WAKEFIELD, MA -- 10/30/07 --
Franklin Street Properties Corp. (the
"Company" or "FSP") (AMEX: FSP), an investment firm specializing in real
estate, announced today Net Income of $9.5 million and Earnings Per Share
(EPS) of $0.13 for the third quarter ended September 30, 2007. The Company
also announced Adjusted Funds From Operations (AFFO) of $16.1 million or
$0.23 per share, AFFO plus Gains on Sales (AFFO+GOS) of $18.0 million, or
$0.25 per share, and provided an update on other activities.
The Company evaluates its performance based on Net Income, EPS, AFFO and
AFFO+GOS, and believes each is an important measure. A reconciliation of
Net Income to AFFO and AFFO+GOS, which are non-GAAP financial measures, is
provided on page 5 of this press release.
(in 000's
except per Three Months Ended Nine Months Ended
share data) September 30, September 30,
----------------------------- -----------------------------
Increase Increase
2007 2006 (Decrease) 2007 2006 (Decrease)
-------- -------- ---------- -------- -------- ----------
Net Income $ 9,486 $ 17,830 $ (8,344) $ 51,694 $ 71,446 $ (19,752)
======== ======== ========== ======== ======== ==========
AFFO $ 16,055 $ 19,273 $ (3,218) $ 53,580 $ 59,666 $ (6,086)
GOS 1,942 6,361 (4,419) 23,532 34,469 (10,937)
-------- -------- ---------- -------- -------- ----------
AFFO+GOS $ 17,997 $ 25,634 $ (7,637) $ 77,112 $ 94,135 $ (17,023)
======== ======== ========== ======== ======== ==========
Per Share Data:
EPS $ 0.13 $ 0.25 $ (0.12) $ 0.73 $ 1.08 $ (0.35)
AFFO $ 0.23 $ 0.27 $ (0.04) $ 0.76 $ 0.90 $ (0.14)
AFFO+GOS $ 0.25 $ 0.36 $ (0.11) $ 1.09 $ 1.43 $ (0.34)
Weighted ave
shares
(diluted) 70,596 70,766 (171) 70,709 65,944 4,765
-------- -------- ---------- -------- -------- ----------
Net Income and EPS decreased $8.3 million or $0.12 per share, AFFO
decreased $3.2 million or $0.04 per share and AFFO+GOS decreased $7.6
million or $0.11 per share in the third quarter of 2007 compared to the
same period in 2006. Net Income and EPS decreased $19.8 million or $0.35
per share, AFFO decreased $6.1 million or $0.14 per share and AFFO+GOS
decreased $17.0 million or $0.34 per share for the nine months ended
September 30, 2007 compared to the same period in 2006.
The following significant factors affected Net Income, EPS, AFFO and
AFFO+GOS for the three and nine months ended September 30, 2007 compared to
results for the same periods in 2006:
For the third quarter of 2007 net income decreased $8.3 million compared to
the third quarter of 2006. The decrease was principally a result of (1) a
$1.7 million decrease in termination fee income, (2) a $0.5 million
decrease from investment banking related income, (3) an increase to
depreciation and amortization of approximately $1.8 million, which was a
result of properties added through acquisition in the last twelve months
and (4) a decrease of $4.4 million from lower gains on sales of properties,
when compared to the third quarter of 2006. AFFO decreased $3.2 million
principally as a result of these factors excluding non-cash items and
including dividends received from equity investments. AFFO+GOS decreased
$7.6 million principally as a result of the factors affecting AFFO and from
lower gains on sales of assets for the three months ended September 30,
2007 compared to the same period in 2006.
For the nine months ended September 30, 2007 net income decreased $19.8
million compared to the same period in 2006. The decrease was principally
a result of (1) a $6.5 million decrease in termination fee income during
the nine months ended September 30, 2007 compared to the same period in
2006, which was partially offset by (2) a $3.4 million increase in net
operating income from properties, (3) an increase to depreciation and
amortization expense of approximately $6.8 million, which was a result of
properties added through mergers and acquisitions over the last twelve
months, (4) a decrease in interest income of approximately $0.2 million,
and (5) a decrease of $10.9 million from lower gains on sales of properties
when compared to the nine months ended September 30, 2006. These decreases
were also partially offset by increases from investment banking income of
approximately $1.2 million and a decrease to selling, general and
administrative costs of $0.1 million for the nine months ended September
30, 2007 compared to the same period in 2006. AFFO decreased $6.1 million
principally as a result of these factors excluding non-cash items and
including dividends received from equity investments. AFFO+GOS decreased
$17.0 million principally as a result of these factors and from lower gains
on sales of assets, for the nine months ended September 30, 2007 compared
to the same period in 2006.
Investment Banking Update
For the nine months ended September 30, 2007, our investment banking
related revenues increased 16% over the same period in 2006. This increase
to syndication and transaction fees was a result of increased investment
banking activity compared to the nine months ended September 30, 2006.
Gross proceeds on the sale of securities, which our revenue and expenses in
investment banking are directly related to, increased $19 million to $119.2
million for the nine months ended September 30, 2007 compared to the same
period in 2006. However, gross proceeds on the sale of securities
decreased $5.9 million to $10 million for the third quarter of 2007
compared to the same period in 2006.
George J. Carter, President and CEO, commented as follows:
"For the first nine months of 2007, our profits as represented by AFFO+GOS
totaled approximately $77.1 million or $1.09 per share. For the third
quarter of 2007, our profits as represented by AFFO+GOS totaled
approximately $18.0 million or $0.25 per share. Dividend distributions
paid in the first three quarters of 2007 totaled approximately $65.8
million or $0.93 per share.
Because of the transactional nature of significant portions of our real
estate investment business, our quarterly financial metrics historically
have been quite variable. However, for the first time since our public
listing on the American Stock Exchange in 2005, the recently completed
third quarter was materially impacted by broader external financial,
mortgage/debt and investment market activity. Specifically, properties we
may have contemplated selling did not trade because of market conditions.
Changes in mortgage loan availability and changes in the cost of those
loans significantly disrupted potential sales of commercial office
buildings and their pricing parameters around the country. Rather than
sell in this tumultuous environment, we decided to hold properties until
some stabilization occurs in the mortgage/debt markets. Right now, a time
frame for this stabilization to occur is hard to predict, but some easing
of liquidity constraints has been occurring since the Federal Reserve
lowered the discount and federal funds rates. We are currently in the
process of re-evaluating property sale opportunities that we had shelved in
the third quarter.
In addition to the mortgage/debt markets being in turmoil during the third
quarter, the investor market for our equity real estate private placement
business also suffered, and negatively affected our Investment Banking
equity-raising efforts. Investor uncertainty surrounding the potential
impact on commercial real estate, emanating from the mortgage/debt market
crisis, caused a "wait-and-see" attitude to prevail among many of our
established investor clients. As mortgage, debt and commercial real estate
asset liquidity have somewhat improved in the last month, so have investor
attitudes. Currently our Investment Banking group is raising equity in two
private placement preferred stock offerings, each representing ownership in
a separate single asset office property.
While it is difficult to predict whether the worst is over relative to the
current credit market problems and their negative effect on our
transactional business components, some near-term relief is being
experienced at the start of the fourth quarter.
While profits suffered in the third quarter of 2007 from our transactional
businesses being negatively impacted by the broader capital market credit
crunch, our unleveraged real estate portfolio and investment/business model
appear well prepared to weather this broader debt market dislocation. We
have the financial capability to maintain our real estate assets and
operational businesses to the highest standards, with the objective to
ultimately realize their full longer-term potential value. As the capital
markets work through the current real estate mortgage/credit crunch, we
will remain conservative, disciplined and patient, while watching for value
investment opportunities that may be caused by the broader market's
dislocation. To facilitate our ability to take advantage of investment
opportunities that may present themselves, on October 19, 2007, we expanded
and extended our previous $150 million line of credit at a lower borrowing
rate. We increased availability on the line of credit by $100 million to a
total of $250 million, and reduced the interest cost of borrowing under a
LIBOR option by 25 basis points. The expiration date on the amended
facility is August 2011. We believe this 66% increase in borrowing
availability comes at a potentially opportune time in the real estate
investment cycle, when some other highly leveraged property owners are
experiencing a more restrictive capital funding view from their lenders.
The following is a brief 2007 third quarter summary of the three major
business components that contribute to FSP's profitability.
Rental Income for the third quarter of 2007 was about as expected, with
leased square footage of our 27 continuing properties as of September 30th
at about 90.7%. Most of our office markets continue to show positive
trends of absorption, occupancy and rent growth, tracking the national
published statistics for their respective geographical locations. Relative
to the current subprime mortgage loan problems, we have identified a total
of nine mortgage companies that are tenants in our various properties.
Combined, their square footage of approximately 77,900 out of our total
5,066,813 square feet represents about 1.5% of our portfolio. We are
monitoring and working with these tenants closely to recognize and minimize
any potential negative effects that could arise from financial problems
they may be having.
We have two properties that we have been physically repositioning in 2007
from single to multi-tenant configurations: a 117,277 square foot property
in the Seattle/Tacoma area, and a 145,951 square foot property in Silicon
Valley. Both properties continue to make progress with virtually all of
the significant construction, other than new tenant improvements to their
specific to-be-leased space, complete. Currently, we have 42,358 square
feet leased at the two properties and 90,467 square feet under letter of
intent and/or active lease preparation. Approximately 1.5% of our total
portfolio's leases are due to expire for the balance of 2007.
Approximately 283,289 square feet of our total portfolio or about 5.6% of
our total rentable square footage is scheduled to expire in 2008.
Property Sales totaling 107,711 square feet from one property located in
Westford, Massachusetts took place in the third quarter. Gain from that
sale totaled approximately $1.9 million. The property that was sold was
similar to our properties in Seattle/Tacoma and Silicon Valley in that it
was a single-tenant facility that became 100% vacant at the end of the
lease. Unlike Seattle/Tacoma and Silicon Valley, this Westford,
Massachusetts property was, in our opinion, not a good candidate for multi-
tenant conversion. We believed the property would work best for another
single tenant, possibly an owner/user. Maintaining this strategy had the
result of a longer vacant period for the property, but no significant
capital repositioning expenditures were incurred. In fact, a single-tenant
user bought the property for approximately $11.5 million. Subject to the
current uncertainty in the mortgage debt/real estate transaction markets,
we plan to continue to upgrade our property portfolio through selective
dispositions and acquisitions. Proceeds from property sales, as well as
from other sources of capital, may be used to purchase our common stock
under the provisions of our existing stock repurchase plan. During the
third quarter of 2007, we purchased 285,600 shares of our common stock in
the open market for approximately $4.8 million. Also during the third
quarter, our Board of Directors voted to extend for an additional two years
our existing stock repurchase plan, which was scheduled to terminate on
November 1, 2007, and to increase the amount of common stock that could be
repurchased from $35 million to $50 million. By doing so, we continue to
have the flexibility to redeploy proceeds from property sales into either
our common stock or new acquisition properties, when the relative financial
opportunity is favorable.
Investment Banking activity for the third quarter of 2007 totaled
approximately $10.0 million. Through the first nine months of 2007, we
have subscribed approximately $119.2 million of permanent equity for
property syndication. This compares with a 2006 full-year total of
approximately $170.2 million. Third quarter capital raising efforts from
our Investment Banking group were adversely affected by the turmoil in the
financial/credit/real estate markets. Uncertainty has always been an enemy
of our traditional investors' decision making to commit capital to our
property offerings. The third quarter's financial market activity created
much uncertainty in many investors' minds. Traditionally, once a direction
and magnitude-consequence to the economy/markets becomes clearer, our
investors become more interested in positioning capital. Currently, our
Investment Banking group is raising equity from investors in two private
placement preferred stock offerings, each representing ownership in a
separate single asset office property REIT."
Dividend Announcement
On October 19, 2007, the Board of Directors of the Company declared a cash
distribution of $0.31 per share of common stock payable on November 20,
2007 to stockholders of record on October 31, 2007.
Financing and Real Estate Update
On October 19, 2007 the Company amended its line of credit with a group of
banks. The amended line of credit provides for borrowings at the Company's
election of $250,000,000, representing a $100,000,000 increase, and reduced
the interest cost of borrowings under a LIBOR option by 25 basis points to
LIBOR plus 100 basis points. The expiration date was extended by three
years to August 2011 as part of the amendment.
Supplementary Schedule D presents our continuing real estate portfolio of
27 properties as of September 30, 2007.
Stock Repurchase Plan
On September 10, 2007, we announced that our 2005 common stock repurchase
program had been modified to authorize the repurchase of up to $50 million
(inclusive of all repurchases made pursuant to the original 2005 program)
of our common stock from time to time in the open market or in privately
negotiated transactions. In addition, the modification extended the
termination date of the program from November 1, 2007 to November 1, 2009.
Repurchases may be made under a Rule 10b5-1 plan, which would permit shares
to be repurchased when we might otherwise be precluded from doing so under
insider trading laws. The repurchase program may be suspended or
discontinued at any time.
A reconciliation of Net Income to AFFO and AFFO+GOS is shown below and
definitions of AFFO and AFFO+GOS are provided on Supplemental Schedule G.
We believe AFFO is used broadly throughout the real estate investment trust
(REIT) industry as a measurement of performance and is generally calculated
in a similar manner to our calculation. We also believe that AFFO+GOS is
an important measure as it considers investment performance.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
(In thousands, except per share
amounts) 2007 2006 2007 2006
-------- -------- -------- --------
Net income $ 9,486 $ 17,830 $ 51,694 $ 71,446
(Gain) Loss on sale of assets (1,942) (6,361) (23,532) (34,469)
GAAP income from non-consolidated
REITs (106) (481) 619 (912)
Distributions from
non-consolidated REITs 476 115 1,199 724
Depreciation of real estate &
intangible amortization 9,016 8,760 26,524 23,406
Straight-line rent (875) (590) (2,924) (529)
-------- -------- -------- --------
Adjusted Funds From Operations
(AFFO) 16,055 19,273 53,580 59,666
Plus gains on sales of assets 1,942 6,361 23,532 34,469
-------- -------- -------- --------
AFFO+GOS $ 17,997 $ 25,634 $ 77,112 $ 94,135
======== ======== ======== ========
Per Share Data
EPS $ 0.13 $ 0.25 $ 0.73 $ 1.08
AFFO $ 0.23 $ 0.27 $ 0.76 $ 0.90
AFFO+GOS $ 0.25 $ 0.36 $ 1.09 $ 1.43
Weighted average shares (basic and
diluted) 70,596 70,766 70,709 65,944
======== ======== ======== ========
Today's news release, along with other news about Franklin Street
Properties Corp., is available on the Internet at
www.franklinstreetproperties.com.
A conference call is scheduled for October 31, 2007 at 10:00 a.m. (ET) to
discuss the third quarter 2007 results. The toll free number is 1-866-831-
6291, passcode 26086514. Internationally, the call may be accessed by
dialing 1-617-213-8660, passcode 26086514. The call will also be available
via a live webcast, which can be accessed at least 10 minutes before the
start time through the Webcasts & Presentations section of our Investor
Relations section at www.franklinstreetproperties.com. A replay of the
conference call will be available on the Company's website one hour after
the call.
About Franklin Street Properties Corp.
Franklin Street Properties Corp., based in Wakefield, Massachusetts, is
focused on achieving current income and long-term growth through
investments in commercial properties. FSP operates in two business
segments: real estate operations and investment banking/investment
services. FSP owns an unleveraged portfolio of real estate. The majority
of FSP's property portfolio is suburban office buildings, with select
investments in certain central business district properties. FSP's
subsidiary, FSP Investments LLC (member, FINRA and SIPC), is a real estate
investment banking firm and a registered broker/dealer. FSP is a Maryland
corporation that operates in a manner intended to qualify as a real estate
investment trust (REIT) for federal income tax purposes. To learn more
about FSP please visit our website at www.franklinstreetproperties.com.
Forward-Looking Statements
Statements made in this press release that state FSP's or management's
intentions, beliefs, expectations, or predictions for the future are
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 changes in economic conditions in
the markets in which we own properties, changes in the demand by investors
for investment in Sponsored REITs (as defined in our Annual Report on Form
10-K for the year ended December 31, 2006), risks of a lessening of demand
for the types of real estate owned by us, changes in government
regulations, and expenditures that cannot be anticipated such as utility
rate and usage increases, unanticipated repairs, additional staffing,
insurance increases and real estate tax valuation reassessments. See the
"Risk Factors" set forth in Item 1A of our Annual Report on Form 10-K for
the year ended December 31, 2006, as the same may be updated from time to
time in subsequent filings with the 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. Financial Results
Supplementary Schedule A
Consolidated Income Statement
(Unaudited)
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands, except per share ------------------ ------------------
amounts) 2007 2006 2007 2006
======== ======== ======== =========
Revenue:
Rental $ 27,431 $ 23,833 $ 76,037 $ 61,647
Related party revenue:
Syndication fees 687 861 7,090 6,288
Transaction fees 604 1,140 7,446 6,548
Management fees and interest
income from loans 1,497 209 5,176 1,078
Other 37 2 84 24
-------- -------- -------- ---------
Total revenue 30,256 26,045 95,833 75,585
-------- -------- -------- ---------
Expenses:
Real estate operating expenses 7,263 5,469 19,340 13,372
Real estate taxes and insurance 4,565 3,750 12,892 8,949
Depreciation and amortization 7,870 6,016 22,041 15,213
Selling, general and
administrative 1,787 2,027 5,675 5,785
Commissions 406 458 3,720 3,289
Interest 1,823 119 6,120 1,260
-------- -------- -------- ---------
Total expenses 23,714 17,839 69,788 47,868
-------- -------- -------- ---------
Income before interest income,
equity in earnings of
non-consolidated REITs and taxes
on income 6,542 8,206 26,045 27,717
Interest income 650 735 1,864 2,080
Equity in earnings (deficit) of
non-consolidated REITs 147 481 (611) 717
-------- -------- -------- ---------
Income before taxes on income 7,339 9,422 27,298 30,514
Income tax expense (261) (131) 352 273
-------- -------- -------- ---------
Income from continuing operations 7,600 9,553 26,946 30,241
Income from discontinued
operations (56) 1,916 1,216 6,736
Gain on sale of assets 1,942 6,361 23,532 34,469
-------- -------- -------- ---------
Net income $ 9,486 $ 17,830 $ 51,694 $ 71,446
======== ======== ======== =========
Weighted average number of shares
outstanding, basic and diluted 70,596 70,766 70,709 65,944
======== ======== ======== =========
Earnings per share, basic and
diluted, attributable to:
Continuing operations $ 0.11 $ 0.13 $ 0.38 $ 0.46
Discontinued operations - 0.03 0.02 0.10
Gains on sales of assets 0.02 0.09 0.33 0.52
-------- -------- -------- ---------
Net income per share, basic and
diluted $ 0.13 $ 0.25 $ 0.73 $ 1.08
======== ======== ======== =========
Franklin Street Properties Corp. Financial Results
Supplementary Schedule B
Condensed Consolidated Balance Sheet
(Unaudited)
(in thousands, except share and par value September 30, December 31,
amounts) 2007 2006
============= =============
Assets:
Real estate assets, net $ 803,780 $ 750,158
Acquired real estate leases, less
accumulated amortization
of $20,561 and $20,345, respectively 37,005 40,577
Investment in non-consolidated REITs 4,948 5,064
Assets held for syndication, net 115,196 -
Assets held for sale - 62,174
Cash and cash equivalents 53,417 69,973
Certificate of deposit - 5,143
Restricted cash 336 761
Tenant rent receivables, less allowance for
doubtful accounts of $430 and $433, respectively 1,387 2,440
Straight-line rent receivable, less
allowance for doubtful accounts of $261 and
$163, respectively 7,069 4,346
Prepaid expenses 2,312 972
Deposits on real estate assets - 5,010
Other assets 477 1,118
Office computers and furniture, net of
accumulated depreciation of $926 and $851,
respectively 371 375
Deferred leasing commissions, net of
accumulated amortization of $1,781, and
$1,313, respectively 8,295 7,206
------------- -------------
Total assets $ 1,034,593 $ 955,317
============= =============
Liabilities and Stockholders' Equity:
Liabilities:
Bank note payable $ 104,550 $ -
Accounts payable and accrued expenses 19,292 25,275
Accrued compensation 1,125 2,643
Tenant security deposits 1,923 1,744
Acquired unfavorable real estate leases,
less accumulated amortization of $1,010,
and $534, respectively 4,627 3,693
------------- -------------
Total liabilities 131,517 33,355
------------- -------------
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,
70,480,705 and 70,766,305 shares issued
and outstanding, respectively 7 7
Additional paid-in capital 907,794 907,794
Treasury stock, 1,017,498 and 731,898
shares at cost, respectively (18,775) (14,008)
Earnings (distributions) in excess of
accumulated earnings/distributions 14,050 28,169
------------- -------------
Total stockholders' equity 903,076 921,962
------------- -------------
Total liabilities and stockholders'
equity $ 1,034,593 $ 955,317
============= =============
Franklin Street Properties Corp. Financial Results
Supplementary Schedule C
Consolidated Statement of Cash Flows
(Unaudited)
For the
Nine Months Ended
September 30,
------------------------
(in thousands) 2007 2006
=========== ===========
Cash flows from operating activities:
Net income $ 51,694 $ 71,446
Adjustments to reconcile net income to net
cash provided by operating activities:
(Gains) on assets sold (23,532) (34,469)
Depreciation and amortization expense 22,818 18,198
Amortization of above market lease 3,706 5,208
Equity in (earnings) deficit from
non-consolidated REITs 619 (912)
Distributions from non-consolidated REITs 1,199 724
Changes in operating assets and liabilities:
Restricted cash 425 (10)
Tenant rent receivables, net 1,053 614
Straight-line rents, net (2,924) (529)
Prepaid expenses and other assets, net (717) 570
Accounts payable and accrued expenses (701) 992
Tenant security deposits 179 248
Payment of deferred leasing commissions (2,905) (4,422)
----------- -----------
Net cash provided by operating activities 50,914 57,658
----------- -----------
Cash flows from investing activities:
Cash acquired through issuance of common
stock in merger transaction - 13,849
Purchase of real estate assets, office
computers and furniture, capitalized merger
costs (75,887) (112,253)
Merger costs paid - (838)
Purchase of acquired favorable and
unfavorable leases (3,726) (5,106)
Investment in non-consolidated REITs (18) (4,127)
Investment in certificate of deposit 5,143 -
Changes in deposits on real estate assets - (2,540)
Investment in assets held for syndication,
net (112,618) -
Proceeds received on sales of real estate
assets 85,673 103,739
----------- -----------
Net cash used for investing activities (101,433) (7,276)
----------- -----------
Cash flows from financing activities:
Distributions to stockholders (65,813) (59,010)
Purchase of treasury shares (4,767)
Other financing costs (7) (119)
Borrowings under bank note payable, net 104,550 -
----------- -----------
Net cash provided by (used for) financing
activities 33,963 (59,129)
----------- -----------
Net increase (decrease) in cash and cash
equivalents (16,556) (8,747)
Cash and cash equivalents, beginning of period 69,973 69,715
----------- -----------
Cash and cash equivalents, end of period $ 53,417 $ 60,968
=========== ===========
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule D
Real Estate Portfolio Summary
(Unaudited)
September 30, 2007
As of September 30,
--------------------
2007 2006
--------- ---------
Commercial real estate
Number of properties 27 31
Square feet 5,066,813 5,301,847
Leased percentage 91% 89%
(In Thousands) As of September 30, 2007
-----------------------------------------------------
# of % of Square % of
State Properties Investment Portfolio Feet Portfolio
---------- ---------- --------- ---------- ---------
Texas 7 $ 215,754 26.8% 1,401 27.7%
Colorado 4 132,176 16.5% 791 15.6%
Georgia 1 79,575 9.9% 387 7.6%
Maryland 2 64,695 8.1% 425 8.4%
Virginia 2 64,266 8.0% 433 8.6%
Missouri 2 58,431 7.3% 349 6.9%
Florida 1 50,754 6.3% 213 4.2%
California 2 21,127 2.6% 182 3.6%
Indiana 1 38,533 4.8% 205 4.0%
Illinois 1 32,999 4.1% 177 3.5%
Michigan 1 15,496 1.9% 215 4.2%
North Carolina 2 14,780 1.8% 172 3.4%
Washington 1 15,193 1.9% 117 2.3%
---------- ---------- --------- ---------- ---------
Total 27 $ 803,779 100.0% 5,067 100.0%
========== ========== ========= ========== =========
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule E
(Unaudited)
September 30, 2007
Property by type:
(dollars & square feet in 000's)
As of September 30, 2007
-----------------------------------------------------------
# of % of Square % of
Type Properties Investment Portfolio Feet Portfolio
---- ----------- ----------- ---------- ----------- ----------
Office 26 $ 798,491 99.3% 4,968 98.1%
Industrial 1 5,289 0.7% 99 1.9%
----------- ----------- ---------- ----------- ----------
Total 27 $ 803,780 100.0% 5,067 100.0%
=========== =========== ========== =========== ==========
Commercial portfolio lease expirations (1)
Total % of
Year Square Feet Portfolio
---- ------------- ------------
2007 75,172 1.5%
2008 283,289 5.6%
2009 658,910 13.0%
2010 796,250 15.7%
2011 349,531 6.9%
2012 625,772 12.4%
Thereafter 2,277,889 44.9%(2)
------------- ------------
5,066,813 100.0%
============= ============
(1) Percentages are determined based upon square footage of expiring
commercial leases and if applicable, exclude assets held for sale.
(2) Includes 471,000 square feet of current vacancies.
Capital Expenditures Three Months Ended Nine Months Ended
------------------- -------------------
(in thousands) 30-Sep-07 30-Sep-06 30-Sep-07 30-Sep-06
--------- --------- --------- ---------
Tenant improvements $ 2,425 $ 2,630 $ 5,598 $ 4,196
Deferred leasing costs 235 1,649 2,905 4,422
Building maintenance expenses 1,722 77 - 295
Increase to investments in
buildings - 1,220 3,596 1,220
--------- --------- --------- ---------
$ 4,382 $ 5,576 $ 12,099 $ 10,133
========= ========= ========= =========
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule F: Previous 4 Quarter information
(Unaudited)
(in thousands) Q3 Q2 Q1 Q4
2007 2007 2007 2006
Revenue: -------- -------- -------- --------
Rental $ 27,431 $ 23,201 $ 25,405 $ 22,715
Related party revenue:
Syndication fees 687 3,448 2,955 4,405
Transaction fees 604 3,761 3,081 4,714
Management fees and interest
income from loans 1,497 1,862 1,817 1,005
Other 37 9 38 36
-------- -------- -------- --------
Total revenue 30,256 32,281 33,296 32,875
-------- -------- -------- --------
Expenses:
Real estate operating expenses 7,263 5,771 6,305 6,114
Real estate taxes and insurance 4,565 4,039 4,288 3,519
Depreciation and amortization 7,870 6,889 7,283 6,114
Selling, general and
administrative 1,787 2,000 1,888 2,733
Commissions 406 1,754 1,559 2,233
Interest 1,823 1,622 2,676 1,190
-------- -------- -------- --------
Total expenses 23,714 22,075 23,999 21,903
-------- -------- -------- --------
Income before interest income,
equity (deficit) in earnings
in non-consolidated REITs 6,542 10,206 9,297 10,972
Interest income 650 560 653 918
Equity in earnings (deficit)
in non-consolidated REITs 147 (142) (616) 128
-------- -------- -------- --------
Income before taxes on income 7,339 10,624 9,334 12,018
Taxes on income (261) 373 240 567
-------- -------- -------- --------
Income from continuing
operations 7,600 10,251 9,094 11,451
Income from discontinued
operations (56) 635 638 1,063
-------- -------- -------- --------
Income before gain on sale of
properties 7,544 10,886 9,732 12,514
Gain on sale of assets 1,942 21,590 - 26,969
-------- -------- -------- --------
Net income $ 9,486 $ 32,476 $ 9,732 $ 39,483
======== ======== ======== ========
AFFO and AFFO+GOS calculations:
Net income $ 9,486 $ 32,476 $ 9,732 $ 39,483
-------- -------- -------- --------
(Gain) on sale of assets (1,942) (21,590) - (26,969)
GAAP income from
non-consolidated REITs (106) 142 583 (131)
Distributions from
non-consolidated REITs 476 442 281 59
Depreciation & amortization 9,016 8,508 9,000 8,684
Straight-line rent (875) (776) (1,273) (805)
-------- -------- -------- --------
Adjusted Funds From Operations
(AFFO) 16,055 19,202 18,323 20,321
Plus gains on sales of assets 1,942 21,590 - 26,969
-------- -------- -------- --------
AFFO+GOS $ 17,997 $ 40,792 $ 18,323 $ 47,290
======== ======== ======== ========
Franklin Street Properties Corp. Earnings Release
Supplementary Schedule G
Definition of Adjusted Funds From Operations ("AFFO"),
and AFFO plus Gains on Sales ("AFFO+GOS")
The Company evaluates the performance of its reportable segments based on
several measures including, Adjusted Funds From Operations ("AFFO") and
AFFO plus Gains on Sales ("AFFO+GOS") as management believes they represent
important measures of activity and are an important consideration in
determining distributions paid to equity holders. The Company defines AFFO
as: Net Income as computed in accordance with accounting principles
generally accepted in the United States of America ("GAAP"); excluding
gains or losses on the sale of real estate and non-cash income from
Sponsored REITs; plus certain non-cash items included in the computation of
Net Income (depreciation and amortization and straight-line rent
adjustments); plus distributions received from Sponsored REITs; plus the
net proceeds from the sale of land; Depreciation and amortization, gain or
loss on the sale of real estate and straight-line rents are an adjustment
to AFFO, as these are non-cash items included in Net Income. The Company
defines AFFO+GOS as AFFO as defined above, plus gains and losses on sales
of properties and provisions for assets held for sale.
AFFO and AFFO+GOS should not be considered as alternatives to Net Income
(determined in accordance with GAAP), as indicators of the Company's
financial performance, as alternatives to cash flows from operating
activities (determined in accordance with GAAP), or as measures of the
Company's liquidity, or are they necessarily indicative of sufficient cash
flow to fund all of the Company's needs. Other real estate companies may
define these terms in a different manner. We believe that in order to
facilitate a clear understanding of the results of the Company, AFFO and
AFFO+GOS should be examined in connection with Net Income and cash flows
from operating, investing and financing activities in the consolidated
financial statements.
Contact:
Donna Brownell
877-686-9496
