EX-99.1 2 ex-99d1.htm EX-99.1

Exhibit 99.1

PRESS RELEASE | Franklin Street Properties Corp.

401 Edgewater Place  Suite 200  Wakefield, Massachusetts 01880  (781) 557-1300  www.fspreit.com

Contact: Georgia Touma (877) 686-9496 | For Immediate Release

Franklin Street Properties Corp. Announces

Third Quarter 2018 Results

Wakefield, MA—October 30, 2018—Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE American: FSP), a real estate investment trust (REIT), announced its results for the third quarter ended September 30, 2018.

George J. Carter, Chairman and Chief Executive Officer, commented as follows:

“For the third quarter of 2018, FSP’s Funds from Operations or FFO totaled approximately $26.2 million or $0.24 per share. Leasing activity continued to be strong within our property portfolio during the quarter and we are currently seeing that activity extend into the fourth quarter of 2018. We also saw increased leasing in our energy influenced markets of Houston and Denver and anticipate further occupancy gains in those markets during the balance of the year as well as 2019. Dispositions during the quarter of the properties owned by two of our single-asset REITs in which FSP had a financial interest provided initial cash proceeds totaling approximately $74.9 million, which was used for debt reduction. These dispositions are projected to have the net effect of reducing FFO for the fourth quarter and full year 2018, and are reflected in our updated FFO guidance. A recast of two of our existing unsecured term loans totaling $370 million during the quarter moved out our near term debt maturities, achieved future interest cost savings and maintained corporate liquidity for anticipated future leasing costs. We remain optimistic about achieving meaningful value creation within our property portfolio during 2018 and 2019, while maintaining our financial capabilities to help achieve those results.”

Highlights

| · |  | FFO was $26.2 million or $0.24 per basic and diluted share for the third quarter ended September 30, 2018. We had Net Income of $9.6 million or $0.09 per basic and diluted share for the third quarter ended September 30, 2018.

| · |  | Adjusted Funds From Operations (AFFO) was $0.12 per basic and diluted share for the third quarter of 2018.

| · |  | During the third quarter we recast $370 million of our unsecured term loans with our bank group and extended maturities of these loans, with $205 million now maturing in November 2021, and $165 million now maturing in January 2024. As a result, we have no scheduled debt maturities for the next three years. The lending spreads on these loans decreased, which we anticipate will decrease interest costs approximately $1 million on an annualized basis while outstanding based on our current credit rating.

| · |  | We reduced debt $81 million during the third quarter, primarily from application of approximately $74.9 million in cash proceeds from dispositions of the properties owned by two of our single-asset REITs in which we had a financial interest.

Leasing Update

| · |  | Our directly owned real estate portfolio of 34 properties totaling approximately 9.8 million square feet was approximately 90.5% leased as of September 30, 2018, which was a 1.5% increase compared to June 30, 2018.

| · |  | During the three months ended September 30, 2018, we leased approximately 515,000 square feet, of which approximately 177,000 square feet was with new tenants. During the nine months ended September 30, 2018, we leased approximately 1,283,000 square feet, of which approximately 343,000 square feet was with new tenants.

| · |  | The portfolio assets in our five core markets reached a three-year high point of 88.0% leased

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occupancy as of September 30, 2018, primarily from leasing improvements in our Denver and Houston assets.

| o |  | Our core market of Denver’s leased percentage increased to 89.6% as of September 30, 2018, up from 87.5% leased as of June 30, 2018.

| o |  | Our core market of Houston’s leased percentage increased to 85.1% as of September 30, 2018, up from 79.3% leased as of June 30, 2018.

| · |  | FSP expects the overall trend of improving leased occupancy in our core five markets to continue into 2019.

Acquisition and Disposition Update

| · |  | On July 19, 2018, one of our single-asset REITs, FSP Grand Boulevard Corp., sold the property owned by it to a third party. On August 17, 2018, we received an initial cash distribution of $5.9 million in consideration of the financial interest we previously held.

| · |  | On September 24, 2018, one of our single-asset REITs, FSP 303 East Wacker Drive Corp., sold the property owned by it to a third party. On September 27, 2018, we received an initial cash distribution of $69 million in consideration of the financial interest we previously held.

| · |  | We anticipate potential additional disposition activity within our managed portfolio during the remainder of 2018 and/or 2019.

Dividend Update

On October 5, 2018, the Company announced that its Board of Directors declared a regular quarterly cash dividend for the three months ended September 30, 2018 of $0.09 per share of common stock that will be paid on November 8, 2018 to stockholders of record on October 19, 2018.

Non-GAAP Financial Information

A reconciliation of Net income (loss) to FFO, AFFO and Sequential Same Store NOI and our definitions of FFO, AFFO and Sequential Same Store NOI can be found on Supplementary Schedules H and I.

Real Estate Update

Supplementary schedules provide property information for the Company’s owned and managed real estate portfolio as of September 30, 2018. The Company will also be filing an updated supplemental information package that will provide stockholders and the financial community with additional operating and financial data. The Company will file this supplemental information package with the SEC and make it available on its website at www.fspreit.com.

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FFO Guidance

We are updating our full year FFO guidance for 2018, which is estimated to be in the range of approximately $0.96 to $0.97 per basic and diluted share, and are initiating guidance for the fourth quarter of 2018, which is estimated to be in the range of approximately $0.23 to $0.24 per basic and diluted share. We are updating full year 2018 net income guidance, which is estimated to be in the range of approximately $0.11 to $0.12 per basic and diluted share, and are initiating net income guidance for the fourth quarter of 2018, which is estimated to be in the range of approximately $0.00 to $0.01 per basic and diluted share. This guidance (a) excludes the impact of future acquisitions, developments, dispositions, debt financings or repayments or other capital market transactions; (b) reflects estimates from our ongoing portfolio of properties, other real estate investments and general and administrative expenses; and (c) reflects our current expectations of economic conditions. We will update guidance quarterly in our earnings releases. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above.

A reconciliation of the guidance for net income (loss) per share to the guidance for FFO per share is provided as follows:

|  |  | Q4 2018 Range |  |  | Full Year 2018 Range
|  | Low |  | High |  | Low |  | High
Net income (loss) per share |  | $ | - |  | $ | 0.01 |  | $ | 0.11 |  | $ | 0.12
GAAP income from non-consolidated REITs |  |  | - |  |  | - |  |  | (0.06) |  |  | (0.06)
FFO from non-consolidated REITs |  |  | - |  |  | - |  |  | 0.02 |  |  | 0.02
Depreciation & Amortization |  |  | 0.23 |  |  | 0.23 |  |  | 0.89 |  |  | 0.89
Funds From Operations per share |  | $ | 0.23 |  | $ | 0.24 |  | $ | 0.96 |  | $ | 0.97

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

Earnings Call

A conference call is scheduled for October 31, 2018 at 10:00 a.m. (ET) to discuss the third quarter results. To access the call, please dial 1-800-464-8240. Internationally, the call may be accessed by dialing 1-412-902-6521. To access the call from Canada, please dial 1-866-605-3852. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website (www.fspreit.com) at least ten minutes prior to the start of the call and follow the posted directions. The webcast will also be available via replay from the above location starting one hour after the call is finished.

About Franklin Street Properties Corp.

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on investing in institutional-quality office properties in the U.S. FSP’s strategy is to invest in select urban infill and central business district (CBD) properties, with primary emphasis on our five core markets of Atlanta, Dallas, Denver, Houston, and Minneapolis. FSP seeks value-oriented investments with an eye towards long-term growth and appreciation, as well as current income. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. To learn more about FSP please visit our website at www.fspreit.com.

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Forward-Looking Statements

Statements made in this press release that state FSP’s or management’s intentions, beliefs, expectations, or predictions for the future may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release may also contain forward-looking statements, such as our ability to lease space in the future, expectations for FFO and net income (loss) in future periods, expectations for growth, leasing and acquisition and disposition activities in future periods, including in the Denver and Houston markets, and prospects for long-term sustainable growth, that are based on current judgments and current knowledge of management and are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, economic conditions in the United States, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events and expenditures that cannot be anticipated such as utility rate and usage increases, delays in construction schedules, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments. See the “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017, as the same may be updated from time to time in subsequent filings with the United States Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, acquisitions, dispositions, performance or achievements. We will not update any of the forward-looking statements after the date of this press release to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.

Franklin Street Properties Corp.

Earnings Release

Supplementary Information

Table of Contents

Franklin Street Properties Corp. Financial Results | A-C
Real Estate Portfolio Summary Information | D
Portfolio and Other Supplementary Information | E
Percentage of Leased Space | F
Largest 20 Tenants – FSP Owned Portfolio | G
Reconciliation and Definitions of Funds From Operations (FFO) and Adjusted |
Funds From Operations (AFFO) | H
Reconciliation and Definition of Sequential Same Store results to Property Net |
Operating Income (NOI) and Net Income (Loss) | I

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Franklin Street Properties Corp. Financial Results

Supplementary Schedule A

Condensed Consolidated Income (Loss) Statements

(Unaudited)

|  | For the |  | For the |
|  | Three Months Ended |  | Nine Months Ended |
|  | September 30, |  | September 30, |
(in thousands, except per share amounts) |  | 2018 |  | 2017 |  | 2018 |  | 2017 |
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |
Rental |  | $ | 67,436 |  | $ | 67,339 |  | $ | 198,473 |  | $ | 201,710 |
Related party revenue: |  |  |  |  |  |  |  |  |  |  |  |  |
Management fees and interest income from loans |  |  | 1,261 |  |  | 1,278 |  |  | 3,793 |  |  | 4,014 |
Other |  |  | 8 |  |  | 9 |  |  | 26 |  |  | 29 |
Total revenue |  |  | 68,705 |  |  | 68,626 |  |  | 202,292 |  |  | 205,753 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate operating expenses |  |  | 17,946 |  |  | 17,898 |  |  | 52,051 |  |  | 52,492 |
Real estate taxes and insurance |  |  | 11,651 |  |  | 11,882 |  |  | 35,120 |  |  | 35,880 |
Depreciation and amortization |  |  | 23,277 |  |  | 24,988 |  |  | 70,903 |  |  | 75,599 |
General and administrative |  |  | 3,394 |  |  | 3,286 |  |  | 9,908 |  |  | 9,806 |
Interest |  |  | 9,935 |  |  | 8,258 |  |  | 29,174 |  |  | 23,730 |
Total expenses |  |  | 66,203 |  |  | 66,312 |  |  | 197,156 |  |  | 197,507 |
Income before equity in income (loss) of non-consolidated REITs, other, gain (loss) on sale of properties and properties held for sale, less applicable income tax and taxes |  |  | 2,502 |  |  | 2,314 |  |  | 5,136 |  |  | 8,246 |
Equity in income (loss) of non-consolidated REITs |  |  | 7,180 |  |  | (121) |  |  | 6,793 |  |  | (719) |
Other |  |  | — |  |  | 67 |  |  | — |  |  | 218 |
Gain (loss) on sale of properties and properties held for sale, less applicable income tax |  |  | — |  |  | (257) |  |  | — |  |  | (18,460) |
Income (loss) before taxes on income |  |  | 9,682 |  |  | 2,003 |  |  | 11,929 |  |  | (10,715) |
Taxes on income |  |  | 74 |  |  | 100 |  |  | 231 |  |  | 297 |
Net income (loss) |  | $ | 9,608 |  | $ | 1,903 |  | $ | 11,698 |  | $ | (11,012) |
Weighted average number of shares outstanding, basic and diluted |  |  | 107,231 |  |  | 107,231 |  |  | 107,231 |  |  | 107,231 |
Net income (loss) per share, basic and diluted |  | $ | 0.09 |  | $ | 0.02 |  | $ | 0.11 |  | $ | (0.10) |

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Franklin Street Properties Corp. Financial Results

Supplementary Schedule B

Condensed Consolidated Balance Sheets

(Unaudited)

|  | September 30, |  | December 31, |
(in thousands, except share and par value amounts) |  | 2018 |  | 2017 |
Assets: |  |  |  |  |  |  |
Real estate assets: |  |  |  |  |  |  |
Land |  | $ | 191,578 |  | $ | 191,578 |
Buildings and improvements |  |  | 1,848,362 |  |  | 1,811,631 |
Fixtures and equipment |  |  | 7,842 |  |  | 5,614 |
|  |  | 2,047,782 |  |  | 2,008,823 |
Less accumulated depreciation |  |  | 419,746 |  |  | 376,131 |
Real estate assets, net |  |  | 1,628,036 |  |  | 1,632,692 |
Acquired real estate leases, less accumulated amortization of $98,890 and $109,771, respectively |  |  | 65,687 |  |  | 86,520 |
Investment in non-consolidated REITs |  |  | — |  |  | 70,164 |
Cash, cash equivalents and restricted cash |  |  | 10,434 |  |  | 9,819 |
Tenant rent receivables, less allowance for doubtful accounts of $225 and $250, respectively |  |  | 3,206 |  |  | 3,123 |
Straight-line rent receivable, less allowance for doubtful accounts of $50 and $50, respectively |  |  | 53,056 |  |  | 53,194 |
Prepaid expenses and other assets |  |  | 9,259 |  |  | 8,387 |
Related party mortgage loan receivables |  |  | 70,925 |  |  | 71,720 |
Other assets: derivative asset |  |  | 22,265 |  |  | 13,925 |
Office computers and furniture, net of accumulated depreciation of $1,493 and $1,420, respectively |  |  | 216 |  |  | 289 |
Deferred leasing commissions, net of accumulated amortization of $24,059 and $22,276, respectively |  |  | 45,475 |  |  | 40,679 |
Total assets |  | $ | 1,908,559 |  | $ | 1,990,512 |
Liabilities and Stockholders’ Equity: |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |
Bank note payable |  | $ | 17,000 |  | $ | 78,000 |
Term loans payable, less unamortized financing costs of $6,086 and $5,099, respectively |  |  | 763,914 |  |  | 764,901 |
Series A&B Senior Notes, less unamortized financing costs of $1,191 and $1,308, respectively |  |  | 198,809 |  |  | 198,692 |
Accounts payable and accrued expenses |  |  | 62,699 |  |  | 61,039 |
Accrued compensation |  |  | 2,844 |  |  | 3,641 |
Tenant security deposits |  |  | 5,619 |  |  | 5,383 |
Other liabilities: derivative liabilities |  |  | — |  |  | 1,759 |
Acquired unfavorable real estate leases, less accumulated amortization of $7,985 and $7,638, respectively |  |  | 4,261 |  |  | 5,805 |
Total liabilities |  |  | 1,055,146 |  |  | 1,119,220 |
Commitments and contingencies |  |  |  |  |  |  |
Stockholders’ Equity: |  |  |  |  |  |  |
Preferred stock, $.0001 par value, 20,000,000 shares authorized, none issued or outstanding |  |  | — |  |  | — |
Common stock, $.0001 par value, 180,000,000 shares authorized, 107,231,155 and 107,231,155 shares issued and outstanding, respectively |  |  | 11 |  |  | 11 |
Additional paid-in capital |  |  | 1,356,457 |  |  | 1,356,457 |
Accumulated other comprehensive loss |  |  | 22,265 |  |  | 12,166 |
Accumulated distributions in excess of accumulated earnings |  |  | (525,320) |  |  | (497,342) |
Total stockholders’ equity |  |  | 853,413 |  |  | 871,292 |
Total liabilities and stockholders’ equity |  | $ | 1,908,559 |  | $ | 1,990,512 |

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Franklin Street Properties Corp. Financial Results

Supplementary Schedule C

Condensed Consolidated Statements of Cash Flows

(Unaudited)

|  | For the |
|  | Nine Months Ended |
|  | September 30, |
(in thousands) |  | 2018 |  | 2017 |
Cash flows from operating activities: |  |  |  |  |  |  |
Net income (loss) |  | $ | 11,698 |  | $ | (11,012) |
Adjustments to reconcile net income or loss to net cash provided by operating activities: |  |  |  |  |  |  |
Depreciation and amortization expense |  |  | 73,127 |  |  | 77,418 |
Amortization of above and below market leases |  |  | (405) |  |  | (941) |
Equity in (income) loss of non-consolidated REITs |  |  | (6,793) |  |  | 719 |
Hedge ineffectiveness |  |  | — |  |  | (218) |
Loss on sale of properties and properties held for sale, less applicable income tax |  |  | — |  |  | 18,460 |
Increase (decrease) in allowance for doubtful accounts |  |  | (25) |  |  | 25 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |
Tenant rent receivables |  |  | (58) |  |  | (902) |
Straight-line rents |  |  | 821 |  |  | (2,021) |
Lease acquisition costs |  |  | (683) |  |  | (876) |
Prepaid expenses and other assets |  |  | (487) |  |  | (1,945) |
Accounts payable and accrued expenses |  |  | (2,665) |  |  | (489) |
Accrued compensation |  |  | (797) |  |  | (784) |
Tenant security deposits |  |  | 236 |  |  | 76 |
Payment of deferred leasing commissions |  |  | (11,051) |  |  | (8,178) |
Net cash provided by operating activities |  |  | 62,918 |  |  | 69,332 |
Cash flows from investing activities: |  |  |  |  |  |  |
Property improvements, fixtures and equipment |  |  | (35,901) |  |  | (41,862) |
Investment in non-consolidated REITs |  |  | 74,931 |  |  | — |
Distributions in excess of earnings from non-consolidated REITs |  |  | 710 |  |  | 1,041 |
Repayment of related party mortgage loan receivable |  |  | 795 |  |  | 9,795 |
Proceeds received on sales of real estate assets |  |  | — |  |  | 6,160 |
Net cash used in investing activities |  |  | 40,535 |  |  | (24,866) |
Cash flows from financing activities: |  |  |  |  |  |  |
Distributions to stockholders |  |  | (39,676) |  |  | (61,122) |
Borrowings under bank note payable |  |  | 30,000 |  |  | 60,000 |
Repayments of bank note payable |  |  | (91,000) |  |  | (40,000) |
Deferred financing costs |  |  | (2,162) |  |  | — |
Net cash used in financing activities |  |  | (102,838) |  |  | (41,122) |
Net increase in cash, cash equivalents and restricted cash |  |  | 615 |  |  | 3,344 |
Cash, cash equivalents and restricted cash, beginning of year |  |  | 9,819 |  |  | 9,366 |
Cash, cash equivalents and restricted cash, end of period |  | $ | 10,434 |  | $ | 12,710 |

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Franklin Street Properties Corp. Earnings Release

Supplementary Schedule D

Real Estate Portfolio Summary Information

(Unaudited & Approximated)

Commercial portfolio lease expirations (1) |  |  |  |  |
|  | Total |  | % of |
Year |  | Square Feet |  | Portfolio |
2018 |  | 562,230 |  | 5.8% |
2019 |  | 953,783 |  | 9.8% |
2020 |  | 991,024 |  | 10.2% |
2021 |  | 696,686 |  | 7.1% |
2022 |  | 1,228,487 |  | 12.6% |
Thereafter (2) |  | 5,328,489 |  | 54.5% |
|  | 9,760,699 |  | 100.0% |

| (1) |  | Percentages are determined based upon total square footage.

| (2) |  | Includes 931,200 square feet of current vacancies.

(dollars & square feet in 000's) |  | As of September 30, 2018 |
|  | # of |  |  |  |  | % of |  | Square |  | % of |
State |  | Properties |  | Investment |  | Portfolio |  | Feet |  | Portfolio |
Colorado |  | 6 |  | $ | 538,772 |  | 33.5% |  | 2,609 |  | 26.7% |
Texas |  | 9 |  |  | 348,576 |  | 21.7% |  | 2,417 |  | 24.8% |
Georgia |  | 5 |  |  | 322,282 |  | 20.0% |  | 1,967 |  | 20.2% |
Minnesota (a) |  | 2 |  |  | 96,624 |  | 6.0% |  | 620 |  | 6.3% |
Virginia |  | 4 |  |  | 83,544 |  | 5.2% |  | 685 |  | 7.0% |
North Carolina |  | 2 |  |  | 50,975 |  | 3.2% |  | 322 |  | 3.3% |
Missouri |  | 2 |  |  | 48,150 |  | 3.0% |  | 351 |  | 3.6% |
Illinois |  | 2 |  |  | 49,350 |  | 3.1% |  | 372 |  | 3.8% |
Florida |  | 1 |  |  | 37,805 |  | 2.4% |  | 213 |  | 2.2% |
Indiana |  | 1 |  |  | 30,135 |  | 1.9% |  | 205 |  | 2.1% |
Total |  | 34 |  | $ | 1,606,213 |  | 100.0% |  | 9,761 |  | 100.0% |

| (a) |  | Excludes approximately $21,823, which is our investment in a property that was redeveloped and is classified as non-operating.

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Franklin Street Properties Corp. Earnings Release

Supplementary Schedule E

Portfolio and Other Supplementary Information

(Unaudited & Approximated)

Recurring Capital Expenditures

(in thousands) |  | For the Three Months Ended |  | Nine Months |
|  | 31-Mar-18 |  | 30-Jun-18 |  | 30-Sep-18 |  | 30-Sep-18 |
Tenant improvements |  | $ | 6,777 |  | $ | 8,212 |  | $ | 7,084 |  | $ | 22,073 |
Deferred leasing costs |  |  | 1,021 |  |  | 5,314 |  |  | 4,394 |  |  | 10,729 |
Non-investment capex |  |  | 1,858 |  |  | 2,558 |  |  | 2,328 |  |  | 6,744 |
|  | $ | 9,656 |  | $ | 16,084 |  | $ | 13,806 |  | $ | 39,546 |

|  | For the Three Months Ended |  | Year Ended |
|  | 31-Mar-17 |  | 30-Jun-17 |  | 30-Sep-17 |  | 31-Dec-17 |  | 31-Dec-17 |
Tenant improvements |  | $ | 6,474 |  | $ | 5,363 |  | $ | 4,474 |  | $ | 4,166 |  | $ | 20,477 |
Deferred leasing costs |  |  | 1,579 |  |  | 1,963 |  |  | 4,482 |  |  | 5,869 |  |  | 13,893 |
Non-investment capex |  |  | 1,670 |  |  | 1,685 |  |  | 1,860 |  |  | 3,836 |  |  | 9,051 |
|  | $ | 9,723 |  | $ | 9,011 |  | $ | 10,816 |  | $ | 13,871 |  | $ | 43,421 |

Square foot & leased percentages |  | September 30, |  | December 31, |
|  | 2018 |  | 2017 |
Owned portfolio of commercial real estate |  |  |  |  |
Number of properties (a) |  | 34 |  | 34 |
Square feet |  | 9,760,699 |  | 9,761,984 |
Leased percentage |  | 90.5% |  | 89.7% |
Investments in non-consolidated REITs (b) |  |  |  |  |
Number of properties |  | — |  | 2 |
Square feet |  | — |  | 1,396,071 |
Leased percentage |  | — |  | 75.3% |
Single Asset REITs (SARs) managed |  |  |  |  |
Number of properties |  | 3 |  | 4 |
Square feet |  | 674,342 |  | 810,278 |
Leased percentage |  | 93.9% |  | 93.0% |
Total owned, investments & managed properties |  |  |  |  |
Number of properties |  | 37 |  | 40 |
Square feet |  | 10,435,041 |  | 11,968,333 |
Leased percentage |  | 90.7% |  | 88.2% |

| (a) |  | Excludes one property that was redeveloped and is classified as non-operating.

| (b) |  | Properties were sold during the three months ended September 30, 2018.

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Franklin Street Properties Corp. Earnings Release

Supplementary Schedule F

Percentage of Leased Space

(Unaudited & Estimated)

|  |  |  |  |  |  |  |  |  | Second |  |  |  | Third |
|  |  |  |  |  |  |  | % Leased (1) |  | Quarter |  | % Leased (1) |  | Quarter |
|  |  |  |  |  |  |  | as of |  | Average % |  | as of |  | Average % |
|  | Property Name |  | Location |  | Square Feet |  | 30-Jun-18 |  | Leased (2) |  | 30-Sep-18 |  | Leased (2) |
1 |  | FOREST PARK |  | Charlotte, NC |  | 62,212 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
2 |  | MEADOW POINT |  | Chantilly, VA |  | 138,537 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
3 |  | TIMBERLAKE |  | Chesterfield, MO |  | 234,496 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
4 |  | TIMBERLAKE EAST |  | Chesterfield, MO |  | 117,036 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
5 |  | NORTHWEST POINT |  | Elk Grove Village, IL |  | 177,095 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
6 |  | PARK TEN |  | Houston, TX |  | 157,460 |  | 89.5% |  | 84.9% |  | 89.5% |  | 89.5% |
7 |  | PARK TEN PHASE II |  | Houston, TX |  | 156,746 |  | 1.4% |  | 1.4% |  | 59.7% |  | 34.6% |
8 |  | GREENWOOD PLAZA |  | Englewood, CO |  | 196,236 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
9 |  | ADDISON |  | Addison, TX |  | 288,794 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
10 |  | COLLINS CROSSING |  | Richardson, TX |  | 300,887 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
11 |  | INNSBROOK |  | Glen Allen, VA |  | 298,456 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
12 |  | RIVER CROSSING |  | Indianapolis, IN |  | 205,059 |  | 94.9% |  | 95.3% |  | 94.9% |  | 94.9% |
13 |  | LIBERTY PLAZA |  | Addison, TX |  | 218,934 |  | 85.8% |  | 85.0% |  | 80.8% |  | 80.3% |
14 |  | 380 INTERLOCKEN |  | Broomfield, CO |  | 240,358 |  | 86.2% |  | 86.2% |  | 86.2% |  | 86.2% |
15 |  | 390 INTERLOCKEN |  | Broomfield, CO |  | 241,512 |  | 98.8% |  | 98.5% |  | 98.2% |  | 98.4% |
16 |  | BLUE LAGOON |  | Miami, FL |  | 212,619 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
17 |  | ELDRIDGE GREEN |  | Houston, TX |  | 248,399 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
18 |  | ONE OVERTON PARK |  | Atlanta, GA |  | 387,267 |  | 79.3% |  | 67.4% |  | 79.7% |  | 79.5% |
19 |  | LOUDOUN TECH |  | Dulles, VA |  | 136,658 |  | 95.7% |  | 95.7% |  | 95.7% |  | 95.7% |
20 |  | 4807 STONECROFT |  | Chantilly, VA |  | 111,469 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
21 |  | 121 SOUTH EIGHTH ST |  | Minneapolis, MN |  | 293,460 |  | 78.9% |  | 78.1% |  | 80.4% |  | 79.1% |
22 |  | EMPEROR BOULEVARD |  | Durham, NC |  | 259,531 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
23 |  | LEGACY TENNYSON CTR |  | Plano, TX |  | 202,600 |  | 86.4% |  | 86.4% |  | 90.4% |  | 87.7% |
24 |  | ONE LEGACY |  | Plano, TX |  | 214,110 |  | 100.0% |  | 100.0% |  | 100.0% |  | 100.0% |
25 |  | 909 DAVIS |  | Evanston, IL |  | 195,098 |  | 92.2% |  | 92.2% |  | 97.8% |  | 97.8% |
26 |  | ONE RAVINIA DRIVE |  | Atlanta, GA |  | 386,602 |  | 91.3% |  | 91.7% |  | 91.3% |  | 91.3% |
27 |  | TWO RAVINIA |  | Atlanta, GA |  | 411,047 |  | 77.4% |  | 76.7% |  | 78.2% |  | 77.7% |
28 |  | WESTCHASE I & II |  | Houston, TX |  | 629,025 |  | 88.1% |  | 87.3% |  | 84.5% |  | 85.8% |
29 |  | 1999 BROADWAY |  | Denver, CO |  | 676,379 |  | 76.6% |  | 79.3% |  | 81.3% |  | 78.2% |
30 |  | 999 PEACHTREE |  | Atlanta, GA |  | 621,946 |  | 84.8% |  | 85.4% |  | 84.6% |  | 84.7% |
31 |  | 1001 17th STREET |  | Denver, CO |  | 655,413 |  | 93.2% |  | 93.9% |  | 97.7% |  | 96.1% |
32 |  | PLAZA SEVEN |  | Minneapolis, MN |  | 326,483 |  | 87.3% |  | 86.4% |  | 87.3% |  | 87.3% |
33 |  | PERSHING PLAZA |  | Atlanta, GA |  | 160,145 |  | 97.4% |  | 97.4% |  | 97.4% |  | 97.4% |
34 |  | 600 17th STREET |  | Denver, CO |  | 598,630 |  | 85.4% |  | 85.1% |  | 84.5% |  | 85.1% |
|  | TOTAL WEIGHTED AVERAGE |  |  |  | 9,760,699 |  | 89.0% |  | 88.6% |  | 90.5% |  | 89.7% |

| (1) |  | % Leased as of month's end includes all leases that expire on the last day of the quarter.

| (2) |  | Average quarterly percentage is the average of the end of the month leased percentage for each of the 3 months during the quarter.

-11-

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule G

Largest 20 Tenants – FSP Owned Portfolio

(Unaudited & Estimated)

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

As of September 30, 2018

|  |  |  |  |  | % of |
|  | Tenant |  | Sq Ft |  | Portfolio |
1 |  | Quintiles IMS Healthcare Incorporated |  | 259,531 |  | 2.7% |
2 |  | CITGO Petroleum Corporation |  | 248,399 |  | 2.6% |
3 |  | Newfield Exploration Company |  | 234,495 |  | 2.4% |
4 |  | US Government |  | 223,641 |  | 2.3% |
5 |  | Centene Management Company, LLC |  | 216,879 |  | 2.2% |
6 |  | Burger King Corporation |  | 212,619 |  | 2.2% |
7 |  | Eversheds Sutherland (US) LLP |  | 179,868 |  | 1.8% |
8 |  | The Vail Corporation |  | 164,636 |  | 1.7% |
9 |  | EOG Resources, Inc. |  | 160,937 |  | 1.7% |
10 |  | T-Mobile South, LLC dba T-Mobile |  | 151,792 |  | 1.6% |
11 |  | Citicorp Credit Services, Inc. |  | 146,260 |  | 1.5% |
12 |  | Petrobras America, Inc. |  | 144,813 |  | 1.5% |
13 |  | Jones Day |  | 140,342 |  | 1.4% |
14 |  | Argo Data Resource Corporation |  | 140,246 |  | 1.4% |
15 |  | SunTrust Bank |  | 127,500 |  | 1.3% |
16 |  | Federal National Mortgage Association |  | 123,144 |  | 1.3% |
17 |  | Kaiser Foundation Health Plan |  | 120,979 |  | 1.2% |
18 |  | Giesecke & Devrient America |  | 112,110 |  | 1.1% |
19 |  | Northrop Grumman Systems Corp. |  | 111,469 |  | 1.1% |
20 |  | Randstad General Partner (US) |  | 109,638 |  | 1.1% |
|  | Total |  | 3,329,298 |  | 34.1% |

-12-

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule H

Reconciliation and Definitions of Funds From Operations (“FFO”) and

Adjusted Funds From Operations (“AFFO”)

A reconciliation of Net income (loss) to FFO and AFFO is shown below and a definition of FFO and AFFO is provided on Supplementary Schedule I. Management believes FFO and AFFO are used broadly throughout the real estate investment trust (REIT) industry as measurements of performance. The Company has included the National Association of Real Estate Investment Trusts (NAREIT) FFO definition as of May 17, 2016 in the table and notes that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently. The Company’s computation of FFO and AFFO may not be comparable to FFO or AFFO reported by other REITs or real estate companies that define FFO or AFFO differently.

Reconciliation of Net Income (Loss) to FFO and AFFO: |  | Three Months Ended |  | Nine Months Ended |  |
|  | September 30, |  | September 30, |  |
(In thousands, except per share amounts) |  | 2018 |  | 2017 |  | 2018 |  | 2017 |  |
Net income (loss) |  | $ | 9,608 |  | $ | 1,903 |  | $ | 11,698 |  | $ | (11,012) |  |
Gain (loss) on sale of properties and properties held for sale, less applicable income tax |  |  | — |  |  | 257 |  |  | — |  |  | 18,460 |  |
GAAP (income) loss from non-consolidated REITs |  |  | (7,180) |  |  | 121 |  |  | (6,793) |  |  | 719 |  |
FFO from non-consolidated REITs |  |  | 649 |  |  | 874 |  |  | 2,511 |  |  | 2,465 |  |
Depreciation & amortization |  |  | 23,081 |  |  | 24,903 |  |  | 70,499 |  |  | 74,658 |  |
NAREIT FFO |  |  | 26,158 |  |  | 28,058 |  |  | 77,915 |  |  | 85,290 |  |
Hedge ineffectiveness |  |  | — |  |  | (67) |  |  | — |  |  | (218) |  |
Acquisition costs of new properties |  |  | — |  |  | — |  |  | — |  |  | 18 |  |
Funds From Operations (FFO) |  | $ | 26,158 |  | $ | 27,991 |  | $ | 77,915 |  | $ | 85,090 |  |
Funds From Operations (FFO) |  | $ | 26,158 |  | $ | 27,991 |  | $ | 77,915 |  | $ | 85,090 |  |
Reverse FFO from non-consolidated REITs |  |  | (649) |  |  | (874) |  |  | (2,511) |  |  | (2,465) |  |
Distributions from non-consolidated REITs |  |  | — |  |  | 350 |  |  | 710 |  |  | 1,041 |  |
Amortization of deferred financing costs |  |  | 799 |  |  | 606 |  |  | 2,223 |  |  | 1,818 |  |
Straight-line rent |  |  | 522 |  |  | (147) |  |  | 821 |  |  | (2,021) |  |
Tenant improvements |  |  | (7,084) |  |  | (4,474) |  |  | (22,073) |  |  | (16,311) |  |
Leasing commissions |  |  | (4,394) |  |  | (4,482) |  |  | (10,729) |  |  | (8,024) |  |
Non-investment capex |  |  | (2,328) |  |  | (1,860) |  |  | (6,744) |  |  | (5,215) |  |
Adjusted Funds From Operations (AFFO) |  | $ | 13,024 |  | $ | 17,110 |  | $ | 39,612 |  | $ | 53,913 |  |
Per Share Data |  |  |  |  |  |  |  |  |  |  |  |  |  |
EPS |  | $ | 0.09 |  | $ | 0.02 |  | $ | 0.11 |  | $ | (0.10) |  |
FFO |  | $ | 0.24 |  | $ | 0.26 |  | $ | 0.73 |  | $ | 0.79 |  |
AFFO |  | $ | 0.12 |  | $ | 0.16 |  | $ | 0.37 |  | $ | 0.50 |  |
Weighted average shares (basic and diluted) |  |  | 107,231 |  |  | 107,231 |  |  | 107,231 |  |  | 107,231 |  |

-13-

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 or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness 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 on properties or investments in non-consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate share of FFO from, non-consolidated REITs.

FFO should not be considered as an alternative to net income or loss (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 NAREIT may define this term in a different manner. We have included the NAREIT FFO as of May 17, 2016 in the 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 or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.

Adjusted Funds From Operations (“AFFO”)

The Company also evaluates performance based on Adjusted Funds From Operations, which we refer to as AFFO. The Company defines AFFO as (1) FFO, (2) excluding our proportionate share of FFO and including distributions received, from non-consolidated REITs, (3) excluding the effect of straight-line rent, (4) plus deferred financing costs and (5) less recurring capital expenditures that are generally for maintenance of properties, which we call non-investment capex or are second generation capital expenditures. Second generation costs include re-tenanting space after a tenant vacates, which include tenant improvements and leasing commissions.

We exclude development/redevelopment activities, capital expenditures planned at acquisition and costs to reposition a property. We also exclude first generation leasing costs, which are generally to fill vacant space in properties we acquire or were planned for at acquisition.

AFFO should not be considered as an alternative to net income or loss (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 may define this term in a different manner. We believe that in order to facilitate a clear understanding of the results of the Company, AFFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements.

-14-

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule I

Reconciliation and Definition of Sequential Same Store results to property Net Operating Income (NOI) and Net Income (Loss)

Net Operating Income (“NOI”)

The Company provides property performance based on Net Operating Income, which we refer to as NOI. Management believes that investors are interested in this information. NOI is a non-GAAP financial measure that the Company defines as net income or loss (the most directly comparable GAAP financial measure) plus 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, hedge ineffectiveness, gains or losses on the sale of assets and excludes non-property specific income and expenses. The information presented includes footnotes and the data is shown by region with properties owned in the periods presented, which we call Sequential Same Store. The comparative Sequential Same Store results include properties held for the periods presented and exclude properties that are non-operating, being developed or redeveloped, dispositions and significant nonrecurring income such as bankruptcy settlements and lease termination fees. NOI, as defined 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 or loss as an indication of our performance or to cash flows as a measure of the Company’s liquidity or its ability to make distributions. The calculations of NOI and Sequential Same Store are shown in the following table:

|  | Rentable |  |  |  |  |  |  |  |  |  |  |  |
|  | Square Feet |  | Three Months Ended |  | Three Months Ended |  | Inc |  | % |
(in thousands) |  | or RSF |  | 30-Sep-18 |  | 30-Jun-18 |  | (Dec) |  | Change |
Region |  |  |  |  |  |  |  |  |  |  |  |  |  |
East |  | 1,007 |  | $ | 4,032 |  | $ | 4,123 |  | $ | (91) |  | (2.2) | %
MidWest |  | 1,549 |  |  | 5,104 |  |  | 4,955 |  |  | 149 |  | 3.0 | %
South |  | 4,597 |  |  | 16,722 |  |  | 15,223 |  |  | 1,499 |  | 9.8 | %
West |  | 2,608 |  |  | 11,324 |  |  | 11,061 |  |  | 263 |  | 2.4 | %
Same Store |  | 9,761 |  |  | 37,182 |  |  | 35,362 |  |  | 1,820 |  | 5.1 | %
Acquisitions |  | — |  |  | — |  |  | — |  |  | — |  | — | %
NOI* from the continuing portfolio |  | 9,761 |  |  | 37,182 |  |  | 35,362 |  |  | 1,820 |  | 5.1 | %
Dispositions, Non-Operating, Development or Redevelopment |  | - |  |  | (69) |  |  | (38) |  |  | (31) |  | — | %
NOI* |  | 9,761 |  | $ | 37,113 |  | $ | 35,324 |  | $ | 1,789 |  | 5.1 | %
Sequential Same Store |  |  |  | $ | 37,182 |  | $ | 35,362 |  | $ | 1,820 |  | 5.1 | %
Less Nonrecurring |  |  |  |  |  |  |  |  |  |  |  |  |  |
Items in NOI* (a) |  |  |  |  | 2,504 |  |  | 1,141 |  |  | 1,363 |  | (3.8) | %
Comparative |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sequential Same Store |  |  |  | $ | 34,678 |  | $ | 34,221 |  | $ | 457 |  | 1.3 | %

-15-

|  |  |  | Three Months Ended |  | Three Months Ended |  |  |  |  |  |
Reconciliation to Net income |  |  |  | 30-Sep-18 |  | 30-Jun-18 |  |  |  |  |  |
Net income |  |  |  | $ | 9,608 |  | $ | 665 |  |  |  |  |  |
Add (deduct): |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Gain) loss on sale of properties and properties held for sale, less applicable income tax |  |  |  |  | — |  |  | — |  |  |  |  |  |
Hedge ineffectiveness |  |  |  |  | — |  |  | — |  |  |  |  |  |
Management fee income |  |  |  |  | (712) |  |  | (746) |  |  |  |  |  |
Depreciation and amortization |  |  |  |  | 23,277 |  |  | 23,591 |  |  |  |  |  |
Amortization of above/below market leases |  |  |  |  | (196) |  |  | (123) |  |  |  |  |  |
General and administrative |  |  |  |  | 3,394 |  |  | 3,082 |  |  |  |  |  |
Interest expense |  |  |  |  | 9,935 |  |  | 9,753 |  |  |  |  |  |
Interest income |  |  |  |  | (1,157) |  |  | (1,141) |  |  |  |  |  |
Equity in (income) loss of non-consolidated REITs |  |  |  |  | (7,180) |  |  | 282 |  |  |  |  |  |
Non-property specific items, net |  |  |  |  | 144 |  |  | (39) |  |  |  |  |  |
NOI* |  |  |  | $ | 37,113 |  | $ | 35,324 |  |  |  |  |  |

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

*Excludes NOI from investments in and interest income from secured loans to non-consolidated REITs.