Nov 21, 2025 12:19 PM Eastern Standard Time Franklin Street Properties Corp. Provides Update on Review of Strategic Alternatives Share WAKEFIELD, Mass.--(BUSINESS WIRE)--Franklin Street Properties Corp. (NYSE American: FSP) ("FSP†or the "Company†) announced today that it is providing an update on its previously announced review of strategic alternatives. On May 14, 2025, FSP announced that its Board of Directors had initiated a review of strategic alternatives in order to explore ways to maximize sharehol ...

Core Viewpoint - Franklin Street Properties Corp. (FSP) is focusing on improving leasing and occupancy in its portfolio despite challenges in the national office sector, with signs of stabilization and increased tenant activity observed [2][4]. Financial Highlights - For the third quarter ended September 30, 2025, FSP reported a GAAP net loss of $8.3 million, translating to $0.08 per basic and diluted share. For the nine months, the net loss was $37.6 million, or $0.36 per share [5]. - Funds From Operations (FFO) for the third quarter was $2.3 million, or $0.02 per share, and for the nine months, it was $7.6 million, or $0.07 per share [5]. - The company leased approximately 274,000 square feet during the nine months, with 219,000 square feet from renewals and expansions of existing tenants [5]. - The leased percentage of the directly-owned real estate portfolio decreased to 68.9% as of September 30, 2025, down from 70.3% at the end of 2024 [5]. - The weighted average GAAP base rent per square foot increased by 6.0% to $31.81 compared to the previous year [5]. Leasing Highlights - The national office vacancy rates have slightly declined for the first time since early 2019, indicating a potential recovery in the market [2]. - There is an increased demand for larger lease transactions, with more prospective tenants looking to expand their office space [2]. Strategic Review - The Board of Directors is conducting a strategic review with BofA Securities to explore alternatives for maximizing shareholder value, including potential sales and refinancing options [4][3]. - No specific outcomes or timelines for the strategic review have been disclosed, and further comments will be withheld until completion [4]. Dividend Information - A quarterly cash dividend of $0.01 per share was declared for the three months ended September 30, 2025, to be paid on November 6, 2025 [6]. Real Estate Update - The company focuses on infill and central business district office properties primarily in the U.S. Sunbelt and Mountain West regions, aiming for long-term growth and appreciation [12].

Portfolio and Occupancy - As of September 30, 2025, the owned portfolio consisted of approximately 4.8 million square feet, located in Dallas, Denver, Houston, and Minneapolis[110]. - The leased occupancy rate of owned properties decreased to 68.9% as of September 30, 2025, down from 70.3% at the end of 2024, with approximately 1,497,000 square feet of vacancy[122]. - The leased space in owned properties was 68.9% as of September 30, 2025, down from 70.4% as of September 30, 2024[142]. - Approximately 1.6% and 11.5% of the square footage in the owned portfolio is scheduled to expire during 2025 and 2026, respectively[123]. - The weighted average rent per occupied square foot across owned properties was $31.13 as of September 30, 2025[173]. Financial Performance - Total revenues decreased by $2.4 million to $27.3 million for the three months ended September 30, 2025, primarily due to a decrease in rental revenue from property sales and lease expirations[142]. - The net loss for the three months ended September 30, 2025, was $8.3 million, compared to a net loss of $15.6 million for the same period in 2024, reflecting an improvement of $7.3 million[151]. - Total expenses decreased by $2.0 million to $35.9 million for the three months ended September 30, 2025, mainly due to reductions in real estate operating expenses and depreciation[143]. - During the nine months ended September 30, 2025, total revenues decreased by $10.6 million to $81.1 million, primarily from a decline in rental revenue due to property sales[153]. - Net loss for the nine months ended September 30, 2025, was $37.6 million, compared to a net loss of $44.2 million for the same period in 2024, reflecting an improvement of approximately 15%[162]. - Funds From Operations (FFO) for the nine months ended September 30, 2025, was $7.566 million, down from $10.579 million in the same period of 2024, representing a decrease of approximately 28.5%[167]. - Net Operating Income (NOI) for the nine months ended September 30, 2025, was $33.994 million, compared to $40.039 million for the same period in 2024, indicating a decline of about 15.1%[170]. Debt and Financing - Approximately 50.6% of total debt as of September 30, 2025, constituted unhedged variable rate debt, which could be adversely affected by rising interest rates[121]. - The credit rating for senior unsecured debt was downgraded to Caa1 as of September 30, 2025, reflecting ongoing economic challenges[118]. - The company has aggregate outstanding indebtedness of approximately $248.9 million under three unsecured loans, maturing on April 1, 2026[175]. - Management intends to engage in discussions with lenders to extend or refinance existing debt, with substantial doubt about the company's ability to continue as a going concern for at least one year following the financial statement issuance[176]. - The BMO Term Loan has a principal amount of approximately $70.7 million, maturing on April 1, 2026, with recent amendments affecting interest rates and repayment terms[185]. - The company anticipates generating funds from continuing real estate operations and property dispositions to cover future growth and expenses[178]. - The interest rate on the BMO Term Loan increased from 8.00% per annum to 9.00% per annum effective April 1, 2025[190]. - The BofA Term Loan bears interest at 300 basis points over SOFR with a floor on SOFR of 5.00% effective February 21, 2024[196]. - The company is subject to mandatory prepayments of the BMO Term Loan, BofA Term Loan, and Senior Notes with net cash proceeds from asset dispositions, with specific percentages allocated to each[203]. - The company may issue debt securities or equity to fund acquisitions, pay down existing debt, and for other corporate purposes[207]. Asset Dispositions and Impairments - For the year ended December 31, 2024, the disposition strategy resulted in gross sale proceeds of $100.0 million, with $102 million of debt repaid on February 21, 2024[116]. - The company recorded a loss on sale of properties and impairment of assets held for sale of $12.9 million during the nine months ended September 30, 2025, compared to a loss of $20.5 million in the same period in 2024[152]. - The company sold a property in Atlanta, Georgia for a gross sales price of approximately $40.0 million, with an expected loss of $20.5 million recorded[147]. - An impairment loss of $13.3 million was recorded for a property in Indianapolis, Indiana during the three months ended March 31, 2025[130]. - The company recorded an impairment charge of $13.3 million for a property sale in Indianapolis, Indiana, with a gross sales price of $6.0 million, and a final sale adjustment of $0.4 million was made in June 2025[157]. - An expected loss of $20.5 million was recorded for a property in Atlanta, Georgia, which was later adjusted to $27.1 million after a new sales agreement for $34.0 million[158]. Cash and Liquidity - The company reported cash and cash equivalents of $31.6 million as of September 30, 2025, a decrease of $11.1 million from $42.7 million as of December 31, 2024[178]. - Cash used in investing activities for the nine months ended September 30, 2025, was $6.5 million, primarily due to $12.6 million in purchases of real estate assets and office equipment[180]. - Cash used in financing activities for the nine months ended September 30, 2025, was $4.5 million, mainly for distributions to stockholders of $3.1 million and debt repayment of $1.4 million[181]. - Interest income for the three months ended September 30, 2025, was $0.2 million, compared to $0.3 million for the same period in 2024[149]. - Interest income earned during the nine months ended September 30, 2025, was $0.8 million, down from $1.7 million in the same period of 2024[160]. Strategic Initiatives - The company initiated a strategic review in May 2025 to explore alternatives for maximizing shareholder value, including potential asset sales and refinancing[119]. - The company adopted a variable quarterly dividend policy in July 2022, with dividends determined based on various factors including annual taxable income estimates[117]. - The impact of geopolitical events and economic conditions may limit new tenant leasing activity in the fourth quarter of 2025 and beyond[124]. - The company does not anticipate that the adoption of recent accounting standards will have a material impact on its consolidated financial statements[136]. - The company has no material changes to its contractual obligations and off-balance-sheet arrangements as disclosed in its Annual Report for the year ended December 31, 2024[210].

Financial Performance - Rental revenue for Q3 2025 was $27.3 million, a slight increase from $26.7 million in Q2 2025[15] - The company reported a net loss of $8.3 million for Q3 2025, compared to a net loss of $7.9 million in Q2 2025[15] - Adjusted EBITDA for Q3 2025 was $8.6 million, down from $8.8 million in Q2 2025[15] - Funds from Operations (FFO) for Q3 2025 were $2.3 million, a decrease from $2.5 million in Q2 2025[15] - The company reported a net loss of $21,435,000 for the three months ended September 30, 2025, compared to a net loss of $7,552,000 for the same period last year[29] - Funds From Operations (FFO) for the three months ended September 30, 2025, was $2,323,000, a decrease from $2,665,000 in the previous year[29] - Adjusted EBITDA for the three months ended September 30, 2025, was $8,582,000, with an annualized figure of $34,328,000[32] - The company reported a net cash used in operating activities of $78 million for the nine months ended September 30, 2025, compared to net cash provided of $6,736 million in the same period of 2024[23] Assets and Liabilities - Total assets were reported at $901.0 million, with total liabilities at $285.7 million as of September 30, 2025[15] - Total assets as of September 30, 2025, were $901,032 million, a decrease of 13.2% compared to $1,038,963 million on December 31, 2024[21] - Total liabilities as of September 30, 2025, were $285,695 million, reflecting a decrease from $335,099 million on December 31, 2024[21] - The total outstanding debt as of September 30, 2025, was $248,917,000, with an average interest rate of 9.00%[38] - The total debt as of September 30, 2025, is $248.92 million[70] Market Capitalization and Equity - The total market capitalization as of September 30, 2025, was approximately $0.4 billion[14] - The total market capitalization as of September 30, 2025, was $414.8 million, a decrease from $537.8 million in the previous year[41] - The total stockholders' equity as of September 30, 2025, was $615,337 million, down from $703,864 million on December 31, 2024[21] Property and Occupancy - As of September 30, 2025, Franklin Street Properties Corp. owned a portfolio of 14 properties totaling 4.8 million square feet[13] - The occupancy rate for owned properties was 68.9% as of September 30, 2025, slightly down from 69.1% in Q2 2025[15] - The total number of owned properties remained at 14 as of September 30, 2025, with a total square footage of 4,807,663[44] - The leased percentage of owned properties was 68.9%, slightly down from 70.4% a year earlier[44] - The total leased square footage as of September 30, 2025, is 1,593,511 square feet, representing 33.1% of the aggregate[52] Dividends and Distributions - The company declared a dividend of $0.01 per share for Q3 2025, consistent with previous quarters[15] - The company declared total dividends of $1.037 million for the quarter, maintaining a common dividend of $0.01 per share[41] - The declared dividend as a percentage of net income per share was -12% for the quarter[41] Leasing Activity - New leasing activity for the nine months ended September 30, 2025, was 55,000 square feet, compared to 122,000 square feet for the same period in the previous year[55] - Renewals and expansions totaled 219,000 square feet for the nine months ended September 30, 2025, down from 242,000 square feet year-over-year[55] - The weighted average lease term increased to 5.7 years for the nine months ended September 30, 2025, compared to 5.4 years in the previous year[55] - Average GAAP rents on leasing increased by 6.0% year-over-year to $31.81 per square foot[55] Cash and Cash Equivalents - Cash, cash equivalents, and restricted cash decreased to $31,575 million as of September 30, 2025, down from $42,375 million at the end of the previous period[23] - The company reported cash, cash equivalents, and restricted cash of $31,575,000 as of September 30, 2025[32] - The company has cash and cash equivalents totaling $31.58 million[70] Capital Expenditures - Total capital expenditures for the nine months ended September 30, 2025, were $14,195,000, with tenant improvements accounting for $8,258,000[64] Losses and Impairments - The company reported a loss on sale of properties and impairment of assets held for sale of $12,900 million for the nine months ended September 30, 2025, compared to $20,459 million in the same period of 2024[23] - The company incurred a loss on the sale of properties and impairment of assets held for sale, netting $12,900,000 for the three months ended September 30, 2025[34] - The company incurred a loss of $12,911 on the sale of Monument Circle, which generated proceeds of $6 million[68] - The company reported a gain of $10,558 from the sale of One Legacy Circle, with proceeds of $48 million[68]

Core Viewpoint - Franklin Street Properties Corp. (FSP) is set to release its third quarter 2025 results on October 28, 2025, after market close, and will not hold a conference call or webcast for this quarter [1] Company Information - FSP is a real estate investment trust (REIT) [1] - The press release and additional news about FSP can be found on their official website [1]

Core Viewpoint - Franklin Street Properties (NYSE: FSP) is a REIT focused on U.S. office properties and is currently trading significantly below its book value, having underperformed the market with a return of -16% over the past two years [1] Group 1: Company Performance - FSP has shown a strong underperformance compared to the market, with a return of -16% since the first article was published nearly two years ago [1] Group 2: Investment Activity - The article mentions notable investment activities, including two "Buy" recommendations for ADTH in September and November 2023, with an acquisition price of $3.21 per share in June 2024 [1] - LUMN also received two "Buy" recommendations in September and November 2023, with a downgrade noted after selling the full position in October 2024 at $6.08 [1]

Core Points - Franklin Street Properties Corp. announced a quarterly dividend of $0.01 per share for the period from July 1, 2025, to September 30, 2025 [1] - The dividend is payable on November 6, 2025, to stockholders of record as of October 17, 2025 [1] Company Information - The announcement was made by the Board of Directors of Franklin Street Properties Corp. [1] - Additional information about the company can be found on their website [1]

Group 1 - The article discusses the author's journey into investing, starting in high school in 2011, focusing on REITs, preferred stocks, and high-yield bonds, indicating a long-standing interest in markets and the economy [1] - The author has recently adopted a strategy that combines long stock positions with covered calls and cash secured puts, emphasizing a fundamental long-term investment approach [1] - The author primarily covers REITs and financials on Seeking Alpha, with occasional articles on ETFs and other stocks influenced by macro trade ideas [1]

Core Insights - Franklin Street Properties reported a GAAP net loss of $(0.08) per share, aligning with analyst expectations, and revenue of $26.7 million, reflecting ongoing operational challenges in the office real estate market [1][7] Financial Performance - EPS (GAAP) for Q2 2025 was $(0.08), consistent with estimates and improved from $(0.20) in Q2 2024, showing a year-over-year change of $0.12 [2] - Revenue decreased by 13.3% from $30.8 million in Q2 2024 to $26.7 million in Q2 2025 [2] - Funds From Operations (FFO) per share fell to $0.02, a 50% decrease from $0.04 in Q2 2024 [2] - Adjusted Funds From Operations (AFFO) per share was approximately break-even, compared to $0.01 in Q2 2024, indicating a significant change [2] - The owned portfolio leased percentage dropped to 69.1%, down from 70.3% at year-end 2024 [2] Operational Trends - The company faced persistent challenges in leasing, with new leasing activity primarily driven by renewals and expansions rather than new tenants [5] - The average rent per occupied square foot decreased from $31.77 at year-end 2024 to $30.98 at June 30, 2025 [6] - Year-to-date leasing activity reached 187,000 square feet, but the overall leasing environment remains weak [5] Strategic Focus - The company is focusing on increasing leasing in existing properties and pursuing selective property sales to reduce debt, which stood at approximately $250 million as of March 31, 2025 [4][8] - Management is exploring options for further property sales or potentially selling the company, with no specified timeline for outcomes [11] Market Overview - The portfolio is concentrated in the Sunbelt and Mountain West regions, particularly Texas, Colorado, and Minnesota, with ongoing difficulties noted in the Minneapolis market [3][10] - Management observed firmer tenant demand in Texas, especially Houston, but this has not significantly improved overall portfolio metrics [10] Dividend and Guidance - The quarterly dividend remained unchanged at $0.01 per share, despite negative cash flow on an adjusted basis [12] - Management did not provide financial guidance for the next quarter or fiscal 2025, citing uncertainty in leasing demand and potential property sales [13]

Portfolio and Occupancy - As of June 30, 2025, the owned portfolio consisted of approximately 4.8 million square feet, located in Dallas, Denver, Houston, and Minneapolis [111]. - The leased occupancy rate of owned properties decreased to 69.1% as of June 30, 2025, down from 70.3% at the end of 2024, with approximately 1,484,000 square feet of vacancy [123]. - The leased space in owned properties was 69.1% as of June 30, 2025, down from 72.3% as of June 30, 2024 [140]. - As of June 30, 2025, the company reported total owned properties with a net rentable square footage of 4,807,663 and an occupied square footage of 3,244,882, resulting in an overall occupancy rate of 67.5% [173]. Financial Performance - Total revenues decreased by $4.1 million to $26.7 million for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to a decrease in rental revenue from property sales and lease expirations [140]. - The company recorded a net loss of $7.9 million for the three months ended June 30, 2025, an improvement from a net loss of $21.0 million in the same period of 2024 [149]. - Total expenses decreased by $3.8 million to $35.1 million for the three months ended June 30, 2025, mainly due to reductions in real estate operating expenses and depreciation [141]. - Total revenues for the six months ended June 30, 2025, decreased by $8.2 million to $53.8 million, primarily due to a decrease in rental revenue from property sales [151]. - Total expenses for the six months ended June 30, 2025, decreased by $7.9 million to $70.6 million, largely due to lower real estate operating expenses and interest expenses [152]. - The net loss for the six months ended June 30, 2025, was $29.3 million, compared to a net loss of $28.6 million for the same period in 2024 [160]. - Funds From Operations (FFO) for the six months ended June 30, 2025, was $5.243 million, down from $7.914 million in 2024 [165]. - Net Operating Income (NOI) for the six months ended June 30, 2025, was $22.902 million, a decrease of 17.2% compared to the same period in 2024 [169]. Debt and Financing - The company repaid a total of $154.7 million of debt during 2024, including $102 million on February 21, $25.3 million on July 10, and $27.4 million on October 25 [117]. - Approximately 50.6% of total debt as of June 30, 2025, was unhedged variable rate debt, which could be adversely affected by rising interest rates [122]. - The credit rating for the company's senior unsecured debt was downgraded to Caa1 as of June 30, 2025, reflecting increased risk in the current economic environment [119]. - The company has aggregate outstanding indebtedness of approximately $249.8 million under three unsecured loans, maturing on April 1, 2026 [175]. - The BMO Term Loan has an outstanding principal amount of approximately $70.9 million, maturing on April 1, 2026, with recent amendments affecting interest rates and repayment terms [185]. - The company intends to engage in discussions with lenders to extend or refinance existing debt, with a belief that it is likely to succeed [176]. - The BMO Term Loan interest rate increased from 8.00% per annum to 9.00% per annum effective April 1, 2025 [190]. - The aggregate principal amount of Senior Notes was approximately $123.4 million as of June 30, 2025, consisting of Series A Notes of approximately $71.6 million and Series B Notes of approximately $51.8 million [204]. - The interest rates for Series A and Series B Notes increased from 4.49% and 4.76% per annum to 8.00% per annum, respectively, following the amendment on February 21, 2024 [204]. - The company had $55.5 million outstanding on the BofA Term Loan as of June 30, 2025, with an interest rate of 9.00% per annum [215]. - The company had $70.9 million outstanding on the BMO Term Loan Tranche B as of June 30, 2025, also with an interest rate of 9.00% per annum [216]. Asset Sales and Impairments - For the year ended December 31, 2024, the company achieved aggregate gross sale proceeds of $100.0 million from property dispositions [117]. - The company sold an office property in Richardson, Texas for $35 million on January 26, 2024, resulting in an impairment loss of $2.1 million recorded in 2023 [130]. - An impairment loss of $13.3 million was recorded for a property in Indianapolis, Indiana, which was sold for a gross price of $6.0 million, leading to a net loss of $12.9 million after final sale adjustments [145]. - The company entered into an agreement to sell a property in Glen Allen, Virginia for approximately $31.0 million, expecting a loss of $13.2 million, with the sale closing on July 8, 2024 [157]. - The company reclassified $28.6 million of office property as an asset held for sale as of June 30, 2024 [157]. Cash Flow and Liquidity - The company had cash and cash equivalents of $30.5 million as of June 30, 2025, down from $42.7 million at the end of 2024, reflecting a decrease of $12.2 million [178]. - Cash used in operating activities for the six months ended June 30, 2025, was $8.4 million, primarily due to the net loss and adjustments for non-cash expenses [179]. - The company reported cash used in investing activities of $1.2 million, primarily due to real estate asset purchases and office equipment investments [180]. - The company has substantial doubt about its ability to continue as a going concern for at least one year following the issuance of the financial statements due to uncertainties regarding debt maturity [176]. Dividend Policy - The company adopted a variable quarterly dividend policy in July 2022, with dividends determined based on various factors including taxable income estimates [118]. - The BofA Credit Agreement restricts quarterly dividend distributions to not exceed $0.01 per share of common stock [202]. - The company discontinued its stock repurchase program authorized for up to $50 million on February 10, 2023 [211]. Market Conditions and Strategic Review - The long-term impact of the COVID-19 pandemic continues to create uncertainty regarding tenant occupancy and rent collection levels [121]. - The company initiated a strategic review in May 2025 to explore alternatives for maximizing shareholder value, including potential asset sales and refinancing [120]. - Rental income exceeded operating expenses for all properties except Monument Circle for the three and six months ended June 30, 2025 [213].