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, 2019. 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 ot ...

Franklin Street Properties Corp (NYSE:FSP) Q4 2018 Earnings Conference Call February 13, 2019 10:00 AM ET Company Participants Scott Carter - General Counsel George Carter - Chief Executive Officer John Demeritt - Chief Financial Officer Jeff Carter - President & Chief Investment Officer John Donahue - President of FSP Property Management Toby Daley - Senior Vice President & Regional Director of Atlanta & Houston Conference Call Participants Dave Rodgers - Robert W. Baird John Guinee - Stifel Rob Stevenson ...

Financial Performance - Total revenue for FSP Corp. in 2018 was $268.87 million, a decrease of 1.6% from $272.59 million in 2017[135] - Net income for 2018 was $13.07 million, compared to a net loss of $15.94 million in 2017[135] - Total revenues decreased by approximately $3.7 million to $268.9 million for the year ended December 31, 2018, compared to $272.6 million in 2017[178] - Total expenses decreased by $1.9 million to $262.2 million for the year ended December 31, 2018, compared to $264.2 million in 2017[179] - Net income for the year ended December 31, 2018, was $13.1 million, a significant increase of $29.0 million compared to a net loss of $15.9 million in 2017[178] - Rental revenues decreased by $3.5 million to $263.8 million for the year ended December 31, 2018, compared to $267.3 million in 2017[178] - Net Operating Income (NOI) for the year ended December 31, 2018, was $144.3 million, a decrease of 1.7% from $146.8 million in 2017[210] - Same Store NOI decreased by 2.1% to $137.8 million in 2018 from $140.7 million in 2017[210] - Comparative Same Store NOI decreased by 4.2% to $131.7 million in 2018 from $137.4 million in 2017[210] - Funds From Operations (FFO) for the year ended December 31, 2018 was $102.5 million, compared to $111.4 million in 2017[207] Real Estate Portfolio - As of December 31, 2018, the real estate portfolio was approximately 89.0% leased, down from 89.7% in 2017, with a total vacancy of approximately 1,046,000 square feet[143] - The company leased approximately 1,681,000 square feet of office space in 2018, with average GAAP base rents at $31.02 per square foot, a 7.3% increase compared to the previous year[143] - Approximately 8.6% of the square footage in the owned portfolio is scheduled to expire in 2019, with expectations of positive leasing activity in major markets[148] - The company plans to actively evaluate its portfolio for potential advantageous property dispositions as market conditions improve[160] - As of December 31, 2018, the company had approximately $957.5 million in future minimum rental income commitments from non-cancelable operating leases[257] Redevelopment and Investment - FSP Corp. expects to incur redevelopment costs of $28.4 million for the 801 Marquette property, with $18.4 million already spent as of December 31, 2018[145] - The redevelopment of Blue Lagoon is expected to cost $22.5 million, with $0.9 million incurred as of December 31, 2018, and completion anticipated by the end of 2019[146] - The company continues to explore additional real estate investment opportunities, anticipating further investments in the future[155] Debt and Financing - Total assets as of December 31, 2018, were $1.90 billion, down from $1.99 billion in 2017, while total liabilities decreased to $1.06 billion from $1.12 billion[135] - The Company entered into a JPM Term Loan of $150 million, with an interest rate of 3.63% per annum as of December 31, 2018[221] - The BMO Term Loan amounts to $220 million, with an effective interest rate of 3.57% per annum as of December 31, 2018[226] - The Company has committed to fund up to $79.5 million to three Sponsored REITs, of which $70.7 million has been drawn and is outstanding[247] - The BAML Term Loan is for $400 million and matures on January 12, 2023[237] - The Company was in compliance with the financial covenants of both the BMO Credit Agreement and the BAML Credit Facility as of December 31, 2018[227][240] - The Company intends to use proceeds from the BAML Credit Facility for property acquisitions and general business purposes[241] - The BAML Revolver has a total of $25,000 due in 2023, while the Series A Notes and Series B Notes have maturities of $116,000 and $84,000, respectively, due in 2024 and 2027[277] Cash Flow and Liquidity - Cash and cash equivalents increased to $11.2 million in 2018 from $9.8 million in 2017, attributed to $80.2 million from operating activities[213] - Cash provided by investing activities was $25.7 million, primarily from liquidating distributions of $74.9 million from non-consolidated REITs[215] - Cash used in financing activities totaled $104.5 million, including $49.3 million in distributions to stockholders[216] - The Company anticipates generating sufficient funds from real estate operations to meet working capital and capital expenditure needs for at least the next 12 months[213] Accounting and Valuation - The company’s critical accounting policies involve significant estimates related to the allowance for doubtful accounts, impairment considerations, and the valuation of derivatives[161] - The company recognized an impairment charge of $0.3 million and $2.5 million during the three months ended June 30, 2018, and December 31, 2017, respectively, indicating a decline in fair value below the carrying value of investments in non-consolidated REITs[180] - The company’s derivatives are recorded at fair value in other liabilities, impacting other comprehensive income and earnings based on their effectiveness[273] Interest and Derivatives - Interest expense increased by approximately $6.0 million to $38.4 million for the year ended December 31, 2018, primarily due to interest accruing on Senior Notes issued at a weighted average rate of approximately 4.10%[179] - Interest income from loans to Sponsored REITs decreased by approximately $0.1 million due to repayments, partially offset by higher interest rates in 2018[182] - The interest rate on the BAML Revolver was LIBOR plus 120 basis points, or 3.70% per annum, as of December 31, 2018[270] - The company entered into interest rate swap agreements to mitigate interest rate risk, fixing the BAML Term Loan at 2.47% per annum and the BMO Term Loan at 3.57% per annum as of December 31, 2018[271]