Franklin (FSP) Q2 Revenue Down 13%

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]