Franklin Street Properties Corp. Announces Fourth Quarter and Full Year 2023 Results
“As the first quarter of 2024 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. We will seek to increase shareholder value by continuing to (1) pursue the sale of select properties where we believe that short to intermediate term valuation potential has been reached and (2) strive to increase occupancy through the leasing of vacant space. We intend to use proceeds from property dispositions primarily for debt reduction.
During the fourth quarter of 2023, we sold two office properties for aggregate gross proceeds of approximately
As a result of our recent property dispositions and our ongoing operations, as of
We look forward to the remainder of 2024 and beyond with anticipation and optimism.”
Financial Highlights
-
GAAP net income was
$3.6 million and net loss of$48.1 million , or$0.03 and$(0.47) per basic and diluted share for the three and twelve months endedDecember 31, 2023 , respectively. -
Funds From Operations (FFO) was
$6.9 million and$30.0 million , or$0.07 and$0.29 per basic and diluted share, for the three and twelve months endedDecember 31, 2023 , respectively. -
Subsequent to
December 31, 2023 , onFebruary 21, 2024 , we repaid approximately$102 million of debt. Immediately following the debt repayment and related transaction closing costs, including accrued interest, we had approximately$39.2 million in cash and cash equivalents on hand. -
Subsequent to
December 31, 2023 , onFebruary 21, 2024 , we entered into amendments to each our bank term loan, revolving line of credit agreement and Series A and Series B notes. As a result of these amendments, we changed the maturity date and repaid the principal amounts of each as set forth in the table below. In addition, the amendment to the revolving line of credit converted the revolving loan to a term loan. Additional information on the amendments is available in our Annual Report on Form 10-K for the year endedDecember 31, 2023 .
(in 000’s)
|
Principal Amount Outstanding Prior to Amendment |
Principal Amount Repaid |
Principal Amount Outstanding After Amendment |
Maturity Date Prior to Amendment |
Maturity Date After Amendment |
|||||||||||
|
|
|
|
|
|
|||||||||||
Bank Term Loan |
|
|
|
|
|
|||||||||||
Revolving Line of Credit* |
90,000 |
22,667 |
67,333 |
|
|
|||||||||||
Series A Notes |
116,000 |
29,215 |
86,785 |
|
|
|||||||||||
Series B Notes |
84,000 |
21,155 |
62,845 |
|
|
|||||||||||
Total |
|
|
|
|
|
*Revolving line of credit converted to a term loan
Leasing Highlights
-
During the year ended
December 31, 2023 , we leased approximately 706,000 square feet, including 228,000 square feet of new leases. -
Our directly owned real estate portfolio of 17 owned properties, totaling approximately 5.6 million square feet, was approximately 74.0% leased as of
December 31, 2023 , compared to approximately 75.6% leased as ofDecember 31, 2022 . The decrease in the leased percentage is primarily a result of lease expirations and property dispositions, which was partially offset by leasing completed during the year endedDecember 31, 2023 . -
The weighted average GAAP base rent per square foot achieved on leasing activity during the year ended
December 31, 2023 , was$29.71 , or 7.4% higher than average rents in the respective properties for the year endedDecember 31, 2022 . The average lease term on leases signed during the year endedDecember 31, 2023 , was 6.8 years compared to 6.4 years during the year endedDecember 31, 2022 . Overall, the portfolio weighted average rent per occupied square foot was$30.72 as ofDecember 31, 2023 , compared to$30.48 as ofDecember 31, 2022 . - We are currently tracking more than 600,000 square feet of new prospective tenants, including approximately 300,000 square feet of prospective tenants that have identified our properties 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.
Investment Highlights
- We have primarily used asset sale disposition proceeds for debt reduction and remain committed to seeking to sell select properties during 2024 and continue using proceeds primarily for debt reduction.
-
Since
December 2020 , our dispositions have resulted in aggregate gross proceeds of approximately$1 billion and reflect an average sales price per square foot of approximately$217 . -
On
October 26, 2023 , we completed the sale of One Legacy inPlano, Texas for approximately$48 million in gross proceeds. -
On
December 6, 2023 , we completed the sale ofBlue Lagoon inMiami, Florida for approximately$68 million in gross proceeds. -
Subsequent to
December 31, 2023 , onJanuary 26, 2024 , we completed the sale ofCollins Crossing inRichardson, Texas for approximately$35 million in gross proceeds.
Dividends
-
On
January 12, 2024 , we announced that our Board of Directors declared a quarterly cash dividend for the three months endedDecember 31, 2023 , of$0.01 per share of common stock that was paid onFebruary 15, 2024 , to stockholders of record onJanuary 26, 2024 .
Consolidation of Sponsored REIT
As of
Additional information about the consolidation of
Non-GAAP Financial Information
A reconciliation of Net income to FFO, Adjusted Funds From Operations (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.
2024 Net Income, FFO and Disposition Guidance
At this time, due primarily to economic conditions and uncertainty surrounding the timing and amount of proceeds received from property dispositions, we are continuing suspension of Net Income, FFO and property disposition guidance.
Real Estate Update
Supplementary schedules provide property information for the Company’s owned and consolidated properties 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 expectations for future potential leasing activity, expectations for future potential property dispositions, the payment of 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 long-term effects of the COVID-19 pandemic, wars, terrorist attacks or other acts of violence, which may negatively affect the markets in which we and our tenants operate, inflation rates, 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 |
|
Year Ended |
|||||||||||
|
|
|
|
|
|||||||||||
(in thousands, except per share amounts) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|||||||||||
Revenue: |
|
|
|
|
|||||||||||
Rental |
$ |
34,519 |
$ |
40,745 |
|
$ |
145,446 |
|
$ |
163,739 |
|
||||
Related party revenue: |
|
|
|
|
|||||||||||
Management fees and interest income from loans |
|
— |
|
462 |
|
|
— |
|
|
1,855 |
|
||||
Other |
|
252 |
|
4 |
|
|
261 |
|
|
21 |
|
||||
Total revenue |
|
34,771 |
|
41,211 |
|
|
145,707 |
|
|
165,615 |
|
||||
|
|
|
|
|
|||||||||||
Expenses: |
|
|
|
|
|||||||||||
Real estate operating expenses |
|
13,105 |
|
14,273 |
|
|
50,732 |
|
|
52,820 |
|
||||
Real estate taxes and insurance |
|
5,943 |
|
7,907 |
|
|
27,200 |
|
|
34,620 |
|
||||
Depreciation and amortization |
|
11,958 |
|
14,804 |
|
|
54,738 |
|
|
63,808 |
|
||||
General and administrative |
|
3,172 |
|
2,888 |
|
|
14,021 |
|
|
13,885 |
|
||||
Interest |
|
6,219 |
|
5,668 |
|
|
24,318 |
|
|
22,808 |
|
||||
Total expenses |
|
40,397 |
|
45,540 |
|
|
171,009 |
|
|
187,941 |
|
||||
|
|
|
|
|
|||||||||||
Loss on extinguishment of debt |
|
— |
|
— |
|
|
(106 |
) |
|
(78 |
) |
||||
Gain on consolidation of Sponsored REIT |
|
— |
|
— |
|
|
394 |
|
|
— |
|
||||
Impairment and loan loss reserve |
|
— |
|
(2,380 |
) |
|
— |
|
|
(4,237 |
) |
||||
Gain (loss) on sale of properties and impairment of assets held for sale, net |
|
8,701 |
|
3,862 |
|
|
(23,384 |
) |
|
27,939 |
|
||||
Interest income |
|
567 |
|
— |
|
|
567 |
|
|
— |
|
||||
Income (loss) before taxes |
|
3,642 |
|
(2,847 |
) |
|
(47,831 |
) |
|
1,298 |
|
||||
Tax expense |
|
67 |
|
37 |
|
|
279 |
|
|
204 |
|
||||
Net income (loss) |
$ |
3,575 |
$ |
(2,884 |
) |
$ |
(48,110 |
) |
$ |
1,094 |
|
||||
|
|
|
|
|
|||||||||||
Weighted average number of shares outstanding, basic and diluted |
|
103,430 |
|
103,236 |
|
|
103,357 |
|
|
103,338 |
|
||||
|
|
|
|
|
|||||||||||
Net income (loss) per share, basic and diluted |
$ |
0.03 |
$ |
(0.03 |
) |
$ |
(0.47 |
) |
$ |
0.01 |
|
Supplementary Schedule B Condensed Consolidated Balance Sheets (Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
|
|
|
||||
(in thousands, except share and par value amounts) |
|
|
2023 |
|
|
|
2022 |
|
Assets: |
|
|
||||||
Real estate assets: |
|
|
||||||
Land |
$ |
110,298 |
|
$ |
126,645 |
|
||
Buildings and improvements |
|
1,133,971 |
|
|
1,388,869 |
|
||
Fixtures and equipment |
|
12,904 |
|
|
11,151 |
|
||
|
|
1,257,173 |
|
|
1,526,665 |
|
||
Less accumulated depreciation |
|
366,349 |
|
|
423,417 |
|
||
Real estate assets, net |
|
890,824 |
|
|
1,103,248 |
|
||
Acquired real estate leases, less accumulated amortization of |
|
6,694 |
|
|
10,186 |
|
||
Assets held for sale |
|
73,318 |
|
|
— |
|
||
Cash, cash equivalents and restricted cash |
|
127,880 |
|
|
6,632 |
|
||
Tenant rent receivables |
|
2,191 |
|
|
2,201 |
|
||
Straight-line rent receivable |
|
40,397 |
|
|
52,739 |
|
||
Prepaid expenses and other assets |
|
4,239 |
|
|
6,676 |
|
||
Related party mortgage loan receivable, less allowance for credit loss of |
|
— |
|
|
19,763 |
|
||
Other assets: derivative asset |
|
— |
|
|
4,358 |
|
||
Office computers and furniture, net of accumulated depreciation of |
|
123 |
|
|
154 |
|
||
Deferred leasing commissions, net of accumulated amortization of |
|
23,664 |
|
|
35,709 |
|
||
Total assets |
$ |
1,169,330 |
|
$ |
1,241,666 |
|
||
|
|
|
||||||
Liabilities and Stockholders’ Equity: |
|
|
||||||
Liabilities: |
|
|
||||||
Bank note payable |
$ |
90,000 |
|
$ |
48,000 |
|
||
Term loans payable, less unamortized financing costs of |
|
114,707 |
|
|
164,750 |
|
||
Series A & Series B Senior Notes, less unamortized financing costs of |
|
199,670 |
|
|
199,506 |
|
||
Accounts payable and accrued expenses |
|
41,879 |
|
|
50,366 |
|
||
Accrued compensation |
|
3,644 |
|
|
3,644 |
|
||
Tenant security deposits |
|
6,204 |
|
|
5,710 |
|
||
Lease liability |
|
334 |
|
|
759 |
|
||
Acquired unfavorable real estate leases, less accumulated amortization of |
|
87 |
|
|
195 |
|
||
Total liabilities |
|
456,525 |
|
|
472,930 |
|
||
|
|
|
||||||
Commitments and contingencies |
|
|
||||||
|
|
|
||||||
Stockholders’ Equity: |
|
|
||||||
Preferred stock, |
|
— |
|
|
— |
|
||
Common stock, |
|
10 |
|
|
10 |
|
||
Additional paid-in capital |
|
1,335,091 |
|
|
1,334,776 |
|
||
Accumulated other comprehensive income |
|
355 |
|
|
4,358 |
|
||
Accumulated distributions in excess of accumulated earnings |
|
(622,651 |
) |
|
(570,408 |
) |
||
Total stockholders’ equity |
|
712,805 |
|
|
768,736 |
|
||
Total liabilities and stockholders’ equity |
$ |
1,169,330 |
|
$ |
1,241,666 |
|
Supplementary Schedule C Condensed Consolidated Statements of Cash Flows (Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
For the |
||||||
|
|
Year Ended |
||||||
|
|
|
||||||
(in thousands) |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities: |
|
|
||||||
Net income (loss) |
$ |
(48,110 |
) |
$ |
1,094 |
|
||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
||||||
Depreciation and amortization expense |
|
57,240 |
|
|
65,697 |
|
||
Amortization of above and below market leases |
|
(44 |
) |
|
(118 |
) |
||
Amortization of other comprehensive income into interest expense |
|
(3,851 |
) |
|
— |
|
||
Shares issued as compensation |
|
315 |
|
|
394 |
|
||
Loss on extinguishment of debt |
|
106 |
|
|
78 |
|
||
Gain on consolidation of Sponsored REIT |
|
(394 |
) |
|
— |
|
||
Impairment and loan loss reserve |
|
— |
|
|
4,237 |
|
||
(Gain) loss on sale of properties and impairment of assets held for sale, net |
|
23,384 |
|
|
(27,939 |
) |
||
Changes in operating assets and liabilities: |
|
|
||||||
Tenant rent receivables |
|
10 |
|
|
(247 |
) |
||
Straight-line rents |
|
625 |
|
|
(5,895 |
) |
||
Lease acquisition costs |
|
(2,007 |
) |
|
(4,494 |
) |
||
Prepaid expenses and other assets |
|
382 |
|
|
(1,805 |
) |
||
Accounts payable and accrued expenses |
|
(2,709 |
) |
|
(5,983 |
) |
||
Accrued compensation |
|
— |
|
|
(1,060 |
) |
||
Tenant security deposits |
|
494 |
|
|
(509 |
) |
||
Payment of deferred leasing commissions |
|
(7,575 |
) |
|
(8,216 |
) |
||
Net cash provided by operating activities |
|
17,866 |
|
|
15,234 |
|
||
Cash flows from investing activities: |
|
|
||||||
Property improvements, fixtures and equipment |
|
(31,637 |
) |
|
(54,910 |
) |
||
Consolidation of Sponsored REIT |
|
3,048 |
|
|
— |
|
||
Proceeds received from sales of properties |
|
142,225 |
|
|
128,949 |
|
||
Net cash provided by investing activities |
|
113,636 |
|
|
74,039 |
|
||
Cash flows from financing activities: |
|
|
||||||
Distributions to stockholders |
|
(4,133 |
) |
|
(53,988 |
) |
||
Proceeds received from termination of interest rate swap |
|
4,206 |
|
|
— |
|
||
Stock repurchases |
|
— |
|
|
(4,843 |
) |
||
Borrowings under bank note payable |
|
77,000 |
|
|
90,000 |
|
||
Repayments of bank note payable |
|
(35,000 |
) |
|
(42,000 |
) |
||
Repayments of term loans payable |
|
(50,000 |
) |
|
(110,000 |
) |
||
Deferred financing costs |
|
(2,327 |
) |
|
(2,561 |
) |
||
Net cash used in financing activities |
|
(10,254 |
) |
|
(123,392 |
) |
||
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
121,248 |
|
|
(34,119 |
) |
||
Cash, cash equivalents and restricted cash, beginning of year |
|
6,632 |
|
|
40,751 |
|
||
Cash, cash equivalents and restricted cash, end of period |
$ |
127,880 |
|
$ |
6,632 |
|
Supplementary Schedule D Real Estate Portfolio Summary Information (Unaudited & Approximated) |
|||||
|
|
|
|||
Commercial portfolio lease expirations (1) |
|||||
|
Total |
% of |
|||
Year |
Square Feet |
Portfolio |
|||
2024 |
518,878 |
9.0 |
% |
||
2025 |
437,374 |
7.6 |
% |
||
2026 |
567,886 |
9.8 |
% |
||
2027 |
330,757 |
5.7 |
% |
||
2028 |
233,589 |
4.0 |
% |
||
Thereafter (2) |
3,691,058 |
63.9 |
% |
||
|
5,779,542 |
100.0 |
% |
||
____________________ | |||||
(1) Percentages are determined based upon total square footage. |
|||||
(2)
Includes 1,649,948 square feet of vacancies at our owned and consolidated properties as of |
(dollars & square feet in 000's) |
As of |
||||||||||||
|
|
|
% of |
Square |
% of |
||||||||
State |
Properties |
Investment |
Portfolio |
Feet |
Portfolio |
||||||||
|
|
|
|
|
|
||||||||
|
4 |
$ |
451,320 |
50.7 |
% |
2,140 |
37.0 |
% |
|||||
|
8 |
|
265,449 |
29.8 |
% |
2,209 |
38.2 |
% |
|||||
Georgia (a) |
1 |
|
- |
0.0 |
% |
160 |
2.8 |
% |
|||||
|
3 |
|
117,095 |
13.1 |
% |
758 |
13.1 |
% |
|||||
|
1 |
|
37,606 |
4.2 |
% |
298 |
5.2 |
% |
|||||
|
1 |
|
19,354 |
2.2 |
% |
214 |
3.7 |
% |
|||||
Total |
18 |
$ |
890,824 |
100.0 |
% |
5,779 |
100.0 |
% |
|||||
____________________ | |||||||||||||
(a) Includes one property in each state that was classified as an asset held for sale as of |
Supplementary Schedule E Portfolio and Other Supplementary Information (Unaudited & Approximated) |
|||||||||||||||
Recurring Capital Expenditures |
|||||||||||||||
|
|
Year |
|||||||||||||
(in thousands) |
For the Three Months Ended |
Ended |
|||||||||||||
|
|
|
|
|
|
||||||||||
Tenant improvements |
$ |
3,047 |
$ |
4,381 |
$ |
3,653 |
$ |
5,295 |
$ |
16,376 |
|||||
Deferred leasing costs |
|
908 |
|
3,230 |
|
1,114 |
|
1,649 |
|
6,901 |
|||||
Non-investment capex |
|
2,967 |
|
2,042 |
|
1,775 |
|
5,230 |
|
12,014 |
|||||
|
$ |
6,922 |
$ |
9,653 |
$ |
6,542 |
$ |
12,174 |
$ |
35,291 |
|
|
|
|
|
|
||||||||||
(in thousands) |
For the Three Months Ended |
Year Ended |
|||||||||||||
|
|
|
|
|
|
||||||||||
Tenant improvements |
$ |
1,877 |
$ |
5,453 |
$ |
6,813 |
$ |
7,508 |
$ |
21,651 |
|||||
Deferred leasing costs |
|
3,032 |
|
1,327 |
|
2,053 |
|
1,152 |
|
7,564 |
|||||
Non-investment capex |
|
5,065 |
|
6,736 |
|
9,289 |
|
9,074 |
|
30,164 |
|||||
|
$ |
9,974 |
$ |
13,516 |
$ |
18,155 |
$ |
17,734 |
$ |
59,379 |
|
|
|
||||
Square foot & leased percentages |
|
|
||||
|
2023 |
2022 |
||||
|
|
|
||||
Number of properties (a) |
17 |
|
21 |
|
||
Square feet |
5,565,782 |
|
6,239,530 |
|
||
Leased percentage |
74.0 |
% |
75.6 |
% |
||
|
|
|
||||
Consolidated Property - Single Asset REIT (SAR): |
|
|
||||
Number of properties |
1 |
|
— |
|
||
Square feet |
213,760 |
|
— |
|
||
Leased percentage |
4.1 |
% |
|
|||
|
|
|
||||
|
|
|
||||
Number of properties |
18 |
|
21 |
|
||
Square feet |
5,779,542 |
|
6,239,530 |
|
||
Leased percentage |
71.5 |
% |
75.6 |
% |
||
(a) Includes two properties that were classified as an asset held for sale as of |
Supplementary Schedule F Percentage of Leased Space (Unaudited & Estimated) |
||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
Third |
|
Fourth |
|||||||||||
|
|
|
|
% Leased (1) |
Quarter |
% Leased (1) |
Quarter |
|||||||||||
|
|
|
|
as of |
Average % |
as of |
Average % |
|||||||||||
|
Property |
Location |
Square Feet |
|
Leased (2) |
|
Leased (2) |
|||||||||||
|
|
|
|
|
|
|
|
|||||||||||
1 |
PARK TEN |
|
157,609 |
83.8 |
% |
83.8 |
% |
83.8 |
% |
83.8 |
% |
|||||||
2 |
|
|
156,746 |
95.0 |
% |
95.0 |
% |
95.0 |
% |
95.0 |
% |
|||||||
3 |
GREENWOOD PLAZA |
|
196,236 |
66.3 |
% |
66.3 |
% |
66.3 |
% |
66.3 |
% |
|||||||
4 |
|
|
289,333 |
83.0 |
% |
83.0 |
% |
83.0 |
% |
83.0 |
% |
|||||||
5 |
|
|
300,887 |
85.5 |
% |
91.8 |
% |
85.5 |
% |
85.5 |
% |
|||||||
6 |
INNSBROOK |
|
298,183 |
81.3 |
% |
81.3 |
% |
90.5 |
% |
87.4 |
% |
|||||||
7 |
|
|
217,841 |
78.3 |
% |
76.1 |
% |
80.2 |
% |
80.8 |
% |
|||||||
|
BLUE LAGOON (4) |
|
|
98.5 |
% |
98.5 |
% |
(4 |
) |
(4 |
) |
|||||||
8 |
|
|
248,399 |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
|||||||
9 |
121 SOUTH EIGHTH ST |
|
298,121 |
79.6 |
% |
79.6 |
% |
80.5 |
% |
79.9 |
% |
|||||||
10 |
801 MARQUETTE AVE |
|
129,691 |
91.8 |
% |
91.8 |
% |
91.8 |
% |
91.8 |
% |
|||||||
11 |
LEGACY |
|
209,461 |
67.3 |
% |
65.7 |
% |
56.6 |
% |
57.2 |
% |
|||||||
|
ONE LEGACY (5) |
|
|
71.3 |
% |
72.1 |
% |
(5 |
) |
(5 |
) |
|||||||
12 |
WESTCHASE I & II |
|
629,025 |
60.7 |
% |
60.1 |
% |
62.7 |
% |
62.4 |
% |
|||||||
13 |
1999 |
|
682,639 |
57.5 |
% |
59.8 |
% |
51.7 |
% |
52.9 |
% |
|||||||
14 |
1001 17TH STREET |
|
649,235 |
71.1 |
% |
71.4 |
% |
71.1 |
% |
71.1 |
% |
|||||||
15 |
PLAZA SEVEN |
|
330,096 |
59.3 |
% |
61.0 |
% |
62.3 |
% |
61.3 |
% |
|||||||
16 |
|
|
160,145 |
79.8 |
% |
79.8 |
% |
79.8 |
% |
79.8 |
% |
|||||||
17 |
600 17TH STREET |
|
612,135 |
80.8 |
% |
80.8 |
% |
81.7 |
% |
81.4 |
% |
|||||||
|
OWNED PORTFOLIO |
|
5,565,782 |
74.8 |
% |
75.4 |
% |
74.0 |
% |
74.5 |
% |
|||||||
|
|
|
|
|
|
|
|
|||||||||||
18 |
MONUMENT CIRCLE (7) |
|
213,760 |
4.1 |
% |
4.1 |
% |
4.1 |
% |
4.1 |
% |
|||||||
|
|
|
|
|
|
|
|
|||||||||||
|
OWNED & CONSOLIDATED PORTFOLIO |
|
5,779,542 |
72.4 |
% |
72.9 |
% |
71.5 |
% |
72.0 |
% |
____________________ |
||
(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. |
(3) |
|
Property was classified as an asset held for sale as of |
(4) |
|
Property was sold on |
(5) |
|
Property was sold on |
(6) |
|
Property was classified as an asset held for sale as of |
(7) |
|
Consolidated property as of |
|
|||||||
Supplementary Schedule G |
|||||||
Largest 20 Tenants – FSP Owned and Consolidated Portfolio |
|||||||
(Unaudited & Estimated) |
|||||||
The following table includes the largest 20 tenants in FSP’s owned and consolidated portfolio based on total square feet: |
|||||||
|
|||||||
As of |
|||||||
|
|
|
|
||||
|
|
|
% of |
||||
|
Tenant |
Sq Ft |
Portfolio |
||||
1 |
|
248,399 |
4.3 |
% |
|||
2 |
EOG Resources, Inc. |
169,167 |
2.9 |
% |
|||
3 |
|
168,573 |
2.9 |
% |
|||
4 |
|
127,500 |
2.2 |
% |
|||
5 |
|
120,979 |
2.1 |
% |
|||
6 |
|
101,296 |
1.8 |
% |
|||
7 |
Deluxe Corporation |
98,922 |
1.7 |
% |
|||
8 |
|
89,856 |
1.6 |
% |
|||
9 |
|
85,650 |
1.5 |
% |
|||
10 |
|
67,856 |
1.2 |
% |
|||
11 |
|
66,304 |
1.1 |
% |
|||
12 |
|
65,878 |
1.1 |
% |
|||
13 |
|
61,826 |
1.1 |
% |
|||
14 |
|
59,569 |
1.0 |
% |
|||
15 |
|
57,100 |
1.0 |
% |
|||
16 |
|
57,100 |
1.0 |
% |
|||
17 |
Olin Corporation |
54,080 |
0.9 |
% |
|||
18 |
|
49,548 |
0.9 |
% |
|||
19 |
|
49,518 |
0.9 |
% |
|||
20 |
|
47,559 |
0.8 |
% |
|||
|
Total |
1,846,680 |
32.0 |
% |
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 Loss to FFO and AFFO: |
Three Months Ended |
|
Year Ended |
|||||||||||||
|
|
|
|
|||||||||||||
(In thousands, except per share amounts) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
Net income (loss) |
$ |
3,575 |
|
$ |
(2,884 |
) |
$ |
(48,110 |
) |
$ |
1,094 |
|
||||
Gain on consolidation of Sponsored REIT |
|
— |
|
|
— |
|
|
(394 |
) |
|
— |
|
||||
Impairment and loan loss reserve |
|
— |
|
|
2,380 |
|
|
— |
|
|
4,237 |
|
||||
(Gain) loss on sale of properties and impairment of assets held for sale, net |
|
(8,701 |
) |
|
(3,862 |
) |
|
23,384 |
|
|
(27,939 |
) |
||||
Depreciation & amortization |
|
11,952 |
|
|
14,773 |
|
|
54,694 |
|
|
63,689 |
|
||||
NAREIT FFO |
|
6,826 |
|
|
10,407 |
|
|
29,574 |
|
|
41,081 |
|
||||
Lease Acquisition costs |
|
112 |
|
|
56 |
|
|
390 |
|
|
262 |
|
||||
Funds From Operations (FFO) |
$ |
6,938 |
|
$ |
10,463 |
|
$ |
29,964 |
|
$ |
41,343 |
|
||||
|
|
|
|
|
||||||||||||
Funds From Operations (FFO) |
$ |
6,938 |
|
$ |
10,463 |
|
$ |
29,964 |
|
$ |
41,343 |
|
||||
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
106 |
|
|
78 |
|
||||
Amortization of deferred financing costs |
|
576 |
|
|
421 |
|
|
2,502 |
|
|
1,889 |
|
||||
Shares issued as compensation |
|
— |
|
|
— |
|
|
315 |
|
|
394 |
|
||||
Straight-line rent |
|
198 |
|
|
(1,831 |
) |
|
626 |
|
|
(5,895 |
) |
||||
Tenant improvements |
|
(5,295 |
) |
|
(7,508 |
) |
|
(16,376 |
) |
|
(21,651 |
) |
||||
Leasing commissions |
|
(1,649 |
) |
|
(1,152 |
) |
|
(6,901 |
) |
|
(7,564 |
) |
||||
Non-investment capex |
|
(5,230 |
) |
|
(9,074 |
) |
|
(12,014 |
) |
|
(30,164 |
) |
||||
Adjusted Funds From Operations (AFFO) |
$ |
(4,462 |
) |
$ |
(8,681 |
) |
$ |
(1,778 |
) |
$ |
(21,570 |
) |
||||
|
|
|
|
|
||||||||||||
Per Share Data |
|
|
|
|
||||||||||||
EPS |
$ |
0.03 |
|
$ |
(0.03 |
) |
$ |
(0.47 |
) |
$ |
0.01 |
|
||||
FFO |
$ |
0.07 |
|
$ |
0.10 |
|
$ |
0.29 |
|
$ |
0.40 |
|
||||
AFFO |
$ |
(0.04 |
) |
$ |
(0.08 |
) |
$ |
(0.02 |
) |
$ |
(0.21 |
) |
||||
|
|
|
|
|
||||||||||||
Weighted average shares (basic and diluted) |
|
103,430 |
|
|
103,236 |
|
|
103,357 |
|
|
103,338 |
|
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 |
|
298 |
|
$ |
285 |
|
|
$ |
239 |
|
|
$ |
46 |
|
|
19.2 |
% |
MidWest |
|
758 |
|
|
1,656 |
|
|
|
1,396 |
|
|
|
260 |
|
|
18.6 |
% |
South |
|
2,369 |
|
|
6,393 |
|
|
|
6,499 |
|
|
|
(106 |
) |
|
(1.6 |
)% |
West |
|
2,140 |
|
|
5,994 |
|
|
|
6,505 |
|
|
|
(511 |
) |
|
(7.9 |
)% |
Property NOI* from |
|
5,565 |
|
|
14,328 |
|
|
|
14,639 |
|
|
|
(311 |
) |
|
(2.1 |
)% |
|
|
214 |
|
|
751 |
|
|
|
1,965 |
|
|
|
(1,214 |
) |
|
(7.1 |
)% |
NOI* |
|
5,779 |
|
$ |
15,079 |
|
|
$ |
16,604 |
|
|
$ |
(1,525 |
) |
|
(9.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
$ |
14,328 |
|
|
$ |
14,639 |
|
|
$ |
(311 |
) |
|
(2.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Less Nonrecurring |
|
|
|
|
|
|
|
|
|
|
|||||||
Items in NOI* (b) |
|
|
|
|
217 |
|
|
|
485 |
|
|
|
(268 |
) |
|
1.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Comparative |
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
$ |
14,111 |
|
|
$ |
14,154 |
|
|
$ |
(43 |
) |
|
(0.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Reconciliation to |
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
|
|
|||||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|||||||
Net income (loss) |
|
|
|
$ |
3,575 |
|
|
$ |
(45,671 |
) |
|
|
|
|
|||
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|||||||
Loss on extinguishment of debt |
|
|
|
|
— |
|
|
|
39 |
|
|
|
|
|
|||
Gain on sale of properties, net |
|
|
|
|
(8,701 |
) |
|
|
39,671 |
|
|
|
|
|
|||
Management fee income |
|
|
|
|
(446 |
) |
|
|
(460 |
) |
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
11,957 |
|
|
|
13,409 |
|
|
|
|
|
|||
Amortization of above/below market leases |
|
|
|
|
(6 |
) |
|
|
(9 |
) |
|
|
|
|
|||
General and administrative |
|
|
|
|
3,171 |
|
|
|
3,265 |
|
|
|
|
|
|||
Interest expense |
|
|
|
|
6,219 |
|
|
|
6,209 |
|
|
|
|
|
|||
Interest income |
|
|
|
|
(567 |
) |
|
|
— |
|
|
|
|
|
|||
Non-property specific items, net |
|
|
|
|
(123 |
) |
|
|
151 |
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
NOI* |
|
|
|
$ |
15,079 |
|
|
$ |
16,604 |
|
|
|
|
|
(a) |
|
We define |
(b) |
|
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. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240226756553/en/
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