 
-5-
 

Franklin Street Properties Corp. Financial Results
Supplementary Schedule A
Condensed Consolidated Income Statements
(Unaudited)

   
For the
Three Months Ended
September 30,
    
For the
Nine Months Ended
September 30,
  
(in thousands, except per share amounts)
  
2010
    
2009
    
2010
    
2009
  
                         
Revenue:
                        
     Rental
   $ 31,368     $ 31,702     $ 91,428     $ 90,774  
Related party revenue:
                                
     Syndication fees
     20       -       682       39  
     Transaction fees
     246       1       1,145       543  
     Management fees and interest income from loans
     630       370       1,721       1,232  
Other
     20       19       35       55  
        Total revenue
     32,284       32,092       95,011       92,643  
                                 
Expenses:
                                
     Real estate operating expenses
     8,737       7,752       24,068       22,176  
     Real estate taxes and insurance
     4,839       5,364       14,403       14,879  
     Depreciation and amortization
     10,414       8,801       28,876       26,940  
     Selling, general and administrative
     2,074       2,243       6,804       6,378  
     Commissions
     16       8       466       178  
     Interest
     1,892       1,744       5,280       4,920  
                                 
       Total expenses
     27,972       25,912       79,897       75,471  
                                 
Income before interest income, equity in earnings of
                                
   non-consolidated REITs and taxes
     4,312       6,180       15,114       17,172  
Interest income
     4       16       21       88  
Equity in earnings of non-consolidated REITs
     404       475       1,037       1,710  
                                 
Income before taxes on income
     4,720       6,671       16,172       18,970  
Income tax benefit
     (37 )     (270 )     (101 )     (644 )
                                 
                                 
Net income
   $ 4,757     $ 6,941     $ 16,273     $ 19,614  
                                 
Weighted average number of shares outstanding,
                                
     basic and diluted
     79,751       71,281       79,704       70,750  
                                 
Net income per share, basic and diluted
   $ 0.06     $ 0.10     $ 0.20     $ 0.28  



 
-6-
 

  Franklin Street Properties Corp. Financial Results
  Supplementary Schedule B
  Condensed Consolidated Balance Sheets
  (Unaudited)

   
September 30,
    
December 31,
  
(in thousands, except share and par value amounts)
  
2010
    
2009
  
Assets:
            
Real estate assets, net
   $  932,689     $  921,833  
Acquired real estate leases, less accumulated amortization
                
   of $22,344 and $34,592, respectively
     53,344       44,757  
Investment in non-consolidated REITs
     89,995       92,910  
Assets held for syndication, net
     -       4,827  
Cash and cash equivalents
     20,554       27,404  
Restricted cash
     55       334  
Tenant rent receivables, less allowance for doubtful accounts
                
   of $1,540 and $620, respectively
     2,123       1,782  
Straight-line rent receivable, less allowance for doubtful accounts
                
   of $700 and $100, respectively
     16,157       10,754  
Prepaid expenses
     2,511       2,594  
Related party mortgage loan receivable
     53,756       36,535  
Other assets
     852       844  
Office computers and furniture, net of accumulated depreciation
                
   of $450 and $1,233, respectively
     535       384  
Deferred leasing commissions, net of accumulated amortization
                
   of $6,455, and $4,995, respectively
     16,626       10,808  
           Total assets
   $ 1,189,197     $ 1,155,766  
                 
Liabilities and Stockholders’ Equity:
                
Liabilities:
                
Bank note payable
   $ 167,968     $ 109,008  
Term loan payable
     75,000       75,000  
Accounts payable and accrued expenses
     25,064       23,787  
Accrued compensation
     1,334       1,416  
Tenant security deposits
     1,922       1,808  
Other liabilities: derivative termination value
     1,416       2,076  
Acquired unfavorable real estate leases, less accumulated amortization
                
   of $2,824, and $2,492, respectively
     6,206       5,397  
           Total liabilities
     278,910       218,492  
                 
Commitments and contingencies
                
                 
Stockholders’ Equity:
                
Preferred stock, $.0001 par value, 20,000,000 shares
    authorized, none issued or outstanding
     -       -  
Common stock, $.0001 par value, 180,000,000 shares authorized,
    79,837,405 and 79,680,705 shares issued and outstanding, respectively
     8       8  
Additional paid-in capital
     1,005,211       1,003,713  
Accumulated other comprehensive loss
     (1,416 )     (2,076 )
Accumulated distributions in excess of accumulated earnings
     (93,516 )     (64,371 )
    Total stockholders’ equity
     910,287       937,274  
    Total liabilities and stockholders’ equity
   $ 1,189,197     $ 1,155,766  


 
-7-
 

Franklin Street Properties Corp. Financial Results
Supplementary Schedule C
Condensed Consolidated Statements of Cash Flows
(Unaudited)

   
For the
Nine Months Ended
September 30,
  
(in thousands)
  
2010
    
2009
  
Cash flows from operating activities:
            
   Net income
   $ 16,273     $ 19,614  
   Adjustments to reconcile net income to net cash provided by operating activities:
          
            Depreciation and amortization expense
     29,078       27,141  
            Amortization of above market lease
     1,243       2,544  
            Equity in earnings of non-consolidated REITs
     (1,037 )     (1,710 )
            Distributions from non-consolidated REITs
     3,923       4,257  
            Increase in bad debt reserve
     920       111  
   Changes in operating assets and liabilities:
                
            Restricted cash
     279       5  
            Tenant rent receivables
     (1,261 )     (182 )
            Straight-line rents, net
     (2,961 )     (849 )
            Prepaid expenses and other assets, net
     (126 )     (472 )
            Accounts payable and accrued expenses
     615       4,294  
            Accrued compensation
     (82 )     (904 )
            Tenant security deposits
     114       (117 )
   Payment of deferred leasing commissions
     (7,894 )     (2,202 )
                        Net cash provided by operating activities
     39,084       51,530  
Cash flows from investing activities:
                
   Purchase of real estate assets, office computers and furniture
     (48,659 )     (130,819 )
   Investment in non-consolidated REITs
     (2 )     (13,200 )
   Investment in related party mortgage loan receivable
     (17,221 )     (22,139 )
Investment in assets held for syndication, net
     4,858       13,017  
                        Net cash used in investing activities
     (61,024 )     (153,141 )
Cash flows from financing activities:
                
   Distributions to stockholders
     (45,418 )     (40,173 )
   Proceeds from equity offering, net
     1,548       115,385  
   Borrowings under bank note payable
     58,960       23,540  
Net cash provided by financing activities
     15,090       98,752  
                        Net decrease in cash and cash equivalents
     (6,850 )     (2,859 )
Cash and cash equivalents, beginning of period
     27,404       29,244  
Cash and cash equivalents, end of period
   $ 20,554     $ 26,385  

 
-8-
 

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule D
Real Estate Portfolio Summary Information
(Unaudited & Approximated)
 
 
Commercial portfolio lease expirations (1)
  As of September 30, 2010
   
Total
% of
Year
  
Square Feet
Portfolio
2010
  
        233,584
3.6%
2011
  
        491,606
7.7%
2012
  
        484,504
7.6%
2013
  
        537,136
8.4%
2014
  
        590,850
9.2%
2015
  
        813,431
12.7%
Thereafter (2)
  
     3,266,188
50.8%
   
     6,417,299
100.0%

 
(1)
Percentages are determined based upon square footage of expiring commercial leases.
 
(2)
Includes 1,126,660 square feet of current vacancies.


(dollars & square feet in 000's)
   As of September 30, 2010
   
# of
          
% of
    
Square
    
% of
  
State
  
Properties
    
Investment
    
Portfolio
    
Feet
    
Portfolio
  
                               
Texas
     7     $ 224,670       24.1 %     1,489       23.2 %
Virginia
     5       161,008       17.3 %     942       14.7 %
Colorado
     4       126,156       13.5 %     789       12.3 %
Georgia
     1       74,282       8.0 %     387       6.0 %
Missouri
     3       70,977       7.6 %     477       7.4 %
Maryland
     2       60,750       6.5 %     424       6.6 %
Minnesota
     2       38,286       4.1 %     628       9.8 %
Florida
     1       47,282       5.1 %     213       3.3 %
Indiana
     1       36,004       3.9 %     205       3.2 %
Illinois
     1       29,120       3.1 %     177       2.8 %
California
     2       21,161       2.3 %     182       2.8 %
Michigan
     1       14,678       1.6 %     215       3.3 %
Washington
     1       14,437       1.5 %     117       1.8 %
North Carolina
     2       13,878       1.5 %     172       2.7 %
      33     $ 932,689       100.0 %     6,417       100.0 %

Property by type:
                              
(dollars & square feet
   As of September 30, 2010
    in 000's)
  
# of
          
% of
    
Square
    
% of
  
Type
  
Properties
    
Investment
    
Portfolio
    
Feet
    
Portfolio
  
Office
     32     $  927,750       99.5 %     6,318       98.5 %
Industrial
     1       4,939       0.5 %     99       1.5 %
      33     $ 932,689       100.0 %     6,417       100.0 %
                                         



 
-9-
 

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


Capital Expenditures
            
Owned Portfolio
     Nine Months Ended  
(in thousands)
  
30-Sep-10
    
30-Sep-09
  
             
Tenant improvements
   $ 5,874     $ 3,217  
Deferred leasing costs
     7,892       2,202  
Building improvements
     1,549       846  
    $ 15,315     $ 6,265  


Square foot & leased percentages
  
September 30,
    
December 31,
  
   
2010
    
2009
  
             
Owned portfolio of commercial real estate
            
Number of properties
     33       32  
Square feet
     6,417,299       5,942,414  
Leased percentage
     82 %     84 %
                 
Investments in non-consolidated commercial real estate
                
Number of properties
     3       3  
Square feet
     1,998,519       1,995,041  
Leased percentage
     76 %     78 %
                 
Single Asset REITs (SARs) managed
                
Number of properties
     11       11  
Square feet*
     2,702,287       2,406,370  
Leased percentage
     73 %     91 %
                 
Total owned, investments & managed properties
                
Number of properties
     47       46  
Square feet*
     11,118,105       10,343,825  
Leased percentage
     79 %     85 %
                 
*December 31, 2009 excludes a managed property that completed construction on July 9, 2010
  
  with approximately 295,891 square feet.
                


The following table shows property information for our investments in non-consolidated REITs:

       
Square
    
% Leased
    
% Interest
  
Single Asset REIT name
City
State
  
Feet
    
30-Sep-10
    
Held
  
FSP 303 East Wacker Drive Corp.
Chicago
IL
     847,559       76.34 %     43.7 %
FSP Grand Boulevard Corp.
Kansas City
MO
     532,453       89.48 %     27.0 %
FSP Phoenix Tower Corp.
Houston
TX
     618,507       65.32 %     4.6 %
          1,998,519       76.43 %        


 
-10-
 

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule F: Quarterly Information
(Unaudited)

(in 000's)
                        
      Q2       Q1       Q4       Q3  
Revenue:
     2010       2010       2009       2009  
   Rental
   $  29,261     $  30,799     $  31,300     $  31,702  
   Related party revenue:
                                
       Syndication fees
     541       121       2,389       -  
       Transaction fees
     753       146       1,537       1  
       Management fees and
                                
          interest income from loans
     558       533       508       370  
   Other
     6       9       6       19  
              Total revenue
     31,119       31,608       35,740       32,092  
                                 
Expenses:
                                
       Real estate operating expenses
     7,358       7,973       8,646       7,752  
       Real estate taxes and insurance
     4,318       5,246       4,349       5,364  
       Depreciation and amortization
     9,243       9,219       9,353       8,801  
       Selling, general and administrative
     2,559       2,171       2,513       2,243  
       Commissions
     336       114       1,623       8  
       Interest
     1,736       1,652       1,650       1,744  
              Total expenses
     25,550       26,375       28,134       25,912  
                                 
       Income before interest income, equity
                                
          in earnings in non-consolidated REITs
     5,569       5,233       7,606       6,180  
       Interest income
     9       8       9       16  
       Equity in earnings in non-consolidated REITs
     380       253       284       475  
                                 
       Income before taxes on income
     5,958       5,494       7,899       6,671  
       Taxes on income
     4       (68 )     65       (270 )
                                 
       Net income
   $ 5,954     $ 5,562     $ 7,834     $ 6,941  
                                 
                                 
FFO and  FFO+GOS calculations:
                                
                                 
Net income
   $ 5,954     $ 5,562     $ 7,834     $ 6,941  
     (Gain) Loss on sale of assets
     -       -       -       -  
     GAAP income from non-consolidated REITs
     (380 )     (253 )     (301 )     (475 )
     Distributions from non-consolidated REITs
     1,324       1,407       1,371       1,119  
     Acquisition costs of new properties
     129       -       4       391  
     Depreciation of real estate and intangible amortization
     9,675       9,934       10,167       9,561  
Funds From Operations (FFO)
     16,702       16,650       19,075       17,537  
     Plus gains on sales of assets
     -       -       -       -  
FFO+GOS
   $ 16,702     $ 16,650     $ 19,075     $ 17,537  


 
-11-
 

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule G
Percentage of Leased Space
(Unaudited & Estimated)

 
Property Name
  
Location
Square
Feet
  
% Leased
as of
3/31/10(1)
First
Quarter
Average
% Leased(2)
  
% Leased
as of
6/30/10(1)
Second
Quarter
Average
% Leased(2)
  
% Leased
 as of
9/30/10(1)
Third
Quarter
Average
% Leased(2)
                           
1
PARK SENECA
  
Charlotte, NC
109,550
  
85.1%
85.2%
  
84.4%
84.8%
  
84.0%
84.3%
2
HILLVIEW CENTER
  
Milpitas, CA
36,288
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
3
SOUTHFIELD
  
Southfield, MI
214,697
  
55.7%
55.6%
  
56.4%
55.9%
  
58.6%
57.6%
4
BOLLMAN PLACE
  
Savage, MD
98,745
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
5
FOREST PARK
  
Charlotte, NC
62,212
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
6
CENTENNIAL
  
Colorado Springs, CO
110,730
  
78.5%
78.5%
  
78.5%
78.5%
  
66.9%
66.9%
7
MEADOW POINT
  
Chantilly, VA
138,537
  
51.5%
50.7%
  
80.6%
70.9%
  
97.9%
96.1%
8
TIMBERLAKE
  
Chesterfield, MO
232,766
  
99.0%
99.0%
  
99.0%
99.0%
  
99.0%
99.0%
9
FEDERAL WAY
  
Federal Way, WA
117,010
  
26.1%
26.1%
  
28.3%
26.9%
  
28.3%
28.3%
10
NORTHWEST POINT
  
Elk Grove Village, IL
176,848
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
11
TIMBERLAKE EAST
  
Chesterfield, MO
116,197
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
12
PARK TEN
  
Houston, TX
155,715
  
66.0%
63.4%
  
49.8%
54.8%
  
48.2%
48.2%
13
MONTAGUE
  
San Jose, CA
145,951
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
14
ADDISON
  
Addison, TX
293,787
  
61.3%
61.3%
  
92.7%
71.8%
  
95.8%
93.7%
15
COLLINS CROSSING
  
Richardson, TX
298,766
  
100.0%
100.0%
  
100.0%
100.0%
  
28.8%
28.8%
16
GREENWOOD PLAZA
  
Englewood, CO
197,527
  
100.0%
100.0%
  
30.6%
53.7%
  
26.6%
23.6%
17
RIVER CROSSING
  
Indianapolis, IN
205,059
  
94.7%
94.7%
  
94.7%
94.7%
  
97.5%
97.5%
18
LIBERTY PLAZA
  
Addison, TX
218,934
  
77.8%
74.4%
  
78.0%
77.7%
  
76.9%
77.6%
19
INNSBROOK
  
Glen Allen, VA
303,745
  
34.7%
25.4%
  
31.3%
31.3%
  
31.3%
31.3%
20
380 INTERLOCKEN
  
Broomfield, CO
240,184
  
87.0%
87.0%
  
89.7%
88.8%
  
85.1%
85.1%
21
BLUE LAGOON
  
Miami, FLA
212,619
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
22
ELDRIDGE GREEN
  
Houston, TX
248,399
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
23
WILLOW BEND
  
Plano, TX
116,622
  
49.8%
49.8%
  
49.8%
49.8%
  
55.5%
53.6%
24
ONE OVERTON PARK
  
Atlanta, GA
387,267
  
90.3%
90.3%
  
91.5%
91.0%
  
92.4%
92.5%
25
390 INTERLOCKEN
  
Broomfield, CO
241,516
  
98.5%
98.5%
  
98.3%
98.3%
  
98.3%
98.3%
26
EAST BALTIMORE
  
Baltimore, MD
325,445
  
94.4%
94.7%
  
95.3%
95.3%
  
94.8%
95.1%
27
PARK TEN PHASE II
  
Houston, TX
156,746
  
97.8%
97.8%
  
97.8%
97.8%
  
97.8%
97.8%
28
LAKESIDE CROSSING I
  
Maryland Heights, MO
127,778
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
29
LOUDOUN TECH
  
Dulles, VA
135,888
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
30
4807 STONECROFT
  
Chantilly, VA
111,469
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
31
EDEN BLUFF
  
Eden Prairie, MN
153,028
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
32
3150 FAIRVIEW PARK DR.
  
Falls Church, VA
252,613
  
100.0%
100.0%
  
100.0%
100.0%
  
100.0%
100.0%
33
121 SOUTH EIGHTH ST.(3)
  
Minneapolis, MN
474,661
  
n/a
n/a
  
89.8%
89.8%
  
92.1%
91.3%
 
TOTAL WEIGHTED AVERAGE
6,417,299
  
85.4%
84.7%
  
85.3%
84.6%
  
82.4%
82.1%
 
 
(1)
Percentage leased as of month's end and includes all leases that expire on the last day of the quarter.
 
(2)
Average quarterly percentage is the average of the end of the month leased percentage for each of the 3 months during the quarter.
 
(3)
Property was acquired on June 29, 2010.


 
-12-
 

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule H
Largest 20 Tenants – FSP Owned Portfolio
(Unaudited & Estimated)

The following table includes the largest 20 tenants in FSP’s owned portfolio based on leased square feet:

 
As of September 30, 2010
        
         
% of
 
Tenant
  
Sq Ft
SIC Code
Portfolio
1
TCF National Bank
(1)
              266,495
           60
4.2%
2
Noblis, Inc.
  
              252,613
           54
3.9%
3
CITGO Petroleum Corporation
(2)
              248,399
           29
3.9%
4
Burger King Corporation
  
              212,619
           58
3.3%
5
RGA Reinsurance Company
  
              185,501
           63
2.9%
6
Citigroup Credit Services, Inc
  
              176,848
           61
2.8%
7
C.H. Robinson Worldwide, Inc.
  
              153,028
           47
2.4%
8
Geisecke & Devrient America, Inc.
  
              135,888
           73
2.1%
9
Murphy Exploration & Production Company
  
              133,786
           13
2.1%
10
Monsanto Company
  
              127,778
           28
2.0%
11
Vail Holding Corp d/b/a Vail Resorts
(3)
              121,913
           79
1.9%
12
Northrop Grumman Information Technology, Inc.
              111,469
           73
1.7%
13
Maines Paper & Food Service, Inc.
  
                98,745
           51
1.5%
14
Federal National Mortgage Association
(4)
                92,358
           61
1.4%
15
Amdocs, Inc.
  
                91,928
           73
1.4%
16
County of Santa Clara
  
                90,467
           91
1.4%
17
Ober Kaler Grimes & Shriver
  
                88,736
           81
1.4%
18
ARGO Data Resource Corporation
  
                83,944
           73
1.3%
19
International Business Machines Corp.
  
                83,209
           79
1.3%
20
Corporate Holdings, LLC
  
                81,818
           67
1.3%
 
Total
  
           2,837,542
  
44.2%

 
(1)
Property was acquired on June 29, 2010.
 
(2)
On January 20, 2010, the Company signed a new lease at a Houston, Texas property, for approximately 248,000 square feet of space with one of its tenants, CITGO Petroleum Corporation, effectively extending the lease expiration from February 29, 2012 to February 28, 2022.
 
(3)
On March 22, 2010, the Company signed a lease for an additional approximate 38,000 square feet of space with one of its tenants, Vail Holdings, Inc. through March 2019.  The remaining space of approximately 84,000 square feet is leased through March 2023.
 
(4)
On June 7, 2010, Federal National Mortgage Association commenced a lease for approximately 92,000 square feet of space at an Addison, Texas property.  The lease expires September 6, 2013.




 
-13-
 

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule I
Definition of Funds From Operations (“FFO”),
and FFO plus Gains on Sales (“FFO+GOS”)


The Company evaluates the performance of its reportable segments based on several measures including Funds From Operations (“FFO”) and FFO plus Gains on Sales (“FFO+GOS”) as management believes they represent important measures of activity and are an important consideration in determining distributions paid to equity holders.  The Company defines FFO as net income (computed in accordance with generally accepted accounting principles, or GAAP), excluding gains (or losses) from sales of property and acquisition costs of newly acquired properties that are not capitalized, plus depreciation and amortization, and after adjustments to exclude non-cash income (or losses) from non-consolidated or Sponsored REITs, plus distributions received from non-consolidated or Sponsored REITs.  The Company defines FFO+GOS as FFO as defined above, plus gains (or losses) from sales of properties and provisions for assets held for sale, if applicable.

FFO and FFO+GOS should not be considered as alternatives to net income (determined in accordance with GAAP), as indicators of the Company’s financial performance, nor as alternatives to cash flows from operating activities (determined in accordance with GAAP), nor as measures of the Company’s liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company’s needs.  Other real estate companies may define these terms in a different manner.  We believe that in order to facilitate a clear understanding of the results of the Company, FFO and FFO+GOS should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.

 
-14-