Franklin Street Properties (US:FSP)2024-10-29 20:26Financial Performance - Total revenues for Q3 2024 were $29.68 million, a decrease of 19.5% compared to $36.90 million in Q3 2023[8] - Net loss for Q3 2024 was $15.62 million, compared to a net loss of $45.67 million in Q3 2023, representing a 65.7% improvement[10] - Rental revenue for the nine months ended September 30, 2024, was $91.71 million, down 17.3% from $110.93 million for the same period in 2023[8] - Total expenses for Q3 2024 were $37.86 million, a decrease of 11.5% from $42.79 million in Q3 2023[8] - Comprehensive loss for Q3 2024 was $15.62 million, compared to $46.73 million in Q3 2023[10] - For the nine months ended September 30, 2024, the net loss was $44,197 thousand, compared to a net loss of $51,685 thousand for the same period in 2023, representing a 14.4% improvement[15] - The company reported net cash provided by investing activities of $43,835 thousand for the nine months ended September 30, 2024, significantly up from $14,086 thousand in 2023, reflecting a 211.5% increase[15] - The company reported total revenues of $29.7 million for the three months ended September 30, 2024, a decrease of $7.2 million compared to the same period in 2023[122] - Total expenses decreased by $4.9 million to $37.9 million for the three months ended September 30, 2024, compared to the same period in 2023[122] - The net loss for the three months ended September 30, 2024 was $15.6 million, a significant improvement from a net loss of $45.7 million for the same period in 2023[134] Revenue and Rental Income - Rental revenues decreased to $29.66 million in Q3 2024 from $36.90 million in Q3 2023, representing a decline of 19.5%[8] - For the nine months ended September 30, 2024, the Company recognized income from leases of $92,937,000, a decrease from $111,316,000 for the same period in 2023[83] - Rental revenue decreased by approximately $19.2 million due to the sale of six properties and lease expirations, with leased space at 67.7% as of September 30, 2024, down from 72.4% in 2023[136] Expenses and Losses - Real estate operating expenses for Q3 2024 were $11.57 million, down 9.5% from $12.80 million in Q3 2023[8] - Loss on sale of properties and impairment of assets held for sale for the nine months ended September 30, 2024, was $20.46 million, compared to $32.09 million for the same period in 2023[8] - The company reported a loss on sale of properties and impairment of assets held for sale of $7.25 million in Q3 2024, compared to $39.67 million in Q3 2023[8] - The company recorded a provision for the Revised Texas Franchise Tax of $162,000 for the nine months ended September 30, 2024, down from $212,000 in 2023[78] Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2024, was $6,736 thousand, down from $11,545 thousand in 2023, indicating a decrease of 41.5%[15] - The total cash, cash equivalents, and restricted cash at the end of the period was $42,375 thousand, a substantial increase from $13,043 thousand at the end of the same period in 2023, marking a 225.5% rise[24] - Cash and cash equivalents decreased from $127.9 million at December 31, 2023, to $42.4 million at September 30, 2024, a reduction of $85.5 million[159] - Cash provided by investing activities amounted to $43.8 million, mainly from asset sales totaling $62.9 million, offset by $19.1 million in real estate and equipment purchases[161] Debt and Financing - The Company has a term loan borrowing of approximately $78.8 million under the BMO Term Loan, maturing on April 1, 2026[42] - The interest rate on the BMO Term Loan was 8.00% per annum as of September 30, 2024, with a weighted average variable interest rate of 8.44% for the nine months ended September 30, 2024[45] - The BofA Term Loan has an aggregate principal amount of approximately $61.7 million, also maturing on April 1, 2026[49] - The Company has senior notes with an aggregate principal amount of approximately $137.1 million, consisting of Series A Notes of approximately $79.5 million and Series B Notes of approximately $57.6 million[57] - The interest rates on the Series A and Series B Notes increased from 4.49% and 4.76% per annum to 8.00% per annum following the NPA First Amendment on February 21, 2024[182] - The BofA Credit Agreement requires the Company to maintain a minimum fixed charge coverage ratio of 1.25x, reduced from 1.50x[55] - The company has utilized various funding sources, including refinancing existing debt and public offerings, to meet cash needs beyond the next twelve months[164] Property and Asset Management - As of September 30, 2024, the company owned and operated 16 properties, down from 20 properties as of September 30, 2023, indicating a 20% reduction in the number of properties[18] - The owned properties were approximately 70.4% leased as of September 30, 2024, a decrease from 74.0% leased as of December 31, 2023[106] - The company’s leased space in owned and consolidated properties was 67.7% as of September 30, 2024, down from 72.4% as of September 30, 2023[125] - The company is focused on acquiring and developing quality properties in good locations to mitigate market downturn impacts and capitalize on upturns[96] Stockholder Information - The Company declared and paid dividends of $0.01 per share for each quarter in 2024, totaling approximately $3.1 million for the first three quarters[68] - The Company declared a cash distribution of $0.01 per share of common stock, payable on November 7, 2024, to stockholders of record on October 18, 2024[91] - As of September 30, 2024, the Company had a total of 1,365,886 shares available for grant, with a compensation cost of $1,991,238 recognized during the period[71] Market and Economic Conditions - The long-term impact of the COVID-19 pandemic continues to present material uncertainty and risk regarding the performance of the company's properties and financial results[103] - The company expects to renew or sign new leases at current market rates, which could be above or below expiring rates[109] - Approximately 50.6% of the total debt constituted unhedged variable rate debt as of September 30, 2024, which could be adversely affected by increasing interest rates[105]