UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported): December 31, 2012

 

Franklin Street Properties Corp.

(Exact name of registrant as specified in its charter)

 

 

Maryland 001-32470 04-3578653

(State or other jurisdiction

of incorporation)

(Commission
File Number)
(IRS Employer
Identification No.)

 

 

401 Edgewater Place, Suite 200, Wakefield, Massachusetts 01880
(Address of principal executive offices) (Zip Code)

 

 

Registrant’s telephone number, including area code: (781) 557-1300

 

 

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

Item 2.02. Results of Operations and Financial Condition.

 

On February 19, 2013, Franklin Street Properties Corp. (the “Registrant”) announced its financial results for the three and twelve months ended December 31, 2012. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The press release references certain supplemental operating and financial data that is now available on the Registrant’s website. A copy of the supplemental operating and financial data is attached hereto as Exhibit 99.2 and is incorporated by reference herein.

 

The information in this Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

See Exhibit Index attached hereto.

 

2
 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  FRANKLIN STREET PROPERTIES CORP.
   
Date: February 19, 2013 By: /s/ George J. Carter
 

George J. Carter

President and Chief Executive Officer

 
       

 

3
 

EXHIBIT INDEX

 

 

Exhibit No. Description
   
99.1 Press Release issued by Franklin Street Properties Corp. on February 19, 2013.
99.2 Supplemental Operating and Financial Data for the three and twelve months ended December 31, 2012.

 

4

Exhibit 99.1

 

PRESS RELEASE Franklin Street Properties Corp.
401 Edgewater Place · Suite 200 · Wakefield, Massachusetts 01880 · (781) 557-1300 · www.franklinstreetproperties.com
Contact: John Demeritt ( 877) 686-9496 FOR IMMEDIATE RELEASE
     

 

FRANKLIN STREET PROPERTIES CORP. ANNOUNCES

FOURTH QUARTER & YEAR END 2012 RESULTS

 

Wakefield, MA—February 19, 2013—Franklin Street Properties Corp. (the “Company”, “FSP”, “we” or “our”) (NYSE MKT: FSP), an investment firm specializing in real estate, announced today Funds From Operations (FFO) of $20.5 million or $0.25 per share for the fourth quarter ended December 31, 2012; and FFO of $79.0 million or $0.95 per share for the full year ended December 31, 2012. Net income was $5.5 million or $0.07 per share for the fourth quarter and $7.6 million or $0.09 per share for the year ended December 31, 2012.

 

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 December 31,     Year Ended December 31,  
(in 000's except per share data)   2012     2011     Increase
(Decrease)
    2012     2011     Increase
(Decrease)
 
                                     
Net Income   $ 5,460     $ 5,062     $ 397     $ 7,633     $ 43,524     $ (35,891 )
                                                 
FFO   $ 20,515     $ 18,457     $ 2,058     $ 79,041     $ 71,210     $ 7,831  
Per Share Data:                                                
EPS   $ 0.07     $ 0.06     $ 0.01     $ 0.09     $ 0.53     $ (0.44 )
FFO   $ 0.25     $ 0.22     $ 0.03     $ 0.95     $ 0.87     $ 0.08  
                                                 
Weighted average shares (diluted)     82,937       82,937             82,937       81,857       1,080  

 

Comparing results for the fourth quarter of 2012 to the same period in 2011, FFO increased $2.1 million or $0.03 per share. The FFO increase was primarily from higher property income due to three acquisitions completed since October 2011 and improved occupancy in our portfolio, and increased interest income from secured real estate loans, which was partially offset by higher interest expense and G&A. Net Income and EPS was $5.5 million or $0.07 per share for the fourth quarter of 2012 compared to net income of $5.1 million and $0.06 per share for the fourth quarter of 2011.

 

Comparing results for the year ended December 31, 2012 to 2011, FFO increased $7.8 million or $0.08 per share. The FFO increase was primarily from higher property income due to seven acquisitions completed since the start of 2011 and improved occupancy in our portfolio, and increased interest income from loans on secured real estate, which was partially offset by higher interest expense and G&A. Net Income and EPS was $7.6 million and $0.09 per share, respectively, for the year ended December 31, 2012 compared to net income of $43.5 million and $0.53 per share for the same period in 2011. For the year ended December 31, 2012, Net Income includes the effect of a loss from discontinued operations of $15.7 million or $0.19 per share. The loss included a $14.8 million loss on a property sold in December and $0.9 million in losses from the operations of the property we sold.

 

 
- 2 -

 

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

 

“For the fourth quarter of 2012, FSP's profits as represented by FFO totaled approximately $20.5 million or $0.25 per share, an increase of approximately $0.6 million or $0.01 per share compared to the third quarter of 2012. Dividend distributions declared for the fourth quarter of 2012, which are payable on February 14, 2013, will be approximately $15.8 million or $0.19 per share. For the full-year 2012, FSP’s profits as represented by FFO totaled approximately $79.0 million or $0.95 per share, an increase of approximately $7.8 million or $.08 per share compared to full-year 2011. We are optimistic about our potential for continued profit growth in 2013.

 

Our directly-owned real estate portfolio of 37 properties, totaling approximately 7,854,679 square feet, was approximately 94.0% leased as of December 31, 2012, up from approximately 89.9% leased at the end of the third quarter and up from approximately 88.7% leased as of December 31, 2011. The increase in the percentage of leased space for the fourth quarter and full-year 2012 continues to make a meaningful contribution to our profit growth. Our property portfolio of primarily suburban office assets has relatively modest lease expirations over the next two years which we have continued to proactively reduce during the course of 2012. As of year-end 2012, only 3.55% of our commercial square footage is scheduled to expire in 2013 and, along with our improving occupancy levels, continues to allow overall tenant improvement expenditures and leasing costs to moderate in relation to the level of rental revenues being achieved.

 

There was one new real estate investment completed in the fourth quarter of 2012. On November 1, FSP completed the acquisition of a Class A suburban office property in Houston, Texas known as “Westchase I & II” for $154.8 million. The property is a two-building office complex totaling approximately 629,025 rentable square feet and is located in Houston’s Westchase District. Each building is 14 stories, and the entire property is approximately 96.3% leased to numerous tenants. FSP, its affiliates and predecessor have been investing in suburban Houston since 1993 and with the addition of this asset, we own five properties totaling approximately 1,515,682 square feet in Houston as of year-end 2012. Additional potential real estate investment opportunities are actively being explored and we would anticipate further real estate investments during 2013.

 

There were two property dispositions completed in the fourth quarter of 2012. First, one of our single–asset REIT affiliates, “FSP Phoenix Tower Corp.”, sold its 34-story 623,944 square foot office building in Houston, Texas for $123,750,000. FSP’s first mortgage loan of $15 million was repaid in full and our equity investment in Phoenix Tower realized a gain of $1.6 million. The second disposition was our Southfield, Michigan property on which we had taken an estimated provision for loss last quarter. We continuously review and evaluate our directly-owned portfolio of 37 properties for potentially advantageous dispositions and would anticipate further potential opportunities in the area during 2013.

 

As 2013 begins, FSP will focus on continuing to grow profits by (1) increasing occupancy and rents on its portfolio of properties while (2) acquiring additional real estate investments that have the potential to add to profits.

 

We are very optimistic about our prospects for growth during 2013 and beyond.”

__________________________________________________________________________________________

 

 

Dividend Announcement

 

On January 26, 2013, the Company announced that its Board of Directors declared a regular quarterly dividend for the three months ended December 31, 2012 of $0.19 per share of common stock payable on February 14, 2013 to stockholders of record on January 25, 2013.

 

 

 
- 3 -

 

Real Estate Update

 

Supplementary schedules provide property information for the Company’s owned real estate portfolio and for three non-consolidated REITs in which the Company holds preferred stock interests as of December 31, 2012. 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 February 20, 2013 at 10:00 a.m. (ET) to discuss the fourth quarter and 2012 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.

__________________________________________________________________________________________

 

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     Year Ended  
    December 31,     December 31,  
                         
(In thousands, except per share amounts)   2012     2011     2012     2011  
                         
Net income   $ 5,460     $ 5,062     $ 7,633     $ 43,524  
(Gain) loss on sale, less applicable income tax     526           14,826       (21,939 )
GAAP (income) loss from non-consolidated REITs     (972 )     (978 )     (2,033 )     (4,490 )
Distributions from non-consolidated REITs     76       971       2,810       5,056  
Depreciation & amortization     15,239       13,247       55,518       48,439  
NAREIT FFO     20,329       18,302       78,754       70,590  
Acquisition costs of new properties     186       155       287       620  
Funds From Operations (FFO)   $ 20,515     $ 18,457     $ 79,041     $ 71,210  
                                 
Per Share Data                                
EPS   $ 0.07     $ 0.06     $ 0.09     $ 0.53  
FFO   $ 0.25     $ 0.22     $ 0.95     $ 0.87  
                                 
Weighted average shares (basic and diluted)     82,937       82,937       82,937       81,857  

 

________________________________________________________________________________________

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.

 

 

 
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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. The majority of FSP's property portfolio is suburban office buildings, with select investments in certain central business district 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 Results A-C
Real Estate Portfolio Summary Information D
Portfolio and Other Supplementary Information E
Quarterly Information – Prior Four Quarters F
Percentage of Leased Space G
Largest 20 Tenants – FSP Owned Portfolio H
Definition of Funds From Operations (FFO) I
 
- 5 -

Franklin Street Properties Corp. Financial Results

Supplementary Schedule A

Condensed Consolidated Income (Loss) Statements

(Unaudited)

 

    For the
Three Months Ended
December 31,
    For the
Year Ended
December 31,
 
(in thousands, except per share amounts)   2012     2011     2012     2011  
                         
Revenue:                                
Rental   $ 41,532     $ 36,744     $ 151,656     $ 134,238  
Related party revenue:                                
Management fees and interest income from loans     1,801       1,051       10,947       4,046  
Other     87       29       199       49  
      Total revenue     43,420       37,824       162,802       138,333  
                                 
Expenses:                                
Real estate operating expenses     10,501       9,486       37,441       35,076  
Real estate taxes and insurance     5,960       5,357       22,913       20,114  
Depreciation and amortization     15,225       12,951       54,872       47,622  
Selling, general and administrative     2,462       2,012       9,916       6,913  
Interest     4,167       3,261       16,068       12,666  
                                 
     Total expenses     38,315       33,067       141,210       122,391  
                                 
Income before interest income, equity in earnings of                                
   non-consolidated REITs and taxes     5,105       4,757       21,592       15,942  
Interest income     34       3       51       22  
Equity in earnings of non-consolidated REITs     972     978       2,033       3,685  
                                 
Income before taxes on income     6,111       5,738       23,376       19,649  
Taxes on income     99       82       335       267  
                                 
Income from continuing operations     6,012       5,656       23,341       19,382  
                                 
Discontinued operations:                                
Income (loss) from discontinued operations, net of income tax     (26 )     (594 )     (882 )     2,203  
Gain (loss) on sale, less applicable income tax     (526 )           (14,826 )     21,939  
Total discontinued operations     (552 )     (594 )     (15,708 )     24,142  
                                 
Net income (loss)   $ 5,460     $ 5,062     $ 7,633     $ 43,524  
                                 
Weighted average number of shares outstanding,                                
   basic and diluted     82,937       82,937       82,937       81,857  
                                 
Earnings (loss) per share, basic and diluted, attributable to:                                
Continuing operations   $ 0.07     $ 0.07     $ 0.28     $ 0.24  
Discontinued operations           (0.01 )     (0.19 )     0.29  
Net income per share, basic and diluted   $ 0.07     $ 0.06     $ 0.09     $ 0.53  

 

 

 
- 6 -

Franklin Street Properties Corp. Financial Results

Supplementary Schedule B

Condensed Consolidated Balance Sheets

(Unaudited)

 

    December 31,  
(in thousands, except share and par value amounts)   2012     2011  
Assets:                
Real estate assets, net   $ 1,142,628     $ 991,225  
Acquired real estate leases, less accumulated amortization                
   of $40,062 and $31,189, respectively     111,982       91,613  
Investment in non-consolidated REITs     81,960       87,598  
Assets held for sale           15,355  
Cash and cash equivalents     21,267       23,813  
Restricted cash     575       493  
Tenant rent receivables, less allowance for doubtful accounts                
   of $1,300 and $1,235, respectively     1,749       1,460  
Straight-line rent receivable, less allowance for doubtful accounts                
   of $135 and $135, respectively     35,441       28,502  
Prepaid expenses     1,106       1,223  
Related party mortgage loan receivables     93,896       140,516  
Other assets     12,655       4,070  
Office computers and furniture, net of accumulated depreciation                
   of $584 and $428, respectively     544       468  
Deferred leasing commissions, net of accumulated amortization                
   of $11,812 and $9,139, respectively     23,376       22,325  
Total assets   $ 1,527,179     $ 1,408,661  
                 
Liabilities and Stockholders’ Equity:                
Liabilities:                
Bank note payable   $ 216,750     $ 449,000  
Term loan payable     400,000        
Accounts payable and accrued expenses     31,122       26,446  
Accrued compensation     2,540       2,222  
Tenant security deposits     2,489       2,008  
Other liabilities: derivative liability     1,219        
Acquired unfavorable real estate leases, less accumulated amortization                
   of $4,870 and $3,759, respectively     8,310       7,618  
Total liabilities     662,430       487,294  
                 
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,
82,937,405 and 82,937,405 shares issued and outstanding, respectively
    8       8  
Additional paid-in capital     1,042,876       1,042,876  
Accumulated other comprehensive loss     (1,219 )      
Accumulated distributions in excess of accumulated earnings     (176,916 )     (121,517 )
   Total stockholders’ equity     864,749       921,367  
   Total liabilities and stockholders’ equity   $ 1,527,179     $ 1,408,661  

 

 
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Franklin Street Properties Corp. Financial Results

Supplementary Schedule C

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

    For the Year Ended December 31,  
(in thousands)   2012     2011  
Cash flows from operating activities:                
Net income   $ 7,633     $ 43,524  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization expense     57,500       50,261  
Amortization of above market lease     71       (47 )
Gain (loss) on sale, less applicable income tax     14,826       (21,939 )
Equity in earnings of non-consolidated REITs     (2,033 )     (3,086 )
Distributions from non-consolidated REITs     705       3,474  
Increase (decrease) in bad debt reserve     65       (365 )
Changes in operating assets and liabilities:                
Restricted cash     (82 )     (73 )
Tenant rent receivables     (354 )     827  
Straight-line rents     (4,464 )     (9,878 )
Lease acquisition costs     (2,520 )      
Prepaid expenses and other assets     (328 )     1,611  
Accounts payable, accrued expenses and other items     3,717       4,213  
Accrued compensation     318       419  
Tenant security deposits     481       78  
Payment of deferred leasing commissions     (5,179 )     (8,058 )
Net cash provided by operating activities     70,356       60,961  
Cash flows from investing activities:                
Purchase of real estate assets, office computers and furniture     (183,868 )     (174,020 )
Acquired real estate leases     (37,302 )     (62,230 )
Investment in non-consolidated REITs     (1 )     (10 )
Distributions in excess of earnings from non-consolidated REITs     2,105       1,582  
Investment in related party mortgage loan receivable     (74,580 )     (82,832 )
Repayment of related party mortgage loan receivable     121,200        
Changes in deposits on real estate assets           200  
Investment in assets held for syndication           2,230  
Proceeds received on sales of real estate assets     157       96,790  
Net cash used in investing activities     (172,289 )     (218,290 )
Cash flows from financing activities:                
Distributions to stockholders     (63,032 )     (62,177 )
Proceeds from equity offering           18,001  
Offering costs           (706 )
Borrowings under bank note payable     294,750       449,000  
Repayments of bank note payable     (527,000 )     (209,968 )
Borrowing (repayment) of term loan payable     400,000       (74,850 )
Deferred financing costs     (5,331 )     (5,388 )
Swap termination payment           (983 )
Net cash provided by financing activities     99,387       112,929  
Net increase (decrease) in cash and cash equivalents     (2,546 )     (44,400 )
Cash and cash equivalents, beginning of year     23,813       68,213  
Cash and cash equivalents, end of year   $ 21,267     $ 23,813  

 

 

 
- 8 -

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
2013   278,946 3.6%
2014   417,721 5.3%
2015   1,074,381 13.7%
2016   1,099,491 14.0%
2017   876,268 11.2%
Thereafter (2)   4,107,872 52.2%
    7,854,679 100.0%

 

 

(1) Percentages are determined based upon square footage of expiring commercial leases.
(2) Includes 472,776 square feet of current vacancies.

 

 

(dollars & square feet in 000's) As of December 31, 2012
  # of   % of   Square % of
State Properties Investment Portfolio   Feet Portfolio
             
Texas 11 $ 421,397 36.9%   2,657 33.8%
Colorado 4 122,335 10.7%   788 10.0%
Georgia 2 107,725 9.4%   774 9.9%
Virginia 4 99,295 8.7%   685 8.7%
Minnesota 2 39,899 3.5%   628 8.0%
Missouri 3 66,083 5.8%   477 6.1%
North Carolina 3 67,032 5.9%   431 5.5%
Illinois 2 49,869 4.3%   372 4.7%
Maryland 1 53,377 4.7%   326 4.2%
Florida 1 45,569 4.0%   213 2.7%
Indiana 1 34,777 3.0%   205 2.6%
California 2 21,444 1.9%   182 2.3%
Washington 1 13,826 1.2%   117 1.5%
  37 $ 1,142,628 100.0%   7,855 100.0%

 

 

 
- 9 -

 

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule E

Portfolio and Other Supplementary Information

(Unaudited & Approximated)

 

Capital Expenditures      
Owned Portfolio Year Ended
(in thousands) 31-Dec-12   31-Dec-11
       
Tenant improvements $ 13,037   $ 19,032
Deferred leasing costs 7,427   8,058
Building improvements 3,712   2,826
  $ 24,176   $ 29,916

 

 

Square foot & leased percentages December 31, December 31,
    2012   2011
         
Owned portfolio of commercial real estate (a)      
  Number of properties 37   36
  Square feet 7,854,679   7,052,068
  Leased percentage 94%   89%
         
Investments in non-consolidated REITs (b)      
  Number of properties 2   3
  Square feet 1,392,316   2,001,542
  Leased percentage 65%   87%
         
Single Asset REITs (SARs) managed      
  Number of properties 13   13
  Square feet 3,323,566   3,322,639
  Leased percentage 87%   80%
         
Total owned, investments & managed properties (a)      
  Number of properties 52   52
  Square feet 12,570,561   12,376,249
  Leased percentage 89%   86%
         
(a) 2011 Includes asset sold in 2012.    
(b) 2011 Includes FSP Phoenix Tower Corp., which was sold in 2012.    

 

 

The following table shows property information for our investments in non-consolidated REITs:

 

      Square % Leased % Interest
Single Asset REIT name City State Feet 31-Dec-12 Held
FSP 303 East Wacker Drive Corp. Chicago IL 857,245 55.7% 43.7%
FSP Grand Boulevard Corp. Kansas City MO 535,071 80.5% 27.0%
      1,392,316 65.2%  

 

 
- 10 -

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule F: Quarterly Information

(Unaudited)

 

(in thousands)                              
    Q1     Q2     Q3     Q4     Annual  
Revenue:   2012     2012     2012     2012     2012  
Rental   $ 36,303     $ 35,570     $ 38,251     $ 41,532     $ 151,656  
Related party revenue:                                        
Management fees and interest income from loans     2,616       3,045       3,485       1,801       10,947  
Other     34       39       39       87       199  
Total revenues     38,953       38,654       41,775       43,420       162,802  
Expenses:                                        
Real estate operating expenses     8,697       8,604       9,639       10,501       37,441  
Real estate taxes and insurance     5,696       5,493       5,764       5,960       22,913  
Depreciation and amortization     13,071       13,004       13,572       15,225       54,872  
Selling, general and administrative     2,077       2,236       3,141       2,462       9,916  
Interest     3,677       4,037       4,187       4,167       16,068  
Total expenses     33,218       33,374       36,303       38,315       141,210  
                                         
Income before interest income, equity in earnings of non-consolidated REITs and taxes on income     5,735       5,280       5,472       5,105       21,592  
Interest income     8       4       5       34       51  
Equity in earnings of non-consolidated REITs     391       494       176       972     2,033  
                                         
Income before taxes on income     6,134       5,778       5,653       6,111       23,676  
Taxes on income     79       77       80       99       335  
                                         
Income from continuing operations     6,055       5,701       5,573       6,012       23,341  
Discontinued operations:                                        
Income from discontinued operations, net of tax     (317 )     (268 )     (271 )     (26 )     (882 )
Gain (loss) on sale, less applicable income tax                 (14,300 )     (526 )     (14,826 )
Total discontinued operations     (317 )     (268 )     (14,571 )     (552 )     15,708
                                         
Net income   $ 5,738     $ 5,433     $ (8,998 )   $ 5,460     $ 7,633  
                                         
                                         
FFO calculations:                                        
                                         
Net income   $ 5,738     $ 5,433     $ (8,998 )   $ 5,460     $ 7,633  
Gain (loss) on sale, less applicable income tax                 14,300       526     14,826  
GAAP income from non-consolidated REITs     (391 )     (494 )     (176 )     (972 )     (2,033 )
Distributions from non-consolidated REITs     929       898       907       76       2,810  
Acquisition costs                 101       186       287  
Depreciation of real estate & intangible amortization     13,295       13,205       13,779       15,239       55,518  
                                         
Funds From Operations (FFO)   $ 19,571     $ 19,042     $ 19,913     $ 20,515     $ 79,041  

 

 
- 11 -

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule G

Percentage of Leased Space

(Unaudited & Estimated)

 

        % Third % Fourth
        Leased (1) Quarter Leased (1) Quarter
      Square as of Average % as of Average %
  Property Name Location Feet 30-Sep-12 Leased (2) 31-Dec-12 Leased (2)
               
1 PARK SENECA Charlotte, NC 109,406 77.3% 78.2% 79.3% 79.4%
2 HILLVIEW CENTER Milpitas, CA 36,288 100.0% 100.0% 100.0% 100.0%
3 FOREST PARK Charlotte, NC 62,212 100.0% 100.0% 100.0% 100.0%
4 CENTENNIAL Colorado Springs, CO 110,405 85.4% 85.4% 85.4% 85.4%
5 MEADOW POINT Chantilly, VA 138,537 100.0% 100.0% 100.0% 100.0%
6 TIMBERLAKE Chesterfield, MO 232,766 97.0% 97.0% 97.0% 97.0%
7 FEDERAL WAY Federal Way, WA 117,010 47.0% 47.0% 47.0% 47.0%
8 NORTHWEST POINT Elk Grove Village, IL 176,848 100.0% 100.0% 100.0% 100.0%
9 TIMBERLAKE EAST Chesterfield, MO 116,197 97.0% 97.0% 97.0% 97.0%
10 PARK TEN Houston, TX 155,715 96.1% 96.1% 96.1% 96.1%
11 MONTAGUE San Jose, CA 145,951 100.0% 100.0% 100.0% 100.0%
12 ADDISON Addison, TX 293,787 98.4% 96.7% 98.4% 98.4%
13 COLLINS CROSSING Richardson, TX 298,766 90.0% 88.5% 90.0% 90.0%
14 GREENWOOD PLAZA Englewood, CO 196,236 48.9% 48.9% 100.0% 83.0%
15 RIVER CROSSING Indianapolis, IN 205,059 97.0% 96.7% 92.2% 94.1%
16 LIBERTY PLAZA Addison, TX 218,934 85.2% 85.2% 81.7% 82.9%
17 INNSBROOK Glen Allen, VA 298,456 98.3% 98.3% 98.3% 98.3%
18 380 INTERLOCKEN Broomfield, CO 240,184 89.5% 89.5% 89.5% 89.5%
19 BLUE LAGOON Miami, FL 212,619 100.0% 100.0% 100.0% 100.0%
20 ELDRIDGE GREEN Houston, TX 248,399 100.0% 100.0% 100.0% 100.0%
21 WILLOW BEND Plano, TX 117,050 77.8% 77.8% 77.8% 77.8%
22 ONE OVERTON PARK Atlanta, GA 387,267 94.6% 94.6% 94.6% 94.6%
23 390 INTERLOCKEN Broomfield, CO 241,516 97.2% 97.2% 97.2% 97.2%
24 EAST BALTIMORE Baltimore, MD 325,445 57.2% 57.5% 77.3% 77.3%
25 PARK TEN PHASE II Houston, TX 156,746 100.0% 100.0% 100.0% 100.0%
26 LAKESIDE CROSSING I Maryland Heights, MO 127,778 100.0% 100.0% 100.0% 100.0%
27 LOUDOUN TECH Dulles, VA 135,888 100.0% 100.0% 100.0% 100.0%
28 4807 STONECROFT Chantilly, VA 111,469 100.0% 100.0% 100.0% 100.0%
29 EDEN BLUFF Eden Prairie, MN 153,028 100.0% 100.0% 100.0% 100.0%
30 121 SOUTH EIGHTH ST Minneapolis, MN 475,303 91.1% 92.6% 90.6% 90.8%
31 EMPEROR BOULEVARD Durham, NC 259,531 100.0% 100.0% 100.0% 100.0%
32 LEGACY TENNYSON CTR Plano, TX 202,600 100.0% 100.0% 100.0% 100.0%
33 ONE LEGACY Plano, TX 214,110 100.0% 100.0% 100.0% 100.0%
34 909 DAVIS Evanston, IL 195,245 97.9% 96.9% 97.9% 97.9%
35 1410 EAST RENNER Richardson, TX 122,300 100.0% 100.0% 100.0% 100.0%
36 ONE RAVINIA DRIVE Atlanta, GA 386,603 84.5% 84.0% 91.0% 86.6%
37 WESTCHASE I & II Houston, TX 629,025 n/a n/a 96.3% 96.3%
               
  TOTAL WEIGHTED AVERAGE (3) 7,854,679 89.9% 89.8% 94.0% 92.4%

 

(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 3 months during the quarter.

(3) Third & Fourth Quarter Total Weighted Averages include asset sold in December 2012 located in Southfield, Michigan with 214,697 sf

 

 
- 12 -

 

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule H

Largest 20 Tenants – FSP Owned Portfolio

(Unaudited & Estimated)

 

 

The following table includes the largest 20 tenants in FSP’s owned portfolio based on leased square feet:

 

  As of December 31, 2012      
        % of
  Tenant Sq Ft SIC Code Portfolio
1 TCF National Bank 268,252 60 3.4%
2 Quintiles Transnational Corp 259,531 87 3.3%
3 CITGO Petroleum Corporation 248,399 29 3.2%
4 Burger King Corporation 212,619 58 2.7%
5 Denbury Onshore LLC 202,600 13 2.6%
6 RGA Reinsurance Company 197,354 63 2.5%
7 SunTrust Bank 182,888 60 2.3%
8 Citicorp Credit Services, Inc 176,848 61 2.3%
9 C.H. Robinson Worldwide, Inc 153,028 47 1.9%
10 T-Mobile South, LLC dba T-Mobile 151,792 48 1.9%
11 Houghton Mifflin Harcourt Publishing Company 150,050 27 1.9%
12 Petrobras America, Inc. 144,813 13 1.8%
13 Murphy Exploration & Production Company 144,677 13 1.8%
14 Giesecke & Devrient America, Inc. 135,888 73 1.7%
15 Monsanto Company 127,778 28 1.6%
16 Federal National Mortgage Association 123,144 61 1.6%
17 AT&T Services, Inc. 122,300 48 1.6%
18 Vail Holdings, Inc. 122,232 79 1.6%
19 Kaiser Foundation Health Plan, Inc. 120,979 64 1.5%
20 Northrop Grumman Systems Corporation 111,469 73 1.5%
  Total 3,356,641   42.7%
         
  (a) Based on rentable square footage      

 

 

 

 

 
- 13 -

Franklin Street Properties Corp. Earnings Release

Supplementary Schedule I

Definition of 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 (computed in accordance with GAAP), excluding gains (or losses) from sales of property and acquisition costs of newly acquired properties that are not capitalized, plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges, and after adjustments to exclude non-cash income (or losses) from non-consolidated or Sponsored REITs, plus distributions received from non-consolidated or Sponsored REITs.

 

FFO should not be considered as an alternative to net income (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 definition in our 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 and cash flows from operating, investing and financing activities in the consolidated financial statements.

Exhibit 99.2

 

 

 

   

Supplemental Operating
and Financial Data

Fourth Quarter 2012

 

 

 

Franklin Street Properties Corp. ● 401 Edgewater Place ● Wakefield, MA 01880 ● (781) 557-1300

 

www.franklinstreetproperties.com

 

 
 
 
 
      Table of Contents

 

  Page     Page
         
Company Overview 3   Tenant Analysis and Leasing Activity  
      20 Largest Tenants, Industry Profile 18
Key Financial Data     20 Largest Tenants with Annualized Rent and Remaining Term 19
Financial Highlights 4   Leasing Activity 20
Income Statements 5   Lease Expirations by Square Feet 21
Balance Sheets 6   Lease Expirations with Annualized Rent per Square Foot 22
Cash Flow Statements 7   Capital Expenditures 23
Property Net Operating Income (NOI) 8      
      Transaction Activity 24
Reconciliation        
FFO & FAD 9   Loan Portfolio of Secured Real Estate 25
EBITDA 10      
Property NOI 11   Net Asset Value Components 26
         
Debt Summary 12   Appendix: Definitions of Non-GAAP Measures  
      FFO 27
Capital Analysis 13   EBITDA and FAD 28
      NOI 29
Owned and Managed Portfolio Overview 14-17      

 

All financial information contained in this supplemental information package is unaudited. In addition, certain statements contained in this supplemental information package may be deemed to be forward-looking statements within the meaning of the federal securities laws. Although FSP believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Factors that could cause actual results to differ materially from FSP’s current expectations include general economic conditions, local real estate conditions, the performance of properties that FSP has acquired or may acquire, the timely lease-up of properties and other risks, detailed from time to time in FSP’s SEC reports. FSP assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

 

December 31, 2012
  2
 
 
 
      Company Overview

 

Overview

Franklin Street Properties Corp. (“FSP”, “we”, “our” or the “Company”) (NYSE MKT: FSP) is an investment firm focused on achieving current income and long-term growth through investments in commercial properties. FSP’s portfolio of real estate assets consists primarily of suburban office buildings and includes select investments in central business district (CBD) properties. FSP’s real estate operations include property acquisitions and dispositions, short-term financing, leasing, development and asset management. FSP’s subsidiary, FSP Investments LLC (member, FINRA and SIPC), is a real estate investment banking firm and registered broker/dealer that previously sponsored the organization of single-purpose entities that own real estate and the private placement of equity in those entities, which we refer to as “Sponsored REITs”.

 

Our Business

As of December 31, 2012, the Company owned and operated a portfolio of real estate consisting of 37 properties, managed 15 Sponsored REITs and held eight promissory notes secured by mortgages on real estate owned by Sponsored REITs. From time-to-time, the Company may acquire real estate, make additional secured loans or acquire one of its Sponsored REITs. The Company may also pursue, on a selective basis, the sale of its properties in order to take advantage of the value creation and demand for its properties, or for geographic or property specific reasons.

 

Management Team      
       
George J. Carter     Scott H. Carter
President, Chief Executive Officer     Executive Vice President, General
Chairman of the Board     Counsel and Assistant Secretary
       
Barbara J. Fournier     Jeffrey B. Carter
Executive Vice President, Chief Operating Officer,     Executive Vice President and
Treasurer, Secretary and Director     Chief Investment Officer
       
Janet Notopoulos     John G. Demeritt
Executive Vice President and Director     Executive Vice President and
      Chief Financial Officer

 

Inquiries

 

Inquires should be directed to: John Demerritt, CFO

877-686-9496 or InvestorRelations@franklinstreetproperties.com

 

Snapshot (as of December 31, 2012)  
Corporate Headquarters Wakefield, MA
Fiscal Year-End 31-Dec
Total Properties 37
Total Square Feet 7.9 Million
Trading Symbol FSP
Exchange NYSE MKT
Common Shares Outstanding 82,937,405
Quarterly Dividend $0.19
Dividend Yield 6.2%
Total Market Capitalization $1.6 Billion
Insider Holdings 12.1%
   

 

 

December 31, 2012
3
 
 
 
      Summary of Financial Highlights
(in thousands, except per share data)

 

(in thousands except per share amounts, SF & number of properties)   For the Three Months Ended  
    31-Dec-12     30-Sep-12     30-Jun-12     31-Mar-12     31-Dec-11     30-Sep-11  
Income Items:                                                
Rental revenue   $ 41,532     $ 38,251     $ 35,571     $ 36,303     $ 36,744     $ 33,398  
Total revenue     43,420       41,775       38,655       38,953       37,824       34,442  
Adjusted EBITDA*     23,909       23,348       22,752       22,789       21,653       19,132  
Equity in earnings in non-consolidated REITs     2,033     176       494       391       978       573  
Net income     5,460       (8,998 )     5,433       5,738       5,062       3,314  
FFO*     20,515       19,913       19,042       19,571       18,459       16,362  
                                                 
Per Share Data:                                                
EPS   $ 0.07     $ (0.11 )   $ 0.07     $ 0.07     $ 0.06     $ 0.04  
FFO*   $ 0.25     $ 0.24     $ 0.23     $ 0.24     $ 0.22     $ 0.20  
Weighted Average Shares (diluted)     82,937       82,937       82,937       82,937       82,937       82,937  
Closing share price   $ 12.31     $ 11.07     $ 10.58     $ 10.60     $ 9.95     $ 11.31  
Dividend   $ 0.19     $ 0.19     $ 0.19     $ 0.19     $ 0.19     $ 0.19  
Payout Ratio:     77%       79%       83%       81%       85%       96%  
                                                 
Balance Sheet Items:                                                
Real estate, net   $ 1,142,628     $ 1,015,984     $ 982,685     $ 987,003     $ 991,225     $ 982,143  
Other assets, net     384,551       379,950       447,678       451,525       417,436       363,641  
Total assets, net     1,527,179       1,395,934       1,430,363       1,438,528       1,408,661       1,345,784  
Total liabilities, net     662,430       521,338       529,340       527,181       487,294       413,784  
Shareholders' equity     864,749       874,596       901,023       911,347       921,367       932,000  
                                                 
Market Capitalization and Debt:                                                
Total Market Capitalization (a)   $ 1,637,709     $ 1,400,117     $ 1,371,478     $ 1,373,136     $ 1,274,227     $ 1,313,022  
Total debt outstanding     616,750       482,000       494,000       494,000       449,000       375,000  
Debt to Total Market Capitalization     37.7%       34.4%       36.0%       36.0%       35.2%       28.6%  
Debt to Adjusted EBITDA     25.8       20.6       21.7       21.7       20.7       19.6  
                                                 
Owned Portfolio Leasing Statistics:                                                
Owned portfolio assets     37       37       36       36       36       35  
Portfolio total SF     7,854,679       7,439,195       7,052,592       7,052,068       7,052,068       6,929,891  
Portfolio % leased     94%       90%       90%       89%       89%       88%  

 

(a) Total Market Capitalization is the closing share price multilplied by the number of shares outstanding plus total debt outstanding on that date.

* See pages 9 & 10 for reconciliations of Net Income to FFO and Adjusted EBITDA, respectively, and the Appendix for Defintions of these Non-GAAP Measures beginning on page 27.

 

December 31, 2012
4
 
 
 
      Condensed Consolidated Income Statements
($ in thousands, except per share amounts)

 

                            For the                             For the  
    For the Three Months Ended     Year Ended     For the Three Months Ended     Year Ended  
    31-Mar-12     30-Jun-12     30-Sep-12     31-Dec-12     31-Dec-12     31-Mar-11     30-Jun-11     30-Sep-11     31-Dec-11     31-Dec-11  
                                                             
Revenue:                                                                                
Rental   $ 36,303     $ 35,570     $ 38,251     $ 41,532     $ 151,656     $ 30,766     $ 33,330     $ 33,398     $ 36,744     $ 134,238  
Related party revenue:                                                                                
Management fees and interest income from loans     2,616       3,045       3,485       1,801       10,947       808       1,150       1,037       1,051       4,046  
Other     34       39       39       87       199       6       7       7       29       49  
Total revenue     38,953       38,654       41,775       43,420       162,802       31,580       34,487       34,442       37,824       138,333  
                                                                                 
Expenses:                                                                                
Real estate operating expenses     8,697       8,604       9,639       10,501       37,441       8,341       8,360       8,889       9,486       35,076  
Real estate taxes and insurance     5,696       5,493       5,764       5,960       22,913       4,655       5,152       4,950       5,357       20,114  
Depreciation and amortization     13,071       13,004       13,572       15,225       54,872       10,613       11,875       12,183       12,951       47,622  
Selling, general and administrative     2,077       2,236       3,141       2,462       9,916       1,645       1,602       1,654       2,012       6,913  
Interest     3,677       4,037       4,187       4,167       16,068       2,408       3,578       3,419       3,261       12,666  
Total expenses     33,218       33,374       36,303       38,315       141,210       27,662       30,567       31,095       33,067       122,391  
                                                                                 
Income before interest income, equity in earnings of non-consolidated REITs and taxes     5,735       5,280       5,472       5,105       21,592       3,918       3,920       3,347       4,757       15,942  
Interest income     8       4       5       34       51       11       5       3       3       22  
Equity in earnings of non-consolidated REITs     391       494       176       972     2,033       968       1,166       573       978       3,685  
                                                                                 
Income before taxes on income     6,134       5,778       5,653       6,111       23,676       4,897       5,091       3,923       5,738       19,649  
Income tax expense     79       77       80       99       335       50       68       67       82       267  
                                                                                 
Income from continuing operations     6,055       5,701       5,573       6,012       23,341       4,847       5,023       3,856       5,656       19,382  
Income from discontinued operations     (317 )     (268 )     (271 )     (26 )     (882 )     327       3,012       (542 )     (594 )     2,203  
Gain (loss) on sale, less applicable income tax                 (14,300 )     (526 )     (14,826 )     19,593       2,346                   21,939  
                                                                                 
Net income   $ 5,738     $ 5,433     $ (8,998 )   $ 5,460     $ 7,633     $ 24,767     $ 10,381     $ 3,314     $ 5,062     $ 43,524  
                                                                                 
Weighted average number of shares outstanding, basic and diluted     82,937       82,937       82,937       82,937       82,937       81,437       81,437       81,600       82,937       81,857  
                                                                                 
Earnings per share, basic and diluted, attributable to:                                                                                
Continuing operations   $ 0.07     $ 0.07     $ 0.07     $ 0.07     $ 0.28     $ 0.06     $ 0.06     $ 0.05     $ 0.07     $ 0.24  
Discontinued operations                           (0.01 )           0.04       (0.01 )     (0.01 )     0.02  
Gain (loss) on less applicable income tax                 (0.18 )           (0.18 )     0.24       0.03                   0.27  
Net income per share, basic and diluted   $ 0.07     $ 0.07     $ (0.11 )   $ 0.07     $ 0.09     $ 0.30     $ 0.13     $ 0.04     $ 0.06     $ 0.53  

 

December 31, 2012
  5
 
 
 
      Condensed Consolidated Balance Sheets
(in thousands)

 

    March 31,     June 30,     September 30,     December 31,     December 31,  
    2012     2012     2012     2012     2011  
Assets:                                        
Real estate assets:                                        
Land   $ 132,393     $ 132,393     $ 135,845     $ 144,336     $ 132,393  
Buildings and improvements     1,009,706       1,013,122       1,051,111       1,178,144       1,006,267  
Fixtures and equipment     860       871       904       904       831  
      1,142,959       1,146,386       1,187,860       1,323,384       1,139,491  
Less accumulated depreciation     155,956       163,701       171,876       180,756       148,266  
Real estate assets, net     987,003       982,685       1,015,984       1,142,628       991,225  
                                         
Acquired real estate leases, net     87,073       82,769       92,717       111,982       91,613  
Investment in non-consolidated REITs     87,061       86,658       85,927       81,960       87,598  
Assets held for syndication, net                              
Assets held for sale     15,215       15,032       685             15,355  
Cash and cash equivalents     29,283       22,620       23,962       21,267       23,813  
Restricted cash     511       533       546       575       493  
Tenant rent receivables, net     1,090       1,403       1,182       1,749       1,460  
Straight-line rent receivable, net     31,861       33,048       34,190       35,441       28,502  
Prepaid expenses     1,164       2,605       2,336       1,106       1,223  
Related party mortgage loan receivable     172,286       177,536       108,236       93,896       140,516  
Other assets     4,006       3,640       8,467       13,199       4,538  
Deferred leasing commissions, net     21,975       21,834       21,702       23,376       22,325  
Total assets   $ 1,438,528     $ 1,430,363     $ 1,395,934     $ 1,527,179     $ 1,408,661  
                                         
Liabilities and Stockholders’ Equity:                                        
Liabilities:                                        
Bank note payable   $ 494,000     $ 494,000     $ 82,000     $ 216,750     $ 449,000  
Term loan payable                 400,000       400,000        
Accounts payable and accrued expenses     23,311       25,408       26,462       31,122       26,446  
Accrued compensation     446       944       2,194       2,540       2,222  
Tenant security deposits     2,181       2,113       2,281       2,489       2,008  
Other liabilities: derivative liability                 1,671       1,219        
Acquired unfavorable real estate leases, net     7,243       6,875       6,730       8,310       7,618  
Total liabilities     527,181       529,340       521,338       662,430       487,294  
                                         
Commitments and contingencies                                        
                                         
Stockholders’ Equity:                                        
Preferred stock                              
Common stock     8       8       8       8       8  
Additional paid-in capital     1,042,876       1,042,876       1,042,876       1,042,876       1,042,876  
Accumulated other comprehensive loss                 (1,671 )     (1,219 )      
Accumulated distributions in excess of accumulated earnings     (131,537 )     (141,861 )     (166,617 )     (176,916 )     (121,517 )
Total stockholders’ equity     911,347       901,023       874,596       864,749       921,367  
Total liabilities and stockholders’ equity   $ 1,438,528     $ 1,430,363     $ 1,395,934     $ 1,527,179     $ 1,408,661  

 

December 31, 2012
 6
 
 
 
      Condensed Consolidated Statements of Cash Flows
(in thousands)

 

    Twelve Months ended December 31  
    2012     2011     2010  
                   
Cash flows from operating activities:                        
Net income   $ 7,633     $ 43,524     $ 22,093  
Adjustments to reconcile net income to net cash provided by operating activities:                        
Depreciation and amortization expense     57,500       50,261       39,627  
Amortization of above market lease     71       (47 )     1,362  
Gain (loss) on sale, less applicable income tax     14,826       (21,939 )      
Equity in earnings (losses) from non-consolidated REITs     (2,033 )     (3,086 )     (1,183 )
Distributions from non-consolidated REITs     705       3,474       1,633  
Increase in bad debt reserve     65       (365 )     980  
Changes in operating assets and liabilities:                        
Restricted cash     (82 )     (73 )     (86 )
Tenant rent receivables     (354 )     827       (1,120 )
Straight-line rents     (4,464 )     (9,878 )     (4,249 )
Lease acquisition costs     (2,520 )            
Prepaid expenses and other assets     (328 )     1,611       865  
Accounts payable and accrued expenses     3,717       4,213       (351 )
Accrued compensation     318       419       387  
Tenant security deposits     481       78       122  
Payment of deferred leasing commissions     (5,179 )     (8,058 )     (10,515 )
                         
Net cash provided by operating activities     70,356       60,961       49,565  
                         
Cash flows from investing activities:                        
Purchase of real estate assets, office computers and furniture, capitalized merger costs and acquired real estate leases     (221,170 )     (236,250 )     (54,344 )
Investment in non-consolidated REITs     (1 )     (10 )     (11 )
Distributions in excess of earnings from non-consolidated REITs     2,105       1,582       3,537  
Investment in related party mortgage loan receivable     (74,580 )     (82,832 )     (21,149 )
Repayment of related party mortgage loan receivable     121,200              
Changes in deposits on real estate assets           200       (200 )
Investment in assets held for syndication, net           2,230       1,319  
Proceeds received on sales of real estate assets     157       96,790        
                         
Net cash used in investing activities     (172,289 )     (218,290 )     (70,848 )
                         
Cash flows from financing activities:                        
Distributions to stockholders     (63,032 )     (62,177 )     (60,586 )
Proceeds (costs) from equity offering, net           17,295       21,868  
Borrowings under bank note payable     294,750       449,000        
Borrowings (repayments) under Revolver     (527,000 )     (209,968 )     100,960  
Borrowing (repayment) of term loan payable, net     400,000       (74,850 )     (150 )
Deferred Financing Costs     (5,331 )     (5,388 )      
Swap termination payment           (983 )      
                         
Net cash provided by (used in) financing activities     99,387       112,929       62,092  
                         
Net decreases in cash and cash equivalents     (2,546 )     (44,400 )     40,809  
                         
Cash and cash equivalents, beginning of period     23,813       68,213       27,404  
                         
Cash and cash equivalents, end of period   $ 21,267     $ 23,813     $ 68,213  

 

December 31, 2012
 7
 
 
 
      Property Net Operating Income (NOI)*
with Same Store comparison
(in thousands)

 

  Net Operating Income (NOI)*
(in thousands) Rentable           Year           Year    
  Square Feet   Three Months Ended: Ended   Three Months Ended: Ended Inc %
Region or RSF   31-Mar-12 30-Jun-12 30-Sep-12 31-Dec-12 31-Dec-12   31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Dec-11 (Dec) Change
East 1,181   $ 3,479 $ 3,094 $ 3,165 $ 3,095 $ 12,833   $ 3,019 $ 2,735 $ 2,801 $ 3,530 $ 12,085 $ 748 6.2%
MidWest 1,487   4,166 4,031 4,078 4,043 16,318   4,597 4,217 4,428 4,195 17,437 (1,119) -6.4%
South 2,089   6,901 6,725 7,152 6,788 27,566   5,886 6,756 6,439 6,586 25,667 1,899 7.4%
West 1,088   2,278 2,443 2,428 2,788 9,937   1,718 2,293 2,095 2,548 8,654 1,283 14.8%
Same Store 5,845   16,824 16,293 16,823 16,714 66,654   15,220 16,001 15,763 16,859 63,843 2,811 4.4%
                               
Acquisitions 2,010   4,901 4,868 5,755 7,975 23,499   807 3,513 3,488 4,738 12,546 10,953 13.6%
Property NOI from the continuing portfolio 7,855   21,725 21,161 22,578 24,689 90,153   16,027 19,514 19,251 21,597 76,389 13,764 18.0%
Dispositions     (132) (47) (101) (26) (306)   336 (72) (236) (175) (147) (159) -0.2%
Property NOI     $ 21,593 $ 21,114 $ 22,477 $ 24,663 $ 89,847   $ 16,363 $ 19,442 $ 19,015 $ 21,422 $ 76,242 $ 13,605 17.8%
                               
Same Store     $ 16,824 $ 16,293 $ 16,823 $ 16,714 $ 66,654   $ 15,220 $ 16,001 $ 15,763 $ 16,859 $ 63,843 $ 2,811 4.4%
                               
Nonrecurring Items in                              
Property NOI (a)     599 21 307 - 927   1 - 169 1,096 1,266 (339) -0.6%
                               
Comparative                              
Same Store     $ 16,225 $ 16,272 $ 16,516 $ 16,714 $ 65,727   $ 15,219 $ 16,001 $ 15,594 $ 15,763 $ 62,577 $ 3,150 5.0%

 

(a) Nonrecurring Items in NOI include proceeds from bankruptcies, lease termination fees or other significant nonrecurring income or expenses, which may affect comparability.
* See page 11 for a reconciliation of Net Income to Property NOI and the Appendix for Definitions of Non-GAAP Measures beginning on page 27. Property NOI Excludes NOI from investments in and interest income from secured loans to non-consolidated REITs.

 

December 31, 2012
 8
 
 
 
      FFO & FAD Reconciliation
(in thousands, except per share amounts)

 

                            For the                             For the  
    For the Three Months Ended:     Year Ended     For the Three Months Ended:     Year Ended  
    31-Mar-12     30-Jun-12     30-Sep-12     31-Dec-12     31-Dec-12     31-Mar-11     30-Jun-11     30-Sep-11     31-Dec-11     31-Dec-12  
                                                             
Net income   $ 5,738     $ 5,433     $ (8,998 )   $ 5,460     $ 7,633     $ 24,767     $ 10,381     $ 3,314     $ 5,062     $ 43,524  
                                                                                 
Gain (loss) on sale, less applicable income tax                 14,300       526     14,826       (19,593 )     (2,346 )                 (21,939 )
GAAP income from non-consolidated REITs     (391 )     (494 )     (176 )     (972 )     (2,033 )     (1,773 )     (1,166 )     (573 )     (978 )     (4,490 )
Distributions from non-consolidated REITs     929       898       907       76       2,810       1,767       1,215       1,104       970       5,056  
Depreciation & amortization     13,295       13,205       13,779       15,239       55,518       10,812       12,047       12,332       13,248       48,439  
NAREIT FFO*     19,571       19,042       19,812       20,329       78,754       15,980       20,131       16,177       18,302       70,590  
Acquisition costs                 101       186       287       269       9       185       157       620  
Funds From Operations (FFO)*   $ 19,571     $ 19,042     $ 19,913     $ 20,515     $ 79,041     $ 16,249     $ 20,140     $ 16,362     $ 18,459     $ 71,210  
                                                                                 
                                                                                 
Funds Available for Distribution:                                                                                
Funds From Operations (FFO)*     19,571       19,042       19,913       20,515       79,041       16,249       20,140       16,362       18,459       71,210  
Straight-line rent     (1,517 )     (1,054 )     (927 )     (965 )     (4,463 )     (2,303 )     (2,873 )     (2,228 )     (2,474 )     (9,878 )
Capital expenditures     (746 )     (1,003 )     (711 )     (1,252 )     (3,712 )     (449 )     (876 )     (754 )     (747 )     (2,826 )
Funds Available for Distribution (FAD)*   $ 17,308     $ 16,985     $ 18,275     $ 18,298     $ 70,866     $ 13,497     $ 16,391     $ 13,380     $ 15,238     $ 58,506  
                                                                                 
Per Share Data:                                                                                
EPS   $ 0.07     $ 0.07     $ (0.11 )   $ 0.07     $ 0.09     $ 0.30     $ 0.13     $ 0.04     $ 0.06     $ 0.53  
FFO*     0.24       0.23       0.24       0.25       0.95       0.20       0.25       0.20       0.23       0.87  
FAD*     0.21       0.20       0.22       0.22       0.85       0.17       0.20       0.16       0.19       0.71  
                                                                                 
Weighted Average Shares (basic and diluted)     82,937       82,937       82,937       82,937       82,937       81,437       81,437       81,600       81,600       81,857  

 

* See the Appendix for Definitions of these Non-GAAP Measures beginning on page 27.

 

December 31, 2012
  9
 
 
 
      EBITDA Reconciliation
(in thousands, except ratio amounts)

 

                            Year Ended                             Year Ended  
    For the three months ended:     31-Dec-12     For the three months ended:     31-Dec-11  
    31-Mar-12     30-Jun-12     30-Sep-12     31-Dec-12           31-Mar-11     30-Jun-11     30-Sep-11     31-Dec-11        
                                                             
Net income   $ 5,738     $ 5,433     $ (8,998 )   $ 5,460     $ 7,633     $ 24,767     $ 10,381     $ 3,314     $ 5,062     $ 43,524  
Interest expense     3,677       4,037       4,187       4,167       16,068       2,408       3,578       3,419       3,261       12,666  
Depreciation and amortization     13,295       13,205       13,779       15,239       55,518       10,812       12,047       12,332       13,248       48,439  
Income taxes     79       77       80       99       335       50       68       67       82       267  
EBITDA     22,789       22,752       9,048       24,965       79,554       38,037       26,074       19,132       21,653       104,896  
Excluding (gain) loss on sale, less applicable income tax                 14,300       526     14,826       (19,593 )                       (19,593 )
Adjusted EBITDA   $ 22,789     $ 22,752     $ 23,348     $ 25,491     $ 94,380     $ 18,444     $ 26,074     $ 19,132     $ 21,653     $ 85,303  
                                                                                 
Interest expense   $ 3,677     $ 4,037     $ 4,187     $ 4,167     $ 16,068     $ 2,408     $ 3,578     $ 3,419     $ 3,261     $ 12,666  
Scheduled principal payments (1)                                                            
Interest and scheduled principal payments   $ 3,677     $ 4,037     $ 4,187     $ 4,167     $ 16,068     $ 2,408     $ 3,578     $ 3,419     $ 3,261     $ 12,666  
                                                                                 
Interest coverage ratio     6.20       5.64       5.58       6.12       5.87       7.66       7.29       5.60       6.64       6.73  
                                                                                 
Debt service coverage ratio     6.20       5.64       5.58       6.12       5.87       7.66       7.29       5.60       6.64       6.73  

 

(1) Scheduled principal payments exclude repayment of our Term Loan on February 22, 2011 in its entirety.

 

* See the Appendix for Definitions of these Non-GAAP Measures beginning on page 27.

 

December 31, 2012
 10
 
 
 
      Reconciliation of Net Income to Property NOI*
(in thousands)

 

Reconciliation to Net income                                                            
                            Year                             Year  
    Three Months Ended:     Ended     Three Months Ended:     Ended  
    31-Mar-12     30-Jun-12     30-Sep-12     31-Dec-12     31-Dec-12     31-Mar-11     30-Jun-11     30-Sep-11     31-Dec-11     31-Dec-11  
Net Income   $ 5,738     $ 5,433     $ (8,998 )   $ 5,460     $ 7,633     $ 24,767     $ 10,381     $ 3,314     $ 5,062     $ 43,524  
Add (deduct):                                                                                
Discontinued operations     317       268       270       26       881       (326 )     (3,012 )     543       43       (2,752 )
Loss (gain) on sale                 14,300       526     14,826       (19,593 )     (2,346 )                 (21,939 )
Management fee income (before eliminations)     (488 )     (479 )     (562 )     (591 )     (2,120 )     (364 )     (428 )     (439 )     (563 )     (1,794 )
Depreciation and amortization     13,071       13,004       13,573       15,224       54,872       10,611       11,876       12,183       13,195       47,865  
Amortization of above/below market leases     40       (20 )     36       15       71       (39 )     (23 )     (57 )     72       (47 )
Selling, general and administrative     2,077       2,236       3,141       2,462       9,916       1,644       1,602       1,656       2,011       6,913  
Interest expense     3,677       4,037       4,187       4,167       16,068       2,408       3,578       3,419       3,260       12,665  
Interest income     (2,340 )     (2,774 )     (3,201 )     (1,533 )     (9,848 )     (600 )     (910 )     (790 )     (810 )     (3,110 )
Equity in earnings of nonconsolidated REITs     (391 )     (494 )     (176 )     (972 )     (2,033 )     (968 )     (1,166 )     (573 )     (978 )     (3,685 )
Non-property specific items, net     24       (50 )     8       (95 )     (113 )     (1,513 )     (38 )     (5 )     305       (1,251 )
                                                                                 
Property NOI from the continuing portfolio   $ 21,725     $ 21,161     $ 22,578     $ 24,689     $ 90,153     $ 16,027     $ 19,514     $ 19,251     $ 21,597     $ 76,389  
                                                                                 
Dispositions and asset held for sale     (132 )     (47 )     (101 )     (26 )     (306 )     336       (72 )     (236 )     (175 )     (147 )
Property NOI   $ 21,593     $ 21,114     $ 22,477     $ 24,663     $ 89,847     $ 16,363     $ 19,442     $ 19,015     $ 21,422     $ 76,242  

 

* See the Appendix for Definition of Non-GAAP Measures beginning on page 27.

 

December 31, 2012
 11
 
 
 
      Debt Summary as of December 31, 2012

 

                    (a)    
(dollars in thousands)       Maximum   Amount   Interest   Interest    
    Maturity   Amount   Drawn at   Rate   Rate at   Draw
2012 Credit Facility   Date   of Loan   31-Dec-12   Components   31-Dec-12   Fee (2)
                         
                         
2012 Revolver   27-Sep-16   $ 500,000   $ 216,750   L+1.45%   1.66%   0.3%
2012 Term Loan   27-Sep-17   400,000   400,000   0.75% + 1.45%   2.20%   0.3%
                         
        $ 900,000   $ 616,750       2.01%    

 

(a) Interest rate excludes amortization of deferred financing costs and facility fees, see notes below

 

On September 27, 2012, we entered into a new bank facility we call the 2012 Credit Facility for a total of $900 million, which is comprised of a line of credit that we can borrow up to $500 million on, which we call the 2012 Revolver and a term loan for $400 million that we call the 2012 Term Loan.

 

The total amount available under the 2012 Credit Facility is $900 million and is subject to a facility fee on the entire amount based on a leverage calculation in the related loan agreement. The facility fee can range between 20 bps and 40 bps depending on our leverage at quarter end. As of December 31, 2012 the facility fee was 30 bps based on our leverage ratio, or approximately $2.7 million per year.
The interest rate on the 2012 Revolver as of December 31, 2012 was 145 bps over the 30-Day LIBOR based on our leverage calculation. The interest rate spread can range between 135 bps and 190 bps over 30-Day LIBOR depending on our leverage at quarter end. As of December 31, 2012 the rate for the borrowing outstanding was 1.66%.
The LIBOR interest rate on the 2012 Term Loan was fixed with a 5-year interest swap at 75 bps and is priced at 145 bps over that rate based on our leverage ratio. The interest rate spread can range between 135 bps and 190 bps over 30-Day LIBOR depending on our leverage at quarter end. As of December 31, 2012 the rate for the 2012 Term Loan was 2.20%.
We incurred financing costs to close the 2012 Credit Facility and the 2011 Revolver that preceded it. These costs are deferred and amortized into interest expense during the term of the loans. The annual run rate for amortization to interest expense from deferred financing costs is approximately $1.7 million.
The 2012 Revolver can be extended for 1 year at the Company’s option upon payment of fees and includes an accordion feature that allows for up to $250 million of additional borrowing capacity subject to receipt of lender commitments and satisfaction of certain customary conditions.

 

December 31, 2012
 12
 
 
 
      Capital Analysis
(in thousands, except per share amounts)

 

    31-Mar-12     30-Jun-12     30-Sep-12     31-Dec-12     31-Mar-11     30-Jun-11     30-Sep-11     31-Dec-11  
Market Data:                                                                
Shares Outstanding     82,937       82,937       82,937       82,937       81,437       81,437       82,937       82,937  
Closing market price per share   $ 10.60     $ 10.58     $ 11.07     $ 12.31     $ 14.07     $ 12.91     $ 11.31     $ 9.95  
Market capitalization   $ 879,136     $ 877,478     $ 918,117     $ 1,020,959     $ 1,145,824     $ 1,051,357     $ 938,022     $ 825,227  
Total Debt     494,000       494,000       482,000       616,750       404,000       345,000       375,000       449,000  
Total Market Capitalization   $ 1,373,136     $ 1,371,478     $ 1,400,117     $ 1,637,709     $ 1,549,824     $ 1,396,357     $ 1,313,022     $ 1,274,227  
                                                                 
Dividend Data:                                                                
Total dividends paid   $ 15,758     $ 15,758     $ 15,758     $ 15,758     $ 15,473     $ 15,473     $ 15,473     $ 15,758  
Common dividend per share   $ 0.19     $ 0.19     $ 0.19     $ 0.19     $ 0.19     $ 0.19     $ 0.19     $ 0.19  
Quarterly dividend as a % of FFO*     80.5%       82.6%       79.2%       76.0%       95.0%       76.0%       95.0%       86.4%  
                                                                 
Liquidity:                                                                
Cash and cash equivalents   $ 29,283     $ 22,620     $ 23,962     $ 21,267     $ 49,488     $ 28,881     $ 44,047     $ 23,813  
Revolving credit facilities:                                                                
Gross potential available under current credit facilities     600,000       600,000       900,000       900,000       500,000       600,000       600,000       600,000  
Less:                                                                
Outstanding balance     (494,000 )     (494,000 )     (482,000 )     (616,750 )     (404,000 )     (345,000 )     (375,000 )     (449,000 )
Total Liquidity   $ 135,283     $ 128,620     $ 441,962     $ 304,517     $ 145,488     $ 283,881     $ 269,047     $ 174,813  

 

*See page 9 for a reconciliation of Net Income to FFO and the Appendix for Definitions of Non-GAAP Measures beginning on page 27.

 

December 31, 2012
 13
 
 
 
      Portfolio Overview

 

  For the Three Months Ended
  31-Dec-12 30-Sep-12 30-Jun-12 31-Mar-12 31-Dec-11
Owned portfolio of commercial real estate:          
Number of properties (a) 37 37 36 36 36
Square feet 7,854,679 7,439,195 7,052,592 7,052,068 7,052,068
Leased percentage 94% 90% 90% 89% 89%
           
Investments in non-consolidated          
commercial real estate:          
Number of properties (a) 2 3 3 3 3
Square feet 1,392,316 2,016,260 2,003,968 2,004,953 2,001,542
Leased percentage 65% 68% 89% 90% 87%
           
Single Asset REITs (SARs) managed:          
Number of properties 13 13 13 13 13
Square feet 3,323,566 3,322,589 3,322,589 3,322,570 3,322,639
Leased percentage 87% 85% 85% 84% 80%
           
Total owned (a) , investments          
and managed properties:          
Number of properties 52 53 52 52 52
Square feet 12,570,561 12,778,044 12,379,149 12,379,591 12,376,249
Leased percentage 89% 85% 89% 88% 86%

 

 

(a) Includes assets held for sale or sold in prior periods

 

December 31, 2012
  14
 
 
 
      Owned Portfolio Overview

 

      Square Percent Wtd Ave (a) GAAP (b)
MSA / Property Name City State Feet Leased Occupied Rent
             
East Region            
             
Baltimore            
East Baltimore Baltimore MD 325,445 77.3% 56.6% $ 26.12
             
Washington, D.C.            
Meadow Point Chantilly VA 138,537 100.0% 100.0% $ 26.56
Stonecroft Chantilly VA 111,469 100.0% 100.0% $ 37.74
Loudoun Tech Center Dulles VA 135,888 100.0% 100.0% $ 15.89
             
Richmond            
Innsbrook Glen Allen VA 298,456 98.3% 95.4% $ 17.41
             
Charlotte            
Park Seneca Charlotte NC 109,406 79.3% 77.8% $ 15.75
Forest Park Charlotte NC 62,212 100.0% 100.0% $ 13.27
             
Raleigh-Durham            
Emperor Boulevard Durham NC 259,531 100.0% 100.0% $ 34.72
             
East Region Total     1,440,944 92.9% 87.6% $ 24.56
             
Midwest Region            
             
Chicago            
Northwest Point Elk Grove Village IL 176,848 100.0% 100.0% $ 19.42
909 Davis Evanston IL 195,245 97.9% 95.1% $ 34.62
             
Indianapolis            
River Crossing Indianapolis IN 205,059 92.2% 92.1% $ 21.79
             
St. Louis            
Timberlake Chesterfield MO 232,766 97.0% 97.0% $ 21.25
Timberlake East Chesterfield MO 116,197 97.0% 90.7% $ 23.33
Lakeside Crossing Maryland Heights MO 127,778 100.0% 100.0% $ 24.17
             
Minneapolis            
Eden Bluff Eden Prairie MN 153,028 100.0% 100.0% $ 27.33
121 South 8th Street Minneapolis MN 475,303 90.6% 91.4% $ 15.22
             
Midwest Region Total     1,682,224 95.5% 95.0% $ 21.98

 

(a) Weighted Occupied Percentage for the year ended December 31, 2012

(b) Weighted Average GAAP Rent per Occupied Square Foot

 

December 31, 2012
 15
 
 
 
      Owned Portfolio Overview

 

      Square Percent Wtd Ave (a) GAAP (b)
MSA / Property Name City State Feet Leased Occupied Rent
             
South Region            
             
Dallas-Fort Worth            
Willow Bend Office Center Plano TX 117,050 77.8% 75.1% $ 20.80
Legacy Tennyson Center Plano TX 202,600 100.0% 100.0% $ 17.09
One Legacy Circle Plano TX 214,110 100.0% 100.0% $ 32.83
Addison Circle Addison TX 293,787 98.4% 95.8% $ 24.74
Collins Crossing Richardson TX 298,766 90.0% 87.2% $ 23.05
East Renner Road Richardson TX 122,300 100.0% 100.0% $ 9.99
Liberty Plaza Addison TX 218,934 81.7% 79.2% $ 19.01
             
Houston            
Park Ten Houston TX 155,715 96.1% 88.6% $ 27.00
Eldridge Green Houston TX 248,399 100.0% 100.0% $ 28.92
Park Ten Phase II Houston TX 156,746 100.0% 100.0% $ 29.06
Westchase I & II Houston TX 629,025 96.3% 94.7% $ 30.04
             
Miami-Ft. Lauderdale-West Palm Beach            
Blue Lagoon Drive Miami FL 212,619 100.0% 100.0% $ 24.34
             
Atlanta            
One Overton Place Atlanta GA 387,267 94.6% 92.1% $ 21.97
One Ravinia Atlanta GA 386,603 91.0% 83.6% $ 22.13
             
South Region Total     3,643,921 94.9% 92.6% $ 24.70
             
West Region            
             
Seattle            
Federal Way Federal Way WA 117,010 47.0% 46.3% $ 18.63
             
San Francisco-San Jose-Oakland            
Hillview Center Milpitas CA 36,288 100.0% 100.0% $ 14.52
Montague Business Center San Jose CA 145,951 100.0% 95.2% $ 15.43
             
Denver            
380 Interlocken Broomfield CO 240,184 89.5% 87.3% $ 26.57
Greenwood Plaza Englewood CO 196,236 100.0% 47.9% $ 19.96
390 Interlocken Broomfield CO 241,516 97.2% 96.0% $ 25.67
             
Colorado Springs            
Centennial Technology Center Colorado Springs CO 110,405 85.4% 82.3% $ 15.95
             
West Region Total     1,087,590 89.9% 78.7% $ 21.65
             
             
Total Owned     7,854,679 93.98% 90.26% $ 23.69

 

(a) Weighted Occupied Percentage for the year ended December 31, 2012

(b) Weighted Average GAAP Rent per Occupied Square Foot

 

December 31, 2012
  16
 
 
 
      Managed Portfolio Overview

 

MSA / Property Name City State Square Feet       City State Square Feet
                   
Columbia           Chicago      
1441 Main Street Columbia SC 264,857     East Wacker (a) Chicago IL 857,245
                   
Atlanta           Indianapolis      
Satellite Place Duluth GA 134,785     Monument Circle Indianapolis IN 213,609
                   
            St. Louis      
Dallas-Fort Worth           Lakeside Crossing II Maryland Heights MO 116,000
5601 Executive Drive Irving TX 152,121            
Galleria North Dallas TX 379,518     Minneapolis      
            505 Waterford Plymouth MN 256,367
Houston           50 South Tenth Street Minneapolis MN 498,768
Energy Tower I Houston TX 325,797            
            Kansas City      
Denver           Grand Boulevard (b) Kansas City MO 535,071
Highland Place Centennial CO 139,142            
385 Interlocken Broomfield CO 296,868     Cincinnati      
            Centre Pointe V West Chester OH 135,936
Subtotal     1,693,088     Union Centre West Chester OH 409,798
                   
            Subtotal     3,022,794
                   
            Total Managed     4,715,882
                   
            Total Owned & Managed   12,570,561

 

(a) FSP has a Preferred Share Interest of 43.7% in the entity that owns this property.
(b) FSP has a Preferred Share Interest of 27.0% in the entity that owns this property.

 

December 31, 2012
 17
 
 
 
      Tenant Analysis – 20 Largest Tenants by Industry Profile
(Top Twenty Largest Tenants by industry as a percentage of the Twenty Tenants
as of December 31, 2012)

 

 

 

 

December 31, 2012
  18
 
 
 
      20 Largest Tenants with Annualized Rent and
Remaining Term at December 31, 2012

 

      Remaining Aggregate % of Aggregate Annualized % of Aggregate
  Tenant Number of Lease Term Leased Leased Rent Leased
  Name Leases in Months Square Feet Square Feet (in 000's) Annualized Rent
               
1 TCF National Bank 2 36 268,252 3.4% $ 2,971,145 1.8%
2 Quintiles Transnational Corp. 1 75 259,531 3.3% 8,279,077 5.1%
3 CITGO Petroleum Corporation 1 110 248,399 3.2% 7,202,681 4.4%
4 Burger King Corporation 1 69 212,619 2.7% 4,465,755 2.8%
5 Denbury Onshore, LLC 2 43 202,600 2.6% 3,510,042 2.2%
6 RGA Reinsurance Company 2 24 197,354 2.5% 4,128,166 2.5%
7 SunTrust Bank 2 46, 105 182,888 2.3% 3,661,136 2.3%
8 Citicorp Credit Services, Inc 1 48 176,848 2.3% 3,511,335 2.2%
9 C.H. Robinson Worldwide, Inc 1 102 153,028 1.9% 4,064,622 2.5%
10 T-Mobile South, LLC dba T-Mobile 1 74 151,792 1.9% 3,610,093 2.2%
11 Houghton Mifflin Harcourt Publishing Company 1 51 150,050 1.9% 5,696,915 3.5%
12 Petrobras America, Inc. 1 83 144,813 1.8% 4,855,533 3.0%
13 Murphy Exploration & Production Company 1 52 144,677 1.8% 4,242,011 2.6%
14 Giesecke & Devrient America, Inc. 1 26 135,888 1.7% 1,842,083 1.1%
15 Monsanto Company 1 25 127,778 1.6% 3,308,333 2.0%
16 Federal National Mortgage Association 1 45 123,144 1.6% 2,741,014 1.7%
17 AT&T Services, Inc. 1 66 122,300 1.6% 977,989 0.6%
18 Vail Holdings, Inc. 1 75, 123 122,232 1.6% 3,415,267 2.1%
19 Kaiser Foundation Health Plan, Inc. (1) 1 135 120,979 1.5% - 0.0%
20 Northrop Grumman Systems Corporation 1 64 111,469 1.5% 4,260,211 2.6%
               
      Total 3,356,641 42.7% $ 76,743,408 47.2%

 

(1) Lease will become rent-producing in 2013

 

December 31, 2012
 19
 
 
 
      Leasing Activity

 

    Six Three Nine Three  
    Months Months Months Months Year
    Ended Ended Ended Ended Ended
Leaasing Activity   30-Jun-12 30-Sep-12 30-Sep-12 31-Dec-12 31-Dec-12
(in Square Feet - SF)            
New leasing   88,402 37,505 125,907 189,833 315,740
Renewals   294,779 100,888 395,667 305,171 700,838
    383,181 138,393 521,574 495,004 1,016,578
             
Other information per SF            
(Activity on a year-to-date basis)            
GAAP Rents on leasing   $ 22.72   $ 22.06   $ 22.41
Weighted average lease term   4.5 Years   4.3 Years   5.1 Years
             
             
Increase over ave GAAP rents in 2011   1.4%   1.4%   1.5%
             
Average free rent   2 Months   2 Months   3 Months
Tenant Improvements   $ 7.80   $ 8.30   $ 12.26
Leasing Costs   $ 3.16   $ 3.69   $ 5.40

 

December 31, 2012
 20
 
 
 
      Lease Expirations by Square Feet

 

Year   Total
Square Feet
  % of
Square Feet
Commercial
         
2013   278,946   3.6%
2014   417,721   5.3%