Franklin Street Properties Corp. Announces First Quarter 2013 Results

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Franklin Street Properties Corp. Announces First Quarter 2013 Results

WAKEFIELD, Ma.--(BUSINESS WIRE)-- Franklin Street Properties Corp. (the "Company", "FSP", "we" or "our") (NYSE MKT: FSP), a real estate investment trust (REIT), announced today Funds From Operations (FFO) of $20.6 million or $0.25 per share for the first quarter ended March 31, 2013. Net income was $4.4 million or $0.05 per share for the first quarter.

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

      
Three Months Ended March 31,
(in 000's except perIncrease
share data)

2013

2012

(Decrease)

 
Net Income$4,401  $5,738  $(1,337)
 
FFO$20,616  $19,571  $1,045 
Per Share Data:
EPS$0.05$0.07$(0.02)
FFO$0.25$0.24$0.01
 
Weighted average
shares (diluted) 82,937   82,937   - 
 

Comparing results for the first quarter of 2013 to the same period in 2012, FFO increased $1.0 million or $0.01 per share. The FFO increase was primarily from higher property income due to two acquisitions completed since July 2012 and improved occupancy in our portfolio, which was partially offset by decreased interest income as a result of repayment of secured real estate loans and by higher interest expense and G&A. Net Income and EPS was $4.4 million or $0.05 per share for the first quarter of 2013 compared to net income of $5.7 million and $0.07 per share for the first quarter of 2012.

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

"For the first quarter of 2013, FSP's profits as represented by FFO totaled approximately $20.6 million or $0.25 per share, essentially flat compared to the fourth quarter of 2012. Dividend distributions declared for the first quarter of 2013, which are payable on May 16, 2013, will be approximately $15.8 million or $0.19 per share.

Our directly-owned real estate portfolio of 37 properties totaling 7,856,859 square feet was approximately 94.4% leased as of March 31, 2013, up from approximately 94.0% leased at the end of the fourth quarter of 2012. We anticipate organic growth in rental revenue/FFO from our existing portfolio of properties in the second half of this year, as we begin to realize the benefit of significant new leases signed in recent quarters and as continuing "same store" rental increases positively affect profits. Our property portfolio of office assets has relatively modest lease expirations over the next two years, which we continue to proactively reduce. As of the end of the first quarter, only 2.2% of our commercial square footage is scheduled to expire during the balance of 2013, down from 3.6% at the start of 2013. Overall tenant improvement expenditures and leasing costs continue to moderate in relation to the level of rental revenues being achieved and we are optimistic that by year end 2013, our portfolio's leased percentage can exceed its current 94.4% level.

Recently, we put under purchase/sale agreement two new real estate investments in long-standing FSP core investment markets for a total acquisition cost of approximately $341,000,000. We believe both properties have superior near-term growth/value-add opportunities and are being purchased at substantial discounts to replacement cost. We expect to close on the purchase of both properties on or before July 1, 2013. The first property, located at 999 Peachtree Street in the "Midtown" sub-market of Atlanta, Georgia, is 28-stories, totals approximately 621,007 rentable square feet and is under agreement to purchase for $157,900,000. The second property, located at 1999 Broadway in the CBD (central business district) of Denver, Colorado, is 43-stories, totals approximately 680,277 rentable square feet and is under agreement to purchase for $183,000,000. We believe the successful acquisition of these two properties has the potential to add significantly to our anticipated growth in rental revenues/FFO this year and in the future.

As the second quarter of 2013 begins, FSP will maintain its focus on continuing to grow profits by (1) increasing occupancy and rents in its existing property portfolio while (2) acquiring additional real estate investments that have the potential to meaningfully contribute to that effort.

We continue to be very optimistic about our prospects for growth during 2013 and beyond."

Dividend Announcement

On April 12, 2013, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended March 31, 2013 of $0.19 per share of common stock payable on May 16, 2013 to stockholders of record on April 26, 2013.

Real Estate Update

Supplementary schedules provide property information for the Company's owned real estate portfolio and for two non-consolidated REITs in which the Company holds preferred stock interests as of March 31, 2013. The Company will also be filing an updated supplemental information package that will provide stockholders and the financial community with additional operating and financial data. The Company will file this supplemental information package with the SEC and make it available on its website at www.franklinstreetproperties.com.

Earnings Call

A conference call is scheduled for May 1, 2013 at 10:00 a.m. (ET) to discuss the first quarter 2013 results. To access the call, please dial 1-888-317-6016. Internationally, the call may be accessed by dialing 1-412-317-6016. To listen via live audio webcast, please visit the Webcasts & Presentations section in the Investor Relations section of the Company's website (www.franklinstreetproperties.com) at least ten minutes prior to the start of the call and follow the posted directions. The webcast will also be available via replay from the above location starting one hour after the call is finished.

Funds From Operations (FFO)

A reconciliation of Net Income to FFO is shown below and a definition of FFO is provided on Supplementary Schedule I. Management believes FFO is used broadly throughout the real estate investment trust (REIT) industry as a measurement of performance. The Company has included the NAREIT FFO definition in the table and notes that other REITs may not define FFO in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently. The Company's computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that define FFO differently.

   

 

Reconciliation of Net Income to FFO:Three Months Ended
March 31,
 
(In thousands, except per share amounts)

2013

2012

 
Net income$4,401$5,738

(Gain) loss on sale of or equity interest in properties,

less applicable income tax

--
GAAP (income) loss from non-consolidated REITs187(391)
Distributions from non-consolidated REITs27929
Depreciation & amortization 15,984   13,295 
NAREIT FFO20,59919,571
Acquisition costs of new properties 17   - 
Funds From Operations (FFO)$20,616  $19,571 
 
Per Share Data
EPS$0.05$0.07
FFO$0.25$0.24
 

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

About Franklin Street Properties Corp.

Franklin Street Properties Corp., based in Wakefield, Massachusetts, is focused on achieving current income and long-term growth through investments in commercial properties. Our real estate portfolio consists of office properties. FSP is a Maryland corporation that operates in a manner intended to qualify as a real estate investment trust (REIT) for federal income tax purposes. To learn more about FSP please visit our website at www.franklinstreetproperties.com.

Forward-Looking Statements

Statements made in this press release that state FSP's or management's intentions, beliefs, expectations, or predictions for the future may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.This press release may also contain forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements.Accordingly, readers are cautioned not to place undue reliance on forward-looking statements.Investors are cautioned that our forward-looking statements involve risks and uncertainty, including without limitation, economic conditions in the United States, disruptions in the debt markets, economic conditions in the markets in which we own properties, risks of a lessening of demand for the types of real estate owned by us, changes in government regulations and regulatory uncertainty, uncertainty about governmental fiscal policy, geopolitical events and expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated repairs, additional staffing, insurance increases and real estate tax valuation reassessments.See the "Risk Factors" set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012, as the same may be updated from time to time in subsequent filings with the United States Securities and Exchange Commission.Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.We will not update any of the forward-looking statements after the date of this press release to conform them to actual results or to changes in our expectations that occur after such date, other than as required by law.

    

Franklin Street Properties Corp.

Earnings Release

Supplementary Information


Table of Contents

 
Franklin Street Properties Corp. Financial ResultsA-C
Real Estate Portfolio Summary InformationD
Portfolio and Other Supplementary InformationE
Quarterly Information - Prior Four QuartersF
Percentage of Leased SpaceG
Largest 20 Tenants - FSP Owned PortfolioH
Definition of Funds From Operations (FFO)I
 
  

Franklin Street Properties Corp. Financial Results

Supplementary Schedule A

Condensed Consolidated Income (Loss) Statements


(Unaudited)

 
   For the

Three Months Ended

March 31,

(in thousands, except per share amounts)   2013    2012 
  
Revenue:
Rental$43,147$36,303
Related party revenue:
Management fees and interest income from loans1,6222,616
Other   31    34 
Total revenue   44,800    38,953 
 
Expenses:
Real estate operating expenses10,7708,697
Real estate taxes and insurance6,5975,696
Depreciation and amortization15,98713,071
Selling, general and administrative2,5322,077
Interest   4,208    3,677 
 
Total expenses   40,094    33,218 
 
Income before interest income, equity in earnings of
non-consolidated REITs and taxes4,7065,735
Interest income18
Equity in earnings (losses) of non-consolidated REITs   (187)   391 
Income before taxes on income4,5206,134
Taxes on income   119    79 
Income from continuing operations   4,401    6,055 
 
Discontinued operations:
Loss from discontinued operations, net of income tax-(317)
Gain (loss) on sale of property, less applicable income tax   -    - 
Total discontinued operations   -    (317)
 
Net income  $4,401   $5,738 
 
Weighted average number of shares outstanding,
basic and diluted   82,937    82,937 
 
Earnings per share, basic and diluted, attributable to:
Continuing operations$0.05$0.07
Discontinued operations   -    - 
Net income per share, basic and diluted  $0.05   $0.07 
 
    

Franklin Street Properties Corp. Financial Results

Supplementary Schedule B

Condensed Consolidated Balance Sheets


(Unaudited)

 
March 31,December 31,
(in thousands, except share and par value amounts)   2013    2012 
Assets:
Real estate assets, net$1,136,204$1,142,628
Acquired real estate leases, less accumulated amortization
of $45,700 and $40,062, respectively105,882111,982
Investment in non-consolidated REITs81,74681,960
Cash and cash equivalents17,28221,267
Restricted cash583575
Tenant rent receivables, less allowance for doubtful accounts
of $110 and $1,300, respectively2,3571,749
Straight-line rent receivable, less allowance for doubtful accounts
of $135 and $135, respectively36,28735,441
Prepaid expenses2,4381,106
Related party mortgage loan receivables96,89693,896
Other assets7,57412,655
Office computers and furniture, net of accumulated depreciation
of $626 and $584, respectively533544
Deferred leasing commissions, net of accumulated amortization
of $12,607 and $11,812, respectively   24,920    23,376 
Total assets  $1,512,702   $1,527,179 
 
Liabilities and Stockholders' Equity:
Liabilities:
Bank note payable$221,750$216,750
Term loan payable400,000400,000
Accounts payable and accrued expenses25,49331,122
Accrued compensation Read Full Story

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