Franklin Street Properties Corp. Announces Fourth Quarter and Full Year 2024 Results

WAKEFIELD, Mass.--(BUSINESS WIRE)--Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE American: FSP), a real estate investment trust (REIT), announced its results for the fourth quarter and the year ended December 31, 2024. George J. Carter, Chairman and Chief Executive Officer, commented as follows: “During the fourth quarter of 2024, we leased a total of approximately 252,000 square feet of office space within our approximately 4.8 million square foot directly–owned property portfolio. As previously reported, on October 23, 2024, we completed the sale of our last property in Atlanta, Georgia. The property, known as Pershing Park Plaza, sold for a gross selling price of $34 million. On October 25, 2024, we repaid approximately $27.4 million of our debt with a portion of the net proceeds from the Pershing Park Plaza disposition. As of October 25, 2024 and December 31, 2024, our total indebtedness was approximately $250.3 million, equivalent to approximately $52 per square foot on our remaining approximately 4.8 million square foot directly-owned property portfolio.” Financial Highlights GAAP net loss was $8.5 million and $52.7 million, or $0.08 and $0.51 per basic and diluted share for the three and twelve months ended December 31, 2024, respectively. Funds From Operations (FFO) was $2.7 million and $13.3 million, or $0.03 and $0.13 per basic and diluted share, for the three and twelve months ended December 31, 2024, respectively. Leasing Highlights During the twelve months ended December 31, 2024, we leased approximately 616,000 square feet, including 171,000 square feet of new leases. Our directly-owned real estate portfolio of 14 owned properties, totaling approximately 4.8 million square feet, was approximately 70.3% leased as of December 31, 2024, compared to approximately 74.0% leased as of December 31, 2023. The decrease in the leased percentage is primarily a result of three property dispositions and lease expirations during the year ended December 31, 2024, which were partially offset by leasing completed during the year ended December 31, 2024. The weighted average GAAP base rent per square foot achieved on leasing activity during the year ended December 31, 2024, was $30.06, or 8.2% higher than average rents in the respective properties for the year ended December 31, 2023. The average lease term on leases signed during the year ended December 31, 2024, was 6.3 years compared to 6.8 years during the year ended December 31, 2023. Overall, the portfolio weighted average rent per occupied square foot was $31.77 as of December 31, 2024, compared to $30.72 as of December 31, 2023. 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 continue to believe that the current price of our common stock does not accurately reflect the intrinsic value of our underlying real estate assets. We will continue to seek to increase shareholder value by pursuing the sale of select properties when we believe that short to intermediate term valuation potential has been reached. Since December of 2020, our property dispositions have resulted in aggregate gross proceeds of approximately $1.1 billion and reflect an average sales price per square foot of approximately $211. Since December of 2020, we have used net proceeds from property dispositions to reduce our total indebtedness by approximately 75%, from approximately $1.0 billion to approximately $250 million. On October 23, 2024, we sold our last property in Atlanta, Georgia, known as Pershing Park Plaza. The property, an approximately 160,145 square foot office building, sold for a gross selling price of $34 million. On October 25, 2024, we used approximately $27.4 million of the net proceeds from the disposition to repay debt resulting in a reduction in total indebtedness to an aggregate of approximately $250.3 million, which reflects about $52 per square foot on the remaining approximately 4.8 million square foot directly owned portfolio. Dividends On January 10, 2025, we announced that our Board of Directors declared a quarterly cash dividend for the three months ended December 31, 2024, of $0.01 per share of common stock that will be paid on February 13, 2025, to stockholders of record on January 24, 2025. Consolidation of Sponsored REIT As of January 1, 2023, we consolidated the operations of our Monument Circle sponsored REIT into our financial statements. On October 29, 2021, we agreed to amend and restate our existing loan to Monument Circle that is secured by a mortgage on real estate owned by Monument Circle, which we refer to as the Sponsored REIT Loan. The amended and restated Sponsored REIT Loan extended the maturity date from December 6, 2022 to June 30, 2023 (and was further extended to September 30, 2023 on June 26, 2023), increased the aggregate principal amount of the loan from $21 million to $24 million, and included certain other modifications. On September 26, 2023, the maturity date was extended to September 30, 2024 and on September 27, 2024, was further extended to September 30, 2025. In consideration of our agreement to amend and restate the Sponsored REIT Loan, we obtained from the stockholders of Monument Circle the right to vote their shares in favor of any sale of the property owned by Monument Circle any time on or after January 1, 2023. As a result of our obtaining this right to vote shares, GAAP variable interest entity (VIE) rules required us to consolidate Monument Circle as of January 1, 2023. A gain on consolidation of approximately $0.4 million was recognized in the three months ended March 31, 2023. Additional information about the consolidation of Monument Circle can be found in Note 2, “Significant Accounting Policies - Variable Interest Entities (VIEs)” and Note 3, “Related Party Transactions and Investments in Non-Consolidated Entities - Management fees and interest income from loans”, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for year ended December 31, 2024. Non-GAAP Financial Information A reconciliation of Net income (loss) 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 (Loss), 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 (Loss), FFO and property disposition guidance. Real Estate Update Supplementary schedules provide property information for the Company’s owned and consolidated properties as of December 31, 2024. The Company will also be filing an updated supplemental information package that will provide stockholders and the financial community with additional operating and financial data. The Company will file this supplemental information package with the SEC and make it available on its website at www.fspreit.com. Today’s news release, along with other news about Franklin Street Properties Corp., is available on the Internet at www.fspreit.com. We routinely post information that may be important to investors in the Investor Relations section of our website. We encourage investors to consult that section of our website regularly for important information about us and, if they are interested in automatically receiving news and information as soon as it is posted, to sign up for E-mail Alerts. Earnings Call A conference call is scheduled for February 12, 2025, at 11:00 a.m. (ET) to discuss the fourth quarter and full year 2024 results. To access the call, please dial 888-440-4368 and use conference ID 5398803. Internationally, the call may be accessed by dialing 646-960-0856 and using conference ID 5398803. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website (www.fspreit.com) at least ten minutes prior to the start of the call and follow the posted directions. The webcast will also be available via replay from the above location starting one hour after the call is finished. About Franklin Street Properties Corp. Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on infill and central business district (CBD) office properties in the U.S. Sunbelt and Mountain West, as well as select opportunistic markets. FSP is focused on long-term growth and appreciation, as well as current income. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. To learn more about FSP please visit our website at www.fspreit.com. 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, 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 Dallas, Denver and Houston, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events and expenditures that cannot be anticipated, such as utility rate and usage increases, delays in construction schedules, unanticipated increases in construction costs, increases in the level of general and administrative costs as a percentage of revenues as revenues decrease as a result of property dispositions, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments. See the “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, which may be updated from time to time in subsequent filings with the United States Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, acquisitions, dispositions, performance or achievements. We will not update any of the forward-looking statements after the date of this press release to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law. Franklin Street Properties Corp. Earnings Release Supplementary Information Table of Contents Franklin Street Properties Corp. Financial Results A-C Real Estate Portfolio Summary Information D Portfolio and Other Supplementary Information E Percentage of Leased Space F Largest 20 Tenants – FSP Owned Portfolio G Reconciliation and Definitions of Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) H Reconciliation and Definition of Sequential Same Store results to Property Net Operating Income (NOI) and Net Loss I Franklin Street Properties Corp. Financial Results Supplementary Schedule A Condensed Consolidated Statements of Operations (Unaudited) For the For the Three Months Ended Year Ended December 31, December 31, (in thousands, except per share amounts) 2024 2023 2024 2023 Revenue: Rental $ 28,375 $ 34,519 $ 120,080 $ 145,446 Other — 252 32 261 Total revenue 28,375 34,771 120,112 145,707 Expenses: Real estate operating expenses 11,423 13,105 45,043 50,732 Real estate taxes and insurance 5,541 5,943 22,716 27,200 Depreciation and amortization 10,756 11,958 44,774 54,738 General and administrative 2,815 3,172 13,884 14,021 Interest 5,911 6,219 26,424 24,318 Total expenses 36,446 40,397 152,841 171,009 Loss on extinguishment of debt (428 ) — (1,042 ) (106 ) Gain on consolidation of Sponsored REIT — — — 394 Gain (loss) on sale of properties and impairment of assets held for sale, net (367 ) 8,701 (20,826 ) (23,384 ) Interest income 394 567 2,090 567 Income (loss) before taxes (8,472 ) 3,642 (52,507 ) (47,831 ) Tax expense 54 67 216 279 Net income (loss) $ (8,526 ) $ 3,575 $ (52,723 ) $ (48,110 ) Weighted average number of shares outstanding, basic and diluted 103,567 103,430 103,510 103,357 Net income (loss) per share, basic and diluted $ (0.08 ) $ 0.03 $ (0.51 ) $ (0.47 ) Franklin Street Properties Corp. Financial Results Supplementary Schedule B Condensed Consolidated Balance Sheets (Unaudited) December 31, December 31, (in thousands, except share and par value amounts) 2024 2023 Assets: Real estate assets: Land $ 105,298 $ 110,298 Buildings and improvements 1,096,265 1,133,971 Fixtures and equipment 11,053 12,904 1,212,616 1,257,173 Less accumulated depreciation 377,708 366,349 Real estate assets, net 834,908 890,824 Acquired real estate leases, less accumulated amortization of $13,613 and $20,413, respectively 4,205 6,694 Assets held for sale — 73,318 Cash, cash equivalents and restricted cash 42,683 127,880 Tenant rent receivables 1,283 2,191 Straight-line rent receivable 37,727 40,397 Prepaid expenses and other assets 3,114 4,239 Office computers and furniture, net of accumulated depreciation of $1,073 and $1,020, respectively 70 123 Deferred leasing commissions, net of accumulated amortization of $14,195 and $16,008, respectively 22,941 23,664 Total assets $ 946,931 $ 1,169,330 Liabilities and Stockholders’ Equity: Liabilities: Bank note payable $ — $ 90,000 Term loans payable, less unamortized financing costs of $2,220 and $293, respectively 124,491 114,707 Series A & Series B Senior Notes, less unamortized financing costs of $1,191 and $329, respectively 122,430 199,670 Accounts payable and accrued expenses 34,067 41,879 Accrued compensation 3,097 3,644 Tenant security deposits 6,237 6,204 Lease liability 707 334 Acquired unfavorable real estate leases, less accumulated amortization of $89 and $396, respectively 45 87 Total liabilities 291,074 456,525 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, 103,566,715 and 103,430,353 shares issued and outstanding, respectively 10 10 Additional paid-in capital 1,335,361 1,335,091 Accumulated other comprehensive income — 355 Accumulated distributions in excess of accumulated earnings (679,514 ) (622,651 ) Total stockholders’ equity 655,857 712,805 Total liabilities and stockholders’ equity $ 946,931 $ 1,169,330 Franklin Street Properties Corp. Financial Results Supplementary Schedule C Condensed Consolidated Statements of Cash Flows (Unaudited) For the Year Ended December 31, (in thousands) 2024 2023 Cash flows from operating activities: Net loss $ (52,723 ) $ (48,110 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization expense 47,742 57,240 Amortization of above and below market leases (17 ) (44 ) Amortization of other comprehensive income into interest expense (355 ) (3,851 ) Shares issued as compensation 270 315 Loss on extinguishment of debt 1,042 106 Gain on consolidation of Sponsored REIT — (394 ) Loss on sale of properties and impairment of assets held for sale, net 20,826 23,384 Changes in operating assets and liabilities: Tenant rent receivables 908 10 Straight-line rents 1,970 625 Lease acquisition costs (666 ) (2,007 ) Prepaid expenses and other assets 355 382 Accounts payable and accrued expenses (3,708 ) (2,709 ) Accrued compensation (547 ) — Tenant security deposits 33 494 Payment of deferred leasing commissions (6,143 ) (7,575 ) Net cash provided by operating activities 8,987 17,866 Cash flows from investing activities: Property improvements, fixtures and equipment (25,213 ) (31,637 ) Consolidation of Sponsored REIT — 3,048 Proceeds received from sales of properties 95,497 142,225 Net cash provided by investing activities 70,284 113,636 Cash flows from financing activities: Distributions to stockholders (4,140 ) (4,133 ) Proceeds received from termination of interest rate swap — 4,206 Borrowings under Bank note payable — 77,000 Repayments of Bank note payable (22,667 ) (35,000 ) Repayments of Term loans payable (55,622 ) (50,000 ) Repayments of Series A&B Senior Notes (76,379 ) — Deferred financing costs (5,660 ) (2,327 ) Net cash used in financing activities (164,468 ) (10,254 ) Net increase (decrease) in cash, cash equivalents and restricted cash (85,197 ) 121,248 Cash, cash equivalents and restricted cash, beginning of year 127,880 6,632 Cash, cash equivalents and restricted cash, end of period $ 42,683 $ 127,880 Franklin Street Properties Corp. Earnings Release Supplementary Schedule D Real Estate Portfolio Summary Information (Unaudited & Approximated) Commercial portfolio lease expirations (1) Year Total Square Feet % of Portfolio 2025 321,725 6.4 % 2026 609,509 12.1 % 2027 301,642 6.0 % 2028 259,540 5.2 % 2029 486,384 9.7 % Thereafter (2) 3,041,213 60.6 % 5,020,013 100.0 % ____________________ (1) Percentages are determined based upon total square footage. (2) Includes 1,632,976 square feet of vacancies at our owned and consolidated properties as of December 31, 2024. (dollars & square feet in 000's) As of December 31, 2024 % of Square % of State Properties Investment Portfolio Feet Portfolio Colorado 4 $ 442,982 53.0 % 2,140 42.6 % Texas 7 259,575 31.1 % 1,909 38.0 % Minnesota 3 113,338 13.6 % 757 15.1 % Indiana 1 19,013 2.3 % 214 4.3 % Total 15 $ 834,908 100.0 % 5,020 100.0 % Franklin Street Properties Corp. Earnings Release Supplementary Schedule E Portfolio and Other Supplementary Information (Unaudited & Approximated) Recurring Capital Expenditures (in thousands) For the Three Months Ended Year Ended 31-Mar-24 30-Jun-24 30-Sep-24 31-Dec-24 31-Dec-24 Tenant improvements $ 2,619 $ 2,558 $ 4,444 $ 4,173 $ 13,794 Deferred leasing costs 2,237 511 421 2,974 6,143 Non-investment capex 1,019 1,480 1,658 2,568 6,725 $ 5,875 $ 4,549 $ 6,523 $ 9,715 $ 26,662 (in thousands) For the Three Months Ended Year Ended 31-Mar-23 30-Jun-23 30-Sep-23 31-Dec-23 31-Dec-23 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 Square foot & leased percentages December 31, December 31, 2024 2023 Owned Properties: Number of properties (a) 14 17 Square feet 4,806,253 5,565,782 Leased percentage 70.3% 74.0% Consolidated Property - Single Asset REIT (SAR): Number of properties 1 1 Square feet 213,760 213,760 Leased percentage 4.1% 4.1% Total Owned and Consolidated Properties: Number of properties 15 18 Square feet 5,020,013 5,779,542 Leased percentage 67.5% 71.5% (a) Includes two properties that were classified as assets held for sale as of December 31, 2023. Franklin Street Properties Corp. Earnings Release Supplementary Schedule F Percentage of Leased Space (Unaudited & Estimated) Property Name Location Square Feet % Leased (1) as of 30-Sep-24 Third Quarter Average % Leased (2) % Leased (1) as of 31-Dec-24 Fourth Quarter Average % Leased (2) 1 PARK TEN Houston, TX 157,609 82.1% 82.1% 83.5% 83.5% 2 PARK TEN PHASE II Houston, TX 156,746 66.9% 66.9% 75.5% 69.7% 3 GREENWOOD PLAZA Englewood, CO 196,236 65.0% 65.0% 65.0% 65.0% 4 ADDISON Addison, TX 289,333 79.4% 79.4% 79.9% 79.9% 5 LIBERTY PLAZA Addison, TX 217,841 75.9% 75.9% 78.4% 76.2% 6 ELDRIDGE GREEN Houston, TX 248,399 100.0% 100.0% 100.0% 100.0% 7 121 SOUTH EIGHTH ST Minneapolis, MN 297,541 72.4% 75.6% 78.5% 76.4% 8 801 MARQUETTE AVE Minneapolis, MN 129,691 91.8% 91.8% 91.8% 91.8% 9 LEGACY TENNYSON CTR Plano, TX 209,562 51.0% 52.4% 51.0% 51.0% 10 WESTCHASE I & II Houston, TX 629,025 68.8% 67.6% 65.5% 65.5% 11 1999 BROADWAY Denver, CO 682,639 50.7% 50.7% 50.2% 50.4% 12 1001 17TH STREET Denver, CO 649,400 76.5% 76.5% 75.4% 75.4% 13 PLAZA SEVEN Minneapolis, MN 330,096 53.8% 55.0% 52.8% 52.2% PERSHING PLAZA (3) Atlanta, GA — 79.8% 79.8% (3) (3) 14 600 17TH STREET Denver, CO 612,135 76.7% 77.1% 77.1% 76.8% OWNED PORTFOLIO 4,806,253 70.4% 70.6% 70.3% 69.8% 15 MONUMENT CIRCLE (4) Indianapolis, IN 213,760 4.1% 4.1% 4.1% 4.1% OWNED & CONSOLIDATED PORTFOLIO 5,020,013 67.7% 67.9% 67.5% 67.0% ____________________ (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 sold on October 23, 2024. (4) Consolidated property as of January 1, 2023, which was previously a managed property. Franklin Street Properties Corp. Earnings Release 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 December 31, 2024 % of Tenant Sq Ft Portfolio 1 CITGO Petroleum Corporation 248,399 4.9% 2 EOG Resources, Inc. 169,167 3.4% 3 US Government 168,573 3.4% 4 Kaiser Foundation Health Plan, Inc. 120,979 2.4% 5 Deluxe Corporation 98,922 2.0% 6 Ping Identity Corp. 89,856 1.8% 7 Olin Corporation 81,480 1.6% 8 Permian Resources Operating, LLC 67,856 1.3% 9 Hall and Evans LLC 65,878 1.3% 10 Cyxtera Management, Inc. 61,826 1.2% 11 Precision Drilling (US) Corporation 59,569 1.2% 12 PwC US Group 54,334 1.1% 13 Coresite, LLC 49,518 1.0% 14 Schwegman, Lundberg & Woessner, P.A. 46,269 0.9% 15 Invenergy, LLC. 42,505 0.9% 16 Ark-La-Tex Financial Services, LLC. 41,011 0.8% 17 Chevron U.S.A., Inc. 35,088 0.7% 18 QB Energy Operating, LLC 34,063 0.7% 19 CarOffer, LLC. 30,913 0.6% 20 WDT Acquisition Corporation 30,913 0.6% Total 1,597,119 31.8% Franklin Street Properties Corp. Earnings Release Supplementary Schedule H Reconciliation and Definitions of Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”) A reconciliation of Net income (loss) to FFO and AFFO is shown below and a definition of FFO and AFFO is provided on Supplementary Schedule I. Management believes FFO and AFFO are used broadly throughout the real estate investment trust (REIT) industry as measurements of performance. The Company has included the National Association of Real Estate Investment Trusts (NAREIT) FFO definition as of May 17, 2016 in the table and notes that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently. The Company’s computation of FFO and AFFO may not be comparable to FFO or AFFO reported by other REITs or real estate companies that define FFO or AFFO differently. Reconciliation of Net income (loss) to FFO and AFFO: Three Months Ended Year Ended December 31, December 31, (In thousands, except per share amounts) 2024 2023 2024 2023 Net income (loss) $ (8,526 ) $ 3,575 $ (52,723 ) $ (48,110 ) Gain on consolidation of Sponsored REIT — — — (394 ) Loss on sale of properties and impairment of asset held for sale, net 367 (8,701 ) 20,826 23,384 Depreciation & amortization 10,755 11,952 44,757 54,694 NAREIT FFO 2,596 6,826 12,860 29,574 Lease Acquisition costs 111 112 426 390 Funds From Operations (FFO) $ 2,707 $ 6,938 $ 13,286 $ 29,964 Funds From Operations (FFO) $ 2,707 $ 6,938 $ 13,286 $ 29,964 Loss on extinguishment of debt 428 — 1,042 106 Amortization of deferred financing costs 703 576 2,968 2,502 Shares issued as compensation — — 270 315 Straight-line rent 720 198 1,969 626 Tenant improvements (4,173 ) (5,295 ) (13,794 ) (16,376 ) Leasing commissions (2,974 ) (1,649 ) (6,143 ) (6,901 ) Non-investment capex (2,568 ) (5,230 ) (6,725 ) (12,014 ) Adjusted Funds From Operations (AFFO) $ (5,157 ) $ (4,462 ) $ (7,127 ) $ (1,778 ) Per Share Data EPS $ (0.08 ) $ 0.03 $ (0.51 ) $ (0.47 ) FFO $ 0.03 $ 0.07 $ 0.13 $ 0.29 AFFO $ (0.05 ) $ (0.04 ) $ (0.07 ) $ (0.02 ) Weighted average shares (basic and diluted) 103,567 103,430 103,510 103,357 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 National Association of Real Estate Investment Trusts, or NAREIT, may define this term in a different manner. We have included the NAREIT FFO as of May 17, 2016 in the table and note that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently than we do. We believe that in order to facilitate a clear understanding of the results of the Company, FFO should be examined in connection with net income or loss and cash flows from operating, investing and financing activities in the consolidated financial statements. Adjusted Funds From Operations (“AFFO”) The Company also evaluates performance based on Adjusted Funds From Operations, which we refer to as AFFO. The Company defines AFFO as (1) FFO, (2) excluding 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. Franklin Street Properties Corp. Earnings Release Supplementary Schedule I Reconciliation and Definition of Sequential Same Store results to property Net Operating Income (NOI) and Net Income 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 Sequential Same Store. The comparative Sequential Same Store results include properties held for all periods presented. We exclude properties that have been placed in service, but that do not have operating activity for all periods presented, dispositions and significant nonrecurring income such as bankruptcy settlements and lease termination fees. NOI, as defined by the Company, may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income or loss as an indication of our performance or to cash flows as a measure of the Company’s liquidity or its ability to make distributions. The calculations of NOI and Sequential Same Store are shown in the following table: (in thousands) Rentable Square Feet or RSF Three Months Ended 31-Dec-24 Three Months Ended 30-Sep-24 Inc (Dec) % Change Region MidWest 757 1,170 1,278 (108 ) (8.5 ) % South 1,909 4,549 4,390 159 3.6 % West 2,140 5,670 6,037 (367 ) (6.1 ) % Property NOI* from Owned Properties 4,806 11,389 11,705 (316 ) (2.7 ) % Disposition and Acquisition Properties (a) 214 (266 ) 678 (944 ) (7.5 ) % NOI* 5,020 $ 11,123 $ 12,383 $ (1,260 ) (10.2 ) % Sequential Same Store $ 11,389 $ 11,705 $ (316 ) (2.7 ) % Less Nonrecurring Items in NOI* (b) 185 78 107 (0.9 ) % Comparative Sequential Same Store $ 11,204 $ 11,627 $ (423 ) (3.6 ) % Reconciliation to Net loss Three Months Ended 31-Dec-24 Three Months Ended 30-Sep-24 Net loss $ (8,526 ) $ (15,622 ) Add (deduct): Loss on extinguishment of debt 428 477 Loss on sale of properties and impairment of assets held for sale, net 367 7,254 Management fee income (386 ) (422 ) Depreciation and amortization 10,757 10,911 Amortization of above/below market leases (1 ) (5 ) General and administrative 2,815 3,275 Interest expense 5,912 6,585 Interest income (395 ) (340 ) Non-property specific items, net 152 270 NOI* $ 11,123 $ 12,383 (a) We define Disposition and Acquisition Properties as properties that were sold acquired or consolidated and do not have operating activity for all periods presented. (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.

Franklin Street Properties Corp. Announces Fourth Quarter and Full Year 2024 Results

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