News Details

WAKEFIELD, Mass.--(BUSINESS WIRE)-- Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE MKT: FSP), a real estate investment trust (REIT), announced today Funds From Operations (FFO) of $27.5 million or $0.27 per share for the fourth quarter ended December 31, 2014; and FFO of $112.5 million or $1.12 per share for the full year ended December 31, 2014. Net income was $4.3 million or $0.04 per share for the fourth quarter ended December 31, 2014 and $13.1 million or $0.13 per share for the year ended December 31, 2014.

The Company evaluates its performance based on FFO, Net Income and EPS and believes each is an important measure. A reconciliation of Net Income to FFO, which is a non-GAAP financial measure, is provided on page 3 of this press release.

Comparing results for the fourth quarter of 2014 to the same period in 2013, FFO decreased $1.7 million or $0.02 per share to $27.5 million or $0.27 per share in 2014. The FFO decrease was primarily from lower property income and higher personnel expenses, which were partially offset by lower interest expense for the quarter. Interest expense was lower as a result of lower spreads on our revolving line of credit that was amended on October 29, 2014 and from lower amounts outstanding during the fourth quarter of 2014 compared to the fourth quarter of 2013. Net Income and EPS was $4.3 million or $0.04 per share for the fourth quarter of 2014 compared to a net income of $6.6 million or $0.07 per share for the fourth quarter of 2013.

Comparing results for the year ended December 31, 2014 to the same period in 2013, FFO increased $11.6 million or $0.05 per share to $112.5 million or $1.12 per share. The FFO increase was primarily from higher property income from acquisitions made during 2013. These increases were partially offset by higher interest and personnel related expenses in 2014 compared to 2013. Interest expense was higher because we entered into a term loan on August 26, 2013, which is included in the full year results of 2014 and was outstanding for only a portion of 2013. Net Income and EPS was $13.1 million or $0.13 per share for the year ended December 31, 2014 compared to a net income of $19.8 million or $0.21 per share for the same period in 2013.

George J. Carter, President and CEO, commented as follows:

“For the fourth quarter of 2014, FSP's funds from operations, or FFO, totaled approximately $27.5 million or $0.27 per share. For the full year 2014, FSP's FFO totaled approximately $112.5 million or $1.12 per share, a 4.7% increase per share over full year 2013. FSP has grown its per share FFO over 33% during the last four years. Dividend distributions declared for the fourth quarter of 2014 were approximately $19.0 million or $0.19 per share. Our directly-owned real estate portfolio of 38 properties, totaling approximately 9.6 million square feet, was approximately 92.8% leased as of December 31, 2014, and our comparative same-store growth totaled approximately 2.2% for the full year 2014.

During the fourth quarter of 2014, we completed the disposition of our "Centennial" property located in Colorado Springs, Colorado for approximately $15,500,000. A gain of $940,000 was realized as a result of the sale. Centennial is a110,405 square foot single story "flex" suburban office property that has been owned by FSP or an FSP affiliate for over 14 years. It was our only property in Colorado Springs. Currently, we are considering disposal of several of our other suburban office assets that we believe are no longer core to our long-term strategy. Also, in the fourth quarter, a single asset REIT affiliate of FSP, "FSP Highland Place I Corp." (or “Highland”), completed the sale of its suburban office property located in the greater Denver, Colorado area. Our outstanding loan with Highland totaling $3,395,000, which was secured by a first mortgage on the Highland Place property, was repaid in full.

We acquired no additional office properties in 2014 primarily because market pricing metrics on properties we were interested in were too elevated to conform to our underwriting criteria. However, as 2015 begins, we are actively pursuing a number of new property acquisition opportunities within our primary markets. We anticipate additional property acquisitions this year. We are also busy trying to finalize potential anchor tenants/leases for our anticipated 2016 development effort in downtown Minneapolis, Minnesota at 801 Marquette Avenue South, and hope to be able to announce the size and scope of this project later this year.

As we begin 2015, our property portfolio is operating smoothly with existing and known upcoming vacancy square footage actively being marketed to multiple potential tenants. We look forward with anticipation to 2015 and beyond.”

Dividend Update

On January 9, 2015, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended December 31, 2014 of $0.19 per share of common stock that will be paid on February 12, 2015 to stockholders of record on January 23, 2015.

FFO Guidance

Our full year FFO guidance for 2015 is updated to be in the range of $1.03 to $1.08 per diluted share. This guidance (a) excludes the impact of future acquisitions, dispositions, debt financings or repayments or other capital market transactions; (b) reflects estimates from our ongoing portfolio of properties, other real estate investments and G&A 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.

Real Estate Update

Supplementary schedules provide property information for the Company’s owned real estate portfolio and for two non-consolidated REITs in which the Company holds preferred stock interests as of December 31, 2014. 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.franklinstreetproperties.com.

Funds From Operations (FFO)

A reconciliation of Net Income to FFO is shown below and a definition of FFO is provided on Supplementary Schedule H. Management believes FFO is used broadly throughout the real estate investment trust (REIT) industry as a measurement of performance. Management also believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company has included the NAREIT FFO definition 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 may not be comparable to FFO reported by other REITs or real estate companies that define FFO differently.

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

Earnings Call

A conference call is scheduled for February 18, 2015 at 10:00 a.m. (ET) to discuss the fourth quarter 2014 results. To access the call, please dial 1-877-507-4376. Internationally, the call may be accessed by dialing 1-412-317-6014. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website (www.franklinstreetproperties.com) at least ten minutes prior to the start of the call and follow the posted directions. The webcast will also be available via replay from the above location starting one hour after the call is finished.

About Franklin Street Properties Corp.

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on 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 top five 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.franklinstreetproperties.com.

Forward-Looking Statements

Statements made in this press release that state FSP’s or management’s intentions, beliefs, expectations, or predictions for the future may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.This press release may also contain forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements.Accordingly, readers are cautioned not to place undue reliance on forward-looking statements.Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, economic conditions in the United States, disruptions in the debt markets, economic conditions in the markets in which we own properties, 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, 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, 2014, as the same may be updated from time to time in subsequent filings with the United States Securities and Exchange Commission.Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.We will not update any of the forward-looking statements after the date of this press release to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule D
Real Estate Portfolio Summary Information
(Unaudited & Approximated)

(1) Percentages are determined based upon square footage of expiring commercial leases.
(2) Includes 688,936 square feet of current vacancies.

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

(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.
(3) Totals for Q3 include Centennial, which was sold on December 3, 2014.

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 leased square feet:

(a) Includes 180,444 and 5,090 square feet which expire in 2018 & 2016, respectively. The remaining 38,893 square feet expire between 2015 - 2020.
(b) Lease expired and tenants vacated on December 31, 2014. As of January 1, 2015, Kaiser Foundation Health Plan will become the 20th largest tenant with 120,979 square feet.
(c) Includes 55,388 square feet which expires October 31, 2016. The remaining 127,500 square feet expires September 30, 2021.
(d ) Includes 38,293 square feet which expires March 31, 2019. The remaining 83,939 square feet expires March 31, 2023.

Franklin Street Properties Corp. Earnings Release
Supplementary Schedule H
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 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 (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 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.

For Franklin Street Properties Corp.
John Demeritt, 877-686-9496

Source: Franklin Street Properties Corp.