EX-99.2 3 ex99-2.htm SUPPLEMENTAL OPERATING AND FINANCIAL DATA

Exhibit 99.2

  Supplemental Operating
and Financial Data First Quarter 2013

 

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.

March 31, 2013  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 March 31, 2013, the Company owned and operated a portfolio of real estate consisting of 37 properties, managed 15 Sponsored REITs and held seven promissory notes secured by mortgages on real estate owned by Sponsored REITs. From time-to-time, the Company may acquire real estate, make additional secured loans or acquire one of its Sponsored REITs. The Company may also pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, or for geographic or property specific reasons.

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

Inquiries

Inquiries should be directed to: John Demeritt, CFO

877-686-9496 or InvestorRelations@franklinstreetproperties.com

Snapshot (as of March 31, 2013)
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	5.2%
Total Market Capitalization	$1.8 Billion
Insider Holdings	12.27%

March 31, 2013 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-Mar-13				31-Dec-12				30-Sep-12				30-Jun-12				31-Mar-12
Income Items:
Rental revenue		$	43,147			$	41,532			$	38,250			$	35,570			$	36,303
Total revenue			44,800				43,420				41,774				38,654				38,953
Adjusted EBITDA*			24,712				25,491				23,348				22,752				22,789
Equity in earnings in non-consolidated REITs			(187	)			972				176				494				391
Net income			4,401				5,460				(8,998	)			5,433				5,738
FFO*			20,616				20,515				19,913				19,042				19,571
Per Share Data:
EPS		$	0.05			$	0.07			$	(0.11	)		$	0.07			$	0.07
FFO*		$	0.25			$	0.25			$	0.24			$	0.23			$	0.24
Weighted Average Shares (diluted)			82,937				82,937				82,937				82,937				82,937
Closing share price		$	14.62			$	12.31			$	11.07			$	10.58			$	10.60
Dividend		$	0.19			$	0.19			$	0.19			$	0.19			$	0.19
Payout Ratio:			76%				77%				79%				83%				81%
Balance Sheet Items:
Real estate, net		$	1,136,204			$	1,142,628			$	1,015,984			$	982,685			$	987,003
Other assets, net			376,498				384,551				379,950				447,678				451,525
Total assets, net			1,512,702				1,527,179				1,395,934				1,430,363				1,438,528
Total liabilities, net			658,869				662,430				521,338				529,340				527,181
Shareholders' equity			853,833				864,749				874,596				901,023				911,347
Market Capitalization and Debt:
Total Market Capitalization (a)		$	1,834,295			$	1,637,709			$	1,400,117			$	1,371,478			$	1,373,136
Total debt outstanding			621,750				616,750				482,000				494,000				494,000
Debt to Total Market Capitalization			33.9%				37.7%				34.4%				36.0%				36.0%
Debt to Adjusted EBITDA			6.3				6.0				5.2				5.4				5.4
Owned Portfolio Leasing Statistics:
Owned portfolio assets			37				37				37				36				36
Portfolio total SF			7,856,859				7,854,679				7,439,195				7,052,592				7,052,068
Portfolio % leased			94.4%				94.0%				89.9%				90.0%				89.0%

(a) Total Market Capitalization is the closing share price multiplied 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 Definitions of these Non-GAAP Measures beginning on page 27.

March 31, 2013 4

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

		Three Months																				For the
		Ended				For the Three Months Ended																Year Ended
		31-Mar-13				31-Mar-12				30-Jun-12				30-Sep-12				31-Dec-12				31-Dec-12
Revenue:
Rental		$	43,147			$	36,303			$	35,570			$	38,251			$	41,532			$	151,656
Related party revenue:
Management fees and interest income from loans			1,622				2,616				3,045				3,485				1,801				10,947
Other			31				34				39				39				87				199
Total revenue			44,800				38,953				38,654				41,775				43,420				162,802
Expenses:
Real estate operating expenses			10,770				8,697				8,604				9,639				10,501				37,441
Real estate taxes and insurance			6,597				5,696				5,493				5,764				5,960				22,913
Depreciation and amortization			15,987				13,071				13,004				13,572				15,225				54,872
Selling, general and administrative			2,532				2,077				2,236				3,141				2,462				9,916
Interest			4,208				3,677				4,037				4,187				4,167				16,068
Total expenses			40,094				33,218				33,374				36,303				38,315				141,210
Income before interest income, equity in earnings of
non-consolidated REITs and taxes			4,706				5,735				5,280				5,472				5,105				21,592
Interest income			1				8				4				5				34				51
Equity in earnings of non-consolidated REITs			(187	)			391				494				176				972				2,033
Income before taxes on income			4,520				6,134				5,778				5,653				6,111				23,676
Income tax expense			119				79				77				80				99				335
Income from continuing operations			4,401				6,055				5,701				5,573				6,012				23,341
Income from discontinued operations			—				(317	)			(268	)			(271	)			(26	)			(882	)
Gain (loss) on sale, less applicable income tax			—				—				—				(14,300	)			(526	)			(14,826	)
Net income		$	4,401			$	5,738			$	5,433			$	(8,998	)		$	5,460			$	7,633
Weighted average number of shares outstanding,
basic and diluted			82,937				82,937				82,937				82,937				82,937				82,937
Earnings per share, basic and diluted, attributable to:
Continuing operations		$	0.05			$	0.07			$	0.07			$	0.07			$	0.07			$	0.28
Discontinued operations			—				—				—				—				—				(0.01	)
Gain (loss) on sale, less applicable income tax			—				—				—				(0.18	)			—				(0.18	)
Net income per share, basic and diluted		$	0.05			$	0.07			$	0.07			$	(0.11	)		$	0.07			$	0.09

March 31, 2013  5

   Condensed Consolidated Balance Sheets
(in thousands)

		March 31,				March 31,				June 30,				September 30,				December 31,
		2013				2012				2012				2012				2012
Assets:
Real estate assets:
Land		$	144,336			$	132,393			$	132,393			$	135,845			$	144,336
Buildings and improvements			1,180,959				1,009,706				1,013,122				1,051,111				1,178,144
Fixtures and equipment			904				860				871				904				904
			1,326,199				1,142,959				1,146,386				1,187,860				1,323,384
Less accumulated depreciation			189,995				155,956				163,701				171,876				180,756
Real estate assets, net			1,136,204				987,003				982,685				1,015,984				1,142,628
Acquired real estate leases, net			105,882				87,073				82,769				92,717				111,982
Investment in non-consolidated REITs			81,746				87,061				86,658				85,927				81,960
Assets held for sale			—				15,215				15,032				685				—
Cash and cash equivalents			17,282				29,283				22,620				23,962				21,267
Restricted cash			583				511				533				546				575
Tenant rent receivables, net			2,357				1,090				1,403				1,182				1,749
Straight-line rent receivable, net			36,287				31,861				33,048				34,190				35,441
Prepaid expenses			2,438				1,164				2,605				2,336				1,106
Related party mortgage loan receivable			96,896				172,286				177,536				108,236				93,896
Other assets			8,107				4,006				3,640				8,467				13,199
Deferred leasing commissions, net			24,920				21,975				21,834				21,702				23,376
Total assets		$	1,512,702			$	1,438,528			$	1,430,363			$	1,395,934			$	1,527,179
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable		$	221,750			$	494,000			$	494,000			$	82,000			$	216,750
Term loan payable			400,000				—				—				400,000				400,000
Accounts payable and accrued expenses			25,493				23,311				25,408				26,462				31,122
Accrued compensation			540				446				944				2,194				2,540
Tenant security deposits			2,474				2,181				2,113				2,281				2,489
Other liabilities: derivative termination value			778				—				—				1,671				1,219
Acquired unfavorable real estate leases, net			7,834				7,243				6,875				6,730				8,310
Total liabilities			658,869				527,181				529,340				521,338				662,430
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			(778	)			—				—				(1,671	)			(1,219	)
Accumulated distributions in excess of accumulated earnings			(188,273	)			(131,537	)			(141,861	)			(166,617	)			(176,916	)
Total stockholders’ equity			853,833				911,347				901,023				874,596				864,749
Total liabilities and stockholders’ equity		$	1,512,702			$	1,438,528			$	1,430,363			$	1,395,934			$	1,527,179

March 31, 2013  6

   Condensed Consolidated Statements of Cash Flows
(in thousands)

		Three Months ended March 31,								Twelve Months ended December 31
		2013				2012				2012				2011
Cash flows from operating activities:
Net income		$	4,401			$	5,738			$	7,633			$	43,524
Adjustments to reconcile net income to net cash         provided by  operating activities:
Depreciation and amortization expense			16,415				13,763				57,500				50,261
Amortization of above market lease			(2	)			40				71				(47	)
Gain (loss) on sale, less applicable income tax			—				—				14,826				(21,939	)
Equity in earnings (losses) from non-consolidated REITs			187				(391	)			(2,033	)			(3,086	)
Distributions from non-consolidated REITs			—				487				705				3,474
Increase in bad debt reserve			(1,190	)			65				65				(365	)
Changes in operating assets and liabilities:
Restricted cash			(8	)			(18	)			(82	)			(73	)
Tenant rent receivables			582				305				(354	)			827
Straight-line rents			(657	)			(1,517	)			(4,464	)			(9,878	)
Lease acquisition costs			(189	)			—				(2,520	)			—
Prepaid expenses and other assets			70				93				(328	)			1,611
Accounts payable and accrued expenses			(5,011	)			(3,388	)			3,717				4,213
Accrued compensation			(2,000	)			(1,776	)			318				419
Tenant security deposits			(15	)			173				481				78
Payment of deferred leasing commissions			(2,624	)			(641	)			(5,179	)			(8,058	)
Net cash provided by operating activities			9,959				12,933				70,356				60,961
Cash flows from investing activities:
Purchase of real estate assets, office computers and           furniture, capitalized merger costs and acquired real estate leases			(3,465	)			(5,376	)			(221,170	)			(236,250	)
Investment in non-consolidated REITs			4,752				(1	)			(1	)			(10	)
Distributions in excess of earnings from non-consolidated REITs			27				442				2,105				1,582
Investment in related party mortgage loan receivable			(3,000	)			(31,770	)			(74,580	)			(82,832	)
Repayment of related party mortgage loan receivable			—								121,200				—
Changes in deposits on real estate assets			(1,500	)			—				—				200
Investment in assets held for syndication, net			—				—				—				2,230
Proceeds received on sales of real estate assets			—				—				157				96,790
Net cash used in investing activities			(3,186	)			(36,705	)			(172,289	)			(218,290	)
Cash flows from financing activities:
Distributions to stockholders			(15,758	)			(15,758	)			(63,032	)			(62,177	)
Proceeds (costs) from equity offering, net			—				—				—				17,295
Borrowings under bank note payable			5,000				45,000				294,750				449,000
Borrowings (repayments) under Revolver			—				—				(527,000	)			(209,968	)
Borrowing (repayment) of term loan payable, net			—				—				400,000				(74,850	)
Deferred Financing Costs			—				—				(5,331	)			(5,388	)
Swap termination payment			—				—				—				(983	)
Net cash provided by (used in) financing activities			(10,758	)			29,242				99,387				112,929
Net decreases in cash and cash equivalents			(3,985	)			5,470				(2,546	)			(44,400	)
Cash and cash equivalents, beginning of period			21,267				23,813				23,813				68,213
Cash and cash equivalents, end of period		$	17,282			$	29,283			$	21,267			$	23,813

March 31, 2013  7

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

(in thousands)		Net Operating Income (NOI)*
		Rentable
		Square Feet				Three Months Ended								Inc				%
Region		or RSF				31-Mar-13				31-Mar-12				(Dec)				Change
East			1,441			$	4,756			$	5,113			$	(357	)			-7.0%
MidWest			1,682				4,839				5,122				(283	)			-5.5%
South			2,630				9,559				9,212				347				3.8%
West			1,088				2,350				2,278				72				3.2%
Same Store			6,841				21,504				21,725				(221	)			-1.0%
Acquisitions			1,016				3,919				—				3,919				18.0%
Property NOI from the continuing portfolio			7,857				25,423				21,725				3,698				17.0%
Dispositions and asset held for sale							—				(132	)			132				0.7%
Property NOI						$	25,423			$	21,593			$	3,830				17.7%
Same Store						$	21,504			$	21,725			$	(221	)			-1.0%
Nonrecurring
Items in NOI (a)							63				514				(451	)			2.1%
Comparative
Same Store						$	21,441			$	21,211			$	230				1.1%

(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.

March 31, 2013  8

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

		Three Months																				For the
		Ended				For the Three Months Ended:																Year Ended
		31-Mar-13				31-Mar-12				30-Jun-12				30-Sep-12				31-Dec-12				31-Dec-12
Net income		$	4,401			$	5,738			$	5,433			$	(8,998	)		$	5,460			$	7,633
Gain (loss) on sale, less applicable income tax			—				—				—				14,300				526				14,826
GAAP income from non-consolidated REITs			187				(391	)			(494	)			(176	)			(972	)			(2,033	)
Distributions from non-consolidated REITs			27				929				898				907				76				2,810
Depreciation & amortization			15,984				13,295				13,205				13,779				15,239				55,518
NAREIT FFO*			20,599				19,571				19,042				19,812				20,329				78,754
Acquisition costs			17				—				—				101				186				287
Funds From Operations (FFO)*		$	20,616			$	19,571			$	19,042			$	19,913			$	20,515			$	79,041
Funds Available for Distribution:
Funds From Operations (FFO)*			20,616				19,571				19,042				19,913				20,515				79,041
Straight-line rent			(657	)			(1,517	)			(1,054	)			(927	)			(965	)			(4,463	)
Capital expenditures			(1,118	)			(746	)			(1,003	)			(711	)			(1,252	)			(3,712	)
Funds Available for Distribution (FAD)*		$	18,841			$	17,308			$	16,985			$	18,275			$	18,298			$	70,866
Per Share Data:
EPS		$	0.05			$	0.07			$	0.07			$	(0.11	)		$	0.07			$	0.09
FFO*			0.25				0.24				0.23				0.24				0.25				0.95
FAD*			0.23				0.21				0.20				0.22				0.22				0.85
Weighted Average Shares (basic and diluted)			82,937				82,937				82,937				82,937				82,937				82,937

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

March 31, 2013  9

   EBITDA Reconciliation
(in thousands, except ratio amounts)

		Three Months																				Year Ended
		Ended				For the three months ended:																31-Dec-12
		31-Mar-13				31-Mar-12				30-Jun-12				30-Sep-12				31-Dec-12
Net income		$	4,401			$	5,738			$	5,433			$	(8,998	)		$	5,460			$	7,633
Interest expense			4,208				3,677				4,037				4,187				4,167				16,068
Depreciation and amortization			15,984				13,295				13,205				13,779				15,239				55,518
Income taxes			119				79				77				80				99				335
EBITDA			24,712				22,789				22,752				9,048				24,965				79,554
Excluding (gain) loss on sale,
less applicable income tax			—				—				—				14,300				526				14,826
Adjusted EBITDA		$	24,712			$	22,789			$	22,752			$	23,348			$	25,491			$	94,380
Interest expense		$	4,208			$	3,677			$	4,037			$	4,187			$	4,167			$	16,068
Scheduled principal payments			—				—				—				—				—				—
Interest and scheduled principal payments		$	4,208			$	3,677			$	4,037			$	4,187			$	4,167			$	16,068
Interest coverage ratio			5.87				6.20				5.64				5.58				6.12				5.87
Debt service coverage ratio			5.87				6.20				5.64				5.58				6.12				5.87
Debt		$	621,750			$	494,000			$	494,000			$	482,000			$	616,750
Adjusted EBITDA			24,712				22,789				22,752				23,348				25,491
Annualized			98,848				91,156				91,008				93,392				101,964
Debt-to-EBITDA			6.3				5.4				5.4				5.2				6.0

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

March 31, 2013  10

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

Reconciliation to Net income
		Three Months Ended
		31-Mar-13				31-Mar-12
Net Income		$	4,401			$	5,738
Add (deduct):
Discontinued operations			—				317
Management fee income			(559	)			(488	)
Depreciation and amortization			15,987				13,071
Amortization of above/below market leases			(2	)			40
Selling, general and administrative			2,532				2,077
Interest expense			4,208				3,677
Interest income			(1,353	)			(2,340	)
Equity in earnings of
nonconsolidated REITs			187				(391	)
Non-property specific items, net			22				24
Property NOI from the continuing portfolio		$	25,423			$	21,725
Dispositions and asset held for sale			—				(132	)
Property NOI		$	25,423			$	21,593

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

March 31, 2013  11

   Debt Summary as of March 31, 2013

					(a)
(dollars in thousands)		Maximum	Amount	Interest	Interest
	Maturity	Amount	Drawn at	Rate	Rate at	Facility
2012 Credit Facility	Date	of Loan	31-Dec-12	Components	31-Dec-12	Fee
2012 Revolver	27-Sep-16	$   500,000	$   221,750	L+1.45%	1.65%	0.3%
2012 Term Loan	27-Sep-17	400,000	400,000	0.75% + 1.45%	2.20%	0.3%
		$   900,000	$   621,750		2.00%

(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 March 31, 2013 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 March 31, 2013 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 March 31, 2013 the annual rate for the borrowing outstanding was 1.65%.

• 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 March 31, 2013 the annual 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.

March 31, 2013  12

   Capital Analysis
(in thousands, except per share amounts)

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

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

March 31, 2013  13

   Portfolio Overview

	For the Three Months Ended
	31-Mar-13	31-Dec-12	30-Sep-12	30-Jun-12	31-Mar-12
Owned portfolio of commercial real estate:
Number of properties (a)	37	37	37	36	36
Square feet	7,856,859	7,854,679	7,439,195	7,052,592	7,052,068
Leased percentage	94.4%	94.0%	89.9%	90.0%	89.0%
Investments in non-consolidated
commercial real estate:
Number of properties (a)	2	2	3	3	3
Square feet	1,392,316	1,392,316	2,016,260	2,003,968	2,004,953
Leased percentage	66.1%	65.0%	68.0%	89.5%	90.0%
Single Asset REITs (SARs) managed:
Number of properties	13	13	13	13	13
Square feet	3,323,566	3,323,566	3,322,589	3,322,589	3,322,570
Leased percentage	87.8%	87.0%	84.8%	84.8%	84.0%
Total owned (a) , investments
and managed properties:
Number of properties	52	52	53	52	52
Square feet	12,572,741	12,570,561	12,778,044	12,379,149	12,379,591
Leased percentage	89.5%	89.0%	85.1%	88.5%	88.0%

(a) Includes assets sold in prior periods

 

March 31, 2013  14

   Owned Portfolio Overview

				Percent	Wtd Ave (a)	GAAP (b)
MSA / Property Name	City	State	Square Feet	Leased	Occupied	Rent
East Region
Baltimore
East Baltimore	Baltimore	MD	325,445	77.3%	63.9%	$        25.41
Washington, D.C.
Meadow Point	Chantilly	VA	138,537	92.6%	92.6%	$        26.84
Stonecroft	Chantilly	VA	111,469	100.0%	100.0%	$        38.51
Loudoun Tech Center	Dulles	VA	135,888	100.0%	100.0%	$        15.89
Richmond
Innsbrook	Glen Allen	VA	298,456	99.0%	98.6%	$        17.42
Charlotte
Park Seneca	Charlotte	NC	109,674	78.1%	77.7%	$        15.75
Forest Park	Charlotte	NC	62,212	100.0%	100.0%	$        13.66
Raleigh-Durham
Emperor Boulevard	Durham	NC	259,531	100.0%	100.0%	$        36.15
East Region Total			1,441,212	92.3%	89.1%	$        24.81
Midwest Region
Chicago
Northwest Point	Elk Grove Village	IL	176,848	100.0%	100.0%	$        19.78
909 Davis	Evanston	IL	195,245	97.9%	97.9%	$        33.58
Indianapolis
River Crossing	Indianapolis	IN	205,059	97.3%	92.2%	$        22.12
St. Louis
Timberlake	Chesterfield	MO	232,766	98.3%	97.0%	$        21.78
Timberlake East	Chesterfield	MO	116,197	97.0%	97.0%	$        23.19
Lakeside Crossing	Maryland Heights	MO	127,778	100.0%	100.0%	$        25.23
Minneapolis
Eden Bluff	Eden Prairie	MN	153,028	100.0%	100.0%	$        27.83
121 South 8th Street	Minneapolis	MN	475,303	90.7%	89.9%	$        14.37
Midwest Region Total			1,682,224	96.4%	95.3%	$        21.98

(a) Based on weighted occupied square feet for the three months ended March 31, 2013, including month-to-month tenants, divided by the Property's net rentable square footage.

(b) Represents annualized GAAP rental revenue for three months ended March 2013 per weighted occupied square foot.

March 31, 2013  15

   Owned Portfolio Overview

				Percent	Wtd Ave (a)	GAAP (b)
MSA / Property Name	City	State	Square Feet	Leased	Occupied	Rent
South Region
Dallas-Fort Worth
Willow Bend Office Center	Plano	TX	117,217	100.0%	81.5%	$        20.44
Legacy Tennyson Center	Plano	TX	202,600	100.0%	100.0%	$        17.06
One Legacy Circle	Plano	TX	214,110	100.0%	100.0%	$        28.64
Addison Circle	Addison	TX	293,787	98.4%	98.4%	$        24.74
Collins Crossing	Richardson	TX	298,766	99.5%	90.0%	$        23.55
East Renner Road	Richardson	TX	122,300	100.0%	100.0%	$          9.99
Liberty Plaza	Addison	TX	218,934	80.4%	81.3%	$        20.30
Houston
Park Ten	Houston	TX	157,460	100.0%	96.6%	$        27.54
Eldridge Green	Houston	TX	248,399	100.0%	100.0%	$        29.33
Park Ten Phase II	Houston	TX	156,746	100.0%	100.0%	$        30.44
Westchase I & II	Houston	TX	629,025	96.3%	95.2%	$        29.86
Miami-Ft. Lauderdale-West Palm Beach
Blue Lagoon Drive	Miami	FL	212,619	100.0%	100.0%	$        23.42
Atlanta
One Overton Place	Atlanta	GA	387,267	97.9%	95.7%	$        21.32
One Ravinia	Atlanta	GA	386,603	91.0%	85.1%	$        22.19
South Region Total			3,645,833	96.8%	94.3%	$        24.48
West Region
Seattle
Federal Way	Federal Way	WA	117,010	48.4%	47.0%	$        18.74
San Francisco-San Jose-Oakland
Hillview Center	Milpitas	CA	36,288	100.0%	100.0%	$        14.49
Montague Business Center	San Jose	CA	145,951	100.0%	100.0%	$        15.27
Denver
380 Interlocken	Broomfield	CO	240,184	86.3%	86.7%	$        27.80
Greenwood Plaza	Englewood	CO	196,236	100.0%	38.4%	$        21.69
390 Interlocken	Broomfield	CO	241,516	83.8%	85.7%	$        27.91
Colorado Springs
Centennial Technology Center	Colorado Springs	CO	110,405	85.4%	85.4%	$        15.77
West Region Total			1,087,590	86.3%	75.6%	$        22.47
Total Owned			7,856,859	94.4%	91.0%	$        23.75

(a) Based on weighted occupied square feet for the three months ended March 31, 2013, including month-to-month tenants, divided by the Property's net rentable square footage.

(b) Represents annualized GAAP rental revenue for three months ended March 2013 per weighted occupied square foot.

March 31, 2013  16

   Managed Portfolio Overview

MSA / Property Name	City	State	Square Feet
Columbia
1441 Main Street	Columbia	SC	264,857
Atlanta
Satellite Place	Duluth	GA	134,785
Dallas-Fort Worth
5601 Executive Drive	Irving	TX	152,121
Galleria North	Dallas	TX	379,518
Houston
Energy Tower I	Houston	TX	325,797
Denver
Highland Place	Centennial	CO	139,142
385 Interlocken	Broomfield	CO	296,868
Subtotal			1,693,088
Chicago
East Wacker (a)	Chicago	IL	857,245
Indianapolis
Monument Circle	Indianapolis	IN	213,609
St. Louis
Lakeside Crossing II	Maryland Heights	MO	116,000
Minneapolis
505 Waterford	Plymouth	MN	256,367
50 South Tenth Street	Minneapolis	MN	498,768
Kansas City
Grand Boulevard (b)	Kansas City	MO	535,071
Cincinnati
Centre Pointe V	West Chester	OH	135,936
Union Centre	West Chester	OH	409,798
Subtotal			3,022,794
Total Managed			4,715,882
Total Owned & Managed			12,572,741

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

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

March 31, 2013  17

   Tenant Analysis – 20 Largest Tenants by Industry Profile
(Top Twenty Largest Tenants by industry as a percentage of the Twenty Tenants
as of March 31, 2013)

 

March 31, 2013  18

   20 Largest Tenants with Annualized Rent and
Remaining Term at March 31, 2013

					% of		% of
			Remaining	Aggregate	Aggregate	Annualized	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	33	263,111	3.4%	$    2,883,485	1.7%
2	Quintiles Transnational Corp.	1	72	259,531	3.3%	8,462,648	5.1%
3	CITGO Petroleum Corporation	1	107	248,399	3.2%	7,356,701	4.4%
4	Burger King Corporation	1	66	212,619	2.7%	4,756,424	2.9%
5	Denbury Onshore, LLC	2	40	202,600	2.6%	3,510,042	2.1%
6	RGA Reinsurance Company	2	21	197,354	2.5%	4,200,823	2.5%
7	SunTrust Bank	2	43, 102	182,888	2.3%	3,599,167	2.2%
8	Citicorp Credit Services, Inc	1	45	176,848	2.3%	3,511,335	2.1%
9	C.H. Robinson Worldwide, Inc	1	99	153,028	1.9%	4,111,367	2.5%
10	T-Mobile South, LLC dba T-Mobile	1	71	151,792	1.9%	3,469,391	2.1%
11	Houghton Mifflin Harcourt Publishing Company	1	48	150,050	1.9%	5,720,529	3.4%
12	Petrobras America, Inc.	1	80	144,813	1.8%	4,855,533	2.9%
13	Murphy Exploration & Production Company	1	49	144,677	1.8%	4,099,120	2.5%
14	Argo Data Resource Corporation	1	124	138,540	1.8%	2,661,560	1.6%
15	Giesecke & Devrient America, Inc.	1	23	135,888	1.7%	1,897,346	1.1%
16	Monsanto Company	1	22	127,778	1.6%	3,297,783	2.0%
17	Federal National Mortgage Association	1	42	123,144	1.6%	2,755,692	1.7%
18	AT&T Services, Inc.	1	63	122,300	1.6%	977,989	0.6%
19	Vail Holdings, Inc.	1	72, 120	122,232	1.6%	3,249,778	2.0%
20	Kaiser Foundation Health Plan, Inc. (1)	1	132	120,979	1.5%	-	0.0%
			Total	3,378,571	43.0%	$   75,376,712	45.4%

(1) Lease anticipated to become rent-producing in July 2013

March 31, 2013  19

   Leasing Activity

		Three
		Months				Year
		Ended				Ended
Leaasing Activity		31-Mar-13				31-Dec-12
(in Square Feet - SF)
New leasing			148,378				315,740
Renewals			204,011				700,838
			352,389				1,016,578
Other information per SF
(Activity on a year-to-date basis)
GAAP Rents on leasing		$	24.66			$	22.41
Weighted average lease term			8.25 Years				5.1 Years
Increase over average GAAP rents
compared to prior year			10.0%				1.5%
Average free rent			3 Months				3 Months
Tenant Improvements		$	19.97			$	12.26
Leasing Costs		$	10.17			$	5.40

March 31, 2013  20

   Lease Expirations by Square Feet

Year		Total Square Feet		% of Square Feet Commercial
2013		169,076		2.2%
2014		386,238		4.9%
2015		1,022,236		13.0%
2016		1,135,277		14.5%
2017		881,225		11.2%
2018		725,373		9.2%
2019		1,135,241		14.4%
2020		199,371		2.5%
2021		779,916		9.9%
2022		500,614		6.4%
2023		295,881		3.8%
2024		120,979		1.5%
2025		69,240		0.9%
Vacant		436,192		5.6%
Total		7,856,859		100.0%

 

March 31, 2013  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	86	(b)		169,076		3,717,390		21.99		2.24%
2014	55			386,238		8,578,683		22.21		5.17%
2015	68			1,022,236		23,430,631		22.92		14.11%
2016	57			1,135,277		22,262,464		19.61		13.40%
2017	49			881,225		22,898,615		25.98		13.79%
2018	33			725,373		15,251,348		21.03		9.18%
2019	20			1,135,241		29,508,673		25.99		17.77%
2020	11			199,371		4,427,464		22.21		2.67%
2021	13			779,916		16,834,040		21.58		10.14%
2022 and thereafter	52			986,714		19,177,302		19.44		11.55%
	444			7,420,667		166,086,611		22.38		100.00%
Vacancies as of 3/31/13				436,192
Total Portfolio Square Footage				7,856,859

(a) Annualized rent represents the monthly rent, including tenant reimbursements, for each lease in effect at March 31, 2013 mulitplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(b) 43 leases are Month to Month

March 31, 2013  22

   Capital Expenditures
(in thousands)

																		Year
		For the Three Months Ended																Ended
		31-Mar-13				30-Jun-13				30-Sep-13				31-Dec-13				31-Dec-13
Tenant improvements		$	1,729			$	—			$	—			$	—			$	1,729
Deferred leasing costs			2,813				—				—				—				2,813
Building improvements			1,118				—				—				—				1,118
Total		$	5,660			$	—			$	—			$	—			$	5,660

																		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

March 31, 2013  23

   Transaction Activity

Recent Acquisitions:							Purchase Price
	City	State	Square Feet		Date Acquired		(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

March 31, 2013  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-Mar-13	Rate (1)	Fee (2)	31-Mar-13
Secured revolving lines of credit
FSP Highland Place I Corp.	Centennial, CO	31-Dec-13	$     5,500	$     1,125	L+4.4%	0.5%	4.60%
FSP Satellite Place Corp.	Duluth, GA	31-Mar-14	5,500	5,500	L+4.4%	0.5%	4.60%
FSP 1441 Main Street Corp.	Columbia, SC	31-Mar-14	10,800	9,000	L+4.4%	0.5%	4.60%
FSP 505 Waterford Corp.	Plymouth, MN	30-Nov-13	7,000	2,350	L+4.4%	0.5%	4.60%
FSP Galleria North Corp.	Dallas, TX	30-Jan-15	15,000	8,380	L+5.0%	0.5%	5.20%
Secured construction loan
FSP 385 Interlocken
Development Corp. (3)	Broomfield, CO	30-Apr-14	42,000	37,541	L+4.4%	n/a	4.60%
Mortgage loan secured by property
FSP Energy Tower I Corp. (4)	Houston, TX	5-Jul-14	33,000	33,000	6.41%	n/a	6.41%
			$ 118,800	$   96,896

(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) On April 26, 2013, the Company agreed to extend the maturity date from April 30, 2013 to April 30, 2014.

(4) 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.

March 31, 2013  25

   Net Asset Value Components

(in thousands except per share data)

		As of
		31-Mar-13
Total Market Capitalization Values
Shares outstanding			82,937.4
Closing price, December 31st		$	14.62
Market capitalization		$	1,020,959
Debt			621,750
Total Market Capitalization			1,637,709

		3 Months
		Ended
NOI Components		31-Mar-13
Same Store NOI (1)		$	21,504
Acquisitions (1) (2)			3,919
Property NOI (1)			25,423
Full quarter adjustment (3)			—
Stabilized portfolio		$	25,423
Financial Statement Reconciliation:
Rental Revenue		$	43,147
Rental operating expenses			(10,770	)
Real estate taxes and insurance			(6,597	)
Taxes (4)			(119	)
Management fees & other (5)			(238	)
Property NOI (1)		$	25,423

Assets:
Loans outstanding on secured RE		$	96,896
Investments in SARs (book basis)			81,745
Straight-line rent receivable			36,287
Cash and cash equivalents			17,282
Restricted cash			583
Tenant rent receivables			2,357
Prepaid expenses			2,438
Office computers and furniture			533
Other assets:
Deferred financing costs, net			7,111
Phoenix Tower Liquidating Trust (6)			110
Other assets			353
		$	245,695
			—
Liabilities:
Debt		$	621,750
Accounts payable & accrued expenses			26,034
Tenant security deposits			2,474
Other liabilities: derivative liability			778
		$	651,036

Other information:
Leased SF to be FFO producing
During 2013, (primarily 2H 2013)			218
Straight-line rental revenue Q1		$	657
Management fee income first quarter 2013		$	270
Interest income from secured loans			1,352
Management fees and interest income from loans		$	1,622

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

March 31, 2013  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.

March 31, 2013  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 shares of equity investments or provisions for losses on assets held for sale. EBITDA and Adjusted EBITDA are not intended to represent cash flow for the period, are not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP and are not indicative of operating income or cash provided by operating activities as determined under GAAP. EBITDA and Adjusted EBITDA are presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to service or incur debt. Because all companies do not calculate EBITDA or Adjusted EBITDA the same way, this presentation may not be comparable to similarly titled measures of other companies. The Company believes that net income is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to EBITDA and Adjusted EBITDA.

Definition of Funds Available for Distribution (FAD)

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

March 31, 2013  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.

March 31, 2013  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