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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Franklin Street Properties Corp | AMEX:FSP | AMEX | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.91 | 0 | 12:00:05 |
Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE American: FSP), a real estate investment trust (REIT), announced its results for the first quarter ended March 31, 2023.
George J. Carter, Chairman and Chief Executive Officer, commented as follows:
“As the second quarter of 2023 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 (1) pursuing the sale of select properties where we believe that short to intermediate term valuation potential has been reached and (2) striving to lease vacant space. We intend to use proceeds from property dispositions primarily for debt reduction.
We look forward to the remainder of 2023 and beyond with anticipation and optimism.”
Financial Highlights
Leasing Highlights
Investment Highlights
Dividends
Consolidation of Sponsored REIT
As of January 1, 2023, we consolidated Monument Circle 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 (subject to further extension to September 30, 2023), increased the aggregate principal amount of the loan from $21 million to $24 million, and included certain other modifications. 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 1, “Organization, Properties, Basis of Presentation, Financial Instruments, and Recent Accounting Standards – Variable Interest Entities (VIEs)” and Note 2, “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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.
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.
2023 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 March 31, 2023. 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 May 3, 2023 at 11:00 a.m. (ET) to discuss the first quarter 2023 results. To access the call, please dial 1-833-470-1428 and use access code 692599. Internationally, the call may be accessed by dialing 1-404-975-4839 and using access code 692599. 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 seeks value-oriented investments with an eye towards 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 our ability to lease space in the future, expectations for 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 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, 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 Dallas, Denver and Houston, and any delays in the timing of any such anticipated dispositions, 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, 2022, 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
Three Months Ended
March 31,
(in thousands, except per share amounts)
2023
2022
Revenue:
Rental
$
37,767
$
41,797
Related party revenue:
Management fees and interest income from loans
—
460
Other
—
7
Total revenue
37,767
42,264
Expenses:
Real estate operating expenses
12,690
12,834
Real estate taxes and insurance
6,973
8,719
Depreciation and amortization
14,727
15,670
General and administrative
3,817
3,784
Interest
5,806
5,366
Total expenses
44,013
46,373
Loss on extinguishment of debt
(67)
—
Gain on consolidation of Sponsored REIT
394
—
Gain on sale of properties, net
8,392
—
Income (loss) before taxes
2,473
(4,109)
Tax expense
67
49
Net income (loss)
$
2,406
$
(4,158)
Weighted average number of shares outstanding, basic and diluted
103,236
103,691
Net income (loss) per share, basic and diluted
$
0.02
$
(0.04)
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)
2023
2022
Assets:
Real estate assets:
Land
$
130,147
$
126,645
Buildings and improvements
1,367,629
1,388,869
Fixtures and equipment
11,411
11,151
1,509,187
1,526,665
Less accumulated depreciation
413,272
423,417
Real estate assets, net
1,095,915
1,103,248
Acquired real estate leases, less accumulated amortization of $20,170 and $20,243, respectively
9,620
10,186
Cash, cash equivalents and restricted cash
13,110
6,632
Tenant rent receivables
3,306
2,201
Straight-line rent receivable
51,703
52,739
Prepaid expenses and other assets
6,125
6,676
Related party mortgage loan receivable, less allowance for credit loss of $0 and $4,237, respectively
—
19,763
Other assets: derivative asset
—
4,358
Office computers and furniture, net of accumulated depreciation of $1,132 and $1,115, respectively
145
154
Deferred leasing commissions, net of accumulated amortization of $19,852 and $19,043, respectively
33,758
35,709
Total assets
$
1,213,682
$
1,241,666
Liabilities and Stockholders’ Equity:
Liabilities:
Bank note payable
$
75,000
$
48,000
Term loans payable, less unamortized financing costs of $635 and $250, respectively
124,365
164,750
Series A & Series B Senior Notes, less unamortized financing costs of $453 and $494, respectively
199,547
199,506
Accounts payable and accrued expenses
37,720
50,366
Accrued compensation
1,189
3,644
Tenant security deposits
5,740
5,710
Lease liability
655
759
Acquired unfavorable real estate leases, less accumulated amortization of $519 and $574, respectively
171
195
Total liabilities
444,387
472,930
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, 103,235,914 and 103,235,914 shares issued and outstanding, respectively
10
10
Additional paid-in capital
1,334,776
1,334,776
Accumulated other comprehensive income
3,544
4,358
Accumulated distributions in excess of accumulated earnings
(569,035)
(570,408)
Total stockholders’ equity
769,295
768,736
Total liabilities and stockholders’ equity
$
1,213,682
$
1,241,666
Franklin Street Properties Corp. Financial Results Supplementary Schedule C Condensed Consolidated Statements of Cash Flows (Unaudited)
For the
Three Months Ended
March 31,
(in thousands)
2023
2022
Cash flows from operating activities:
Net income (loss)
$
2,406
$
(4,158)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization expense
15,316
16,195
Amortization of above and below market leases
(18)
(9)
Amortization of other comprehensive income into interest expense
(662)
—
Loss on extinguishment of debt
67
—
Gain on consolidation of Sponsored REIT
(394)
—
Gain on sale of properties, net
(8,392)
—
Changes in operating assets and liabilities:
Tenant rent receivables
(1,105)
(87)
Straight-line rents
(332)
(1,216)
Lease acquisition costs
(818)
(1,069)
Prepaid expenses and other assets
(513)
(1,274)
Accounts payable and accrued expenses
(3,317)
(10,568)
Accrued compensation
(2,455)
(3,498)
Tenant security deposits
30
(382)
Payment of deferred leasing commissions
(908)
(3,706)
Net cash used in operating activities
(1,095)
(9,772)
Cash flows from investing activities:
Property improvements, fixtures and equipment
(11,420)
(9,952)
Consolidation of Sponsored REIT
3,048
—
Proceeds received from sales of properties
28,098
—
Net cash provided by (used in) investing activities
19,726
(9,952)
Cash flows from financing activities:
Distributions to stockholders
(1,033)
(42,640)
Proceeds received from termination of interest rate swap
4,206
—
Stock repurchases
—
(4,843)
Borrowings under bank note payable
57,000
45,000
Repayments of bank note payable
(30,000)
(5,000)
Repayments of term loans payable
(40,000)
—
Deferred financing costs
(2,326)
(2,561)
Net cash used in financing activities
(12,153)
(10,044)
Net increase (decrease) in cash, cash equivalents and restricted cash
6,478
(29,768)
Cash, cash equivalents and restricted cash, beginning of year
6,632
40,751
Cash, cash equivalents and restricted cash, end of period
$
13,110
$
10,983
Franklin Street Properties Corp. Earnings Release Supplementary Schedule D Real Estate Portfolio Summary Information (Unaudited & Approximated)
Commercial portfolio lease expirations (1)
Total
% of
Year
Square Feet
Portfolio
2023
256,233
4.1%
2024
705,840
11.3%
2025
436,447
7.0%
2026
608,427
9.7%
2027
321,740
5.1%
Thereafter (2)
3,934,539
62.8%
6,263,226
100.0%
(1)
Percentages are determined based upon total square footage.
(2)
Includes 1,785,876 square feet of vacancies at our owned and consolidated properties as of March 31, 2023.
(dollars & square feet in 000's)
As of March 31, 2023
% of
Square
% of
State
Properties
Investment
Portfolio
Feet
Portfolio
Colorado
4
$
460,360
42.0%
2,133
34.0%
Texas
9
331,302
30.2%
2,423
38.7%
Georgia
1
52,854
4.8%
160
2.6%
Minnesota
3
120,745
11.0%
758
12.1%
Virginia
1
32,008
2.9%
298
4.8%
Florida
1
70,510
6.5%
213
3.4%
Indiana
1
19,609
1.8%
214
3.4%
North Carolina
1
8,527
0.8%
64
1.0%
Total
21
$
1,095,915
100.0%
6,263
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
31-Mar-23
Tenant improvements
$
3,047
Deferred leasing costs
908
Non-investment capex
2,967
$
6,922
For the Three Months Ended
Year Ended
31-Mar-22
30-Jun-22
30-Sep-22
31-Dec-22
31-Dec-22
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
March 31,
December 31,
2023
2022
Owned Properties:
Number of properties
20
21
Square feet
6,049,466
6,239,530
Leased percentage
73.9%
75.6%
Consolidated Property - Single Asset REIT (SAR):
Number of properties
1
—
Square feet
213,760
—
Leased percentage
4.1%
Total Owned and Consolidated Properties:
Number of properties
21
21
Square feet
6,263,226
6,239,530
Leased percentage
71.5%
75.6%
Franklin Street Properties Corp. Earnings Release Supplementary Schedule F Percentage of Leased Space (Unaudited & Estimated)
Fourth
First
% Leased (1)
Quarter
% Leased (1)
Quarter
as of
Average %
as of
Average %
Property Name
Location
Square Feet
31-Dec-22
Leased (2)
31-Mar-23
Leased (2)
1
FOREST PARK
Charlotte, NC
64,198
78.4%
78.4%
78.4%
78.4%
NORTHWEST POINT
Elk Grove Village, IL
—
100.0%
100.0%
(3
)
(3
)
2
PARK TEN
Houston, TX
157,609
78.1%
76.1%
90.8%
86.6%
3
PARK TEN PHASE II
Houston, TX
156,746
95.0%
95.0%
95.0%
95.0%
4
GREENWOOD PLAZA
Englewood, CO
196,236
66.3%
66.3%
66.3%
66.3%
5
ADDISON
Addison, TX
289,333
83.0%
83.0%
83.0%
83.0%
6
COLLINS CROSSING
Richardson, TX
300,887
96.1%
96.1%
97.1%
96.8%
7
INNSBROOK
Glen Allen, VA
298,183
47.8%
47.8%
47.8%
47.8%
8
LIBERTY PLAZA
Addison, TX
217,841
72.9%
74.7%
72.9%
72.9%
9
BLUE LAGOON
Miami, FL
213,182
98.5%
98.5%
98.5%
98.5%
10
ELDRIDGE GREEN
Houston, TX
248,399
100.0%
100.0%
100.0%
100.0%
11
121 SOUTH EIGHTH ST
Minneapolis, MN
298,121
85.2%
86.3%
84.5%
84.5%
12
801 MARQUETTE AVE
Minneapolis, MN
129,691
91.8%
91.8%
91.8%
91.8%
13
LEGACY TENNYSON CTR
Plano, TX
209,461
49.0%
46.2%
49.0%
49.0%
14
ONE LEGACY
Plano, TX
214,110
64.7%
64.7%
69.3%
69.3%
15
WESTCHASE I & II
Houston, TX
629,025
63.5%
63.7%
59.0%
60.3%
16
1999 BROADWAY
Denver, CO
680,255
66.9%
66.9%
61.9%
65.2%
17
1001 17TH STREET
Denver, CO
644,785
70.2%
70.1%
70.8%
70.3%
18
PLAZA SEVEN
Minneapolis, MN
330,096
79.3%
79.3%
65.0%
71.6%
19
PERSHING PLAZA
Atlanta, GA
160,145
79.2%
79.2%
79.8%
79.8%
20
600 17TH STREET
Denver, CO
611,163
78.3%
78.0%
80.5%
79.3%
OWNED PORTFOLIO
6,049,466
75.6%
75.9%
73.9%
74.9%
21
MONUMENT CIRCLE (4)
Charlotte, NC
213,760
(4
)
(4
)
4.1%
4.1%
OWNED & CONSOLIDATED PORTFOLIO
6,263,226
75.6%
75.9%
71.5%
72.5%
(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 March 10, 2023.
(4)
Consolidated property as of January 1, 2023, previously was 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 March 31, 2023
% of
Tenant
Sq Ft
Portfolio
1
CITGO Petroleum Corporation
248,399
4.0%
2
EOG Resources, Inc.
169,167
2.7%
3
US Government
168,573
2.7%
4
Lennar Homes, LLC
155,808
2.5%
5
Kaiser Foundation Health Plan
120,979
1.9%
6
Argo Data Resource Corporation
114,200
1.8%
7
Swift, Currie, McGhee & Hiers, LLP
101,296
1.6%
8
Deluxe Corporation
98,922
1.6%
9
Ping Identity Corp.
89,856
1.4%
10
Permian Resources Operating, LLC
67,856
1.1%
11
Bread Financial Payments, Inc.
67,274
1.1%
12
PricewaterhouseCoopers LLP
66,304
1.1%
13
Hall and Evans LLC
65,878
1.1%
14
Cyxtera Management, Inc.
61,826
1.0%
15
Precision Drilling (US) Corporation
59,569
1.0%
16
Schwegman, Lundberg & Woessner, P.A.
58,263
0.9%
17
EMC Corporation
57,100
0.9%
18
ID Software, LLC
57,100
0.9%
19
Olin Corporation
54,080
0.9%
20
Unique Vacations
53,119
0.8%
Total
1,935,569
31.0%
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 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 to FFO and AFFO:
Three Months Ended
March 31,
(In thousands, except per share amounts)
2023
2022
Net income (loss)
$
2,406
$
(4,158)
Gain on consolidation of Sponsored REIT
(394)
—
Gain on sale of properties, net
(8,392)
—
Depreciation & amortization
14,709
15,661
NAREIT FFO
8,329
11,503
Lease Acquisition costs
78
79
Funds From Operations (FFO)
$
8,407
$
11,582
Funds From Operations (FFO)
$
8,407
$
11,582
Loss on extinguishment of debt
67
—
Amortization of deferred financing costs
589
526
Straight-line rent
(331)
(1,216)
Tenant improvements
(3,047)
(1,877)
Leasing commissions
(908)
(3,032)
Non-investment capex
(2,967)
(5,065)
Adjusted Funds From Operations (AFFO)
$
1,810
$
918
Per Share Data
EPS
$
0.02
$
(0.04)
FFO
$
0.08
$
0.11
AFFO
$
0.02
$
0.01
Weighted average shares (basic and diluted)
103,236
103,691
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:
Rentable
Square Feet
Three Months Ended
Three Months Ended
Inc
%
(in thousands)
or RSF
31-Mar-23
31-Dec-22
(Dec)
Change
Region
East
362
$
478
$
526
$
(48)
(9.1)
%
MidWest
758
2,239
2,406
(167)
(6.9)
%
South
2,797
7,933
7,896
37
0.5
%
West
2,132
6,422
6,028
394
6.5
%
Property NOI* from Owned Properties
6,049
17,072
16,856
216
1.3
%
Disposition and Acquisition Properties (a)
214
668
1,359
(691)
(3.9)
%
NOI*
6,263
$
17,740
$
18,215
$
(475)
(2.6)
%
Sequential Same Store
$
17,072
$
16,856
$
216
1.3
%
Less Nonrecurring
Items in NOI* (b)
1,292
818
474
(2.9)
%
Comparative
Sequential Same Store
$
15,780
$
16,038
$
(258)
(1.6)
%
Three Months Ended
Three Months Ended
Reconciliation to Net income (loss)
31-Mar-23
31-Dec-22
Net income (loss)
$
2,406
$
(2,884)
Add (deduct):
Loss on extinguishment of debt
67
—
Gain on consolidation of Sponsored REIT
(394)
—
Impairment and loan loss reserve
—
2,380
Gain on sale of properties, net
(8,392)
(3,862)
Management fee income
(374)
(295)
Depreciation and amortization
14,727
14,805
Amortization of above/below market leases
(18)
(30)
General and administrative
3,817
2,888
Interest expense
5,806
5,668
Interest income
—
(460)
Non-property specific items, net
95
5
NOI*
$
17,740
$
18,215
(a)
We define Disposition and Acquisition Properties as properties that were sold or 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230502005954/en/
Georgia Touma (877) 686-9496
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