EX-99.2 3 ex99-2.htm

Exhibit 99.2

|  | Supplemental Operating and Financial Data Fourth Quarter 2012

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

www.franklinstreetproperties.com

|  | Table of Contents

| Page |  |  | Page
Company Overview | 3 |  | Tenant Analysis and Leasing Activity |
|  |  | 20 Largest Tenants, Industry Profile | 18
Key Financial Data |  |  | 20 Largest Tenants with Annualized Rent and Remaining Term | 19
Financial Highlights | 4 |  | Leasing Activity | 20
Income Statements | 5 |  | Lease Expirations by Square Feet | 21
Balance Sheets | 6 |  | Lease Expirations with Annualized Rent per Square Foot | 22
Cash Flow Statements | 7 |  | Capital Expenditures | 23
Property Net Operating Income (NOI) | 8 |  |  |
|  |  | Transaction Activity | 24
Reconciliation |  |  |  |
FFO & FAD | 9 |  | Loan Portfolio of Secured Real Estate | 25
EBITDA | 10 |  |  |
Property NOI | 11 |  | Net Asset Value Components | 26
Debt Summary | 12 |  | Appendix: Definitions of Non-GAAP Measures |
|  |  | FFO | 27
Capital Analysis | 13 |  | EBITDA and FAD | 28
|  |  | NOI | 29
Owned and Managed Portfolio Overview | 14-17 |  |  |

All financial information contained in this supplemental information package is unaudited. In addition, certain statements contained in this supplemental information package may be deemed to be forward-looking statements within the meaning of the federal securities laws. Although FSP believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from FSP’s current expectations include general economic conditions, local real estate conditions, the performance of properties that FSP has acquired or may acquire, the timely lease-up of properties and other risks, detailed from time to time in FSP’s SEC reports. FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

December 31, 2012 | 2

|  | Company Overview

Overview

Franklin Street Properties Corp. (“FSP”, “we”, “our” or the “Company”) (NYSE MKT: FSP) is an investment firm focused on achieving current income and long-term growth through investments in commercial properties. FSP’s portfolio of real estate assets consists primarily of suburban office buildings and includes select investments in central business district (CBD) properties. FSP’s real estate operations include property acquisitions and dispositions, short-term financing, leasing, development and asset management. FSP’s subsidiary, FSP Investments LLC (member, FINRA and SIPC), is a real estate investment banking firm and registered broker/dealer that previously sponsored the organization of single-purpose entities that own real estate and the private placement of equity in those entities, which we refer to as “Sponsored REITs”.

Our Business

As of December 31, 2012, the Company owned and operated a portfolio of real estate consisting of 37 properties, managed 15 Sponsored REITs and held eight promissory notes secured by mortgages on real estate owned by Sponsored REITs. From time-to-time, the Company may acquire real estate, make additional secured loans or acquire one of its Sponsored REITs. The Company may also pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, or for geographic or property specific reasons.

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

Inquiries

Inquires should be directed to: John Demerritt, CFO

877-686-9496 or InvestorRelations@franklinstreetproperties.com

Snapshot (as of December 31, 2012) |
Corporate Headquarters | Wakefield, MA
Fiscal Year-End | 31-Dec
Total Properties | 37
Total Square Feet | 7.9 Million
Trading Symbol | FSP
Exchange | NYSE MKT
Common Shares Outstanding | 82,937,405
Quarterly Dividend | $0.19
Dividend Yield | 6.2%
Total Market Capitalization | $1.6 Billion
Insider Holdings | 12.1%

December 31, 2012 | 3

|  | Summary of Financial Highlights (in thousands, except per share data)

(in thousands except per share amounts, SF & number of properties) |  | For the Three Months Ended |
|  | 31-Dec-12 |  |  | 30-Sep-12 |  |  | 30-Jun-12 |  |  | 31-Mar-12 |  |  | 31-Dec-11 |  |  | 30-Sep-11 |
Income Items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental revenue |  | $ | 41,532 |  |  | $ | 38,251 |  |  | $ | 35,571 |  |  | $ | 36,303 |  |  | $ | 36,744 |  |  | $ | 33,398 |
Total revenue |  |  | 43,420 |  |  |  | 41,775 |  |  |  | 38,655 |  |  |  | 38,953 |  |  |  | 37,824 |  |  |  | 34,442 |
Adjusted EBITDA* |  |  | 23,909 |  |  |  | 23,348 |  |  |  | 22,752 |  |  |  | 22,789 |  |  |  | 21,653 |  |  |  | 19,132 |
Equity in earnings in non-consolidated REITs |  |  | 2,033 |  |  |  | 176 |  |  |  | 494 |  |  |  | 391 |  |  |  | 978 |  |  |  | 573 |
Net income |  |  | 5,460 |  |  |  | (8,998 | ) |  |  | 5,433 |  |  |  | 5,738 |  |  |  | 5,062 |  |  |  | 3,314 |
FFO* |  |  | 20,515 |  |  |  | 19,913 |  |  |  | 19,042 |  |  |  | 19,571 |  |  |  | 18,459 |  |  |  | 16,362 |
Per Share Data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
EPS |  | $ | 0.07 |  |  | $ | (0.11 | ) |  | $ | 0.07 |  |  | $ | 0.07 |  |  | $ | 0.06 |  |  | $ | 0.04 |
FFO* |  | $ | 0.25 |  |  | $ | 0.24 |  |  | $ | 0.23 |  |  | $ | 0.24 |  |  | $ | 0.22 |  |  | $ | 0.20 |
Weighted Average Shares (diluted) |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |
Closing share price |  | $ | 12.31 |  |  | $ | 11.07 |  |  | $ | 10.58 |  |  | $ | 10.60 |  |  | $ | 9.95 |  |  | $ | 11.31 |
Dividend |  | $ | 0.19 |  |  | $ | 0.19 |  |  | $ | 0.19 |  |  | $ | 0.19 |  |  | $ | 0.19 |  |  | $ | 0.19 |
Payout Ratio: |  |  | 77% |  |  |  | 79% |  |  |  | 83% |  |  |  | 81% |  |  |  | 85% |  |  |  | 96% |
Balance Sheet Items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate, net |  | $ | 1,142,628 |  |  | $ | 1,015,984 |  |  | $ | 982,685 |  |  | $ | 987,003 |  |  | $ | 991,225 |  |  | $ | 982,143 |
Other assets, net |  |  | 384,551 |  |  |  | 379,950 |  |  |  | 447,678 |  |  |  | 451,525 |  |  |  | 417,436 |  |  |  | 363,641 |
Total assets, net |  |  | 1,527,179 |  |  |  | 1,395,934 |  |  |  | 1,430,363 |  |  |  | 1,438,528 |  |  |  | 1,408,661 |  |  |  | 1,345,784 |
Total liabilities, net |  |  | 662,430 |  |  |  | 521,338 |  |  |  | 529,340 |  |  |  | 527,181 |  |  |  | 487,294 |  |  |  | 413,784 |
Shareholders' equity |  |  | 864,749 |  |  |  | 874,596 |  |  |  | 901,023 |  |  |  | 911,347 |  |  |  | 921,367 |  |  |  | 932,000 |
Market Capitalization and Debt: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total Market Capitalization (a) |  | $ | 1,637,709 |  |  | $ | 1,400,117 |  |  | $ | 1,371,478 |  |  | $ | 1,373,136 |  |  | $ | 1,274,227 |  |  | $ | 1,313,022 |
Total debt outstanding |  |  | 616,750 |  |  |  | 482,000 |  |  |  | 494,000 |  |  |  | 494,000 |  |  |  | 449,000 |  |  |  | 375,000 |
Debt to Total Market Capitalization |  |  | 37.7% |  |  |  | 34.4% |  |  |  | 36.0% |  |  |  | 36.0% |  |  |  | 35.2% |  |  |  | 28.6% |
Debt to Adjusted EBITDA |  |  | 25.8 |  |  |  | 20.6 |  |  |  | 21.7 |  |  |  | 21.7 |  |  |  | 20.7 |  |  |  | 19.6 |
Owned Portfolio Leasing Statistics: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owned portfolio assets |  |  | 37 |  |  |  | 37 |  |  |  | 36 |  |  |  | 36 |  |  |  | 36 |  |  |  | 35 |
Portfolio total SF |  |  | 7,854,679 |  |  |  | 7,439,195 |  |  |  | 7,052,592 |  |  |  | 7,052,068 |  |  |  | 7,052,068 |  |  |  | 6,929,891 |
Portfolio % leased |  |  | 94% |  |  |  | 90% |  |  |  | 90% |  |  |  | 89% |  |  |  | 89% |  |  |  | 88% |

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

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

December 31, 2012 | 4

|  | Condensed Consolidated Income Statements ($ in thousands, except per share amounts)

|  |  |  |  |  |  |  |  |  |  |  |  |  | For the |  |  |  |  |  |  |  |  |  |  |  |  |  |  | For the |
|  | For the Three Months Ended |  |  | Year Ended |  |  | For the Three Months Ended |  |  | Year Ended |
|  | 31-Mar-12 |  |  | 30-Jun-12 |  |  | 30-Sep-12 |  |  | 31-Dec-12 |  |  | 31-Dec-12 |  |  | 31-Mar-11 |  |  | 30-Jun-11 |  |  | 30-Sep-11 |  |  | 31-Dec-11 |  |  | 31-Dec-11 |
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental |  | $ | 36,303 |  |  | $ | 35,570 |  |  | $ | 38,251 |  |  | $ | 41,532 |  |  | $ | 151,656 |  |  | $ | 30,766 |  |  | $ | 33,330 |  |  | $ | 33,398 |  |  | $ | 36,744 |  |  | $ | 134,238 |
Related party revenue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Management fees and interest income from loans |  |  | 2,616 |  |  |  | 3,045 |  |  |  | 3,485 |  |  |  | 1,801 |  |  |  | 10,947 |  |  |  | 808 |  |  |  | 1,150 |  |  |  | 1,037 |  |  |  | 1,051 |  |  |  | 4,046 |
Other |  |  | 34 |  |  |  | 39 |  |  |  | 39 |  |  |  | 87 |  |  |  | 199 |  |  |  | 6 |  |  |  | 7 |  |  |  | 7 |  |  |  | 29 |  |  |  | 49 |
Total revenue |  |  | 38,953 |  |  |  | 38,654 |  |  |  | 41,775 |  |  |  | 43,420 |  |  |  | 162,802 |  |  |  | 31,580 |  |  |  | 34,487 |  |  |  | 34,442 |  |  |  | 37,824 |  |  |  | 138,333 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate operating expenses |  |  | 8,697 |  |  |  | 8,604 |  |  |  | 9,639 |  |  |  | 10,501 |  |  |  | 37,441 |  |  |  | 8,341 |  |  |  | 8,360 |  |  |  | 8,889 |  |  |  | 9,486 |  |  |  | 35,076 |
Real estate taxes and insurance |  |  | 5,696 |  |  |  | 5,493 |  |  |  | 5,764 |  |  |  | 5,960 |  |  |  | 22,913 |  |  |  | 4,655 |  |  |  | 5,152 |  |  |  | 4,950 |  |  |  | 5,357 |  |  |  | 20,114 |
Depreciation and amortization |  |  | 13,071 |  |  |  | 13,004 |  |  |  | 13,572 |  |  |  | 15,225 |  |  |  | 54,872 |  |  |  | 10,613 |  |  |  | 11,875 |  |  |  | 12,183 |  |  |  | 12,951 |  |  |  | 47,622 |
Selling, general and administrative |  |  | 2,077 |  |  |  | 2,236 |  |  |  | 3,141 |  |  |  | 2,462 |  |  |  | 9,916 |  |  |  | 1,645 |  |  |  | 1,602 |  |  |  | 1,654 |  |  |  | 2,012 |  |  |  | 6,913 |
Interest |  |  | 3,677 |  |  |  | 4,037 |  |  |  | 4,187 |  |  |  | 4,167 |  |  |  | 16,068 |  |  |  | 2,408 |  |  |  | 3,578 |  |  |  | 3,419 |  |  |  | 3,261 |  |  |  | 12,666 |
Total expenses |  |  | 33,218 |  |  |  | 33,374 |  |  |  | 36,303 |  |  |  | 38,315 |  |  |  | 141,210 |  |  |  | 27,662 |  |  |  | 30,567 |  |  |  | 31,095 |  |  |  | 33,067 |  |  |  | 122,391 |
Income before interest income, equity in earnings of non-consolidated REITs and taxes |  |  | 5,735 |  |  |  | 5,280 |  |  |  | 5,472 |  |  |  | 5,105 |  |  |  | 21,592 |  |  |  | 3,918 |  |  |  | 3,920 |  |  |  | 3,347 |  |  |  | 4,757 |  |  |  | 15,942 |
Interest income |  |  | 8 |  |  |  | 4 |  |  |  | 5 |  |  |  | 34 |  |  |  | 51 |  |  |  | 11 |  |  |  | 5 |  |  |  | 3 |  |  |  | 3 |  |  |  | 22 |
Equity in earnings of non-consolidated REITs |  |  | 391 |  |  |  | 494 |  |  |  | 176 |  |  |  | 972 |  |  |  | 2,033 |  |  |  | 968 |  |  |  | 1,166 |  |  |  | 573 |  |  |  | 978 |  |  |  | 3,685 |
Income before taxes on income |  |  | 6,134 |  |  |  | 5,778 |  |  |  | 5,653 |  |  |  | 6,111 |  |  |  | 23,676 |  |  |  | 4,897 |  |  |  | 5,091 |  |  |  | 3,923 |  |  |  | 5,738 |  |  |  | 19,649 |
Income tax expense |  |  | 79 |  |  |  | 77 |  |  |  | 80 |  |  |  | 99 |  |  |  | 335 |  |  |  | 50 |  |  |  | 68 |  |  |  | 67 |  |  |  | 82 |  |  |  | 267 |
Income from continuing operations |  |  | 6,055 |  |  |  | 5,701 |  |  |  | 5,573 |  |  |  | 6,012 |  |  |  | 23,341 |  |  |  | 4,847 |  |  |  | 5,023 |  |  |  | 3,856 |  |  |  | 5,656 |  |  |  | 19,382 |
Income from discontinued operations |  |  | (317 | ) |  |  | (268 | ) |  |  | (271 | ) |  |  | (26 | ) |  |  | (882 | ) |  |  | 327 |  |  |  | 3,012 |  |  |  | (542 | ) |  |  | (594 | ) |  |  | 2,203 |
Gain (loss) on sale, less applicable income tax |  |  | — |  |  |  | — |  |  |  | (14,300 | ) |  |  | (526 | ) |  |  | (14,826 | ) |  |  | 19,593 |  |  |  | 2,346 |  |  |  | — |  |  |  | — |  |  |  | 21,939 |
Net income |  | $ | 5,738 |  |  | $ | 5,433 |  |  | $ | (8,998 | ) |  | $ | 5,460 |  |  | $ | 7,633 |  |  | $ | 24,767 |  |  | $ | 10,381 |  |  | $ | 3,314 |  |  | $ | 5,062 |  |  | $ | 43,524 |
Weighted average number of shares outstanding, basic and diluted |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 81,437 |  |  |  | 81,437 |  |  |  | 81,600 |  |  |  | 82,937 |  |  |  | 81,857 |
Earnings per share, basic and diluted, attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  | $ | 0.07 |  |  | $ | 0.07 |  |  | $ | 0.07 |  |  | $ | 0.07 |  |  | $ | 0.28 |  |  | $ | 0.06 |  |  | $ | 0.06 |  |  | $ | 0.05 |  |  | $ | 0.07 |  |  | $ | 0.24 |
Discontinued operations |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (0.01 | ) |  |  | — |  |  |  | 0.04 |  |  |  | (0.01 | ) |  |  | (0.01 | ) |  |  | 0.02 |
Gain (loss) on less applicable income tax |  |  | — |  |  |  | — |  |  |  | (0.18 | ) |  |  | — |  |  |  | (0.18 | ) |  |  | 0.24 |  |  |  | 0.03 |  |  |  | — |  |  |  | — |  |  |  | 0.27 |
Net income per share, basic and diluted |  | $ | 0.07 |  |  | $ | 0.07 |  |  | $ | (0.11 | ) |  | $ | 0.07 |  |  | $ | 0.09 |  |  | $ | 0.30 |  |  | $ | 0.13 |  |  | $ | 0.04 |  |  | $ | 0.06 |  |  | $ | 0.53 |

December 31, 2012 | 5

|  | Condensed Consolidated Balance Sheets (in thousands)

|  | March 31, |  |  | June 30, |  |  | September 30, |  |  | December 31, |  |  | December 31, |
|  | 2012 |  |  | 2012 |  |  | 2012 |  |  | 2012 |  |  | 2011 |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Land |  | $ | 132,393 |  |  | $ | 132,393 |  |  | $ | 135,845 |  |  | $ | 144,336 |  |  | $ | 132,393 |
Buildings and improvements |  |  | 1,009,706 |  |  |  | 1,013,122 |  |  |  | 1,051,111 |  |  |  | 1,178,144 |  |  |  | 1,006,267 |
Fixtures and equipment |  |  | 860 |  |  |  | 871 |  |  |  | 904 |  |  |  | 904 |  |  |  | 831 |
|  |  | 1,142,959 |  |  |  | 1,146,386 |  |  |  | 1,187,860 |  |  |  | 1,323,384 |  |  |  | 1,139,491 |
Less accumulated depreciation |  |  | 155,956 |  |  |  | 163,701 |  |  |  | 171,876 |  |  |  | 180,756 |  |  |  | 148,266 |
Real estate assets, net |  |  | 987,003 |  |  |  | 982,685 |  |  |  | 1,015,984 |  |  |  | 1,142,628 |  |  |  | 991,225 |
Acquired real estate leases, net |  |  | 87,073 |  |  |  | 82,769 |  |  |  | 92,717 |  |  |  | 111,982 |  |  |  | 91,613 |
Investment in non-consolidated REITs |  |  | 87,061 |  |  |  | 86,658 |  |  |  | 85,927 |  |  |  | 81,960 |  |  |  | 87,598 |
Assets held for syndication, net |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Assets held for sale |  |  | 15,215 |  |  |  | 15,032 |  |  |  | 685 |  |  |  | — |  |  |  | 15,355 |
Cash and cash equivalents |  |  | 29,283 |  |  |  | 22,620 |  |  |  | 23,962 |  |  |  | 21,267 |  |  |  | 23,813 |
Restricted cash |  |  | 511 |  |  |  | 533 |  |  |  | 546 |  |  |  | 575 |  |  |  | 493 |
Tenant rent receivables, net |  |  | 1,090 |  |  |  | 1,403 |  |  |  | 1,182 |  |  |  | 1,749 |  |  |  | 1,460 |
Straight-line rent receivable, net |  |  | 31,861 |  |  |  | 33,048 |  |  |  | 34,190 |  |  |  | 35,441 |  |  |  | 28,502 |
Prepaid expenses |  |  | 1,164 |  |  |  | 2,605 |  |  |  | 2,336 |  |  |  | 1,106 |  |  |  | 1,223 |
Related party mortgage loan receivable |  |  | 172,286 |  |  |  | 177,536 |  |  |  | 108,236 |  |  |  | 93,896 |  |  |  | 140,516 |
Other assets |  |  | 4,006 |  |  |  | 3,640 |  |  |  | 8,467 |  |  |  | 13,199 |  |  |  | 4,538 |
Deferred leasing commissions, net |  |  | 21,975 |  |  |  | 21,834 |  |  |  | 21,702 |  |  |  | 23,376 |  |  |  | 22,325 |
Total assets |  | $ | 1,438,528 |  |  | $ | 1,430,363 |  |  | $ | 1,395,934 |  |  | $ | 1,527,179 |  |  | $ | 1,408,661 |
Liabilities and Stockholders’ Equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bank note payable |  | $ | 494,000 |  |  | $ | 494,000 |  |  | $ | 82,000 |  |  | $ | 216,750 |  |  | $ | 449,000 |
Term loan payable |  |  | — |  |  |  | — |  |  |  | 400,000 |  |  |  | 400,000 |  |  |  | — |
Accounts payable and accrued expenses |  |  | 23,311 |  |  |  | 25,408 |  |  |  | 26,462 |  |  |  | 31,122 |  |  |  | 26,446 |
Accrued compensation |  |  | 446 |  |  |  | 944 |  |  |  | 2,194 |  |  |  | 2,540 |  |  |  | 2,222 |
Tenant security deposits |  |  | 2,181 |  |  |  | 2,113 |  |  |  | 2,281 |  |  |  | 2,489 |  |  |  | 2,008 |
Other liabilities: derivative liability |  |  | — |  |  |  | — |  |  |  | 1,671 |  |  |  | 1,219 |  |  |  | — |
Acquired unfavorable real estate leases, net |  |  | 7,243 |  |  |  | 6,875 |  |  |  | 6,730 |  |  |  | 8,310 |  |  |  | 7,618 |
Total liabilities |  |  | 527,181 |  |  |  | 529,340 |  |  |  | 521,338 |  |  |  | 662,430 |  |  |  | 487,294 |
Commitments and contingencies |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Stockholders’ Equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Common stock |  |  | 8 |  |  |  | 8 |  |  |  | 8 |  |  |  | 8 |  |  |  | 8 |
Additional paid-in capital |  |  | 1,042,876 |  |  |  | 1,042,876 |  |  |  | 1,042,876 |  |  |  | 1,042,876 |  |  |  | 1,042,876 |
Accumulated other comprehensive loss |  |  | — |  |  |  | — |  |  |  | (1,671 | ) |  |  | (1,219 | ) |  |  | — |
Accumulated distributions in excess of accumulated earnings |  |  | (131,537 | ) |  |  | (141,861 | ) |  |  | (166,617 | ) |  |  | (176,916 | ) |  |  | (121,517 | )
Total stockholders’ equity |  |  | 911,347 |  |  |  | 901,023 |  |  |  | 874,596 |  |  |  | 864,749 |  |  |  | 921,367 |
Total liabilities and stockholders’ equity |  | $ | 1,438,528 |  |  | $ | 1,430,363 |  |  | $ | 1,395,934 |  |  | $ | 1,527,179 |  |  | $ | 1,408,661 |

December 31, 2012 | 6

|  | Condensed Consolidated Statements of Cash Flows (in thousands)

|  | Twelve Months ended December 31 |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 7,633 |  |  | $ | 43,524 |  |  | $ | 22,093 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization expense |  |  | 57,500 |  |  |  | 50,261 |  |  |  | 39,627 |
Amortization of above market lease |  |  | 71 |  |  |  | (47 | ) |  |  | 1,362 |
Gain (loss) on sale, less applicable income tax |  |  | 14,826 |  |  |  | (21,939 | ) |  |  | — |
Equity in earnings (losses) from non-consolidated REITs |  |  | (2,033 | ) |  |  | (3,086 | ) |  |  | (1,183 | )
Distributions from non-consolidated REITs |  |  | 705 |  |  |  | 3,474 |  |  |  | 1,633 |
Increase in bad debt reserve |  |  | 65 |  |  |  | (365 | ) |  |  | 980 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Restricted cash |  |  | (82 | ) |  |  | (73 | ) |  |  | (86 | )
Tenant rent receivables |  |  | (354 | ) |  |  | 827 |  |  |  | (1,120 | )
Straight-line rents |  |  | (4,464 | ) |  |  | (9,878 | ) |  |  | (4,249 | )
Lease acquisition costs |  |  | (2,520 | ) |  |  | — |  |  |  | — |
Prepaid expenses and other assets |  |  | (328 | ) |  |  | 1,611 |  |  |  | 865 |
Accounts payable and accrued expenses |  |  | 3,717 |  |  |  | 4,213 |  |  |  | (351 | )
Accrued compensation |  |  | 318 |  |  |  | 419 |  |  |  | 387 |
Tenant security deposits |  |  | 481 |  |  |  | 78 |  |  |  | 122 |
Payment of deferred leasing commissions |  |  | (5,179 | ) |  |  | (8,058 | ) |  |  | (10,515 | )
Net cash provided by operating activities |  |  | 70,356 |  |  |  | 60,961 |  |  |  | 49,565 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |
Purchase of real estate assets, office computers and furniture, capitalized merger costs and acquired real estate leases |  |  | (221,170 | ) |  |  | (236,250 | ) |  |  | (54,344 | )
Investment in non-consolidated REITs |  |  | (1 | ) |  |  | (10 | ) |  |  | (11 | )
Distributions in excess of earnings from non-consolidated REITs |  |  | 2,105 |  |  |  | 1,582 |  |  |  | 3,537 |
Investment in related party mortgage loan receivable |  |  | (74,580 | ) |  |  | (82,832 | ) |  |  | (21,149 | )
Repayment of related party mortgage loan receivable |  |  | 121,200 |  |  |  | — |  |  |  | — |
Changes in deposits on real estate assets |  |  | — |  |  |  | 200 |  |  |  | (200 | )
Investment in assets held for syndication, net |  |  | — |  |  |  | 2,230 |  |  |  | 1,319 |
Proceeds received on sales of real estate assets |  |  | 157 |  |  |  | 96,790 |  |  |  | — |
Net cash used in investing activities |  |  | (172,289 | ) |  |  | (218,290 | ) |  |  | (70,848 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |
Distributions to stockholders |  |  | (63,032 | ) |  |  | (62,177 | ) |  |  | (60,586 | )
Proceeds (costs) from equity offering, net |  |  | — |  |  |  | 17,295 |  |  |  | 21,868 |
Borrowings under bank note payable |  |  | 294,750 |  |  |  | 449,000 |  |  |  | — |
Borrowings (repayments) under Revolver |  |  | (527,000 | ) |  |  | (209,968 | ) |  |  | 100,960 |
Borrowing (repayment) of term loan payable, net |  |  | 400,000 |  |  |  | (74,850 | ) |  |  | (150 | )
Deferred Financing Costs |  |  | (5,331 | ) |  |  | (5,388 | ) |  |  | — |
Swap termination payment |  |  | — |  |  |  | (983 | ) |  |  | — |
Net cash provided by (used in) financing activities |  |  | 99,387 |  |  |  | 112,929 |  |  |  | 62,092 |
Net decreases in cash and cash equivalents |  |  | (2,546 | ) |  |  | (44,400 | ) |  |  | 40,809 |
Cash and cash equivalents, beginning of period |  |  | 23,813 |  |  |  | 68,213 |  |  |  | 27,404 |
Cash and cash equivalents, end of period |  | $ | 21,267 |  |  | $ | 23,813 |  |  | $ | 68,213 |

December 31, 2012 | 7

|  | Property Net Operating Income (NOI)* with Same Store comparison (in thousands)

| Net Operating Income (NOI)*
(in thousands) | Rentable |  |  |  |  |  | Year |  |  |  |  |  | Year |  |
| Square Feet |  | Three Months Ended: | Ended |  | Three Months Ended: | Ended | Inc | %
Region | or RSF |  | 31-Mar-12 | 30-Jun-12 | 30-Sep-12 | 31-Dec-12 | 31-Dec-12 |  | 31-Mar-11 | 30-Jun-11 | 30-Sep-11 | 31-Dec-11 | 31-Dec-11 | (Dec) | Change
East | 1,181 |  | $ 3,479 | $ 3,094 | $ 3,165 | $ 3,095 | $ 12,833 |  | $ 3,019 | $ 2,735 | $ 2,801 | $ 3,530 | $ 12,085 | $ 748 | 6.2%
MidWest | 1,487 |  | 4,166 | 4,031 | 4,078 | 4,043 | 16,318 |  | 4,597 | 4,217 | 4,428 | 4,195 | 17,437 | (1,119) | -6.4%
South | 2,089 |  | 6,901 | 6,725 | 7,152 | 6,788 | 27,566 |  | 5,886 | 6,756 | 6,439 | 6,586 | 25,667 | 1,899 | 7.4%
West | 1,088 |  | 2,278 | 2,443 | 2,428 | 2,788 | 9,937 |  | 1,718 | 2,293 | 2,095 | 2,548 | 8,654 | 1,283 | 14.8%
Same Store | 5,845 |  | 16,824 | 16,293 | 16,823 | 16,714 | 66,654 |  | 15,220 | 16,001 | 15,763 | 16,859 | 63,843 | 2,811 | 4.4%
Acquisitions | 2,010 |  | 4,901 | 4,868 | 5,755 | 7,975 | 23,499 |  | 807 | 3,513 | 3,488 | 4,738 | 12,546 | 10,953 | 13.6%
Property NOI from the continuing portfolio | 7,855 |  | 21,725 | 21,161 | 22,578 | 24,689 | 90,153 |  | 16,027 | 19,514 | 19,251 | 21,597 | 76,389 | 13,764 | 18.0%
Dispositions |  |  | (132) | (47) | (101) | (26) | (306) |  | 336 | (72) | (236) | (175) | (147) | (159) | -0.2%
Property NOI |  |  | $ 21,593 | $ 21,114 | $ 22,477 | $ 24,663 | $ 89,847 |  | $ 16,363 | $ 19,442 | $ 19,015 | $ 21,422 | $ 76,242 | $ 13,605 | 17.8%
Same Store |  |  | $ 16,824 | $ 16,293 | $ 16,823 | $ 16,714 | $ 66,654 |  | $ 15,220 | $ 16,001 | $ 15,763 | $ 16,859 | $ 63,843 | $ 2,811 | 4.4%
Nonrecurring Items in |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property NOI (a) |  |  | 599 | 21 | 307 | - | 927 |  | 1 | - | 169 | 1,096 | 1,266 | (339) | -0.6%
Comparative |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Same Store |  |  | $ 16,225 | $ 16,272 | $ 16,516 | $ 16,714 | $ 65,727 |  | $ 15,219 | $ 16,001 | $ 15,594 | $ 15,763 | $ 62,577 | $ 3,150 | 5.0%

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

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

December 31, 2012 | 8

|  | FFO & FAD Reconciliation (in thousands, except per share amounts)

|  |  |  |  |  |  |  |  |  |  |  |  |  | For the |  |  |  |  |  |  |  |  |  |  |  |  |  |  | For the |
|  | For the Three Months Ended: |  |  | Year Ended |  |  | For the Three Months Ended: |  |  | Year Ended |
|  | 31-Mar-12 |  |  | 30-Jun-12 |  |  | 30-Sep-12 |  |  | 31-Dec-12 |  |  | 31-Dec-12 |  |  | 31-Mar-11 |  |  | 30-Jun-11 |  |  | 30-Sep-11 |  |  | 31-Dec-11 |  |  | 31-Dec-12 |
Net income |  | $ | 5,738 |  |  | $ | 5,433 |  |  | $ | (8,998 | ) |  | $ | 5,460 |  |  | $ | 7,633 |  |  | $ | 24,767 |  |  | $ | 10,381 |  |  | $ | 3,314 |  |  | $ | 5,062 |  |  | $ | 43,524 |
Gain (loss) on sale, less applicable income tax |  |  | — |  |  |  | — |  |  |  | 14,300 |  |  |  | 526 |  |  |  | 14,826 |  |  |  | (19,593 | ) |  |  | (2,346 | ) |  |  | — |  |  |  | — |  |  |  | (21,939 | )
GAAP income from non-consolidated REITs |  |  | (391 | ) |  |  | (494 | ) |  |  | (176 | ) |  |  | (972 | ) |  |  | (2,033 | ) |  |  | (1,773 | ) |  |  | (1,166 | ) |  |  | (573 | ) |  |  | (978 | ) |  |  | (4,490 | )
Distributions from non-consolidated REITs |  |  | 929 |  |  |  | 898 |  |  |  | 907 |  |  |  | 76 |  |  |  | 2,810 |  |  |  | 1,767 |  |  |  | 1,215 |  |  |  | 1,104 |  |  |  | 970 |  |  |  | 5,056 |
Depreciation & amortization |  |  | 13,295 |  |  |  | 13,205 |  |  |  | 13,779 |  |  |  | 15,239 |  |  |  | 55,518 |  |  |  | 10,812 |  |  |  | 12,047 |  |  |  | 12,332 |  |  |  | 13,248 |  |  |  | 48,439 |
NAREIT FFO* |  |  | 19,571 |  |  |  | 19,042 |  |  |  | 19,812 |  |  |  | 20,329 |  |  |  | 78,754 |  |  |  | 15,980 |  |  |  | 20,131 |  |  |  | 16,177 |  |  |  | 18,302 |  |  |  | 70,590 |
Acquisition costs |  |  | — |  |  |  | — |  |  |  | 101 |  |  |  | 186 |  |  |  | 287 |  |  |  | 269 |  |  |  | 9 |  |  |  | 185 |  |  |  | 157 |  |  |  | 620 |
Funds From Operations (FFO)* |  | $ | 19,571 |  |  | $ | 19,042 |  |  | $ | 19,913 |  |  | $ | 20,515 |  |  | $ | 79,041 |  |  | $ | 16,249 |  |  | $ | 20,140 |  |  | $ | 16,362 |  |  | $ | 18,459 |  |  | $ | 71,210 |
Funds Available for Distribution: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Funds From Operations (FFO)* |  |  | 19,571 |  |  |  | 19,042 |  |  |  | 19,913 |  |  |  | 20,515 |  |  |  | 79,041 |  |  |  | 16,249 |  |  |  | 20,140 |  |  |  | 16,362 |  |  |  | 18,459 |  |  |  | 71,210 |
Straight-line rent |  |  | (1,517 | ) |  |  | (1,054 | ) |  |  | (927 | ) |  |  | (965 | ) |  |  | (4,463 | ) |  |  | (2,303 | ) |  |  | (2,873 | ) |  |  | (2,228 | ) |  |  | (2,474 | ) |  |  | (9,878 | )
Capital expenditures |  |  | (746 | ) |  |  | (1,003 | ) |  |  | (711 | ) |  |  | (1,252 | ) |  |  | (3,712 | ) |  |  | (449 | ) |  |  | (876 | ) |  |  | (754 | ) |  |  | (747 | ) |  |  | (2,826 | )
Funds Available for Distribution (FAD)* |  | $ | 17,308 |  |  | $ | 16,985 |  |  | $ | 18,275 |  |  | $ | 18,298 |  |  | $ | 70,866 |  |  | $ | 13,497 |  |  | $ | 16,391 |  |  | $ | 13,380 |  |  | $ | 15,238 |  |  | $ | 58,506 |
Per Share Data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
EPS |  | $ | 0.07 |  |  | $ | 0.07 |  |  | $ | (0.11 | ) |  | $ | 0.07 |  |  | $ | 0.09 |  |  | $ | 0.30 |  |  | $ | 0.13 |  |  | $ | 0.04 |  |  | $ | 0.06 |  |  | $ | 0.53 |
FFO* |  |  | 0.24 |  |  |  | 0.23 |  |  |  | 0.24 |  |  |  | 0.25 |  |  |  | 0.95 |  |  |  | 0.20 |  |  |  | 0.25 |  |  |  | 0.20 |  |  |  | 0.23 |  |  |  | 0.87 |
FAD* |  |  | 0.21 |  |  |  | 0.20 |  |  |  | 0.22 |  |  |  | 0.22 |  |  |  | 0.85 |  |  |  | 0.17 |  |  |  | 0.20 |  |  |  | 0.16 |  |  |  | 0.19 |  |  |  | 0.71 |
Weighted Average Shares (basic and diluted) |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 81,437 |  |  |  | 81,437 |  |  |  | 81,600 |  |  |  | 81,600 |  |  |  | 81,857 |

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

December 31, 2012 | 9

|  | EBITDA Reconciliation (in thousands, except ratio amounts)

|  |  |  |  |  |  |  |  |  |  |  |  |  | Year Ended |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Year Ended |
|  | For the three months ended: |  |  | 31-Dec-12 |  |  | For the three months ended: |  |  | 31-Dec-11 |
|  | 31-Mar-12 |  |  | 30-Jun-12 |  |  | 30-Sep-12 |  |  | 31-Dec-12 |  |  |  |  |  | 31-Mar-11 |  |  | 30-Jun-11 |  |  | 30-Sep-11 |  |  | 31-Dec-11 |  |  |  |
Net income |  | $ | 5,738 |  |  | $ | 5,433 |  |  | $ | (8,998 | ) |  | $ | 5,460 |  |  | $ | 7,633 |  |  | $ | 24,767 |  |  | $ | 10,381 |  |  | $ | 3,314 |  |  | $ | 5,062 |  |  | $ | 43,524 |
Interest expense |  |  | 3,677 |  |  |  | 4,037 |  |  |  | 4,187 |  |  |  | 4,167 |  |  |  | 16,068 |  |  |  | 2,408 |  |  |  | 3,578 |  |  |  | 3,419 |  |  |  | 3,261 |  |  |  | 12,666 |
Depreciation and amortization |  |  | 13,295 |  |  |  | 13,205 |  |  |  | 13,779 |  |  |  | 15,239 |  |  |  | 55,518 |  |  |  | 10,812 |  |  |  | 12,047 |  |  |  | 12,332 |  |  |  | 13,248 |  |  |  | 48,439 |
Income taxes |  |  | 79 |  |  |  | 77 |  |  |  | 80 |  |  |  | 99 |  |  |  | 335 |  |  |  | 50 |  |  |  | 68 |  |  |  | 67 |  |  |  | 82 |  |  |  | 267 |
EBITDA |  |  | 22,789 |  |  |  | 22,752 |  |  |  | 9,048 |  |  |  | 24,965 |  |  |  | 79,554 |  |  |  | 38,037 |  |  |  | 26,074 |  |  |  | 19,132 |  |  |  | 21,653 |  |  |  | 104,896 |
Excluding (gain) loss on sale, less applicable income tax |  |  | — |  |  |  | — |  |  |  | 14,300 |  |  |  | 526 |  |  |  | 14,826 |  |  |  | (19,593 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (19,593 | )
Adjusted EBITDA |  | $ | 22,789 |  |  | $ | 22,752 |  |  | $ | 23,348 |  |  | $ | 25,491 |  |  | $ | 94,380 |  |  | $ | 18,444 |  |  | $ | 26,074 |  |  | $ | 19,132 |  |  | $ | 21,653 |  |  | $ | 85,303 |
Interest expense |  | $ | 3,677 |  |  | $ | 4,037 |  |  | $ | 4,187 |  |  | $ | 4,167 |  |  | $ | 16,068 |  |  | $ | 2,408 |  |  | $ | 3,578 |  |  | $ | 3,419 |  |  | $ | 3,261 |  |  | $ | 12,666 |
Scheduled principal payments (1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Interest and scheduled principal payments |  | $ | 3,677 |  |  | $ | 4,037 |  |  | $ | 4,187 |  |  | $ | 4,167 |  |  | $ | 16,068 |  |  | $ | 2,408 |  |  | $ | 3,578 |  |  | $ | 3,419 |  |  | $ | 3,261 |  |  | $ | 12,666 |
Interest coverage ratio |  |  | 6.20 |  |  |  | 5.64 |  |  |  | 5.58 |  |  |  | 6.12 |  |  |  | 5.87 |  |  |  | 7.66 |  |  |  | 7.29 |  |  |  | 5.60 |  |  |  | 6.64 |  |  |  | 6.73 |
Debt service coverage ratio |  |  | 6.20 |  |  |  | 5.64 |  |  |  | 5.58 |  |  |  | 6.12 |  |  |  | 5.87 |  |  |  | 7.66 |  |  |  | 7.29 |  |  |  | 5.60 |  |  |  | 6.64 |  |  |  | 6.73 |

(1) Scheduled principal payments exclude repayment of our Term Loan on February 22, 2011 in its entirety.

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

December 31, 2012 | 10

|  | Reconciliation of Net Income to Property NOI* (in thousands)

Reconciliation to Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Year |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Year |
|  | Three Months Ended: |  |  | Ended |  |  | Three Months Ended: |  |  | Ended |
|  | 31-Mar-12 |  |  | 30-Jun-12 |  |  | 30-Sep-12 |  |  | 31-Dec-12 |  |  | 31-Dec-12 |  |  | 31-Mar-11 |  |  | 30-Jun-11 |  |  | 30-Sep-11 |  |  | 31-Dec-11 |  |  | 31-Dec-11 |
Net Income |  | $ | 5,738 |  |  | $ | 5,433 |  |  | $ | (8,998 | ) |  | $ | 5,460 |  |  | $ | 7,633 |  |  | $ | 24,767 |  |  | $ | 10,381 |  |  | $ | 3,314 |  |  | $ | 5,062 |  |  | $ | 43,524 |
Add (deduct): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discontinued operations |  |  | 317 |  |  |  | 268 |  |  |  | 270 |  |  |  | 26 |  |  |  | 881 |  |  |  | (326 | ) |  |  | (3,012 | ) |  |  | 543 |  |  |  | 43 |  |  |  | (2,752 | )
Loss (gain) on sale |  |  | — |  |  |  | — |  |  |  | 14,300 |  |  |  | 526 |  |  |  | 14,826 |  |  |  | (19,593 | ) |  |  | (2,346 | ) |  |  | — |  |  |  | — |  |  |  | (21,939 | )
Management fee income (before eliminations) |  |  | (488 | ) |  |  | (479 | ) |  |  | (562 | ) |  |  | (591 | ) |  |  | (2,120 | ) |  |  | (364 | ) |  |  | (428 | ) |  |  | (439 | ) |  |  | (563 | ) |  |  | (1,794 | )
Depreciation and amortization |  |  | 13,071 |  |  |  | 13,004 |  |  |  | 13,573 |  |  |  | 15,224 |  |  |  | 54,872 |  |  |  | 10,611 |  |  |  | 11,876 |  |  |  | 12,183 |  |  |  | 13,195 |  |  |  | 47,865 |
Amortization of above/below market leases |  |  | 40 |  |  |  | (20 | ) |  |  | 36 |  |  |  | 15 |  |  |  | 71 |  |  |  | (39 | ) |  |  | (23 | ) |  |  | (57 | ) |  |  | 72 |  |  |  | (47 | )
Selling, general and administrative |  |  | 2,077 |  |  |  | 2,236 |  |  |  | 3,141 |  |  |  | 2,462 |  |  |  | 9,916 |  |  |  | 1,644 |  |  |  | 1,602 |  |  |  | 1,656 |  |  |  | 2,011 |  |  |  | 6,913 |
Interest expense |  |  | 3,677 |  |  |  | 4,037 |  |  |  | 4,187 |  |  |  | 4,167 |  |  |  | 16,068 |  |  |  | 2,408 |  |  |  | 3,578 |  |  |  | 3,419 |  |  |  | 3,260 |  |  |  | 12,665 |
Interest income |  |  | (2,340 | ) |  |  | (2,774 | ) |  |  | (3,201 | ) |  |  | (1,533 | ) |  |  | (9,848 | ) |  |  | (600 | ) |  |  | (910 | ) |  |  | (790 | ) |  |  | (810 | ) |  |  | (3,110 | )
Equity in earnings of nonconsolidated REITs |  |  | (391 | ) |  |  | (494 | ) |  |  | (176 | ) |  |  | (972 | ) |  |  | (2,033 | ) |  |  | (968 | ) |  |  | (1,166 | ) |  |  | (573 | ) |  |  | (978 | ) |  |  | (3,685 | )
Non-property specific items, net |  |  | 24 |  |  |  | (50 | ) |  |  | 8 |  |  |  | (95 | ) |  |  | (113 | ) |  |  | (1,513 | ) |  |  | (38 | ) |  |  | (5 | ) |  |  | 305 |  |  |  | (1,251 | )
Property NOI from the continuing portfolio |  | $ | 21,725 |  |  | $ | 21,161 |  |  | $ | 22,578 |  |  | $ | 24,689 |  |  | $ | 90,153 |  |  | $ | 16,027 |  |  | $ | 19,514 |  |  | $ | 19,251 |  |  | $ | 21,597 |  |  | $ | 76,389 |
Dispositions and asset held for sale |  |  | (132 | ) |  |  | (47 | ) |  |  | (101 | ) |  |  | (26 | ) |  |  | (306 | ) |  |  | 336 |  |  |  | (72 | ) |  |  | (236 | ) |  |  | (175 | ) |  |  | (147 | )
Property NOI |  | $ | 21,593 |  |  | $ | 21,114 |  |  | $ | 22,477 |  |  | $ | 24,663 |  |  | $ | 89,847 |  |  | $ | 16,363 |  |  | $ | 19,442 |  |  | $ | 19,015 |  |  | $ | 21,422 |  |  | $ | 76,242 |

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

December 31, 2012 | 11

|  | Debt Summary as of December 31, 2012

|  |  |  |  |  |  |  |  |  | (a) |  |
(dollars in thousands) |  |  |  | Maximum |  | Amount |  | Interest |  | Interest |  |
|  | Maturity |  | Amount |  | Drawn at |  | Rate |  | Rate at |  | Draw
2012 Credit Facility |  | Date |  | of Loan |  | 31-Dec-12 |  | Components |  | 31-Dec-12 |  | Fee (2)
2012 Revolver |  | 27-Sep-16 |  | $ 500,000 |  | $ 216,750 |  | L+1.45% |  | 1.66% |  | 0.3%
2012 Term Loan |  | 27-Sep-17 |  | 400,000 |  | 400,000 |  | 0.75% + 1.45% |  | 2.20% |  | 0.3%
|  |  |  | $ 900,000 |  | $ 616,750 |  |  |  | 2.01% |  |

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

On September 27, 2012, we entered into a new bank facility we call the 2012 Credit Facility for a total of $900 million, which is comprised of a line of credit that we can borrow up to $500 million on, which we call the 2012 Revolver and a term loan for $400 million that we call the 2012 Term Loan.

| • | The total amount available under the 2012 Credit Facility is $900 million and is subject to a facility fee on the entire amount based on a leverage calculation in the related loan agreement. The facility fee can range between 20 bps and 40 bps depending on our leverage at quarter end. As of December 31, 2012 the facility fee was 30 bps based on our leverage ratio, or approximately $2.7 million per year.

| • | The interest rate on the 2012 Revolver as of December 31, 2012 was 145 bps over the 30-Day LIBOR based on our leverage calculation. The interest rate spread can range between 135 bps and 190 bps over 30-Day LIBOR depending on our leverage at quarter end. As of December 31, 2012 the rate for the borrowing outstanding was 1.66%.

| • | The LIBOR interest rate on the 2012 Term Loan was fixed with a 5-year interest swap at 75 bps and is priced at 145 bps over that rate based on our leverage ratio. The interest rate spread can range between 135 bps and 190 bps over 30-Day LIBOR depending on our leverage at quarter end. As of December 31, 2012 the rate for the 2012 Term Loan was 2.20%.

| • | We incurred financing costs to close the 2012 Credit Facility and the 2011 Revolver that preceded it. These costs are deferred and amortized into interest expense during the term of the loans. The annual run rate for amortization to interest expense from deferred financing costs is approximately $1.7 million.

| • | The 2012 Revolver can be extended for 1 year at the Company’s option upon payment of fees and includes an accordion feature that allows for up to $250 million of additional borrowing capacity subject to receipt of lender commitments and satisfaction of certain customary conditions.

December 31, 2012 | 12

|  | Capital Analysis (in thousands, except per share amounts)

|  | 31-Mar-12 |  |  | 30-Jun-12 |  |  | 30-Sep-12 |  |  | 31-Dec-12 |  |  | 31-Mar-11 |  |  | 30-Jun-11 |  |  | 30-Sep-11 |  |  | 31-Dec-11 |
Market Data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Shares Outstanding |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 82,937 |  |  |  | 81,437 |  |  |  | 81,437 |  |  |  | 82,937 |  |  |  | 82,937 |
Closing market price per share |  | $ | 10.60 |  |  | $ | 10.58 |  |  | $ | 11.07 |  |  | $ | 12.31 |  |  | $ | 14.07 |  |  | $ | 12.91 |  |  | $ | 11.31 |  |  | $ | 9.95 |
Market capitalization |  | $ | 879,136 |  |  | $ | 877,478 |  |  | $ | 918,117 |  |  | $ | 1,020,959 |  |  | $ | 1,145,824 |  |  | $ | 1,051,357 |  |  | $ | 938,022 |  |  | $ | 825,227 |
Total Debt |  |  | 494,000 |  |  |  | 494,000 |  |  |  | 482,000 |  |  |  | 616,750 |  |  |  | 404,000 |  |  |  | 345,000 |  |  |  | 375,000 |  |  |  | 449,000 |
Total Market Capitalization |  | $ | 1,373,136 |  |  | $ | 1,371,478 |  |  | $ | 1,400,117 |  |  | $ | 1,637,709 |  |  | $ | 1,549,824 |  |  | $ | 1,396,357 |  |  | $ | 1,313,022 |  |  | $ | 1,274,227 |
Dividend Data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total dividends paid |  | $ | 15,758 |  |  | $ | 15,758 |  |  | $ | 15,758 |  |  | $ | 15,758 |  |  | $ | 15,473 |  |  | $ | 15,473 |  |  | $ | 15,473 |  |  | $ | 15,758 |
Common dividend per share |  | $ | 0.19 |  |  | $ | 0.19 |  |  | $ | 0.19 |  |  | $ | 0.19 |  |  | $ | 0.19 |  |  | $ | 0.19 |  |  | $ | 0.19 |  |  | $ | 0.19 |
Quarterly dividend as a % of FFO* |  |  | 80.5% |  |  |  | 82.6% |  |  |  | 79.2% |  |  |  | 76.0% |  |  |  | 95.0% |  |  |  | 76.0% |  |  |  | 95.0% |  |  |  | 86.4% |
Liquidity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 29,283 |  |  | $ | 22,620 |  |  | $ | 23,962 |  |  | $ | 21,267 |  |  | $ | 49,488 |  |  | $ | 28,881 |  |  | $ | 44,047 |  |  | $ | 23,813 |
Revolving credit facilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross potential available under current credit facilities |  |  | 600,000 |  |  |  | 600,000 |  |  |  | 900,000 |  |  |  | 900,000 |  |  |  | 500,000 |  |  |  | 600,000 |  |  |  | 600,000 |  |  |  | 600,000 |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding balance |  |  | (494,000 | ) |  |  | (494,000 | ) |  |  | (482,000 | ) |  |  | (616,750 | ) |  |  | (404,000 | ) |  |  | (345,000 | ) |  |  | (375,000 | ) |  |  | (449,000 | )
Total Liquidity |  | $ | 135,283 |  |  | $ | 128,620 |  |  | $ | 441,962 |  |  | $ | 304,517 |  |  | $ | 145,488 |  |  | $ | 283,881 |  |  | $ | 269,047 |  |  | $ | 174,813 |

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

December 31, 2012 | 13

|  | Portfolio Overview

| For the Three Months Ended
| 31-Dec-12 | 30-Sep-12 | 30-Jun-12 | 31-Mar-12 | 31-Dec-11
Owned portfolio of commercial real estate: |  |  |  |  |
Number of properties (a) | 37 | 37 | 36 | 36 | 36
Square feet | 7,854,679 | 7,439,195 | 7,052,592 | 7,052,068 | 7,052,068
Leased percentage | 94% | 90% | 90% | 89% | 89%
Investments in non-consolidated |  |  |  |  |
commercial real estate: |  |  |  |  |
Number of properties (a) | 2 | 3 | 3 | 3 | 3
Square feet | 1,392,316 | 2,016,260 | 2,003,968 | 2,004,953 | 2,001,542
Leased percentage | 65% | 68% | 89% | 90% | 87%
Single Asset REITs (SARs) managed: |  |  |  |  |
Number of properties | 13 | 13 | 13 | 13 | 13
Square feet | 3,323,566 | 3,322,589 | 3,322,589 | 3,322,570 | 3,322,639
Leased percentage | 87% | 85% | 85% | 84% | 80%
Total owned (a) , investments |  |  |  |  |
and managed properties: |  |  |  |  |
Number of properties | 52 | 53 | 52 | 52 | 52
Square feet | 12,570,561 | 12,778,044 | 12,379,149 | 12,379,591 | 12,376,249
Leased percentage | 89% | 85% | 89% | 88% | 86%

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

December 31, 2012 | 14

|  | Owned Portfolio Overview

|  |  | Square | Percent | Wtd Ave (a) | GAAP (b)
MSA / Property Name | City | State | Feet | Leased | Occupied | Rent
East Region |  |  |  |  |  |
Baltimore |  |  |  |  |  |
East Baltimore | Baltimore | MD | 325,445 | 77.3% | 56.6% | $ 26.12
Washington, D.C. |  |  |  |  |  |
Meadow Point | Chantilly | VA | 138,537 | 100.0% | 100.0% | $ 26.56
Stonecroft | Chantilly | VA | 111,469 | 100.0% | 100.0% | $ 37.74
Loudoun Tech Center | Dulles | VA | 135,888 | 100.0% | 100.0% | $ 15.89
Richmond |  |  |  |  |  |
Innsbrook | Glen Allen | VA | 298,456 | 98.3% | 95.4% | $ 17.41
Charlotte |  |  |  |  |  |
Park Seneca | Charlotte | NC | 109,406 | 79.3% | 77.8% | $ 15.75
Forest Park | Charlotte | NC | 62,212 | 100.0% | 100.0% | $ 13.27
Raleigh-Durham |  |  |  |  |  |
Emperor Boulevard | Durham | NC | 259,531 | 100.0% | 100.0% | $ 34.72
East Region Total |  |  | 1,440,944 | 92.9% | 87.6% | $ 24.56
Midwest Region |  |  |  |  |  |
Chicago |  |  |  |  |  |
Northwest Point | Elk Grove Village | IL | 176,848 | 100.0% | 100.0% | $ 19.42
909 Davis | Evanston | IL | 195,245 | 97.9% | 95.1% | $ 34.62
Indianapolis |  |  |  |  |  |
River Crossing | Indianapolis | IN | 205,059 | 92.2% | 92.1% | $ 21.79
St. Louis |  |  |  |  |  |
Timberlake | Chesterfield | MO | 232,766 | 97.0% | 97.0% | $ 21.25
Timberlake East | Chesterfield | MO | 116,197 | 97.0% | 90.7% | $ 23.33
Lakeside Crossing | Maryland Heights | MO | 127,778 | 100.0% | 100.0% | $ 24.17
Minneapolis |  |  |  |  |  |
Eden Bluff | Eden Prairie | MN | 153,028 | 100.0% | 100.0% | $ 27.33
121 South 8th Street | Minneapolis | MN | 475,303 | 90.6% | 91.4% | $ 15.22
Midwest Region Total |  |  | 1,682,224 | 95.5% | 95.0% | $ 21.98

(a) Weighted Occupied Percentage for the year ended December 31, 2012

(b) Weighted Average GAAP Rent per Occupied Square Foot

December 31, 2012 | 15

|  | Owned Portfolio Overview

|  |  | Square | Percent | Wtd Ave (a) | GAAP (b)
MSA / Property Name | City | State | Feet | Leased | Occupied | Rent
South Region |  |  |  |  |  |
Dallas-Fort Worth |  |  |  |  |  |
Willow Bend Office Center | Plano | TX | 117,050 | 77.8% | 75.1% | $ 20.80
Legacy Tennyson Center | Plano | TX | 202,600 | 100.0% | 100.0% | $ 17.09
One Legacy Circle | Plano | TX | 214,110 | 100.0% | 100.0% | $ 32.83
Addison Circle | Addison | TX | 293,787 | 98.4% | 95.8% | $ 24.74
Collins Crossing | Richardson | TX | 298,766 | 90.0% | 87.2% | $ 23.05
East Renner Road | Richardson | TX | 122,300 | 100.0% | 100.0% | $ 9.99
Liberty Plaza | Addison | TX | 218,934 | 81.7% | 79.2% | $ 19.01
Houston |  |  |  |  |  |
Park Ten | Houston | TX | 155,715 | 96.1% | 88.6% | $ 27.00
Eldridge Green | Houston | TX | 248,399 | 100.0% | 100.0% | $ 28.92
Park Ten Phase II | Houston | TX | 156,746 | 100.0% | 100.0% | $ 29.06
Westchase I & II | Houston | TX | 629,025 | 96.3% | 94.7% | $ 30.04
Miami-Ft. Lauderdale-West Palm Beach |  |  |  |  |  |
Blue Lagoon Drive | Miami | FL | 212,619 | 100.0% | 100.0% | $ 24.34
Atlanta |  |  |  |  |  |
One Overton Place | Atlanta | GA | 387,267 | 94.6% | 92.1% | $ 21.97
One Ravinia | Atlanta | GA | 386,603 | 91.0% | 83.6% | $ 22.13
South Region Total |  |  | 3,643,921 | 94.9% | 92.6% | $ 24.70
West Region |  |  |  |  |  |
Seattle |  |  |  |  |  |
Federal Way | Federal Way | WA | 117,010 | 47.0% | 46.3% | $ 18.63
San Francisco-San Jose-Oakland |  |  |  |  |  |
Hillview Center | Milpitas | CA | 36,288 | 100.0% | 100.0% | $ 14.52
Montague Business Center | San Jose | CA | 145,951 | 100.0% | 95.2% | $ 15.43
Denver |  |  |  |  |  |
380 Interlocken | Broomfield | CO | 240,184 | 89.5% | 87.3% | $ 26.57
Greenwood Plaza | Englewood | CO | 196,236 | 100.0% | 47.9% | $ 19.96
390 Interlocken | Broomfield | CO | 241,516 | 97.2% | 96.0% | $ 25.67
Colorado Springs |  |  |  |  |  |
Centennial Technology Center | Colorado Springs | CO | 110,405 | 85.4% | 82.3% | $ 15.95
West Region Total |  |  | 1,087,590 | 89.9% | 78.7% | $ 21.65
Total Owned |  |  | 7,854,679 | 93.98% | 90.26% | $ 23.69

(a) Weighted Occupied Percentage for the year ended December 31, 2012

(b) Weighted Average GAAP Rent per Occupied Square Foot

December 31, 2012 | 16

|  | Managed Portfolio Overview

MSA / Property Name | City | State | Square Feet |  |  |  | City | State | Square Feet
Columbia |  |  |  |  |  | Chicago |  |  |
1441 Main Street | Columbia | SC | 264,857 |  |  | East Wacker (a) | Chicago | IL | 857,245
Atlanta |  |  |  |  |  | Indianapolis |  |  |
Satellite Place | Duluth | GA | 134,785 |  |  | Monument Circle | Indianapolis | IN | 213,609
|  |  |  |  |  | St. Louis |  |  |
Dallas-Fort Worth |  |  |  |  |  | Lakeside Crossing II | Maryland Heights | MO | 116,000
5601 Executive Drive | Irving | TX | 152,121 |  |  |  |  |  |
Galleria North | Dallas | TX | 379,518 |  |  | Minneapolis |  |  |
|  |  |  |  |  | 505 Waterford | Plymouth | MN | 256,367
Houston |  |  |  |  |  | 50 South Tenth Street | Minneapolis | MN | 498,768
Energy Tower I | Houston | TX | 325,797 |  |  |  |  |  |
|  |  |  |  |  | Kansas City |  |  |
Denver |  |  |  |  |  | Grand Boulevard (b) | Kansas City | MO | 535,071
Highland Place | Centennial | CO | 139,142 |  |  |  |  |  |
385 Interlocken | Broomfield | CO | 296,868 |  |  | Cincinnati |  |  |
|  |  |  |  |  | Centre Pointe V | West Chester | OH | 135,936
Subtotal |  |  | 1,693,088 |  |  | Union Centre | West Chester | OH | 409,798
|  |  |  |  |  | Subtotal |  |  | 3,022,794
|  |  |  |  |  | Total Managed |  |  | 4,715,882
|  |  |  |  |  | Total Owned & Managed |  | 12,570,561

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

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

December 31, 2012 | 17

|  | Tenant Analysis – 20 Largest Tenants by Industry Profile (Top Twenty Largest Tenants by industry as a percentage of the Twenty Tenants as of December 31, 2012)

December 31, 2012 | 18

|  | 20 Largest Tenants with Annualized Rent and Remaining Term at December 31, 2012

|  |  | Remaining | Aggregate | % of Aggregate | Annualized | % of Aggregate
| Tenant | Number of | Lease Term | Leased | Leased | Rent | Leased
| Name | Leases | in Months | Square Feet | Square Feet | (in 000's) | Annualized Rent
1 | TCF National Bank | 2 | 36 | 268,252 | 3.4% | $ 2,971,145 | 1.8%
2 | Quintiles Transnational Corp. | 1 | 75 | 259,531 | 3.3% | 8,279,077 | 5.1%
3 | CITGO Petroleum Corporation | 1 | 110 | 248,399 | 3.2% | 7,202,681 | 4.4%
4 | Burger King Corporation | 1 | 69 | 212,619 | 2.7% | 4,465,755 | 2.8%
5 | Denbury Onshore, LLC | 2 | 43 | 202,600 | 2.6% | 3,510,042 | 2.2%
6 | RGA Reinsurance Company | 2 | 24 | 197,354 | 2.5% | 4,128,166 | 2.5%
7 | SunTrust Bank | 2 | 46, 105 | 182,888 | 2.3% | 3,661,136 | 2.3%
8 | Citicorp Credit Services, Inc | 1 | 48 | 176,848 | 2.3% | 3,511,335 | 2.2%
9 | C.H. Robinson Worldwide, Inc | 1 | 102 | 153,028 | 1.9% | 4,064,622 | 2.5%
10 | T-Mobile South, LLC dba T-Mobile | 1 | 74 | 151,792 | 1.9% | 3,610,093 | 2.2%
11 | Houghton Mifflin Harcourt Publishing Company | 1 | 51 | 150,050 | 1.9% | 5,696,915 | 3.5%
12 | Petrobras America, Inc. | 1 | 83 | 144,813 | 1.8% | 4,855,533 | 3.0%
13 | Murphy Exploration & Production Company | 1 | 52 | 144,677 | 1.8% | 4,242,011 | 2.6%
14 | Giesecke & Devrient America, Inc. | 1 | 26 | 135,888 | 1.7% | 1,842,083 | 1.1%
15 | Monsanto Company | 1 | 25 | 127,778 | 1.6% | 3,308,333 | 2.0%
16 | Federal National Mortgage Association | 1 | 45 | 123,144 | 1.6% | 2,741,014 | 1.7%
17 | AT&T Services, Inc. | 1 | 66 | 122,300 | 1.6% | 977,989 | 0.6%
18 | Vail Holdings, Inc. | 1 | 75, 123 | 122,232 | 1.6% | 3,415,267 | 2.1%
19 | Kaiser Foundation Health Plan, Inc. (1) | 1 | 135 | 120,979 | 1.5% | - | 0.0%
20 | Northrop Grumman Systems Corporation | 1 | 64 | 111,469 | 1.5% | 4,260,211 | 2.6%
|  |  | Total | 3,356,641 | 42.7% | $ 76,743,408 | 47.2%

(1) Lease will become rent-producing in 2013

December 31, 2012 | 19

|  | Leasing Activity

|  | Six | Three | Nine | Three |
|  | Months | Months | Months | Months | Year
|  | Ended | Ended | Ended | Ended | Ended
Leaasing Activity |  | 30-Jun-12 | 30-Sep-12 | 30-Sep-12 | 31-Dec-12 | 31-Dec-12
(in Square Feet - SF) |  |  |  |  |  |
New leasing |  | 88,402 | 37,505 | 125,907 | 189,833 | 315,740
Renewals |  | 294,779 | 100,888 | 395,667 | 305,171 | 700,838
|  | 383,181 | 138,393 | 521,574 | 495,004 | 1,016,578
Other information per SF |  |  |  |  |  |
(Activity on a year-to-date basis) |  |  |  |  |  |
GAAP Rents on leasing |  | $ 22.72 |  | $ 22.06 |  | $ 22.41
Weighted average lease term |  | 4.5 Years |  | 4.3 Years |  | 5.1 Years
Increase over ave GAAP rents in 2011 |  | 1.4% |  | 1.4% |  | 1.5%
Average free rent |  | 2 Months |  | 2 Months |  | 3 Months
Tenant Improvements |  | $ 7.80 |  | $ 8.30 |  | $ 12.26
Leasing Costs |  | $ 3.16 |  | $ 3.69 |  | $ 5.40

December 31, 2012 | 20

|  | Lease Expirations by Square Feet

Year |  | Total Square Feet |  | % of Square Feet Commercial
2013 |  | 278,946 |  | 3.6%
2014 |  | 417,721 |  | 5.3%
2015 |  | 1,074,381 |  | 13.7%
2016 |  | 1,099,491 |  | 14.0%
2017 |  | 876,268 |  | 11.2%
2018 |  | 819,331 |  | 10.4%
2019 |  | 1,111,529 |  | 14.2%
2020 |  | 199,371 |  | 2.5%
2021 |  | 696,035 |  | 8.9%
2022 |  | 490,225 |  | 6.2%
2023 |  | 157,341 |  | 2.0%
2024 |  | 161,264 |  | 2.0%
Vacant |  | 472,776 |  | 6.0%
Total |  | 7,854,679 |  | 100.0%

December 31, 2012 | 21

|  | Lease Expirations with Annualized Rent per Square Foot

|  |  | Rentable |  |  |  | Annualized |  | Percentage
| Number of |  | Square |  |  |  | Rent |  | of Total Final
Year of | Leases |  | Footage |  | Annualized |  | Per Square |  | Annualized
Lease | Expiring |  | Subject to |  | Rent Under |  | Foot Under |  | Rent Under
Expiration | Within the |  | Expiring |  | Expiring |  | Expiring |  | Expiring
December 31, | Year |  | Leases |  | Leases (a) |  | Leases |  | Leases
2013 | 94 | (b) |  | 278,946 |  | $ 6,528,388 |  | $ 23.40 |  | 4.0%
2014 | 52 |  |  | 417,721 |  | 7,948,187 |  | 19.03 |  | 4.9%
2015 | 72 |  |  | 1,074,381 |  | 24,325,379 |  | 22.64 |  | 15.0%
2016 | 50 |  |  | 1,099,491 |  | 21,718,625 |  | 19.75 |  | 13.3%
2017 | 50 |  |  | 876,268 |  | 22,623,181 |  | 25.82 |  | 13.9%
2018 | 31 |  |  | 819,331 |  | 16,819,456 |  | 20.53 |  | 10.3%
2019 | 23 |  |  | 1,111,529 |  | 28,968,850 |  | 26.06 |  | 17.8%
2020 | 11 |  |  | 199,371 |  | 4,307,167 |  | 21.60 |  | 2.7%
2021 | 13 |  |  | 696,035 |  | 16,018,841 |  | 23.01 |  | 9.9%
2022 and thereafter | 37 |  |  | 808,830 |  | 13,255,463 |  | 16.39 |  | 8.2%
| 433 |  |  | 7,381,903 |  | $ 162,513,536 |  | $ 22.02 |  | 100.0%
Vacancies as of 12/31/12 |  |  |  | 472,776 |  |  |  |  |  |
Total Portfolio Square Footage |  |  |  | 7,854,679 |  |  |  |  |  |

(a) Annualized rent represents the monthly rent, including tenant reimbursements, for each lease in effect at December 31, 2012 mulitplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(b) 41 leases are Month to Month

December 31, 2012 | 22

|  | Capital Expenditures (in thousands)

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

|  |  |  |  |  |  |  |  |  |  |  |  |  | Year |
| For the Three Months Ended |  |  | Ended |
|  | 31-Mar-11 |  |  | 30-Jun-11 |  |  | 30-Sep-11 |  |  | 31-Dec-11 |  |  | 31-Dec-11 |
Tenant improvements |  | $ | 2,506 |  |  | $ | 3,215 |  |  | $ | 5,092 |  |  | $ | 8,219 |  |  | $ | 19,032 |
Deferred leasing costs |  |  | 2,819 |  |  |  | 2,567 |  |  |  | 1,324 |  |  |  | 1,348 |  |  |  | 8,058 |
Building improvements |  |  | 449 |  |  |  | 876 |  |  |  | 754 |  |  |  | 747 |  |  |  | 2,826 |
Total |  | $ | 5,774 |  |  | $ | 6,658 |  |  | $ | 7,170 |  |  | $ | 10,314 |  |  | $ | 29,916 |

December 31, 2012 | 23

|  | Transaction Activity

Recent Acquisitions: |  |  |  |  |  |  |  |  |
| City | State | Square Feet |  | Date Acquired |  | Purchase Price |  |
|  |  |  |  |  |  | (in thousands) |  |
2012 |  |  |  |  |  |  |  |  |
One Ravinia | Atlanta | GA | 386,603 |  | 7/31/12 |  | $ 52,750 |  |
Westchase I & II | Houston | TX | 629,025 |  | 11/1/12 |  | 154,750 |  |
2011 |  |  |  |  |  |  |  |  |
Emperor Boulevard | Durham | NC | 259,531 |  | 3/4/11 |  | 75,800 |  |
Legacy Tennyson Center | Plano | TX | 202,600 |  | 3/10/11 |  | 37,000 |  |
One Legacy Circle | Plano | TX | 214,110 |  | 3/24/11 |  | 52,983 |  |
909 Davis | Evanston | IL | 195,245 |  | 9/30/11 |  | 37,062 |  |
East Renner Road | Richardson | TX | 122,300 |  | 10/6/11 |  | 11,282 |  |
Recent Dispositions: |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  | Net Sales |  | Gain (Loss)
| City | State | Square Feet |  | Date Sold |  | Proceeds |  | on Sale
|  |  |  |  |  |  | (in thousands)
2012 |  |  |  |  |  |  |  |  |
Southfield | Southfield | MI | 252,613 |  | 12/21/12 |  | $ 293 |  | $ (14,826)
2011 |  |  |  |  |  |  |  |  |
Fairview | Falls Church | VA | 252,613 |  | 1/21/11 |  | 89,382 |  | 19,592
Bollman (a) | Savage | MD | 98,745 |  | 6/24/11 |  | 7,408 |  | 2,346

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

December 31, 2012 | 24

|  | Loan Portfolio of Secured Real Estate

(dollars in thousands) |  |  | Maximum | Amount |  |  | Interest
|  | Maturity | Amount | Drawn at | Interest | Draw | Rate at
Sponsored REIT | Location | Date | of Loan | 31-Dec-12 | Rate (1) | Fee (2) | 31-Dec-12
Secured revolving lines of credit |  |  |  |  |  |  |
FSP Highland Place I Corp. (3) | Centennial, CO | 31-Dec-13 | $ 5,500 | $ 1,125 | L+4.4% | 0.5% | 4.62%
FSP Satellite Place Corp. (4) | Duluth, GA | 31-Mar-13 | 5,500 | 5,500 | L+4.4% | 0.5% | 4.62%
FSP 1441 Main Street Corp.(4) (a) | Columbia, SC | 31-Mar-13 | 10,800 | 8,500 | L+4.4% | 0.5% | 4.62%
FSP 505 Waterford Corp. (4) | Plymouth, MN | 30-Nov-13 | 7,000 | 2,350 | L+4.4% | 0.5% | 4.62%
FSP Galleria North Corp. (d) | Dallas, TX | 30-Jan-15 | 15,000 | 5,880 | L+5.0% | 0.5% | 5.22%
Secured construction loan |  |  |  |  |  |  |
FSP 385 Interlocken |  |  |  |  |  |  |
Development Corp. (4) (b) (c) | Broomfield, CO | 30-Apr-13 | 42,000 | 37,541 | L+4.4% | n/a | 4.62%
Mortgage loan secured by property |  |  |  |  |  |  |
FSP Energy Tower I Corp. (5) (e) | Houston, TX | 5-Jul-14 | 33,000 | 33,000 | 6.41% | n/a | 6.41%
|  |  | $ 118,800 | $ 93,896 |  |  |

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

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

(3) Effective January 1, 2011 and February 1, 2011, the interest rate was 30-day LIBOR plus 3% and effective March 1, 2011 became LIBOR plus 4.4% until maturity. Effective January 31, 2011, any future draws will require a draw fee in an amount equal to 0.5%.

(4) Effective January 1, 2011 through March 30, 2011, the interest rate was 30-day LIBOR plus 3%.

(a) The borrower is FSP 1441 Main Street LLC, a wholly-owned subsidiary.

(b) The borrower is FSP 385 Interlocken LLC, a wholly-owned subsidiary.

(c) The borrower paid a commitment fee of $210,000 at loan origination in March 2009.

(d) The borrower is FSP Galleria North Limited Partnership, a wholly-owned subsidiary.

(e) The borrower is FSP Energy Tower I Limited Partnership, a wholly-owned subsidiary.

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

December 31, 2012 | 25

|  | Net Asset Value Components

(in thousands except per share data) |
| As of
| 31-Dec-12
Total Market Capitalization Values |
Shares outstanding | 82,937.4
Closing price, December 31st | $ 12.31
Market capitalization | $ 1,020,959
Debt | 616,750
Total Market Capitalization | 1,637,709
| 3 Months
| Ended
NOI Components | 31-Dec-12
Same Store NOI (1) | $ 16,714
Acquisitions (1) (2) | 7,975
Property NOI (1) | 24,689
Full quarter adjustment (3) | 986
Stabilized portfolio | $ 25,675
Financial Statement Reconciliation: |
Rental Revenue | $ 41,532
Rental operating expenses | (10,501)
Real estate taxes and insurance | (5,960)
Taxes (4) | (96)
Management fees & other (5) | (286)
Property NOI (1) | $ 24,689

Assets: |
Loan outstanding on secured RE | $ 93,896
Investments in SARs (book basis) | 82,070
Straight-line rent receivable | 35,441
Cash and cash equivalents | 21,267
Restricted cash | 575
Tenant rent receivables | 1,863
Prepaid expenses | 1,106
Office computers and furniture | 544
Other assets: |
Deferred financing costs, net | 7,111
Distribution received in January (6) | 4,752
Other assets | 682
| $ 249,307
Liabilities: |
Debt | $ 616,750
Accounts payable & accrued expenses | 33,776
Tenant security deposits | 2,489
Other liabilities: derivative liability | 1,219
| $ 654,234

Other information: |
Leased SF to be FFO producing |
after 2012, (not in Q4) | 229
Straight-line rental revenue Q4 | $ 965
Management fee income full year 2012 | $ 1,149
Interest income from secured loans | 9,798
| $ 10,947

Footnotes to the components

| (1) | See pages 11 & 29 for definitions and reconciliations

| (2) | Includes NOI from 5 acquisitions in 2011 and 2 in 2012

| (3) | Adjustment to reflect property NOI for a full quarter in the quarter acquired

| (4) | HB3 Tax in Texas is classified as an income tax, though we treat it as a real estate tax in Property NOI

| (5) | Management & other fees are eliminated in consolidation but included on Property NOI

| (6) | Liquidating distribution from sale of equity interest (received cash in January)

December 31, 2012 | 26

|  | Appendix: Non-GAAP Financial Measure Definitions

Definition of Funds From Operations (“FFO”)

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

FFO should not be considered as an alternative to net income (determined in accordance with GAAP), nor as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs.

Other real estate companies and the National Association of Real Estate Investment Trusts, or NAREIT, may define this term in a different manner. We have included the NAREIT FFO definition in our table and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do.

We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.

December 31, 2012 | 27

|  | Appendix: Non-GAAP Financial Measure Definitions

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

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

Definition of Funds Available for Distribution (FAD)

The Company defines FAD as the sum of (1) FFO, (2) less the effect of straight-line rent, (3) less recurring capital expenditures that are generally for maintenance of properties and are not recovered through rental income from tenants, and (4) plus non-cash compensation expenses, if any. FAD should not be considered as an alternative to net income (determined in accordance with GAAP), as an indicator of the Company’s financial performance, nor as an alternative to cash flows from operating activities (determined in accordance with GAAP), nor as a measure of the Company’s liquidity, nor is it necessarily indicative of sufficient cash flow to fund all of the Company’s needs. Other real estate companies may define this term in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, FAD should be examined in connection with net income and cash flows from operating, investing and financing activities in the consolidated financial statements.

December 31, 2012 | 28

|  | Appendix: Non-GAAP Financial Measure Definitions

Definition of Property Net Operating Income (Property NOI)

Property NOI is a non-GAAP financial measure equal to net income, the most directly comparable GAAP financial measure, plus selling, general and administrative expenses, depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, interest expense, less equity in earnings of nonconsolidated REITs, interest income, management fee income, gains or losses on the sale of assets and excludes non-property specific income and expenses. Property NOI presented by the Company may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions.

December 31, 2012 | 29

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

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

www.franklinstreetproperties.com