Franklin Street Properties Corp. Announces Second Quarter 2022 Results
Franklin Street Properties Corp. (FSP) reported its second-quarter results as of June 30, 2022, highlighting a GAAP net loss of $9.1 million. The company plans to increase shareholder value through property sales and aims for $200-$300 million in gross proceeds from dispositions. Occupancy in its portfolio decreased to 76.3% from 78.4%. Notably, the company adopted a variable quarterly dividend policy, declaring a cash dividend of $0.01 per share. The upcoming earnings call is set for August 3, 2022.
- Updated property disposition guidance for 2022 indicates potential gross proceeds of $200-$300 million.
- Adoption of a variable quarterly dividend policy can provide flexibility in capital allocation.
- Leasing activity included approximately 276,000 square feet in the first half of 2022.
- GAAP net loss of $9.1 million, indicating financial challenges.
- Decrease in occupancy to 76.3% from 78.4% since the end of 2021.
- Adjusted Funds From Operations (AFFO) showed a loss per share for the first half of 2022.
“As the third quarter of 2022 begins, we continue to believe that the current price of our common stock does not accurately reflect the value of our underlying real estate assets. Our objectives for 2022 are twofold: We will seek to increase shareholder value (1) through the potential sale of select properties where we believe that short to intermediate term valuation potential has been reached and (2) by striving to increase occupancy in our continuing portfolio of real estate. We intend to use proceeds from any potential future property dispositions for debt reduction, repurchases of our common stock, dividends under our variable quarterly dividend policy and any dividends required to meet REIT requirements, and other general corporate purposes.
At this time, we are updating our property disposition guidance for full-year 2022 to be in the range of approximately
We look forward to the balance of 2022 and beyond with anticipation and optimism.”
Financial Highlights
-
GAAP net loss was
and$9.1 million , or$13.3 million and$0.09 per basic and diluted share for the three and six months ended$0.13 June 30, 2022 , respectively. -
Funds From Operations (FFO) was
and$10.3 million , or$21.8 million and$0.10 per basic and diluted share for the three and six months ended$0.21 June 30, 2022 , respectively. -
Adjusted Funds From Operations (AFFO) was a loss of
and$0.04 per basic and diluted share for the three and six months ended$0.03 June 30, 2022 , respectively.
Leasing Highlights
-
During the six months ended
June 30, 2022 , we leased approximately 276,000 square feet, including 171,000 square feet of new leases. -
Our directly owned real estate portfolio of 24 owned properties totaling approximately 6.9 million square feet, was approximately
76.3% leased as ofJune 30, 2022 , compared to approximately78.4% leased as ofDecember 31, 2021 . The decrease in the leased percentage is primarily a result of lease expirations during the first half of 2022. -
Lease expirations for 2022 and 2023 are approximately 127,000 and 383,000 square feet, representing approximately
1.8% and5.5% of our owned portfolio, respectively. -
The weighted average GAAP base rent per square foot achieved on leasing activity during the six months ended
June 30, 2022 was , or$33.58 4.7% higher than average rents in the respective properties as applicable compared to the year endedDecember 31, 2021 . The average lease term on leases signed in the six months endedJune 30, 2022 , was 6.9 years compared to 7.7 years for the year endedDecember 31, 2021 . Overall the portfolio weighted average rent per occupied square foot was as of$30.48 June 30, 2022 compared to as of$30.60 December 31, 2021 . - Subsequent to quarter end, we are currently tracking approximately 600,000 square feet of new prospective tenants, including approximately 400,000 square feet of prospective tenants that have identified FSP assets on their respective short lists of potential locations.
- We believe that our continuing portfolio of real estate is well located, primarily in the Sunbelt and Mountain West geographic regions, and consists of high-quality assets with upside leasing potential in a post-COVID-19 environment.
Investment Highlights
-
Disposition guidance for full-year 2022 was updated to be in the range of approximately
to$200 million in aggregate gross proceeds.$300 million - Subject to market conditions and satisfactory outcomes on prospective transactions, we anticipate dispositions to occur during the third and/or fourth quarters of 2022 and will provide updates as appropriate.
- Disposition proceeds are intended to be used for debt reduction, dividends under our variable quarterly dividend policy and any special dividends required to meet REIT requirements, repurchases of our common stock, and other general corporate purposes.
-
Potential disposition candidates include: 380 and 390 Interlocken in
Broomfield, Colorado ;Eldridge Green and Park Ten inHouston, Texas ; 909 Davis inEvanston, Illinois ;Pershing Park inAtlanta, Georgia ; andBlue Lagoon inMiami, Florida .
Stock Repurchases
-
During the first quarter of 2022, we repurchased approximately 847,000 shares of our common stock for approximately
pursuant to our previously announced stock repurchase plan. We did not repurchase any shares of our common stock during the second quarter of 2022.$4.8 million -
Up to approximately
remains authorized for potential future repurchases of our common stock pursuant to our previously announced stock repurchase plan.$26.9 million
Dividends
-
In light of the gains achieved on our dispositions in 2021, on
December 3, 2021 , we announced that our Board of Directors declared a special dividend of per share, which was paid on$0.32 January 12, 2022 to shareholders of record onDecember 31, 2021 , in order to meet REIT requirements. -
On
July 5, 2022 , we adopted a variable quarterly dividend policy, which replaced our previous regular quarterly dividend policy. Under the new variable quarterly dividend policy, the Board of Directors will determine quarterly dividends based upon a variety of factors, including the Company’s estimates of its annual taxable income and the amount that the Company is required to distribute annually in the aggregate to enable the Company to continue to qualify as a real estate investment trust for federal income tax purposes. -
On
July 5, 2022 , we announced that our Board of Directors declared a quarterly cash dividend for the three months endedJune 30, 2022 of per share of common stock pursuant to our variable quarterly dividend policy that will be paid on$0.01 August 11, 2022 to stockholders of record onJuly 19, 2022 . - If we are able to dispose of properties in 2022 at anticipated pricing levels, we may be required to again declare a special dividend in 2022 in addition to any regular quarterly dividends in order to meet REIT requirements.
Non-GAAP Financial Information
A reconciliation of Net income 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.
2022 Net Income, FFO and Disposition Guidance
At this time, due primarily to uncertainty surrounding the timing and amount of proceeds received from property dispositions, we are continuing suspension of Net Income and FFO guidance. We are updating our previously announced disposition guidance for full-year 2022 as we execute on our strategy to dispose of certain properties that we believe have met their short to intermediate term valuation objectives and whose value may not be accurately reflected in our share price. Anticipated dispositions in 2022 are estimated to result in aggregate gross proceeds in the range of approximately
Real Estate Update
Supplementary schedules provide property information for the Company’s owned and managed real estate portfolio as of
Today’s news release, along with other news about
Earnings Call
A conference call is scheduled for
About
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 those relating to our ability to lease space in the future, expectations for dispositions, potential stock repurchases, the payment of special dividends and the repayment of debt in future periods, value creation/enhancement in future periods and expectations for growth and leasing activities in future periods 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, adverse changes in general economic or local market conditions, including as a result of the COVID-19 pandemic and other potential infectious disease outbreaks and terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, increasing interest rates, 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, adverse changes in energy prices, which if sustained, could negatively impact occupancy and rental rates in the markets in which we own properties, including energy-influenced markets such as
Earnings Release Supplementary Information Table of Contents |
|
|
|
|
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 |
|
Operating Income (NOI) and Net Loss |
I |
|
|
Supplementary Schedule A Condensed Consolidated Statements of Operations (Unaudited) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
For the |
|
For the |
|||||||||||||
|
Three Months Ended |
|
Six Months Ended |
|||||||||||||
|
|
|
|
|||||||||||||
(in thousands, except per share amounts) |
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
||||||||||||
Revenue: |
|
|
|
|
||||||||||||
Rental |
$ |
40,831 |
|
$ |
55,722 |
|
$ |
82,628 |
|
$ |
114,345 |
|
||||
Related party revenue: |
|
|
|
|
||||||||||||
Management fees and interest income from loans |
|
467 |
|
|
417 |
|
|
927 |
|
|
827 |
|
||||
Other |
|
6 |
|
|
6 |
|
|
13 |
|
|
12 |
|
||||
Total revenue |
|
41,304 |
|
|
56,145 |
|
|
83,568 |
|
|
115,184 |
|
||||
|
|
|
|
|
||||||||||||
Expenses: |
|
|
|
|
||||||||||||
Real estate operating expenses |
|
12,344 |
|
|
15,352 |
|
|
25,178 |
|
|
31,291 |
|
||||
Real estate taxes and insurance |
|
9,043 |
|
|
11,895 |
|
|
17,762 |
|
|
24,261 |
|
||||
Depreciation and amortization |
|
18,186 |
|
|
19,136 |
|
|
33,856 |
|
|
43,517 |
|
||||
General and administrative |
|
3,981 |
|
|
3,962 |
|
|
7,765 |
|
|
8,108 |
|
||||
Interest |
|
5,664 |
|
|
10,054 |
|
|
11,030 |
|
|
18,654 |
|
||||
Total expenses |
|
49,218 |
|
|
60,399 |
|
|
95,591 |
|
|
125,831 |
|
||||
|
|
|
|
|
||||||||||||
Loss on extinguishment of debt |
|
— |
|
|
(167 |
) |
|
— |
|
|
(167 |
) |
||||
Impairment and loan loss reserve |
|
(1,140 |
) |
|
— |
|
|
(1,140 |
) |
|
— |
|
||||
Gain on sale of properties, net |
|
— |
|
|
20,626 |
|
|
— |
|
|
20,626 |
|
||||
Income (loss) before taxes |
|
(9,054 |
) |
|
16,205 |
|
|
(13,163 |
) |
|
9,812 |
|
||||
Tax expense |
|
56 |
|
|
56 |
|
|
105 |
|
|
123 |
|
||||
Net income (loss) |
$ |
(9,110 |
) |
$ |
16,149 |
|
$ |
(13,268 |
) |
$ |
9,689 |
|
||||
|
|
|
|
|
||||||||||||
Weighted average number of shares outstanding, basic and diluted |
|
103,193 |
|
|
107,359 |
|
|
103,441 |
|
|
107,344 |
|
||||
|
|
|
|
|
||||||||||||
Net income (loss) per share, basic and diluted |
$ |
(0.09 |
) |
$ |
0.15 |
|
$ |
(0.13 |
) |
$ |
0.09 |
|
Supplementary Schedule B Condensed Consolidated Balance Sheets (Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
|
|
|
||||
(in thousands, except share and par value amounts) |
|
|
2022 |
|
|
|
2021 |
|
Assets: |
|
|
|
|
||||
Real estate assets: |
|
|
|
|
||||
Land |
|
$ |
146,844 |
|
|
$ |
146,844 |
|
Buildings and improvements |
|
|
1,477,913 |
|
|
|
1,457,209 |
|
Fixtures and equipment |
|
|
12,192 |
|
|
|
11,404 |
|
|
|
|
1,636,949 |
|
|
|
1,615,457 |
|
Less accumulated depreciation |
|
|
450,792 |
|
|
|
424,487 |
|
Real estate assets, net |
|
|
1,186,157 |
|
|
|
1,190,970 |
|
Acquired real estate leases, less accumulated amortization of |
|
|
12,373 |
|
|
|
14,934 |
|
Cash, cash equivalents and restricted cash |
|
|
4,693 |
|
|
|
40,751 |
|
Tenant rent receivables |
|
|
2,627 |
|
|
|
1,954 |
|
Straight-line rent receivable |
|
|
54,354 |
|
|
|
49,024 |
|
Prepaid expenses and other assets |
|
|
6,863 |
|
|
|
4,031 |
|
Related party mortgage loan receivable, less allowance for credit loss of |
|
|
22,860 |
|
|
|
24,000 |
|
Other assets: derivative asset |
|
|
1,951 |
|
|
|
— |
|
Office computers and furniture, net of accumulated depreciation of |
|
|
187 |
|
|
|
198 |
|
Deferred leasing commissions, net of accumulated amortization of |
|
|
39,654 |
|
|
|
38,311 |
|
Total assets |
|
$ |
1,331,719 |
|
|
$ |
1,364,173 |
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity: |
|
|
|
|
||||
Liabilities: |
|
|
|
|
||||
Bank note payable |
|
$ |
55,000 |
|
|
$ |
— |
|
Term loans payable, less unamortized financing costs of |
|
|
274,518 |
|
|
|
274,286 |
|
Series A & Series B Senior Notes, less unamortized financing costs of |
|
|
199,424 |
|
|
|
199,342 |
|
Accounts payable and accrued expenses |
|
|
39,315 |
|
|
|
89,493 |
|
Accrued compensation |
|
|
2,252 |
|
|
|
4,704 |
|
Tenant security deposits |
|
|
5,819 |
|
|
|
6,219 |
|
Lease liability |
|
|
962 |
|
|
|
1,159 |
|
Other liabilities: derivative liabilities |
|
|
— |
|
|
|
5,239 |
|
Acquired unfavorable real estate leases, less accumulated amortization of |
|
|
397 |
|
|
|
528 |
|
Total liabilities |
|
|
577,687 |
|
|
|
580,970 |
|
|
|
|
|
|
||||
Commitments and contingencies |
|
|
|
|
||||
|
|
|
|
|
||||
Stockholders’ Equity: |
|
|
|
|
||||
Preferred stock, |
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
10 |
|
|
|
10 |
|
Additional paid-in capital |
|
|
1,334,776 |
|
|
|
1,339,226 |
|
Accumulated other comprehensive loss |
|
|
1,951 |
|
|
|
(5,239 |
) |
Accumulated distributions in excess of accumulated earnings |
|
|
(582,705 |
) |
|
|
(550,794 |
) |
Total stockholders’ equity |
|
|
754,032 |
|
|
|
783,203 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,331,719 |
|
|
$ |
1,364,173 |
|
Supplementary Schedule C Condensed Consolidated Statements of Cash Flows (Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
For the |
||||||
|
|
Six Months Ended |
||||||
|
|
|
||||||
(in thousands) |
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating activities: |
|
|
|
|
||||
Net income (loss) |
|
$ |
(13,268 |
) |
|
$ |
9,689 |
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
||||
Depreciation and amortization expense |
|
|
34,863 |
|
|
|
44,910 |
|
Amortization of above and below market leases |
|
|
(54 |
) |
|
|
(38 |
) |
Shares issued as compensation |
|
|
394 |
|
|
|
338 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
167 |
|
Impairment and loan loss reserve |
|
|
1,140 |
|
|
|
— |
|
Gain on sale of properties, net |
|
|
— |
|
|
|
(20,626 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
||||
Tenant rent receivables |
|
|
(673 |
) |
|
|
4,540 |
|
Straight-line rents |
|
|
(2,904 |
) |
|
|
(2,858 |
) |
Lease acquisition costs |
|
|
(2,426 |
) |
|
|
(623 |
) |
Prepaid expenses and other assets |
|
|
(1,153 |
) |
|
|
(485 |
) |
Accounts payable and accrued expenses |
|
|
(18,268 |
) |
|
|
(18,520 |
) |
Accrued compensation |
|
|
(2,452 |
) |
|
|
(1,609 |
) |
Tenant security deposits |
|
|
(400 |
) |
|
|
(1,870 |
) |
Payment of deferred leasing commissions |
|
|
(5,033 |
) |
|
|
(6,926 |
) |
Net cash provided by (used in) operating activities |
|
|
(10,234 |
) |
|
|
6,089 |
|
Cash flows from investing activities: |
|
|
|
|
||||
Property improvements, fixtures and equipment |
|
|
(21,496 |
) |
|
|
(36,957 |
) |
Proceeds received from sales of properties |
|
|
— |
|
|
|
228,717 |
|
Net cash provided by (used in) investing activities |
|
|
(21,496 |
) |
|
|
191,760 |
|
Cash flows from financing activities: |
|
|
|
|
||||
Distributions to stockholders |
|
|
(51,924 |
) |
|
|
(19,319 |
) |
Stock repurchases |
|
|
(4,843 |
) |
|
|
— |
|
Borrowings under bank note payable |
|
|
60,000 |
|
|
|
66,500 |
|
Repayments of bank note payable |
|
|
(5,000 |
) |
|
|
(70,000 |
) |
Repayments of Term Loans |
|
|
— |
|
|
|
(155,000 |
) |
Deferred financing costs |
|
|
(2,561 |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
(4,328 |
) |
|
|
(177,819 |
) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
(36,058 |
) |
|
|
20,030 |
|
Cash, cash equivalents and restricted cash, beginning of year |
|
|
40,751 |
|
|
|
4,150 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
4,693 |
|
|
$ |
24,180 |
|
Supplementary Schedule D Real Estate Portfolio Summary Information (Unaudited & Approximated) |
|||||
|
|
|
|
|
|
Commercial portfolio lease expirations (1) |
|
|
|
|
|
|
|
Total |
|
% of |
|
Year |
|
Square Feet |
|
Portfolio |
|
2022 |
|
126,588 |
|
1.8 |
% |
2023 |
|
382,953 |
|
5.5 |
% |
2024 |
|
747,458 |
|
10.8 |
% |
2025 |
|
498,772 |
|
7.2 |
% |
2026 |
|
543,683 |
|
7.9 |
% |
Thereafter (2) |
|
4,616,261 |
|
66.8 |
% |
|
|
6,915,715 |
|
100.0 |
% |
____________________ | ||
(1) | Percentages are determined based upon total square footage. |
|
(2) |
Includes 1,638,306 square feet of vacancies at our operating properties as of |
|
|
|
|
|
|
|
|
|
|
|
|||
(dollars & square feet in 000's) |
|
As of |
|||||||||||
|
|
|
|
|
|
% of |
|
Square |
|
% of |
|||
State |
|
Properties |
|
Investment |
|
Portfolio |
|
Feet |
|
Portfolio |
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
6 |
|
$ |
533,365 |
|
45.0 |
% |
|
2,628 |
|
38.0 |
% |
|
|
9 |
|
|
331,463 |
|
27.9 |
% |
|
2,423 |
|
35.0 |
% |
Georgia |
|
1 |
|
|
43,727 |
|
3.7 |
% |
|
160 |
|
2.3 |
% |
|
|
3 |
|
|
121,902 |
|
10.3 |
% |
|
758 |
|
11.0 |
% |
|
|
1 |
|
|
32,955 |
|
2.8 |
% |
|
298 |
|
4.3 |
% |
|
|
1 |
|
|
68,476 |
|
5.8 |
% |
|
213 |
|
3.1 |
% |
|
|
2 |
|
|
45,433 |
|
3.8 |
% |
|
372 |
|
5.4 |
% |
|
|
1 |
|
|
8,649 |
|
0.7 |
% |
|
64 |
|
0.9 |
% |
Total |
|
24 |
|
$ |
1,185,970 |
|
100.0 |
% |
|
6,916 |
|
100.0 |
% |
Supplementary Schedule E Portfolio and Other Supplementary Information (Unaudited & Approximated) |
|||||||||
Recurring Capital Expenditures |
|||||||||
|
|
|
|
|
|
|
|||
|
|
|
|
Six Months |
|||||
(in thousands) |
|
For the Three Months Ended |
|
Ended |
|||||
|
|
|
|
|
|
|
|||
Tenant improvements |
|
$ |
1,877 |
|
$ |
5,453 |
|
$ |
7,330 |
Deferred leasing costs |
|
|
3,032 |
|
|
1,327 |
|
|
4,359 |
Non-investment capex |
|
|
5,065 |
|
|
6,736 |
|
|
11,801 |
|
|
$ |
9,974 |
|
$ |
13,516 |
|
$ |
23,490 |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|||||||||||
|
|
For the Three Months Ended |
|
Year Ended |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Tenant improvements |
|
$ |
4,491 |
|
$ |
4,277 |
|
$ |
3,952 |
|
$ |
1,881 |
|
$ |
14,601 |
Deferred leasing costs |
|
|
2,597 |
|
|
1,922 |
|
|
2,371 |
|
|
1,319 |
|
|
8,209 |
Non-investment capex |
|
|
5,336 |
|
|
3,793 |
|
|
4,528 |
|
|
4,672 |
|
|
18,329 |
|
|
$ |
12,424 |
|
$ |
9,992 |
|
$ |
10,851 |
|
$ |
7,872 |
|
$ |
41,139 |
|
|
|
|
|
||
Square foot & leased percentages |
|
|
|
|
||
|
|
2022 |
|
2021 |
||
Owned or |
|
|
|
|
||
Number of properties |
|
24 |
|
|
24 |
|
Square feet |
|
6,915,715 |
|
|
6,911,225 |
|
Leased percentage |
|
76.3 |
% |
|
78.4 |
% |
|
|
|
|
|
||
|
|
|
|
|
||
Number of properties |
|
1 |
|
|
2 |
|
Square feet |
|
213,760 |
|
|
348,545 |
|
|
|
|
|
|
||
Total Owned or |
|
|
|
|
||
Number of properties |
|
25 |
|
|
26 |
|
Square feet |
|
7,129,475 |
|
|
7,259,770 |
|
Supplementary Schedule F Percentage of Leased Space (Unaudited & Estimated) |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First |
|
|
|
Second |
|
|
|
|
|
|
|
|
% Leased (1) |
|
Quarter |
|
% Leased (1) |
|
Quarter |
|
|
|
|
|
|
|
|
as of |
|
Average % |
|
as of |
|
Average % |
|
|
Property |
|
Location |
|
Square Feet |
|
|
|
Leased (2) |
|
|
|
Leased (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
64,198 |
|
|
|
|
|
|
|
|
2 |
|
NORTHWEST POINT |
|
|
|
177,095 |
|
|
|
|
|
|
|
|
3 |
|
PARK TEN |
|
|
|
157,609 |
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
156,746 |
|
|
|
|
|
|
|
|
5 |
|
GREENWOOD PLAZA |
|
|
|
196,236 |
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
289,333 |
|
|
|
|
|
|
|
|
7 |
|
|
|
|
|
300,887 |
|
|
|
|
|
|
|
|
8 |
|
INNSBROOK |
|
|
|
298,183 |
|
|
|
|
|
|
|
|
9 |
|
|
|
|
|
217,600 |
|
|
|
|
|
|
|
|
10 |
|
380 INTERLOCKEN |
|
|
|
240,359 |
|
|
|
|
|
|
|
|
11 |
|
390 INTERLOCKEN |
|
|
|
241,512 |
|
|
|
|
|
|
|
|
12 |
|
BLUE LAGOON |
|
|
|
213,182 |
|
|
|
|
|
|
|
|
13 |
|
|
|
|
|
248,399 |
|
|
|
|
|
|
|
|
14 |
|
121 SOUTH EIGHTH ST |
|
|
|
298,121 |
|
|
|
|
|
|
|
|
15 |
|
801 MARQUETTE AVE |
|
|
|
129,691 |
|
|
|
|
|
|
|
|
16 |
|
LEGACY TENNYSON CTR |
|
|
|
208,966 |
|
|
|
|
|
|
|
|
17 |
|
ONE LEGACY |
|
|
|
214,110 |
|
|
|
|
|
|
|
|
18 |
|
909 DAVIS |
|
|
|
195,098 |
|
|
|
|
|
|
|
|
19 |
|
WESTCHASE I & II |
|
|
|
629,025 |
|
|
|
|
|
|
|
|
20 |
|
1999 |
|
|
|
680,255 |
|
|
|
|
|
|
|
|
21 |
|
1001 17TH STREET |
|
|
|
657,706 |
|
|
|
|
|
|
|
|
22 |
|
PLAZA SEVEN |
|
|
|
330,096 |
|
|
|
|
|
|
|
|
23 |
|
|
|
|
|
160,145 |
|
|
|
|
|
|
|
|
24 |
|
600 17TH STREET |
|
|
|
611,163 |
|
|
|
|
|
|
|
|
|
|
OWNED PORTFOLIO |
|
|
|
6,915,715 |
|
|
|
|
|
|
|
|
____________________ | ||
(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 three months during the quarter. |
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:
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
Tenant |
|
Sq Ft |
|
Portfolio |
1 |
|
|
|
248,399 |
|
|
2 |
|
EOG Resources, Inc. |
|
169,167 |
|
|
3 |
|
|
|
168,573 |
|
|
4 |
|
|
|
164,636 |
|
|
5 |
|
|
|
155,808 |
|
|
6 |
|
|
|
146,260 |
|
|
7 |
|
|
|
120,979 |
|
|
8 |
|
|
|
114,200 |
|
|
9 |
|
|
|
101,296 |
|
|
10 |
|
VMWare, Inc. |
|
100,853 |
|
|
11 |
|
Deluxe Corporation |
|
98,922 |
|
|
12 |
|
|
|
89,856 |
|
|
13 |
|
|
|
67,856 |
|
|
14 |
|
|
|
67,274 |
|
|
15 |
|
|
|
66,304 |
|
|
16 |
|
|
|
65,878 |
|
|
17 |
|
|
|
61,826 |
|
|
18 |
|
|
|
59,569 |
|
|
19 |
|
|
|
58,263 |
|
|
20 |
|
|
|
57,100 |
|
|
|
|
Total |
|
2,183,019 |
|
|
Supplementary Schedule H
Reconciliation and Definitions of Funds From Operations (“FFO”) and
Adjusted Funds From Operations (“AFFO”)
A reconciliation of Net income 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
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation of Net Income to FFO and AFFO: |
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
||||||||||||
(In thousands, except per share amounts) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income (loss) |
|
$ |
(9,110 |
) |
|
$ |
16,149 |
|
|
$ |
(13,268 |
) |
|
$ |
9,689 |
|
Impairment and loan loss reserve |
|
|
1,140 |
|
|
|
— |
|
|
|
1,140 |
|
|
|
— |
|
Gain on sale of properties, net |
|
|
— |
|
|
|
(20,626 |
) |
|
|
— |
|
|
|
(20,626 |
) |
Depreciation & amortization |
|
|
18,141 |
|
|
|
19,130 |
|
|
|
33,802 |
|
|
|
43,479 |
|
NAREIT FFO |
|
|
10,171 |
|
|
|
14,653 |
|
|
|
21,674 |
|
|
|
32,542 |
|
Lease Acquisition costs |
|
|
86 |
|
|
|
69 |
|
|
|
165 |
|
|
|
185 |
|
Funds From Operations (FFO) |
|
$ |
10,257 |
|
|
$ |
14,722 |
|
|
$ |
21,839 |
|
|
$ |
32,727 |
|
|
|
|
|
|
|
|
|
|
||||||||
Funds From Operations (FFO) |
|
$ |
10,257 |
|
|
$ |
14,722 |
|
|
$ |
21,839 |
|
|
$ |
32,727 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
167 |
|
|
|
— |
|
|
|
167 |
|
Amortization of deferred financing costs |
|
|
481 |
|
|
|
686 |
|
|
|
1,007 |
|
|
|
1,393 |
|
Shares issued as compensation |
|
|
394 |
|
|
|
338 |
|
|
|
394 |
|
|
|
338 |
|
Straight-line rent |
|
|
(1,688 |
) |
|
|
(1,041 |
) |
|
|
(2,904 |
) |
|
|
(2,945 |
) |
Tenant improvements |
|
|
(5,453 |
) |
|
|
(4,277 |
) |
|
|
(7,330 |
) |
|
|
(8,768 |
) |
Leasing commissions |
|
|
(1,327 |
) |
|
|
(1,922 |
) |
|
|
(4,359 |
) |
|
|
(4,519 |
) |
Non-investment capex |
|
|
(6,736 |
) |
|
|
(3,793 |
) |
|
|
(11,801 |
) |
|
|
(9,129 |
) |
Adjusted Funds From Operations (AFFO) |
|
$ |
(4,072 |
) |
|
$ |
4,880 |
|
|
$ |
(3,154 |
) |
|
$ |
9,264 |
|
|
|
|
|
|
|
|
|
|
||||||||
Per Share Data |
|
|
|
|
|
|
|
|
||||||||
EPS |
|
$ |
(0.09 |
) |
|
$ |
0.15 |
|
|
$ |
(0.13 |
) |
|
$ |
0.09 |
|
FFO |
|
$ |
0.10 |
|
|
$ |
0.14 |
|
|
$ |
0.21 |
|
|
$ |
0.30 |
|
AFFO |
|
$ |
(0.04 |
) |
|
$ |
0.05 |
|
|
$ |
(0.03 |
) |
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares (basic and diluted) |
|
|
103,193 |
|
|
|
107,359 |
|
|
|
103,441 |
|
|
|
107,344 |
|
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, acquisition costs of newly acquired properties that are not capitalized and lease acquisition costs that are not capitalized plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on mortgage loans, 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 the
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 loss on extinguishment of debt that is non-cash, (3) excluding our proportionate share of FFO and including distributions received, from non-consolidated REITs, (4) excluding the effect of straight-line rent, (5) plus the amortization of deferred financing costs, (6) plus the value of shares issued as compensation and (7) 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.
Supplementary Schedule I
Reconciliation and Definition of
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 extinguishment of debt, 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
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Rentable Square Feet |
|
Three Months Ended |
|
Three Months Ended |
|
Inc |
|
% |
|||||||
(in thousands) |
|
or RSF |
|
|
|
|
|
(Dec) |
|
Change |
|||||||
Region |
|
|
|
|
|
|
|
|
|
|
|||||||
East |
|
363 |
|
$ |
475 |
|
|
$ |
497 |
|
|
$ |
(22 |
) |
|
(4.4 |
)% |
MidWest |
|
1,130 |
|
|
4,850 |
|
|
|
3,897 |
|
|
|
953 |
|
|
24.5 |
% |
South |
|
2,796 |
|
|
5,611 |
|
|
|
5,817 |
|
|
|
(206 |
) |
|
(3.5 |
)% |
West |
|
2,627 |
|
|
8,037 |
|
|
|
9,681 |
|
|
|
(1,644 |
) |
|
(17.0 |
)% |
Property NOI* from |
|
6,916 |
|
|
18,973 |
|
|
|
19,892 |
|
|
|
(919 |
) |
|
(4.6 |
)% |
|
|
- |
|
|
146 |
|
|
|
(311 |
) |
|
|
457 |
|
|
2.2 |
% |
NOI* |
|
6,916 |
|
$ |
19,119 |
|
|
$ |
19,581 |
|
|
$ |
(462 |
) |
|
(2.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
$ |
18,973 |
|
|
$ |
19,892 |
|
|
$ |
(919 |
) |
|
(4.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Less Nonrecurring |
|
|
|
|
|
|
|
|
|
|
|||||||
Items in NOI* (b) |
|
|
|
|
1,258 |
|
|
|
273 |
|
|
|
985 |
|
|
(5.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Comparative |
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
$ |
17,715 |
|
|
$ |
19,619 |
|
|
$ |
(1,904 |
) |
|
(9.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
|
|
|||||||
Reconciliation to Net income |
|
|
|
|
|
|
|
|
|
|
|||||||
Net loss |
|
|
|
$ |
(9,110 |
) |
|
$ |
(4,158 |
) |
|
|
|
|
|||
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|||||||
Loss on extinguishment of debt |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|||
Impairment and loan loss reserve |
|
|
|
|
1,140 |
|
|
|
— |
|
|
|
|
|
|||
Gain on sale of properties, net |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|||
Management fee income |
|
|
|
|
(267 |
) |
|
|
(291 |
) |
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
18,185 |
|
|
|
15,670 |
|
|
|
|
|
|||
Amortization of above/below market leases |
|
|
|
|
(45 |
) |
|
|
(9 |
) |
|
|
|
|
|||
General and administrative |
|
|
|
|
3,981 |
|
|
|
3,784 |
|
|
|
|
|
|||
Interest expense |
|
|
|
|
5,664 |
|
|
|
5,366 |
|
|
|
|
|
|||
Interest income |
|
|
|
|
(455 |
) |
|
|
(451 |
) |
|
|
|
|
|||
Non-property specific items, net |
|
|
|
|
26 |
|
|
|
(330 |
) |
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
NOI* |
|
|
|
$ |
19,119 |
|
|
$ |
19,581 |
|
|
|
|
|
(a) |
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We define redevelopment properties as properties being developed, redeveloped or where redevelopment is complete, but are in lease-up and that are not stabilized. We also include properties that have been placed in service, but that do not have operating activity for all periods presented. |
(b) |
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Nonrecurring Items in NOI include proceeds from bankruptcies, lease termination fees or other significant nonrecurring income or expenses, which may affect comparability. |
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*Excludes NOI from investments in and interest income from secured loans to non-consolidated REITs. |
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