Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Address of principal executive offices)(Zip Code) (781) 557-1300 (Registrant's telephone number, including area code) For the transition period from to Commission File Nu ...

Franklin Street Properties Corporation (NYSE:FSP) Q1 2023 Earnings Conference Call May 3, 2023 11:00 AM ET Company Participants Scott Carter - EVP, General Counsel & Secretary John Demeritt - EVP, CFO & Treasurer George Carter - Chairman & CEO John Donahue - EVP Jeff Carter - President & CIO Conference Call Participants Craig Kucera - B. Riley Securities Operator Good morning. Thank you for attending the Franklin Street Properties Corp. First Quarter 2023 Results Call. My name is Elissa, and I will be your ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-32470 Franklin Street Properties Corp. (Exact name of registrant as specified in its charter) (State or othe ...

Property Sales and Dispositions - The company sold two office properties in Broomfield, Colorado for total gross sales proceeds of $102.5 million, achieving a gain of $24.1 million in 2022[21]. - In 2021, the company sold 10 office properties across four states for total gross sales proceeds of $602.7 million, resulting in a net gain of $113.1 million[21]. - The company aims to increase shareholder value by pursuing the sale of select properties and leasing vacant spaces[20]. - The company plans to use proceeds from property dispositions primarily for debt repayment[22]. - The company may not be able to dispose of properties at acceptable prices or within anticipated timeframes, affecting its financial flexibility[78]. Financial Condition and Debt Management - The company has no mortgage debt on its owned properties as of February 10, 2023[29]. - The company is committed to ensuring liquidity and meeting debt obligations to avoid defaults and maintain operational stability[64]. - As of February 10, 2023, the company had $48 million and $105 million in borrowings under the BofA Revolver, with a maximum borrowing limit of $150 million, which will reduce to $125 million on October 1, 2023, and to $100 million on April 1, 2024[70]. - The BMO Term Loan had outstanding amounts of $165 million and $125 million as of December 31, 2022, and February 10, 2023, respectively, with a required repayment of an additional $25 million by April 1, 2024[71]. - The company anticipates challenges in refinancing existing debts, including the BofA Revolver and BMO Term Loan, which could adversely affect cash flow and financial condition[66]. Operational Challenges and Market Conditions - The company has experienced significant disruptions due to the COVID-19 pandemic, impacting financial condition and operational results[58]. - The ongoing pandemic may lead to increased rent delinquencies and defaults, affecting occupancy rates and rental income[61]. - A tenant leasing approximately 130,000 square feet filed for Chapter 11 bankruptcy, resulting in a write-off charge of $3.1 million[62]. - The financial impact of the pandemic on the company's real estate holdings remains uncertain, influenced by external factors beyond control[63]. - The management team is actively monitoring market conditions to navigate potential adverse effects on business operations[60]. Employee and Workforce Information - The company had 28 employees as of February 10, 2023, with women representing 46.4% of the workforce[32]. Real Estate Portfolio and Risks - As of December 31, 2022, the company owned 21 office properties located in eight different states[19]. - The company believes its common stock price does not reflect the value of its underlying real estate assets[20]. - The company is focused on acquiring properties in prime locations with substantial infrastructure[29]. - Approximately 20% of the company's rental revenue from commercial properties is expected to expire each year, which may lead to challenges in re-leasing at favorable terms[84]. - As of December 31, 2022, the company had a tenant concentration of 17% in the energy services industry, which poses risks during economic downturns affecting these sectors[85]. - The company's properties are geographically concentrated, with 44.8% in the South and significant holdings in Denver, Dallas, and Houston, making it vulnerable to economic conditions in these areas[86]. - The company faces competition from national, regional, and local real estate operators, which could negatively impact occupancy rates and rental revenues[87]. - A tenant default in December 2020 resulted in a write-off charge of $3.1 million, highlighting the risks associated with tenant bankruptcies[81]. Financial Instruments and Interest Rate Risks - The company terminated interest rate swaps related to the BMO Term Loan, receiving approximately $4.3 million from these terminations[71]. - The company does not believe that the interest rate risk on the BofA Revolver is material as of December 31, 2022[277]. - The effective portion of the derivatives' fair value is recorded in other comprehensive income in the consolidated statements[281]. - The company requires derivatives contracts to be with counterparties that have investment grade ratings to mitigate counterparty credit risk[280]. - The company anticipates no significant loss of basis in the contracts due to unanticipated changes in interest rates[280]. Insurance and Compliance Risks - The company carries comprehensive insurance, but certain losses may be uninsurable, risking capital investment and anticipated profits[92]. - Compliance with environmental regulations may require substantial capital expenditures, affecting cash available for distribution to stockholders[96]. - The company faces risks related to climate change, which could increase operating costs significantly, including energy and insurance, potentially impacting profitability[88]. - Security breaches pose a risk to the company, with potential financial exposure and liability claims if sensitive data is compromised[90]. - The company has significant investments in markets vulnerable to terrorism, which could lead to decreased demand for office space and increased vacancies[91]. Shareholder Considerations - The company adopted a variable quarterly dividend policy in 2022, which may lead to fluctuations in dividend levels based on financial performance[98]. - As of December 31, 2022, the company owned 21 properties, which may decline in value, adversely affecting stockholder investments[101]. - Future equity issuances could dilute existing stockholders' interests, impacting the company's ability to finance acquisitions and operations[102]. - The market price of the company's common stock may fluctuate due to changes in economic conditions and perceptions of REITs[103]. - Provisions in the company's organizational documents may inhibit changes in control, potentially affecting stockholder opportunities for premium realization[107].

[Part I. Financial Information](index=5&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The company's financial position and performance reflect impacts from property dispositions, with decreased assets and liabilities, and varied net income results across quarterly and nine-month periods [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets and liabilities decreased to $1.26 billion and $489.5 million respectively, driven by property sales and subsequent debt repayment Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Real estate assets, net | $1,118,983 | $1,190,970 | | Total assets | $1,262,070 | $1,364,173 | | Term loans payable, net | $164,692 | $274,286 | | Total liabilities | $489,509 | $580,970 | | Total stockholders' equity | $772,561 | $783,203 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Property sales led to lower Q3 revenue but a higher net income due to gains, while nine-month revenue and net income both declined year-over-year Quarterly Operating Results (in thousands, except per share) | Metric | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Total Revenues | $40,836 | $50,802 | | Total Expenses | $46,810 | $55,112 | | Gain on sale of properties, net | $24,077 | $8,632 | | Net Income | $17,246 | $4,456 | | Net Income per Share | $0.17 | $0.04 | Nine-Month Operating Results (in thousands, except per share) | Metric | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | Total Revenues | $124,404 | $165,986 | | Total Expenses | $142,401 | $180,943 | | Gain on sale of properties, net | $24,077 | $29,258 | | Net Income | $3,978 | $14,145 | | Net Income per Share | $0.04 | $0.13 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash from operations decreased, while investing activities provided cash from property sales, and financing activities used cash for debt and dividend payments Cash Flow Summary (in thousands) | Activity | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $9,354 | $26,961 | | Net cash provided by investing activities | $63,972 | $264,349 | | Net cash used in financing activities | ($105,360) | ($285,729) | | **Net (decrease) increase in cash** | **($32,034)** | **$5,581** | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail a smaller property portfolio, significant debt restructuring, a new credit loss provision, and a reduced quarterly dividend - As of September 30, 2022, the company owned **22 operating properties**, down from 26 properties as of September 30, 2021, due to its disposition strategy[24](index=24&type=chunk)[26](index=26&type=chunk) - The company recorded a **$1.9 million provision for credit losses** during the first nine months of 2022 related to a $24 million loan to a Sponsored REIT, FSP Monument Circle LLC, due to deterioration in the real estate market[39](index=39&type=chunk)[45](index=45&type=chunk) - On September 6, 2022, the company prepaid the remaining **$110 million balance of the BofA Term Loan**; as of September 30, 2022, **$65.0 million was drawn on the new BofA Revolver**[56](index=56&type=chunk)[69](index=69&type=chunk) - On August 31, 2022, the company sold two office properties in Colorado for **$102.5 million**, realizing a net gain of approximately **$24.1 million**[105](index=105&type=chunk) - The quarterly dividend was reduced from **$0.09 per share in Q2 2022 to $0.01 per share in Q3 2022**; a subsequent dividend of $0.01 per share was declared on October 7, 2022[85](index=85&type=chunk)[107](index=107&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management focuses on a strategy of selective asset sales and debt repayment amid challenges from rising interest rates and declining office occupancy - The company's current strategy is to invest in office properties in the U.S. sunbelt and mountain west regions and to **sell select properties** where valuation potential has been reached[109](index=109&type=chunk)[112](index=112&type=chunk) - Anticipated property dispositions in 2022 are expected to generate gross proceeds between **$102.5 million and $200 million**, which will be used for debt repayment, stock repurchases, and dividends[112](index=112&type=chunk)[131](index=131&type=chunk) - The company adopted a **variable quarterly dividend policy** in July 2022, replacing its previous regular quarterly dividend policy[117](index=117&type=chunk) - The portfolio's leased percentage decreased from 78.4% at year-end 2021 to **75.9%** as of September 30, 2022[124](index=124&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) Property dispositions drove a year-over-year decline in rental revenue, though Q3 net income was boosted by a significant gain on sale Comparison of Three Months Ended September 30 (in thousands) | Account | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Rental Revenue | $40,366 | $50,326 | $(9,960) | | Total Expenses | $46,810 | $55,112 | $(8,302) | | Gain on sale of properties, net | $24,077 | $8,632 | $15,445 | | Net Income | $17,246 | $4,456 | $12,790 | Comparison of Nine Months Ended September 30 (in thousands) | Account | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Rental Revenue | $122,994 | $164,671 | $(41,677) | | Total Expenses | $142,401 | $180,943 | $(38,542) | | Impairment and loan loss reserve | $(1,857) | $— | $(1,857) | | Net Income | $3,978 | $14,145 | $(10,167) | [Non-GAAP Financial Measures](index=50&type=section&id=Non-GAAP%20Financial%20Measures) Funds From Operations (FFO) and Same Store Net Operating Income (NOI) both declined, reflecting lower operating income from a smaller property portfolio Funds From Operations (FFO) (in thousands) | Period | 2022 | 2021 | | :--- | :--- | :--- | | **Three Months Ended Sep 30** | | | | Net Income | $17,246 | $4,456 | | FFO | $9,041 | $14,797 | | **Nine Months Ended Sep 30** | | | | Net Income | $3,978 | $14,145 | | FFO | $30,880 | $47,524 | - Comparative Same Store NOI decreased by **11.6%** for the nine months ended September 30, 2022, compared to the same period in 2021, falling from $57.0 million to $50.4 million[167](index=167&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) Cash reserves decreased significantly, but management believes liquidity is sufficient for the next year, supported by a new revolving credit facility - Cash, cash equivalents, and restricted cash decreased from **$40.7 million** at year-end 2021 to **$8.7 million** at September 30, 2022[173](index=173&type=chunk) - The company has a **$165 million BMO Term Loan** maturing in January 2024 and **$200 million in Senior Notes** maturing in 2024 and 2027[183](index=183&type=chunk)[203](index=203&type=chunk) - In January 2022, the company entered into a new BofA Revolver with a capacity of **$237.5 million**, of which **$65.0 million was outstanding** as of September 30, 2022[189](index=189&type=chunk) - The company's stock repurchase program, authorized for up to **$50 million**, had **no activity** during the second and third quarters of 2022[89](index=89&type=chunk)[206](index=206&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The primary market risk stems from interest rate changes on its floating-rate debt, though this is partially mitigated by an interest rate swap - The company is exposed to interest rate risk on **$65.0 million of floating-rate debt** under the BofA Revolver[216](index=216&type=chunk)[217](index=217&type=chunk) - The BMO Term Loan's variable rate is hedged by an interest rate swap, fixing the effective interest rate at **4.04% per annum** as of September 30, 2022[218](index=218&type=chunk) [Controls and Procedures](index=67&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the third quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2022[226](index=226&type=chunk) - **No material changes** to internal control over financial reporting occurred during the quarter ended September 30, 2022[227](index=227&type=chunk) [Part II. Other Information](index=70&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=70&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no current legal proceedings that are expected to have a material adverse effect on its financial condition or operations - The company is **not currently involved in any legal proceedings** that are expected to have a material adverse effect on its business[230](index=230&type=chunk) [Risk Factors](index=70&type=section&id=Item%201A.%20Risk%20Factors) The company highlights significant risks from rising interest rates and adverse economic conditions, which could increase debt costs and reduce office demand - **Rising interest rates** pose a significant risk, as they increase interest costs on unhedged variable rate debt (BofA Revolver) and could adversely affect cash flow and the ability to refinance[233](index=233&type=chunk)[235](index=235&type=chunk) - **Uncertain economic conditions** in the U.S., including recessionary concerns, inflation, and the ongoing effects of the COVID-19 pandemic, are negatively impacting the demand for office space and could materially harm the company's earnings[236](index=236&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the company's $50 million stock repurchase authorization during the third quarter of 2022 - **No shares of common stock were repurchased** during the third quarter of 2022[237](index=237&type=chunk) [Defaults Upon Senior Securities](index=72&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None reported [Mine Safety Disclosures](index=72&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) None reported [Other Information](index=72&type=section&id=Item%205.%20Other%20Information) None reported [Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO and iXBRL data files

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-32470 Franklin Street Properties Corp. (Exact name of registrant as specified in its charter) (State or other ...

Table of Contents ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-32470 Franklin Street Properties Corp. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (Exact name of registrant as specified in its charter) (State or othe ...

Property Dispositions and Sales - The company anticipates property dispositions in 2022 will generate estimated gross proceeds between $250 million and $350 million[26]. - In 2021, the company sold 10 office properties for aggregate gross sale proceeds of $602.7 million, resulting in a net gain of $113.1 million[27]. - The company plans to use proceeds from property sales for debt repayment, stock repurchases, and special dividends to meet REIT requirements[28]. - The company anticipates that Sponsored REIT Loans will be repaid at maturity, but defaults could require additional draws or cash usage, reducing cash available for distribution[70]. Financial Performance and Challenges - The COVID-19 pandemic has caused significant disruptions, adversely impacting financial condition and results of operations, with potential tenant rent payment issues[62]. - The company has experienced increased operational costs and reduced rental receipts due to the pandemic, impacting overall profitability[66]. - The company has been unable to predict the full extent of the COVID-19 pandemic's impact on future financial performance, which remains uncertain[68]. - Ongoing economic impacts from the pandemic could lead to increased rent delinquencies and defaults, affecting occupancy and rental rates[67]. - The company may face challenges in refinancing existing debts, including the BofA Revolver and various term loans, which could adversely affect financial condition[71]. Competition and Market Conditions - The company continues to face competition in its real estate markets, impacting rental revenues and occupancy levels[30]. - The company faces competition from national, regional, and local real estate operators, which could adversely affect cash flow and rental revenues[98]. - The company has a significant concentration of properties in energy-influenced markets, which may be adversely affected by reduced demand for oil[65]. - Approximately 18% of the company's tenants operate in the energy services industry, indicating a concentration risk[94]. Debt and Interest Rate Management - As of December 31, 2021, the company had $35 million drawn and outstanding under the BofA Revolver, with a borrowing limit of $237.5 million[76]. - The BofA Term Loan had $110 million drawn and outstanding as of December 31, 2021, with an accordion feature allowing for up to $500 million in additional borrowing capacity[76]. - The BMO Term Loan had $165 million drawn and outstanding as of December 31, 2021, with the potential to increase by an additional $100 million[77]. - The company faces risks from potential increases in interest rates, which could adversely affect cash flow and refinancing capabilities[79]. - The company has fixed the base LIBOR rate on the BMO Term Loan at 2.39% per annum until January 31, 2024, through interest rate swap agreements[78]. Regulatory Compliance and Risks - The company is committed to compliance with various governmental regulations, which may require substantial capital expenditures[31]. - The company must comply with the Americans With Disabilities Act and fire and safety regulations, which may require significant capital expenditures[106]. - The company is subject to risks associated with climate change, which could increase operating costs and impact property demand[99]. - The company’s ability to qualify as a REIT is complex and could be jeopardized by various factors, leading to adverse tax consequences[117]. Operational and Workforce Insights - The company had 32 employees as of February 4, 2022, with women representing 46.9% of the workforce[38]. - The management team is focused on maintaining financial strength and operational efficiency amid ongoing challenges[58]. - The inability to operate effectively in affected areas could lead to delays in construction and increased operational challenges[65]. Stockholder Value and Market Perception - The company believes its common stock price does not reflect the value of its underlying real estate assets[26]. - The company’s common stock price may fluctuate based on market conditions and financial performance, affecting stockholder value[114]. - The company has provisions in its organizational documents that may inhibit changes in control, potentially affecting stockholder interests[119]. - The company may experience fluctuations in dividends due to changes in real estate occupancy levels and rental rates[111]. Risk Management and Financial Instruments - The company carries comprehensive liability and property insurance, but certain losses may be uninsurable, risking capital investment and anticipated profits[104]. - The Company requires derivatives contracts to be with counterparties that have investment grade ratings to mitigate counterparty credit risk[295]. - The effective portion of the derivatives' fair value is recorded in other comprehensive income in the consolidated statements[296]. - The Company has hedged variable cash flows related to interest on its loans using derivative instruments[295].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-32470 Franklin Street Properties Corp. (Exact name of registrant as specified in its charter) Maryland 0 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021. OR (Registrant's telephone number, including area code) N/A For the transition period from to Commission File Number: 001-32470 Franklin Street Properties Corp. (Exact name o ...